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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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Will 2013 Be Harder For Startups Than 2012?

Comments (71)

tl;dr: Fuck, I don’t know. I’m not in the prediction business. But plan for it. And behave accordingly.

A lot of people have been talking about how 2013 will be harder for startups and fast growing companies. Tiresome things like the endless discussion about the Series A crunch, more conservative behavior from VCs due to the performance of Facebook, Groupon, and Zynga in the public market, and overall concerns about the economy dominate. Counterarguments prevail as different people try to predict and justify what’s going to happen.

All I know is that I have no idea what is going to happen. The macro is exogenous to me – I can’t impact or control it. So rather than try to predict what is going to happen, I’m going to assume a tougher 2013 for startups until I have evidence that it’s not.

I sent Fred Wilson’s post Advice for 2013: Deliver On Your Promises out to our CEO email list. I felt like Fred’s punch line was powerful.

“So if I can give entrepreneurs a single piece of advice for 2013 it would be to deliver on your promises. Not just to your investors but also to your team and ultimately to yourself. This is no time to be in denial. That is a lethal attribute in times like these.

That generated a response on the email thread about actionable advice. So, I responded with two examples:

1. Recognize that your expense plan will be linked to your promises. Tighten the time frame – do what a lot of successful companies have done in the past. Rather than having an annual 2013 plan, have a 1H13 and 2H13 plan. Lag your headcount growth behind what you need by a quarter, running “hot” on all fronts as you try to get the growth you expect. Hire only when this growth materializes. Then, replan 2H13 and 1H14 at the end of 1H13.

2. Make sure you know exactly how much money your EXISTING investors have reserved for you and are willing to fund you in 2013 independent of any new outside investors. Don’t ever be in a position where you need a new outside investor to continue operating your business.

I’ve got a bunch of others, but I’m curious what you think. Operate under the hypothesis that 2013 will be harder for startups than 2012. What are you going to do different in 2013?

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  • http://twitter.com/jkaljundi jkaljundi

    Thinking of the 20 or so years I’ve been involved with startup scene in Estonia and elsewhere, I would say no: 2013 will not be any harder. Quite contrary, over the years it has become easier each year for the startups. Looking at next year from the Baltic and European perspective, neither of which has been very frothy over the last years, the change can be only for the better. There is much more know-how, there are many more angel and other investors, (startup) people are more educated and experienced, international cooperation is getting stronger etc.

    The point I’m trying to make is that let’s not project startup life only on what’s happening in some single localities like Silicon Valley, New York, Boston or Boulder ;) The big change that’s happening is on the world scene – like you well know with the local Startup Communities.

    So one thing to do differently – be you an investor, entrepreneur, sales person or marketer – is to think what can you do on the international scene, be it Asia, Europe, LatAm or Africa. Travel more. Talk more to people outside your local or regional bubble. Do international experiments. Remember there are 200+ countries across the world. Have fun and enjoy 2013!

    • http://www.feld.com bfeld

      Awesome point – thanks for bringing the perspective from someone outside the US.

    • James Mitchell

      Most of the literature I have read on startups says to focus on your home country first. You understand the culture, language, business customs, etc.

      I used to do LBOs and sometimes I would see a deal in Canada. Canadians look and speak like Americas, I assumed it was no big deal to guy a company in Canada. Yet the few times I looked beneath the surface, there were so many differences that I felt I was walking on thin ice, so I pulled back.

      • https://angel.co/jkaljundi jkaljundi

        I remember trying to do a startup in 10+ countries in parallel. Real subsidiaries, real sales an content teams in each. All different culture. Yes, it was tough and one of the most expencive mistakes done. Succeeded in half, failed in half. It can be a real stretch, especially if you are a management team of 2-3.

        But that was not my point, doing many countries at once. Choose wisely, but remember that we live in a connected world. Look beyond your back yard.

      • http://www.feld.com bfeld

        True. We only invest in the US and Canada. Many of the companies we invest in have global customers, and some have remote development or sales offices early in their lives, but they are US-based companies with US business operations and culture. We made this decision as a core principle when we started Foundry Group – I had plenty of experience previously at Mobius investing in Europe and Asia and I personally sucked at it.

