1. G. Hamel, “Bringing Silicon Valley Inside,” Harvard Business Review 77 (September–October 1999): 70–84.
2. For a discussion of how disruptive technologies create challenges for executives, see:
C.M. Christensen, “Innovators’ Dilemma: When New Technologies Cause Great Firms to Fail” (Boston, Massachusetts: Harvard Business School Press, 1997); and for a discussion of how technological innovations require new skills, see:
M.L. Tushman and P.A. Anderson, “Technological Discontinuities and Organizational Environments,” Administrative Science Quarterly 31 (1986): 439–465.
3. Discussion with panel members at the MIT Forum, “Incubators: The Future of Early Stage Venture Capital” (MIT, Sloan School of Management, Cambridge, Massachusetts, Feb. 17, 2000).
4. M. Stepanek, “How Fast Is Net Fast?” Business Week ebiz, Nov. 1, 1999;
P. Bronson, “Instant Company,” The New York Times, July 11, 1999, p. 46;
for a discussion of why first movers often fail to achieve market leadership, see:
G.J. Tellis and P.N. Golder, “First to Market, First to Fail? The Real Causes of Enduring Market Leadership,” Sloan Management Review 37, (Winter 1996): 65–75;
Opinion Research Corporation Survey (Princeton, New Jersey: August 1999); and
for a clear discussion of network externalities, first-mover advantages and lock-in effects in information industries, see:
C. Shapiro and H. Varian, “Information Rules: A Strategic Guide to the Network Economy” (Boston: Harvard Business School Press, 1999).
5. Contributing to the development of those ideas and others in the article were Andersen Consulting’s Edward M. Schreck, Mitch Hill, Doug Kramer, Julia Kirby, Susan Gurewitsh and Paul Nunes. We also acknowledge Ari Ginsberg of New York University, Robert Glen of Prudential Volpe Technologies, Jean Sullivan of Starvest, Jim Coutre and William Mullett of Bishop Rock Partners, and independent consultants Dennis Maroney and G. Bruce Friesen.
6. We broadly define equity partners to include corporations, consulting firms and banks that provide venture capital in return for equity in the new venture.
7. Interview with Andersen Consulting representatives March 2000 and press releases on OneSwoop (www.OneSwoop.com).
8. Interviews with Dan Cunningham, CEO, Dan’s Chocolates in March and May 2000.
9. “SubmitOrder.com To Provide E-fulfillment for Goodhome.com, the New Web Site that Redefines the Way People Decorate Their Homes,” Business Wire, Oct. 19, 1999;
“Simplement Reduces SAP Implementation Time by 70 Percent,” Financial News, Sept. 29, 1999; and Venture Capital Journal, Sept. 1, 1999.
10. Interview with Staples.com representative, March 2000.
11. Interview with Nordstrom.com representative, March 2000.
12. For a discussion on the importance of cultural compatibility and cultural due diligence, see:
R.J. Thomas, “Irreconcilable Differences,” Andersen Consulting Outlook Magazine (January 2000).
13. Interview with Bruce Golden, general partner, Accel Partners, April 2000.
14. In 1999, a record $48.3 billion in venture capital had gone to more than 3,000 emerging companies, most competing in e-commerce. In 1995, by comparison, fewer than half that number of companies had received barely one-fifth of today’s disbursement. Source: Venture Economics and National Venture Capital Association.
15. Janet Rae-Dupree, “How Panasonic Learns from the Hatchlings in Its Incubator,” Business Week ebiz, Aug. 24, 1999.
16. Yahoo Inc. reported in its March 31, 2000, proxy statement filed with the U.S. Securities and Exchange Commission that Softbank held 22.6% of Yahoo shares.
17. Venture funds are explicitly forming to industrialize, or systematize, the venture process for e-commerce and other types of ventures. For example, a group of investors recently formed Incuvest to invest in companies and incubators and launch new e-commerce and non-e-commerce ventures. Interview with R. Bertoldi, president; H. Bertoldi, vice president of marketing; and J. Gold, managing director of Incuvest.
18. Although we recognize that angel investor networks and other structures will support new ventures, we expect venture networks to become the dominant infrastructure creating the most successful Internet ventures of the future.