Will the Credit Crunch Inflate the Internet Bubble?

Professional social network PartnerUp has surveyed 862 real estate, mortgage, and financial workers about their intent to start their own businesses following this summer’s subprime mortgage financial crisis.

The results are thought-provoking: 56.2% of the respondents claimed that they were “seriously considering starting a business within the next 6 months” and 13.4% claimed that they “are [already] in the process of starting a business.” Out of this whopping 70% of workers who have or intend to become entrepreneurs, 42.1% gravitate towards starting something tech-related (“Internet/Web/IT/Technology”). Assuming this survey is representative, almost 30% of this demographic can be expected to try their hand at the Silicon Valley Dream over the next year.

This news can be taken very positively. The credit crunch has made many of these professionals down on their luck, and entrepreneurship could be a saving grace that will not only provide them with new opportunities but create more jobs for others as well. Before you know it, the crunch actually stimulates the economy instead of the other way around. Such optimism is expressed by a respondent’s remark that “starting a business is an incredibly satisfying experience…it is so great to know that you control your own destiny.”

But hold on a second – do we really want ex-real estate agents and bankers heading into tech? It’s worrisome to me that people coming from entirely different industries think they can foster a successful tech startup without needing much familiarity with the industry or exhibiting any technical skills to speak of. The success rate for startups is already frighteningly low, and that’s accounting for people who know what they’re doing. The same respondent quoted above is currently developing JustMyEvents, “an events-based online social network”. Oh boy. I can safely say that we do not need another events-based social network (run a Google search for “JustMyEvents” and you’ll see that the problem lies not only in the idea).

Here’s my advice for professionals coming from completely different industries who think they can achieve fame and fortune on the Internet: think very hard about your idea and business model; educate yourself thoroughly about Web 2.0 trends and concepts; do your homework on competitors; find a team of technically skilled, motivated, and smart individuals who love your idea; and figure out just what you bring to the table (and don’t rely on your marketing skills; they won’t be needed until later). Then, and only then, think about switching industries – you’ll save yourself, and your potential investors, a lot of trouble.