        We’ve always viewed Canada as an extension of the US. We find the business culture and rules to be very similar and there are some extraordinary entrepreneurs and a broad base of extremely smart engineers in Canada.

      • http://engag.io/ William Mougayar

        Hi James, I agree with Brad. I’m in Canada and do the reverse, i.e. business in the US. When it comes to the tech startup communities and operating models, Canada is very similar to the US, if not an exact replica. Perhaps as you move-up into more established PE / LBO ype deals, some changes arise. What were the show-stoppers in your experience?

        • James Mitchell

          The problem I had was that everything on the surface seemed just like the US, but when you got into the details, there was too much for me that was different to understand. The tax law were different, the legal system is different, the labor laws are different. Lending is very different. If I spent enough time I could have figured it out, but it seemed better to me that I spent that time working on a US deal, where I was already up to speed.

    • http://www.engag.io/Abdallah Abdallah Al-Hakim

      A most excellent point. I have a friend who returned from Slush startup conference Finland (http://slush.fi/meet-the-startups/) and the ecosystem in that part of the world is thriving. Helsinki-St. Petersburg-Tallin-Berlin. Also, the startups in the Arab world are pushing ahead despite the obvious clear challenges in Egypt, Jordan, Lebanon and other countries.

  • dvasefi

    Both are great points, it is better to run a tighter ship and be more efficient, than having to face the prospect of a downturn. Personally I see enormous opportunities coming our way in 2013 and the rest of this decade but having a balanced approach will only increase our chances of success.

    Continuous communication will probably be the underlying theme between companies and their investors. Better to over-communicate than under.

  • Vishal Vazirani

    Easy or hard are considerations based on anticipated targets, outcomes, aspired destination… When the founder team is committed and focused and deeply passionate to raise a venture to success no matter what, and all that in order to nurture their own intrinsic passion, their inner zeal, then its not a matter of anything being easy or hard.. its just to be won over.. In such scenarios, costs are taken up seriously, are cut down even 10x, and ways are created even overnight to win over all challenges. Otherwise, things aren’t truly easy for entrepreneurs in general whether its 2011, 2012 or 2013… its a bumpy ride altogether,, because hundreds of factors need to be coincided in order to create a success, just a few here or there going out of the line just do not make much difference in the overall challenges and issues a founder team has to face… and this is true w.r.t. specifically those startups that take care of being profitable right from their seed stage, and take in funds specifically to scale up…

    I deeply believe things will get more easier for entrepreneurs… reasons..

    - massive internet growth on desktop and mobile which hasn’t reached a cliff… increasing consumer base…

    - massive tech growth with more of awesome enterprise, cluster and database management softwares available than ever before, and openstack going in public domain, which will enable more private clouds managed optimally with ease, will aid in better security… I believe it should evolve as the wordpress of the cloud world… enabling more and more ventures to deploy scaling private clouds with enhanced security of being private, and scaling up and down their private instance types based upon the momentary loads on specific types of platform services…

    - massive competition should occur among cloud providers, with SSDs and cheap CDNs, and bandwidth costs going further down…

    - tons of third party network security providers are upgrading themselves on the lines of cloudflare, and that should make life easier for a lot of startup tech ventures, enabling them to take off more fast, test and pivot fast…

    - signs of economic recovery in the west, proven economic boom in the east… and there doesn’t seem any economic downturn in the making with the preexisting economic conditions in Europe and USA, that should get addressed slowly and steadily in 2013 and 2014…

    - It doesn’t seem that the equity markets globally have completed their current cycle of rise… it seems we’re at least 3 years away from yet another global economic crash technically :) So hopefully, there will be a lot of mergers and acquisitions in the tech space in 2013, some kind of consolidation of existing successful ventures while a lot new ones might fail if they just end up as copycats, creating yet another groupon, yet another yelp, yet another payment service, or yet another location based social network or anything similar… Time for new startups to innovate more!

    On the venture capital and investments front, its impossible for me to believe that the more the investment, the more the success… I believe investment has nothing to do with the success, rather its the right approach, optimization of all factors contributing to success result in any success which is real… otherwise convertible equity is just yet another debt! Please correct me if I’m wrong… And yes, patent trolls and improper patent and immigration laws will definitely affect the overall success of any venture in this global space.

