Archive of TheNextWeb.org
Written on November 14, 2008 – 4:50 pm
Patrick de Laive, Internet entrepreneur and co-founder of Fleck
In 1987 we had a major stock market crash, ten years later (1997) another correction of the stock prices made us shiver and in 2001, still fresh in mind, the bubble burst, resulting in a vaporization of almost all Internet related stocks. We can say that 2008 is a dramatic year for stocks, but also for the worldwide economy.
We, the people, lost huge amounts of money (wealth) during each and every of these crises, but many people earned their fortune during these bearish times. The difference between a good economy and a very bad one is that during a good economy the wealth of a lot of people increases, during a bad economy Joe and Jane Schmo loose wealth but there are still big winners. You could argue that under certain circumstances the stock market is a zero sum game, meaning that for every dollar won someone else lost 1 dollar (conventional economics state that the stock market is not a zero sum game, it is not easy to understand and goes beyond the scope of this post).
Lots of professional traders for example earn money when stock goes up or goes down, the higher the swings the better, as long as the market moves these volatility traders earn money. Lets translate this to the web. We could say that there a loads of companies going after gold but are actually poorly managed, have the wrong/right people in the right/wrong place, or anything else that makes it that a company doesn’t work (the Joe and Jane Schmoes of this world). On the other hand we have some professional traders in the embodiment of professional and healthy companies that know there way around, build stuff that people want and earn money. Those are the companies who have the opportunity to grow and come out even stronger of this
The good things of a bad economy
Employee loyalty
Your employees will love you if you nurture them and can give them security that they can keep their job. As it becomes more difficult to find another job, your employees are more likely to stick with you then to try finding another job at another company.
Fire badly performing employees
First of all a bad economy urges companies to think over their strategy and their right of existence. If you have a company and you have employees that do not blend in very well, the crisis is a good excuse to use to lay off some staff. In Europe it is really hard to fire someone, but during the crisis even that is possible. I’ve heard some companies saying that they don’t need to lay off people cash wise, but do so because if there is a time to say goodbye to some people who are more happy somewhere else, that time is now. Everybody understands it.
Down to earth
Second, companies and their employees get down to earth again and focus on stuff they are good at (and makes money). No more wild and excessive parties, no more buying every gadget we think we need. No more Salmon and caviar for lunch (or is this a bad thing..). The message the economy sends us is clear. Hold your horses and go back work.
Less competition
Third, a lot of companies that are badly managed or are underpricing their services in the hope to get some market share will not make it through the downturn. This is good news if you have a company and have positive cash flows. You’ll survive these turbulent times, you might even come out stronger and you might loose some of your competitors along the way!
Internet services might find new clients
Fourth, I think companies are looking for a way to reduce costs, they’ll go over all costs and might find qualitative equal but cheaper ways to get the job done. In general this is good news for Internet companies (you need to have a good product or service though). A senior manager at Amazon mentioned that since the economic downturn they see an uptake in the use of their web services. I wouldn’t buy Amazon stock in the blind based on this info, but see it as an example how high-quality-low-costs services find new clients.
Buy things cheap
Of course, you need to have cash in the bank, but you can buy stuff or companies cheap now. We saw acquisitions in the banking scene (e.g. the Dutch government that bought the healthy part of Fortis, including ABN AMRO, for less than the price Fortis paid a year ago for ABN AMRO alone). But what about buying Yahoo! for almost 1/10th of the price you’d pay 8 years ago (Apple… maybe). And there are a ton of nifty startups out there that build a sweet service and are up for grabs for the bigger fish in the sea (publishers, wake up I’m talking about your chances here).
Buying companies now allows you to grow and will create you a stronger position after the crisis, if all goes right.
Read also this excellent essay of Paul Graham on Why to Start a Startup in a Bad Economy
I hope you like that post!
The Next Web Blog covers start-up news from all over the world (not just the Valley), exciting new technologies and inspiring entrepreneurs. If you're new here, you may want to read our '
About' page and subscribe to our
RSS feed.
Do you have a start-up that we should write about?
