In some very important ways the current financial crisis is a good thing. First, it will preemptively pop the Web 2.0 bubble. Why is that important? Well – and this is just my opinion – we’ve returned to the same type of fundamental philosophy we saw in the Dot Com bubble – version 1.0 was “get big fast”; version 2.0 is “business model isn’t important – figure that out once you’ve aggregated lots of subscribers”.
When you boil both of them down you see the same fundamental flaw – failure to plan for success. To be clear – by success I mean a profitable business.
Second, it will – hopefully – result in a fundamental change in the US economy. For the last three years American families have been spending more than they make. Our government has been doing the same thing since 1980 (with a brief respite during the Clinton administration). We have to start balancing consumerism with savings. That means credit will be harder to get and more expensive. That means that businesses will have to be prepared to face stiffer competition for scarce consumer dollars.
But most of all, it means innovators and entrepreneurs will have to begin by determining if they are creating and delivering something that adds value and, as importantly, is that value something their customers will be willing to put hard dollars on the counter to get.
I actually welcome both of these changes. Will it make the odds of success longer, yes.
That being said, if you can return to the fundamentals:
- Solve important problems
- Meet unmet needs
- Create value added services over commodity services
- Focus on delivering value your customers will trade for dollars
- Focus on long term growth (not next year’s exit)
You can still found and grow a successful company.