We were seeing a new wave of companies ramping up to release in the fall as with previous years.  This was just one of many signs that we felt the US economy was turning around.  Money was flowing, new projects were getting some funding, and development teams were being staffed.

As usual, most companies targeted October listing a window of opportunity as the driving factor.  I first referred to this phenomenon in my post about the 2-month launch.

We have had many customers successfully hit October.  One company launched and closed an impressive round of funding shortly thereafter.  Another signed up a Fortune 500 company before the end of the year.  We are very proud of what these budding enterprises achieved.  What’s the one thing that has not happened?

Not a single one has seen any validation that a window of opportunity really existed.

Opportunity?  Yes, definitely.  A window?  One that might close soon?  In my opinion, absolutely not.  The opportunity available to these companies is no better or worse before or after their launch.  The proverbial window remains open for everyone even to this day.

Defining a market window is like trying to predict when the recession you are in began.  Was the Internet search market opened by the invention of the Web or the rise of Yahoo?  If Google closed that window, how do you explain bing? The iPod entered a crowded MP3 market.  facebook is clobbering myspace who left friendster in the dust.  The list goes on and on.

I was reading an essay by William Gates Sr. about his son Bill.  He said Bill left Harvard before graduating to create software for the Altair 8088 because, and I quote, “to take advantage of a window of opportunity he believed would be long gone by the time he graduated”.  This is like seeing a Model T and thinking if you don’t get into the car business soon you’ll miss out.  Laughable now, but I am sure those early companies felt this way just as Gates did and most start-ups do.

I am not saying that windows of opportunity are a complete myth.  Did everyone think Twitter would become this huge or that there was a market for really short messages?  One of our start-ups truly has a unique opportunity.  They can point to market factors, new legislation and a host of other factors converging on what truly looks like a new opportunity.

Hitting a specific window of opportunity is not the dominant factor that determines who survives in my opinion.  New opportunities open up all the time.  Eventually markets become crowded and finding success becomes more difficult.  Companies need to focus more on obtaining an impenetrable position instead of nailing the start or end of a window.

What do I conclude from all of this?

1) Running a start-up successfully is a marathon not a sprint.  Having the early lead in a marathon doesn’t matter that much. Just ask Yahoo or friendster.  You still could easily lose to runners managing their race better if you don’t do the same.

2) Windows of opportunity are very real, yet they don’t exist just because you want to launch in October.  Base your launch time on smart planning and not only on hoping to capture the big spending months before the holidays.

3) If the TechCrunch post about you lists competitors already up and running, then your product is probably not going to create a new window.  Your first mover advantage is already gone.  Learn as much as you can from your competitors.  Most importantly, don’t assume they are standing still.

Here are some different launch goals to consider along with the date of your launch:

Considering launching off-season.  This allows you to fine tune your offering and your infrastructure.  When you expect your most explosive growth, would you rather have a new product that you are still vetting or a proven solution supported by well-trained people?  Maybe ask potential customers this question?

Consider launching based on milestones instead of dates.  For example, launch after you have 500 active beta customers on the system for 2 months or more. Do you think potential investors will care about October if you can show your product is “sticky” for users?  Maybe ask potential investors this question?

Consider launching based on your financial goals.  Your product must be in the market generating revenue at a certain rate to hit your break even target.  Managing to cash flow positive is something many companies may have to do in this changed economy if you believe our predictions back in 2009. Maybe ask your executive staff this question?

I realize that windows of opportunity are one of the many motivators that drive teams to achieve the insane.  Gates may have been wrong about the market for Altair software, but his drive on that opportunity and all the ones that followed ultimately lead to his success.   Believe me, whatever the reason, you must have this drive.  Just remember that while October may seem important, surviving long beyond October is definitely important.

Coyuchi sells organic cotton products including linens and clothing that are produced following the best practices for certified organic and fair trade products.  You can read more about them on their Web site here.

We have a set of Coyuchi organic sheets for our bedroom and we love them.  My wife is a serious linen shopper.  The bed is always covered with the softest cotton sheets and a warm down comforter in natural patterns.  We live in downtown Napa and our bedroom looks out at green hills and, right now, red and yellow colored maple trees. Every morning we share a cup of fresh ground brew in bed with our dog Huck at our feet.  Getting the picture that the quality of the sheets is a big deal?

Socially conscious living is important to us and to Open Mountain.  Here’s a post about company efforts to be more green.  Finding a company like Coyuchi is such a score because it allows us to be eco-friendly without necessarily sacrificing creature comforts.  Sure, we’ll make compromises to support the environment.  Give up our morning coffee experience?  That’s a tough call and I am glad I now don’t have to make it.

