5 career alternatives for start-up founders during the recession

I remember the recession in the late 80’s all too well when I got kicked out of my first tech job. Now I can’t be made redundant because I own the company. However, we’ve formed our tech start-up just as the recession is getting hold. Hummm, that’s either great or lousy timing.

Are you as tough as old boots?

Some think it’s bad to start now. However many start-up founders including Kevin Rose; Bob Warfeild and Ross Mayfeild say it’s great timing. However the VC’s ain’t quite so positive. The debate and uncertainly goes on and on. I beleive there are five career alternatives for founders like me with new or very early stage start-ups:

1. Do nothing.. Pretend it’s not happening. Bury your head in the sand. Problem is that your current product may not have any demand. By following the same plan you could be throwing your hard earned savings away.

2. Bail-out and go back to work?The trouble is the everyone else is looking for a job and anyway you have turned your back on working for someone else. Plus if you are in sales and marketing, as in my case, it will take a long time to reastablish yourself and by then the recession will probably be over.

3. Bail-out and go on a very long holiday vacation?That sounds nice but it won’t pay the bills and probably will cost alot unless you live in Goa (India) on a few rupee’s a day. Anyway I’ve done that before for a year on a round the world ticket. Today its not an option as I’ve got kids. Plus I’d be bored after a couple of months.

4. Bail-out and give up? Mike Michalowicz wrote a great post on the difference between quiting and failing. So, don’t quit before you have even really tried. Business is still being done out there, it’s just the focus of needs is changing.

5. Stick with it!Yes it’s going to be emotionally tough but it was anyway. Yes your money is going to have to last longer and the VC’s will be hard to convince. And yes the prospects are all going to say NO! However if you have got the right product at the right time with the right prospect they will say YES. I think now is not the time to panic but to see this as an opportunity. Change means opportunity and boy this looks like its going to rain with new opportunities if you look for them.

There is lots of good advice around including Ryan Carson on how to recession-proof yourself and Techcrunch’s The First-Time CEO’s Recession Survival Guide. There is even a new community website for new start-ups in the recession. Now that’s an entrepreneurial idea.

Paul Graham believes its the quaility of the founders that really counts, recession or not. As the saying goes – ‘When the going gets tough, the tough get going’.

Christmas nightmare on Wall Street

Christmas has gone bad for the Bankers.
Dan Aykroyd in Trading Places(1983)

Click play below for the the best scenes from the Christmas film Trading Places (3:35 minuets). Caution:  May offend some viewers:

* * Wishing all my readers a Merry Christmas * *

Organic Google search highly trusted with blogging influencing results

In a recent report Forrester Research are advocating an end to corporate blogging. This has resulted in a debate with Richard MacManus  of ReadWriteWeb. I agree with Richard that  readers develop trust with individual bloggers over time.  Bill Ives discusses can you trust a blogger in detail. However I also agree with Forrester that corporate blogs are struggling to gain traction. What really caught my eye on the Forrester chart (below) was that search is such a highly trusted information source at 50% and personal/corporate blogs so low at 18/16% respectively.

 

The question is then is it worth all the effort to produce blogs with such a low trust rate? Well, blogs and search ranking are highly related. In Google ranking research by Marketing Sherpa and published by Hubspot 75% of search readers click on the organic results and the remaining 25% on the sponsored links. Note that Google has a 70% dominance in search. This Google results page shows an eye-tracking heat map that shows where on the page people look and click on the page of search results.

 
Google’s golden triangle of organic search

One of the best ways to rank highly on organic search is to actively blog and engage with others. I disagree with Forrester’s conclusion. Corporate and personal blogging with a genuine human approach that brings value to the reader can indirectly result in trust  by increasing organic search ranking. 

However it is a major challenge to be in Google’s golden triangle top three position on a popular Google search term. But also consider that most people only read social media with just 1% writing as discussed by Janet Lee Johnson. So if you don’t put in the effort to climb the search ranking engine you’ll never get there.

Scary Gehry

With my new found fascination in modern art academic buildings (as I now work in one) I’ve stumbled upon another one:

Frank Gehry’s Princeton University, USA new Lewis Library (2008)

I’ve always been interested in Man’s symbolic construction projects. They bring structures which are grand, bold and iconic. They also result in designs which can be controversial, excessive and unpractical. The Lewis Library has received some harsh comments on Princeston’s Alumni Weekly. But there are rave reviews from designers.

The Lewis building lead me to find a whole series of Gehry designs scattered across the globe including another acedemic and commercial buildings:

Gehry business education building (2005)Case Western Reserve Cleveland, USA

Walt Disney Concert Hall (2004) Los Angeles, USA

The Rasin Building Prague (1996), Czech Republic

In an interview with Gehry he believes that “architecture is art”. I prefer the Walk Disney design as it seems most fitting for the subject matter. What do you think?

The future of software: Open source, but where’s the profit?

I’m fascinated by Open source. It’s changing how software is developed, marketed and customised but can commercial Open source firms make healthy profits? They have been grappling with this challenge since the 90’s.  “Keith Curtis, an 11-year veteran of Microsoft, believes deeply that open source is the future of software” as discussed by Paige Finkelman. It seems the old proprietary and open source models are dead and commercial Open source vendors are now evolving into a mixed hybrid model.

Is this the key to a profitable open source model?

This year I met two evangelical CEO’s of commercial Open source firms, Ismael Ghalimi of Intalio and Aaron Fulkerson of Mindtouch. Ismael attempted to commercialise with GPL licencing but had to restart his business twice, racking-up $43m $34m in debt investments. A recent report form The 451 Group entitled “Open source is not a business model” concludes,“There is very little money being made out of open source software that doesn’t involve proprietary software and services.” Stuart Cohen thinks that the Opensource model is broken and “open-source companies that rely on support and service alone are not long for this world.”

Open source firms such as Intalio and Mindtouch are increasing becoming a mixed model supplying both open source community versions and chargeable enterprise editions which are reliant on proprietary code. Whether they will make healthy profits is yet to been seen. We know it can be done. Red Hat is the leading Open source commercial provider with revenues of $400m (2007). Profiteering from an aquision as good as the Sun $1b purchase of MySQL is unlikely to come around again soon because the revenue challenge remains. MySQL makes a mere $60m from support and services. This compares against Oracle’s $22b in licence and service revenues.

Some concider MySQL a growing threat to Oracle. Conspiracy theorists see the Sun deal as trying to stop Open source growing so that the perpetual software vendors such as Oracle can continue to make huge profits. It turns out Sun’s aquision of MySQL is not going well with latest version having major bugs. Ismael believes that “traditional Software is a dead market with propriety software companies no long existing in the future”.

I believe this new hybrid Open source/propriety mix is the future of software. Open source brings firms like Intalio and Mindtouch a huge developer community and a powerful marketing channel.  Customers get cheaper, better software which is much easier to customise and integrate. This market change will spell the end of enormous profits for future software vendors.

However today’s big software vendors ain’t going down without a fight. Microsoft have taken a strong stance against Open source with accusations of patent violations. Some believe this attitude will change at Microsoft in the post Bill era as discussed by Dana Blankenhorn & Paula Rooney of ZDnet. I don’t think so. Does a leopard change his spots? The recession we are now entering is likely to be a long and deep depression. This pressure on budgets could be the catalyst which ushers in a new dominate software model into the market.