How Tech Got Its Groove Back

Generation Next

Now that we know technology businesses are rebounding, we turn to look at where all the innovation is coming from. You'll get different answers depending on whom you ask. Some say older, experienced entrepreneurs are behind most of the startups. But as Johnson shows, there are still very young entrepreneurs launching companies. And as the BitPass founders show, there are still recent Stanford graduates helming their own tech ventures. Being located in Silicon Valley isn't necessary, either. As Johnson and CertificateSwap.com show, you don't even necessarily need an office.

Many large companies are looking at smaller technology businesses almost as outsourced R&D resources. Reduced R&D spending in enterprises has opened up opportunities for entrepreneurs. Kawasaki also sees this as a good time for high-valuation public companies to go shopping for early-stage technology businesses. The days of zooming from startup to a quick IPO exit plan are gone, but now entrepreneurs have opportunities to sell their products or services to larger companies.

Here's a blast from the past: Remember the search engine Excite.com? Its big purple mascot now resides in the quarters of LiveOffice, a small-business Web marketing and collaboration services company in Torrance, California. Matthew Smith, 35, co-founder and COO of LiveOffice, helped shepherd the company from its start in a small office in 1994 with a financial services software focus, through the downturn, and out the other side with 55 employees and a wider portfolio of service offerings. Though it started before the boom, by maintaining a focus on profitability, LiveOffice was able to grow while other techs fell by the wayside. That approach is now prevalent throughout the industry.

LiveOffice has picked up a variety of bargain-priced relics from shutdown dotcoms at auction. Besides equipment and a mascot, they've also taken on a lot of dotcom veterans as employees. "We're able to find people [who] have a much different perspective, a much more mature perspective," Smith says. "Everybody is really excited and motivated." You may be wondering if this is a good time to start a technology business. From a talent and affordable equipment perspective, it is. And as LiveOffice shows, for tech entrepreneurs who have been at it for a few years or more, it's a good time to think about expansion.

Work Hard for the Money
Now that VCs are loosening up and looking for smart technology investments, it may be a good time to go shopping for funding. It's important to find a good fit between you and your VC. Finding someone who strongly believes in your business is as valuable as the actual cash. There are a lot of Web sites out there that offer to hook you up with VCs or post your business plan for investors in exchange for a fee or subscription. You might want to consider that, or you may be better off asking around among your friends and peers and doing your own research.

You can start by reading Entrepreneur's 4th Annual VC 100 listing in the upcoming July issue. Another good place to start is simply by keeping up on the news. Dow Jones & Co.'s VentureWire keeps tabs on all sorts of VC comings and goings. Check up on recent deals at VC Buzz. To get a feel for some of the leading Silicon Valley angel investors, check out the Band of Angels and The Angels' Forum LLC. Research is smart, but nothing replaces getting out and networking.

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This article was originally published in the June 2004 print edition of Entrepreneur with the headline: How Tech Got Its Groove Back.

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