How Tech Got Its Groove Back

Different World

Here's a sneak peek at what's ahead for new tech entrepreneurs, particularly those who choose to use the Internet as a delivery platform for software or services. When we asked Johnson and Smith what their biggest challenge is today, we received pretty much the same answer. Says Johnson, "Our greatest challenge is simply getting the word out."

Smith says his greatest challenge is "letting people know who we are, what we do, what we stand for and what our products can do for them." This isn't the lust for "eyeballs" and brand building that obsessed Internet companies in the late '90s and early 2000. The new boom (or boomlet) features a grass-roots approach where word-of-mouth, customer service and user-friendliness are all powerful marketing engines.

Some things haven't changed. Huang has a cot beside his desk and puts in the kinds of insane hours so many young technology entrepreneurs were familiar with during the boom. "I'm pretty much here all the time," he says. "It's my passion, and I don't think of it as work." The advantages of an established company allow Smith, on the other hand, to have more regular hours than when he first started. He says a regular schedule has helped his employees avoid the burnout that hit so many technology workers after the boom. Johnson has the most unusual schedule of all, usually fitting in his CertificateSwap.com time late at night, between schoolwork, soccer and college life.

Everyone we interviewed had advice for technology entrepreneurs. When it comes to thinking up innovative business plans, Huang has a suggestion: "You've got to focus on pains, and the best kind of pains are the personal pains. We wanted to build a system that we would use." Huang and Jun got tired of seeing Web sites they liked fold due to the lack of a revenue model. Their micropayment system helps sites collect lots of small amounts. If you can find a way to solve a technology issue that bothers you, it could be the basis for a new business.

Johnson has a basic suggestion: "The best thing you can do is research. You better know who your competitors are," he says. "You have to know everything about everybody." With more startups hitting the market and more established tech companies looking into expansion, make sure your great idea hasn't been run through already. But if you can fill a need or save consumers or businesses money, you're off to a good start.

So what conclusions can we draw from this? Some technology entrepreneurs today are young. Some technology entrepreneurs today are older and more experienced. Enterprise software is big. Wireless is big. Security is big. Internet companies are back and smarter than before. You may not need their help, but VCs are seeking solid investment opportunities. Looking at all that, it's hard to draw any sweeping conclusions. And that's actually good news. It means there's a lot of room for entrepreneurs to start or grow their technology businesses.

Whether you're sleeping on a cot in an office or launching a business with contract workers all over the globe, these are new days for technology entrepreneurs. As Oster says, "Those who ignore the past are doomed to repeat it." If entrepreneurs heed those lessons, we won't have another cycle quite like the dotcom explosion and implosion of the past decade. So get your well-thought-out business plans ready, throw "cautious optimism" to the winds, and dive in. The water is all right.

Grow With the Flow
A technology rebound is underway, but you don't have to take just our word for it. IT and telecom research firm IDC has made a host of predictions for the rebound in 2004. These include the proliferation of public Wi-Fi hot spots to an estimated 85,000 worldwide; that consumers will embrace new technologies like broadband and camera-phones; and that offshore IT services will grow. Tech research firm Forrester Research Inc. sees healthy IT investments in e-commerce with a focus on improving the user experience and purchasing security technology. That increased spending is also expected to increase demand for e-commerce consulting and implementation services.

For a solid sign of enterprise software and services growth, look to the IT research and consulting firm META Group Inc. META sees the market for enterprise content management tools hitting $2.3 billion in software and $7 billion in services by 2007, a compound annual growth rate of 15 percent. Entrepreneurs looking to launch a new business or expand their offerings should keep an eye on these technology trends. There will always be opportunities for savvy startups in these growth areas.

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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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