Once bitten, twice shy - Dot-com business undergoing cautious renaissance, Independent 12 may

Ebrahim Mohamed, director of the Tanaka Business School's executive MBA programme, points to mobile networking as the big new change.

Last month 20 MBA students from London Business School flew west to a forgotten land. They went to look for career opportunities in Silicon Valley.

"It certainly didn't happen a couple of years ago," says Graham Hastie, the school's career service director. "But we're seeing a lot of interest from technology and internet companies in our students. Amazon, Google, Sony, Vodafone, BT, Cisco Systems; they're all looking for talented managers."

Ten years ago the world wide web was changing the business environment. Microsoft's operating system Windows 95 included access to the internet for the first time. It was the start-up Klondike, and business school students were in the forefront.

In America, students left reputable MBA courses halfway through to set up companies. Graduates deserted consultancies. The core principles of business turned upside down and it needed a calm head to stay afloat. By 1995, Jeff Skoll, graduating from Stanford's MBA course, had seen several start-ups sink and was careful not to make the same mistakes with his new venture eBay.

Hastie remembers it well. "I also graduated in 1995, from INSEAD," he says. "A lot of people I left with got seduced into that world."

Five years later, as we know, it all turned ugly. The NASDAQ dived and the incubators that business schools had set up to nurture promising ideas went cold. Investors were left wondering where their profits were coming from. Dot-commery was over.

Or was it? The IT scene suddenly looks buoyant. Pure-play survivors such as Google, Yahoo and Lastminute.com now seem as solid as any traditional company, and investors are chewing over acronyms such as VoIP (Voice Over Internet Protocol), Wi-Fi, Wi-Max, even VoWi-Fi. Dynamic mobile content and nanotechnology are evolving, Skype is hyped and a concept called IP Multimedia Subsystem, or IMS, is said to be about to revolutionise the telecoms industry.

"They're hiring skilled problem solvers with cross-cultural backgrounds who can hit the ground running," Hastie says.

"Entrepreneurial activities are still attractive to students. But the opportunities that existed in the late 1990s - apocryphal people wandering the corridors with cheque books - have gone. The market is much more cautious."

Hastie's view is echoed by Alison Edmonds, head of MBA careers services at Manchester. "Google has approached us for the first time, and some of the digital companies in the north-west have done the same. Because the market is about to revolutionise, they are looking for people who have the technology experience plus the commercial and marketing expertise to make assessments about how they position themselves."

Because of the dot-com failure there is now a shortage of both middle management and programming talent in digital companies. Analysts are predicting a boom in corporate IT spending, management consultants' revenues are soaring and there is renewed interest in outsourcing. And Forrester Research expects online retail to quadruple by 2009.

"It's the quiet revolution," says Gerard Burke, who now runs the business growth and development programme at Cranfield School of Management. Six years ago Burke was responsible for setting up CranfieldCreates, a business incubator modelled on the latest fashion in the private sector. Many other business schools were doing the same. "I was deeply involved in dot-com and was swept up in the euphoria like everyone else," he admits.

The incubators lasted a couple of years. "Unless they were enormously heavily financed they couldn't survive once the bubble burst. It was a typical technology wave; a bounce-back followed by a period of consolidation."

MBA students, Burke says, are still as entrepreneurial as ever, but when it comes to attracting investment these days their CV is as important as their idea. "During the dot-com boom it didn't seem to matter what someone's background was."

Ebrahim Mohamed, director of the Tanaka Business School's executive MBA programme, points to mobile networking as the big new change.

"During the dot-com growth, the technology wasn't mature," he says. "Now it has matured enormously; it's just a question of changing consumer habits, although they're not far behind, with broadband adoption and the explosion in online shopping.

"What people thought would happen in a day with the dot-com revolution has taken five years; but it's here, and business models are changing accordingly to embrace uncomplicated access to technology."

So will we see a return to incubators? In a recent survey Manchester Business School found that half its MBA class was as interested in start-ups and SMEs (small and medium enterprises) as they were in blue-chip household names, Edmonds says. "Some people prefer a flexible progressive environment and they're less attracted to the heavy structure and bureaucracy of a large organisation.

"Telcoms used to take 10 per cent of the class in 2000. Back in 2002 it dropped to 3 per cent but in last year's class it was back up to 10 per cent."

The essential lesson of the dot-com revolution, however, won't be easily forgotten in the quiet corridors of the business schools: if there is no obvious revenue stream, don't swim.