Contact us! Thanks for visiting and hope you come back again!
Written on October 13, 2008 – 9:52 pm
Ayelet Noff, Next Web WebTipr Israel
During these times we are all somewhat paranoid about what the future will bring and whether we are entering a startup depression. In his newsletter dated September 27th, Jason Calacanis writes:
“It’s my belief that the economic downturn will be much worse than it is today, and 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.”
Jason gives startups a few pointers on how to survive the upcoming days and advises them to get focused, get leaner, and ultimately get profitable.
R.I.P Good Times
Om Malik had written last week that Sequoia held a meeting of all the entrepreneuers/CEOs of its portfolio companies and advised them to tighten their fiscal belts. Attendees were greeted with an image of a Grave Stone, with the following message: “R.I.P.: Good Times“.
According to The Marker, Other VCs such as Benchmark and Carmel Ventures in Israel have not only asked their portfolio companies to make budget cuts but have also taken their own advice and fired a few employees of their own.
So you may ask, is all this paranoia justified?
Some people in the industry think differently and much more optimistically about to the situation. Fred Wilson, of Union Square Ventures, an early stage venture capital fund in New York City, writes:
“But I do think Jason’s missing one important point in his email. It’s not the venture backed startups that are going to struggle the most…All startups are going to have to batten down the hatches, get leaner, and work to get profitable, but the venture backed startups are going to get more time to get through this process than those that are not venture backed. Here’s why.
Venture capital firms are largely flush with capital from sources that are mostly rock solid. If you look back at the last market downturn, most venture capital firms did not lose their funding sources (we did at Flatiron but that’s a different story). If you are an entrepreneur that is backed by a well established venture capital firm, or ideally a syndicate of well established venture capital firms, then you have investors who have the capacity to support your business for at least 3-5 years (for most companies).
Venture capital firms will get more conservative and they will urge their portfolio companies to do everything Jason suggests (and more), but they will also be there with additional capital infusions when and if the companies are making good progress toward a growing profitable business.”
Lack of IPO’s
According to VentureBeat, Mark Heesen, president of the National Venture Capital Association, believes there is an economic crisis in the lack of IPOs. but he doesn’t agree that so many start-ups are going to close. He believes there are still many angels who will continue to finance innovation among the seed-stage companies.
Mike Kwatinetz, founder and partner at Azure Capital Partners who invested in Bill Me Later during the post-bubble period and sold it recently to Ebay for $945 million, believes that this is exactly the time when investors should look for and target good business opportunities that they could profit from when the market revives.
He raises five good points:
- Since there’s less competition between the VCs, deals are priced more reasonably.
-
Entrepreneurs have a better understanding of how much funds they really need in order to build their business and will stop asking for $40 million.
- The entrepreneurs who will stay in the game are those that really have a passion about building their company and not those adventurous entrepreneurs who come to Silicon Valley to make a few easy millions.
- There’s less competition between companies and there are less startups doing the same thing.
-
One can hire a more skilled staff. Since the last bubble it’s been quite hard to find good people. Now this will change.
Flush out the doomed start-ups
So what do I think? In all honesty, nobody really knows what will happen as the startup world has never had to deal with such economic uncertainty in the past. However, it is my belief that the current situation will only do us good and allow those startups that have a unique offering to survive while flushing out those startups that were doomed to failure from the beginning. As Calacanis writes, companies now need to get better, more efficient, deliver more value, and use more cost-effective means to develop and promote their offerings. But this is not a bad thing. It just means that those entrepreneurs who really believe in their ideas need to find new ways to adapt to the current situation.
As Fred writes:
“I don’t think we are in a “depression” in startup land. We are in a down cycle driven by a bad global economy. I think the web and information technology is one of the few bright spots in an overall gloomy economic outlook. So if you are working on a web technology company, be happy that you aren’t working for a bank, a brokerage firm, an automobile company, or in many other industries. The tools and services that are made in the web technology business are only going to increase in demand over the next five years. But we are going to have to service that growing demand with leaner and more focused businesses and it’s time to start thinking more about profitability and how you are going to get there.”
