THE DREAM IN ACTION

Dharmesh wrote another post on why the economic resession is good for startups. I wanted to post 2 that I’ll be keeping closely in mind as SocialDreamium really picks up here in early 2009.

• You need constraints to build great software. If there’s one thing we’ve got plenty of in this economy, it’s constraints. Make good use of them.

• Constraints enforce discipline. You’ll need to, among other things, manage your expenditure, focus on making products that people actually want to buy, learn the difference between cash flow and profitability and figure out how to market on a shoe-string. Now is an excellent time to forge those skills. You will need them the next time things go bad.

• In difficult times, skill and hard work, which you can control, become more important than luck, which you can’t. I like this soccer analogy. If you want to compare my soccer skills with David Beckham’s then don’t put us both six feet away from an open goal and ask us to kick a ball into the net. I might get lucky, and he might show off and miss. Instead, start us off from the other end of pitch against a couple of defenders and a goalkeeper. Then you’ll get a true picture.

Starting a business is risky, but not as risky as you think. The oft-stated fact that 90% of startups fail within their first year is an urban myth. In reality, the four year survival rate for IT startups is over 50%, and there’s no evidence that this is significantly lower for companies founded in a downturn. And most start-ups that fail don’t crash and burn, owing people money and bankrupting their founders. They are quietly wound down, or sold on, and the founders set something else up or return to employment, with the added skills that even attempting, and failing, to build a business bring.

Dharmesh is an obvious thought leader and subject matter expert when it comes to software startups which is the direction that SocialDreamium seems to be taking. With the combination of his expertise and his optimism, I’ll be listening closely.

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