Good Companies in Bad Times: What Tech Investors Say
All tech investors are saying that good companies are usually made during bad economic markets.
I believe that Roger will be a great success in his new venture with Battery Ventures. He has the experience and drive to make it in the competitive world of business. I am sure that he will be able to help many businesses grow and thrive.
Many tech investors are saying that great companies are often formed during bad economic markets. This is because during these times, there is more opportunity for innovation and creativity to thrive. Companies that can adapt and innovate during these difficult times are often the ones that succeed in the long run.
There's no question that difficult economic times can be a breeding ground for innovation and success in the tech world. Just look at Salesforce and Google, both of which grew rapidly during and after the 2000-2001 dot-com bust. Or now-iconic tech names like Uber, Airbnb and WhatsApp—they got off the ground during the 2008-2009 recession and subsequently flourished, despite some bumps along the way. So if you're a budding entrepreneur with a great idea, don't be discouraged by a down economy—it could be just the opportunity you need to get your business off the ground.
1. Look for opportunities in downturns: Companies that have been able to scale during recent economic downturns offer lessons for today’s startups. 2. Be patient: It takes time to build a successful company. 3. Focus on your core strengths: Don’t spread yourself too thin. 4. Be flexible: Be prepared to adapt to changing circumstances.
The current economic climate has left many people struggling to make ends meet. Business models that offer opportunities to earn extra income can be a lifeline for many families. These types of businesses can also help boost the local economy by providing much-needed jobs.
It's fascinating to see how new peer-to-peer marketplaces are emerging, especially in the sharing economy. Turo is a great example of this, allowing people to share their cars with others for a fee. Neighbor is another example, allowing people to rent out extra space in their homes for storage. It's amazing to think that just a few years ago, none of this would have been possible. But now, thanks to the internet and other technologies, people are able to connect and share resources in ways that were never before possible. It's truly amazing what can happen when people are given the opportunity to connect and share.
In today's economy, it is more important than ever to find ways to save money. One way to do this is to provide cheaper alternatives to current products or services.
It is often said that the most sustainable and lower-cost provider usually captures the most market share in the long run. This statement is especially true during difficult times like recessions. After the 2008 recession, for example, Airbnb became a popular alternative to hotels because it was cheaper and helped property owners earn additional income. A 2016 study by Morgan Stanley found that 49% of Airbnb users chose the platform over a hotel stay because it was more affordable. Similarly, during the recession of 2010, Warby Parker became a successful online retailer of affordable and fashionable eyeglasses. These companies prove that it is possible to succeed during a recession if you offer a lower-cost alternative to the standard product or service.
I'm bullish on Groupon's prospects. I believe the company is well-positioned to continue benefiting from consumer trends, including a desire to save money and support local businesses. I think Groupon's deals will continue to be popular with consumers and businesses alike, and the company is well-positioned to capitalize on this.
Similarly, "freemium" revenue models are effective go-to-market strategies during tough times. By offering a basic product or service for free, businesses can entice potential customers to try their product.
Mailchimp's freemium strategy is a great example of how a company can respond to tough economic times. By offering a portion of its service for free, Mailchimp was able to attract a lot of new users and grow its business. This strategy can be applied to other businesses as well, and it is a good way to weather a crisis.
The power of free is demonstrated by Slack, an online gaming company that pivoted to become an ubiquitous online business and collaboration tool. Within 24 hours of its beta launch in 2013, 8,000 companies had signed up for Slack. By 2018, the paid version of Slack was being used by 3 million users.
As software becomes more and more essential to the functioning of businesses and other organizations, those that can provide durable, mission-critical software will be in a strong position to prosper.
Software has become an essential part of almost every business and industry. But the most powerful software products are ones that customers rely on to perform a critical business function and use daily, like a core system of record. These are sticky products users won’t want to give up, even during times of cost-cutting. For this reason, startups offering products on a subscription basis, often through long-term, enterprise contracts, often do well during tough times.
The network effect is a powerful tool for businesses, as it can make their products more valuable the more people use them. This is especially true for SaaS-enabled marketplaces, which can aggregate a scattered supply of labor or materials in a given industry. WhatsApp is a great example of a consumer application that has capitalized on the network effect; users are more likely to join and stay on the platform because their peers are already using it.
While it's difficult to say how the economy will develop in the coming months, some tech startups may be able to weather a potential recession better than others. Those executives who are able to make tough decisions and persevere through difficult times will always have a better chance of success.
Battery Ventures is a private investment firm that provides advisory services to other private investment funds. The company does not provide investment advice to the public or other advisory clients. Battery Ventures invests in a variety of companies, and its full list of investments is available online.
The Forbes Finance Council is an invitation-only organization for top executives in successful accounting, financial planning and wealth management firms. If you are a CEO, CFO, or other top financial executive, you may qualify for membership.
