as the money’s melting down, we’ve seen post after post from venture capitalists.
they are the fairy godfathers for many an internet story. but now, with the economy dipping and diving, some of those tales are looking grim. (or, uh, grimm.)
the view is a bit different from the inside. when we officially started on july 1, we were truly starting up from scratch — no product, no site, just the rough rock of an idea we were anxious and excited to polish. and we set about doing just that.
then, almost four months later, the markets went mad. and we knew we needed to do something. here’s what we did, our startup steps for keeping dollars and sense:
1. pay attention
what happens outside affects you inside. the economy matters, for your product and your audience. do not ignore what’s happening. we thought about what we’re building, and how it would play in a good economy and a bad one. we thought about adjustments we might need to make, and the associated costs and efforts. we’re big on back-up plans.
2. show me the money
repeat after me: i am running a business. i am running a business.
now figure out if – when – how that business will make money or provide an equivalent value in a lopsided economy. we looked at our potential revenue sources, and estimated high and low scenarios. the more information we have, the better equipped we’ll be to roll with whatever happens.
update your operating plan and budget. if you don’t have one, do one now. n-o-w. we have some initial funding, and decided we’d like it to last through (at least) december ’09. so we went through the budget, line by line, and made adjustments. we spent money on a very good biz dev/finance guy in order to do this. money well spent, in our opinion, with an eye on long term survival. we know what we need to do, we’re comfortable with the changes and we did it all in a week or so. we also reviewed it with our investors, to get their input and support.
4. scrimp AND spend
sure, you’ll need to hire contractors instead of staff. and maybe you’ll have to let some people go. or you’ll hold off on a particular product feature or partnership for a bit, or closely evaluate open source tech (we are big into open source). but spend where it makes the most sense, where you’ll get the biggest bang for your bucks. be objective and unemotional when making those decisions. think about the greater good, not your particular pet project. we have a solid core team of 4, and we will invest our time and energy (and our investors’ money) in our product. we know the experience we want to create, and we are unified in our pursuit. which leads me to. . .
stay focused. that’s it. know what you need to do, and do it. do not get distracted. do not panic.
oh, and use common sense. lots of it.
we are aware, but not scared. we know when we’ll need to go for a second round of funding, and we’re doing all we can to be smartly positioned. there are, of course, plenty of unknowns (including how the advertising market will be impacted). we keep up, we think, we talk and we plan. and we do. we are launching phase 1 of our alpha next week.
as always, we are appropriately anxious.
sensibly yours -