Wednesday, March 28, 2007

That Was Then, This is Now

There’s a lot of talk in the last six months to a year about the return of the “dotcom boom”. That’s both cool and bad at the same time for a guy like me, who makes his living online.

That’s cool because it’s nice to be back in the saddle, so to speak. When there’s a vibrant, exciting scene going on, it’s a fun place to be. It’s also much more lucrative. I do like being in a living market more than being in a dying one.

But then I also have to deal with the doomsayers. They want to remind us what happened last time the dotcoms boomed. They want to remind us that the tech companies also crashed, and crashed hard.

While that’s true, I think it’s valuable to remember that there are some fundamental differences between the first and the second waves. I’m not saying that the market was a disaster then, and it’s perfect now. Things are never that black and white. I am saying, however, that things are very different now. And it’s good to study the differences.

  1. Advertising

Then, the ‘net was driven by advertising. We can put up a website and pay for it by selling ads! That was all well and good, except that those ads were driven more by hopes than by reality.

Now, once again, much of the commerce on the ‘net is being driven by advertising. But we’ve learned a lot in the intervening years. We’ve learned better how to advertise. We’ve learned what kinds of advertising works and what kinds don’t. We’ve learned to better track and target our advertising. And we’ve learned to price it more realistically.

The result is that advertising now is much more stable way to make money on a website than it was in the ‘90’s.

  1. Profits

Back then, many businesses were started with a “Gold Rush” mentality. “The ‘net is the NBT (Next Big Thing), and you have to get on board or you’ll be left behind!” As a result, many companies started without any real business plan or way to generate profits.

Now, we’ve learned that time-proven economic law: Profit = income – expenses. And if, at the end of the day (or at least, at the end of the year), you don’t have a profit, it doesn’t look well for the business.

  1. Funding and Capital

Then, business sprung up overnight, funded by venture capitalists driven by dreams, vanity, and the all-powerful IPO. Rather than having an effective business plan, they shaped their business on their dreams. Is it any wonder the bubble burst?

Now, companies start backed with real money, rather than imagination and excitement. As a result, they’re much more stable and more likely to succeed.

  1. Interaction with the “Real World”

Then, the ‘net competed with existing “brick and mortar” businesses. Many pundits asked if the days of going into town and going shopping were dead. “The personal interaction of customer and shopkeeper is missing,” they said.

Now, we’ve learned just how important it is for even the webpreneur to maintain the personal touch in customer service. And moreso than not, traditional B&M stores are enhancing their revenues through web sales.

  1. Giving it All Away

Everything was free in the ‘90s. Music, programs, information, connectivity, services. I even remember one company was giving away computers. Free. Here you are, here’s your new computer. You just had to see ads everytime you booted it up.

Well, you can’t give away the store for very long and hope that you can stay afloat. Now, there is still a lot of things that are free, but most things that are of value, I end up paying for. While that’s not so good for my pocketbook, it’s much better for my business.

So there’s a lot of things that have changed in just a few years. We’ve all learned and we’re still trying new things. Keep in mind that while some were preaching the end of the internet, it kept on growing. More users signed on, and more businesses were created. Even though many died in the dotcom crash, the concept carried on, and more and more businesspeople learned how to use it more wisely.

see this and more articles by Mark at eShopTalk