    Conclusively, consumers are here, consumers aren’t going anywhere in 2013, rather, a lot more globally are on the way to join the web 2.0 party, tech is booming, expertise is growing, cost of hardware is falling dramatically, mobiles and cheap tablets are on the way, the positive story seems remaining intact and on the growth side! That’s what I believe!

  • http://www.about.me/stevepalmer Steve Palmer

    Fred was right in that there will always be some startups that get the green light regardless of the economic climate or measuring stick analytics. However, I know we can come through on many, if not all, very tangible promises but we are facing a chicken-egg situation. We need to raise capital to come through on the promises. We may not raise without making good on some promises, though. And so begins the cycle.

    Startups like ours are likely to feel this pinch. I can understand why, it’s ok with me from a pure business standpoint – VC/investment is a business. But it is about more than just money. It is access to expertise, talent, networks and more that I feel we need as much, if not more, than capital.

    I try to pick the brains of everyone from VC’s (Brad) to other founders so I keep learning and moving forward. Maybe at some point, regardless of the forecasts or lack there of, we gain enough knowledge and insight that we put together the right formula to get the green light too. Why this is relevant to this post is because we can’t control it either. So we will just keep working our asses off to pull it off.

    • http://www.feld.com bfeld

      “We will just keep working our asses off to pull it off” – perfect, correct, and why you have increased the probability that you will win!

    • http://about.me/kirsten.lambertsen Kirsten Lambertsen

      Ya – my impulse when I see all this “Series A Crunch” talk is, “I’m not letting *that* stop me.” I mean, I can’t imagine having any other reaction to bad news! Otherwise, I don’t see how I could be an entrepreneur.

      You’re in Philly, yes? They have a pretty good tech/startup community going there, no?

      • http://www.about.me/stevepalmer Steve Palmer

        We aren’t letting it stop us either!

        Yes, I am in Philly area (just outside in Lancaster, PA). Community is really great in Philly. Emerging in many ways. It’s a tough place to be as there isn’t a lot of capital in comparison to NYC, Boston and of course, SV. Talent is being cultivated and great startups are being founded but then they leave for the capital, usually to NYC.

        First Round and the City of Philadelphia, among others are trying to find ways to keep people in Philly. Dorm room funds and tax breaks are some things being piloted. I really want to remain part of this community as well as Lancaster, which is wee-tiny compared to Philly. Rather than depart, even if we were fortunate enough to raise, we aim to stay put. We want to become part of the solution.

        Long winded answer for YES, Philly has an awesome tech/startup scene! Thanks for commenting.

        • http://www.justanentrepreneur.com Philip Sugar

          I am in Newark, DE. Philly is an interesting place in that there are more tech companies than you think, but they keep a low profile.

          • http://www.about.me/stevepalmer Steve Palmer

            Oh, absolutely a hotbed. Not sure we try to keep a low profile as much as we don’t get the recognition. There are dozens of serious tech startups/companies worthy of mention!

  • http://www.JamesSiminoff.com Siminoff

    Shit, was it easy before? I wish someone had told me:)

    • http://www.feld.com bfeld

      It’s never easy. I think at the end of the year everyone always gets ramped up about predicting whether it will be relatively easier or harder than the previous year. I suppose this is just human nature, or the nature of the thing that gets humans to read what other humans write. But you nailed it – it’s always hard.

  • http://www.incentivibe.com/ Adeel vanthaliwala

    As a Canadian entrepreneur involved in the waterloo/Toronto Startup (I couldn’t help but remove the hyphen from the spelling :)) scene, I agree that 2K13 will be tough. I’ve heard first hand from the Angel and VC insiders that not only has the money dried up due to frantic investments in the past two years, but also that even those with the money are becoming super super careful as they are seeing their past companies teetering on failure.

    ***Question for Brad:*** In your years of investment, do you find that investments that were made during the tough times ended up being some of the best ones. Because the type of entrepreneurs that sought (and won) your money, probably spent time going the extra mile to stand out and really demonstrated some key entrepreneurial skills ( ex. they hustled harder, showed more traction, brought original ideas, better business models, higher willingness to sacrifice given that they could have packed their bags and blamed bad times etc. etc. ) ?

