The initial months of 2001 were a period of great upheaval for many online businesses, especially those heavily dependent on third-party paid advertising on their websites and newsletters. This turbulence was not exclusive to any particular type of business, affecting everyone from major media outlets like the Wall Street Journal to small, one-person operations. The fallout from plummeting stock indexes and dot-com failures has made many wary of anything associated with the term "Internet". Consequently, numerous online business owners have decided to close their doors, believing that the returns no longer justify the investment of time and money.
In its early days, the Internet was seen as a new frontier, a land of untapped potential and limitless opportunities. The metaphor of a gold rush was frequently used, with pioneers encouraged to stake their claim and seize their share of the Internet riches. This led to a surge in the number of websites and newsletters, with many individuals and businesses making substantial profits from advertising and selling information products.
However, this period of rapid growth eventually began to slow down. While business remained steady, the thrill of exponential weekly growth was replaced by a more stable, consistent pace. This marked the end of the first major growth phase, prompting many to start consolidating their businesses. They focused on nurturing existing relationships, developing their customer base, and leveraging joint ventures to maintain momentum.
Unfortunately, the promised land of the Internet soon began to show signs of instability. Many promising and innovative Internet businesses started to fail. Venture capitalists began demanding business plans that included a path to profitability. The focus shifted from being at the forefront of a new economy to generating returns on investment and profits. Internet businesses were now expected to produce business plans with realistic numbers, timelines, and results. The era of easy money was over, with loans being called in and businesses closing down.
In the aftermath of this shake-out, many once high-flying businesses were brought down to earth. However, small, conservative entrepreneurs who had always understood that an Internet business, like any other, needed to generate more revenue than expenses, managed to survive. These entrepreneurs, who had once wondered how they could compete with larger businesses, now found themselves in a position of strength. They could target niche markets effectively, provide personalized customer service, and adapt quickly to changing market dynamics.
While the Internet economy has experienced both extremes - the gold rush and the backlash - it is now finding its center. This new equilibrium will establish new norms and standards. Those businesses that have managed to weather the storm and remain in the center will be well-positioned to thrive in the emerging new economy.
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