Start Now: 6 Reasons Why This Economy Is Good For Startups

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Start Now: 6 Reasons Why This Economy Is Good For Startups

 

The following is a guest article by Jason Cohen.  Jason is the CEO and founder of Smart Bear, Inc. Smart Bear creates tools for peer code review.  Jason "gets" software startups.

---

Doom and gloom. Layoffs, bankruptcy, insolvency, bailouts. Blah blah blah Wall Street, blah blah blah Main Street.

It's a terrible time to start a company, right?  Wrong!

Here are six reasons why you should start your new company right now.

1.  Low opportunity cost

When the economy is booming, staying in a regular job makes sense. Generous bonuses are common when revenues are soaring, stock option grants are valuable when an IPO is imminent, your resume is improving in direct proportion to the success of the company.  Upside and safety! Fabulous.

Of course that scenario is almost non-existent today.  Most companies aren't hiring; many are laying off. Salaries are low, bonuses are suspended, stock options are as worthless as a vote for Pat Buchanan.

So if the alternative is working for low pay without job security, why not work for yourself and build your startup? You'll be investing your time and energy into something with more potential upside in future. If you're talented and have always toyed with the idea of a startup, financially it makes sense to do it now.

2.  Cheap Talent

It's hard to hire good people because they already have a job.  But right now that's not true -- companies are exploding and laying off everyone, even the stars.

If you're starting a company you're probably looking for a co-founder more than an employee. Even better. In an environment where few companies are hiring, lots of stars (or, better, potential stars) are out of work.

The market is flooded with good people.  Maybe you yourself just got laid off with some co-workers you like!  Just keep your hiring standards high and dig into your social network. (Or go get a social network now. See? That Facebook account really was a good idea.)

3.  Cheap Stuff

Need cheap office space? Layoffs mean newly empty desks in empty offices with phones that still work. Look for subleases where someone is trying to recoup some costs -- often they'll throw in Internet as long as you don't abuse it.

Need cheap furniture?  Companies are dumping stuff into used furniture stores and there aren't a lot of buyers.  Drive a hard bargain.

Need cheap advertising? Ad revenue is drying up as companies down-size marketing budgets and miss their next round of funding. Combine that with lower readership (especially in print) and ad deals are everywhere. Don't listen to the protestations of ad reps -- they're under duress and will take almost any offer. (I'll post later on ways to wrangle with ad reps.)

With everyone hurting, deals are everywhere.  Your expenses will never be lower than right now.  Low expenses mean getting to profitability faster -- exactly what a new bootstrapped company needs.

4.  Eager customers

When budgets are tight, people need to get stuff for free.  Good for open source projects, bad for companies, right?

Good for startups.  Remember, with your first twenty customers you'll be giving away your product for nothing.  You need to -- your product isn't fully-formed, they're helping you work out the kinks, you're counting on them for testamonials, and you need to prove your product works in the market.

You'll be a Godsend to companies who need your product.  Their (lack of) budget prevents them from buying anything else, including competing products that are better than yours. They'll be ecstatic to get something for free or cheap.

Here's a trick: Trade your product for a customer story (that you write and they approve). They'll be happy to tell the world how you bailed them out of their crisis.

I'd like a side of grated cheese, please?

5.  Competitor carnage

Is there an 800 lb gorilla blocking your market?  Or a few hip companies you're afraid to compete with?

They're all in SOS mode now. They have overhead, recurring bills, 12-month advertising contracts and 5-year office leases. Their prices are high and are hard to lower.

They're eating cash.  Those that are unfunded are watching cash reserves fall, computing months-remaining before they'll have to close the doors.  Venture-backed companies are in a bigger pickle -- they weren't profitable before, cash is now disappearing at an alarming rate, and many of them won't get fed again when they run out.

Perfect, if you're a little startup.  You have none of these pains; you're sipping cash with no overhead and lots of time to devote to coddling new customers.  While your competitors convulse, shed talent, and invent stories to calm their doubting shareholders, you've got nowhere to go but up. While they're figuring out how to wring more money from their existing customers, you're acquiring new customers they can no longer entice.

