Internet start-ups must have a strong brand value, viable business
plan, experienced management, real customers and a revenue stream in
order to survive in the long-term.
Speaking at the Business Week-organised E-Biz Marketing seminar, Ogilvy
Interactive Worldwide president Mike Windsor said: "Many venture
capitalists are taking internet companies public so early that no one
can say if the companies are viable or not.
"The venture capitalists are getting earlier and safer exits while still
making absurdly lucrative profits, though they are shifting the risk to
the public."
He predicted that many billions of investors' dollars will be lost over
the next two years as start-ups fall by the wayside because of a lack of
detailed planning.
But judging by the declining enthusiasm for Internet stocks globally, it
seemed that the end was near for indiscriminate investing in cyber
ventures, Mr Windsor added.
"A good litmus test for the worthiness in investing in start-up
companies is: who is their real target audience? The stock market for an
IPO? Or a real customer who has a real need to be met?" he said.
The successful company, Mr Windsor noted, is customer-focused and
meeting the needs of consumers better than their rivals.
"Success in the interactive world is ultimately not about technology but
about recognition and trust. So it should come as no surprise that what
most often determines success online is who has the strongest brand.
"This makes perfect sense, because at the heart of every successful
brand is recognition and trust," he said.
