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« Previous EntriesWeb companies raising lots of money, to make themselves recession-proof
Wednesday, February 6th, 2008
Many economists and others think a recession is imminent, if not here already. A number of prominent web companies appear to have reacted over the last few months by raising large amounts of money.
Take widget-maker Slide, for example. The company hired well-connected investment bank Allen & Co. in December and rushed to raise $50 million at a $550 million valuation. Its executives flew out to New York right before Christmas to seal the deal with its private-equity backers, as Keith Rabois, Slide’s vice president of business development, tells me. They didn’t want to wait until the economy got worse (and pocketbooks thinner) in January.
Perhaps the biggest thriller here is Glam, the online media and ad network for women, which boldly planned to raise $200 million in equity and debt in August, but which it has yet to close. Things are clearly taking longer than expected, although the company says it has an announcement coming soon.
Here’s some data. Out of 379 IT-related funding rounds that happened in the fourth quarter of 2007, 129 were for web companies, according to Dow Jones VentureSource. From total of $3.7 billion in investments, nearly $1.1 billion went to these web companies. “It’s pretty impressive for that little [industry] segment”, Dow Jones’ Adam Wade tells me, noting that there have been more than 300 rounds raised already in January, a good portion of which have been web deals.
For more data points on the latest funding, take a look at the social networks. Facebook raised $240 million from Microsoft last October, then raised another $60 million from Hong Kong billionaire Li Ka-Shing in November, and an undisclosed amount from European entrepreneurs the Samwer brothers in January. Hi5, as well, just raised another $15 million in venture debt on top of a $20 million round last summer. Meanwhile, Bebo hired a bank last fall, and I hear it is looking both at selling and raising more money.
What’s all this money for?
Why, to hire top entrepreneurs, many of whom have been working at smaller startups or at larger companies. Glam, for example, recently nabbed a top product manager from Yahoo, as did instant message service Meebo. Facebook, Admob and other fast-growing private companies have meanwhile hired top employees away from Google.
In fact, hiring big is Slide’s plan, and not the first time for its executives — PayPal veterans like Rabois, co-founder Max Levchin, and others. PayPal was able to hire plenty of top engineers in 2000 and 2001: People who were out of work after the dot-com bubble burst. It could afford to do this because it had raised more than $225 million in previous years, including a $100 million round that closed just days before technology stocks began taking a nose-dive in April of 2000. Even though PayPal continued to lose money for years, it improved its technology to combat fraud better than its rivals, and ended up selling to eBay in 2002 for nearly $1.5 billion.
Of course, there are other big factors at play in taking rounds, besides a recession. Most of these sites need money to pay for hosting costs, to handle their high traffic numbers. They haven’t, shall we say, perfected their revenue models — and they may take years to do so. Facebook plans to spend $200 million on capital expenditures this year (as well as double its workforce to 1000 employees), according to one report. While the company is making money, spending is set to outpace revenue growth.
It takes money to make money on social networks, apparently. Slide, which has made high growth the priority for much of its history, is itself starting to focus on monetization. It most recently cut a deal with Kodak, where the 60 million users of Kodak’s digital photo-sharing service can easily share their photos on Slide’s Myspace slideshow widget.
The other option besides raising money or breaking even is to try to sell, as I heard Bebo has considered. Last December, social news site Digg also hired Allen & Co. — but to shop itself around with an asking price of at least $300 million.
Not selling, one hopes, will eventually have an even bigger upside. As opposed to the dot-com bubble, this downturn is not of the technology world’s making, as Bernard Lunn points out. Instead it’s an opportunity, he concludes, for technology companies to develop new services that save money for clients.
Let’s say social networks and other social media sites figure out how to help advertisers reach users more efficiently than print and television advertising, if not other forms online advertising — something these web companies are increasingly focused on. Advertising spending typically drops during a recession, and advertisers have already been busy developing their “widget strategies” for reaching social network users, we hear. If these web companies can prove themselves in the coming years, they’ll be major beneficiaries of increased ad spending when the economy recovers.
(Andy Warhol painting via.)
Originally
from VentureBeat
by
reBlogged
on Feb 7, 2008, 12:45AM
Microsoft/Yahoo - let the exodus begin
Sunday, January 6th, 2008
Back in November, Facebook launched their new SocialAds platform. Like many other folks, I decided to spend $50 to check out
the platform. Like Fred, I decided to advertise for my fund - First Round
Capital. Unlike Fred, however, I decided to test Facebook’s targeting mechanism by running targeted ads to employees of large
Internet companies — including Yahoo and Microsoft.
