Things were looking a little bleak yesterday for some start-ups, news comes to us from Mike Butcher over on Techcrunch UK that both Reevoo and Trutap are in trouble. Meanwhile over in the US, Pownce is set to close in just two weeks.
Photo owned by Henrik Moltke (cc)
The reason for both Reevoo’s and Trutap’s troubles is simple. The ‘R’ word, both companies are reliant on VC investment and now in these tighter times it seems the investment that they hoped was coming may not arrive. So they are bunkering down and preparing for the long haul. Trutap have put all their 30 staff on notice, they are looking for a buyer but if they can’t get one in time, they say they will have to let go up to 80% of their staff in an effort to keep the service going.
Meanwhile Reevoo has put 7 of its 31 staff on notice. While no-one has been laid off yet, I fear they are not far away. Already this year high profile start-ups like Loic Le Meur’s Seesmic had to let go 7 staff and Jason Calacanis’s Mahalo let go 10% of their staff.
CEO Richard Anson said to Techcrunch UK today that we “have made the decision to drive for profitability faster”. This is a similar story to what we are hearing from most companies in this situation and it’s a good idea. Reduce costs to survive longer and hope to reach profitably sooner.
I think for too long companies have being surviving on Venture Capital funded ideas on the basis of, once we get scale and critical mass, we can’t but make money. The problem is the exits are drying up for these companies. Pownce was lucky today, but then they were bought for their people not their excellent business, and buyers Six Apart are to close the service down in just two weeks time.
I say why not think about making money now? There are many unexplored options to start-ups that could get them earning money right away. The obvious is always advertising but this uses valuable real estate and if you don’t have it right from the start then it’s hard to add it later. But what about the less obvious ways, freemium is a tried and tested model by companies like Flickr and can be an easy way to fund some of those great features you can’t afford to add. Or why not go the whole hog like the very successful 37 Signals and just charge for use of your product.
Photo owned by EvinDC (cc)
Now I know what you are thinking not everyone can just stick some ads up or start charging. That’s where my angle comes in, there is another option and that’s affiliate marketing. Reevoo already do some of it but as I’m sure they are finding out it’s difficult to maintain. So I say out-source it. Why not try skimlinks, it’s an easy way to earn money via affiliate marketing from your application, site or blog without any outlay on development or sales. Just leave all that to us and just start earning, but enough of the sales pitch check out our site for more info.
But it’s not all doom and gloom, most start-ups shouldn’t face too much trouble getting through the recession, if you have a good product, well executed and are ready to face challenges head-on you should barely notice it. The one thing I will say though is take my advice and start planning how you will get profitable now. I hope to expand on the ideas in this post in some of my upcoming blog posts.
I'm a Developer, Entrepreneur, and Mobile Geek. I am currently CTO at Skimbit where we do