Home Startup Tips: Surviving & Thriving in a Down Economy

Startup Tips: Surviving & Thriving in a Down Economy

This week’s RWW Live podcast show was on the topic of how startups can navigate through the choppy waters of the current economy. We’ve already posted today on a two year old life-story repository startup called Dandelife, which is struggling – although we were able to draw some lessons from that. But it’s also good to look at the startups that continue to battle away. Our podcast guests were two examples of that – BrightKite and Zoho. Both were recognized by ReadWriteWeb in our annual end of the year awards: Zoho won ‘Best Little Co’ and BrightKite won ‘Most Promising Little Co’. In the podcast they had some excellent advice for startups, so in this post we review some of those tips; and we invite you to add your own tips in the comments.

RWW Live host Sean Ammirati started by asking Zoho and BrightKite how they got their startups off the ground. Zoho replied that they started small, bootstrapping with one product. They started in the desktop business software market and within 6-12 months they had begun to generate revenue from that; then in 2003-04 they began to develop web apps, which they did using the revenue from the business software. So they’ve always managed to bootstrap using company revenue – they’ve not taken funding.

BrightKite started as a “nights and weekends” project that they submitted to TechStars, a small funding initiative similar to Y Combinator. TechStars provided mentorship, a bit of seed capital and generally got them off the ground – in return for some equity. BrightKite did a working prototype, then raised an angel round of $1M last year.

I then asked the two companies about how their product plan will be affected, if at all, by the economy downturn. I noted that Zoho has a wide variety of products in their Web Office suite, so for example do they plan to fold some of those into bigger products due to the economy? Zoho replied that they make money from their business applications, rather than their collaboration apps. So they have made it a priority to integrate their collaboration apps into the business apps over the coming year(s). They will also continue to add new apps, however those will be money-making business apps.

I put the same question to BrightKite: has their product plan changed due to the economy? BrightKite replied that it hasn’t changed significantly, they were always planning to ramp up the marketing and do more partnerships this year. They also plan to introduce revenue drivers – e.g. location-based advertising and analytics for businesses. Generally the economy hasn’t changed their revenue-generating plans too much, although it’s perhaps brought it forward by a month or so.

In terms of success factors, Zoho mentioned that “constant innovation” has allowed them to keep ahead of the pack. In the online word processing space, there were around 17 competing apps when they launched Zoho Writer – but continually improving their product helped them keep ahead. Zoho has about 250 staff, so that has helped. On the other side of the staffing coin, BrightKite is a small 10-person team. They believe that being open and iterating on user problems is key for their success.

There are many more tips in the podcast, which we invite you to listen to below. Also let us know your own thoughts on not just surviving, but thriving, in this current economic environment.

Download MP3

Cat pic: fofurasfelinas

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