In downturn, entrepreneurs think small
How is this downturn different? Bloggers of all kinds have been busy reading the economic tea leaves. Many in the tech sector find themselves comparing the current situation with the dot-com blowout of 2000. Bijan Sabet, a venture capitalist at Spark Capital in Boston, assessed where things stand.
Most VCs and entrepreneurs have been changing their strategy for a while now, actually. Yes, the last few weeks have been incredibly ugly, but we have been telling our portfolio companies for the past six to 12 months to raise more, take on more dilution, spend less, and focus on revenue. And I know our firm hasn't been the only one with this mantra.
I think we will see a lot of small exits this year. There [are] a bunch of interesting small companies that haven't raised a lot of money but have built valuable stuff. I've heard some good arguments recently that suggest we could see strong tech IPOs in the second half of 2009. Right now, there are many good private companies generating profits that can't do an IPO this year.
In the last downturn a lot of folks decided that they didn't want to be entrepreneurs after all. They felt burned by paper [stock] options that didn't work out and they sought comfort in large companies. I'm seeing almost the opposite right now. More people are leaving big companies (by their choice or not) and looking for something that they can control or have more influence over. The only negative, I guess, is not everyone is built for a start-up. It really isn't for everyone. We'll see how that plays out.
Bolstering Boston. At an event last week organized by Charles River Ventures, entrepreneur Jeff Bennett spoke on a panel that focused on making the Boston tech economy more competitive. Bennett was an executive at the search site Lycos in the 1990s, and is now chief operating officer at NameMedia, Inc., a Waltham company that trades Internet domain names.
For many reasons we have not been able to spawn the next Lycos or Monster yet. I am an optimist and I am committed to the East Coast. I contend that we have the ingredients in this area to be much better than we are. I do not subscribe to the fact that the way forward is to "copycat" West Coast ideas, methodology, or culture. We have to be who we are and celebrate this. As one member of the audience said last evening, the reason we don't all hang out in cybercafes at night is that in Boston we have a more diverse lifestyle, we have winning sports teams, we have theater, we have museums, [and] we have a life here.
Having said that we need as a community to look, embrace, and act on several factors for the future:
Entrepreneurs need to come together more, not only in events sponsored by VCs, but as a community to share and support each other. There are several groups that are splintered, [but] we need more of a concerned effort to unite and help each other. We need to celebrate ideas and create buzz around them for the betterment of our whole community.
East Coast schools are not like Stanford. We suffer from professors on the dole at these schools who themselves have run from the competitive rigor of free enterprise. Having said that, the kids at these schools are the source of the future. As an entrepreneurial community we must embrace these students and get them involved in ventures and welcome them into this community so they will want to stay here.
iPhone owners for Obama. Hewlett-Packard executive Antonio Rodriguez checked out a new application for the iPhone, released last week by Barack Obama's campaign. (There isn't yet a corresponding pro-McCain app for the popular Apple mobile phone.)
Two nice details are the "days till the election" counter and the phone-sized encyclopedia of where Obama/Biden stand on all of the issues. This latter feature would be even better if it included the equivalent parts of the McCain/Palin stance - because as the counter gets below 30 days, many of us will find ourselves in lunchtime conversations arguing about the difference between the candidates - a handy use for the pocket reference.
When you click on the "Call Friends" option, what you get is a re-sorted version of your address book based on who you know who lives in battleground states. So for instance, all of the Ohio contacts come up first, followed by New Hampshire, etc. You also get a new button next to each name that lets you classify the state of that given contact - i.e., "called," "left a message," "not called," etc.
Seen an interesting local business blog item? E-mail kirsner@pobox.com 