The new economics of entrepreneurship

June 11, 2009 | Guy Kawasaki

StaffI speak to tech and entrepreneurial audiences once a week. Every time, I ask people if they’ve heard of my web site, Alltop.com. Usually, about two percent of the people in the crowd raise their hands.

This pathetic market awareness comes after I’ve been evangelizing Alltop.com for the past 18 months, using Twitter, blogs, sucking up, and cajoling in every way, manner, and form that’s legal.

What should my reaction be? I could get depressed, but I look at it differently: I say to myself, “Alltop is getting about 50,000 page views a day right now, and this is with only two percent of the world knowing about it. Imagine how popular it will be when the word gets out.”

Delusional? Perhaps, but one has to be delusional to be an entrepreneur these days.

Eternal question: is the glass half-full or half-empty?

Now let’s zoom out to a bigger picture: this pesky recession we’re in. It’s the worst time ever to start a company, right? Only if you’re not an entrepreneur.

If you are an entrepreneur, the economics have never been better:

  • Talent is free or cheap. Sorry, I’m not a warm and fuzzy guy, but the truth is that there are lots of talented people who are unemployed or under-employed right now. If there was ever a time to get great people for free or cheap, this is it.
  • Tools are free or cheap. With open source stuff like MySQL, Drupal, PHP, Rails, and WordPress, can tools get any cheaper? You’d really have to work at it to spend a lot of money for the tools to build something these days.
  • Storage, bandwidth and servers are free or cheap. I’m old enough to remember when you had to buy servers from Network Appliance to host your web site. Now with the cloud services that companies such as Rackspace provide, you can get more storage, bandwidth, and servers for $1,000 a month than you’ll be able to use.
  • Marketing is free or cheap. The single best way to market your product or service is Twitter, and that happens to be free. Facebook is a close second, and it’s free too. Sucking up to bloggers takes effort and swallowing your pride, but it’s not expensive.

The only thing that’s wrong right now is that very few people and organizations are spending money. Thus, while the cost side is under control, the sales side isn’t. You could adopt the logic that you’ll start innovating and entrepreneuring when the recession ends, but that is plain stupid. You want products and services that are ready to roll when the recession ends—not a year later.

So my advice is to take advantage of the new economics of entrepreneurship and get going now. Keep your costs down, and keep grinding away at the opportunity.

Then one day, you’ll ask an audience how many people have heard of your company, and everyone will raise their hands.


Guy Kawasaki is a managing director of Garage Technology Ventures, an early-stage venture capital firm and a columnist for Entrepreneur Magazine. He is a marketing partner and Evangelist for Rackspace.
Previously, he was an Apple Fellow at Apple Computer, Inc. Guy is the author of nine books including Reality Check, The Art of the Start, Rules for Revolutionaries, How to Drive Your Competition Crazy, Selling the Dream, and The Macintosh Way. He has a BA from Stanford University and an MBA from UCLA as well as an honorary doctorate from Babson College.

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