6.  "Now" is always the right time

The most common day for starting a new company is the same as starting a new diet: Tomorrow.

Take the leap.  Not tomorrow.  Today.

The third-hardest thing you'll do is to take the leap. (The second-hardest is getting through the first fifty sales, the ones well before the chasm, when you're sick of tech support and wondering when the real money is going to show up. The hardest is firing someone.)

Never mind all that. Get started. "Now" is always the right time to start, because otherwise odds are you'll never start.

If you don't start, you're doomed to a life of trudging through jobs, depending on someone else for salary and bonuses and health care and retirement, a life's work without ownership or upside.

You're better than that.  That's why you're reading this blog.

So go for it.

--

So, what are your thoughts?  Are you convinced yet?  Still think that toiling away at that (ahem) "stable" job at that Fortune 500 company is the right thing to do?  I realize that taking the leap is hard, and situations vary, but it's good to at least think about it.  Lots of other people are thinking about it (or doing it) too.  The OnStartups group on LinkedIn now has 34,000+ members.  Of the 170,000+ groups on LinkedIn, it's in the top 10.  So, you're not alone.

Posted by Dharmesh Shah on Wed, Dec 03, 2008

COMMENTS

Trade your product for a customer story (that you write and they approve).  
 
No offence, but that is dishonest. It is NOT a customer story. Its a marketing story pretending to be a customer story. 
 
Stephen

posted on Wednesday, December 03, 2008 at 1:13 PM by Stephen Kellett


@Stephen, If the customer is willing to do all the work and write-up, that's fantastic. 
 
Usually, though, people have lots of things to do other than write a user story for you. 
 
The best way is to piece together things the customer has said (or better: written), write up the text of the story, and allow the customer to edit at will.

posted on Wednesday, December 03, 2008 at 1:42 PM by Jason Cohen


Stephen, a customer story is a factual account about a problem your software was able to solve for them (often referred to as white papers). What's dishonest about that? 
 
And, Jason, you're right: the best time to start a company is now; as long as your product is able to save/make money for your customers, they will buy in good times and bad.

posted on Wednesday, December 03, 2008 at 2:22 PM by Derek


Where is that wonderful "leaping" sculpture?

posted on Wednesday, December 03, 2008 at 2:24 PM by Cristina Cassidy


@Cristina: Yeah isn't that fantastic? 
 
First I have to credit the Flickr user who snapped it: http://www.flickr.com/photos/rayphua/188791058/ 
 
It's in Singapore, "near the river."

posted on Wednesday, December 03, 2008 at 2:29 PM by Jason Cohen


Timely post! We're just starting a business. Current job security, future security, and the fact that the fall to the bottom isn't that far these days are the primary factors. "Why not?" is darn near becoming a personal slogan.

posted on Wednesday, December 03, 2008 at 2:48 PM by Mike Shaughnessy


another downside to this market is the companies retaining people and cutting salaries 
 
J

posted on Wednesday, December 03, 2008 at 3:47 PM by Judy


Great piece!

posted on Wednesday, December 03, 2008 at 5:04 PM by denise


So if the alternative is working for low pay without job security, why not work for yourself and build your startup? 
 
Because I need an income to support myself and my family! Duh!

posted on Wednesday, December 03, 2008 at 5:05 PM by DAR


@DAR: Yes, of course if you cannot afford to starve than you cannot bootstrap a company, which indeed is more or less what I'm writing about. 
 
I was trying to speak to folks who could financially take the plunge but who need a psychological and tangible shove. 
 
However, don't forget about angel investors. Sure banks are tight, but friends and family with money are looking for new places to invest. People over a certain net worth always have money to invest in risky ventures with big up-side and that are fun. 
 
Dharmesh is one of them, actually. I am too.

posted on Wednesday, December 03, 2008 at 5:08 PM by Jason Cohen


I would agree with all of this except one small detail. Pownce is going under soon. While they were bought out by 6 Apart, I have a theory on that. I believe the only reason they allowed themselves to be bought out is the fact that the economy is so weak right now, and they want to keep jobs. It seems as though Pownce was no longer profitable, so they jumped ship. By selling off the community they ensured themselves jobs. That's not to say it's WRONG to do so, however it proves that it may not be the best time. 
 
