STARTUPS 2012: Tips on what to expect

Here we are in 2012 with a lot facing us as we peer into the coming twelve months.

Like you, I've been pondering what is likely to happen so that I can take advantage of what I perceive and determine what to avoid.

Your primary personal goal for 2012 is to Remain Positive in Spite of Whatever Happens.

You have a lot on your mind and a lot to do today so I here are some short, swift tips to think about:

1. Basic Rollercoaster World Economy
2. Startup Investors Cautious and Very Picky
3. Mass Market Wins Most
4. Great Employees Harder to Find
5. Emotions Ride Big Waves Up and Down

• Basic Rollercoaster World Economy: Expect the unexpected from the giant economies. Consensus has forecast a year of "stagflation" (stagnation overall, with inflation in some areas such as food and energy). Europe in recession, China and India slowing down dramatically, US not accellerating, with the rest of the world hoping to avoid such troubles. National leadership is up for change in bitter elections in major countries. Thus 2012 is not the year of "The rising tide lifts all boats". It is "The Year of the Rollercoaster", a year of many ups and downs, all not easily predictable.
  
  • POINT: Your startup will have to be founded on a rising wave that is independent of the world economy. End users will have to get very excited about it, regardless of their economic situation. Your product/service has to have lots of Wow! to succeed in 2012.

• Startup Investors Cautious and Very Picky: The lack of enough liquidity events has tied up the check books of the angels and venture capitalists. It is not a drought, but many of the people with money are not confident they have enough cash to eagerly pump more into struggling startup after struggling startup. Startup investors reflect the same attitudes of other investors around the world who are upset by poor 2011 returns on investments and now are struggling to do better.
  
  • POINT: You will have to have a lot of WOW! in your presentation to get investors to open their cash vaults. Spend time to pick those who have a lot of fresh cash looking for fresh ideas. Beware of those who have limited cash remaining for their existing portfolio companies. Raising startup money in 2012 will be a long, hard slog for most founders.

• Mass Market Wins Most: Any technology, any idea must appeal to huge world markets during 2012. Life or information science, service or software or hardware, all are now caught up in the vast turmoil of the world market. Did you know the hottest markets for startups are in Africa? Their economies are growing twice as fast as China and India. Industrial simply means being on the food chain that ends up with a consumer. Investors and potential startup employees know that. So must you.
  • POINT: Your startup has to appeal to huge potential audiences. 2012 is not the year for a cautious niche enterprise. It is a year for bold ideas that exploit existing markets and technologies. Expect to see many "mashups" that mix such elements into exciting products/services that get a lot of people excited. I bet we see several Wright brothers emerge with amazing gadgets/businesses built with stuff that already exists and which make headlines in a hundred languages.

• Great Employees Harder to Find: Hot startup zones (e.g. Silicon Valley) already have funded startups at war with each other as they try to recruit the great engineers, marketing people and startup experienced leaders. The uncertain world economic outlook has great people cautious about leaving a blue chip job to join a risky startup. This will continue during 2012. Great people eager to join startups are going to be tough to recruit.
  
  • POINT: Your recruiting skills will be tested as in no other year. Investors want confidence you can find and hire and retain the best people. The best people want the same from you. It is up to you to achieve that. You have to have the skills to do so. Related experience that has lead to recruiting success in the near past will make you stand out. A clear plan of how you will recruit needs careful thinking.
• Emotions Ride Big Waves Up and Down: All of the above add up to an unusually violent range of emotions that leaders will experience during 2012. The highs will be very high and the lows very low, none predictable. When they come (and they will), you'll have to respond quickly and not destruct. You will not avoid such emotions. Even Steve Jobs often nearly barfed before his famous stage presentations. Serial entrepreneurs know such emotional power is real and provokes intense fear and related stress. I've been there. And I've seen the best go there. It happens and it will in 2012. You are not immune. And remember that you are in as much danger when you hit the highs as you are when you hit the lows.
  
  • POINT: You can get prepared to manage better the big waves of personal emotions during 2012. Start with recognition that "it is lonely at the top". Then find at least one person you can speak to in confidence when the emotions hit. Better yet, find several people. Support groups are needed when you get surprised and frightened and have to make The Big Decision. Find spiritual and physical resources. Good psychological and religious well being help people weather intense personal storms. Good health keeps immune systems strong, they are your first defense against illnesses that sap your strength and lead to more emotional dark days and nights.

BOTTOM LINE: You can remain positive in an unusually demanding year like 2012. Anticipation of what is likely to happen helps. Pundants are not God, they are just looking forward as best as they can. Anything can happen. Respecting the hard work of the forward thinkers helps you see what to anticipate and to avoid. You can do things different this year and that will help you attract the money and people talent you need to win big in mass world markets. It is your job to plan how to do that and then convince people you are the leader that knows the way to success and are the one who can convince others to follow you. When you can do that, you are laying the foundation for building the unfair competitive advantage of your new enterprise. Others have preceeded you. Now just go do it!

I wish you The Best on your Adventure in 2012!