Space.com isn't the final frontier

Lou Dobbs returns to network television Monday evening to reclaim his anchor seat on CNN's "Moneyline." But the longtime financial journalist continues to proudly wear his other hat as a dot-com entrepreneur.

When Dobbs left CNN last year to found Space.com, a news and information Web sited focused entirely on the space industry, he became one of the best-known figures to trade in their Old Economy stirrups for a ride in what fashionably came to be known as the "New Economy."

It was an exhilarating time but also one fraught with risk--something Dobbs experienced firsthand when the market reception toward Internet start-ups peremptorily shifted away from "eyeball" aggregation to show-me-the-money bottom line.

The renewed emphasis on profitability did not come as a revelation to Dobbs, who in 1995 helped found CNNfn.com--which he says became one of the first profitable news sites on the Web. "Business requires profitability," he says, a message that entrepreneurs--dot-com or otherwise--should take to heart.

Dobbs sat down with CNET News.com in advance of his return to the other small screen, offering his thoughts about the future of the Internet and what defines the difference between the winners and the losers in cyberspace.

Q: You've had a front-row seat for the whole dot-com phenomenon. What can you tell us about it?
A: I built CNN/FNN, the first digital nonlinear network in the world, and simultaneously built CNNfn.com in 1995. That site became the first profitable news site on the Web. So I've had a six- or seven-year perspective in addition to going out on my own with a group of very talented people building Space.com.

Have expectations changed?
The expectations on everyone's part--whether investors, whether the private equity market, the venture capitalists, the men and women who built the companies and who are building them now--I think we were all unrealistic about how quickly we could move the business ahead and probably underestimated the risk in terms of markets turning, whether they be the capital market or the advertising market.

But from that perspective, it's also exhilarating to see the entrepreneurial spirit that still abounds in terms of the Web. I'm one of those people who believes the future is the Web, irrespective of the cycle that we're in. And I believe that we're going to see a tremendous number of success stories in the next few years.

Amid the rubble?
Amid the rubble, without question. Warren Buffett said there's no such thing as the "New Economy." In one respect, he's absolutely right. New or old, digital or analog, business requires profitability. And this consolidation that we're going through in this contraction is necessary and is no different, frankly, than that of any other incipient marketplace in history, whether we're talking about railroads or telecommunications--whatever.

The fact that Space.com is still with us--does that indicate that on some level, you were able to focus on those old-school fundamentals?
From the very beginning, I said we were building a business. Our strategy was not particularly clever or complex. Because of my enthusiasm about space and space exploration, our strategy from the beginning in 1999 was to create a multimedia company with multiple platforms--that is, build a Web site first, establish the brand, and then move into magazines, radio and television. Software was really the first acquisition that we made, but it was really the last thing we thought about doing. So we also had some very good luck over the last year and a half or so.

Did you feel at any point that going back to CNN was taking a step back in your career?
At this time?

Yes.
No. As a matter of fact, they made me a very attractive financial offer and allowed me to preserve all of my interests outside. My range of investments--most particularly in Space.com--permitted me to maintain my joint venture with NBC and to focus on one broadcast. This is the best job in television news, and I love doing it. The timing could not have been better.

It's times like these where old media seems to look pretty good, doesn't it?
Old media is suffering, by the way. The focus right now tends to be on new media, the Internet and dot-coms in particular. But the fact is that this is a tough time for advertising-supported media, whether new or old. We're not out of the woods yet. I'm not one of those people who believes we're heading towards recession, but I don't think there's any question--new or old media--that there are significant challenges out there.