Issue link: http://www.e-digitaleditions.com/i/58060
Research They found that VCs contributed to the dot-com bust not just by investing in nonviable companies, but also by cashing out early and leaving companies to fend for themselves. Their research also pinpointed other indi- cations that an Internet company might not make it, such as a drop in ownership among the top three manag- ers, which conveys their lack of confidence in the compa- ny; an oversized IPO, which invites mismanagement of funds; and a large number of outsid- ers on the board. On the other hand, signs of a promising Internet company include pre-IPO investor demand, years in business, and the number of employees it has on the payroll. An entrepreneurial spirit, expertise, and a tendency to take risks also play large roles in a startup's suc- cess. Surprisingly, the study didn't find that an experienced CEO or reputable CFO accelerated the time it took for an Internet company to turn a profit. The study is particularly relevant because data indicates that the num- ber of unprofitable Internet compa- nies initiating IPOs is once again on the rise. "We find that venture capi- tal participation leads to a decrease in the likelihood of profitability and an increase in the time required to move firms into the black," Jayara- man says. "Our results suggest that the skills and competencies required of top management are fundamen- tally different in emerging industries such as the Internet, where prior organizational experience in the technology sector or in reputable organizations does not convey any significant advantages." 62 BizEd JULY/AUGUST 2007 Calculator, which can be accessed online at www. networksfirst.com/calculator/ index.htm. In all cases, WBS researchers note that their findings make it clear that businesses are becoming increasingly dependent on computer networks—when the network fails, it can bring business to a grind- ing halt. The researchers designed the calculator so that companies could iden- The True Cost of Network Crashes Some industries may be more vulnerable than others when computer net- works fail. Research from the War- wick Business School in the United Kingdom indicates that the retail industry may take the hardest hit in the case of a network crash. The research, which WBS con- ducted for network support servic- es provider Networks First, found that the downtime cost for the retail industry would likely average £350,000 per hour; the financial industry, by comparison, would lose £100,000 per hour. As a result of their analysis, WBS research- ers devised a Network Downtime tify the tangible and intangible costs that an inoperable network represents to companies. The Cost of Low Self-Esteem High self-esteem in youth can lead to higher salaries as adults, according to researchers at the University of Flor- ida's Warrington College of Business Administration in Gainesville. In fact, self-confidence in youth may lead to hundreds of thousands of dollars more in salary over a lifetime, according to management professor Timothy Judge and graduate stu- dent Charlice Hurst. The two used data from the U.S.- Narayanan Jayaraman and Omesh Kimi based National Longitudinal Survey of Youth, a nationally representative sample that included 12,686 men and women. Participants were first interviewed in 1979, when they were between the ages of 14 and 22. Their self-esteem was measured by how they responded to prompts such as "What happens to me is of my own doing," "I feel I have a number of good qualities," and "When I make plans, I am almost certain to make them work." Par- ticipants were interviewed again