One of the nice parts about
Facebook’s platform is their realtime statistics. Back in November, I saw that my Yahoo ad received 21,291 impressions with only 64 clicks —
a clickthrough rate of 0.30%. And my Microsoft ad received no clicks with 1,058 impressions.
So when Microsoft announced they wanted to acquire Yahoo, it got me (and everyone else) wondering. Specifically, I wondered
if YHOO/MSFT employees were indeed more likely to "look around" for new jobs — and if so, how much more. Since I had
baseline data from just 90 days ago, I decided to run the ads again.
On the Yahoo side, there was a 260% increase in clickthrough rate — from 0.3% to 0.86%. That is not surprising. But on
the Microsoft side, I was really surprised. When I ran around 1,000 impressions before, the ad did not receive one click — now the same advertisement received
15 clicks. Microsoft’s clickthrough rate increased from 0% to 1.19%. Maybe it’s not just Microsoft’s shareholders who are unhappy.
I acknowledge that this data is probably not statistically significant — however, it probably is a good leading
indicator of the exodus that will occur. And, while there has been a lot of discussion of whether a Microsoft/Yahoo
combination would help or hurt Silicon Valley, the impact of this coming exodus has been largely ignored.
As talent leaves the big Internet/technology companies, there will be
a flood of experienced folks looking to join (or start) startup companies. And that’s a flood I look forward to.
Originally
from Redeye VC
by
reBlogged
Google’s Universal Search
Sunday, January 6th, 2008
A little over a year ago, I wrote a blog entry about Google’s OneBox feature — and it’s potential to impact other vertical search engines. Danny Sullivan’s SearchEngineLand blog has a detailed post that shows how Google has shifted from OneBox towards Universal Search. If you’re interested in search or content discovery, Danny’s post is well worth the read…
Originally
from Redeye VC
by
reBlogged
After the Techcrunch Bump
Sunday, January 6th, 2008I see many consumer Internet pitches these days where the basic marketing strategy is to (1) get covered by Techcrunch, (2) get tens of thousands of users from the "Techcrunch Bump", and then (3) "grow virally". While a positive Techcrunch review has the potential to send thousands of consumers your way, it does not represent a marketing plan. Munjal Shah at Riya found this out after the launch of Riya back in 2006, when he wrote about "the cocaine like high and subsequent crash of the Techcrunch effect":
The Techcrunch article got put on Digg and read in thousands of feed readers and viola… the Techcrunch effect begins. Michael’s blog is the single more effective vehicle to get the word to the online blogosphere about new technology companies on the planet..The unfortunate fact was that the initial hammering [our servers] took was just not the reality we would see later. The number of photos uploaded per hour began to fall and then stabilized near the end of the 22nd at around 25,000 photos per hour and would continue to fall for weeks to come. - Munjal Shah
So while a positive reception from the blogging community is valuable — and can generate a lot of initial activity/interest and a nice looking Alexa chart — it is not the only ingredient in your ultimate marketing success. When I see a post-launch consumer Internet startup, I basically look for a few simple things:
1) Usage Growth — how many unique users are visiting/engaging with your site and product, and how is the rate of growth evolving over a several week period of time. I also look at the source of this growth — is it scalable, repeatable and systemic? Is it event-driven (ie, PR)? Is it organic or driven by marketing (ie, is the company buying growth via Adwords, etc)?
2) Virality — So many people misunderstand virality. Virality is not "word of mouth". And having a product go viral is not easy — nor is it something you can just "sprinkle on a product" after creating it. If making a product viral was as easy as adding a "share with your friends" button, there would be no reason for the $100 Billion advertising industry. (I can see companies asking themselves — "let’s see, should we spend millions on advertising…or should we just add virality…Hmmm"). I believe a viral product is one where a consumer’s basic usage of a site/product brings new users (and therefore additional utility) to the site/product. Facebook, LinkedIn and Paypal are all great examples of viral products. If you’re pitching your business, you should know your viral coefficient. That is, how many new users get added virally from each additional user. And if you can get your viral coefficient greater than 1.0, then you’ve built something really special.
3) Engagement Level — Do your visitors actively engage in your site? How long are they there for? How many pages do they view? What is their user experience like? One of the easiest ways I’ve found to evaluate a company’s engagement level is to have them (temporarily) share access to their Google Analytics account — this gives us the ability to get the data/insight we’d need without having to bother them to run each and every report.
