Editor’s Note: This post was originally published on Seattle 2.0, and imported to GeekWire as part of our acquisition of Seattle 2.0 and its archival content. For more background, see this post.
By Andy Sack
I’ve been noodling on whether it’s a good time or a bad time to be an early stage technology entrepreneur or an early stage investor. I’m sure if I did a survey of other enterperneurs and investors, I’d likely get 9 out of 10 people to say that staying on the sidelines is likely the best strategy for this market. My answer — contrary to this popular opinion — is its a decent time to be both an etnepreneur and an early stage investor. Yes, it is a much scarier time to be either but I’m warming up to the idea that it may be a good time to be taking risk and innovating. Why, you ask?
It’s pretty simple:
- Lack of competitors makes occupying a new market gap easier
Companies that have been in existence for a over a year are all attempting to put out existing fires. They’re in a state of trying to hold onto the revenue and the business of yesterday. The companies are trying to figure out how much sales are going to drop and what is the right size for their company. Should the management lay off people now or after the holiday? The general position of existing companies — of all size — Let’s wait on making that investment while we hold onto cash. People are also less willing ot quit their jobs and become entrepreneurs. - The lack of “cheap” investor capital forces entrepreneurs innovate on obtaining cash and revenues from customers. This forcing function builds the corporate muscle of building cash flows to sustain a business. This is hard but excellent training for both entrepreneurs and early stage organizations.
So, while it is scary out there — with the worst economic climate in my lifetime. I’m thinking that the two points above mean that the landscape for those brave enough or stupid enough to take some risks now might just pay off significantly in the future.