Survival of the fittest
About a year and a half ago I wrote about the fact that we have too many startups offering us too many of the same things and that it may be time for Darwin’s survival of the fittest to take its place in the dotcom world. I mean, how many social networks do we really need?
As Stowe Boyd, writes:
“How many social bookmarking apps do we need? Is there really a place for seventeen social aggregators, or eleven blog comment plug-ins? Attention to hard numbers and real growth rates might lead hopeful entrepreneurs and investors to get smart fast and drop experiments that aren’t working, and to go back and dream something up that is really innovative instead of just-another-fill-in-the-blank application.”
Get funded one way or another
It’s time to get innovative people. It’s time to make changes. And if you’ve got a good, unique concept, I don’t think you need to be worried. You will get funded one way or another by VCs who still have plenty of dow or an angel who rather keep his money away from the Stock Market these days. Those companies that need to be worried are the ones that offer too much of the same and too little of the extraordinary. Sure, most startups will need to cut their budgets, but what doesn’t kill us, makes us stronger and the extraordinary will thrive. So stop getting depressed. Stop panicking. Depression and panic will lead us no where. Get inspired. This is your time to shine.
Written on October 7, 2008 – 8:30 am
Timo Paloheimo, Next Web Finland Webtipr
Ever since I started blogging about Finnish startups about a year ago, I’ve wanted to get my hands on a list of all of them. That obviously didn’t exist, so I had to compile it myself. I’ve compiled the list from various sources, mainly my own blog and Arctic Startup. At this point the list should contain most of the Finnish web startups, but I must have missed a few. Should you know a company missing from the list, please let me know in the comments.
It was quite hard to categorize all of the startups as many seem to fall into several categories. As you can see from the list, there are a lot of startups in the Social media, gaming and mobile categories. There is a nice variety in the startups and it’s great that they have managed to find some unique ideas.
The List of Finnish Web Startups
Social Networking
Social Networking, Travel
- Dopplr - Share your business travel plans
- Tripsay -Travel information organizer
Social recommendation services
Creating and sharing media
- Comex.com -Create & share funny picture messages in web or using your mobile phone
- Floobs -Build you own online tv-channel
- Innofile -Online file transfer service
- Mahshelf -YouTube for comics/books
- Moogo -Easy creation of web sites. By Ideakone
- MySites -Online desktop for multimedia
E-commmerce
- Fruugo -Trusted 3rd party of E-Business
- Leads House -Sales leads community
- MyCashFlow -Easy to use web shop software
- Norfello -E-invoicing (laskulle.fi) and web-based sending of letters (postita.fi)
- Timalaya -Social shopping space. By Gemilo
Gaming
Mobile
- Blyk -free mobile phone network
- HappyWakeUp -Smart alarm clock on mobile phone
- JoikuSpot -Turns your phone to a mobile WLAN HotSpot
- Kuneri -Mobile software based on Flash Lite
- Senseg -Touch interface technology
- Whatamap -Mobilize your maps
Personal tools
- NewsToScreen -News and ads delivered via a screensaver
- One did it -Test your consumption of natural resources, share the results and reduce it with simple, easy actions
- Scred -Community-oriented cost balancing tool
- SoftColor -Online image processing
- WOT -Free web security browser add-on
Business tools
- Lumo Flow -Social Workspaces
- Numcore -Online monitoring and controlling instruments for the process industry
- Oindex -Public listing of web sites’ analytics data
- Rate Cards -Helps online and print publishers and advertisers find each other
Development services
- HammerKit -Web-based development platform
- nCore -Embedded localisation and user interface products
- VerticeTree -Innovative platforms and applications for the internet and mobile devices
- Zipipop -Develops web-based services for making everyday life easier.
Crowdsrourcing
Written on September 15, 2008 – 10:30 am
Patrick de Laive, Internet entrepreneur and co-founder of Fleck
We have invites for one of the up and coming music services. It is very Hush Hush and there have been a handful people testing it. So still in super secret beta, but especially for The Next Web they have opened the doors for 250 Next Web readers to test this new service. To keep things exciting we like to keep the secrecy and we’ll not mention the name of this highly secret company.
