Young men and women seeking their fortunes in technology no longer only “go west.” When the dot-com bust left Silicon Valley smoldering five years ago, young techies decamped in every direction. Venture capitalists, coders, engineers, and geek philosophers staked out new turf in different places. Andrew Zolli, for instance, founded his consultancy Z+ Partners in Brooklyn, the haunt of struggling artists and musicians.
Meanwhile, young tech entrepreneurs fostered innovation in new and growing—and cash-strapped—economies around the world. Rafael Romay started a video chip company in Seville, Spain, and managed to secure venture funding in a country where VCs are few and far between. In China, Chen Tianqiao founded Shanda Interactive, an online gaming community that went public on the Nasdaq in 2004, raising $151.8 million.
The spread of the Silicon Valley ethos around the globe isn’t the only lasting result of the boom and bust. At least, not according to what we’ve seen from Red Herring’s list of notable Entrepreneurs Under 35. It is a diverse list, to be sure—from sharks who’ve managed to gain funding in capital-challenged realms to those who seem truly committed to changing society with their companies. We didn’t pick the biggest moneymakers, or the flashiest media darlings. Instead, Red Herring consciously chose people who might be little known outside the insular world of the business of technology, or whose ideas, visions, or passions may turn them into tomorrow’s leaders—a kinder Bill Gates, a gentler Larry Ellison, a more huggable Steve Jobs, perhaps (or not).
That they’ve survived and thrived—or seem ready to do so—is notable, given the current environment for startups. The number of venture-backed startups fell by 14.6 percent worldwide between 2003 and 2004, according to a study by Ernst & Young. In 2004, 8 percent of all venture-backed U.S. companies failed, compared to 7 percent in 2003. And during the first quarter of 2005, 10 U.S. startups raised $720.7 million in initial public offerings—a 74 percent drop from last year’s first quarter, according to the National Venture Capital Association.
However, there is good news for young entrepreneurs. In 2004, 5 percent, or 257, of U.S. venture-backed startups folded, compared to 10 percent of companies that went out of business in 2003. In Europe, the picture is a bit brighter. In May, CambridgeUniversity formed a new entity called Cambridge Venture Partners, teaming the school’s “challenge fund” (money to be doled out to spin-offs) with several prominent VC firms including 3i Group, Amadeus Capital Partners, and IDG Ventures. And in the second quarter of 2005, 14 European startups raised €313.5 million (about $377.7 million) in their IPOs, according to VentureOne—about $140 million more than U.S. companies garnered.
It may be a while before all of the global entrepreneurs on Red Herring’s list make it as far as those European IPOs. But some of them will be rolling in it soon, if their workaholic ways pay off. Vicky Wu, CEO of mobile gaming company Froghop, founded her business in the trough of the dot-com bust, and had to chase after VCs skeptical of her chances for success and her abilities as CEO. Jorge López Ceballos of Spain has already founded seven businesses at age 28.
For others on our list, technology functions as a social outlet and a source of revenue. In China, Maxthon founder Jeff Chen took up where a political outlaw left off with Internet browser MyIE, and a dedicated community of coders kept in constant touch to improve upon it. Today, 31 million people have downloaded the browser, and Maxthon pulls in $40,000 a month (which goes pretty far in China). Mena Trott, co-founder of blogging company Six Apart, started blogging simply because she didn’t have many friends. Now, her company, which she runs with her husband Ben, counts 10 million users.
Some of Red Herring’s entrepreneurs have made money by taking a risk on a new technology. Michael Merhej founded music file-sharing site Audiogalaxy in 1999 and grew it to 80 million users. Now, he’s using peer-to-peer (P2P) technology for a different (legal) kind of file-sharing at his new company, ByteTaxi. Paul Kocher of Cryptography Research says that he is one of about 200 publishing crypto-researchers like himself in the world, all of them self-taught. Rafael Romay is clearly tickled about AnaFocus’ vision system that can help catch criminals. And Germany’s Karsten Kuhla, founder of Fileants, simply wanted computers to do banal work for him.
Perhaps because they’re more open to change, these younger entrepreneurs may have a leg up on their older counterparts. Shifts in culture are more easily embraced by a younger generation that will adapt to the circumstances handed to them. “The VC community has changed a little,” says Scott Hirsch, one of the principals at consulting firm MIG5. “Some of the smarter ones are getting it—they’re investing into customer-facing business models, rather than in some big technology.”
Like many others, Mr. Hirsch felt compelled to start a business because he wanted to make a social impact. MIG5 helps companies improve dysfunctional operations and foster better relationships with customers. Princeton Power, co-founded by Darren Hammell, cuts the amount of electricity used by industrial motors by 30 percent, and Mr. Hammell says heading an energy-conserving company is the “right thing to do.”
That feeling pervades the new generation of entrepreneurs and investors, say others. “There’s a deep structural swing happening in the Valley,” says Z+ Partners’ Mr. Zolli, who’s also curator of the annual Pop!Tech conference. “In the first round [of 1990s entrepreneurs] there was the idea that, ‘I created it in my garage, so I deserve every penny.’ A lot of cyber-selfishness. There’s a new generation saying, ‘I want to make money, but I also want to do good.’”
At least, new-generation companies and their clients want to appear more people-friendly. Let us introduce you to 20 fascinating entrepreneurs younger than 35. They may have the same drive to succeed as their predecessors, but they seem more concerned about being seen as warm and fuzzy than the grayheads they’re anxious to shove aside.