In an Internet World session here titled "Insanely great ideas worth billions," executives painted a familiar picture of an industry awash with venture capital and hungry for good ideas. But all advised their audience to proceed with caution before approaching venture capitalists for funding.
In the first place, Internet entrepreneurs had better have an idea for something that works better online than it does off.
"You have to find a problem and then solve it," said Robert Levitan, chief executive of Internet start-up Flooz.com and one of the founders of women's Web site iVillage. "That's the place you start to create an insanely great idea."
Levitan's new business is aimed at gift-giving consumers who can give "Flooz currency" that can be used to purchase various products online.
"It'll never be insanely great if it isn't insanely useful," agreed Michael Mulligan, chief executive of online map provider MapQuest.com. He said maps are not only more useful online than offline but also provide localized advertising opportunities because companies can find out where consumers are on the Web and where they're going next.
Once the entrepreneur has a great idea, however, there's a significant risk that what an audience member termed the "5,000-pound gorilla" will come along and duplicate it with more marketing muscle than the start-up can hope to match.
Panel members acknowledged the risk but said the start-up--particularly those originating on the Internet--has inherent advantages over the 5,000-pound gorillas. For one thing, they said, start-ups generally can move faster than multinational, multibillion-dollar corporations.
"To succeed you have to be first, fast, and focused," Levitan said. He noted that large established companies frequently fail in catching up with Net-native start-ups, citing the success of Yahoo and the failure of Time Warner's Pathfinder portal.
Levitan said large corporations are sometimes hamstrung by the care they have to take in protecting their established brand names.
"Disney can't [take risks] under their brand name," he said. "They have too much equity in it, they have too much at stake."
Mulligan said speed is the key.
"The way to avoid the gorilla is to continue to move faster than they can move," he said. "They can approximate what you're doing as a start-up, so it's incumbent on the start-up to move fast so when they come into the space you're several yards down the field. Then you have to continue executing rapidly."
Panel moderator and Internet World conference chairman Jack Powers emphasized the difficulty that companies based in old media typically encounter in adapting to business on the Web.
"If you're an existing business, probably the best thing you can do is have a fire and start over again," he quipped.
Another piece of advice from the panel was to anticipate the advancement and improvement of your technology, even if it's unsatisfactory today.
Eli Singer, chief of North American operations for translation software company Slangsoft.com, acknowledged that translation software leaves a lot to be desired in its present technological state.
"We are a long way off," he conceded. But he noted that portal site AltaVista is planning to adopt Slangsoft technology this year.