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How to Succeed in the Recession by Building Your Own High-Tech Start-Up



The economic news is truly gruesome out there.  Companies are laying off workers by the thousands.  The unemployment rate has reached the highest level in decades and continues to rise.  Companies that are not cutting headcount may be cutting benefits from 401K match to profit sharing plans to much more.  In essence, you should feel lucky to still have a job.  But for hard driving individuals who thrive on getting things done and achieving success it is hard to be motivated when companies are taking away rewards across the board regardless of whether you are a top performer or a slacker, taking everyone down to the least common denominator: mediocrity.

If you find yourself without a job or you are just tired of the corporate non-sense of overpaid, greedy CEOs, this may be the time to take the plunge and build your start-up company.  You may be wondering if it makes sense at all to start a company in the middle of the worst recession since the Great Depression.  But some high-tech companies are seeing this environment as an opportunity.

The USA Today reported recently on how new tech start-ups can bloom from the ashes.  Looking back you see companies like Cisco that emerged from the 1987 recession, and Facebook and MySpace that came out shortly after the dot-com burst.  Here is what Steve Jurvetson, a renown venture capitalist in Silicon Valley had to say about this subject:

“A good forest fire cleans out the prairie.  Start-ups unburdened by debt or history and cash-rich big companies thrive on disruption.”

Despite of the tough conditions in the IPO market, Mark Heesen, president of the National Venture Capital Association, says early-stage investing was stable at $6.8 billion in 2008 and he predicts it will get higher in 2009 as investors make smaller bets of $200,000 to $500,000 on start-ups in internet services and medical devices.

Here is what Ray Rothrock of the VC firm Venrock has to say:

“It’s a good time to be an entrepreneur and an investor.  It’s time to buy.”

Usama Fayyad, Yahoo’s former data officer and current technology investor explains that large companies are overly sensitive to market numbers and share prices.  This provides an opportunity for more nimble start-up companies who are not as conservative and who are taking advantage of available talent to invest in new technologies.

But how do you build a start-up if you don’t have a ton of money to invest and can’t get credit anywhere?  The answer is bootstrapping.  In the article Web Entrepreneurs Change the Rule of the Game, we discussed how smart web entrepreneurs are taking advantage of open source software such as MySQL and php to start their companies with a few thousand dollars.

Guy Kawasaki gives great advice to aspiring tech entrepreneurs.  Read the article The Five Most Important Lessons for Entrepreneurs for some great tips from Guy on starting a high-tech company.  He has also recently published a new book called Reality Check: The Irreverent Guide to Outsmarting, Outmanaging, and Outmarketing Your Competition in which he covers great “Kawasaki fundamentals” such as:

  • Frame of be Framed – If you don’t frame your product someone else will do it for you, and you won’t like the results
  • Evangelism – Build products that people love and let them be unpaid publicists for you
  • Why some people excel while others don’t – for a prime on this topic see the article How Mindset Influences Success.

We leave you with this interview with Kawasaki in which he talks about how several internet companies are getting started with less than fifty thousand dollars by leveraging open source.  He emphasizes how it is much easier to seek additional funding once you have achieved some level of success with a small initial investment than having to go to the VCs with nothing but a grand idea.  I hope you enjoy it:

 

 





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