Additionally you have to have the coding skills and everything to do so. Which isn't a big deal within that, however if you want to start it right now you may be unable too do so until you learn the coding end of it. 
 
Final point (I know I have a lot of 'em) It takes money to make money. You have to be able to afford the hosting costs, the office space (if you chose to do that), and employs pay checks. 
 
That's not to say it's a BAD idea, I enjoyed this article very much. However I thought I'd throw in those points. 
 
All the best, 
Oliver

posted on Wednesday, December 03, 2008 at 10:32 PM by Oliver


There was also a very intersting article by Paul Graham of YCombinator - titled "Why to Start a Startup in a Bad Economy?" http://www.paulgraham.com/badeconomy.html

posted on Wednesday, December 03, 2008 at 11:11 PM by Suggestions4Obama


I enjoyed reading the article very much. It reaffirmed the reasons I am starting a business. I am not in the Tech Industry, but the points that were made are universal. (minus the one about giving away product. I don't know if that applies to home decor` items?) I would like to add one thing... when you hear all the negative doom and gloom about this economy, don't let the fear paralyze you. Believe in your strengths and abilities and surround yourself with people that fuel creativity and positive energy. But most important, believe in your product! 
 
Best of Luck! 
K

posted on Thursday, December 04, 2008 at 2:47 PM by Karin Brown


I'd have to agree with Karin here. Giving away product for free is not always feasible or possible no matter which industry your business is in.  
 
At the same time I believe that giving away *something* of value for free is always possible and a very good idea.  
 

posted on Thursday, December 04, 2008 at 3:57 PM by Perisos


@Perisos, @Karin: Thanks for pointing that out; indeed not all businesses can do that. 
 
You're right that my suggestion makes sense for businesses where the marginal cost is low (e.g. consulting, software) but not where you have real COGS. 
 
However, the point can be modified to say "Sell something cheaper" or even "Sell something at cost." That is, don't let it put you further in the hole, but give the customer an amazing deal that proves you're putting as much into this relationship as they are. 
 
Another way of doing that is one-time or short-time deals, coupons, offers, etc.. That way you can always repeat them (if you need to) or not repeat them (if you're now able to get business without it).

posted on Thursday, December 04, 2008 at 5:59 PM by Jason Cohen


That brings up an interesting question... When starting up a business during a recession, should your margins be lower than if we were in a thriving economy? If anyone has an article or any information on that issue, I would love to hear/read it!

posted on Thursday, December 04, 2008 at 6:18 PM by Karin Brown


I agree. If you get laid off or your company is treating you poorly, as long as you're not squeezed for income to pay your bloated mortgage, do it. Strategically, if you can get capital, it's a good time to take on the big boys while they're cutting their budgets. They won't even notice it. Also, if you're innovative and work well under minimal capital, you probably can bootstrap it.

posted on Thursday, December 04, 2008 at 11:31 PM by Do Duong


@Derek ... a customer story is a factual account about a problem your software was able to solve for them (often referred to as white papers). What's dishonest about that?  
 
We disagree on what a customer story is. You are trying to pass of your writing as theirs. That is dishonest. Its like writing a testimonial for a customer and getting them to say "yeah I said that" when clearly they did not. That too is dishonest - it isn't a testmonial. 
 
A customer story is something they write and you edit and ask for approval.  
 
A white paper may well encompass what you describe. A white paper is obviously written by the company. In my view, a customer story is not written by the company. 
 

posted on Friday, December 05, 2008 at 7:52 AM by Stephen Kellett


I am late to this blog and apologize if I am adding already posted info A book I recommend hightly is; 
The Art Of The Start by Guy Kawasaki 

posted on Friday, December 05, 2008 at 10:06 AM by Gordon King


I love this article! All great points and very timely. I know there are a lot of wanna-be-prenuers out there wondering if the time is right. 
 