Coyuchi could make a small profit catering to locals and out-of-town guests visiting Pt Reyes on the Northern California coast.  The store is an hour or two drive from San Francisco and the town has an eco-friendly feel to it.  Two things happened that set Coyuchi on a different course.

First, people started to care about the planet.  They started to recognize that irresponsible consumption could have serious consequences in the not so distant future.  Second, the Internet provided a means to share information.  The availability of global information brought communities together and informed them about what was happening in the world.  We’re all much more connected now and I think we can agree this has been a positive change.

Coyuchi uses the Internet to expand their reach, sell to even more customers and increase their revenue.  They provide a nice solution for people looking for quality in their linen that also want to support the environment in a socially responsible way.  Best of all, I can tell my sister in New York or family in Los Angeles about the company just in time for Christmas (wink wink nudge nudge).  This is exactly what the Internet was supposed to be about among other things.

The new Web store looks great.  The design is clean and friendly.  We built the site on top of the open source product osCommerce for e-commerce.  Using open source tools fit with the spirit of the project while also providing a cost-effective way to launch an online store without re-inventing the wheel.  In truth, we prefer to use open source tools as much as possible so long as we can meet the needs of our customers.

You’ll have to see for yourself what you think of the result.  The store is live now at Coyuchi.com.  As for the sheets, I can only tell you that we are very satisfied customers and we look forward to more and more products coming online.  Until then, I’m off to my post-morning, pre-lunch nap on my comfy organic sheets.  Huck, hey Huck, time for a nap…

We did not take any initial investment to start the company and that mandates we watch our expenses fastidiously.  In an upcoming post reviewing our predictions for 2009, we think our prediction about back-to-basics business principals has proven true in the new economy. Young companies that thrive in 2009 are often profit drive and bottom line focused.  Open Mountain is no different.

That said, there is a risk staying virtual.  Will customers be more impressed if they walk into a well decorated office with large conference rooms and amazing views of the San Francisco bay?  Or will they understand if we meet using rented conference room space that is nice but not part of our headquarters?  Does this really matter?

The good news is more and more of our customers understand the virtual concept.  Customers are in fact virtual themselves including the new customer we met with and many of our existing customers.  We no longer have to explain that working remote and having a work-space only head quarters does not hinder our ability to deliver.

A virtual company structure is becoming a sign of forward thinking and smart money management.  Companies grow more cost effectively and avoid the risk of expensive leases or even worse having to move.  This approach beckons back to the original Silicon Valley garage start-up and the lore that turned the garage of Bill Hewlett and Dave Packard into a historic land mark.   Spend your money where it matters and preserve your cash until you have money coming in.  As developers, we like working for smart companies as that increases the chance the fruits of our labor will live beyond the challenging launch phase.

I’ve spoken enough in the past about remove collaboration strategies like this post.  I thought I would add some other ideas to help create a sense of company for people who primarily work together yet separate.

Meet periodically face-to-face

We try to meet once a week in a common location.  When we do, we often include lunch, dinner or social activities.  If our near-shore developers come to town, we do our project work in-person as much as possible even if it is not necessary.

Become friends on facebook

Sharing photos, links and comments on facebook is like putting a picture or comic outside your cubicle and having people stop by.  My business partner posts his runs and other actives online and in my mind I hear him telling me I need to exercise.  Sharing life experiences contributes to the sense of company and community.

Use video conferencing

I’ve talked about the benefits of using video in collaboration often enough.  Next time you have a remote Skype session, fire up that Web cam that probably came free with your laptop.

Send weekly status reports

A great way to keep everyone connected is to send and read status reports from everyone in the company.  Reading status reports takes the place of weekly or monthly company meetings and creates a more effective way for employees to feel part of a larger whole.

As you start your company or plan your growth, we highly recommend you consider a virtual strategy.  The cost benefit is significant.  Online tools, status reports and other techniques help you ensure your work force is connected and engaged even if you can not see for yourself.  Interestingly, we are seeing the same evolution with online computing resources.  Companies are saving the cost of building expensive hosting infrastructure by deploying applications on virtual resources in the cloud.  While you are at it, how about considering a virtual development team too!

Business models – We think because of the current economic client and funding environment companies will be forced to focus on the business side of running a business in 2009. Closing the doors because you run out of cash is not fun for anyone. Investors will expect a real business model from startups and one that doesn’t start with, “Once we have 50,000 users…” We saw this start to happen last year at a facebook meet-up. Several people in the audience wanted to know how the top application developers were going to monetize their success. Short of acquisition, these companies didn’t have an answer. This year, they will need one. How about charging customers who use your software? Surely, if the product is valuable, people can spare $10 a month. Look at the iTunes App Store for an example of how to do this right.