All we are saying is that it is a new music startup (rock on!) and you can be in before everybody else! Well…. unless you promise one thing: They shall take the vow.
The vow (inspired by Shakespeare):
They shall keep the name of the startup secret and they will not tell it to anybody, nor put it they blog, twitter about it or say the name in they sleep to they dear beloved.
OK, here is the deal. We have 250 invites, and if you want one, please leave a comment.
If you’re good at keeping a secret you’re welcome to join the new music revolution.
P.S. Internet Explorer users have to wait another 2 weeks, sorry.
P.S. 2 This service is still early stage, there might be some bugs and/or some missing edges here and there.
Update: I’ll send out the invites tomorrow (Tuesday) morning (GMT +1). Keep it coming
Written on April 16, 2008 – 12:09 pm
Mark Schiefelbein, Product Management Consultant
Several people have asked me to turn the “After the Funding” posts into a document for offline reading. I thought this was a good idea and hope that the document will be a useful checklist for all startups having received funding recently and making plans for the next phase.
Here is a link to a PDF document that provides details on the following five crucial guidelines for recently funded startups:
- Base Decision-Making on Long-Term Strategy instead of Short-Term Constraints
- Set-up a Repeatable Sales Process First, Then Expand Sales Force
- Align Business and Technology around a Product Roadmap
- Establish a Product Heartbeat – a Continual Rapid-Fire Release Plan
- Build a Team that is Smart and Gets Things Done
I will be back in May with more advice on how to unlock startup growth. In the meantime I would be quite curious to hear about what you consider the most significant challenges in the post-funding stage. Strategy? Sales expansion? Roadmap? Releases? Teams? What are the three challenges that keep you awake at night?
Written on April 9, 2008 – 3:37 pm
Mark Schiefelbein, Product Management Consultant
Another Wednesday, another post in the series “After the Funding“. While previous posts have looked at strategy, sales, roadmap and releases, I will today look at people. At the end of the day it’s people that make or break startups. And you need to have the right team on board to succesfully unlock growth.
Build a Team that is Smart and Gets Things Done
The early team is built up of founders and a close circle of trusted employees that have often worked together previously and that become close friends. The team has natural chemistry and complementing skills. You need few management skills and early employees wear many hats, filling in as office manager or accountant when needed.
To expand the business, the team needs to be expanded. Expansion means bringing in seniority as well as volume. The team of founders and early employees needs to determine which management roles can be assumed by the current team and which need to be brought in from the outside. And the founders need to create a recruitment process that consistently lands the startup additional talent.
The founders must realize that it is time to bring in the professionals when they are spending more time learning than leading and the staff starts losing confidence. At the same time, they must avoid bringing in too much senior staff with high salaries and low hunger for success. As for expanding the team, the key lies in hiring people that are smart and that get things done. Read and apply Joel Spolky’s “Guerrilla Guide to Interviewing” and never hire someone if there are any doubts or you are having a hard time make a “hire or no hire” decision.
After the Funding
In the first post of the series I explained that decision-making needs to be based on long-term strategy. Owners need to spend time defining a clear and concise strategy and enable others to make day-to-day decisions based on their roles in the company.
Then I cautioned about the risks of premature expansion of the sales force. Owners must set-up a repeatable sales process first and then expand the sales force.
Then followed a post about the importance of a product roadmap to create alignment between teams, to help business define its target market and to guide technology in setting priorities and allocating resources.
And last week I made the case for your product heartbeat – a continual rapid-fire release plan that provides customers with new features at short, predictable intervals and gives focus to the development team.
Interesting Reads
Here are some interesting articles and posts on hiring:
Written on April 2, 2008 – 8:36 am
Mark Schiefelbein, Product Management Consultant
Welcome again to my weekly installment for startups “After the Funding“. Things are going well with your startup. Your dream is about to become reality. You built the prototype, launched the beta and got the funding! Time to sit back and think about the upcoming challenges you must master to unlock the growth of your post-funding startup.
