Tough Economy but Perfect Storm for Startups

  • December 7, 2010
  • Scott

Steve Blank writes about the “enterpreneurial singularity“, a result of a combination of factors that make it easier than ever to start up a new company – combined with a set of factors that reduce the opportunity cost of doing so (the implied risk is less than it has been in a long time).

The Entrepreneurial Singularity
The barriers to entrepreneurship are not just being removed. In each case they’re being replaced by innovations that are speeding up each step, some by a factor of ten. For example, Internet commerce startups the time needed to get the first product to market has been cut by a factor of ten, the dollars needed to get the first product to market cut by a factor of ten, the number of sources of initial capital for entrepreneurs has increased by a factor of ten, etc.

And while innovation is moving at Internet speed, this won’t be limited to just internet commerce startups. It will spread to the enterprise and ultimately every other business segment.

When It’s Darkest Men See the Stars
The economic downturn in the United States has had an unexpected consequence for startups – it has created more of them. Young and old, innovators who are unemployed or underemployed now face less risk in starting a company.  They have a lot less to lose and a lot more to gain.

This is partly why I’ve remained (perhaps overly) optimistic throughout the recession.  I just believe the seeds are being planted for a sound recovery, and perhaps a more diverse future economic base.  Companies that survive the recession will emerge with new skills, customers, products, and survival skills that will help immensely as the economy grows.

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