Personally, I'll stick with my current gig!

posted on Friday, December 05, 2008 at 4:52 PM by Dan Abdinoor


One advantage to starting in these crazy times is that there is no longer a need for funding partners to press a new CEO CFO any of the O's to be thoughtful about money, demanding of a team to produce and realistic in goal setting. Evrone is learning to work lean & that can be a good thing.

posted on Friday, December 05, 2008 at 5:31 PM by Gordon King


The Toilet Paper Entrepreneur Mike Michalowicz is preaching this same philosophy. He even made a video about it on vimeo here is the link...its 17 minutes long! http://vimeo.com/2089707

posted on Friday, December 05, 2008 at 8:05 PM by Scott


Great video  
 
I suggest, for those with a little time, that you go to the TED site. Not directly related to the stat up issues but lots of stimulating material in manageable bits.

posted on Friday, December 05, 2008 at 8:35 PM by Gordon King


Very refreshing take on this. It's trite, but FDR's old line about fearing fear itself is very apt in a startup situation.

posted on Monday, December 08, 2008 at 8:16 AM by Glenn Schmelzle


Am I missing something ? site seems great but it does not look to be getting much traffic

posted on Tuesday, December 09, 2008 at 6:22 PM by Gordon King


Interactive Webinar for ISVs and Technology Product Companies: Where should you be putting your money in 2009? chaired by Mike Thornton, VP Engineering, ImageStream Inc, and Nitin Kumar, CEO, Appulse Technologies. 
 
 
 
This webinar will answer questions like: 
 
 
 
-Is this a good time to invest in new product development?  
 
-Where should you REALLY be cutting your costs?  
 
-What investments should be protecting?  
 
-Are there new growth markets out there?  
 
-Can outsourcing really help?  
 
 
 
When: Wednesday, Dec 17, 2008 
 
Time: 1 PM Eastern Time, 10 AM Pacific Time 
 
Duration: 60 minutes 
 
 
 
You can register online by following this link: https://www2.gotomeeting.com/register/882066746 
 
 
 
I look forward to your participation. 
 
 
 
Best regards  
 
Shweta Gupta  
 
Business Development Manager  
 
Appulse Technologies Inc  
 
 
 
 
 
 
 

posted on Wednesday, December 10, 2008 at 3:56 AM by Shweta


The sculptor(leaping image) is in Singapore

posted on Friday, December 12, 2008 at 1:43 AM by Murali


I agree with the above, but before you start, make sure the economics work out--make sure you know the range of profit you can end up with. 
 
startupfinancialmodeling.blogspot.com

posted on Monday, December 15, 2008 at 11:44 AM by Lance


We are a startup and have many doubts including our timing with regard to the ecomomy. We appreciate the metaphorical shove offered in this article and will press forward.

posted on Monday, December 15, 2008 at 12:08 PM by Tammra


Please, write more.  
I really like your straight forward approach and personalized style. I would love to read more from you.  
 
Or, write me and explain why this doesn't work for you. :)

posted on Wednesday, December 17, 2008 at 10:35 AM by Johnsons Idea


You also have to think with the economy being down, you have no where to go but up. If you were already in a business that is dropping you might have to consider closing down, but when you are a start up, things being a little slow at the beginning means they will only get better.

posted on Wednesday, December 17, 2008 at 2:12 PM by Ann


Are you finding that the economic downturn is affecting you too in the computer industry? Are you an ISV partner? What do you think?http://itservices.cbronline.com/comment/has_the_downturn_hit_the_it_industry_031108 
 
 
 
mandy 
 
https://partner.microsoft.com/UK/program/managemembership/empowerprogram 
 
 
 
Microsoft Empower for ISV's 
 

posted on Thursday, December 18, 2008 at 8:56 AM by mandyjane


"...I would like to add one thing... when you hear all the negative doom and gloom about this economy, don't let the fear paralyze you. Believe in your strengths and abilities and surround yourself with people that fuel creativity and positive energy. But most important, believe in your product!" 
 
