Monday, December 28, 2009

Why playing by recession-era rules is good for your business

About nine months ago, my business partner, Rustin, and I both quit our full-time jobs to start a Web2.0 company that builds social features for blogs. We had no funding, no office, a few customers, and operated the company from our savings. We both have families to support, mortgages to pay and college educations to save for. What person in their right mind would quit their job during the worst economy since the Great Depression?

Starting a company in the middle of a recession certainly has its challenges.
Funding is hard to come by and investors are gun-shy. It’s tougher to get loans and skilled employees who have jobs are less likely to leave for riskier ventures. Consumers have less money to spend on products and are very selective about what they do spend money on. While all those things might be true, with tough times comes great opportunity. There are pools of extremely talented people who are looking for work and willing to take below-market salaries to join a great team. Employees are more flexible about relocating, work hours, and job sharing. Commercial property rates are lower and the cost of travel is down. The challenging economy also means fewer companies will start new ventures, which results in fewer competitors.

From a product perspective, a tight economy and skeptical investment climate forces us to be ruthless in our product development. We don’t have the luxury of going in ten different directions and chasing features that are cool but way outside our core vision (we call those “bright shiny objects”).
If we spend one day on something that doesn’t further the goal of solving our customers problems, we have wasted precious time. Competitors with more money and resources will eat our lunch if we take our eye off the ball for a minute.

And we wouldn’t have it any other way.

We are conditioned to think fast, test often, be brutal with priorities and involve feedback from real customers every step of the way.

We still don’t have a fat budget, fancy office or corporate salary.
What we do have is a customer base of over 22,000 customers that grows every day. We launch features in weeks, not months. We’re able to advance swiftly in a market where others have retreated with a wait-it-out mentality. We are making significant progress and have overcome hurdles with customers, investors, and competitors. We’re even driving revenue sooner than we thought we would.

Being forced to play by recession-era rules is good for our business.
Our gutsy move is paying off and we’re months ahead of where we would be if we’d played it safe and waited. Sometimes what looks like a challenge is really fate handing you a lottery ticket and inviting you to play a bigger game.


CFMama said...

I am going to share this post with my husband who has been trying to start his own business for several years now. I think he would appreciate this success story.

Dorothy said...

Wow, do I give you credit and I wish you much success. Keep us posted..


Dorothy from grammology

Cop Mama said...

Congrats on the success of your new company. You are courageous but if it's something you believe in and you have a good business plan, you most likely will see results. You are an inspiration. Many women, myself included, find it hard to try new ventures for fear of failure. Thanks for sharing your story.

Happy New Year!

Barb said...

Loved reading the story of what you have put into the BlogFrog community. You have a wonderful product and you know I wish you every success.

PJ said...

Hi Holli! Are you the fantastic person who fixed my Blog Frog? I think I remember you leaving me an e-mail saying you left a message, but I couldn't see it because I couldn't see my Blog Frog. Anyway, if you are the person responsible for doing whatever was needed to restore my Blog Frog, God Bless You! It truly was about to drive me buggy!

Love & Prayers,


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