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We write about what happens in our startup week by week...
I read an interesting article recently about one famous company and its history. The story goes like this:
In 1833, Marcus Samuel founded an import business to sell seashells to London collectors. When collecting seashell specimens in the Caspian Sea area in 1892, the son of the founder realized there was potential in exporting oil from the region and commissioned the world's first purpose-built oil tanker, the Murex. By 1907 the company had a fleet.
The name of the company is Shell, and the brand is one of the most famous symbols in the world. The yellow and red colours used in the brand logo are thought to relate to the colours of the flag of Spain, as Shell built early service stations in the state of California which had strong connections with Spain.
Wow, that's a lot of information! First the guy starts a business to collect shells. Then his son, some 60 years later, finds out that the shells are not enough and switches to oil, propelling the business into unseen heights. The company is from London, UK, their logo is red and white because of the Spanish flag and everything is connected through the State of California in the USA. Sounds like 21st century, although it happened 150 years ago.
Starting up any business is hard, making money out of it is even harder. One of the first lessons every manager learns while trying to push the company through the break-even point is that business models change. In the times you're starting up, you thought you will earn money with the "best business idea" ever. Yes, of course it is the best business idea in the world - nobody thought about it, nobody knows it, you are in the position to change the world. The dream lasts until the time you have to earn the first dollar from your "great business idea".
Then you start tweaking, turning, changing, refactoring! You do everything and anything for your company with only one goal in your mind - survival!
This is exactly what we did in Bumblehood. I saw that the investment "situation" is far from being perfect and that it is going to be hard to raise new capital for the project in the near future. So we started to tweak, turn and change; 6 months later we have BumbleMap, the product which feeds us in these stormy days.
The times are hard, especially for startups. Last week I got an E-mail from the founding member of The Funded, a web site dedicated to research, rating, and reviewing funding sources worldwide. In that E-mail, the first couple of sentences were not so inspiring to the young entrepreneur which is searching for a new round of investment. The E-mail said: "The venture capital bubble has burst, and change is coming. Investments into venture funds are at a fifteen year low. There is increasing risk that innovative businesses will be unable to raise capital within 18 months."
Wow again! 18 months - that's a long, cold winter. Maybe even two long, cold winters. Young entrepreneurs, prepare for the ride.
I have been talking to some of the venture capitalists in the last 10 months. Most of them silenced at some moment and I thought I did something wrong. The project is crap, ideas we created are useless, my team is not known enough, I suck, something is wrong! You know all those thoughts person has when not everything goes as planned.
Then I asked a couple of my friends, who happen to be in the same process of raising capital, how were they doing. And this is where I figured out that we all suck, all our ideas are crap and none of the teams is known enough. But it was not us being wrong. It was just the lack of new investments happening in the world. And they still don't.
New entrepreneurs, prepare yourself for the ride. And two cold winters!
Posted by Boro Milivojevic on November 2nd, 2009 --- Permalink --- Tagged in categories: What's up --- Comments on Forum