4) Repeat Usage — User retention tends to be an area where people pay the least amount of attention, but I think is one of the most important to monitor. Specifically, how often do people come back to your site. While there are a lot of different ways to measure retention, my preferred way is to look at a cohort analysis. Say you’ve had your site running for five months — you now have five "first month cohorts", four "second month cohorts", three "third month cohorts", two "fourth month cohorts" and one "fifth month cohort". And you can see, what percent of your users come back in each subsequent month. A simple chart is below.
You can also plot it out graphically — I’ve attached a generic Cohort Analysis Excel document. From this data you can learn a lot. Not only do you see how many people are returning this month, but you can see the trends over time. For example, in this model spreadsheet you can see that while the site is still just retaining a small percentage of their overall users, the rate of retention has gone up by over 250% over the course of the year. And while this example cohort analysis is shown by month, immediately post-launch I’d recommend that you create and track cohorts by week.
Originally
from Redeye VC
by
reBlogged
Even more on pricing…
Sunday, January 6th, 2008
Further to my post a few weeks back about pricing, a study released yesterday from the Proceedings of the National Academy of Sciences found that the more wine costs, the more people enjoy it — regardless of how it tastes!
The researchers said that when 20 adult test subjects sampled the same
wine at different prices, they reported experiencing pleasure at
significantly greater levels when told the wine cost more. At the same
time, the part of the brain responsible for pleasure showed significant
activity.
via Reuters — thanks to Donna Murdoch for alerting me to the study…
Originally
from Redeye VC
by
reBlogged
The earlier the better…
Sunday, January 6th, 2008Most VC’s typically “pass” on a deal with a line like “you’re too early for us, but let’s stay in touch as you execute your plan and hit your milestones.” Why wouldn’t they? This non-pass pass gives the VC a second opportunity to see a deal – and let’s the VC avoid the finality of declaring: “Nope, we’re not ever going to fund you.” In a business that’s all about maintaining options, the non-pass pass has become standard practice.
At First Round Capital, we can’t follow this standard practice. We prefer to see (and fund) companies early – after all, we’re not Second Round Capital. We are comfortable with “Powerpoint Risk” (ie, funding powerpoints) and are used to funding incomplete technologies, teams and business models. Our fund’s average initial investment is just under $500,000. So I found it ironic last week, when, I ended up passing on several startups using a line like “you’re too late for us – I wish I had seen you six months ago during your angel round.”
Since our inception, First Round Capital has always been focused on early-stage, seed investments. Just last week we closed a new fund. And as rumors spread that we might be raising a larger fund, we’ve already started to get more inbound requests for larger, later-stage, deals – ($2+ million funding rounds). But while our fund is larger, our focus remains the same. We plan to continue to make the same early-stage, seed investments we always have. The same initial investment size. The same investment style. And the same investment strategy.
Our average initial investment will remain around $500,000. And our investment goal remains the same – to help an entrepreneur validate, “de-risk,” or disprove his/her hypothesis…and to do so as quickly and capital efficiently as possible. The only real difference is that we won’t be raising a new venture fund annually (as we did in the past), allowing us to spend more time with our portfolio companies and looking at new deals. So in an election year where everyone seems to scrambling to embrace "CHANGE", we’re looking forward to more of the same in 2008 and beyond.
(And keep the Powerpoints coming – you can’t send them early enough!)
Originally
from Redeye VC
by
reBlogged
Old Half.com Commercials
Sunday, January 6th, 2008I was going through my music on my computer the other day, and I came across two old radio commercials from the Half.com days. I got a laugh out of hearing them, so I thought I’d share. Click either of the buttons below to hear the commercials…
Originally
from Redeye VC
by
reBlogged
Some thoughts on pricing…
Sunday, January 6th, 2008
I recently returned from a family vacation, and while I tried not to do much "work", I did find that a hotel can provide an interesting ecosystem to observe some interesting pricing dynamics.
