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Koogle: easy money has gone
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January 26, 2001: 9:23 a.m. ET
Tech leaders warn firms to focus on profit or die
By Rod Cant CNN.com Europe business writer
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DAVOS, Switzerland (CNNfn) - Tech sector leaders gave a sober picture of the outlook for the Internet Friday, but they said good companies would see out the current downturn.
Tim Koogle, chief executive officer of Yahoo!, said the easy money from the capital markets had dried up, and Net companies had to focus much more closely on the bottom line.
"The markets were generous in providing capital to early-stage firms," he told a busy auditorium at the World Economic Forum in Davos, Switzerland, but "firms must get to the point where they are cash flow positive and can support and fund their own growth."
Yahoo! had long ago reached that point, according to Koogle, who said the Internet portal now has 180 million users, and generates annual revenue of more than $1 billion.
Koogle's sentiments were echoed by one of Europe's leading technology pioneers, Hasso Plattner, founder and CEO of Germany's SAP. SAP is the world's third-largest independent software provider.
Plattner told delegates that greed had been a major factor in the recent tech crash. He blamed entrepreneurs for attempting to sell out too quickly:
"We've seen too much greed in the last three years; investors thought 30 percent was too easy, and 100 percent possible" on their returns, he said.
Plattner said his own firm had blown $250 million through jumping into the Net, with partner Intel, on a business model that had proved "utopian". Plattner warned that the slowdown in US economic growth would make it harder for startups to find financial backers.
Although the execs pointed out the huge change in circumstances for Internet-oriented companies, they did not paint a picture of total gloom.
Yahoo!'s Koogle defended advertising on the Web as a source of revenue, even though he saw some impact from the slowing U.S. economy.
"Advertising does work, it depends you can get the scale to break even," he told delegates.
He predicted Internet advertising would grow as a proportion of total advertising, and forecast a split in two directions.
He said large firms would win the bulk of advertising on the Net, though that would still leave room for quality niche players. Koogle predicted the medium-sized firms would face the most difficult situation.
Koogle maintained the proliferation of devices that connect to the Internet would have a significant impact on the years ahead, with consumers surrounded by equipment that would make accessing the Web much more simple than it is today. 
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