I just found this old hub about cost savings tips that I wrote when I first came up with the idea for HubPages back in 2005. I think I copied it from a word doc to make the Hub. My favorite line in this is about office space. It’s funny how fondly I remember the bike storage closet.
Archive for October, 2008
Venturebeat hosted a short conference today about how to survive in a down market. There is a lot of doom and gloom out there. As CEO, I’m always aware of costs and runway. And. I know it’s easier to save money than to make it. However, there is a lot of missed opportunity happening right now. Lot’s of smart people are getting together to talk about cutting costs. However, for most of the folks that are talking about cutting costs is because they let their expenses get too far ahead of revenue. They hired too many sales folks before they proved there was a market, or hired too many engineers and other people to find that they had too small a runway for the current environment for raising money. These people need to change plans quickly.
But. There are a lot of startups out there that are frugal. And. Very lean. There are also many that remember what it was like in 2000 when the money stopped flowing and had to get profitable. The discussion I want to hear, which nobody seems interested in talking about is how to make money. I’m specifically interested in how in this environment can development cycles be shortened to get to revenue quicker. How to switch from growth without revenues, to growth with revenues. How can companies work together to get ad dollars online. How can we share meetings with ad agencies? What are the best tactics to getting revenue coming in the doors now?
We have a marvelous set of really smart hardworking people hear in the Bay Area. I certainly think we can do better for our employees, customers, and companies by moving beyond cutting cost and figuring out how we can make more money.
He has a leadership quality where he sticks up for people. For people at his rally. For people that work on his campaign. For Sarah Palin. I don’t think it’s enough, but I do like it about him.
When the bubble popped in 2000, that has come to be known as Web 1.0. The companies that survived and some new ones that started were lean, used ajax technology, perhaps used open-source platforms and heavily incorporated social networking features became known as web 2.0.
Some people tried to coin web 3.0. It felt trite and self-serving. It was too early. And. Nothing dramatic enough had happened to create a marker for the industry to line up against.
This past week and weekend there has been lots of talk about how to handle the major economic issues that are facing startups. Whether it is the collapse of the housing market and the credit markets drying up, or if it’s the new (like this week) valuations put on public companies that’s going to affect private company exits, it really doesn’t matter. Because. As an entrepreneur, there is nothing you can do about it. However, this is a defining moment. One that will define the next generation of the internet because of the global economic issues that are facing all of us.
Here’s why. Access to capital will decrease. For really early companies, angels that just lost 20% of their net worth in the last week. They are going to write less checks. Second, VCs are going to spend more time on their existing portfolio and less on new investments. Also, as a consequence of the amount of capital it now takes to bring a web company to market, it became trendy to raise smaller funds. VCs that raised smaller funds will need to go and raise new funds sooner. This may prove challenging to smaller funds that invest in the earliest of stages. The result will be less institutional investors for early stage companies.
Second, engineers are getting scared. Some have been through one failed company already. They read about the headwinds, and they will fly to secure jobs at large companies. They think this will be a secure job with a dependable check. This thinking is flawed - big companies will let go many people. None the less, there will be a flight of workers to large companies. At least they will try to get jobs at fortune 500 companies. This is going to put more emphasis on cash compensation. What I think smart job searchers will do is look for companies that pay less wages. This should be a sign that they are creating a sustainable cost structure. But, they should focus on the equity portion. A talented engineer should be willing to trade income for equity at a startup. And startups should focus on people that understand the importance of conserving cash in exchange for equity. Companies with frugal cultures will do better in the short and long term.
Third, it’s going to be tougher to get revenues for ad supported businesses. It shouldn’t be a surprise that if earnings decrease, so will marketing budgets. Internet, video, and mobile are all going to slow. Brand dollars that are difficult to get will become more difficult. The performance advertisers are much more educated than they were. They are going to focus more and experiment less.
I think we’ve learned a lot about what it takes to build a big business on the internet. Here is what’s on my mind.
1. Getting to scale.
2. Efficiency of people
3. Proving a business model that supports 1 and 2.
What’s the fastest and most practical way to get to scale. Is it rolling up, partnering, or even co-selling? Can two or three companies be but together that reduces burn because of redundant people and creates product synergies that allows them to get to number 3. Making money. To make real money on the web it takes 1 and 2. Massive scale and efficiency. So, perhaps the next generation of the web will be a federation of services that work together. They’ll bring scale by aggregating their users for reach as an example. Perhaps they’ll work so close together that they will share offices and cut their rent in half.
This brings me to what I think the great opportunity right now. Attitudes have been reset. There is a sense of openess. Now is the time for us all to work together. To align our interest, put our egos aside, and find ways to be better together.
In the past few weeks I’ve talked with at least three companies that are struggling and I suspect there will be more everything must go listings. However, when the going gets tough, it creates opportunity. Opportunity to find more talented people. Opportunity to sharpen focus. Opportunity to save money. And. Opportunity to learn.
I’ve been thinking of buying some stocks. I usually only buy mutual funds. But. I’m tempted. I’ve been looking at MSFT. If it gets to $20. I’ll buy. Also. I’ve been looking at APPL. $79B market cap and $20B in cash. The big question is just how much these guys will slow down.
Now. In time of a recession. I’ve always heard to buy tobacco, gambling, and alcohol. That these sectors are counter cyclical. I’ve never been one to prey on someone’s misory. I wonder how many people are adding BUD, WYNN, and MO. What do you think?