This week I will look at release planning and advocate putting in place an aggressive yet predictable rollout schedule.
Establish a Product Heartbeat – a Continual Rapid-Fire Release Plan
Initially the majority of development resources went into the core product. A lot of time is spent researching, investigating and fine tuning, which keeps the code base small and manageable. There are few external deadlines and commitments and the release schedule is opportunity-driven. A multitude of different versions of the product are released in response to specific requests of a hot prospect or a brilliant idea of the founder.
As the company grows, the customer base expands and matures. It will soon become infeasible to maintain customer specific versions, each with their own features, defects, hot fixes and updates. And an expanding development team will create management challenges to keep everybody productive.
It is time to introduce your product heartbeat, a continual rapid-fire release program that will maximize productivity and flexibility. It will provide customers with new features and fixes at short, predictable intervals. It will shield the development team from disruptions by frequently alternating periods of focused production with periods of re-planning and re-prioritization. And it will stave off the temptation of short-notice customer-specific releases. To support the heartbeat you should invest in a solid development infrastructure early on.
After the Funding
In the first post of the series I explained that decision-making needs to be based on long-term strategy. In a rapidly growing company, the owners need to spend time defining a clear and concise strategy while day-to-day decision making shifts to others based on their roles in the company.
Then I cautioned about the risks of premature expansion of the sales force. Owners must set-up a repeatable sales process first and then expand the sales force.
And last week I talked about the importance of a product roadmap to create alignment between expanding departments. The roadmap will help business defining its target market and will provide guidance to technology in setting priorities and allocating resources.
Next week I will explain how to build a team of professionals that is smart and gets things done.
Further Reading
- Join the Agile Alliance or read the Agile Manifesto
- Participate in the Agile Commons community - blogs, forums and much more on anything agile!
- Download and start using agile web tools such as Basecamp for project collaboration, XPlanner for agile project tracking or JIRA for combined bug, issue and task tracking
Written on March 26, 2008 – 9:00 am
Mark Schiefelbein, Product Management Consultant
Welcome back to “After the Funding“, the series about key management challenges for startups that have secured funding and now must focus their energy on flawless execution.
Today I will talk about the importance of a product roadmap to create alignment between expanding departments.
Align Business and Technology around a Product Roadmap
Business and technology align easily for early startups. The team is small; business and technology work side by side, often in the same office. There is no standard product to sell and no history of successfully closed deals, so business will want to discuss every deal with technology. And the number of prospects and customers is low so technology will value being involved with many of them to get necessary feedback. All in all, communication lines are direct, there are few opportunities and commitments and hence few challenges to maintain alignment.
As business grows, the sales force will start focusing on volume and there will be pressure to go after prospects that fit the product value proposition poorly. This is especially true when expanding geographically or selling indirectly through partners and resellers. And as technology advances, there will be less and less tacit market knowledge within the expanding development team. Communication will get more complex as more specialized roles such as marketing, support and consulting are created. From now on the company needs to work hard at maintaining focus and avoiding becoming a disoriented “jack of all trades, master of none”.
You will need to introduce a product roadmap to align business and technology. The roadmap will map out product direction over the following six to twelve months. It will help business defining its target market and get an early start at pitching future products and features. It will provide guidance to technology in setting priorities and allocating resources. The roadmap will assure consistent communication which is essential for survival as Steve Johnson explains convincingly by comparing it to NASA’s Capsule Communicator (CAPCOM), the single communication agent between space shuttle and mission control.
After the Funding
In the first post of the series I explained that decision-making needs to be based on long-term strategy. In a rapidly growing company, the owners need to spend time defining a clear and concise strategy while day-to-day decision making shifts to others based on their roles in the company.
And last week I cautioned about the risks of premature expansion of the sales force. Owners must set-up a repeatable sales process first and then expand the sales force.
Next week I will turn to release planning and explain how heartbeat release schedules improve productivity.
More on Product Roadmaps
Here are two good pointers to learn more about product roadmaps:
- The Pragmatic Marketing site with its hundreds of relevant articles is a good starting point. You can also follow their blog, sign up for webinars or subscribe to their newsletter.
