BACK TO THE GARAGE 

What do you do when you've built a company from scratch in your Silicon Valley garage, floated it on the stock exchange, seen it become the second biggest site on the internet, employed more than 3,000 people - and then watched the whole thing come crashing back to earth?

The answer, if you're a serial entrepreneur like Joe Kraus, is a no-brainer: you do it all over again.

Kraus is one of the six 20-somethings who started up the search engine Excite. It is almost easy to forget it nowadays, but the company was the Google of its day: a creative, forward-thinking and search-driven company that floated for $177m in 1996, when the rest of us where only just cottoning on to email. By 1999, Excite had merged with broadband services company @Home for $6.7bn, netting Kraus and his co-founders a paper fortune worth tens of millions each.

But dreams of a lifetime of luxury pads and Learjets were not to be. Unable to convert internet traffic into revenue, Excite went bankrupt in late 2001 in the depths of the dotcom crash.

These days, Kraus is still in Silicon Valley - and he is back in business, applying the lessons he learned from Excite to a new internet startup, JotSpot.

JotSpot is a web-based software company which offers collaborative web tools such as wikis - a term made famous by the publicly editable online encyclopedia, Wikipedia - to small and medium-sized businesses. It is not quite a garage startup. But for Kraus, JotSpot represents a return to Silicon Valley's entrepreneurial roots.

Excite once employed 3,000 people; JotSpot employs 20. Excite took $3m to get from idea to launch; JotSpot took $100,000.

But perhaps the biggest difference is this: when Excite started out, its motto was "unencumbered by reality". These days - despite talk of a "new boom" in the technology sector - reality bites.

"Eight or nine years ago when the internet was really starting to get going, it was the Wild West," says Geoff Yang, a respected venture capitalist who invested in Excite. "There were no proven business models, they weren't proven entrepreneurs."

Not so now. All over Silicon Valley, it seems, those entrepreneurs who survived the first dotcom boom and bust are dipping their toes back into the water - except this time, they can show that they have the experience of running an internet company, and there are proven business models that simply weren't there back in 1999.

Certainly, the amount of venture capital flowing into the Valley is increasing: for the second quarter of 2006, VCs poured $2.4bn capital into 300 Silicon Valley deals, according to Price Waterhouse’s Money Tree report, the highest amount of capital invested since the 4th quarter of 2001. (These figures look set to increase significantly – especially with Google’s recent purchase of Youtube.com for $1.6bn).

But why go back into entrepreneurship if you've already ridden the dotcom rollercoaster? The answer to that, says Kraus, is as much about character as cash.

"You hear professional athletes talking about 'the zone'," he says.

"There's a psychologist, Mihaly Csikszentmihalyi, who focuses on extreme performance: he calls it 'flow'. Those states of being in the zone, or the flow state, are addictive. The idea of starting a company from nothing is kind of an insane notion - why should you be able to do it and somebody else fail? What gives you the right to believe those kinds of things? For me the achievement of a ridiculous goal with a small dedicated team of people, that shared struggle, is what brings me that kind of flow-state. That's why I think I do it."

There are also fewer barriers to entry. Hardware is cheaper, there is more open-source software, and - ironically enough for the former owner of Excite - you don't even have to spend a fortune on advertising your website any more, because you can market yourself cheaply via search engines such as Google.

And that, as Kraus is always quick to say, is why Google succeeded where Excite failed. It brought its product - search-based advertising - to large numbers of small companies, not small numbers of big ones.

Where Excite had tied up deals with large cable companies after its doomed @Home merger, Google went after the millions of small companies who were prepared to pay for search-based advertising - and came up with the cost-per-click advertising model that has made it its billions.

These days, it's just six miles along the Bay freeway from Jotspot to the famous Googleplex - so Kraus can be forgiven a note of nostalgia as he looks at the giant Excite might have become.

In 1997, staff at Excite enjoyed health check-ups, a weekly barbecue, and had their internal mail delivered by bicycle. But if you want all those kinds of perks now, you go work for Google.

