ODDPOST Timing is right for frugal dot-com startup

The software designer isn't having trouble finding qualified help.
SAN FRANCISCO (AP) -- Caffeinated Stanford alums ride mountain bikes to work and crank out computer code late into the evening. Boyish executives perfect PowerPoint presentations and insist their plucky startup is destined for glory.
This sounds like the typical high-tech startup that fizzled when the dot-com bubble burst.
But Oddpost is different. The six-person company, which began creating a Web-based e-mail application in late 2000, is a product of the region's economic downturn and bears little resemblance to the extravagant, venture-funded dot-coms of yesteryear.
Shoestring budget
Frugality is Oddpost's hallmark.
Iain Lamb, the company's 32-year-old chief technology officer, went a year and a half without salary. He sold his 1997 Saturn sedan to pay for food and rent.
When Oddpost President Ethan Diamond scraped together $60,000 from friends and relatives in early 2002, he leased a former hardware store for $1,500 a month as company headquarters.
The funky studio, next to a Chinatown restaurant that emits mysterious odors, is an upgrade from the public-library cubicles and 24-hour doughnut shop he used to call his office.
"We used to keep the server in our friend's basement until someone ran over the power cord with a vacuum," said Diamond, 31. "That's when we realized we needed to do something a little more professional or we'd never be taken seriously. But we're still really frugal."
Chris Shipley, executive producer of the DEMO 2003 technology conference, which begins Sunday in Scottsdale, Ariz., invited Oddpost to the exclusive event in part because she likes Oddpost e-mail -- and in part because of the founders' chutzpah.
"A lot of people who were disguised as entrepreneurs got out of the market," Shipley said. "These guys have built a better mousetrap, and the quality of the product is outstanding. ... They're very scrappy and are building the company with a lot of sweat equity."
Nonetheless, Oddpost's long-term prospects remain murky.
Large corporations have reined in spending and have shunned products and services from relatively obscure companies. That is partly the reason the failure rate of startups backed by venture capital in 1999 and 2000 could climb as high as 50 percent by the end of this year, according to a January survey by Deloitte & amp; Touche.
An advantage
But some say Oddpost's odd timing, coinciding with the San Francisco area's worst economic decline in a generation, could become its biggest advantage. Entrepreneurs willing to work on a shoestring may be more successful than those who start when times are flush, business experts say.
"If you start a business now, and you can get money or you don't need a lot of money to do it, you're going to be lean and mean," said Steven Kaplan, professor of entrepreneurship at the University of Chicago's business school. "If you're not dead from the get-go, you're stronger and smarter."
According to an April study by consulting firm Bain & amp; Co., companies that had launched or expanded during the 1991-92 recession were twice as likely to be successful in 1998 than companies that had launched or expanded during booms. Researchers found that companies forged during recessions were more fiscally disciplined and better at killing money-losing products.
Cut-rate advice
For Oddpost, the downturn has meant legions of unemployed consultants offering free or cut-rate advice on public relations, marketing and business planning.

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