We put that question to some of the brightest minds in the business world and asked them to let us in on the thinking behind their choices. We talked to people with a wealth of hands-on experience -- CEOs and company founders whom we consider "masters of business." We went through our address book and contacted people who spend their time evaluating the viability of companies: angel investors and venture capitalists who've made a name for themselves picking companies that fly. And to get a slant on how to bring the big picture into focus, we turned to business futurists who have a knack for forecasting economic and technological trends.

Of the dozens of people we talked with, only one said emphatically that he would not start any business in this economic climate. As for the others, the comments ranged from Michael Dell's saying that passion must be the driving force behind starting a company, to founder Terri Lonier's very specific idea for educational centers for soloists, to futurist Paul Saffo's advice to look for a technology that's been failing for 20 years. Taken together, their comments provide a detailed view of the changing entrepreneurial landscape.


Name: Michael Dell
Age: 36
Location: Austin
Background: Chairman and CEO of Dell Computer Corp., a top 50 Fortune 500 company with sales in excess of $31 billion, which he founded as a freshman at the University of Texas in 1984 with a $1,000 investment

"I was pretty oblivious to the fact that the economy was in a state of turmoil when I started the company. That didn't really concern me too much. I mean, what I saw was the opportunity and the beginnings of the personal-computer industry. And the fact that the economy wasn't doing so well, there was a recession, and the following year would be the worst year ever for the PC industry -- those were just sort of insular facts, and I wasn't worried about any of that.

"You know, when you're 19 years old, the worst thing that can happen to you is you go back to college. So I didn't see starting the company as a huge kind of bet-your-life decision. I wasn't particularly worried about whether I was going to make a lot of money. It just didn't really bother me very much.

"I'm not really a market timer when it comes to entrepreneurship. I think you do it when it feels like it's the time to do it. I mean, I did it when I was a freshman in college because that, to me, seemed like the perfect time to do it because I saw the opportunity.

"I think there are opportunities everywhere. The question is, which ones are the right ones, and which ones are the ones that will make a success? The simple answer to the question 'How do you do this?' is, you find a really large market -- or one that's going to be large -- that's inefficient, and you come up with a breakthrough way of delivering value to customers that nobody has ever done before.

"My personal opinion about the last three or four years is that a lot of people were sort of going and starting these companies because they could. There wasn't any reason why they couldn't, and there were incredible amounts of capital. I would say the worst thing you could do to a new business is to give it too much capital. And that's exactly what we did in the last three or four years with all these new businesses. 'Oh, here's $20 million, $50 million. Go start your own.'

"When it's so easy to raise capital and anything can raise capital, the good side is you get all kinds of experimentation. But the bad side is you get people who try to spend that money. They forget what the fundamentals are in terms of customers and creating value and being disciplined with capital, and you get pretty horrific results. What you have now is more like what the world has been like for most of history and capitalism. The last three or four years were sort of a one-of-a-kind event.

"What business would I start today if I were 19, I don't know. I'd look for a different market. Going into the market that we're in, it's not clear to me that there's a lot of inefficiency. If I were in my dorm room 12 miles away from here and I were trying to think up what is a radically better way of doing this business that Dell and others haven't figured out -- well, we would have already done that because that's our job. Now, maybe there's a college student out there who's figured it out and we haven't.

"All markets will continue to be under pressure in terms of efficiency and pricing. The principles that Dell is applying in this business, in connecting suppliers and customers together -- that's going to happen in just about any business. And those pressures are going to drive down cost. I think it's going to vary a bit by industry. Certainly, if you look at the services industry, efficiency there is measured a little bit differently. It's utilization. It's skills and those kinds of things. But there's a lot of inefficiency that is still being squeezed out of our economy.

"If you look at what Dell has done with inventory, we have four days of inventory. Our industry -- and Dell specifically -- has brought its inventory down much, much faster and much further than most industries. And I think there are similar opportunities in other industries. There have to be. It's not going to be exactly the same as ours, but the opportunities are there.

"I do think you've got to believe in what you're doing. There has to be somebody who's passionate about the product or the service, and it certainly helps if it's the people who are in charge of the enterprise, whether it's a new company, an old company, an entrepreneurial company, whatever."