    • http://www.feld.com bfeld

      I’ve found that amazing companies get started every year, regardless of the cycle.

  • http://www.facebook.com/john.girard2 John Girard

    I find it interesting that the title is “Will 2013 be harder for startups than 2012″ but the focus of your comments is (unintentionally?) on what the capital markets will be like. As an entrepreneur, I like to think that how hard my year is going to be hinges on more than whether there is a series A crunch.

    What are the trends that represent opportunities or threats to entrepreneurs that are *not* capital-market driven? I can think of a few: BYOD to work, consumerization of the enterprise, social media backlash, and open government are all fascinating to me and I think represent huge opportunities for entrepreneurs, independent of what happens in the capital markets.

    • http://www.feld.com bfeld

      While my title could have been “Will Raising Money For Startups Be Harder in 2013 Than In 2012″ I think I actually covered a broader perspective than just the capital markets. My first example was all about performance. That said, I totally agree with you that it’s about a lot more than simply “will it be harder to raise money in 2013?”

  • http://twitter.com/toddvernon Todd Vernon

    Read Fred’s piece and it immediately felt like a pre-echo to the infamous 2008 Sequoia presentation – but more subtile :-) It does feel to me like we are leaving a period of boundless consumer experimentation (and Venture Experimentation) with services and heading toward more back-to-basics business. I think thats good. Both cycles are good frankly and I think the sine wave between the extremes is healthy.

    I do think the more conventional outlook on the business model by investors makes raising money more difficult as you need to have a much more clear understanding of your business model earlier. Sometimes the unique thing that appears in startups is the different way to approach the business model as things become more known about the consumer behavior you generate. So, I think what happens in a “less risk cycle” is the businesses become less risky, but the homeruns become less. I have no data to support that at all. Right out of my ass, but it feels that way. Would like to hear Brads take on that assessment.

    I have been out over my ski tips a few times before, and I enjoy the reminder frankly. Nothing is a constant in our world, surf the wave of whats normal right now :-)

    • http://www.feld.com bfeld

      I think the sine wave is a great metaphor. However, I don’t think it correlates to bigger or smaller homeruns. I think the homeruns are independent of the cycle.

  • Jeffrey Hartmann

    I like to think that 2013 will be an easier year for startups here in Oklahoma. Thanks to efforts by the two local accelerators and some of us trying to build a closer knit community, I think we will have a year full of new possibilities. I am very excited, I feel like there will be some big things that we will accomplish this year. While the dynamics across the more mature startup hubs seem to be in flux, I think many of the smaller communities are experiencing some meaningful growth that will only continue in 2013.

    That being said, I really agree with the sage advice to plan that things will be tough, and adjust your plan accordingly. You should never put your business in a position where you execution absolutely requires additional financing. Figure out your constraints, watch your burn rate, and execute to that. I’m not saying you have to avoid seeking investment, or not plan out what can be done with that additional investment. Just don’t bet the farm on it. As startups, goal number one should be to not die before you have a chance to build your vision. You know your vision will change the world, don’t let it be stillborn. Should a pregnant woman chain smoke and drink alcohol every night? Of course not, you need to take your prenatal vitamins, keep your prenatal appointments, and eat right. Your startup is like a child, treat it with equal respect and you will be rewarded.

    If you start executing purely on hope and don’t temper it with a hard dose of reality, your more then likely headed straight for the grave. Optimize for revenue, do some boring A/B testing, do whatever it takes to get to that strong position. Or, if your pre-revenue or pre-product, figure out the path of least resistance to get there as soon as you can, with the minimal expenditure. Its much easier to fight the marauders when your at the top of a hill, then when your in a deep dark hole and barely see the light.

    • http://www.feld.com bfeld

      Having been to Oklahoma City twice in the fall of 2012, I agree. There’s a nice buzz around the startup community there and great activity brewing as a result of the efforts of a bunch of entrepreneurs.

  • http://about.me/kirsten.lambertsen Kirsten Lambertsen

    I appreciate the calm inquisitive nature of this post (vs hyperbole and putting stakes in the ground).

