Small Ideas, Big Ideas, Bad Ideas, Good Ideas: 'Get Big Fast' and Dot Com Venture Creation

30 Pages Posted: 22 Nov 2006

See all articles by David Kirsch

David Kirsch

University of Maryland

Brent D. Goldfarb

University of Maryland - Robert H. Smith School of Business

Date Written: November 2006

Abstract

In this paper, we establish a series of starting points for understanding the emergence of the industries associated with the commercial internet. First, we report baseline estimates of the number of internet technology companies created from 1994-2001. Approximately 50,000 companies solicited venture capital to exploit the commercialization of the internet. Of these, less than 15% followed the GBF-model of venture-backed growth. Fewer than 500 companies (<1%) had an initial public offering. Within the larger set of initial entrants, however, the five-year survival rate was 48%. The survival rate is higher than most observers typically predict and similar to that associated with the introduction of other general purpose technologies. Standing in stark contrast to the popular picture of the Dot Com era consisting of a boom phase followed by an unprecedented bust, our findings suggest underlying continuity in the exploitation of entrepreneurial opportunities arising from the diffusion of a new general purpose technology.

JEL Classification: Dot Com Era

Suggested Citation

Kirsch, David and Goldfarb, Brent D., Small Ideas, Big Ideas, Bad Ideas, Good Ideas: 'Get Big Fast' and Dot Com Venture Creation (November 2006). Robert H. Smith School Research Paper No. RHS-06-049, Available at SSRN: https://ssrn.com/abstract=946446 or http://dx.doi.org/10.2139/ssrn.946446

David Kirsch (Contact Author)

University of Maryland ( email )

College Park
College Park, MD 20742
United States

Brent D. Goldfarb

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States
301-405-9672 (Phone)
301-314-8787 (Fax)

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