If you are trying to start a traditional sustainable company, in many ways, it's easier to do during a downturn.
This was basically the message of PG's recent leaked "bad times" email:
"The startups that really get hosed are going to be the ones that have easy money built into the structure of their company: the ones that raise a lot on easy terms, and are then led thereby to spend a lot, and to pay little attention to profitability. That kind of startup gets destroyed when markets tighten up. So don't be that startup." [1]
What I take away from all this is: have a revenue model built into your startup from the start. Use it. Generate profits of some kind. Not only will this help when you need investors (since they like businesses that can stand alone), but it will help you even more if they don't come.
Interesting. That's completely the opposite of what I was taking away from PG's essay; My takeaway from the essay was that investors want you to swing for the fences; in my mind, that means not worrying about profitability early on.
I mean, twitter didn't introduce advertising at all until they were absolutely huge. I had the impression that facebook was similar (though I could be off; I'm not a regular user of facebook) - I mean, in a very real sense, it's easier to grow if you don't monetize (assuming you can still keep the lights on.)
I get the feeling from PG's other essays that he regards Google, Facebook, Twitter, etc. as the extreme outliers that succeeded in defiance of the "rule of revenue," not because of it.
This was basically the message of PG's recent leaked "bad times" email:
"The startups that really get hosed are going to be the ones that have easy money built into the structure of their company: the ones that raise a lot on easy terms, and are then led thereby to spend a lot, and to pay little attention to profitability. That kind of startup gets destroyed when markets tighten up. So don't be that startup." [1]
What I take away from all this is: have a revenue model built into your startup from the start. Use it. Generate profits of some kind. Not only will this help when you need investors (since they like businesses that can stand alone), but it will help you even more if they don't come.
[1] http://www.businessinsider.com/facebook-fallout-y-combinator...