    I think 2013 will be harder for fund-raising than 2012. But looking at the longer curve, I think 2013 will still be easier than, say, 5 years ago, because of the growth of accelerator and incubator programs.

    And things are definitely easier than they were when I launched my first startup in 2000 (as a “nobody”).

    Early stage startups have more sources for funding now, I think. Organized programs like incubators with pre-seed funds understand startup dynamics – especially leading edge tech startup dynamics – much better than the average angel that I’ve met. (I’m not saying ALL angels, but the majority.)

    That said, I will be placing a laser focus on revenue, more so than I would have if I had been at this stage with my startup at the beginning of 2012. With a freemium model, I might have been tempted to grow free users as fast as possible a year ago to demonstrate traction. As of now, the focus is 100% on getting paying users as quickly as possible and serving those paying users.

    Now, what are we going to do about spell-check flagging “startup” every time I type it? ;-)

    • http://hirethoughts.blogspot.com/ Donna Brewington White

      Insightful comment, Kristen. You have the advantage of the longer-curve perspective and the experience of working the revenue generating muscle. Interesting observation about fund-raising. As an outsider who spends a lot of time looking in, I think I am seeing more “community” forming around startups, from incubators and accelerators to crowdfunding. And it seems like some VCs are bringing more of that community element to their portfolio. I think I am seeing this. Interesting to watch a game changing.

      • http://www.feld.com bfeld

        Some VCs are, but many VCs are merely doing the same thing they’ve always done, which is talk a lot about it, spend money on the surface trying to demonstrate that they are doing it, but not really internalize and activate it in a meaningful way. What firms like True and First Round do stands out as a positive example to many of the other firms, especially ones that have been around for a long time.

        • FAKE GRIMLOCK

          STARTUP INFRASTRUCTURE BIG THING IN 2013.

      • http://about.me/kirsten.lambertsen Kirsten Lambertsen

        Everyone I meet these days in the industry understands the importance of community now for startups. It’s more than just networking. The emergence of co-working spaces is a big indicator, I think, of a new attitude. It’s pretty wonderful!

    • http://www.feld.com bfeld

      I agree strongly that a focus on revenue is important at an early stage for most companies. We’ve always had this as an approach at Foundry Group – we are fine with no revenue as you get the product fit right but once you do it’s time to make money regardless of your growth pace. And having real money coming in gives you a wide base to build on.

      • FAKE GRIMLOCK

        WHICH DAY RIGHT ONE FOR STARTUP TO MAKE MONEY?

        THE FIRST ONE.

    • http://www.justanentrepreneur.com Philip Sugar

      I agree I think early startup stage has been easier than it ever was (and my perspective starts in 1990) for the exact reasons you point out.

      Later (relative term) stage has always been fickle because you have a relative few that can put up $5-$10mm

      But I don’t think that really changes much unless you are a tweener. By that I mean between these two strategies:
      Get as many users as possible worry about revenue/profits later
      Work as hard as you can every single day for revenue so you can hit breakeven as fast as possible.

      I think if you are trying to do a little of both which many are doing the runway is going to get much shorter

      • http://www.feld.com bfeld

        Correct. Pick one. Don’t be a tweener.

    • https://angel.co/jkaljundi jkaljundi

      Not sure fundraising will be harder across the world. Even in the US, it might be somewhat harder in Silicon Valley, but much less say in Boston or Austin. Don’t think it will be any harder in Europe, Asia or Africa, may be even easier.

    • FAKE GRIMLOCK

      #IN2013 INVEST IN VETERANS FROM 2000 STARTUPS. THEM KNOW HOW TO SURVIVE OUTSIDE OF BUBBLE.

      • http://about.me/kirsten.lambertsen Kirsten Lambertsen

        From your lips to investors’ ears :-)

        • http://twitter.com/CynthiaSchames Cynthia Schames

          Kirsten smart lady! BACONNINJA APPROVED!

          • http://about.me/kirsten.lambertsen Kirsten Lambertsen

            Now the party’s startin’!

  • http://www.eliainsider.com Elia Freedman

    It’s a start-up, right? Aren’t they all hard, no matter the year?

