When the late 1990s dotcom boom went bust, so did several of the entrepreneurs at its epicentre. Where are they now and what lessons can they impart to fellow entrepreneurs?

Today's buzz around Web 2.0 and beyond is reminiscent of the late 1990s, when so many entrepreneurs punched through traditional business models with then exotic "dotcom" start-ups. It took barely a decade for those early internet firms to collide discordantly with certain financial realities. Nevertheless, they were the pioneers of the Net, without whom the giants of today, such as Google and Ebay, wouldn't exist.

Bill Lessard shot to internet fame with his book NetSlaves, about the reality of living in the dotcom boom. Now running a New York PR firm, he remembers the bubble bursting. "These start-ups were like psychological experiments," he says. "It was as if somebody was sitting behind a glass wall, 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."

Lessard recalls going into his office on the first day of a new job and being offered another job by a recruitment executive worth $20,000 more than he was earning. "I've never seen anything like it," he says. Then the stockmarket started to tank. "None of us had any clear notion of just how bad things were going to get." It was, says Lessard, a time when everyone thought they were an entrepreneur.

"There was no division, in people's minds, between the CEO and the rank and file. Even if you were the guy plugging in the servers, you thought of yourself as an entrepreneur. We were all entrepreneurs. Then the realisation hit that that wasn't the case. It was the founders of the companies, and the investors, who were the ones making the money. Your stock options were just the carrot—they were worthless at the end of the day."

Yet as the good times return to Silicon Valley, so things are getting better for the ordinary Joe. Unemployment in the Valley was down to 4.4 per cent in May 2007, compared with 7.5 per cent in December 2002. Like so many of the early internet pioneers, Lessard takes great pride in his role in the dotcom boom. "We were a generation that had been completely written off by the boomer generation, who decided we were just a bunch of slackers, who were never going to amount to anything. And what did we do? We built the internet in five years." So where are those dotcom pioneers today and what lessons can they offer up-and-coming Web 2.0 entrepreneurs?

Lesson one: Identify a revenue stream

Name: Joe Kraus
Original dotcom: Excite search engine
Now: Silicon Valley entrepreneur

Joe Kraus is one of six entrepreneurs who founded internet search engine Excite in 1994. The company was the Google of its day, a creative, search-driven business that floated for $177m in 1996, at a time when many of us were 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 Kraus and his colleagues faced the dilemma common to many "Web 1.0" entrepreneurs—they could not turn internet traffic into revenue. By late 2001, Excite was declared bankrupt.

Today, Kraus is still in the Valley, and still in business. "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: you want to be there again."

With fellow Excite team member Graham Spencer, he started Web company JotSpot, which was bought by Google. JotSpot is a Web-based software company offering collaborative Web 2.0 tools, such as "wikis"—a term made famous by the publicly editable online encyclopedia, Wikipedia-to SMEs.

There are also fewer barriers to entry this time around. Hardware is cheaper, there is more open-source software, and you don't have to spend a fortune on advertising your website any more, thanks to the likes of Google. This, Kraus is quick to point out, is why Google succeeded where Excite failed. It brought its product, search based advertising, to lots of small companies, not small numbers of big ones. It's working to the model author Chris Anderson outlined so clearly in his 2006 bestseller, The Long Tail.

It is just six miles along the Bay freeway from where Jotspot has made its home to the famous Googleplex. Kraus can be forgiven a note of nostalgia in selling his company to the giant Excite might have become.

In 1997, staff at Excite enjoyed health check-ups, a weekly barbecue, and had their mail delivered by bicycle. To enjoy those kinds of perks now, you have to work for Google. "They embody every piece of the dotcom lifestyle," 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 Ryan McIntyre, a third member of Excite's founders, who today works at Mobius Venture Capital. "It still feels like an office from 1999, with the crazy colours and people riding around on bikes." He says it's unfortunate Excite met its demise when it did. "We were early, before people figured out the right model."

Lesson two: Sell while you can

Name: Dave Samuel
Original dotcom: Spinner.com
Now: Serial entrepreneur

Another entrepreneur with fond memories of the last boom is Dave Samuel, once CEO of Spinner.com, an online radio station launched as thedj.com in April 1996. Sitting at the same ping-pong table that he put in the office on the first day, he remembers the "excitement and buzz" of being named "Cool Site of the Day"—then a well known internet gong—just four days after his website launched.