Name: Gary Hoover
Age: 50
Location: Austin
Background: Founder of Bookstop Inc. (now part of Barnes & Noble), the nation's first book superstore chain; TravelFest Superstores (now defunct), a travel-and-leisure superstore chain; and Hoover's Inc., the company behind Hoover's Online, an electronic distributor of information on companies and industries; and author of Hoover's Vision: Original Thinking for Business Success

"I think it's real important to separate two questions here: One is, What business should you start? And the other is, What business should I start? Because they're very different questions. I think a critical part of deciding what kind of business to start is to look at your own skills and passions and to look at where you stand in time and space in history and geography, and from those, create your own enterprise. If you don't love what you're doing, your odds of success are very, very slim. These people that go through a formulaic or mechanical approach -- I meet M.B.A.'s who say, well, they're trying to figure out which industry is going to go fastest and all that. If it's only that, it's not going to work.

"Four of the industries that I think look most exciting over the next 20 to 30 years are financial services, health services and health-related things, travel, and education. And all four are really based on the continuing aging of the baby boomers. I keep a list of business ideas. Right now there are about 70 ideas on it. It's a very broad range. Hopefully, not a day goes by that I'm not investigating opportunities and passions.

"Now, it might surprise you that I'm deliberately not mentioning technology as an opportunity area. The thing about technology is that, by definition, advancements will die off. Yesterday's high-tech center is today's industrial graveyard. It's a challenge to build businesses that last for a long time in technology. Xerox, Digital Equipment -- you can go on and on. So it's easier to build a lasting business if you make soap or run a retail chain.

"Instead, the first thing I point to is banking. I think banking is a wonderful opportunity for people who want to go in and revolutionize it because a big chunk of it is just dead in the water. The big banks have gotten so removed from their customers and focused on big mergers, which don't do anybody any good. The only change for customers is that they go from being a 6-digit number to being a 14-digit number. And it's just awful.

"But when I see somebody doing something dramatic in the human-gene project and all that, I can say, Hey, you're in the right place. But it ain't going to be me. I don't have a passion for it. I pass out at the sight of a needle! The health-services industry is ripe with opportunity. It's a mess, just like the auto industry was in 1921. It's going to be 10 times as big as it is today. And where there are problems and where there are challenges, there are opportunities. There's just a gold mine there.

"I'd also look at travel and education. As the baby boom ages, these people are going to have all this time and all this money. And a lot of them are workaholics, and they're going to find out they have no hobbies or interests. After a life of accounting and marketing and lawyering and all that, a lot of them are going to say, 'Well, I saw that Ken Burns special on the Civil War, and it might be kind of neat to go down and look at Gettysburg.' They'll realize that there's more to life.

"What I personally am interested in is bringing liberal-arts education on a for-profit basis to adults who aren't pursuing a degree. What I'm thinking about is in-person, face-to-face learning. It might be in a classroom; it might be at a resort; it might be on a cruise ship; it might be in Florence or Cairo; it might be in a big New York City hotel; it might be out here in the hills west of Austin or in Palm Springs or La Jolla. The idea is, get great teachers together with groups of people who have taken their vacation time or their retirement time and said, 'I'm going to spend 3 to 14 days learning one, two, or three subjects.'

"To me the opportunity is really focused on the baby-boomer demographics. A Goldman Sachs partner said to me, 'Well, all investing essentially is demographics.' And I think he's right. I spend a lot of time analyzing an opportunity. So I'm a big numbers guy.

"But I also know there is also a place for intuition. You can't get paralyzed by analysis. I love analysis, but you need to know when to stop it and say, 'Yeah, there's something here' and roll with it. You've just got to do that. For me the trigger is always the day I incorporate, go down to the State of Texas or Delaware or whatever and do the papers. And I haven't done that with this idea. I still have 69 other ideas. I haven't crossed any of them off the list."


Name: Paula E. Chauncey
Age: 44
Location: Boston
Background: Banker turned financial adviser; founder of ?re LLC, a financial-advisory firm serving individuals and business owners; partner of 8 Wings Enterprises LLC, a company that works with and invests in businesses led by women

"The 77 million baby boomers born between 1946 and 1964 have driven consumer purchasing patterns in the United States since birth, and they will continue to do so till death do them part. And that's where some very interesting business opportunities lie, if you want to get crassly commercial about it.