    Love this line by the way: “The macro is exogenous to me – I can’t impact or control it.” My last post for the year, at the risk of promoting my own blog inappropriately, was a thought rolling around in my head for a long time. People always say “don’t sweat the small stuff” except the small stuff are the only things I can control. The post is here if you want to read it: http://eliainsider.com/2012/12/21/the-small-things/

    Happy new year, Brad, if I don’t comment before then. Here’s hoping the new ones are always better than the old ones.

    • http://www.feld.com bfeld

      Elia – I loved your post. Don’t ever be bashful about posting links to relevant posts in the comments, especially if you’ve written them. Great stuff – right on the money.

    • http://www.justanentrepreneur.com Philip Sugar

      Upvoted.

  • http://engag.io/ William Mougayar

    Your #2 is golden advice. 

    But difficult / easy is a relative thing, isn’t it? 

    Yes, if you had it easy in 2012, 2013 could be more difficult. But if you were slugging it in 2012 & now seeing good traction, then 2013 will be easier. 

    I think the year-end is an artificial signal for good/bad things. Cycles shift gears because of external events, not Dec 31st. 

    • http://twitter.com/andyidsinga andyidsinga

      awesome point William.

    • http://www.weeklyhustle.com/ Ryan Ridgway

      So very true William! Thanks for enlightening me on that. It’s all relative, and rarely scheduled. I think 2013 is just as good time as any to seek inspiration and still create sustainable traction through a start-up or small business. Technology ceases to settle, and new opportunities to be ingenuitive arrive every day. It’s all in your perspective. Cheers – Ridg

    • http://www.feld.com bfeld

      Bingo!

    • http://amble.com/ambler/ Amble Resorts

      Time itself might be arbitrary, but the collective consciousness turns the change from one year to another into something significant. Others (investors, customers) might very well view 2013 as a time for change, a time to take a risk, try something new, pursue a promising project… So the wise entrepreneur capitalizes on this by doing all the hard homework so as to be capable of making their very strong case, and concisely, to external parties, out of a highly informed stance. Lao Tzu and other great Asian philosophers spoke and wrote unforgettably; mere snippets of their teachings linger in the minds of folks living today… and their wisdom evolved out of both scholarship and reflection.

      Be an unforgettable, irresistible entrepreneur by engaging with both of these disciplines: study hard, and think big. There’s no easy year or hard year, because this is your constant quest.

      Cheers and best to all in 2013,
      Rachel Kowalczyk, Managing Editor, Amble Resorts

    • http://hirethoughts.blogspot.com/ Donna Brewington White

      I second Andy.

      BTW found this post via Engagio discovery.

      • http://engag.io/ William Mougayar

        Cool. Thx

  • http://twitter.com/tmcgove Tom McGovern

    This a great reminder to deliver… one thought is that in late 2008 Sequoia suggested pulling back on expense growth and even cutting to the bone putting which put everyone in a tail spin. However a few companies invested like crazy and flourished. So there is no time to be in denial but we should not let opportunities slip away.

    • http://www.feld.com bfeld

      I’m not sure that your interpretation of what happened with Sequoia’s RIP is correct. I know a number of companies that dramatically slowed down spending by pausing expense growth and/or cut headcount by 25% – 33% who ended up benefiting enormously from this reset in expectations in 2009 and saw the benefits from this in Q409 forward.

    • http://about.me/ricfulop Ric Fulop

      I was a Sequoia entrepreneur in 2008 and remember the moment vividly. We pared back and it really helped the company get through a crisis. The truth is that today isn’t nearly as bad as 2008 was and the companies you are probably mentioning are a handful of exceptions who were either very early stage like twitter or rare rockets like Facebook. My two cents after watching this movie over 20yrs Is that these dips are great times to invest in early stage and produce the best mega-hits.

  • Luke Vernon

    Parallel to this, I really appreciated your insight in the WSJ article yesterday. In particular, the following quote struck a cord with me and reminded me how important it is to zig when others zag and never stop working my ass off (thanks, Brad!): “If you are an entrepreneur and following a trend, you are too late. You want to be creating the trend that other people are following. And then yo need to work your butt off to stay ahead of them every single day…”

    • http://hirethoughts.blogspot.com/ Donna Brewington White

      That’s a money quote. I can’t wait to read the article.

