Monday, February 16, 2004

startup.com: the raise & fall of the american dream

A pair of high school classmates propose to start an Internet company that will help citizens deal with local governments. They call it "govWorks." It will enable people to go online to register their motor vehicles, pay parking tickets, and do all the other nasty little things municipal and regional governments require of them. From 2 to 233 employees... from 0$ to $50M in venture capital... back to zero in about a year. From 1999 to 2001.

What lessons can we get out of this fascinating documentary?

startup.com I was curious and researched more information. What is striking is:

  • being able to get venture capital even without the slightest business plan
  • arguing about a company name rather than discussing the business strategy
  • the friendship of the beginning gives place to the difficulties of the "business reality"
  • the size of the speculative Net bubble (the CEO of the company made the front page of several magazines and was even invited by president Clinton!)... and the very rapid fall when the bubble busted
  • a very insightful comment from a senior executive (not in the Net business) when meeting with the CEO of govWorks who was explaining the huge market ($6billions/yr): "we have to see who will make money out of it"... The young, sometime arrogant CEO was bragging the old timer...
  • the advantage of the first mover that disappear when a late comer shows off a better solution...

Some references:

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