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Dot-Com Bubble Reconsidered

Today's WSJ on page B1 mentions a research study examining 1,100 business plans submitted to a second-tier venture capital firm during the bubble years (August 1995 to March 2000). The study concludes that the dominate business strategy was to 'get big fast'. No surprises there! This seems like the strategy for many Web 2.0 companies today.

However, the study found that the attrition rate for dot-com companies was roughly 20% per year, which is the same as other industries in their early boom periods. And, these survivors were not the large well-known companies (like Google and eBay), but they were smaller firms in niche markets sustained by web shopping. These niche businesses have provided decent returns to those involved.

So, the Dot-Com Bubble may not be as bad as we all think. Read the full research study when it is published in a future issue of the Journal of Financial Economics.

Technorati Tags: Business Intelligence, Dot-Com

  Posted by rhackathorn on November 8, 2006 8:59 AM |

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