Whether or not the market has hit the bottom, now is an excellent opportunity to begin building your new internet-based startup. If you have cash, and time to plan and build, and were waiting for a good time to start, your opportunity has arrived. This is my opinion, of course, but let me tell you why.

The most important prerequisites are available time and money. In a way, this reminds me of an old (70′s) joke Steve Martin used to tell in his standup acts: “How to make a million dollars and never pay taxes. First, get a million dollars (said simply). Then, when the taxman comes around to collect, you just tell him that you just forgot to pay your taxes.” It’s a joke, of course, but you need the money to operate your business during planning and development. You also need to have time, which can be significantly assisted by having sufficient finances.

Ok, so let’s assume you have money lined up (not an easy feat in this market), or you can build with your own cash. Other people in my industry are touting the cost savings opportunities as the primary reason for starting now. I agree this is a great opportunity to save money on hardware, networking and people costs. Additionally, business operating costs like commercial rent are also looking good right now. However, imo, this is not the most powerful driver.

Our economy (and the world, for that matter) runs in cycles. If you believe we will be coming out of our recent downturn by the end of 2009 or early 2010, it makes sense to look at your future product and it’s lifecycle. This is an area that most make mistakes.

While I have seen complex projects developed and launched in 6 – 9 months, the average is usually more like 12 – 15 months. Based on the assumption that your project falls into this timeframe, if you started today your launch would be in the last quarter of 2009 or the first quarter of 2010. You would be launching at the beginning of a positive upturn in the market, as opposed to the end of one. VC/Angel/IPO/M&A interest will improve and investors will be hungry to take advantage of an upswing.

Most successful internet products are technologically complex. If not, barriers to competition are lower and investors will see this as a risk. I would see it this way. This is not to say your idea can’t be a simple one that is overlooked in the marketplace. However, if you get traction, people will jump at the chance to beat you at your own game. The easier that is, the more risky your business.

The question that will be asked is “If someone wanted to compete with you, how long would it take to get to your stage of maturity?”. Also, “How much would it cost?” If the answers are that it would not take long and cost very little, you might want to reconsider what you are planning. A good answer to these questions would be something like “We decided to get into this product because there is a market need, it’s not easy to build and a competitor would need significantly more than a few servers a a couple of programmers to get to our level.”

Why do entrepreneurs make mistakes estimating time to market?

1. Hiring the right people takes time. Even in an employers market, it is a consuming process. You should also expect that one or more of your most important hires will not work out for some reason and you will need to rehire/retrain.
2. Building detailed product specifications is often overlooked as a potential bump. A product spec document should read like a fluent roadmap for all members of your team, right down to the person writing the code. Even when you think they are complete from the business perspective, you will likely need to be revised many times to reflect the necessary ongoing feedback from technology.
3. And finally, writing and testing the code will have its own bumps along the way. Even if business and technology agree on the feasibility of some aspect of your product, you will likely find some part(s) that won’t work within your capabilities or budgeting constraints.

Don’t get me wrong. As I’ve stated earlier, concept to live product can happen quickly. However, banking on it could be a big mistake.

Back to the original point. If 12 – 15 months is what it takes to get your product live…do the math and look at the calendar. Fifteen months from now is January 2010. What will the financial world be like then?

IMO, It’s time to start!

Kevin