Tales from the dot-com economy

Mark Simon is a serial entrepreneur who runs The Chemistry, a forum where aspiring net moguls meet v

This year so far, there have been more column-inches written about the so-called new economy than perhaps any other topic - at least it seems that way. But what is all the fuss about? Who are these rising and falling dot-com stars who, like policemen, seem to get younger every day? After all, the new economy is simply a way of conducting business using information technology; more specifically, the internet. Old-economy companies, so-called "bricks and mortar" businesses, are desperate to embrace the opportunities of the internet, too. They can't afford to ignore it.

To succeed in this new economy, a company needs a sound management team and it needs to move quickly. The difference between this industrial revolution and the previous one is speed. I've just turned 37 and I've been in business for almost 20 years. The speed at which things happen in the new economy is awesome. Technology allows us to do things in a fraction of the time it used to take. If I want to send a newsletter to my database of 3,000 customers, then I have two choices, I can use post or e-mail. If I go for the post option, I'd have to send off a newsletter to be printed, then forward it to a mailing house to collate and post. The whole process would take two weeks and cost about £2,000. Alternatively, I can e-mail the newsletter at the press of a button. It's instant and costs a few pence in phone calls.

We're increasingly seeing UK businesses adopting the "can do" culture. Today, business meetings are set up and appointments are made hours, rather than days or weeks, away. This might seem frightening. However, once you start working in this way, you might find it curiously liberating. To add to this sense of freedom, there are no history books on the new economy; business people are making it up as they go along. The world has never been here before.

The risks are high, yet the rewards are higher. This is what gives the new economy and those who play in it such an adrenalin rush. However, it won't be like this for ever. As Bill Gates said, referring to the internet gold rush: "These are the good old days." The barriers to entry for any internet business are getting higher. Dot-com businesses now have to work on building national and often international brands. They may have the cheapest prices in town or the most amazing widget ever invented, but if they don't advertise their website, then who will know about them? Many of these businesses will fail.

In the United States, everyone wants to be a venture capitalist. Everyone wants to invest in the business that will be the next Yahoo! - and the same seems to be true here. There is still too much money chasing too few good ideas. There are more investment funds being set up than ever before. At the last count, there were more than 200 internet business incubators in the UK. Incubators help businesses get started by providing them with not only capital, but also management teams, premises, computers and marketing expertise. Once up, running and growing, the start-up leaves the nest. The incubator takes a large slug of equity for this service. Like the venture capitalists, the incubators need deal flow; otherwise, they don't make any money.

At the other end of the business scale is the SME (small to medium-sized enterprise). These businesses are not immune to the advance of the new economy, either. Take plumbing - not a typical example of the kind of business to be affected by the new economy. Today, there are community websites springing up where they vet and screen plumbers. It's your assurance that the plumber is qualified and creditworthy. The website takes it one step further, allowing customers to post references, testimonials or complaints. In a few years, you'll be able to book your appointment directly into the plumber's diary. Welcome to the world of e-plumbers!

It's a new economy, so, from time to time, businesses and investors are inevitably going to get it wrong. If we look to the US, we can get some sense of where Britain sits in the net history books. In Silicon Valley, there have been some very high-profile successes and failures. This is what makes for a vibrant economy. Silicon Valley entrepreneurs who fall down pick themselves up and start all over again. More importantly, investors are not scared of investing in the entrepreneurs. Investors in the UK are gradually taking more risks - for UKplc.com to be successful, they must.

Mark Simon set up his previous company from a dining table in 1990, building it up to become one of the top five UK computer mail-order businesses before selling it in April 1999. His latest venture, The Chemistry (www.thechemistry.com) is a networking hub bringing together start-up entrepreneurs and investors