An upcoming paper in the Journal of Financial Economics studied business plans from the dot-com era and concluded that the "bubble" wasn't much different from what happens at the birth of any new industry. David A. Kirsch from the University of Maryland (see WSJ.com) says:
- the failure rate of dot-coms was only about 20% per year
- spectacular blow-outs (like pets.com or webvan) resulted from the "get big fast" strategy that many pursued in order to gain their first-mover advantage.
- many success stories happened in smaller niches that are just fine as businesses, though not as well-known as the big names.
This reminds me of the advice in entrepreneurship classes, how it's a myth that "the vast majority of new businesses fail". In fact, the majority of dumb businesses fail, but well-thought ideas that focus on good, flexible business plans with good execution do just fine.