...yet many of them went belly up. For each person that was in it as a scam, I would assume that there were many others that really thought they had a chance for success. Hindsight is 20-20, and based on current economic conditions, we know that only a few of them really ever had a chance of survival.

Actually the dot com bust is not particularly unique when it comes to new markets that open up. Simulataneously, state deregulation of power, telecommunications, and biotechnology resulted in a 'gold rush' of the same sorts - you could also look for parallels in the development of radio and tv companies earlier in the 20th century. Whenever a new line of business opens up, there is invariably an influx of money, capital and labor. In almost every situation, these are (a) extremely risky; (b) prone to scams; and (c) beneficial to the health of the economy in the long term (although the short term results can approach catastrophe).

Any individual whose primary objective is "job security" should steer clear of new markets. Even if the individuals involved are honest, the chance of failure is still very high - not all businesses fail simply because management and stockholders were greedy. Starting a business as an entrepreneur is an extremely difficult proposition. Finding people to doubt your sanity is very easy.

If you have a business plan that simply can't be executed without outside/venture capital, you pursue it.

Most startups have an extremely difficult time doing simple things like meeting payrolls, attracting talented people, paying vendors, etc. Without an influx of venture capital, many of them are doomed to failure. Since the investors are assuming some of the risk, it is obvious that they should share in the rewards.

Having seen many startups up close, one danger that the entrepreneur faces is that they end up giving too much away in order to get the needed funding. I've seen situations where the investors ended up owning everything, when all was said and done. I'm also working for a startup at the current time that has tried to resist outside investment, hoping to hold to 100% ownership - but the allure of getting some funding is a very strong attraction.

But if attracting outside investment is the point of the business you don't have what I would consider a valid business plan.

What you are describing is not so much a business as a scam. If it is a business, it is based on the model of making money by bilking investors, rather than setting up a business to supply goods and services to other businesses or consumers. These sorts of businesses will inevitably fail as they are based on unsound principles of making money.

The preference for blaming these things on fraud, though, misses another aspect - that of the culpability of the employees. I notice that there were not a lot of software developers that were complaining that these companies paying them too much money - offering to work for less money. Software developers were willing to change jobs at the drop of a hat and charge well over six figures for work that was, in hindsight, based on a fraudalent pyramid structure. Had these employees resisted the urge for short term megabucks, it's possible that not nearly as many companies would have bombed - thus increasing the total number of jobs in the economy over the long haul - which you consider the primary goal of business.

So I'm back to my original point: The main purpose or a business is, or should be, to provide a living for its employees.

That's quite a stretch. First you outline that business should be predicated on sound principles for making money over the long haul. Although I agree with that assessment, what you seem to really be implying is that only those markets which are not risky should be explored. The problem with low risk ventures is that they are generally few and far between or they are commodity markets. Yes, business must try to minimize risk as much as possible, but the system is based exactly upon the idea of taking risks - that's how new jobs are created in our economy.

Even allowing that owners of business should put in place a viable business plan, the plan is still geared towards making the owners money - you've just shifted the time frame involved - from short-term to long-term. The ownership still has a vested interest in making money over the long haul. If no money is made, or if it is a money losing proposition, then the company will sooner or later become unviable.

Or to analyze the [link|http://www.eagletribune.com/news/stories/20001210/FP_004.htm|Polar Fleece] example you cite:

"His company is a family business, and therefore, he can do pretty much what he thinks is the right thing to do," said Frank Leary, a professor of business administration at Northern Essex Community College. Publicly held companies have stockholders to answer to. And stockholders care about profits.

Implicit within this statement is that a family business is somehow more ethical than a corporation. Having worked for some family businesses over the years, I'd say that they are, on average, no more benevolent - with exceptions leaning both ways.

That said, this is a nice bit of public relations that was pulled off. Somehow, this owner has the media and employees believing that he has no interest in 'profit' - that's only something that stockholders care about.

"He looks at it from a long-term investment point of view," Mr. Leary said. "He knows he has highly motivated, highly trained people that are available, and if he moves, it will take him time to get up to speed, to hire, train, motivate and assure quality control. His advantage is that he produces a high-quality product and has great confidence in the expertise of his workers. He thinks that his workers are an asset of the same value that capital equipment would be."

So, what he really wants is to do is hold on the current employees as assets, so he doesn't risk his company in some foreign country that doesn't have skilled labor. In other words, in his valuation for making money, he thinks that the extra productivity of his current skilled workers may will outweigh the costs to shifting from a cheap - but unskilled - labor force.

Yes, the evidence seems to indicate that the owner made a sound economic decision - a decision that resulted in saving many "American" jobs. But the purpose of this businessman was not simply 'to provide a living for its employees', it was to make money. He should be commended for making a decision which will result in profit, based on a long term strategy. I wish that more businesses would get out of the quarterly time frame.

Anyhow, Polar Fleece is simply one example of how profits and treating employees like assets need not be mutually exclusive.