Pick a Price, Any Price
Despite my best efforts to kick the habit, I still find myself addicted to Diet Coke. And while I was able to lower my intake on vacation, I still found myself craving a Diet Coke or two during the day. What surprised me was the multitude of different places — and different prices — a single hotel sold the same product for. The mini-bar in the room sold a can of diet coke for $3.50 (ouch!). The soda machine down the hall sold it for $1.00. The gift shop sold it for $2.00. You can order it in one of their restaurants for $2.50 a glass (with free refills) or you can get it delivered poolside for $2.50 (with no refills). And you can order it via room-service for $2.50 plus a $2 delivery fee. Five different prices (ranging from $1 to $4.50) for the same product. The only difference is the method of delivery — and the convenience each method offers the consumer.
And this got me thinking- can this model work online? Are there examples of online services which charge differentially for the exact same product? Let me know what you think…
The Anti-Penny Gap
I’ve written before on "The Penny Gap" — where I discussed the challenge in converting a user from free to paying. In that post I concluded that the hardest part of an online business was "getting your users to pay you anything at all". Well, after this vacation I have to add an amendment to my theory.
My wife and I wanted to go out to dinner without the kids a few times on the trip, so we asked the concierge if they could recommend any baby sitters. The provided me with a list of three services - Capable Caregivers, Affordable Assistance, and Reliable Babysitting Agency. There was no description of the services. No references. No recommendations. No listing of "years in business". Just their names, prices and contact information.
So how am I to choose which one to select? Do I trust my kids lives with "Affordable Assistance" for $12.50 an hour? Or do I select the more expensive "Capable Caregivers?" Well, in the absence of any comparative information, I chose the Capable Caregivers. (As did, it appears, everyone else in the hotel — my informal study of six other families who hired babysitters from the hotel concluded that everyone chose the most expensive option).
So I hereby amend the Penny Gap theory — when a decision involves (1) safety/security/risk, (2) children, and/or (3) information assymetry, the highest price is often chosen over all over options. Let me know any other places where the "Anti-Penny Gap" applies.
Originally
from Redeye VC
by
reBlogged
A Guide to Billionaire Bloggers - And Some We’d Like to See
Sunday, January 6th, 2008
With the news today that billionaire investor Carl Icahn is getting ready to start blogging, we started to wonder what other billionaires blog. Sadly (or perhaps not so sadly), not many of them blog. Why should we care if a billionaire blogs? After all, they only represent the tiniest fraction of the population (there are at last count 946 billionaires worldwide compared to about 6.6 billion people). Really, you might not care about the things a billionaire might write about, but along with controlling a disproportionally large amount of the world’s money, they also wield a lot of power over our daily lives as a result. So it might be nice to see what goes on in their heads.
Billionaire Bloggers
Name: Carl Icahn
Worth: $14.5 Billion
Blog: The Icahn Report
What It’s Like: The only thing Icahn’s blog has up right now is a notice saying that the blog is coming soon. But for a man who is so known for trying to publicly control the companies he invests in, I think we can expect a lot of posts about what direction his thinks specific business should take.
Name: Mark Cuban
Worth: $2.8 Billion
Blog: Blog Maverick
What It’s Like: Mark Cuban is probably the best known billionaire blogger. As both a technology entrepreneur and the owner of a professional sports team, Cuban uses his blog to opine on everything from business to sports to ethics to the trials and tribulations of Facebook account maintenance (handy if you too have 5000 friends on the network…). It’s not quite the must-read that Marc Andreesen’s blog has become, but it is still worth checking out.
Name: Donald Trump
Worth: $3.5 billion
Blog: The Trump Blog
What It’s Like: Ah, Trump. The billionaire real estate magnate cum TV celebrity writes a blog about business (along with a few other contributors) on his Trump University web site. Trump University is a non-accredited online university that sells correspondence courses in real estate and entrepreneurship. It has also been accused of spamming prospective students. Which is fitting given that Trump’s blog, which is plastered in ads for his books and other products, feels like one giant ad.
Name: Pierre Omidyar
Worth: $8.8 billion
Blog: Pierre’s blog
What It’s Like: The wealthy founder of eBay may have been the first billionaire to blog, when he started writing on on a TypePad blog in May, 2003. But after 3 years of no updates, Pierre shifted his blogging to Vox late last year. Mostly, though, his Vox blog is just a feed of his Twitter stream. It’s an interesting peek at the daily thoughts of one of the web’s most influential people, but we miss his full blog, on which he used to write at length about political and social issues (he still writes about his dislike of the Bush administration on his Vox blog, but it seems less often).
