Joe Blow StakesHisClaim.com

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Chrissie and John Kremer are typical Silicon Valley business professionals. They both have MBAs–his is from Stanford, hers from UCLA. They both worked in marketing jobs at technology companies. And now they are launching their own Internet startups. In so doing, the Kremers have joined thousands of fortune seekers, in Silicon Valley and elsewhere, who are flocking to cyberspace. They’ve also joined the rest of their family: John’s sister helps run the Gap’s online store; John’s brother-in-law Kris is starting an e-commerce company; and Kris’ brother, Erik, recently began working at Planet Rx, which sells prescription drugs on the Net. John’s business is Advoco.com, an electronic marketplace for professional services, while Chrissie and a former colleague are building MakeoverPlace.com, a Website that will sell makeup and skin- and hair-care products.

A short year ago, starting an Internet company–or even joining an existing one–was considered a gutsy career move; now everyone and his brother-in-law are doing it. These would-be Web entrepreneurs are smothering venture capitalists with their enthusiasm. “We’re dying,” says Gus Tai, a partner with Trinity Ventures, who estimates that the number of e-commerce business plans his firm receives jumped 20-fold in the past year. Other venture capital firms report similar growth, driven by the Internet. In 1998, Accel Partners was inundated with some 10,000 business plans of all kinds (a whopping 40 each business day), up from 2,500 plans two years before; Draper Fisher Jurvetson logged in 5,000 business plans last year–a number twice that of two years ago, thanks to the flood of, yes, Internet ideas.

Venture capitalists liken the current frenzy to a land grab where potentially fertile plots–groceries, gifts, drugs, and such–go not to the person with the best credentials but to the one who gets there first. Many high-profile e-businesses were started by guys like Jeff Bezos, CEO of [hotlink]Amazon.com[/hotlink] (AMZN), who struck out into cyberspace with little more than a good marketing idea. Silicon Valley–and now the rest of the country, for that matter–is full of people with ideas of making a go of it on the Web. “Everyone is one step removed from someone who is being very successful with an Internet business,” says Steve Jurvetson, a partner with Draper Fisher Jurvetson. When a friend makes a leap into cyberspace, the frustrated entrepreneur within begins to wonder, “If she can do it, why can’t I?”

That’s what happened to Allyson Campa, former general manager of MySoftware. She watched a former colleague snag funding from venture powerhouse Kleiner Perkins Caufield & Byers to launch Della & James, a gift registry site. “She looked like she was having so much fun,” Campa says of her friend. So Campa joined the party and started BravoGifts.com, a yet-to-be-launched Website selling corporate gifts. “There is so much support for starting an Internet company,” adds Campa, who lives in the San Francisco Bay Area. “Every night of the week I could go to a seminar on the topic.”

Of course, the frenzy isn’t all driven by fun, games, and motivational speakers. There’s also the money. Venture capitalists are pouring money into Internet projects. Last year they handed out $5 billion for Internet ventures: that’s 533% more than in 1995, according to VentureOne. In this year’s first quarter, Internet companies raised $2 billion–double what they raised in the same period last year. Venture capitalists are so eager to place their bets on the Net that some company founders have raised millions of dollars with little more than an idea and a few charts. John Kremer and Mark Benning, CEO of Advoco.com, went on the VC circuit with 12 Powerpoint slides and some financial projections. Within a few weeks, they had commitments for over $4 million.

With startups backed by that kind of money, Web entrepreneurs aren’t exactly betting the farm when they leave the old world for the virtual one. They can now pay themselves decent salaries yet still look forward to the potential upside of equity ownership. And with Internet companies rocketing from launch to initial public offering in as little as two years, entrepreneurs anticipate a big payoff without a long period of struggle. Bill Nguyen, the founder of Onebox.com, an Internet communications startup, has worked at five e-startups in four years. Each of the previous four companies was either bought or went public, leaving Nguyen free and cash-laden to pursue his next adventure.

Everyone is one step removed from someone succeeding at an Internet business.

Of course, money attracts all kinds, including those with ideas that venture capitalists politely call “way out there.” Some tough sells: a Website for purchasing clerical vestments (in case you were wondering, the market is half Catholic and half other); another selling health-oriented sexual aids (featuring an herb with supposed Viagra-like powers); and a Gone With the Wind Website and theme park.

So what do venture capitalists want? Tod Francis, a partner with Trinity Ventures, says he looks for four things in e-commerce plans: the size of the market; whether the company can be first in its niche; whether the Internet will offer a superior buying experience; and a management team with the passion to move fast.

Passion, in fact, may be more important than that tired credential called experience. In the old days (say, two years ago) venture capitalists mostly backed businesses started by experienced managers. No longer. “The Internet is a great leveler,” says Bruce Dunlevie, a partner with Benchmark Capital. “You can’t find a lot of people who are Internet experts. Instead, you look for people who have leadership and smarts and can shift strategy in real time.” Adds Francis of Trinity Ventures: “If managers have too much experience, we wonder, will they move quickly enough?”

Whatever the investor’s rationale, now is the time for itchy, traditional-economy types to make the switch. Paul Herman, frustrated and bored with corporate America, quit his job as a management consultant with CSC Index to start an Internet company. In search of a business idea, he and three friends combed through the top 25 sites on the Internet. They discovered that while the major portals have features targeted at children, none of them provide kids with financial services. Bingo! icanbuy.com, a Website that provides teens with online debit cards, was born.

Herman has only one year of experience in banking and no children; in fact, his only experience working with children is sitting on the board of Big Brothers Big Sisters. Yet he had no trouble persuading private investors to back him. Now, as he shops the deal to venture capitalists, Herman thinks he has a real shot at funding. A year or two from now, he might not have come so far. As an experienced Internet class begins to form and as veterans leave companies like Netscape to strike out on their own, their qualifications will raise the bar for funding. Says Geoff Yang, a partner with the venture capital firm Institutional Venture Partners: “Everyone graduating today from Stanford wants to start an Internet company. In five years they will be much less fundable.” In other words, don’t be late for the party.

PATRICIA NAKACHE was a consultant at McKinsey & Co. when she reported this article. She now works at Trinity Ventures.

A version of this article was originally published in the June 7, 1999 issue of Fortune.

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