Staying cool - in good times and in bad
I clearly remember the last boom and bust. I was an entrepreneur at the time.
The boom was amazing. Lots of innovative companies were built. Founders, employees and investors were rewarded big time for the very best companies.
The bust was interesting too. Lots of great companies were built in the last bust. And of course a lot of companies didn’t make it and lots of folks lost their shirt. In the world of early stage startups this is the risk we all take. And when I say “all” I mean it.
One thing I hated the most about the last bust was the behavior of some individuals that seemed to grow by the day. These particular folks started blaming everyone else. It was nasty nasty. I’m sure many of you remember.
I hope we can keep perspective in the next downturn that many believe we are already in right now. When I see a post like this, well, it makes me worry that the nastiness is coming back. Blame the VCs is the message of the Hank Williams post. There may be good reasons to blame specific VCs for specific things but lashing out that the free model broadly speaking is a bad idea (which I disagree with) and VCs are to “blame” is just so wrong in my view.
I think Hank’s post is a bit ugly and misguided.
Matthew Ingram’s post in response sums it up nicely when he says:
This is the essence of the “freemium” approach. Give people some of what you have for nothing, and see if they like it. If they do, then offer them more for a fee. It works for SmugMug.com, it works for 37Signals.com and other companies. Did Craigslist choose to offer its services for free because its VC backers forced it to? No. It did so because Craig wanted to do it that way — and because he could do it that way. Only when it had become obvious how valuable it was did he start to charge for certain things, and then only in a limited way, and still the company makes close to $100-million a year with virtually no more effort than when it was free.
That is the power of the “free” model — it’s not some kind of snake-oil trick that VCs desperate for an exit have foisted on Web startups.
I won’t go into the merits of why free can be a great idea because that isn’t the subject of this post. The real message of this post is keep your chin up and keep innovating thru the cycle.
We need to keep cool and offer constructive advice. Thru the good times and bad.
