I spent some time this week at the AlwaysOn conference in New York City, which focuses on technology start-ups and venture capital with Silicon Valley lenses. I'm a big fan of conferences, so I like it even more when they attract a great crowd -- this one did -- and especially when they're in my city; this one was. The mood of the conference was very positive and upbeat, as you might expect given the strong tailwinds that this industry sector has had for the past couple of years, and has had generally for the past couple of decades. In spite of all of the optimism, one issue popped up several times in sessions related to the advertising marketplace or to the financing and mergers and acquisition environments: "What if there's an economic downturn?"
Most folks had pretty good answers to the question, or at least pretty good rationalizations for what they might do, or why their particular market sector was likely to be insulated from broader consumer spending patterns. However, I wonder how seriously most of these folks are taking concerns about a potential slowdown in the U.S. economy in developing and executing their business plans. While I'm personally bullish on the online ad sector, I have run start-ups through a couple of downturns and one big bubble burst, so I do have some thoughts in this area. Whether or not a downturn is imminent, or already here, this is probably a good time for advertising-focused start-ups to take a breath and do a full evaluation of their business, their revenues, their expenses, their sources of funds and their exposure to a market downturn. At the least, they may end up a bit smarter about their businesses.
What should start-ups be looking at?
Is this about doom and gloom? Absolutely not. It is about start-ups being smart and doing the best job possible to prepare for those things that they can't control. I personally feel very good about the future of online advertising and don't see any big slowdown crushing the industry, but I do think that a number of companies may find themselves spending more of their investors' money faster than they should, at moments when going a little slower might be a good thing. What do you think?