 
 
I totally agree with the above comment provided by Karin. I have been noticing that there is a lot of focus and angst regarding recession. If we gloom with the gloom then we are going to end up going one way; backwards. If we think of it as a motivator - yes Jason you have portrayed this in your article here, then we can move on forward and up, and we can get on with it! 
 
 
 
As a Virtual Assistant my startup cost was quite low. Part of the reason was because over the years I had accumulated the equipment required to work effectively from home. 
 
 
 
More information can be found about the Virtual Assistance industry at http://www.VAnetworking.com. This site provides useful information to those who are seeking to become a Virtual Assistant (VA), or are looking to partner with an independent entrepreneur for marketing, secretarial support, word processing, IT support and financial services to list just a few.

posted on Thursday, December 18, 2008 at 9:05 AM by Rachel Reeves


As someone who has not only worked for many start ups but also as an investor I notice during these trying times that there is a lot of consensus decision making. Do we go now, do we wait, will it get better will it get worse, do we have enough money, maybe we need more money, lets ask everyone we know and some we don't and see if we can all agree on the timing, the money, the product. It is like betting on Sunday football. You have your picks but you ask everyone in the office who they like and see if there is overwhelming evidence that you have picked right. It doesn't work. If you believe in your idea, the business model, the product, the team then commit to your vision and step off. The economy and the mood around may be a little grim but that should not be the only thing in your mind.Don't let all this clutter get in the way of your vision, your passion. In good or bad times there is always opportunity for smart ideas and dreams.

posted on Thursday, December 18, 2008 at 9:54 AM by Gordon King


Thanks so much for pointing out some positives, as I'm sure many people feel as I do that all this doom and gloom just makes you feel like giving up. I own a website development company, and have been very fortunate thus far. However, watching too much news can make even the most successful business owner think things are about to go down hill fast. 
 
 
 
www.datexmedia.wordpress.com

posted on Sunday, December 21, 2008 at 4:27 PM by Scott Mahler


In my consulting practice I always stress the importance and the actual power of the New year and using it as a force behind change in your life and in your business. I think it is important to leave as many unresolved problems in this year and try very hard not to carry them into next. Too many people use the coming new year as an excuse to wait on dealing with the tough decisions that are part of everyone's business today. Don't drag negativity in to 2009 if you can avoid it. Look at the things you and your team need to change and improve for the new year. Make a list of all the things that should be done to improve your business, communication,polices and procedures,tough choices about compensation,benifits, commitments,and discuss in December imlement on January 2nd. You will be amazed at how easy people find changing how things are done at work and in our lives if we make the changes in January. New Year, new opportunity for change, new attitudes new energy. Don't miss the power of stating the new year in a new ways.

posted on Sunday, December 21, 2008 at 5:16 PM by Gordon King


Good piece of writting, got some helpfull stuff out of it, thanks!

posted on Monday, December 22, 2008 at 6:40 AM by Dustin


Can someone point me to other sites that have more going on regarding entrepreneurs & startups? This site, OnStartups seems to e running out of steam.

posted on Friday, December 26, 2008 at 5:39 PM by Gordon King


Having taken the plunge to operate my own business 18 years ago, I have had few reasons to go back into the corporate world (only twice in two decades). It is a challenge to take a leap of faith and build your own business when others like family are depending on you. The most important agenda item is a bit of self-assessment before you begin. Are you a risk taker? Are you prepared for a roller coaster ride? Do you know how to sell yourself? Is what you do for one customer replicable for others? Do you want partners, or are you ready to go it alone? Do you have the cash on hand to make it through the first year so that you can really know this is going to work for the long term? Eighteen years later I still ask myself these questions at the beginning of every year, and I continue to operate my consulting practice. I work from home. I spend time with family. I travel twice a year on vacation. I value my clients and they value me. Sometimes we get into disputes about services rendered and bills, but for the most part, these are resolved easily. I wouldn't chose any other way to go quite frankly.

posted on Friday, January 02, 2009 at 8:10 AM by Len Rosen


This is a great article. An additional point is that certain technologies, like alternative energy, biotech, and green are more popular and more valuable during hard times. See my blog at http://startupprofessionals.blogspot.com for details.

posted on Wednesday, January 07, 2009 at 7:59 PM by Martin Zwilling


I would like to echo the comments of many and simply add that if now is not a good time to strike out on your own, when will be? Most people accept that life no longer provides 100% job securiity, headlines scream doom and gloom all the time, so why not just go out there and try to do what you really want, you might like it and lo be very succesful at it.  
 
