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These are tough days for entrepreneurs seeking new cash, and even for venture capital firms that may be forced to conduct triage on existing portfolios. Still, now may be just the moment to turn a great idea into a lasting enterprise. That was the take, anyway, of venture capitalists and entrepreneurs who gathered in Silicon Valley earlier this year to talk about why recessions are the best times to launch companies and topple old orders.

Steve Jurvetson, managing director of the venture capital firm Draper Fisher Jurvetson, and Dave Goldberg, former manager of Yahoo Music and entrepreneur-in-residence at Benchmark Capital, explained that while a world of failing corporate titans and changing government policy is chaotic, chaos creates opportunity and leaner times bring focus. Jurvetson and Goldberg were joined by three entrepreneurs who described their travails and coping strategies in their recently launched ventures.

They are Krishna Subramanian, cofounder of Mobclix, which helps iPhone developers monitor and profit from their apps; Leah Culver, who founded the now-defunct microblogging site Pownce (she’s now developing social technologies at the blogging site Six Apart); and Sol Lipman, cofounder of 12seconds, which he hopes will do for short videos what Twitter did for text.

Jason Pontin, editor in chief and publisher of Technology Review, moderated the discussion at a February gathering in Mountain View, CA, sponsored by the Churchill Club, a Silicon Valley business and technology forum. Edited and condensed excerpts from the event follow.

Jason Pontin: Why start a venture now? To many, it might seem like the worst of times. And yet, as Steve will tell you, there are good examples from history that suggest that now may be a very goodtime to start a company.

Steve Jurvetson: The best time. Certainly from an investor’s standpoint, there’s perhaps no better time to be investing in startups. The entrepreneurs doing it are pretty passionate about what they do. Companies raised with scarce resources tend to be more resourceful, right?

This tends to form the DNA of the firm early on. Some companies, like Hewlett-Packard, are still frugal to this day, largely tracing back to their roots. … It’s also the case that startups thrive in disruption.

Big companies falling on their swords left and right create opportunities for new entrants. It’s almost like a forest fire has cleared out the old-growth trees and now prairies can grow again, and new entrants and new species. If you’re [electric-­car startup] Tesla, for example, what better time to compete with General Motors and Chrysler?

JP: Sol, why did you decide to start your venture now?

Sol Lipman: We were looking for funding in September. It was a very difficult time; it’s still a very difficult time. In October I said, “We’re not going to go looking for any more funding,” because I was spending 80 percent of my time looking for funding instead of focusing on my product and doing a kick-ass job. As soon as we started focusing, we started succeeding. And I think that is the key to succeeding in this recession. … Yes, you’re going to work about a thousand times harder than you generally do, but you’re passionate and you’re there for the journey.

So when we do go to raise money, I think that (a) our company is going to be more valuable, and (b) we’re going to understand our revenue model. We’re going to have traction. We’re going to be in a way better position. And we will have–as Steve said, we’re going to have a culture of frugality.


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Credit: Jeff Singer
Video by Danny Zemanek

Tagged: Business

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