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Startups: The beat goes on in Portland

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Thursday, May 01, 2008

PORTLAND The downturn, big or small, is here. The gloomy economic pronouncements are being made. And for a lot of tech startups in Silicon Forest, things couldn’t be better.

As Oregon’s economy begins to slide, the startup community is coming off of a record year for raising funds: nearly $226 million. Companies are moving into hip new spaces in downtown Portland. Other companies from out of state, Vidoop is one example, are opening offices here.

Rick Turoczy, who runs Silicon Florist, the go-to industry blog that follows startups, says he sees a healthy flow of talent moving in and out of the state, and not just to Portland but to Eugene, Corvallis and Bend, too.

The question is, will it last? The answer, based on the anecdotes and individual perspectives of some in Silicon Forest, is yes.

Hideshi Hamaguchi has an almost philosophical take. Hamaguchi is one of the founders of LUNARR, a 2-year-old Portland startup that’s created a way for people to edit files together on the web. Big companies hate uncertainty, he says, but it’s a core element of a startup — innovative ideas always bring an element of uncertainty to an industry.

In a recession, where nothing is certain, big businesses falter. But since startups are already equipped to handle uncertainty, Hamaguchi says, they don’t face the same risks as their bigger counterparts.

Cost cutting at big companies, says Sam Lawrence, chief marketing officer for Portland’s Jive Software, is another reason startups survive in economic slumps: Big businesses see what they’re paying for big programs with lots of licenses and they being shopping around for something new. That’s great for Jive — which makes collaborative software that’s cheaper and easier to use than what’s offered by Microsoft.

Not all startups will be immune to the downturn. Some VC money will dry up. In Silicon Valley, employees at some startups are hedging their bets and moving to more established companies.

Their fears may be unfounded. Turoczy, who also owns the Portland startup communications firm Return, argues the “startups do better in a downturn” idea is flawed. A good startup will do well during practically any economic condition, he says.

“That’s the beauty of the startup. It seems risky, but in actuality, it’s the safer bet,” he says. “During downturns, startups simply start getting the attention they truly deserve.”                           


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