Q: What triggered the demise of Net companies?
A: We all got caught up in the promise of the Internet. We mistook the promise for a guarantee and lost sight of business fundamentals.
Q: E*Trade has been trying to expand from its online roots, with offline financial advice, physical stores, and a network of ATM machines. Is there no future in a stand-alone business model?
A: First and foremost, you have to understand that the Internet is just a touch point and a channel, not a stand-alone business model. The Internet offers a way to improve efficiencies inside businesses. But the companies that survive will have to expand into other services, like we've done, and so have Yahoo! and Amazon.
Some people said we were crazy when we first started branching out beyond online trading with new offerings and multiple touch points. Now it looks pretty smart.
Q: Will there be no more pure-play Internet startups?
A: The next inflection point will be in about five years. Then we could see some movement. Certainly, there's plenty of opportunities targeting health, wealth, and education. Those are the three main things people really care about. If you can empower people in these areas, by doing things like bringing wireless access to remote areas, your business can be successful. But, remember, the Internet can be only one touch point.
Another thing that has really proven out for Internet companies is that brand is essential. Look at who the big four Internet companies were a few years ago. It was always Amazon, e-Bay, Yahoo!, and E*Trade. Now, look again today. Despite all the carnage, it's still really the same four companies. We all have in common a great brand, and a service that people need.