““A feast is made for laughter, and wine maketh merry; but money answereth all things.”” – Song of Solomon

The Internet will surely go down in history as the most oversold economic phenomenon of the 20th century. The high-tech stock market, with its Alice-in-Wonderland valuations, is just the most egregious proof that you really can fool all of the people some of the time.

Today, with dot coms falling from the financial sky like clay pigeons, it is clear that the New Economy is 90% old and that the old rules (e.g., supply and demand, the efficiency of free markets) still apply.

And that means that ordinary people are scared to jump on the bandwagon. Don’t be.

There has never been a better time than now to capitalize on the Internet economy. That’s because the first phase – the time of hype and sensationalism – is pretty much over. The dust is clearing. It’s getting easier to distinguish a good business from a bad one.

Of course, it is also harder to raise capital. Investors are looking for profits (imagine that!), not just growth. But the good news is that the best business ideas – the ones you will most likely succeed at – do not require millions of dollars in start-up money.

So What Is the Internet Economy?

Basically, the Internet is a communications medium – a way to transmit information. Like the telegraph, the telephone, and television before it, it has actually expanded the business and consumer marketplace by making it easier for people to buy and sell things.

This has spelled big money for some of the entrepreneurs who jumped in early during the first phase. A short list of top performers would have to include Jeff Bezos, creator of Amazon.com ($7.8 billion); Jay Walker of Priceline.com ($4.1 billion); Pierre Omidyar and Margaret Whitman of eBay ($4.9 billion and $1 billion, respectively); Joe Ricketts of Ameritrade ($2.4 billion); Steve Case, Barry Schuler, Robert Pittman, and Ted Leonsis of America Onlline (hovering around a measly billion dollars each); and Silicon Valley venture capitalists Johan Doerr and Vinod Khosla at a billion each.

Technical Changes in Media Create Selling Opportunities – and There Have Never Been More Than There Are Right Now With the Internet

Not every one of these lucky billionaires created good businesses. Some of them got rich simply by selling a hot idea into a frenzied market.

So if you want your own Internet fortune, you have to choose the right success story. One I’d recommend is that of Jerry Yang and David Filo – two young men who up until several years ago were graduate students at Stanford. To fill their spare time, they created a list of their favorite Web sites, which they shared with some friends and fellow students. The response was positive, so they developed it some more. Before long, thousands of people were using their site for guidance.

Netscape and America Online, among others, offered to buy them out. But they weren’t interested. Instead, they renamed the site Yahoo and hired a CEO, Jeff Mallett, who still runs it today. Filo, Yang, and Mallett are billionaires. (Yang and Filo are estimated to be worth $3.7 billion each.)

What’s the Lesson Here?

What’s great about what Filo and Yang did was this:

1. They developed a useful service – one that benefited from Internet delivery.

2. They spent most of their early years establishing a market for it.

3. They found a business model that allowed them to sell it cheap.

What started as a simple service to their friends developed quickly into something the whole world wanted. Before they got their first public dollar, they had proven that there was a market for their service.

It is highly unlikely that you are going to make your Internet fortune by starting a new portal. And it is equally improbable you will create anything very large – there is simply too much competition from the established superpowers.

How to Start Your Own Successful Internet Business

To make your own little Internet fortune, you should follow the Yahoo model.

First, think of something you can do or sell that (a) interests you, (b) has genuine value, (c) can be sold at a discount, and (d) can be tested inexpensively.

Let’s use Early to Rise as an example. I began this service as a free benefit to some friends and colleagues. They found it useful. I figured a way to price it more cheaply than comparable services and I tested it before I spent any money on it.

ETR benefits from Internet delivery. It arrives early in the morning in your mailbox. The kind of benefit ETR delivers is best appreciated in small, daily doses. I’m banking on the hope that it will work better than books and seminars and the success my readers have will translate to more profitable back-end sales.

The Internet Economy Is Just Beginning

The Internet economy will surely have some significant ups and downs. (One economist has said that the future statistic he most wishes he knew in order to assess the health of the Internet economy is the number of ex-billionaires there will be in 2002.) But there is no doubt that it will provide many, many opportunities for new business.

The best time to get into a boom is early. If the Industrial Revolution lasted 100 years and the computer Revolution lasted 50, surely the Internet Revolution can be counted on for 25 good years. That gives you 20 more years to get rich.

What are you waiting for?

Think about what you want to do. Then think about how it can be better accomplished via Internet delivery. Toss around some ideas with your friends. Take some time to think about it. But not too much. Tempus fugit.