Start up or go home.

With the economy starting to tick and employment on the rise, what are the effects on startups? Caterina Fake, co-founder of Flickr, says it's a:

bad time to start a company:

  1. Everybody else is starting a company. It's crazy. Every single person who leaves a tech company isn't going to Microsoft or Google or Apple or whatever, they're going to a startup. Trying to operate in this environment is crazy. I'm getting late-onset ADD from trying to keep track of them all, and it's impossible to get attention for your product amidst all the buzz (er, noise).
  2. Your competition just got funded too. You've got $5 million in the bank, and they do too. Their VCs want them to succeed every bit as much as your VCs want you to succeed. This gets you into a horse race, which no one wants: it's exhausting and expensive.
  3. Talent is scarce again. Hell, I want to find someone to write a little bit of PHP for and I can't find anyone (Hey if you are a PHP webapp builder and have some spare cycles, email me at caterina-at-gmail). Everyone's gainfully employed, and fielding several offers.
  4. You can't operate in obscurity anymore. We started our company in 2002 when nothing was getting funded anywhere and everyone was still licking their wounds from the big bubble bang. Nobody cared about us except us. We were in Vancouver fer crissakes. But we were able to focus on finding and connecting with the people who mattered most: the customers, the users, the community. You get more done when no one's looking over your shoulder.
  5. Web 2.0 isn't all that. Hello?. I don't think there's a rising tide lifting all boats here. I don't think Web 2.0 is the magic bullet some people seem to think it is either. It ain't the features, it's that AND the business. Tagging was a great feature, no doubt. But Flickr was at break even -- about to tip into the black -- when we were acquired.
  6. There's too much going on. Every night there's a Mashup get together, or a TechCrunch party, or it's Tag Tuesday, or SuperHappyDevHouse or SXSW or this conference or that conference. And this stuff is fun. It's a real community. But all of these things are great by themselves, but terrible in combination. I see some entrepreneurs in photos from *every single event*. Who's talking to the users, writing the code, tweaking and retweaking the UI? It ain't the Chief Party Officer.
David over at 37 Signals counters with: It's a great time to start a company.
  1. You don't need VC diesel to get your motor running. Working nights or putting money aside to run full-time for three months is enough to get off the ground if you have a great idea and enough passion to make it matter.
  2. You can actually charge money for valuable services. People have never been more willing to part with their credit cards to pay for services that improve their business or their life. You don't need to spend aeons and cumbaja meetings pondering HOW TO MONITIZE?! when all you need is a service worth paying for.
  3. You don't need mainstream tech to make a dent. No wonder you have a hard time finding people if you're only looking at the mainstream tech circles. You're competing for talent with all the risk-averse insurance companies of the world. We picked Ruby early and used Rails to get access to the cream of the crop. People bustling with passion to develop using tools they love.
  4. You don't need to live in San Francisco to make it big. Or rather, if you want to make it big, don't live in San Francisco. You'll get sucked in to the myths (you need VC!) and drowned by the parties. Most of the worlds talent does not live in that tiny spot of land. I developed the Basecamp, Backpack, Tada List, and Writeboard from Copenhagen, Denmark. And we have one of the greatest developers I've ever met in Provo, Utah. While the rest of the company is in Chicago and New York. The Rails core team includes people from Germany, Canada, Austria, and all over the US.
  5. You don't need a swarm of worker bees to take off. Of course its hard to find 10 or 20 great people by tomorrow, but you don't have to. We're entering a golden age of small teams capable of doing big things. Just get a band of three together and you're good to go for v1. Using modern tools and simply doing less software means that having more people is likely to slow you down rather than speed you up.

 Who's more in the know? For myself, I'll go with: We're not getting any younger. The only time to start a business is immediately.