recently I’ve read many articles about how hard the recession is hitting the startup scene or, whether the scene will profit from it and there is just the usual write-off phase for investors.
Do you remember the remarkable amount of startups in 2006 that were captured in this picture? Now there is a updated version from the same author, marking flipped companies (green circle) and shut-down startups (purple crosses).
What does it mean?
Some have been to early, some have communicated wrong, some made a good deal by selling to big corporates and some went into the market with too high ambitions. In the end, no big surprise and a normal free market procedure.
What does it mean for the startup industry? Well, investment bankers are still gone (for good) and only the strong entrepreneurs are holding out for a market change. It might be to early to predict a recovery, but looking at the latest funding and acquisition activities, the market is clearly going back up again. Slowly but steady.
In the end, I don’t understand hysteric reactions and claims like web 2.over – for those who haven’t been out there during 1998 – 2001: there is much more potential in the market today and the “big bang” 2000/2001 influenced the scene much more. Now there is a clear opportunity for everyone out there to come back strong and bold in a much shorter time. Companies (almost) failed in 2000/2001 took 5-6 years to recover. This time it will go much quicker. Everyone is waiting for the next big wave. Be smart and catch it first!
Whether you are already a bootstrapper or planing to quit your job to run for your own startup, I’d like to refer to big wave surfer guidelines:
Big wave surfing is the extreme frontier of a fairly extreme sport. Big waves, or waves over 20 feet in height, add a whole new element to surfing that requires special boards, skills and methods of dropping into the wave. The rewards of surfing big waves are as big as the waves themselves, but with those big waves and thrills comes serious risks
1) Work up to big waves
= stay in the cold water, paddle, work and never ever give up!
2) Get the right board
= get good advisors, let them help you to complete your team – get people “infected” with your idea
3) Tow in
= partner as early as you can with companies that help your startup to grow faster
4) Learn to wipe out
= if your business case is not working out, rethink your business! never more than now, a business model is something that needs to change over time and can be changed so rapidly – you need to add value to a market (see Jeff Jarvis at 2:00 – 3:45).
As Paul Graham writes: “Don’t get too deeply into business models.” It’s good to talk about how you plan to make money, but mainly because it shows you care about that and have thought about it. Don’t go into detail about your business model, because (a) that’s not what smart investors care about in a brief presentation, and (b) any business model you have at this point is probably wrong anyway. If you’re solving an important problem, you’re going to sound a lot smarter talking about that than the business model. The business model is just a bunch of guesses, and guesses about stuff that’s probably not your area of expertise. A VC who came to speak at Y Combinator talked about a company he just invested in: He said their business model was wrong and would probably change three times before they got it right.
Holding on to innovation might not make you rich in the short term, but can change the world in the long run.
And the most important thing:
PS: if you are also interested into surfing, check out the big wave surfing rules 🙂