Entrepreneurs surviving first recession

Mitchell Hartman Dec 16, 2008

Entrepreneurs surviving first recession

Mitchell Hartman Dec 16, 2008


Steve Chiotakis: This is a pretty scary economy, even for the investor with the thickest skin.
Imagine what it’s like for an entrepreneur who’s never had to deal with a serious recession. Some are looking at the bad news as a learning experience. From the Entrepreneurship Desk at Oregon Public Broadcasting, Mitchell Hartman reports.

Mitchell Hartman: Consider this: During the recession of the early 1980’s, Bill Lynch was still in diapers. In the ’90’s recession, he was nerding out in middle school playing computer games. By the time Lynch and his best friend, Matt Tucker, landed jobs in Silicon Valley just out of college, the dot-com boom was well into its heyday and headed for a crash.

Bill Lynch: We started in 2001, right, and that was on the heels of the dot-com implosion.

What they started that year was Jive Software, a suite of online collaboration tools for business. Lynch says they were still pretty green, but they’d seen enough dot-com failure for an entrepreneurial lifetime.

Lynch: The biggest takeaway for Matt and I were a set of anti-lessons if you will. We’re not going to do it this way, we’re going to focus on a really great viable product from the get-go. We’re going to have a way to make money.

Jive Software now has 120 employees and offices in Portland, San Francisco, London and Zurich. When the IT sector started looking sketchy this fall, they quickly downsized to get expenses in line with revenue.

Lynch: The biggest risk is not taking action soon enough, or if you’re going to cut anything — be it people or expenses — that you don’t go deep enough, fast enough.

Rieva Lesonsky blogs about the startup-economy for MSN Office Live. She says even though young entrepreneurs aren’t seasoned by success and failure yet, they have some advantages over their elders.

Rieva Lesonsky: They seem to like, travel in packs. And they seem to just inherently share information with one another.

Translation: they understand the power of social networking, and marketing on the Internet. Lesonsky says they also tend to be risk-takers.

Lesonsky: And I think it’s really good to be a little bit fearless. When you start being fearful is when you start pulling back. And you never can grow your business with that attitude.

Of course, not all young entrepreneurs are the business equivalent of bungy-jumpers. Zach Davis founded his web development company, CastIronCoding, a few years ago with a raft of student loans to pay off and a new baby on the way. Now, he’s heading into no-man’s land without a map.

Zach Davis: Once you’ve been through this and gotten through it, you know that you’re going to get through it most likely again. I don’t have that behind me.

Davis says business has been up every year since he launched. But he’s not adding employees or taking on debt to expand, until the economy turns around.

I’m Mitchell Hartman for Marketplace.

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