"They embody every piece of the dotcom lifestyle from a company perspective," says Kraus: "tons of free food, free massages, every service you can imagine from oil changes to dry-cleaning."

"It is a little bit of a time warp there," says Excite co-founder Ryan McIntyre, who works these days at Mobius Venture Capital. "It still very much feels like a '99 type office, with the crazy colours and people riding around on bikes - but you know what? Google has the money to be that way, so God bless 'em for having that continue."

Another self-confessed "startup guy" is Rakesh Mathur, who founded the successful virtual database company Junglee in 1996 - which was sold to Amazon for $200m just two years later.

These days, Mathur is concentrating his efforts on Webaroo, a product which allows users to carry a "representative sample of the internet" on their hard drives for offline research. On the surface the concept doesn't seem to make sense especially at a time when wireless Internet connections are becoming increasingly available. However Brad Husick, Mathur's co-founder argues that wireless Internet access is still limited and that the memory capacity of computers is increasing so quickly that storing copies of Web pages for fast access will make sense even when wireless service gets better.

But Mathur is also profiting from a new trend in Silicon Valley: start your company in the US, but do your development offshore. Webaroo has offices at the university IIT Bombay, where Mathur graduated - and where all the core IP development for the company has been made.

"We're in something like a third wave out in India," he says. "The first wave was pure body-shopping, where companies would send their engineers to other people's facilities, and they would work there as less expensive consultants than companies would be able to hire locally.

"Phase two was entire projects, where project management would be handed off to India.

"Phase three, which is just emerging, is that products will be defined and developed entirely in India. And Webaroo is one of the companies that is early on that."

Webaroo may be in its early stages, but for Mathur, that's what he gets the excitement from.

"I get my kicks from doing new things. As long as what I'm doing hasn't been done before and is hopefully useful, I'm happy."

Another entrepreneur who looks back 10 years with fondness is Dave Samuel, once CEO of Spinner.com, an online radio station launched as thedj.com in April 1996 - at almost the exact time Excite went to market.

When I catch up with him, he's sitting at the very same ping-pong table that he once used as a meeting table at Spinner.com. Samuel remembers the "excitement and buzz" of being nominated Cool Site of the Day - then a well-known internet gong - just four days after Spinner was launched.

But Samuel admits he was fortunate with Spinner which he launched with the help of Josh Felser: the company was sold to AOL for $320m in 1999, before ever turning a profit - and as it was to be years before anybody made money out of web radio, it seems likely that Spinner would have been in the dotcom graveyard come 2001.

"We were very lucky with the way it worked out," Samuel says. "We could have taken Spinner public, and I am extremely happy that we did not, because 90% of the companies who went public in 1999-2000 barely exist or don't exist any more."

These days, Samuel has not one, but two companies: Grouper, a site for sharing video content, and Brondell, a company marketing the hi-tech toilets you find in Japan, complete with warm-water rinse and blow-dry.

So what makes you go back into business for a second and even third time?

"An entrepreneur is a person who can believe in an idea even when there's lots of naysayers," says Samuel. "If the idea was good and everybody thought it was a good idea, there'd be a lot of people doing it."

But he admits: "Spinner has afforded me the luxury of being able to take additional risks that other people may not be able to do."

Samuel admits his life has more balance these days. "Spinner was my sole focus - my top nine out of ten priorities were all Spinner-related. Here I have a wife, two kids, two companies, and other responsibilities."

But for every entrepreneur who got lucky out of the internet and has gone back into the market, there are others who had their fingers burned. For wine expert Peter Granoff that meant his next venture would still be in San Francisco - but outside the technology sphere.

Along with his brother-in-law Robert Olson, Granoff, one of America's best-known sommeliers, set up online wine retailer Virtual Vineyards in 1995. The company seemed to have everything going for it: knowledge about the wine industry, early mover status in the e-commerce field, and technology at the heart of the business.

