Remember the Tortoise

Everything about the past two years was fast. Too fast. Instant formation of

new companies followed by quick initial public offerings. Rapid failures and

sudden stock plunges. Books such as The 10-Second Internet Man@ger and magazines

called Fast Company. Fast talkers pulling fast ones on impatient investors. So

here’s my suggestion for 2001: Let’s slow down. Just because computers run

at the speed of light doesn’t mean we have to.

I know this notion flouts one of the basic tenets of capitalism, especially

Silicon Valley’s hypercharged version: Throw as many companies at a market as

fast as you can, and great products and financial returns quickly follow.

Granted, the formula often works. Amazon.com Inc. and eBay Inc. wouldn’t be so

dominant if they had taken it easy. But now, even the champions of this approach

know the idea that speed always wins has skidded off the highway.

Take Epinions.com, the quintessential fast company. Formed in under six

weeks, the product-rating Web site was profiled in a New York Times Magazine

article even before it went live. Unlike many dot-coms, it’s still here. But

CEO Nirav Tolia admits the fast fame created expectations that it would be an

instant success, making it tougher to keep investors on board for the long haul.

Says Tolia: "I’m not convinced speed is the ultimate metric for success.’’

Mantra. The blind belief in speed has hampered entire industries. Consider

wireless commerce. The furious efforts of some 600 wireless startups have

resulted in often incompatible networks and competing standards. So now only

300,000 people, or 2% of the 15 million customers of AT&T Wireless, are

using the company’s Web service via their phones. The underlying problem: With

talent diluted among too many startups, no leader emerges, technology gets

fragmented, and progress crawls. Gripes John Hamm, managing director of

operations for Internet Capital Group: "We can’t put together a whole,

good team for a company because the VP of marketing we want is the CEO of a

business that shouldn’t have been funded.’’

The tech slump could slow things down. But I fear we now have the same

problem in reverse. Frightened by Nasdaq’s swoon in 2000, everyone is running

backwards so fast that they’re missing a world of e-business opportunity. And

who can blame them? Too many entrepreneurs masked their greed with the doctrine

of speed. They thought GBF, the New Economy mantra that stands for Get Big Fast,

meant GRQ: Get Rich Quick.

Veterans know better. "There’s a difference between fast and too fast,’’

says Packet Design CEO Judy Estrin, who has started four businesses. Her latest

effort guides the formation of tech firms, but she won’t launch them, let

alone take them public, until they have real prospects for products and profits.

It’s an attitude she says far too few entrepreneurs and venture capitalists

follow anymore.

That’s why I’m skeptical when I hear execs swear they’ve reformed, even

as they launch the umpteenth optical networking startup and hire a PR firm

before they fill out their engineering team. I still see many of these GRQ types

running their BMWs through stop signs in my neighborhood. Some people never

learn: Even in the New Economy, the tortoise often beats the hare.

By ROBERT D. HOF in BusinessWeek. Copyright 2001 by The McGraw-Hill Companies, Inc