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How can we create one million new startups with a failing/failed VC system?
We won't. The cost of starting up will have to come down. Labor cost will drop as will the cost of office space and technology. Spending millions in VC on startups isn't going to be they way we come out of this. Bootstrapping is going to be the way we come out of it, and it's going to take a while. Expectations will change. People are going to be dragged kicking and screaming into reality. We've been pretty fat and happy for a while, now were going to learn the hard way. Don't live beyond your means. Too many people believe you can get rich quick, especially in tech. It might be true in some cases, but in most it isn't. I'd much rather see a million 1-2 person shops that are modestly profitable than these giant tech behemoths. I think that is the direction we are headed.
Step 2 is to send away some eisting H1b holders, the idea of the visa is to fill places when there are no local workers to do the job, the H1b was designed as a buffer to level out demand and supply of employees.
When supply outstrips demand the H1b's should be cancelled - they are currently not in the country's best interests.
Many potential start ups have changed their tech implementations to require less seed capital.
While at the same time tech firms have laid off full time employees but often still have the need to have certain part time projects competed that require tech skills.
Why not exchange those project needs for an exchange in seed capital and the tech firm exchanging seed capital for project work being completed also gets stock in the potential start up?
You avpoid setting it up as a fund and thus keep it at high tech speed instead forming it as an ad-hoc arrangement or start up new VC social network..
My Biases: I am one of those potential startups that changed my tech implementation to be lower in dev costs and also seeking seed capital currently. My mobile app uses new hybrid mobile dev technology that relies upon web code base to make web app behave like a native mobile app using javascript to access GPS and etc. Yes, iPhone, Android, And Palm Pre stuff. why seed capital? To pay for several months dev so that I can present full demo to Fred Wilson, he already said yes to viewing it..
Rob
I watched a presentation by Channing Dawson at Inman’s Real Estate Connect where he mentions Marshall McLuhan’s “The medium is the message” and repackages it as “Marshall McLuhan (predicting the rise of social media online).” I mean, I learned about McLuhan in Mass Comm 101 back in my undergrad days in 1990, but this 60 year old message does seem to have just as much, if not more relevance today.
In any event, I’m a bit of a communication theory geek, but I’m sure you can see the relevance. It seems to me that many social media advocates are espousing would be entrepreneurs (e.g., small business owners or sole proprieters) to brand themselves and use social media to market. Are we moving to a place where each business will need to develop into a media property with their own radio, tv, newsprint broadcasting capabilities to promote their business and build online brand value to build equity?
Best Regards,
Matt Gentile, Director
PR and Brand Communication
Century 21 Real Estate
2 cents on the black jan doom and gloom and innovation:
http://gluecon.ipower.com/blog/?p=20
wanna come to Glue? it'd be great to get you out to the boulder-denver tech corridor...
Thus, there's no VC payday.
We need to see innovation applied to the financing arm of tech which is just as creative as the tedch itself. Maybe investor pools/funds managed by reputable firms...difficult to find..but out there somewhere.
I'd put some moey behind a lot of companies if i thought i could get better returns.
Also, the new government is going to support labor law reform, but they don;t prefer larger companies over small, they will be passing legislation that will make it easier for a union to organize any company or employer, including small tech stuart-ups.
"Regulation like Sars-Ox stifles startups and protects the dinosaurs."
Nope. It euqal across the board. I work for a so-called "dinosaur" and yes, believe it or not, we have to deal with this atrocity too.
That said there's a reason for it.
"Innovation and small business is our way out of this. Right now you pay twice as much payroll tax (SS and Medicare) if you are self-employed as when you work for a corporation."
Wow. You're serious? You make the uninformed believe that the government gets twice as much FICA/MED from a self-employed and from one who "works for a corporation". Disingenuous.
Right now an EMPLOYEE pays just as much as an EMPLOYER for this tax.
Innovation and small business isn't the only way out of this. I can think of more. Save more and buy less on credit. Lend responsibly - instead of lending to unemployed college students and ARM balloon filled mortgagees. Live within your means. Just to name a few.
What's so great about this country and the internet is the ability to speak an opinion without much to back you. Like this post.
In the same month - Black January? - Microsoft posted profits, Apple posted record numbers (once again), and Google just posted better than expected numbers.