Despite legal impediments to shipping wine across state lines, things started off well. The company raised around $30m of venture capital funding between 1995 and 1999, during which time the net "started to explode into the mainstream consciousness", as Granoff puts it, and the company re-branded as Wine.com. But in 1999 the pair lost control of the company as $100m came pouring in from various venture capital firms.

Wine.com was one of many companies that spent large amounts on marketing its section of dotcom turf - the received wisdom among venture capitalist investors at the time.

"It had an air of unreality to it," Granoff says. "My brother-in-law and I would have these conversations where we would kind of look at each other and say 'this is goofy'. On some level your gut just says 'this is unreal, this can't go on'.

"And sometime before the meltdown started in 2000, it went through this transition. It seemed to have ceased to have anything to do with healthy businesses for the long haul, and was all about 'how much money can I bail out here with?'"

The disastrous move, says Granoff, was when Wine.com merged with debt-laden rival Wineshopper.com in August 2000.

"My biggest frustration," he says, "was if we had been allowed to grow at a little saner pace, I think it could have been a very healthy business. It might not have been a venture-capital-scale healthy business, but it certainly would have justified itself and then turning a profit."

These days, Granoff has returned to his own roots, and gone back to wine retailing - but in a bricks-and-mortar business, the Ferry Plaza Wine Merchant & Wine Bar, where he says he still gets dotcommers among his customers.

"San Francisco was very, very hard hit on meltdown," he says. "The economy [in the city] seems to have come back and solidified: it's not crazy like it was, it just seems to be reasonably healthy. And there are certainly dotcom businesses that are actually doing well, and they're part of the fabric of the Bay area economy - they don't stick out like they used to."

But even Granoff can't ignore the internet for long.

"We're getting ready to launch the e-commerce part of this business," he says. "We've taken our time and we're determined to integrate it as closely as we possibly can with the experience the customer has when they're in our shop."

Some dotcom pioneers have followed different paths - and left Silicon Valley altogether.

Neil Peretz, who co-founded mobile email company Pocket Science in 1995, is conducting research into online cross-border disputes at the respected Katholieke Universiteit Leuven in Belgium, while training to be a lawyer. But for Peretz, it's not Google he looks at with a wistful eye: it's Blackberry.

"When I started the company, we'd go meet VCs and they'd say 'Mobile email? Why would I want that? I'll just have my secretary fax it to me.'

"They're all tied to their Blackberry these days."

PocketScience failed to grasp the concept of wireless email that has made Blackberry so successful. The former's email devices still require its users to dial into an analogue U.S. phone number in order to send and receive email messages.

PocketScience was ultimately bought by an Australian spin-off company that Peretz himself helped start up. But Peretz says the biggest lesson he learned from the bubble was the importance of strong personal relationships, and having people in business you can trust.

And he retains a certain cynicism about the new boom. "This dotcom second wave is a lot like the first one dusted off again. Is it a podcast, or is it just we put your MP3 files on your website? Is it a blog, or are you just making a web page with Geocities? Even the social networking websites, MySpace, Friendster, go back in time to 97, 98, and PlanetAll, Six Degrees."

Like Junglee, PocketScience used themed rooms to try to inspire creativity in its employees. Back in 1998, employees would wear togas in a Roman room, perhaps designed for dotcom empire-building; or as if to prove that the dotcom bubble really was the Wild West, there was a room designed around the OK Corral.

When I ask Peretz if he has a toga in his wardrobe these days, his answer is "probably".

"San Francisco tends to wear off on people, and pervades their wardrobe - so I'll have to find some festive gatherings to break out all the stuff that I've picked up from having lived in San Francisco. It doesn't really come up as much in Belgium for some reason."

Another whose post-bubble trajectory has taken him away from the Valley is Francis Tapon. Once marketing director at machine systems company SighTech, Tapon is now living in Seattle as a travel writer - and is on a mission to visit every country in the world.

For Tapon, the dotcom crash made him reassess his life - and made him realize that, despite his love for technology, chasing internet dollars was not for him.

