Recession

Recession

The din around start-ups is reaching unbearable decibels. Cautious optimism seems to be the flavour of the season despite the darkness of recession looming large in every possible industry and region. There is frenzied dialogue in communities on the dos and don’ts, about incubation, about angels. The situation has become somewhat like the Alice in Wonderland’s mad tea party but like in the story one hopes that Alice 2.0 would emerge the winner with her questioning the fundamentals, knowledge and finally asserting as a victor (not a victim) of her circumstances.

It is about seizing the opportunity as against surrendering to circumstances. It is about innovating the way in which your enterprise can be built.

I was reading a slightly older but nevertheless authoritative and brilliant post by Marylene Delbourg-Delphis on Startups-Starting during a recession. I would like to build on some of the wisdom that Marylene brings to the table on her blog:

3 things that she mentions upfront are written across the wall:

1.      Angel financing has dried

2.      A slowing economy has reduced near term growth expectations

3.      Venture Capitalists are focusing on their “portfolio” companies

Build the leanest possible organization

Leveraging friends and other sources of organized “pay-for-skills” sites makes sound business sense. Add to that the potential of leveraging a community of talented contributors whom you can co-opt on a “return on efforts” basis – i.e. pay for efforts or trade an affordable percentage of equity for helping you transform your ideas into products. Building your network of Contributors as against adding full-time headcounts to your organization is an option you need to weigh out. It would in my sense be better to err towards “building adaptability” versus bringing up “another-brick-in-the wall’ enterprise.

Issues around Trust can be addressed by exploring means for validating identities and reputation available both in online and offline formats coupled with simple yet encompassing Teaming Agreements which help protect your IP.

There could be no better time for investing in your ecosystem of Contributors and other Ideators. This is simply because availability of talent and capacity is at an all time high now. And, so are the appetite for co-creation and the available attention span for new ideas.

The key question that needs to be answered for those you partner with is : Does it help them realize their aspirations?. Unless the WIFM (What’s in it for me) Factor is addressed upfront it can lead to uncalled for misunderstandings down the road.

Generate Revenue

Following the early beta approach made famous by Google, one has to be ready to capture monetization and revenue opportunities during the early stages. These could include independent components you have built for your product or exploiting partnering opportunities with another product which compliments yours. We were in discussion today with an Identity and Reputation Solution Provider and saw great sense in partnering with them for our Community Powered Innovation Platform. Our platform which lends itself to Innovation by leveraging a Community of Ideators, Contributors and Sponsors is right now seeing significant potential use cases in areas we had not thought about and promise immediate revenue streams. “While you reach for the stars don’t forget the pearls at your feet”

Less is more Talent and Deeper company culture

I couldn’t agree with this more. Tying revenues to headcount is sure death formula, especially for Startups. Starting with your close contacts you can leverage whole communities to rally around your value proposition (don’t forget the WIFM Factor). It is important to think of an “extended enterprise” right from the word Go. If you can inculcate a culture of working beyond boundaries from day one the chances of your success are greatly enhanced because then you are no longer dependent upon the proverbial gurus “inside” your enterprise or garage wherever you start from.

Gaming the Recession

What are also becoming evident are the convergence and the need for social skills in building our enterprises of tomorrow and the key requirement for a more “inclusive” model of partnering to build them.

Just as the abundance of capital (and the resultant carelessness) of the dotcom era has taught us hard lessons, the current environment of scarcity will also teach us how to realize our goals.

Whatever be the challenges, the audacity of enterprise will always find a way to win the elections to our collective futures.

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