Dots Dashed

Tod Francis

General partner
Trinity Ventures
Menlo Park, California

Sometimes you learn the most valuable lessons from what you decide not to do. We passed on some early-stage companies whose valuations were beyond our comfort zone. And at the end of the day, at least one of them went on to be worth $10 billion. We didn't recognize that the valuation multiples on really great companies could be so significant.

We learned from that. We learned that when a company is proposing a true platform change, businesses of significant scale can be created. It's worth being part of high-quality companies -- even if it means you have to step up in valuation.

But today, one truth remains: There's no easy money. The unreal market of 1998 and 1999 was based on fantasy. Now that the market has returned to core metrics, we have a healthier environment in which to do business. Companies will be built and measured over the long term. And only the best teams and business models will survive and provide robust returns for investors.

Many people think that the Internet economy has come and gone. I say we've seen only the first inning of the Internet ball game. As the game progresses, the Internet will become as accessible and consistent as your telephone dial tone. Accordingly, a whole new attitude and set of ideas about what we can do with it will emerge.

Think about it. The pc was Time magazine's Man of the Year in 1982. But when did it actually achieve relevant impact? It has taken 20 years. As the Internet becomes more reliable, it too will prove an indispensable part of our daily lives and of the way that businesses and consumers interact.

Tod Francis (tod@trinityventures.com) was vice president of marketing and sales for a consumer-products company before joining Trinity Ventures in 1993. Trinity manages a $1 billion fund, focusing on early-stage software, communications, and e-business companies.

Tandeka Guilderson

Director
Center for Women & Enterprise
Boston, Massachusetts

My colleagues and I see about 250 female entrepreneurs every year -- women with big dreams, who are seeking equity financing. But about 75% of them get disappointed, because their business plans are inappropriate. My job is to find the narrow segment of entrepreneurs with scaleable businesses and coach them on early-stage financing. When it comes to equity capital, women have been rejected time and again.

Women are fabulous leaders. They have an intuitive and informed sense of what it takes to build great companies. But as a group, they've simply had too little access to the venture community. As a result, women have been late entrants in the Internet revolution.

Among the many business violations in the last few years, entrepreneurs, male and female, didn't think through their revenue models. With the enormous amount of Web traffic, they assumed that customers would just show up. They didn't stop to think about how to drive traffic to their site, and they certainly didn't give enough consideration to the competitive environment.

Giddy ambition also got in the way. Entrepreneurs weren't screening themselves or analyzing their business models to see if accessing capital was even appropriate. vcs aren't mercenary -- they're just bottom-line oriented. Money is sexy, but you have to be pragmatic. Don't count on venture capitalists. They aren't about to buy you dinner.

Tandeka Guilderson (tguilder@cWeboston.org) was a junior partner in a small-service business before joining the Center for Women & Enterprise in 1998. CWE acts as an entrepreneurial boot camp with a mission to accelerate access to venture funding for women-led startups.

Mark Breir

Author
Los Altos, California

I believe that there's lots of room for optimism when it comes to the Internet. Amazon.com and Barnes & Noble might have books all sewn up, but there are still some huge categories up for grabs. Think about the big-ticket items: where you go to buy a car, to buy a house, to buy jewelry. The race has yet to be won in those areas.

That said, there are clearly lessons to be learned from dotcoms. For example: You can't be all things to all people. At Beyond.com, it took us a while to realize that. Beyond expanded into four divisions, but we could really do only one or two of those things well without placing impossible demands on the engineering team. We eventually decided to major in being an Internet-commerce-services provider of software. Should Beyond have narrowed its focus sooner? In hindsight, the answer clearly is yes.