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Dot-Coms Are So '90s; In Silicon Valley, Doing Good Is the New Thing
Venture capitalist John Doerr, shown in 1998, is into health care and energy investments. In the late '90s he funded dot-com successes and dot-bombs.
(By Todd Cross -- The Washington Post)
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Many of the new entrepreneurs are technologists, not MBAs -- signifying a new emphasis on products over profits.
"The thinking today is, 'I don't care as much how much of a Harvard MBA or super-experienced CEO or whatever you are or how much money you've raised,' " said Philip J. Kaplan, the founder of an infamous Web site that mocked the deaths of thousands of dot-coms. He said businesses have to be "cool." He works at a start-up that sells online ads to corporations but provides them to nonprofit organizations for free.
The change can be quantified in venture capital investment. In the second quarter of this year, investments totaled $5.8 billion in 750 companies, an increase of 19 percent over the previous quarter, according to the MoneyTree Survey by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association.
Life sciences, which includes biotechnology and medical devices, has been the dominant sector for investment for the past two years. Energy investments are also on the rise.
Many of the companies that have recently received funding probably would not have had a chance in 1999, when many of the venture capital firms' portfolios were laden with dot-coms.
Ion America Corp., for instance, is working on technology to create a clean energy source from hydrogen that would reduce pollution and dependence on foreign oil. Savi Technology Inc. is making radio identification tags for container cargo that it hopes will help border security officials keep out bombs or other weapons. Satiety Inc. is fighting obesity by designing a tubed instrument that may reduce complications from stomach surgery.
Former Homeland Security Department chief Tom Ridge said he recently joined the board of Savi because he is "very interested in any technology that can help create a safer and more secure America."
Venture capital firm RWI Group Inc. has invested in various health-related companies, such as DexCom Inc., which sells a continuous blood glucose monitor that helps people with diabetes manage their disease, and Paracor Medical Inc., which has designed a device that treats patients with heart failure.
"It's a very rewarding experience to be dealing with companies that are committed to helping people," RWI managing director Mark J. Foley said.
Phil Schaaf learned his own lessons when he worked in business development at six dot-coms before the crash. He has commemorated the experience by writing a play -- "Goin' Dot Com" -- that has been drawing crowds of Silicon Valley veterans to the Eureka Theatre in San Francisco. A wry sendup of the era, the play involves venture capitalists enthusiastically backing a company, RentalPuppy.com, that rents pets to guys who want to meet girls. But after the initial public offering, the venture capitalists cash out and leave the company to its ruin.
The outcome is the kind of aimless destruction that many participants experienced -- "there was no moment of apology and dramatics," Schaaf said -- and that led to the drive to do something more. "Everyone just turned right back around," he said, "and began innovating again."
