Ease of Maintaining Net Contacts Encourages Real World Travel

Dear readers: I’m trying out a new format, answering some of the questions you send me. Keep them coming.

Question: I hear you travel all the time, but I thought the Internet was supposed to reduce the need for travel. What gives?

Answer: As you might guess, I am answering this on an airplane, on my laptop. Although the Net replaces some travel, it also increases people’s ability to maintain contacts around the world, and thus increases other travel. In my own case, it would make little sense to go places to meet people that I would never communicate with again. But with the Net I can maintain contact with people--and so that actually adds to the value of the travel I do and makes it more appealing.

On this last trip, for example, I met some people I know already--that’s one value of travel--and others who were new. I have already sent follow-up messages to 15 or 20 of them . . . everything from “Juri, meet Bjorn” to “Tomasz, please come and speak at my conference in Barcelona in November.” None of this would have happened had I not gone to Budapest and Zagreb (and Stockholm before that), and none of the future stuff will happen unless I use e-mail to follow up.

Travel is vital for getting to know people, establishing human contact and ironing out tough issues. On the other hand, once you have strong relationships, you can rely more and more on e-mail (or eventually video-conferencing) to handle the day-to-day communications.

Q: What’s your reaction to the current volatility in the stock market, especially for high-tech stocks?

A: I was glad to see the market come down, even though it’s been painful for a lot of individuals. Fundamentally, stock prices were too high and bore little relation to reality. I do believe in the “new economy” and its benefits, but not all the players in that market will reap the benefits.

Many companies simply have no sustainable business model other than selling stock; they need to figure out how to deliver something of value that customers will pay for. Many of the new companies will disappear, and the rest will become stronger. The benefits will go to those stronger companies and also to their customers and employees, who will enjoy more transparent, open and competitive markets.

As a venture capitalist, I hope it will now be easier to hire and keep good people, since they will no longer be lured away by the next hot new start-up and stock-option plan. Until now, there has been too much money, too many similar companies and too few good people able to carry out all their business plans. It seems that all the salespeople have become CEOs, not always qualified, and then these new CEOs can’t find any salespeople to hire! Now that may change.

Q: How do I go about starting an Internet-based company to repair hi-fi equipment and sell reconditioned items?

A: Find someone in the business you can learn from before starting your own. Anyone who has been in a particular business knows many details that a newcomer will miss. Sometimes the press makes it sound as if all you need to do is set up a Web site and people will come knocking at your door (or clicking at your services), but that’s not likely. Another thing you should do is surf the Web yourself, as if you were a customer looking for such services. Who’s in the market already? What are they doing right or wrong? If you find someone who seems to be doing everything right, maybe you should ask them for a job.

If no one seems to be in that particular niche (or any other), two things may be the case: One, there’s a real opportunity waiting there for you. More likely, it’s basically a bad business, and you shouldn’t try it either. Try to find out which is true before you jump.

Q: Would you like to invest in my company? I have an idea guaranteed to make millions--but I can’t disclose the details yet.

A: A lot of people think the way to get funding is to write to some wealthy, well-known or well-connected person. That’s already a bad sign, because they are not looking at the question from the point of view of the prospective investor: What will convince someone--me, for example--to invest? Well, it’s not magic, but it’s also not a stranger telling me he has a great idea.

Most of the companies I and other venture capitalists invest in are companies where the founder has some kind of track record. The people who know that track record intimately are the most likely to invest in the founder’s second time around.

Alternatively, for someone just starting out, call him Juan: Juan should go to Alice, who knows him quite well and who happens to have a business of her own. If Alice can say, “Juan is just a great guy. If he ever left his job and started a company of his own, I’d be sure to invest,” then there’s hope. After that, Juan and Alice need to sit down and go over the business plan to see if it makes sense. Then, if Juan has no good connections of his own, maybe Alice can call on hers. Perhaps she knows me, or some other venture capitalists.

Typically, getting investors--like almost any other business activity--is about leveraging what you already have--people who know you, your reputation, your assets, your expertise. Trying to convince a stranger is tough. Start with the people around you--it’s called the “angel” round. And don’t be ashamed to start small.

Q: What advice do you have on board of director positions? How do you pick companies and how do you get paid? In fact, the question applies not just to directorships, but to almost any new job.

A: My first piece of advice is not to say yes too quickly! (All my advice is based on my own mistakes).

Second, in general smaller companies are more rewarding; they may actually follow your advice and you will see some impact.

Packages vary all over the lot. I usually try to join a board where someone greedier than I has already dealt with those issues, and ask for the same. (This doesn’t work if the previous director is a de facto co-founder, but otherwise it’s a handy tactic.)

Aside from that: The company is sure to get into trouble at some point. When that happens, will you regret that you are on the board, or will you feel a genuine eagerness to pitch in and help fix things because you like the people and believe in the service or product? Answer that question and you’ll know whether to say yes.

*

Esther Dyson edits the popular technology newsletter Release 1.0 and is the author of the bestseller “Release 2.0.” She is also chairwoman of the Internet Corp. for Assigned Names and Numbers. Questions and comments should be directed to Esther Dyson at edyson@edventure.com.

Distributed by New York Times Special Features.