    • http://www.feld.com bfeld

      Thx. I’ve always believed that deeply. And I think it’s even more true today.

  • http://www.engag.io/Abdallah Abdallah Al-Hakim

    Expect the best but prepare for the worst. I personally don’t get all these articles trying to make predictions. Has there ever been an article in the past predicting an easy year to grow startups and to raise money. I have not checked but I don’t believe so.

    • http://www.feld.com bfeld

      I don’t get the predictions either. In fact, I reject them.

      • http://www.engag.io/Abdallah Abdallah Al-Hakim

        I was never a fan and became extremely annoyed by them ever more after reading Nassim Taleb’s Black Swan. FYI. his new antifragility book is a gem!

        • http://www.feld.com bfeld

          Antifragility is on the list!

  • http://twitter.com/brianprogrammer Brian Andersen

    It continues to get easier to create a company.

    I continues to get harder to fund one without revenue.

    That is my prediction.

  • http://www.photospotland.com/ Mario Bucolo

    it’s a return to manage a company without see it as a startup (in term of no revenue model, no biz, cash burn) real entrepreneurs will be advantaged in this way to run a startup. But a part usual traction oriented expense (marketing, pr, social etc) that can be limited allowing low budget and lower seed…going to revenue mode implicate for example to hire sales persons or a chief revenue officer…in US at witch salary? for info I received around 250k$ yearly plus bonus. This need change cash need for a startup.

  • http://www.facebook.com/bhakdi Johannes Suriya Bhakdi

    Thanks for the great article, Brad. One idea: when we talk about “startups”, we address a very broad range of companies and stages. And inmho,the concerns of the vast majority of startups – those without funding and traction – are very different from those at later stages, and within those there are huge differences between angel / Series A vs. close to IPO. I recently had a long conversation with a Goldman Sachs analyst about startups and wondered why we had so different opinions, until I figured out that they view “startups” as tech companies 1-2 years before IPO (meaning: 100m+ valuations, mostly significant revenue and profit).

    You don’t need to be concerned about a series A crunch (that might very well disappear or even reverse in 2015) if you are looking for seed / angel funding. In general, I think life becomes easier for founders at the earliest stage who look for community, feedback, inspiration and knowledge thanks to a rapidly growing community of ecosystems and facilitating resources.

    Once more (>250k) capital comes into play, I also think things will get a little harder next year than in 2012. But this also can be interpreted as a good thing: a sign that our innovation infrastructure becomes more professionalized, and investors develop a better understanding how value can / should be created in the post-angel phase. Vision and dreams are great; supporting them with evidence (revenue or significant user traction) is even better, especially if you use other people’s money.

    So, inmho we should start making a clearer distinction between the needs / challenges of idea-stage startups vs. those that got significant outside funding. These different stages have very different challenges, needs, and reference systems, and it is important we make this distinction to deliver clear ideas and advise to founders in these different stages. It’s the next step in the evolution of startup conversation. Let’s give the fish some legs :)

    • http://www.feld.com bfeld

      I agree that we need a different word for “startups” and for “companies that are now scaling.” Some people call them gazelles, sometimes they are called “scaleups”. I’m not yet happy with any of the phrases.

  • sbell22

    Of course it’s going to be harder in 2013! We have had the biggest bubble ever, in terms of startups getting funded. Many of them have no business model. It has to end. And it will end soon – probably in 2013. Not being negative, just come on – a bubble is a bubble. A lot of Angels are going to lose their shirt.

    I’m willing to put a stake in the ground on that one.

  • MJ

    Good advice. I believe adaptation is key. Be aware, informed but not scared. I tend to think that if you operate in a reactionary state, the market or whatever else will cause you to lose focus on the core mission (promise). There is no shame in being leaner, meaner, more efficient. Good or bad markets, it is undoubtedly hard. I think it is a great challenge and opportunity to rise above and be a success in a tougher market. Imagine what will be said about that and the attention you will attract…count me in.

  • http://www.clickdesk.com/ Sudarshan

    People who are starting out in 2013 might do things differently, but for startups that already have a decent revenue model, a lot doesn’t change – stick to your promises, great service, keep trying to add more value to your offering and always keep listening to your customers.

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