 
 
But if you never try, you'll never know. 
 
 
 
It ain't going to be perfect, run smoothly or be stress free but you will learn a lot about yourself, business and people. No corporate job will really ever prepare you in the same way to deal with life's swings and roundabouts, the choice curve balls and help you stand tall.  
 
 
 
Carpe diem

posted on Friday, January 09, 2009 at 10:52 AM by Zebedee


I enjoyed the article and this stuff is all so true but just like any other type of investing, it seems that startup investments decrease when the market falls and increase when the market is doing well. 
 
Counter-cyclical thinking isn't stressed enough in our society. If we go with the crowd how are we going to get ahead of the crowd?

posted on Tuesday, February 03, 2009 at 9:32 PM by Curtis


Guys I like this string but too long between postings. Are you all working at any other blogs? 
I am seeing investors, particularly VC's, continuing to be cautious and really focused as much on the team as the idea. With no clear exits, M&A at a crawl it has become all about break even, when, and profitability, when, and please don't ask for any more money.

posted on Friday, February 06, 2009 at 9:57 AM by gordon King


Thanx Gordon. Its really important for learnhub members to get the valuable feedback. It would be really great if you guys can just browse through it once and give your feedback. 
 
We are just 11 months old and have got first round of funding and doing pretty well till date :)

posted on Saturday, February 07, 2009 at 9:49 PM by Saumil


Not just cheap stuff, but free stuff too. 
 
 
 
Atwww.clearbooks.co.uk, a start up can sign up for free to set their business on a sound financial footing. 
 

posted on Saturday, February 14, 2009 at 2:07 AM by Clear Books


LearnHub I have been staying in touch with the site and am going to go on and see about stating a community. Lots of potential. i hope it does turn into a job site.

posted on Saturday, February 14, 2009 at 12:05 PM by gordon King


Hi Gordon, 
 
Do you have your own blog? Actually, we are making a big announcement in 3 days and I can send you the press release tomorrow on Study Abroad if you would like to include in one of your blogs.  
 

posted on Wednesday, February 18, 2009 at 3:39 AM by Saumil


Yes, you hit it right on the head... The only problem is does anyone have time for a start up when they're struggling to pay the bills.

posted on Wednesday, March 04, 2009 at 12:38 PM by Infopreneur


If time was the only problem then there might be easier answers.  
An entrepreneur is a person who has possession of an enterprise, or venture, and assumes significant accountability for the inherent risks and the outcome. It is an ambitious leader who combines land, labor, and capital to create and market new goods or services. [1]The term is a loanword from French and was first defined by the Irish economist Richard Cantillon. Entrepreneur in English is a term applied to the type of personality who is willing to take upon herself or himself a new venture or enterprise and accepts full responsibility for the outcome. 
 
I think it is helpful to go to this definition, there are others, and note the emphasis on the individual and the need to act and take responsibility. Although these are challenging economic times this is not the time, in my view, to let all this doom & gloom get in the way of your idea, your passion. This assumes that you have the idea and the passion to go at it. The time is always right if your individual passion drives you to step off and commit.  
 
Good times or bad there is always an excuse to not go. Focus on all the ways that going can work for you now not later.

posted on Wednesday, March 04, 2009 at 1:01 PM by gordon King


I'm a startup, thanks for the great info. I'm also a user for ClearBooks ;)

posted on Wednesday, April 01, 2009 at 3:02 PM by Mediaroots Video Training


WHere are u located? I can point you at some resources.

posted on Wednesday, April 01, 2009 at 3:13 PM by gordon King


Hi. I'm based in South London, Peckham to be exact, but often travel into central london.

posted on Wednesday, April 01, 2009 at 4:34 PM by Mediaroots : Jack Smith


ahhh I am in LA. I have some contacts in London mostly technology types working with open source projects. 
 
