From the Editor: Watch Your Step

It didn’t take long. Encouraged by the success of Google, venture capitalists are once again looking to strike it rich on the Internet. This time they hope to improve their odds by hiring Internet Sherpas, if you will, to guide them to the mother load. Benchmark brought on the founder of Expedia, Mayfield hired the founder of Snapfish, and Enterprise Partners Venture Capital is still looking for its go-to consumer Internet partner.

It’s good to see that more VCs appreciate that just because you use a Web browser that doesn’t make you an Internet guru. That was lost on investors-both private and public-during the Internet gold rush. What’s not clear this time around is whether the irrational exuberance has worn off.

As much as they want that great big consumer hit, VCs must temper their enthusiasm and remember what has brought them success to date: the painstaking work required to achieve a deep understanding of technology and markets, and years of toiling in the trenches to become expert at picking the right people.

In other words, they must apply the same rigorous due diligence to consumer Internet deals that they apply to hardcore technology deals. Due diligence was gleefully chucked out the window five years ago, to the detriment of the industry. Let’s hope that doesn’t happen again.

Lawrence Aragon

Editor-in Chief