Substantive content – The Internet has truly democratized content. You can post a video, publish a book, write a blog, become an expert, and really put any content you want online as soon as it’s done. But now, we consumers of content spend a lot of time searching for something worth reading let alone finding something we might remember or share. Many people who published perhaps shouldn’t have. Case in point, who better to know what’s funny or not than Will Ferrell versus some guy listing his video under comedy on YouTube? We predict in 2009 consumers of content will focus more on content they can validate or that includes some level of credibility. Sites that have credible subject matter experts or support validation of content should garner more attention in 2009.

facebook is valuable, but social networking is a feature – My non-tech family members are on facebook. The Today Show just did a segment recently about parents invading their kids playground. I even saw some not so flattering pictures of my nephew at his first year in college. facebook may not be worth 15 billion anymore, but we definitely see a new surge of friend requests and many are coming from the least likely of usual suspects. The increased user base will renew the interest in facebook and reverse the declining valuation trend. On the other hand, many other social networking sites are struggling as most companies now include common features like invites, friends, posting, sharing and profiles. We suspect it will be hard for social networking destinations to prove their value in 2009 except for those already well established like LinkedIn for business and facebook for consumers. Look to facebook, and LinkedIn, to grow their dominant position but also for them to introduce new ways to generate revenue for themselves and those around them.

Bootstrapping – As the funding pendulum swings back toward tighter controls and stringent valuations, more and more innovators will resort to the garage startup and working a day job to fund the night job. Founders won’t want to give away ownership, nor invite board members into their decision space, unless the money is good and the cost not so bad. Those caught in this downturn or in the last one in 2001 remember what it means to lose control of your company to investors. Founders will choose to retain ownership as long as possible even if their launch is delayed. We discuss the impacts of various funding models in a previous post.

The New New New Thing – It’s time for new ideas. Calling your company Web 3.0 is not a new idea (notice the version 3 in the name). Tweets. Blogs. Wikis. Community. SaaS. Good stuff that came out of Web 2.0 and before. But people are no longer interested in a new twist on an old idea. The companies that establish a new product category in 2009 will be pleasantly surprised by increased interest from people tired of hearing about yet another way to send a message or post content.

Fast launch – Is the 6 month launch obsolete? Is the 2 month launch simply a bad idea let alone doable? We provide our opinion in this post. The latest trends in development languages and technologies, especially Ruby on Rails and cloud computing, enable faster launch times through quicker process and less over-head. Development teams will be forced to make hard trade-offs this year as they struggle to meet the demands of an evolving market and shrinking development cycle.

Please let us know what you think of our predictions and what you think will be important in 2009.

In posting our question, we were considering what impact being green could have on the revenue side of our business. As we had hoped, several executives indicated that they would look favorably on companies making a green effort. The responses were definitely encouraging. Considering our environmental impact is now even more of a factor than before. Making your company more attractive to customers, saving money at the same time, while contributing to a global cause, all sounds like a win-win-win to me.

We haven’t implemented everything we planned, but here are a few things we did to be more green:

Limited office space – We moved our office to San Francisco as part of our company growth. Instead of renting a large space with extra common areas, we procured a smaller space with room for people to work. We’ll rent larger conference rooms, which we need far less often, from a nearby company that offers meeting rooms and other amenities. This is a win-win-win for us (sound familiar). We’re keeping our fixed costs low, reducing our impact on the environment, and yet not reducing our ability to work collaboratively or meet with clients.

Virtual corporation – We fully support working at home. We use online software tools such as Google docs and a virtual PBX so that the working location of the employees does not impact productivity. We have agreed upon times when we’re in the office together. We reduced our commute with these decisions, and at the same time, increased productivity, improved our green-ness and improved employee satisfaction. Wait a minute, is that another win-win-win?

Email PDFs – We try to use as little paper as possible. Email and shared online documents cut our usage significantly. But then, contracts often require a dreaded signature. When a real signature is needed or when we must start with paper, we scan the final document into electronic form as a PDF so that the document can be emailed. For most recipients, an emailed PDF they can print is no different than a FAX. We bought an HP scanner which has a very convenient PDF button right on the top.

e-faxing – We use myfax but have heard eFax is good choice as well. You can send faxes via email attachment and incoming faxes come in as electronic documents. When combined with the previous point, you really can do most of your document handling sans paper. The recipient will still be printing on paper unless they are also using an e-fax solution. I guess we only have a win-win this time.

We’re not done yet, but we feel we have made a good start. We have some new contracts to sign with clients and partners. We’re going to look at using an electronic signature service such as EchoSign. One of our existing partners used the service with us and the process was straight forward. We need to review with our legal team how binding the signature is for legal matters.

We’re still using printed business cards. Maybe someday the infrared technology will be prevalent enough where we can just beam our details to a contact standing a few feet away. Our mobiles have this ability, but the recipient does not always.