Times are bad. No doubt. But Robert loves to cherry-pick. And it seems that Steve Olson does the same.
As to SarbOx - witness the dearth f IPOs since then, and draw your own conclusions. There's no reason for it at all, other than making accountants hapy and making them blameless. What a great idea!
Enron was found w/o SarbOx....
PS 15% is a figure I pulled out of my hat and has no real accuracy, akin to any other number that might be produced to the contrary.
Post inauguration, you may wish to reconsider your use of the word "black" to describe negative events. Black Friday means positive news for retailers. Using "black" in a negative context will surely raise the thought police's ire.
I don't even know what this means. Unless it's an attempt at satire. If so, it's not too far off the mark
Well, we have our first event we can blame Obama for. For 33 years Microsoft had never publically announced layoffs. Two days after Obama is sworn in? Layoffs. Coincidence? I think not. :-)
Demands by the consumer.
Demands by companies or industries.
That's why Obama will start large public and infrastructure works.
Just like Hoover did.
So Scoble do you have a demand?
If so, then see if there are other people with the same demand.
It's simple, but there's no chance in hell our federal government would do it: Remove the barriers that keep small businesses from offering equity to the public. As things are today, it makes no sense at all to go public until you need tens of millions of dollars.
Right now, if you want to start any business that needs more capital than you've got in your pocket, you can only raise it from a bank, from friends and family, and from "qualified investors" (IE, people who are already rich.) This doesn't protect anybody from fraud, of course. Bernie Madoff and the Enron perps have proven that a crook can still be a crook in a highly-regulated market.
There are trillions of dollars in behemoth mutual funds that could be far more useful if the average person had the opportunity to invest in new ventures.
Oh, you noticed that? Gee, I guess the feds are going to have to do a better job of disseminating propaganda.
The damage of the bailout is actually far worse than just the inflation and the robbery of our purchasing power. The worst part of it is that the bailout keeps incompetent management in place and in control of vast swaths of our economy.
We could be out of this depression in a year, but the sad fact is that the lovers of power will never admit that the solution is to quit fucking with it and let the people sort it out for themselves.
Nope. The employee takes 100% of the hit for payroll taxes, and the pretense that it's somehow split between the employer and the employee is just a shell game. The employer is spending money for labor that the employee's not getting.
Corporations don't pay taxes, they only collect them. People pay taxes. Don't ever let a government leech try to tell you otherwise.
Most startups should really be funded through founder equity or credit, rather than outsider equity. Equity is very expensive capital: just ask any VC what their targeted rate of return is. Unless your startup is one that will grow very large and very fast (rare), paying 30% or 40% for capital just doesn't pencil. Which is why most VC-funded startups eventually die.
I don't know about a million startups, but I did develop a plan that would be far more effective, and infinitely more cost-effective, than the bailout monstrosities coming out of Washington.
In the old economy, the assets were things like factories and inventory. Unfortunately, those are still the only assets that banks will lend against. In the new economy, the assets are people: their ideas and their work product. But you can't borrow to keep or grow your most important asset. This plan solves that problem, and best of all, it would actually turn a profit for the government, even if the default rates were double the historic SBA rate.
The plan has been seen by several U.S. Senators, economists, and even the Obama team. People on both sides of the political spectrum like it, and can't find any big holes. Forbes.com even published it. But not surprisingly, no politician has the courage to champion it. Too darn practical, I guess...
http://www.printingforless.com/pressreleaseStim...
The only objection would be that government should stay the heck out of the private sector. I actually share that view, but that horse is far, far out of the barn.
As for the creation of new businesses, investment hasn't stopped entirely - as the story on this very site about Twitter having just secured some shows - but I imagine we'll see a lot more companies bootstrapping. Instead of dropping tens of thousands on colocated servers, they'll be spending hundreds on cloud hosting initially, getting up and running with a much smaller outlay. Instead of working full-time on VC cash, they'll build the business in evenings and at weekends. Ultimately, successful companies and failures will both benefit: greater equity for the founders of the latter, smaller losses for the latter. Meanwhile, someone newly laid off might spend the first few months and some payoff money building a startup, rather than trying to find a job working for someone else in this climate. Given a good idea and suitable skills, building a company might just be a better use of your time than sending out resumes - more so now than a year or two ago when jobs were easier to find.