Our answer is: None of the above. The real answer is written in the walls of eBay’s offices in San Jose, California.

Rajiv Dutta, eBay’s CFO, who is on our cover this issue, is relatively low-profile, incredibly level-headed, and as excited about what he does for a living as any other high-tech executive or entrepreneur we’ve ever seen. As he took us on a quick tour of the company’s offices, he substantiated the comments he made during the interview he just gave us: “In every business, to be successful, you need a constraint. Our constraint was that this was not investment for the sake of investment.” He poignantly pointed to the walls and said, “Regular concrete, fresh paint.” What he meant was that his company was built from the ground up with solid materials that last a long time, without costing a fortune. To keep it livable and looking good, all that was needed was a good, old-fashioned, cheap coat of paint. eBay could have created multi-million dollar interior decoration projects (like Excite@Home), built a campus in the most expensive part of Silicon Valley (Redback Networks), borrowed money to build massive infrastructure (Exodus Communications), plunked down the money they raised in their IPO into a massive national ad campaign (Pets.com) . . . and so on. But it stayed focussed.

But eBay’s management team preferred to give the company solid foundations – building it on sound business fundamentals that ask for a nose-to-the-grind financial approach. It proffers a high resistance to ideas, business principals and attitudes that are driven by momentary fluctuations in the business environment – be it bullish or recessionary. Its effective business model, first mover advantage and luck is only half the story.

Businesses can be unsuccessful because of bad luck and market forces. But as we have seen through the boom and bust in the high-tech sector, it is difficult to find a business that is successful in the long run despite poor financial engineering.

Poor financial engineering, performed by the entire food chain in the high-tech sector – investors, entrepreneurs, executives, analysts, bankers – has resulted in companies with good business models, products, services, market share and opportunity, running out of cash and going out of business. On the other hand, we are also seeing companies, especially private venture funded companies, replete with cash in the bank, solid management teams, but without good business models, and lucrative markets to go after. It’s a complicated world of contradictions that the industry is tackling today, and whoever comes out of this malaise healthy can be almost assured of long-term growth and success.

This is the theme of this issue that kicks of a new year of exciting coverage, in-depth perspective and relentless analysis. From all of us at siliconindia, we wish you a Happy and Peaceful New Year!

Yogesh Sharma
Editor
Write to: yogesh@corp.siliconindia.com