In a recession it is unfortunate that many people lose their jobs. It’s going to be extremely hard for sites that are not getting any traction are going to find it hard to VCs and Angels to invest or give funding for the next round. Facebook one of the highest valued websites of 2008 lost nearly 80% of its value within 12 months, wiping of $14 billion. According to reports YouTube still has not made Google any profit.
During this recession Angels and VC’s are going to hold back on funding especially for “back of napkin” businesses. It will however be a great time for scrappy entrepreneurs to start-up.
Now is the time for scrappy entrepreneurs, it is important to remember that it was scrappy entrepreneurs that started the world of web 2.0. After the dot com crash many people went back to their basements and started on projects that now have become an integral part of the internet today.
Timing is crucial, Digg, Facebook and delicious are all 5 years old and launched before the height of web 2.0. We must remember that with the likes of Flickr, these were started in the basement and have now become the very successful sites they are today. Digg.com is another website that was first started when founder Kevin Rose was still at working a full time job. Social media has for the last 5 years been the major trend in website development.
Web 2.0 came out of the crash will web 3.0 come out of this crash?
In the height of web 2.0 when the likes of Techcrunch was reporting over a dozen new startup a week it became very hard for any of them to gain traction, the reason for this is that they were all competing to get some press. With the lack of funding and a slowdown in the number of start-ups the press are willing to report on a good business that will help you gain tracking.
In the words of Rohm Emanuel’s famous quote regarding the current financial crisis "Never let a serious go to waste"
http://vodpod.com/watch/1177723-never-let-a-serious-crisis-go-to-waste-wsj
The people who are motivated and love the web will take us to the next level and bring us some of the most exciting new start-ups.
Paul Graham wrote an excellent post 6 months back if you have not read it I would suggest having a look.
http://www.paulgraham.com/badeconomy.html
And for anyone that is scrappy digital entrepreneur I wish you all the best of success.
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