What are u looking for with your NewCo?

posted on Wednesday, April 01, 2009 at 4:52 PM by gordon King


Well basically I am 20 years old and have started a Video Training Company. In America you might have heard of like Lynda.com and Total Training. Well there's nothing comparable in the UK. I am their equivalent. I only use talent sourced from within the British Creative industry. Basically I am always looking to learn. My DVDs cover Photoshop, Adobe stuff, QuarkXPress, Apple Final Cut etc. basically I'd be interested in wherever you feel help might be available, ANY area.

posted on Wednesday, April 01, 2009 at 6:49 PM by Jack Smith


I may well print this article and pin it to the wall above my screen, Dharmesh. Exactly what I was looking for. Thanks!

posted on Thursday, April 23, 2009 at 12:59 AM by Tariq Nisar Ahmed


...and Jason, thanks for writing it! :)

posted on Thursday, April 23, 2009 at 1:34 AM by Tariq Nisar Ahmed


Very true and GREAT time to start on your own. I started a video and media website software company and very happy I did! Sales actually doubled in September when the crash hit and quadrupled in 2009 in the heart of the finacial globally crisis. Why? I have some ideas, but it does show that you can make money online running your own business. Im not yet ready to leave the day job, but its moving ahead nicely www.giantisland.com). 
 
 
 
If you have ever thought about running your own company, do it now! Great time! Just be willing to work out of your garage for some time and go slow. I would avoid the venture capital route unless you fit the profile for hockey-stick growth curves. Thats not most of us...still, if you are an innovator in your field, thats the key to success. Same for passion. In that case, you will do well....but it takes time. 
 
 
 
I have read about all the innovative people leaving many of these companies and starting their own now. The mISV movement was strong before the recession, now its even stronger. Shows that many smart talented people have also become unhappy with the corporate management and ready to reward themselves. Thats the only way you can do that....starting your own business.

posted on Sunday, April 26, 2009 at 12:42 AM by Video Website Software Guy


A quick note from a Silicon Valley lawyer who has represented early-stage startups for over 25 years: 
 
1. Innovation is fed by necessity and down times cause founders to dig deep into their innovative spirit. When we are fat and happy, our incentive to change goes soft. We experiment and change most when we have no choice. 
 
2. Founders in brand new ventures relying on a capital-intensive business model have had to shelve things for now. VCs are clamped down and are mainly supporting existing portfolio companies, if that. Strategic partners are cautious in fronting investments even for strategic opportunities arising in their field. If your model depends on raising significant capital within the first year (say, a Series A round of $2M or more), your venture will likely die in transition unless it can be put in some sort of hold mode (which most cannot). 
 
3. On the other hand, startups relying on creativity and resourcefulness - without high initial capital demands - are as strong as ever in Silicon Valley. Most of them do need some capital (say up to $100K, sometimes less, sometimes a little more) but such capital is available from angels, friends and family, etc. if the venture is a good one. Ramping up during down times will let them hit stride when the upswing comes, or at least that is what my founder clients tell me. 
 
4. One downside in the current environment - pulling together founding teams is harder as people become reluctant to leave paying jobs. Those who have already lost jobs, though, are obviously available and there are lots of them out there, as are those who moonlight. 
 
In sum, if you can build value outside the confines of the conventional VC industry, you are fine; if not, times are not good for your startup.

posted on Sunday, May 10, 2009 at 2:04 PM by George Grellas


JOHN & AND NEWCO starts. Do you seen any value in stating a forum that takes postings from the founders and key players in newly launched business ? The focus would be on sharing company profiles that could result in business/partner opportunities and sharing best practices that could help everyone move quicker.

posted on Friday, June 19, 2009 at 3:06 PM by GORdon King


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