Erik Hanberg class visit

Mr. Hanberg presented an insider’s look at how versatile an entrepreneur must be in order to be successful.  He explained how a person must be abreast of new technology and must be always looking for better ways to do things as well as having more than one project going on at a time.  Diversity in finding sources of revenue seemed to be an essential part of being successful as a self-employed person.  He also emphasized the need for multiplier skills that would help someone to be able to achieve their goals.  He said that basic soft skills were essential, like writing, design, marketing, persuasion, multiple languages, psychology, etc.  Success or failure can be dependent on one’s ability to communicate effectively.  


His work as an author also showed that even beyond being a good writer, a person had to be competent in the technology available with respect to the process of publishing.  From profit to non-profit publishing, a writer had to know all the available paths to getting their work published in print or electronically and the costs associated with getting a book published.  Finding cheap methods of getting one’s work into the hands of the public are necessary because you could incur a lot of debt without even selling anything.  He mentioned some of the downsides of working in the virtual world of the internet, the first being that the work never stops and it goes on regardless of where you are.  The second, and most important, is that if you have an online presence, blog, etc., anything that you publish or say will always be there for someone to read.  Comments you made in the past, that other people might find offensive when they read them now, in or out of context, could negatively affect what you are trying to accomplish in the present. 

The Dotcom boom and bust

The Dotcom boom and bust.


The dotcom boom, or bubble, started in the early 1990’s and was caused by the increase in use of the internet as a commercial platform.  The invention of HTTP and web browsers made access to the World Wide Web possible and were responsible for the rapid growth of companies with services available to public and private companies and individuals.  As growth in the industry increased and people became more computer literate (and purchased more computers for access to the web), the full potential of the World Wide Web in almost unlimited applications from advertising to the service industry was recognized.  This led to investors and entrepreneurs believing in the possibility of achieving huge returns and allowed for businesses to be able to raise large amounts of money to start their companies.  Companies would sell stock at initial public offerings (IPO) and this seemingly unlimited amount of capital available led to companies that were worth millions of dollars on paper but not on actual assets or products.  It came to a point where companies like Infospace.com, a search engine that provides information and had mostly virtual assets, were worth more than Boeing, an aircraft company with immense physical assets. (1)  Stock prices for these virtual industries became unsustainable in the real world of physical products.   Many companies had more money going out than coming in, spending more on infrastructure that the cash flow in return.  “After venture capital was no longer available, the operational mentality of executives and investors completely changed.  A dot-com company's lifespan was measured by its burn rate, the rate at which it spent its existing capital. Many dot-com companies ran out of capital and went through liquidation. Supporting industries, such as advertising and shipping, scaled back their operations as demand for services fell. However, many companies were able to endure the crash; 48% of dot-com companies survived through 2004, albeit at lower valuations.”(2) 


This was a story of not looking far enough into the future to see the possible end result of a new type of technology that was available and the potential ramifications of not taking all possible consequences into account.  Investors and entrepreneurs alike were blinded by the apparent abundance of profit available and did not see the looming disaster staring them in the face.


1. Andrew Fry, Lecture, 20 November, 2019
2. Leslie Barron. "Lessons of Survival, From the Dot-Com Attic," New York Times, November 21, 2008.

A review of the film "Startup.com"

Startup.com


This was quite an eye-opening documentary about the perils of starting a company during the dotcom internet bubble.  It was an interesting perspective of what young professionals trying to start a company had to navigate through in order to be successful and then watch them fail.  You could clearly see the change in character of the subjects as the stress of the ramping up of a company began to take effect.  Indifference to the company’s goal caused one of the three founders to sell out his portion of the company, and fortunately for him he got out with some money, which did not happen with his other partners.  The CEO of the company, Tuzman, and his friend and partner, Herman, also began to have problems with their management styles, which led to Herman being forced out of his position.  It also affected other personal relationships, as Tuzman neglected his relationship with his girlfriend, which caused her to leave him.  This is what happens when problems at work start to come home.


It did seem at first that the establishment of govWorks was a rather precarious attempt by some college students, but it turns out that Tuzman was a Harvard graduate and had worked for five years for Goldman Sachs getting experience at raising capital and Tom Herman and Chieh Cheung, who had the technical expertise.  They had experience behind them, just not in forming a new company.  They had to learn the business the hard way as they had no real experience in how corporate relations worked and had to learn from their mistakes.  One major mistake was not realizing the need for security, which resulted in the theft of computers and other information which put their venture at risk.  Another was not realizing that competition is cutthroat and that they shouldn’t have invited the CEO of a competitor to come by and see their progress.  They had found a niche in providing ease in accessing government sources but should not have allowed their competition any advantage.  Another mistake was their failure to look to the future and try to adjust to problems before they arose.  They had a very reactive problem-solving style and were not proactive enough to meet and overcome business obstacles.  All of this, and the dotcom bubble burst, combined to allow their company to fail regardless of any preventative actions that they could have taken.