- Or read about perspectives on the technical and commercial aspects of software at “Business of Software” - a conference cum blog like TheNextWeb. The conference features Joel Spolsky who I will write about in a future post about creating teams.
Written on March 24, 2008 – 10:49 pm
Patrick de Laive, Internet entrepreneur and co-founder of Fleck
In only 9 days The Next Web Conference 2008 will be held in Amsterdam, The Netherlands. We will post short daily updates about speakers, initiatives and events here.
The Conference basically has 3 different parts. We have Keynote speakers, each sharing their vision on the web in 30 minutes, networking breaks and events and 24 companies who’ll show their cool stuff in 5 minute demos. A lot of these companies are launching new versions, features or whole new services.
Over the 2 days there are 4 blocks of 6 presenting companies. These demos/presentations are 300 seconds and 300 seconds only! The sessions will be moderated by European Venture Capitalists (Robert Schrimpff -TVM Capital-, Yoav Leitersdorf -YL Ventures-, Barend van den Brande -Big Bang Ventures-, and Guido van Nispen -Dutch Creative Industry Fund-). After the 6 presentations, there will be room for questions from the audience and the moderator.
22 of 24 presenting companies are already selected and we’ve had so many companies wanting to fill in the last 2 places that we couldn’t decide anymore, so we thought it would be a good idea to let you decide who you want to see in the last two 5 minute presentations.
This is how it works:
Startups who want to apply for the last 2 demo presentations can do so by attending the conference (for these startups we have a special ticket with 200 euros discount, register with promocode: lasttwodemos ) and sending an email with a 140 character line why they should be on stage during The Next Web Conference.
Next Monday, all contestants will be posted here and via a poll the audience can decide which 2 companies will be on stage. The two companies who have the most votes on Wednesday April 2nd at noon will be presenting on The Next Web.
register for a conference pass via:
http://secureshop.thenextweb.org/
The presenting companies until now:
I’m really looking forward to see all the presentations of these great companies!
Written on March 19, 2008 – 9:00 am
Mark Schiefelbein, Product Management Consultant
This is the second post in the series “After the Funding“. Each post identifies a pitfall you must avoid and tells you how to invest the funding wisely and how to successfully unlock growth of your recently funded startup.
Today’s post is about the right approach to expanding the sales force. It argues that you need to be well prepared before you can ramp up sales.
Set-up a Repeatable Sales Process First, Then Expand Sales Force
Many startup founders are highly charismatic, visionary and persuasive sales people with a great network. They know the product intimately. And they understand the market as well as the future product vision like no one else. This combination allows them to go to virtually any prospect and design a unique solution that at the same time solves the customer’s problem, brings in revenue and advances the product development.
Now you will want to aggressively accelerate sales by strengthening presence in your home market or expanding geographically. But before you start hiring top-notch sales talent and before you start pondering the most promising countries for expansion you need to think about how to enable others to sell as successfully as you did. Building a sales force before you are ready is the “second fastest way to burn cash after buying traffic for a new dot-com” according to Max Bleyleben.
You first need to set-up a repeatable and measurable sales process. Tacit knowledge used successfully by the founders and early-days sales champions needs to be unlocked, captured and made available to the to-be-built sales force. You need to identify the unique selling point, define an ideal prospect profile and make sure every sales person pitches the same, non-customer specific solution. You must invest in sales training. And finally you need to have at least a simple sales process supported by a basic CRM system in place. See Andy Blackstone’s article “Ready for a Sales Force?” for more details.
After the Funding
In the first post of the series I explained that decision-making needs to be based on long-term strategy. In a rapidly growing company, the owners need to spend time defining a clear and concise strategy while day-to-day decision making shifts to others based on their roles in the company. Next week I will highlight the importance of aligning business and technology around a product roadmap.
Further Reading
you?
Email
Facebook
Netlog
Linkedin
Twitter
The Next Web Blog is closely associated with The Next Web Conference which is held annually in Amsterdam, The Netherlands. At this event speakers from all over the world come together to talk about, and show of, the future of the Web. (
