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There are a few factors at play that keep me optimistic. First, the web continues to attract double-digit increases in advertising dollars. While this growth m
by wehriam 19y ago
There are a few factors at play that keep me optimistic.
First, the web continues to attract double-digit increases in advertising dollars. While this growth might slow, it seems unlikely to reverse. This means the web industry will continue to expand even if the economy as a whole does not.
Second, when the economy slows people tend to save and invest instead of spending. Given that many startups are driven by angel investment or venture funds, that's a good thing.
Third, web based and open source technologies are making huge gains in big business. They'll be increasingly attractive as companies tighten their belts. Given that the YC crowd is focused on this sort of development, that puts us in an enviable position.
I would start to worry if Google, Yahoo, Microsoft's web division, IAC, etc start making big layoffs. They could flood the market with competent programmers, driving down market rates and increasing competition for investment dollars. (Although I'm sure there are some companies fighting for talent that would love for that to happen.)
I think there's a greater risk of VCs moving to greener pastures - solar, biotech, etc - as web applications become commoditized.
- foonamefoo 19y ago>First, the [...] It has reversed before, why does it seem unlikely now?
- wehriam 19y agoBecause it's a different market than it was in 2002. Technology has progressed and people continue to move from other forms of media to the internet. The large players are more stable. Media buyers are more comfortable with the idea of advertising on the web. That's why online ad revenue increased by 25% in 2007 - http://www.iab.net/insights_research/1357 http://www.iab.net/insights_research/1357
- david927 19y agoIn a downturn: 1. advertising dries up completely. 2. people tend to curb risky financial moves, such as early stage capital 3. businesses will cut back on almost all new development The big question isn't, "Will it get bad?" but "Just how bad will it get?"
- wehriam 19y agoLook at this graph of television ad spending over the last 30 years - http://www.nextcenturymedia.com/images/Image3.gif http://www.nextcenturymedia.com/images/Image3.gif - (the associated article - http://www.nextcenturymedia.com/library/dougross-article-b.htm http://www.nextcenturymedia.com/library/dougross-article-b.h... - is less pertinent.) While there is a noticeable lack of growth during recessions, it's anything but dried up completely. Jeff Bussgang does a nice job of explaining why VC funds are more attractive to investors during a downturn - http://bostonvcblog.typepad.com/vc/2008/01/whos-afraid-of.html http://bostonvcblog.typepad.com/vc/2008/01/whos-afraid-of.ht... The sky is not falling.