Where To Now?

Chris and I have been asked one question many times in the past few weeks: how will the financial crisis impact the start-up ecosystem? The answer depends partly on your place in that ecosystem but if I were forced to boil it down to one pithy statement, I’d say this: The real world has horned in on our heady idyll and that is a very good thing.

If there’s one point at which Guidewire Group relentlessly hammers, it is this: Remember the Masses. And when cash and attention are flowing to ideas that don’t make sense for everyday consumers – as they have been the past few years – it’s hard to keep that point top of mind. So what if Joe Six-Pack (sorry, couldn’t resist) doesn’t understand lifestreaming? He’s a hopeless fellow who doesn’t understand technology and should stick with digital picture frames, assuming he can get them to work. But as anyone at Pets.com can attest, Joe Six-Pack very much matters. Without him, your product is destined to a very small market of people who will leave you when the next big thing comes around.

So as markets crash around us and VCs become increasingly skittish, what’s an entrepreneur to do? First and foremost, stay true to your nature. No matter the economic climate, entrepreneurs will always be entrepreneurs. It’s in their bones to innovate and as long as there are problems to be solved, there will be creative minds working to solve them. Smart entrepreneurs will either tweak current companies to answer real-world needs or develop new solutions for them. For instance, I expect an influx of financial solutions in the coming year. We explored this idea a bit at DEMOfall last month, with companies like Rudder and Green Sherpa recognizing the hole in personal financial management. Many consumers complain that Mint, while well-designed and intuitive, is also labor-intensive. In a climate where consumers find themselves budgeting to the penny for gas and groceries, reactive, super-smart financial tools will be more important than ever. And how many of us could now appreciate similar functionality around investment planning? Even smaller companies designing Facebook and iPhone apps should jump on this bandwagon. Where’s a location-aware, gas-price app for the iPhone? Or an investment tracker for Facebook? If successful entrepreneurship is about locating pain points, this is arguably an ideal market in which to develop; we are literally awash in them.

I’m getting a bit off track here. I didn’t intend to start throwing out product ideas, so let me return to the original point: Remember the Masses. Ideally, I’d hope the current economic climate will serve as an alarm bell for start ups. A smart use of your time, money and energies will be to keep one target customer in mind: your next-door neighbor. What technologies do they use on a regular basis? I’m betting its Google, Facebook, Kodak Gallery/Shutterfly and the like. They haven’t heard of FriendFeed and don’t see the point of Twitter. So if you’re FriendFeed, start thinking about bridges to the real world. How do you take that vibrant community and make it… need-able by mass consumers? I truly believe FriendFeed has the potential to become the next Facebook with consumers; it just needs to find that one pain point that will pull people in.

This feels a bit like a broken record, as I think we had this same conversation in 2001. The start up economy will find ways to thrive; innovators will never stop innovating. There will be corrections, if only because they’re needed. Sorry, but we just don’t need another social aggregation app; let’s hone the ones we have now. The difference, though, is in the technologies that exist today. When the first bubble burst, we didn’t have Facebook with a huge, primed user base, ready and waiting for the site to go to the next level. Semantic technologies were just hatching in university labs and think tanks; they’re now set to inherently transform our online actions and interactions. If anything, this is one of the most exciting times in technology. When funding is scarce and only the truly brave are venturing forth, the resulting ideas and companies are sure to be groundbreaking.

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  1. Thank you for sharing with us, carla, you are absolutely right. Very recently, Dan Kimerling at TechCrunch posted a similar article titled “The Seeds of the Next Big Thing Are Being Planted Now”, which presents the similar thoughts as you mentioned here. I also see that your predictions are happening. After this ice age, we will embrace a new Spring that is another fascinating season.


  2. […] real-world consumers and what technology means to them. Both posts echo Guidewire Group’s sentiment that the current financial crisis should be a call for the tech world to focus attention on the […]

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