I came across this story and I was enthralled. Apparently the Internet Bubble of the 1990′s really was a bust. That is the conclusion of one investor, Ron Conway who owns the investment group SV Angel.
He investigated the results of his own investment company on the entrepreneurs of that time, 1997 – 2000. What he found was that 70% had failed. The audit that they conducted involved 500 companies they invested in over a 12 year period. They are picky about who they invest in, taking 1 in 60.
Why did they fail? Maybe it was not a good product, or the company did not have a good management team, or there were not enough investors with confidence in the product, or even late delivery of the product left customers or investors unsatisfied. Tack on to that and the skepticism of the public near the end in 2000, that the idea that the Internet was truly going to revolutionize the way companies and economies of scale worked fell flat.
The good news is that Conway sees a failure rate today at about 40%. That is still close to half of the entrepreneurs and their companies do not make it. Many of the reasons are the same, but what is different is that investors are pickier about who to invest in. If a company cannot get investors, it cannot fail because it cannot get off the ground at all. The other reason is that a second go around makes a difference in the approach to success. “Nothing succeeds like failure.” That is a standard cliche, but if a company and its founders face an earlier debacle, they have learned lessons that they can use.
One other thing of note, the big companies, the one’s too watch are coming around faster. The belief was that a Google like company comes around once every 10 years. However, Conway that successful companies on the big scale are now starting to show up much faster.
Conway notes “that AskJeeves came, then six years later, Google came. But then six years after that was Facebook. And now the big companies are coming faster. After Facebook, it was only four years until Twitter came around. Then it was two years later that Foursquare, Zynga, and others have come along. Great companies are being created at a much greater rate, Conway says.”
Source: TechCrunch
