Today's Pick: Lessons for VCs and start-ups

Lessons of the Last Bubble
by Tim Laseter, David Kirsch, and Brent Goldfarb

Smaller bets can make the next technological boom more productive and enduring.

Excerpt:

Quiz time: What percentage of dot-com startups have failed?

If you are like most people we have informally surveyed, you probably estimated around 90%. A few people posit a slightly lower failure rate; some say the rate was 98% or more. Virtually no one assumes that the numbers of dot-com failures and successes have been roughly equal, but that’s what our research found. Of nearly 2,000 business-to-business (B2B) e-Marketplaces launched during the dot-com days, 55% remained active for at least two years after September 2002, when the Nasdaq hit its lowest point. (See “Through the Service Operations Looking Glass: An Empirical Model of B2B eMarketplace Failures,�? by T. Laseter, E. Rosenzweig, and A. Roth, Darden School working paper.) We conducted a separate study of a random sample of companies seeking venture-capital funding in 1999 and found that the five-year survival rate was 48%. (See “Small Ideas, Big Ideas, Bad Ideas, Good Ideas: ‘Get Big Fast’ and Dot Com Venture Creation,�? by David Kirsch and Brent D. Goldfarb, Robert H. Smith School of Business research paper no. RHS-06-049, Nov. 2006.)…

Full article available at: http://www.strategy-business.com/press/freearticle/07102