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This article by Kathleen McGinn Spring was prepared for the November 6, 2002 edition of U.S. 1 Newspaper. All rights reserved.

The New Internet: Slow But Steady

<d>Edwin Goodman, a founder of Milestone Venture

Partners, speaks on "After the Fall: The New VC Landscape,"

at a meeting of the Venture Association of New Jersey on Tuesday,

November 12, at 11:30 at the Westin hotel in Morristown. Cost: $50.

Goodman and his partner, Richard Dumier founded Milestone in

1999, but Goodman, a graduate of Yale (Class of 1962) has been


in the venture capital arena for 26 years. While he was with Patricof

& Co. he managed the fund that invested in Apple Computer in the


of 1977.

Holdings in Milestone’s funds now include a number of young companies

using technology in innovative ways. Among the companies are CarParts,

which provides supply chain management to manufacturers, warehouse

distributors, jobbers, and installers, and, a media


with an interesting, gossip-filled website, which targets the business

event and business entertainment market.

Other portfolio companies include Plusfunds, an electronic marketplace

for the hedge fund industry; Knovel, which provides online technical

information to the engineering and applied science community; and

Cosential, a managed application service provider for the


engineering, and construction industries.

In a recent newsletter, Goodman quotes Andrew McAfee of Harvard


School saying that "we’ll never see again a wave of enthusiasm

and investment and speculation that rises and crashes the way the

first Internet wave did. But we are in for a slow steady progression

and a deepening of these technologies."

In the newsletter, Goodman goes on to tick off the challenges facing

entrepreneurs — and why he thinks they will beat them. Here is

an excerpt:

The last few months have brought more numerous and more


distractions, including additional tragedies in the Middle East and

the odious and mounting pile of evidence of genocide in the Balkans

at the hands of Mr. Milosevic and his cohorts.

Closer to home, in a professional sense, the sleazeratti have emerged

on the business scene. These individuals, through their malfeasance,

in the delicate phrasing of Chairman Greenspan, have mugged the


capital markets along with many stakeholders. The market is punishing

these companies severely, although it remains to be seen to what


the key perpetrators will suffer.

Politicians on both sides of the aisle are aggressively moving


legislation forward while trying, at the same time, to avoid killing

the golden business goose. The only thing we can be certain of is

that those supportive of business and market solutions and those who

would rely on government intervention to cure the excesses of market

capitalism will both emerge from this melee unhappy. However, I am

reasonably optimistic that the pull and tug of our system with its

many disparate power centers won’t fundamentally harm the economy

and, on the margins, may help to restore confidence.

The basic U.S. economic engine continued to chug along at an amazing

pace, particularly in the light of the September, 2001, horrors,


by the self-inflicted wounds caused by some of our


corporate leaders.

I think there are four factors of which three will recede in


over the coming months. First, we are still experiencing a retreat

in pricing from historic high and unsustainable levels that peaked

in March of 2000. Second, the corporate felons have wreaked havoc

by undermining confidence in the markets, which has been exacerbated

by media sharks with talk of systemic structural problems. Third,

despite the improving macroeconomy, a number of highly visible


have failed to meet their operating objectives for the year-to-date.

The fourth "wild card issue" is the birth of preemptive strike

foreign policy and its possible implementation against Iraq. Putting

aside the question of the folly or wisdom of such a move, markets

like certainty and the specter of war is hugely destabilizing.

But Milestone’s business is good. Deploying capital in troubled times

in capital-scarce markets has always bred opportunity. We are


many energetic entrepreneurs who focus on the task at hand in their

respective micro-markets and don’t do too much hand wringing about

macro conditions and the state of the world.

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