"As the first boomers turn the corner at 50, the gestalt is becoming: 'What's the second part of my life about? What do I really want to do with my life, and how do I figure out financially how to make that possible?'

"I began to cross paths with business owners who'd been in business 10 years, 15 years, and wanted to go off and do something else. But guess what? Their capital was locked up in the business. So now they're wondering: 'How the hell do I liberate myself and my capital from this business that I spent the first half of my life building? And what comes next? What do I really want to do?' As I've gone about exploring this issue, people keep springing up and saying, 'Yes, I'm hungry for it, tell me more.'

"So my business was born, a business in which I work with individuals to identify and deploy their capital resources, broadly defined -- financial, economic, intellectual, creative, and other -- on behalf of achieving their dreams. I work with my clients around the financial-planning and investment-management aspects to finance what it is they'd like to be doing with their lives.

"The boomers are going to redefine what it means to be 50, 60, and 70-plus. And a vital part of that entails helping people get comfortable with the idea that money is a tool; money is a lever; financial knowledge and expertise is a lever to their dreams; it's a lever to the unique vision that they hold for their lives."


Name: Paul Saffo
Age: 47
Location: Menlo Park, Calif.
Background: Technology forecaster and director of the Institute for the Future, a nonprofit research firm specializing in long-term forecasting, alternative-futures scenarios, and the impact of new technologies and products on society and business

"First of all, the dot-com bubble burst, but the Internet is definitely not over. Consumers are using the Internet as much as ever. The bottom line on the bubble is that everybody got the magnitude of the revolution right, but they got the time wrong. They thought this was all going to happen in compressed time. One of my mottoes as a forecaster: 'Never mistake a clear view for a short distance.'

"The fastest-moving part of the Internet is wireless. I don't know anyone who's saying 'I don't need broadband.' The only complaint I hear is 'I can't get broadband.' Or 'It's too expensive.' So here comes wireless, which at a minimal level is going to make that affordable and accessible. But more important, here's why wireless matters: the Internet was a revolution, but it was a revolution that came only to our desktops. And even before the Internet arrived, business was something that was happening less and less at our desks and more and more everywhere else. Well, what wireless does is it delivers connectivity to where we actually live and work and play. And that has huge implications in terms of new ways of doing business, all kinds of new services. So the fundamental question to ask is, OK, In a world where people are carrying the Internet in their pockets, what can I deliver to them that they want? How do you connect people to information based on where they are? That's a big space.

"One big secret is that most new technologies take about 20 years before they take off. And so my general blanket advice is, If you want to find something that's going to take off tomorrow, look for something that's been failing for about 20 years. And wireless data has been failing in one way or another for several decades.

"This is the decade that will be shaped by cheap sensors. Basically, sensors are devices that allow us to put eyes, ears, and sensory organs on computers. The revolution now is machines talking to machines. And I would say, plan for a world where we're no longer alone because there will be machines with rudimentary intelligence working quietly by our sides. We'll all end up not unlike Blanche DuBois in A Streetcar Named Desire, when she says, 'I have always relied on the kindness of strangers.' Well, in this case the stranger is probably going to be a simple little machine with rudimentary communications enabled by sensors."


Name: Bob Johnson
Age: 55
Location: Washington, D.C.
Background: Founder and CEO of BET Holdings II Inc., the parent company of Black Entertainment Television (now owned by Viacom)

"If I were going to start a business today, I would start one that's aimed at the growing-older generation: a medical facility that focuses on total wellness. It's a health and leisure product -- almost like a country club -- that you can join. Two things we know absolutely: the population is getting older, and the older population is living longer. If you assume that's the case, what are these people going to do to remain active? If you can ever combine active and healthy, that's a market for you.

"The other reason I like this concept is that I think African Americans in general have a lower life expectancy because they have less focus on and access to health care. So if I start this business and African Americans say, 'Wow, Bob is starting this business in the health-care field, and this is something I'll look at,' that may focus them on being more health oriented, which would increase the life expectancy of African Americans. And so it could be beneficial from both a social and an economic standpoint."


