“We’ll never see again a wave of enthusiasm and investment and speculation that rises and crashes the way the first Internet wave did,” said Andrew McAfee, an assistant professor at Harvard Business School’s technology and operations management unit. “But we are in for a slow, steady progression and deepening of these technologies.”
Mr. McAfee was quick to point out that the breakneck pace from 1998 to 2000 was an aberration, and not worth using as a benchmark.
Sharing that view is Robert M. Metcalfe, the inventor of the Ethernet (and Metcalfe’s Law), the local-area network technology, in 1973 and the founder of 3Com. “Just forget those years happened,” said Mr. Metcalfe, who is now a partner at the technology venture capital firm Polaris Ventures in Waltham, Mass. Since the dot-com crash, he said, the appearance of new Internet technologies has followed a time line that better reflects normal business cycles.
In the venture capital community, for instance, the so-called “time-to-liquidity” the period from a venture firm’s financing a company to the time the company goes public or is sold is now five to seven years, Mr. Metcalfe said. During the dot-com peak, the average was 18 months. “We’re much relieved to be doing business in this environment,” Mr. Metcalfe said. “We have time to do due diligence. Time to do evaluations based on profit and revenues.”
“I know of a number of people who were successful Internet entrepreneurs and have either cashed in or had reasonable success in ’98 and ’99 who took some time off,” Mr. Levchin said. “A lot of these guys are still in their 20’s who aren’t keen on retiring, so they’re now coming up with new ideas.”
Steve Papa, chief executive of Endeca, a privately held developer of Web site navigation technology, said that he, too, had seen a period of about 12 months after the dot-com market crashed “when people basically stopped.”
Mr. Papa, who was an early employee of Inktomi and then of Akamai Technologies, both of which subsequently went public, said that as companies adapted to the new market, “there were a lot of organizational issues to deal with that take time away from the ongoing process of innovation.”
“And for a lot of other companies,” Mr. Papa said, the period between 1998 and 2000 “was basically an experiment, where they were collecting data.” Part of the slowdown in innovation among those companies, he said, could be attributed to them “digesting what they learned.”
In a similar way, Mr. McAfee said, the Internet infrastructure is now largely in place for corporations to communicate with each other in ways that will substantially improve efficiency. Such efficiency was, of course, the promise of the business-to-business e-marketplaces in 2000 a promise on which most companies failed to deliver.
“E-marketplaces worked out a lot of the technical issues, but there have been more important business-process and trust issues that need to be ironed out,” Mr. McAfee said. “And that’s fundamentally not quick work.”
Now that venture capitalists, Internet executives and other pacemakers of innovation are taken a more measured approach, maybe the introduction of new technologies will be more in pace with the ability of companies to carry them out.