Lessons Learned From Building Startups During A Downturn
AlwaysOn:
1. If you are doing a startup, you won’t even know you are in a downturn. I sure didn’t. I was so focused on my own day-to-day problems (averting starvation as a single mom) that I didn’t even notice the interest rates of 12-16% around me. No one was going to lend me money anyway, because I was a startup. So why would a downturn make a difference?
2. Downturns do, however, make you clever. In 1980, when I started my first business, secretaries were still commonplace and considered a necessity, but I couldn’t afford one. So I bought one of the earliest answering machines and one of the first personal computers (the Apple 2e). To disguise my poverty, I concocted an outgoing message that enjoined my callers to “trust the technology” to take a better message than a secretary. Ironically, this made me a thought leader.
3. Don’t hire. Hiring people only means laying them off later. Outsource, contract, partner, but don’t hire. It lays you open to so much grief: payroll processing, tax issues, HR issues. You don’t need to own the people.
4. Related lesson. Don’t rent space. Unless you are producing something, you don’t need it. There’s a structural change coming in the commercial real estate market as people realize during this downturn that the work can go to the people instead of the people coming to the work.
5. Forget funding. You won’t get it anyway, and you will waste a lot of time searching for it. In the mean time, your competitors will beat you to the window of opportunity.
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