Name: Terri Lonier
Age: 49
Location: New Paltz, N.Y.
Background: Founder and president of Working Solo Inc., a consulting firm that helps large and high-tech companies connect with the SOHO (small office/home office) market

"Our research shows that there's continuing interest among people in starting their own businesses, but they don't know where to begin. So I'd start a nationwide training center for the self-employed. Think of it as a cross between Sylvan Learning Centers and Starbucks. It would feature in-person centers as well as online programs. A component of the in-person centers would be a showcase for products and services for the self-employed, like computers from Apple, Dell, Gateway, Compaq; software from all the leading vendors -- a place where the self-employed could test-drive things before they buy, as well as network with their peers. I could also see the service's being tied into corporate HR outplacement centers so that as people get laid off from corporations they can go to these centers.

"I envision a standardized curriculum nationwide so people can continue the program if they start it in one part of the country and move away. The training center would feature everything from self-assessment tools (say, asking, Are you a good match for self-employment?), to how to start your business, to how to write a business plan, to how to get funding -- the whole spectrum. The reason it would be both in-person and online: in-person is really needed for the individual entrepreneur-to-be. The face-to-face networking is where a lot of the brainstorming happens, a lot of the reality check. Online would be some self-paced, self-directed learning modules. For example, 'This is the way to do a business plan.' And then the person could come into a center and talk to someone about it. There's a lot of value in a mix of online and in-person.

"The program would offer a certification that would give the person credibility with lending institutions. One of the big stumbling blocks for soloists is when they walk into a bank and the lender asks, 'What do you know about business?' A certificate isn't a slam dunk, but at least it demonstrates you've spent some time learning. Also, there would be some internship opportunities so that people who are just thinking about being self-employed could go work in another small biz to get a reality-based look at the daily operations. For example, if I were interested in running a catering firm, I could go work as an intern with a one- or two-person outfit with the understanding that the labor costs would be less but it would be on-the-job training. The sponsoring business may be looking for employees who are experienced in the field, but it may not have a lot of money to spend on employees. It's a win-win situation."


Name: Watts Wacker
Age: 48
Location: Westport, Conn.
Background: Futurist and author, including coauthor of The 500-Year Delta; CEO of think tank FirstMatter LLC; former resident futurist at SRI International, in Menlo Park, Calif.

"The information society is completed -- it's actually been around about 90 years. Now we're beginning the post-information society. In Alvin Toffler's terms, any time one of these new 'waves' comes in, like when the agricultural economy started giving way to the industrial economy, you have an 'epoch of uncertainty.' Now we're at a point where the uncertainty may never stabilize -- there is such a cascading of the amount of change with the rate of change. It isn't just about the acceleration of the pace of change. It's also the amount of it. The only certainty we can count on in the future will be a continuing state of uncertainty.

"First let me give you some of the building blocks. Every epoch has its organizing premise. When we were industrial, it was reason; when we were information, it was complexity, chaos theory, choice modeling -- you know, the learning how to manage, thriving through chaos, if you will.

"Now we think the new organizing premise is paradox. And so when you're starting a new business of any description, you have to be prepared at the same time for it to be the exact opposite.

"Case in point: the Ford Motor Co. At one end of the spectrum, Ford could become a $500-billion business with 85 employees. That would be one approach to its future. At the other end, it could give every one of its current employees a laptop, which it started to do. The company could then build a vertical portal, which means every employee would go through Ford to go into the ether, and it could make a deal with all of the best-of-class retailers for a meter click on anything the employees buy. You buy anything, I get paid money. It's called click-through revenue. Well, when you have well over 100,000 U.S. employees delivering click-through revenue to you -- you could actually do nothing that would make you more money than that.

"So bringing it back to the question, What kind of business would I start? Whatever it is, I would recognize that whatever approach I'm using, the exact opposite may be just as opportunistic.

"So paradox becomes the organizing premise of the post-information society, just as complexity was the organizing premise of the information society. The key to paradox is that you don't do one or the other of those approaches; you do both. You start your business, and whatever direction you pursue, you think about opportunities in the opposite direction at the same time."