Name: George Soros
Worth: $8.5 Billion
Blog: George Soros
What It’s Like: Ok, George Soros doesn’t really blog. Just once, on the Huffington Post. In his single stint at blogging, Soros wrote about how the concept of the war on terror is self-defeating and framing US policy inside it isn’t doing the country any favors. But his post is tainted when you realize his one foray into the blogosphere coincided with the publication of his book about the war on terror. In otherwords, even though his ideas may be valid, the entire thing was a political stunt.
Name: J.K. Rowling
Worth: $1 Billion
Blog: J.K. Rowling’s Diary
What It’s Like: Ah, here we go, a best selling author. Certainly J.K. Rowling must have an awesome blog, right? Not so much. The Diary section of Rowling’s official site is a little weak. A not-so-often updated single page with no archives. I’m not even sure that qualifies as a blog, and I can’t help but think her fans must be somewhat disappointed by it. Rowling also appears to pen the news section of her site, which is a bit more interesting, has archives, and is updated slightly more frequently. But even so… no comments? No thoughts about the writing process, other literature, the decline of reading in society, your philanthropic work? C’mon, Ms. Rowling, give us a little more, please.
Name: Jerry Yang and David Filo
Worth: $2.2 and $2.5 Billion
Blog: Yodel Anecdotal
What It’s Like: Though not exclusively theirs, Yahoo! founders Jerry Yang and David Filo do occasionally contribute to the company’s corporate blog. Though Filo has written less recently, his posts tend to be more interesting, often concerning the environment or things outside of the Yahoo! product line or business.
Name: Steve Jobs
Worth: $5.7 Billion
Blog: The Secret Diary of Steve Jobs
What It’s Like: Jobs is one lucky billionaire… he doens’t have to lift a finger to blog his every thought. Who needs the real Steve Jobs when you’ve got a perfectly good fake one already?
Who We Want to See Blog
The list of billionaires who blog is rather paltry (let us know if we missed any). So below are some of people on the billionaire list we wish blogged, and why.
Name: Oprah Winfrey
Worth: $1.5 Billion
Why: Oprah has her hand in just about every other type of media, so why not blogging? She’s one of the most influential women in America and her opinions are closely followed by millions of people — she’s even recently shown that she can have an effect on US politics. What better way to connect to fans than through a blog?
Name: Sir Richard Branson
Worth: $3.8 Billion
Why: The man does crazy things like try to fly around the world in a balloon. You try telling me that his blog wouldn’t be interesting to read…
Name: Meg Whitman
Worth: $1.3 Billion
Why: If the rumors are true that Meg Whitman is planning to run for the governorship of California, it would be wise to start blogging and getting her ideas out there.
Name: Bill Gates
Worth: $56 Billion
Why: Not only is he the richest man in the world, but Bill Gates is about to step down from day-to-day work at Microsoft. He’ll have plenty of time to start blogging, and given all the charity work he is involved in through his foundation, I’m sure he has a lot to say about the state of the world.
Name: Michael Bloomberg
Worth: $5.5 Billion
Why: Bloomberg, who is the well-liked mayor New York City, recently left the Republican party and rumors persist that he is mulling a presidential run in the US. It’s starting to get a little late for that, but he has a lot of interesting ideas on pressing issues like the environment that we’d love to hear, if not as part of a presidential platform, then on a blog.
Name: Eric Schmidt
Worth: $6.2 Billion
Why: Our post about the Google CEO’s take on web 3.0 remains one of our most popular of all time. Clearly, people are interested in what Schmidt has to say.
Name: George Lucas
Worth: $3.6 Billion
Why: Because we’re nerds…
Originally
from ReadWriteWeb
by
reBlogged
on Feb 6, 2008, 11:03PM
This Is Not Our Bubble
Sunday, January 6th, 2008
Back in early October I posted about coming economic storms and what entrepreneurs could do to prepare. Given recent news, it is now almost certain that we are in recession. The bad news from financial institutions and credit markets is like a steady drumbeat, so it would be easy to write about “battening down the hatches” or even jumping for the lifeboats.
Far from it. These are great times for entrepreneurs. Really. This is not our bubble. We had our bubble and it burst in March 2000.
The fallout from that - the technology nuclear winter - was as ugly as it gets in business. We won’t get another bubble inflating in our business (technology/media start-ups) until all of us who had any involvement have retired. We will get bubbles in other places, but they don’t recur in the same place within a generation or longer. Tulips, anybody wanna buy some tulips?
This is a credit bubble, pure and simple. That has far, far bigger implications for the economy than a stock bubble. So the recession is real. It is only a question of how long and how deep and my guess would be on the side of long and deep.
