Who Starts a Company During Economic Collapse?

Yesterday, I attended Demo Day for AlphaLab, a local tech startup incubator here in Pittsburgh (and a sponsor of PodCamp Pittsburgh 3). The six companies they're currently working with will be nudged out the door at the end of the year, so yesterday was their chance to spread their wings (and make their pitch) in front of a roomful of potential investors, advisers and other interested parties.

But will any of their ideas fly?

Web-Wide Ripples of Discontent

Earlier this week, Steve Woolf of Epic FU (formerly JetSetShow) announced that they'll be ending their relationship with (formerly-considered-to-be) rising web video production company Revision 3. Due to international economic calamity, among other factors, Revision 3 is dropping numerous shows from their lineup, including Epic FU and Gary Vee's Wine Library TV -- which is odd, considering they're some of the web's most successful niche shows.

Perhaps their production costs outweigh their current revenue potential, but the long-term implications of this decision seem to be: Revision 3 can't afford to keep incubating emerging web video hits long enough for them to take flight on their own.

So if a company that's supposedly trafficking in The Next Big Thing (aka the web video revolution) can't keep their flagship shows afloat, what does that mean for companies like AlphaLab, who are incubating similarly-positioned, service-driven companies whose business plans hinge upon Web 2.0 metrics?

Building Houses During a Forest Fire

Every new company is fighting an uphill battle during this economic downturn, not to launch or to grow, but merely to validate their own right to exist. New ideas and properties that might have had a few years to experiment and develop an audience won't have that same luxury from investors who will increasingly be looking exclusively for "sure things" -- and if there's one field that's anything but "sure," it's the entire social media spectrum.

Admittedly, the AlphaLab-supported companies I consider to have the most potential -- Chogger and GameHuddle -- seem sexy to me because they're social media-based, and that's the arena I work in. But just because I can see their potential, that doesn't mean investors -- or customers -- will. In fact, I'd go so far as to say that these companies may be the exact right idea at the exact wrong time: concepts that COULD be sticky and even useful, if only their business plans didn't rely on large numbers of niche users having the time to find them, use them and spread the word.

In this economy, time is even less abundant than capital.

So: how can emerging companies -- social media-based or otherwise -- insulate themselves from an uncertain economy? Or, do new companies need to stretch beyond existing patterns of business thought and seize upon new opportunities before those uncharted waters seem too hazardous for anyone to fund?