More time than money

Nat Torkington has a great post, Effect of Depression on Technology, on the Radar Blog. The last recession or downturn or whatever friendly euphemism you’d like to use, gave us 37signals, Flickr, del.icio.us and others. The tightening financial belts will leave many developers out of a job. But this is really about managing costs, building solutions that deliver value to real customers. Downturns are great at getting rid of the fluff. Valuations tend to freefall during these times, but sustainable companies tend to continue or thrive. The hope is that you’ve raised enough money to survive the credit crunch and customer liquidity issues.

Nat’s observations include the effects as developers and entrepreneurs that we’re likely to see, including:

  1. Good for innovation
  2. Great for free and open source
  3. Open source and cloud computing services will benefit from the tight financial situation
  4. Most consumer apps will be a harder sell
  5. People will have more time than money

It is interesting that Nat doesn’t discuss the impact that this will have on the advertising marketplace. Looking at the latest set of IAB numbers, Google’s “grip on search advertising is tightening”. But it doesn’t talk about the viability of targeted advertising and lead generation as a potential revenue model for startups. I think that Don Dodge discussed how internet advertising works and how a startup built on target advertising might make money. Unlike the last downturn, the online channel has become tightly integrated into businesses. Coupled with a strong tie to performance metrics, it’s likely that online advertising will “consolidate gains over other media during the economic decline”. Advertisers are looking to online and mobile experiences as a way to “boost brand and market share when money is tight”. Startups need to understand the economics and models of the targeted advertising business, this may include deep partnering with advertising networks like Federated Media.

Nat has nailed the role that cloud computing and software+services will play going forward. Why bother with captial expenditure on new servers, when Amazon, Google, Microsoft and others either have or are about to have their servers in cloud that you can rent. Need proof that organizations, both big and small, can benefit from using services in the cloud. Check out the NY Times conversion of their archive and the creation of TimesMachine.

By leveraging the power of AWS and Hadoop, we were able to utilize hundreds of machines concurrently and process all the data in less than 36 hours.

Thirty six hours. No new capital expenditure. Just operational expenditure. For the Times, it seems like a no-brainer to get more content and hopefully more impressions to build their brand. You can see the NY Times use digital channels: iPhone application; the TimesReader application, they are just ways to leverage the existing content to build richer, deeper brand experiences and impressions for readers.

Thinking about starting a company? Build a StartupEmpire, November 13-14, 2008 at the Diesel Playhouse in Toronto.