Off The Cuff

Leaders in the world of business share their thoughts on the way we

Ever dream of making millions with a Silicon Valley IPO? An early valley software developer, Tom Proulx, has done it twice: first in building Intuit, and that company's Quicken personal-finance software, in his dorm room at Stanford in 1983, and now as CEO of Netpulse, which connects health-club exercise machines to the Internet.

On a recent trip to Boston, he shared with the Monitor's Eric Evarts the lessons he's learned.

The lessons of the Intuit days are different than today. We never had venture capital. We were able to build the company based on our own profits. It meant that we had a little slower start, but it didn't matter.

"Today it's a lot harder to do. Companies are expected to grow meteorically fast. And most businesses require cash to grow.

"You spend hundreds of millions of dollars to build a brand to drive people to your Web site. Meanwhile three other portals have become active backed by hundreds of millions of dollars. So you keep spending money like there's no tomorrow.

"There's so many deals now that the investment community really short-circuits a lot of what they used to do. They don't look at business plans, financials, or ideas, because they say, 'If I back the right team, even if the initial idea is wrong, a great team will adapt the idea and the company to make it work.'

"So if you didn't start early, it makes it a lot harder. It's: If you don't go to the right kindergarten, you won't get into the right grammar school, in which case you won't get into the right high school, in which case you won't get into the right college.

"It can be done; it is done. But it's a lot harder.

"Silicon Valley is an incredible place and time to be right now. There's incredible wealth being created. Incredible businesses being formed, lots of junk being formed that lots of people will never know is junk, because it doesn't matter and [the companies are] going to go public and everybody's going to get rich. And then they're going to get sold before anybody figures out that there was never anything there to begin with.

"The market is absolutely forgiving of business models that don't work, as long as they can show revenue growth. It's impossible to distinguish between a fast-growing business that is unprofitable [only] because it's ... using what would be profits to build itself versus a fast-growing business that has no profits - and no prospect of ever having profits."

(c) Copyright 1999. The Christian Science Publishing Society

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