Matt Hulett

In a guest post on TechFlash last month, Frank Catalano wrote that today's entrepreneurs and Internet companies essentially exhibit similar flaws seen during the Web 1.0 era.

He paints a picture that Web 2.0 entrepreneurs, like their predecessors, are more interested in quick exits than building long-term profitable businesses. I vehemently disagree with Frank’s assessment.

Having lived and breathed during both eras, I have a much different, more positive view of Web 2.0. For a host of reasons, today's startups are in a much better position than during the Web 1.0 implosion.

It may be easy to look at Internet "deadpool numbers" and draw the conclusion that companies today are in the same leaky boat as the last era. But they're not.

There are three important differences that distinguish today’s Web 2.0 companies:

1. Less capital needed today. It is simply cheaper to start a startup. Most businesses have rich access to Web services, cloud computing, and far less expensive bandwidth and storage costs. During Web 1.0, the amount of capital required was high and the approach to investing in companies was to apply a lot of capital upfront. There has simply not been as much funding thrown at startups in this era versus the last given the relatively inexpensive infrastructure that’s available.

2. Today's companies have business models. I have talked to a bunch of local venture capitalists recently and they overwhelmingly agree that startups today start their efforts with a business model in mind. I am not going to call-out efforts of yesteryear, but, you simply do not see top-tier firms putting money in what one local VC calls: “companies that are long on vision, short on steps to get there."

The bar is higher to get quality investors. The same VC highlighted a company that just closed its first round of venture capital (previously angel-backed). It closed a $5 million round. It had more than 5 million unique monthly visitors and $10,000 per day in revenue. You will not find companies without business model traction, nor products/services, still stuck in beta getting serious dollars.

3. We’re wiser now. Let’s face it, most of us have been there, done that. The Web 2.0 class of entrepreneurs is smarter now and so are the VCs, largely because of the Web 1.0 experience. Venture capitalists are more realistic than before with less “get-big-or-go-home” pressure. CEOs in these companies also learned their lessons. Today's startups generally have more cash on hand, have hired fewer employees, and overall have lower cash burn rates.

As an entrepreneur, I am more optimistic than most. In fact, find me one entrepreneur who’s not an optimist. There simply is a much different approach in today's startup world. That said, the future is still uncharted amid a global economic crisis.

But having the luxury of looking back, and currently living through this current wave, I would put my bet on today's companies any day versus ventures of Web 1.0.

Matt Hulett is the chief executive of Seattle-based Mpire and a former executive at Expedia and Atom Entertainment. He blogs at Startup Whisperer. Guest posts are the opinions of their authors, and don't necessarily represent the viewpoint of TechFlash or its staff.