Did you hear the story about the two grad students who tried to make a list of everything on the Web? What about the one about the investment banker who drew up a list of 20 things he could sell online?
 

Yahoo's Jerry Yang and David Filo and Amazon.com's Jeff Bezos are the stars of the Web's creation myths. But their real-world companies developed a buttoned-down approach that serves them awfully well.

Take quarterly earnings. No one has been more effective in playing this game than Yahoo has.

Each quarter, Yahoo begins with earnings assumptions that are more conservative than the pack. And each quarter, the company blows those predictions away.

Yahoo has beaten projections largely by keeping a tight rein on expenses. In the first quarter, Yahoo had lower R&D and administrative costs than competitor Excite had, despite Yahoo's higher revenues. Its sales and marketing costs were only slightly higher than Excite's.

As a result, Yahoo actually posted a profit. In fact, the company would have shown an even larger profit the quarter had it not acquired Viaweb.

Fellow portals Infoseek and Excite are both expected to show a loss when they report result.

Amazon.com, though nowhere near profitability, shares Yahoo's yen to minimize costs. Jeff Bezos located his company in Seattle largely to be near a major book distributor.

But Amazon.com's careful stock shepherding is an even greater example of the company's extraordinary financial prudence. While other Web companies have looked to follow-on offerings and stock swaps to build their business, Amazon.com confounded observers in month by issuing bonds – paying money to avoid diluting the company's stock.

The business press scoffed at a big bond offer from a company with almost no track record. Wrong call. Amazon raised $326 million – $51 million more than its initial goal.

The market loved it. Heavily shorted in few months, Amazon.com shrugged off predictions of collapse to start a renewed surge, rising from the low $40s to as high as $143.75.