The document provides 10 lessons for starting companies during economic downturns: 1) Downturns don't make a difference for startups since funding is already difficult, and focusing will prevent noticing the downturn. 2) Downturns can be good as they force creativity and teaching efficiency. 3) Hiring and renting space should be avoided since partners and outsourcing are better, and work can be brought to people instead. 4) Funding will be scarce so time is better spent on traction than pursuing it.

1. 10 LESSONS I LEARNED FROM
STARTING COMPANIES IN
DOWNTURNS
Francine Hardaway
BIL, February 2009

2. IT DOESN’T MAKE ANY
DIFFERENCE
No one lends to startups anyway

 Focus and you won’t notice

3. DOWNTURNS CAN BE GOOD
They force you to be clever

 They teach you to do more with less
 Over funding often kills companies

4. YOU DON’T NEED TO OWN PEOPLE
Don’t hire

You’re going to hire incorrectly anyway
Partner and outsource

5. DON’T RENT SPACE
You don’t need it

 Bring the work to the people, not the people to
the work

6. FORGET FUNDING
You won’t get it anyway, and you will waste a lot

of precious time looking for it
 Downturn in VC
 Frightened angels
 Diminished discretionary spending for the rich

7. TURN DOWN MONEY
Draconian terms for startups

 Loss of control
 Exit of the founder with boot in his butt

8. YOU NEED LAWYERS
Ycombinator has outsourced its documents

 Document everything
 Run the docs by a lawyer when you are finished
 Set your company up to be big

9. GET AN IMMEDIATE CUSTOMER
And make that customer pay

 If you can’t, re-examine whether you actually
have a product anyone wants

10. QUIT AND CHANGE YOUR MODEL
Seth Godin’s “Dip”

 If you can’t get any traction, there’s a time when
you should stop
 Not after they have foreclosed on your home

11. ONLY PROTECT YOUR IP IF IT
MATTERS
This is a discussion for an attorney.

 An IP attorney, not your mom’s divorce lawyer