Until recently, Web companies could raise large sums from initial public offerings by substituting vision for lack of profits. This widely accepted practice, while sensible in some cases, inadvertedly eliminated an important winnowing process. While many Internet outfits remain solid investments and stocks rise and fall for many reasons, too often exuberant investors fundamentally misunderstand what an entrepreneur is and what he does. They are savvy dealmakers who see opportunities and rush to fill them. After they have accumulated some cash, won credibility, and gained new insights into their niche, a few of the determined and lucky ones expand and build sizeable businesses.
Research shows that the entrepreneurial reality is more mundane.
When Microsoft founders Paul Allen and Bill Gates were developing the Basic programming language for the first personal computer, the Altair in 1975, so were a score of competitors. They went on to develop programs for Apple in 1977. And the rest is history. Richard Branson's first step towards building the Virgin Empire was the 1967 launch of the magazine, Student. This was followed by a mail order record business, a record shop and, in 1973, a music-publishing business, Virgin Records.