Name: Manny Fernandez
Age: 55
Location: Fort Myers, Fla.
Background: Cofounder and managing director of SI Ventures, a venture-capital firm specializing in information-technology and communications infrastructure companies; and chairman emeritus and former president and CEO of Gartner, an IT information and advice firm.

"I think that the reality of the world today is that we are in many ways going back to the future. What created great businesses in the 1980s is really what's going to create great businesses in the 21st century. In the 1980s the world was pretty much driven by new technology breakthroughs and technology implementations. And as we moved into the '90s we became very much driven by marketing and hype. I think the next few years, through the horizon year of 2006, are once again going to be driven by tech breakthroughs and the implementation of technologies.

"A lot of the technologies are going to come out of universities, research labs, and major technology centers and companies that exist today. It's just not going to be from a one-laptop person on a mountaintop anymore."

Name: Patricia M. Cloherty
Age: 59
Location: New York City
Background: Former general partner and cochair of Patricof & Co. Ventures Inc., a large international private-equity investment firm; current chair of the $440-million U.S.-Russia Investment Fund/Delta Capital Management

"I've been heavily involved for the past 30 years in businesses that are based on intellectual property -- that is to say, on know-how and patents. In today's world I think that's the area to explore if you want to create large value and large benefit. Specifically, I believe that the greatest opportunities lie in science or technology. I've concentrated mostly on biotech as it applies to human health and to catalysts for the chemical industry. So I would really squeeze the tomatoes in those areas.

"I think you start a business when it can be done cost-effectively regardless of the market cycle. Remember, the bench chemist doesn't stop working. In general the United States is a capital-surplus society, which means that when the economy is suffering, like now, you may have to make 100 calls to get your financing rather than 10. But if the potential power of the implemented know-how is attractive, there are responsible people with enough capital to take the risk to invest. Personally, I tend to be a bit contrarian. I generally invest in areas that are reasonably cool, like telecom is now -- there's overbuilt capacity everywhere -- and I try to sell when things are hot. I take a long-term view. I frankly think you have to do that with any value building."

Name: Howard H. Stevenson
Location: Cambridge, Mass.
Background: Sarofim-Rock Professor of Business Administration, senior associate dean, and director of external relations at Harvard Business School; angel investor who's made more than 80 investments; and coauthor of Winning Angels: The Seven Fundamentals of Early Stage Investing

"I think we've learned a lesson that we ought to take to heart from the events of 9-11. We've got to find ways to create redundancies without extra cost. I think that more people are figuring out that in a world where you can't count on everything happening exactly as you think, you need redundancy -- you need multiple sources -- whereas the trend over the last few years has been to get one supplier and beat him up. Even if 9-11 hadn't happened, I think I would have been saying the same thing because redundancy is necessary whenever you have a hiccup.

"Another area that I think will be an interesting one is, somebody's going to invent a concept called a bank. They will take money from people and they will lend it to people without going through the securitization process. They'll make credit judgments based on the old character and collateral instead of saying, 'We don't do any loans except those things we can sell through Solomon or Merrill."

Name: Susan Davis
Age: 60
Location: Elkhorn, Wis.
Background: Founder and president of Capital Missions Co., a social-venture consulting firm that creates networks of investors who invest for both market returns and social impact

"I'd start a business creating strategic alliances between investment-management firms and social-investment firms. There's been a 10-year record of outperformance of social investments over traditional investments, and for more than 5 years social investments have been the fastest-growing segment of finance. So you have two strong trends coming together that create a terrific market opportunity -- outperformance on the one hand and people's desire to invest around their values on the other.

"The big firms need the expertise that the small social-investment firms have, and they can't get it overnight. And those small firms need access to the customers that the big firms have. Only one in eight dollars is now invested socially -- $2.1 trillion.

"The market is poised for an explosion in social investing because pensions are going to be adopting it. If pension managers find that social investments are matching the financial benchmark, and they have all these goodies like clean air and water, then it starts to put them under scrutiny. That's why there's going to be a huge swing in the next five years. So a business that created those alliances would be very profitable."

Thea Singer is an associate editor at Inc. Additional interviewing was provided by deputy editor Karen Dillon and staff writer Ilan Mochari.

Please E-mail your comments to editors@inc.com.