There is no doubt there are tight times for tech entrepreneurs in the US & UK right now, but there are substantive differences between the current climate and the big bust. Richard Waters of the Financial Times explores this in his piece Back to Bust? I'm quoted briefly on how things have changed.
"We're talking about products that are one tenth the cost of things that were hawked in the last recession," says Ross Mayfield, whose company SocialText, is trying to sell tools to corporate customers that emphasise the "Web 2.0" concepts of networking and collaboration.
I'd also add that new opportunities are created in tight times.
Entrepreneurs are a curious breed of optimist and contrarian pragmatist. We find opportunities in big problems and experiment at the margin of what we know works to solve them. A startup is the art of making do with less resources, and in turbulent times such resources are more difficult to acquire at speed. But the upside of a recession is there is less competition and time to explore whitespaces.
Keep in mind the best startups started in the midst of recession. From Apple to Microsoft (to Socialtext ;-).
For those entrepreneurs who worked through the crash, perhaps the most devastating time in the in Silicon Valley's history, we learned some solid lessons. About making do with less, finding real markets, work/life balance if not treasuring what we are working for and places where it is better to cooperate than compete in open source and on the web.
For Socialtext, the challenge with these macro conditions is ensuring you are creating and selling penicillin, not vitamins. This has meant a shift from Wikipedia-inside knowledge sharing communities to process-specific implementations for marketing, sales, support, partners and customers. We are helping our customers not only be productive, but enabling the edge of their organization to move faster in adapting to turbulent markets and seizing opportunity.
