Most startups are formed by passionate and creative beings – that said, if one survives, the need to succeed will most certainly catalyze a metamorphosis to a sustainable entity. I doubt most real entrepreneurs will cling to their idea without listening to the market. Clearly this metamorphosis will comprise of many a sacrifice and hardship, but I would hate to throw the baby with the bath water. And, most definitely it may not result in an enterprise worthy of VC returns.

There are numerous examples in Silicon Valley history – all the way from Sun to dare I say Junglee. Sometimes, the proverbial “s### or get off the pot” has a very valid corollary – if you sit long enough you will finally succeed. Zombiehood while easy to pontificate is not very deterministic.

This boils down to – do you invest in the team or the product??

Exactly, supposed, just like politicians should be fixing the world.

Problem is around 97% of all startups out there are attacking already saturated markets (ie: all the youtube clones and same-o social networks) or unreliable business models from where no revenue is known to have been made (ie: twitter) or seem possible to be made.

As far as I see it as, Startups are both flexible and quick! This should provide an edge to startups over other big/established players. More so in case of downturns. Instead of curtailing growth by reducing resources, startups can leverage their resources tactically! I have seen quite a few startups doing that now, coming up with new things which other ways they wont have done. Of course, this doesn’t mean changing their strategic plans and long term vision.We at JobeeHive(http://www.jobeehive.com) are also doing things tactically.

Having said all this, for few there might not be any tactical solution other than reducing resources. Survival they see it as!

Either case, wish you all good luck! Lets take this downturn head on and make sure we sail through!

– –Sandeep G

It’s just like diet alone won’t do too much on reducing weight, you need to excise too.

Business is not always about “strategy”, it’s more about common sense, and people want to live, no matter what. In my view cutting cost is, despite its cruelty of laying off, a legitimate path toward survival.

“If you can’t provide decent returns to your VCs, quit cutting costs just to survive, instead shut shop and go home” — I disagree with this underlying tone in the article.

In fact, this “quick money” syndrome and constant obsession with “exit” that drives the overall financial sector is what has got the economy into this mess in first place. VCs make investments in good faith that a company would go places and give them a decent ROI in a 4 years. But if that doesn’t happen it doesn’t mean that the company should fold! A perfect example of throwing the baby with the bath water.

Ultimately a business (irrespective of whether it be venture backed or not) is about adding value and getting paid for it. Unfortunately, the valley has been seen far too many of companies that produce “cool” products which produce “zero” or insignificant revenue, yet get acquired, and turn out to be brilliant investments. The result is that several entrepreneurs and VC have been dreaming up “get rich quick” ideas, that often don’t pan out as good investments. But even some of these over time start producing truly valuable products and services and generate revenues. There are no shortage of companies from the dot com days who have survived and are today profitable, but have never sold out or gone public for various reasons. These are terrible VC investments but not bad businesses that don’t deserve to survive!

The “preference overhang” is an excellent point but its easier said than done. Its a delicate balance between emotion and money. Even in worst of times entrepreneurs and VCs alike hope to get blood from a stone.

Mike http://www.wannadevelop.com/