On the MUNI this morning, I overheard a guy (I think he built medical buildings) say that he really liked recessions, because they destroy all of his competitors. He’s one of the happy few, I guess. There’s only one of him, but many who will become his competition. When the first Valley Bubble broke, the Web was still essentially a frontier. In the years since, practices have been set – online buying and banking is the norm, Wikipedia.com and Ask.com answer all our questions, social media brings people together from around the world. The last few years have been ripe for startups. People now understand the Internet, they know what to do with it, and they are open to new ways of interfacing with it (see: the Twitter craze). As little as two months ago there was a notion that tech was going to go through it untouched. In this short time, that optimism has begun to fade.
Jason Calacanis (picture right), one of the major voices of the Valley, recently retired from blogging, but has posted a missive from his newsgroup called “(The) Startup Depression.” Due to great demand, he posted the essay; as it has some salient points, I thought I’d pass them along.
Calacanis believes that “50-80% of the venture-backed startups currently operating will shut down or go on life-support (i.e. 3-4 folks working on them) within the next 18 months.” He advises ten things startups can do to maximize their chances of success:
Grow the talent you have
Fire the average people
Cut spending everywhere you can
Find a revenue stream and ride it
Focus on your profitable clients
Make your top 10% better
Hold an off-site breakfast meeting on a Sunday and see who shows up
Build market share
Calacanis’ posting has started a lengthy dialogue. Somewhat surprisingly, many of his respondents are agreeing with him. What do you think about the chances of startup success in this economy? How do Calacanis’ suggestions jive with your own enterprise philosophy?