There has been a bunch of talk recently about the credit crunch/slowing economies and start-ups. Yesterday I noticed an article on Techmeme: How start-ups can survive by Rafe Needleman.
It’s a great list of things to do, but I think it’s a great list of things that any start-up should do in any economic environment.
So let me add my comments about the list from an Aussie start-up perspective.
Firstly though, I’d question anyone getting more concerned in the current environment. I mean seriously, we’ve known this economic slow down has been coming for some time, they always do. I’ve also heard of issues with the US economy for well over a year. So it’s no real surprise. We should all have a solid business plan that works in and out of a recession.
Secondly, what Needleman outlines sounds like common sense business practice to me. You’ll see what I mean.
1. Advertising is a trailing indicator. People have questioned the reliance of advertising in the start-up world for several years. It works for some, but traffic needs to be dramatic for it to be successful.
2. Rotation into business. Really this is the same underlying issue as number one, and harks back to having a robust business model. He’s also spot on when he says, “to sell to business you need products that are more robust than single-feature Web sites, and you need a top-flight sales team. B2B products don’t sell themselves.” But again, that’s mandatory for any business, in any economic environment.
3. Nobody trusts start-ups. Very true. Again, this applies to any environment.
4. Forget the VCs, head to the angels. Now this is where I get Aussie specific. For Australian web based start-ups, this is going to be the case for almost all of us, and has been the case even through the boom. Aussie VCs are more primed for established companies, not those starting up, and definitely not those based on the web.
5. No credit. Or as Needleman says conserve money, and “lay off the fancy parties and expensive conference travel.” I can’t think of any Aussie startups that have had fancy parties, and again, it seems like business sense in any environment. We all learnt that lesson from 2001.
6. Spend into the recession, or move. This one is great advice, and harks back to old sayings about opportunities in recessions. “Every cloud has a silver lining,” blah blah blah. I certainly agree with one of his last comments, “The clouds will lift eventually–and if not in this economy, then perhaps in another, like China or Dubai.” I was speaking to a web entrepreneur the other day, and suggested that he look to China. I think all Aussie start-ups should. There is far greater potential in China right now than in Silicon Valley. If you’re going to invest some time somewhere, or even relocate, I’d look there for the opportunities. Especially now.
The bottom line from my point of view is that it’s business as usual for Aussie web start-ups. We’ve always had to have our head down and bum up, and we’ve never had it easy from a VC point of view, so what has changed in the last week? Nothing. So lets keep barreling along as normal.
