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INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads | | FEBRUARY 27, 2003 COMMENTARY By Steve Hamm The Living Legacies of Shuttered Startups Plenty of starry-eyed entrepreneurs fell victim to the dot-com bust, but many of their brightest ideas continue to transform tech
Yet their innovations live on. As a subsidiary of EarthLink, PeoplePC continues to break the mold by selling consumers PCs and Net access in a package for an affordable $24.95 monthly fee. And Microsoft made Firefly's technology the basis for its 200 million-member Passport system for storing people's crucial personal information on the Web. Grouf, who was CEO of both companies, says he doesn't regret that he no longer gets to play a role. "When you sell a business, you still get the satisfaction of seeing them survive and touch millions of people's lives," he says. COOL IDEAS REHEATED. Grouf's journey is part of a huge transfer of innovation now under way that's reshaping the tech industry. While hundreds of Internet startups are dying or selling out after nearly three years of being pummeled by the rotten economy, many of the technologies they created are destined to live on and play important roles in the future -- either via acquisitions, in new startups, or through copycatting by the industry's giants. Think of it as a mammoth recycling project. "The company is the most ephemeral institution in the information technology world. The people are perennial, the technologies are repurposed, and the products find new homes in surviving companies," says Geoffrey A. Moore, chairman of tech consulting firm Chasm Group in San Mateo, Calif. Although the boom is remembered as a time of frivolity and excess, it was also a bountiful gusher of business creativity. Nearly 6,000 tech companies were financed by venture capitalists, and since there was little pressure to achieve profits in the short term, entrepreneurs were given permission to dream -- and in some cases, hallucinate. Sure, plenty of ideas were silly. But the era also produced an abundance of ideas that were mind-bending, even if their inventors didn't survive as independent businesses. Take ICQ, the instant-messaging pioneer, which flourished after its 1998 sale to America Online. In many cases, the challenge facing the new caretakers of these innovations is to take a potentially world-changing idea and give it business legs. BARGAIN BASEMENT. Established firms are cherry-picking the best of the distressed properties. One sizzling technology is Internet search. And anything to do with Wi-Fi, the wireless networks that are spreading through dorms, offices, and coffee shops, is sure to attract shoppers. In the past couple of months, Search site Overture Services has taken over Web search pioneer AltaVista, paying just $140 million for a property that had once been valued at more than $2 billion. Level 3 Communications snapped up the original Net backbone operator, Genuity. Even the stodgiest of Main Street outfits are getting into the act: Anderson Merchandisers, a leading music CD distributor, in late January bought assets of Net music-download specialist Liquid Audio. "The task is sifting through the wreckage and seeing where there's an overlooked opportunity," says Paul Saffo, executive director of think tank Institute for the Future. "A lot of these ideas were good, but were ahead of their time."
 Hamm covers technology in New York. Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | FEBRUARY |
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