In the end, we’re happy we made the effort. Being green feels good and is a strong motivator to re-evaluate business processes. We like obtaining more customers. Saving money in this economy is also good. We’ll see over the course of the year what impacts our actions have on our business

Feel free to let us know what else we could be doing!

Some very lucky people were at technology startups around 1995. Companies going public prior to 1995 were forced into a strict reality of profitability. The general rule of thumb was several quarters of profits before you IPO. Then Netscape went public in 1995 with no profits and based on the hope, or should I say the hype, of the emerging Web. Look what they started by offering hype above reality. Their success changed the game for what was required by companies to create value in the market.

Imagine what may have happened to you if you believed in hype back then. Development of Hotmail started around 1994 and Microsoft bought it for $400 million in 1997. The product was just email in a browser which is something most developers could create in a weekend with PHP and the mail API. Broadcast.com was started in 1992 as online radio. In 1998, it went IPO and a year later was bought for $5.7 billion. The founders of Netscape, Hotmail and Broadcast.com were looking for the next great thing when most of the industry was stuck in reality.

Then the boom hit.

Everyone came flocking to the Internet and companies were starting all over the place. Idealab!, an Internet incubator, was working on creating a company a month. A company a month! How could that possibly lead to success? It takes years to build a great company. Yet, in 1999, 457 companies went public and a quarter of those doubled in the first day. If you define success by a liquidity event, then clearly success was to be had by many.

One of the most discussed business models was the land grab, a.k.a. the Amazon.com model. Don’t worry about profits or debt, just get as many eyes on your site as possible and stake your claim. Amazon incurred what felt like mountains of debt, and in the end out spent their competitors to success, though I don’t mean to trivialize the other aspects of their impressive execution. While some companies succeeded in this great California gold rush, like eBay and Amazon, many more did not. Why?

The bottom fell out.

In 2001, the stock market took a nose dive and the money dried up. A mere 76 companies went IPO that year. Most of the companies started during the boom went out of business or were gobbled up at bargain basement prices. What happened?

Companies were so focused on the hype and the land grab that they ignored one of the fundamental realities of business. When you don’t have any money, the doors close. Watch the movie Startup.com if you want to see this played out in real life.

Notables like WebVan, eToys, and Beyond.com floundered because they were caught up in the hype and expected the investor community to keep funding them. Had they paid attention to the reality of running a business that must pay expenses and do marketing to get customers, they could have weathered the storm and been the last man standing in a wide open field. Talk about a land grab. When hype implodes, the companies who come to their senses first will have the best chance of surviving.

History is repeating itself right now. The Web 2.0 movement emerged from the dust of the previous fire. The economy rebounded and money started flowing. Look at how many new companies are riding this wave, and as an aside, what’s up with those names???

Facebook is worth billions. MySpace sold for $580 million in 2005. YouTube sold for $1.65 billion in 2006. While many of us were just trying to stay employed, and others were switching back to their former careers, the savvy entrepreneurs remained dedicated to innovation and chance. Being at Google in 1999-2003, forgeddaboutit!

The movement was still hitting stride when some very notable investors in the valley revealed this presentation to the industry earlier this year. OK, to be fair, the economy was already in a funk. But yet again, those companies who were living on hype suddenly found themselves needing to preserve every dollar hoping they can reach cash flow positive before the lights go out. How many of these companies do you think will be around in a year or two?

What does this tell us?

If you believe Warren Buffet, then soon will be the time for hype again as everyone has just been forced back into the reality of trying to get through the crunch. Companies that have identified successful markets or products may run out of cash leaving a door wide open. Investors are preserving cash in case they need it to protect investments they have already made. How long do you think they’ll do that before they start looking for the next MySpace or Facebook?

Even more important, the companies that survive this contraction will be forced to become well-run businesses that effectively manage their bottom line. That in turn makes them attractive to investors provided the hockey stick growth is possible in their market. The money will flow again, that much is sure, if you believe Warren Buffet.

My advice to you is to let the market thin out for a year or so. Spend the time working in a stable job while you enhance your skills and brainstorm ideas. Then, when you have your next idea, a feeling you should definitely validate with all the smart people you trust, get started so that you will have a solid offering when money becomes more available again. That’s what I’ll be doing. I predict by 2010, the seed money will be flowing again. The best founders will not forget the lessons of economic down turn and opposing forces.

If you don’t think there are still great ideas out there, let me say that I still can’t check my voice mail when walking in my front door by just saying “What’s new?” I still don’t know how energy efficient my house is from reading a meter on my wall. I still haven’t worked on the product for my sister that I uncover in this post. And don’t even get me started about how many small businesses are still using desktop software.