"I was sleeping under my table almost 50% of the time when I was starting up our company," he says, "so in that sense I lived the classic Silicon Valley startup."

Tapon left Sightech in spring 2001 to hike the Appalachian trail, having made a six-figure sum out of company - and when he returned after his walk in the woods, he found a "different world". September 11 had happened, and the tech boom had collapsed.

Tapon remembers a friend whose net worth had gone up to a billion dollars, and bought a jet. "The dotcom crash came and he had to sell the plane and most of his other assets as the whole market came tanking down.

"I started thinking to myself, if I had a billion dollars, what would I do with my time? How would I spend my days? Some billionaires like Bill Gates stay in their job because they absolutely love it, but I thought to myself, I wouldn't stay here at Sightech. I'd ideally be able to travel anywhere, live anywhere, and have that freedom."

The result of that, for Tapon, is a book out this summer called "Hike Your Own Hike". Part travelogue, part self-help, the book advises people not to follow the crowd, but to listen to what makes them tick. Most interestingly, he says he's targeted the book at the Silicon Valley professional.

"I see all these people in Silicon Valley, they have these jobs, they're going for the almighty dollar - and they're not fulfilled on a deeper level. They've got the kids, they've got the nice house, they've got the cool job, they've had the stock options, they've done very well on paper - but spiritually they're empty, or emotionally they're drained.

"They're either not listening to themselves, or they realize they haven't got the balls to do something about it, to change their career."

But for the everyday Silicon Valley professional, perhaps it wasn't as easy to ride out the dotcom crash.

Bill Lessard shot to internet fame with his book NetSlaves, about the reality of living in the dotcom boom. Now a New York PR, he remembers that for most people, the bursting bubble hit hard.

"These startups were almost like psychological experiments," he remembers, "as if somebody was sitting behind a glass wall, someplace, saying: 'I wonder what would happen if we kept people here 18 hours a day, and made them never see their family and friends?' It was totally crazy. But this is what happens when you tell a lot of people that they can all be billionaires.

"There was no division, in people's minds at least, between the CEO and the rank and file. Even if you were the guy who was plugging in the servers, you still thought of yourself as an entrepreneur. We were all entrepreneurs! But then the realization for me, and for other people who became disgruntled technology workers, was that that was really not the case.

"In the final analysis it was the founders of the companies, and the investors, who were the ones who were making the money. Your stock options were just the carrot - they were worthless at the end of the day."

In the heady days, Lessard remembers going into his office on the first day of a new job - and being offered a job by a recruitment executive worth $20,000 more than he was currently earning. "I've never seen anything like it," he says.

"When all this stuff started falling out I was one of these people who thought there was going to be this corrective period - all the fools would go out of business, and then a year or so later everything was going to stabilize and it was going to be OK.

"None of us had any clear notion of just how bad things were going to get."

After going freelance to write his book, Lessard turned to building websites to pay his way. Suddenly, there was no work at all.

"It was so bad that I wound up working in catering, for the better part of a year, working with a bunch of 20-year-olds who are just there to make enough money to pay the cell phone bill."

Yet as the good times return to the Valley, so things get better for the ordinary Joe. The unemployment rate in the Valley was 4.8% in March 2006, compared to 7.5% in December 2002. But for all the down times, Lessard still takes pride in his role in the dotcom boom.

"We were a generation that had been completely written off by the boomers - 'They're just a bunch of slackers, they're never going to amount to anything.' And what did we do? We built the internet in five years."

And that's something that the NetSlaves and the CEOs have in common. Asked what the high point of building Excite was, Kraus is adamant that it was the uses for the technology that gave him ultimate satisfaction.

"It's the international plane trip where your seat mate tells you a story of how Excite found them the information on a loved one's illness," he says. "You were affecting people's lives on a broad scale."

Kraus sees technological progress as a series of "do-it-yourself revolutions", from PCs to search engines to podcasts that allow normal people to do things that previously only technical people could do.

Perhaps, somewhere in a Silicon Valley garage, the next world-changing technology is only just being dreamed up.