Category: Start Up

Santa’s business model

Its Christmas in the middle of an economic blizzard. Money is tight, credit is crunched. Banks are not lending, angels are not investing, VCs are not funding. So how does one go about getting dough to make cookies for Santa?

Why not learn from Santa himself. If Santa was looking to raise money, here is how he would pitch his business:

Santa’s Perfect Pitch

And what do you know; there are businesses out there that reward good behavior.

Thanks Santa.

This is the time to start a company.

With mayhem all about and news media predicating a certain doom, smart money claims this to be the right time to start a company. And I agree (not that I have any money, smart or otherwise).

Paul Graham (Partner, Y Combinator), for example, thinks this is one of the best times to start a business, especially a technology company. Technology, Paul says, progresses independently of the economy. If you have a good idea it is better to start now than wait. If you wait, it may be too late. Chances are you are not the only one with that idea. Your potential competitors may be working on the same concept as you. If you wait for the economy to get better, your competitors probably already have a head start on you.

Don Dodge (serial entrepreneur) is of similar opinion, adding some great reasons why this is a good time to start a company.

  • Easier to hire great employees, which you wont be able to during boom time.
  • Easier to find office space, and cheaply too
  • Office equipment and furniture can be had for less money

And perhaps most importantly Don says, if your product provides real value, customers looking to improve productivity are more willing to hear you out and perhaps even buy from you.

If that’s not enough to convince you, listen to Melissa Chang (President, Pure Incubation) and Caterina Fake (Flickr, co-founder) who echo Paul’s sentiments. Melissa’s five reasons on why this is a great time to start a company (written in March 2008) resonates well with Caterina’s six reasons why starting a company in boom time is not a good idea (written in March 2006).

One of the interesting points they both make is lack (Melissa’s point 4) or abundance (Caterina’s point 2) of competition. In bad economic times few companies will be started and hence you will have a head start when the conditions change.

However, if the economy is doing well, everyone and their dogs are starting companies and getting funded. Even if your product is better, you still have to deal with a shoddy product from a well funded competitor.

But in my opinion, there is no bad time to start a company. If you have entrepreneurial character, which implies resourcefulness, persistence and perseverance, economic conditions should not deter you from starting a company.

So if you have a great idea, I only have one question. Why are you still reading this?

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