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