Behind the Headlines: Profit dubbed 'unimportant' for Net start-ups

Profits should not be the measure of a successful Internet company, according to experts speaking on this week's Behind the Headlines programme.

Chris Setz, director of the Network Professional Association, argued that companies should be valued on their customer relationships and growth potential, and that old economy profit considerations are "backward thinking".

The touchstone for the discussion was research carried out by Hoover Online, which found that 40 per cent of this year's high-tech flotations in the US are now trading below their opening price.

Martin Brampton, operations director at Bloor Research, said: "What people are looking for now is P2P, or path-to-profit. People want to know 'how is this business actually going to make a profit?'"

But Setz disagreed: "Forget about profit. It's not the right way to look at it. What we're looking for is a way of valuing the dot-com that is accurate," he said. "Profit could be for wimps."

Setz added that unprofitable dot-coms are not disappearing. High-profile failures have thus far been few and far between, despite an overall lack of profitability which Setz claimed proves old economy principles are unimportant.

Brampton said: "On the contrary, they are valued very much on those principles because people believed that in the future, these would be immense and very profitable companies. Now people are losing faith in their ability to deliver profits in the long run."

Also up for discussion on this week's show is the future of e-marketplaces in the face of criticism from suppliers.

You can see Behind the Headlines in full in the Media and Marketing Channel. (http://www.silicon.com/a38456 )