As I review r2010 and examine the buzz about the coming Consumer Electronics Show, I forsee a very optimistic 2011 for entrepreneurs like you.
There is a battle of elephants going on in the media war, massive shifts of computing into the cloud, tablet and smartphone markets are mushrooming, and global issues of security are stimulating creativity. Those are just a few of the massive waves for entrepreneurs to surf. And that does not even consider the amazing creations emerging in life sciences, energy and agriculture.
Each of those waves is so huge that there is room for many startups to ride each to greatness.
Such a confluence of waves builds the next tsunami.
Experienced investors have cash to invest. A few have even raised fresh funds during the past two years of business recession and psychological depression. Other investors still have cash standing ready to invest. And angels are increasingly organized with money looking for seed rounds. Emerging countries have established pools of capital looking for startups. We now are operating in a highly competitive global money market for new enterprise investing.
And the IPO market is returning to health, promising long overdue exits for tired (and in some cases desperate) investors. Such liquidity events will be quickly followed by investors raising fresh capital which will be looking eagerly for startups surfing the new waves. A few are already filed with the SEC, others are ready. A trickle is ready to start a river and further feed the implied tsunami.
Giant private startups such as Facebook and Twitter will increasingly face the 500 stock ownership limit that triggers mandatory SEC filing of a stock offering. That in effect forces an IPO. It happened finally to Microsoft decades ago. Others will follow. Those are liquidity and valuation events so huge that they add fuel to the rising tsunami.
How can a budding entrepreneur best take advantage of such favorable conditions? Here are a few of the classic tips from years of observing the waves form and rise:
- Founders with an idea will be expected to quickly advance it to the proof of concept stage. That may be a working prototype or a letter of intent from a giant corporate buyer. Whatever it is, it is not just an idea in your head described in a few PowerPoint slides. This implies that you'll need to find some way of financing that work. It is now considered pre-seed and required.
- Getting commitments from top talented people to join you will be increasingly difficult. The good people are already in high demand. Talent wars between Facebook and Google and all the rest are now notorious. Established public corporations will not lose vice presidents without a strong fight. And the global talent pool is so mobile ("Have passport, cell phone, laptop, will travel") that the good people are as likely to find a chance at greatness in Shanghai or Santiago, or anywhere else on this planet. Even Africa has heated up for startups recently. Your skills in forming your core team and recruiting the rest of your employees will be central to your success.
- There is no shortage of startup money, but there is a shortage of startups worth financing. That means you have to have the ingredients for building an unfair advantage. I've blogged and published on that many times. It is still central to all investors who have succeeded backing startups.
All of this assumes the world does not suddenly spin into cataclysmic disaster, political, nuclear or whatever. I end each day amazed that we are still hanging on to a world eagerly engaged in "the pursuit of happiness". Entrepreneurs contribute a huge amount to that worthy human endeavor.
BOTTOM LINE: I open my 2011 year with refreshed optimism. Countless waves of opportunity are rising. Each has room for you to pick an idea and pursue it. Give careful attention to whom you choose to embark with on your adventure. They will be instrumental in helping you attract the people and investors you need to get going. They are central to building your unfair advantage.
I wish you The Best on your Adventure!