“It’s easier to start up in a downturn”

Jun 03 2010

Jason Cohen

Jason Cohen

He considers himself a gear-head geek. Jason Cohen is the founder of  Smart Bear Software, maker of Code Collaborator, the world’s most popular tool for peer code review, and also a founding member of ITWatchdogs, another bootstrapped startup which became profitable and was sold. He blogs about marketing and small business and has kindly answered HitBarcelona questions.

- You built your business, Smart Bear Software, with no venture funding and no debt. Is it possible to do that in the current economic situation?

Yes, bootstrapping isn’t dependent on the economy. In fact, it’s easier to start up in a downturn because (1) Good people have lost their jobs and could help you, (2) Vendors are willing to give you a good deal, (3) If your company doesn’t work out, by then the economy is probably back into upswing and it won’t be hard to find a job.

Modern technology like inexpensive cloud servers, free email and collaboration tools, free application development tools and platforms, and free (in money, not in time) marketing channels make it easier than ever to start a company with no money.

I give further explanations on this in a couple of posts: ‘Why little companies grow in recessions‘ and  ‘6 reasons to start up in a bad economy‘.

- Then, you sold the company. Was it the plan all along?

Yes, although you can’t build a company with the idea that you’ll flip it because it sucks all the heart out of it. Try to build a genuinely good company and it will be easy to sell. “Good” means: Growing revenue, new users every month, profitable, clear audience, customers who like you.

- You’re currently working at Capital Factory, a seed-stage mentoring program for startups: What is your principal advice to startup entrepreneurs? What is the path to profitability and growth?

If there was a simple answer to those questions, I could snap a finger and launch 20 successful companies! Of course there’s no one answer. A common mistake is to not honor the goal of profitability. There’s a lot of “build something cool and customers + profits will appear.” Not true. Tackle the path to getting paying customers first, before you write a bunch of code, before you waste a bunch of time. Test your assumptions by having other people say they’ll buy it. Do the hard stuff (marketing, finding customers) before the easy stuff (writing code). But mostly, just start. Most companies fail simply because you don’t try it! How lame is that?

- Do you think an event like HitBarcelona can help entrepreneurs to achieve their goals?

Sure! We all learn best when we interact with other entrepreneurs – both seasoned successful founders and people struggling just like you. Sharing ideas and real knowledge from the field has no substitute. Events like business plan competitions force you to think through your business and listening to others gives you ideas and inspiration. No one thrives alone!


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