Table: How They're Adapting to a New World
Internet entrepreneurs have learned from their successes and their mistakes--and are coming up with new ways to win with their second-generation Web startups.
Raising money: In April, 2000, Charles Ferguson founded Juice Software, which makes programs that integrate the Web with PC applications. He put up $2.5 million from the sale of a previous Net startup and scraped together $600,000 in other backing. Only after Juice got going could he get venture funding.
Lesson: Even experienced Net entrepreneurs have to scramble. Among those ponying up seed cash: Juice's landlord.
Hiring: With bud-gets tight, startup salaries for new recruits have dropped nearly 15%. Mike Homer, CEO of video tech company Kontiki, offers workers restricted shares instead of options. The shares are available immediately and offer tax advantages for employees.
Lesson: Don't overpay, but come up with ways to attract and keep the best and brightest workers.
Developing products: In 1996, Net medical pioneer Healtheon rushed a product out in eight months--too fast, says co-founder Kittu Kolluri. At his new company, DanaStreet, which sets up private networks on the Web, Kolluri is taking 18 months to deliver his first product, due in November.
Lesson: Products these days must be rock-solid. Take the time to survey customers and test thoroughly.
Selling: As Netscape's technology VP, Mike McCue says he learned how not to treat customers. Today he's chairman of voice processing startup Tellme and has organized sales and technical workers into customer satisfaction teams that focus on just a handful of clients.
Lesson: With customers queasy about spending money, go overboard to please them.
Making a profit: Zack Rinat learned discipline at Web startup NetDynamics, which he sold for $180 million in 1998. Now, as CEO of Model N, a maker of collaboration software, he's so tight with expenses that he completed two customer installations before hiring a sales chief. Rinat aims to be cash-flow positive in four quarters.
Lesson: Unlike in the old days, profits are the only real yardstick companies are being measured by.
Going public: At David Morgan's last company, Real Media, new recruits always wanted to know how rich they'd be after the IPO. Now, Morgan, CEO of Web ad software maker True Audience, says he and his employees never discuss going public: It's not part of his business plan.
Lesson: Going public is a potential step along the route to building a company--not the end goal.