But equity valuations are fine. A very conservative investor friend who manages money on an asset allocation basis - choosing between bonds and equities - is pushing into equities. There are of course pockets of excess - please don’t tell me all the stocks you see that are overvalued, I know thats true - but broad markets are in reasonable value shape.
Nor are VCs going hog wild; sadly, because those days were fun 
Sure there is a bit too much money at work, but that’s good. VCs sure as hell remember the bubble and the burst. It is their “cousins”, the Private Equity (PE) guys, who’ve just had their bubble - fueled by the credit markets. But while VC and PE may sound the same to an entrepreneur - hey they are all money guys right? - at a more fundamental level they are on opposite sides of what is a very big battle.
The battle is around something which few people like to talk about in start-up circles. It is the big unmentionable, like sex for Victorians. The unmentionable is zero sum game. Yes, in an economy growing at 3% if we are lucky and zero or less if we are not, the dollars you earn come from another business. Economists call it “creative destruction”. People who work at newspapers call it a “disaster”. Entrepreneurs coming in like barbarians at the gate call it “window of opportunity”. Established companies and - this is the point - their PE backers, call it a possible negative externality which might impact Q4 earnings to the extent that they go near their debt covenant ratios. Or in other words, “I missed that barbarian with my boiling oil and he is now over the wall and wreaking havoc and oh my god there are so many of them….”
The first wave of barbarians were bad enough. They at least talked the same language of margins and profits. It is firms such as Craigslist and Plenty of Fish that really worry the bejesus out of people, as they are happy to take massive volume at ridiculous prices; which in a digital world where additional users are virtually zero cost and all the rewards go to the firm that gets the network effect, is totally sensible, rational economic behavior. More rational than chanting phrases learned in MBA classes like a mantra to ward off evil spirits.
But we are in recession, and that does change the game for entrepreneurs. In particular it changes the game for entrepreneurs banking on consumer advertising dollars. Advertising gets cut in a recession. Always has in the past and will do so now. There is a strong belief in start-up circles that the shift from traditional media to online is such a huge shift that it opens up an opportunity that is “big enough to drive a truck through”. Yes we are still in the relatively early days of this massive shift. But recessions lead to irrational behavior as much as bubbles and that can mean some short term pain.
More importantly, recessions have a way of changing behavior that lasts into the recovery and next boom. From that change of behavior, new companies and new industries are born. Pay Per Click, a more cost effective form of advertising, and offshore outsourcing, a way to cut legacy costs, both got their momentum going in the last recession.
Online CPM is like traditional media advertising. It is a traditional media model grafted onto online services. Which is like the talking heads in the early days of TV mimicing Radio. CPM is “faith based advertising”, you cannot measure the return. We will always have CPM but the prices will crash. Facebook ads going for 12.5c per CPM is one straw in this wind. Those low prices are OK when it costs so little to acquire the eyeballs, so these low prices are sustainable and may become the “new normal”.
Think about that. Right now there are new companies and new models that are below the radar screen that will emerge as major powerhouses in a few years and they will be radically different from what’s out there today. Thats kinda cool. Kinda scary too.
In a recession, the winners are able to make one of these two propositions:
- I will get you new revenue for a variable cost that is lower than your current cost of revenue acquisition. Note, that does not mean invest a lot of money now in the belief that new revenue comes in. It means, your current cost of revenue is 30%, I will deliver you that revenue for 25%. Guaranteed, no revenue = no fee to us.
- I will cut your costs now. Not, in 12 months, maybe, if it all works out. I will cut it now, this month, no investment needed. We are talking hard costs, external vendor costs, not fire a bunch of people to get the return; the latter is also popular in a recession but takes longer and is more painful and may also harm the business, who knows when it is muscles not fat that is being cut. But if you are replacing another vendor it is simple; “they cost you $100,000 per month, we cost $80,000 per month and I can prove that we are at least as good”.
Those are not easy things to deliver on, but if you can deliver on them you will win. If your start-up proposition is marginal, burning cash and the VCs are not calling, well it could get a bit messy. But if you have one of those propositions you can build a phenomenal business in a recession and there plenty of VCs willing to bankroll you to get there - if thats what you need.
Who do you see out there who can deliver what customers want in a recession?
Originally
from ReadWriteWeb
by
reBlogged
on Feb 6, 2008, 8:27PM