Samuel was fortunate with Spinner: the company was sold to AOL for $320m in 1999, before ever turning a profit. "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 per cent of the companies who went public in 1999-2000 don't exist any more."

Samuel, too, is back in business. He recently sold Grouper, a YouTube-style site for sharing video content, to media giant Sony for $65m in cash. And, in something of a departure, he is also running Brondell, a company marketing the high-tech loo seats you find in Japan, complete with warm-water rinse and blow-dry. "An entrepreneur is a person who can believe in an idea even when there's lots of naysayers," says Samuel. "If everybody thought it was a good idea, there'd be a lot of people doing it. Spinner has afforded me the luxury of being able to take additional risks that other people can't take."

Lesson three: Grow at your own pace

Name: Peter Granoff
Original dotcom: Virtual Vineyards
Now: Traditional "bricks" business director

For every entrepreneur who made it big in the dotcom boom, there were plenty who got their fingers burned. Wine experts Peter Granoff and his brother-in-law Robert Olson, set up online wine retailer Virtual Vineyards in 1995. The company seemed to have lots going for it: knowledge about the industry, early-mover status, and technology placed at the heart of the business.

Despite legal impediments to shipping wine across state lines, things began well. The company raised around $30m of venture capital between 1995 and 1999, during which time the internet "started to explode into mainstream consciousness," as Granoff puts it. The company re-branded as Wine.com, but soon fell into a popular trap, spending more than it could afford on marketing. In 1999, Granoff and Olson lost control of the company, as $100m of outside investment poured in.

"It had an air of unreality to it," Granoff says. "We  would have these conversations, look at each other and say 'this is goofy'. On some level your gut just says 'this is unreal, this can't go on'. Somewhere before the meltdown started, it went through this transition. It seemed to have ceased to have anything to do with businesses in it for the long haul, and had become all about, 'how much money can I bail out here with?'"

The death-blow, 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 more slowly, I think it could have been a very healthy business. It might not have been healthy on a scale to please venture capitalists, but it certainly would have justified itself."

Granoff is now back in wine retailing, but in an old-fashioned bricks-and-mortar business, the Ferry Plaza Wine Merchant & Wine Bar. "San Francisco was very, very hard hit on meltdown," he says. "The economy [in the city] seems to have come back and solidified. 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."

Lesson four: Deal with people you trust

Name: Neil Peretz
Original dotcom: PocketScience
Now: US Department of Justice, Washington DC

Some dotcom pioneers have left Silicon Valley altogether. Neil Peretz, who co-founded mobile email company PocketScience in 1995, is now a trial attorney at the US Department of Justice in Washington DC. While some watch all-powerful search engine Google with envy, for Peretz it's RIM's Blackberry that he eyes up wistfully.

"When I started the company, we'd meet VCs and they'd say: 'Mobile email? Why would I want that? I'll just have my secretary fax it to me.' Those same people are all tied to their Blackberrys these days."

Part of the PocketScience approach was to use themed rooms to try to inspire creativity in its employees. Back in 1998, people would wear togas in a Roman room, perhaps designed for dotcom empire-building. And, as if to prove that the dotcom bubble really was the Wild West, there was a room designed around the OK Corral.

PocketScience was bought by an Australian spin-off company that Peretz himself helped start up. But he says the biggest lesson he learnt from the bubble was the importance of strong personal relationships, and having people in business you can trust. 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 putting 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 can be traced to 1997 or 1998 and sites such as PlanetAll and Six Degrees."

Lesson five: Not everyone's an entrepreneur

Name: Francis Tapon
Original dotcom: SighTech
Now: Published travel writer

Another Valley defector is Francis Tapon. Once marketing director at machine systems company SighTech, Tapon now works as a travel writer in Seattle. The dotcom crash made Tapon reassess his life, forcing the realisation that chasing internet dollars was not for everyone.

"I was sleeping under my table almost 50 per cent of the time when I was starting up our company," he says, "so I lived the classic Silicon Valley [lifestyle]."

Tapon left SighTech in 2001 to hike the Appalachian trail, having made a six-figure sum out of the company. When he returned, he found a "different world". September 11 had happened, and the tech boom had collapsed.

Tapon remembers a friend who'd been riding high on the boom: "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 asking myself, 'how would I spend my days if I had a billion dollars. What would I do with my time?' 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 had the stock options, they've done very well on paper, but spiritually they're empty, or emotionally they're drained."