Through these tremendously tumultuous (to say the very least) weeks in the US market, I haven’t been posting instead focusing on what’s important right now.
A lot has been said about Jason Calacanis’ e-mail, then blog post, about (The) Startup Depression. At the risk of seeming too diplomatic, I happen to generally agree with Jason’s assertions but see how certain viewpoints have a tendency to invoke the ire of certain folks (which I think is OK in the interest of discussion). And the usage of the cliche that it’s always darkest before the dawn is absolutely true. If that seems too terse for you, then you likely don’t relate to too much startup depression talk anyway.
Jason revolves around two internal factors (to focus on) and an external factor (psychologically very important for startup founders):
- How are you executing. And basically how can you improve it. Read “good”, “hard working”, and “determined”.
- How good is your idea. How quickly can you adjust to figure out and adjust your hypotheses. Read “smart” and “flexible”.
- Outside Factors. Once you’ve optimized for the first two, theoretically the only factor between you and success is being able to ride out the “nuclear winter” and how you deal with this. Read “tough”.
There are some very obvious lessons:
- Harder to Get Credit. Translates to harder time to raise money, but still possible when solid value proposition and model is presented
- Spend Less Anywhere You Can
- Find Revenue
- Execute Better
- Focus on Creating Value
From Rafe Needleman’s tips for startups:
- Advertising is a trailing indicator
- US is not the only market
Valleywag today naturally leads the charge in value creation and innovation against more opportunistic business and value destruction.
I’ve personally experienced the creation of maximum value created during down times. The reasons are numerous, but the most obvious is a less crowded field as less determined, less effective competitors drop out of running. Survival of the fittest becomes amplified when there are less artificial tools at everyone’s disposal.
Every startup founder needs to make the decision of when to close its doors. If you have a good idea and you are executing, a down market generally benefits you.
It’s a different yet similar time than post-2000. Today’s online economic model means you can survive by running your company lean and focusing on revenue. The fittest can and will survive, and come out strong at the end. As Jason says, it’s always darkest before the dawn and it’s an evolution not a revolution. How you get there is a different (your) story.
As usual, I’d love to hear any thoughts on the matter.