(Editor’s note: Don Rainey is a general partner at Grotech Ventures. He submitted this column to VentureBeat.)

In the world of startups, success or failure can be hard to consistently predict. One thing that’s sure, however, is that anyone who starts a business is changed by the process. The continual challenges of meeting the opportunities and issues that arise make it fun and always interesting. I think it is why many people continue to start businesses regardless of the (easier) alternatives presented by employment for somebody else.

Having started a few businesses in my life, I view some of the lessons of the experience as intuitive and others much less so. Given the time and money involved in learning these lessons, none could be characterized as cheap.

They all changed my worldview, though. And they all changed me as a person. I’m glad I learned these lessons, but that doesn’t mean I don’t wish that I knew them originally.

Here are the eight things I wish I knew when I started my first business.

1. Things take longer than you ever imagine –Everything that involves people, resources, tasks and coordination takes longer than you ever think it should take to get done. It isn’t about developing patience, as patience doesn’t really help you keep driving things forward. It is about being realistic in your planning and management.

2. Items that do succeed tend to do so quickly – I have seen more successes — products, projects, employees, etc. — start strongly than slowly. The great salesperson or employee is great from the first day. The strong employees contribute immediately. The product that is going to be a hit gets strong, initial reactions from customers.

3. People will let you down – This will happen in ways you can’t even imagine when you start out. It can range from inattentiveness and laziness to fraud and theft. You’ll see it all from the people you meet along the way.  Your faith in people or belief in them can be a dangerous thing. As Pres. Reagan put it, “Trust, but verify.” Blind faith will get your butt kicked again and again. Love and reward your employees, but don’t have too much confidence in them.

4. Good employees are really hard to find – A solid worker isn’t just difficult to find, he or she is reallydifficult to find. And they’re the first ones to leave. The truth is that 10 percent of the world is competent – and you’re looking for that 10 percent in every hire.

It’s hard to do consistently. And that’s why organizations that do it with frequency have such strong reputations. If you want to build a business predicated largely on finding, getting and keeping quality employees to succeed, you should understand that premise will be your greatest risk. Finding a market and profitably selling to it (usually the greatest risks) will take a back seat. Better yet, pursue a business that needs some reasonable percentage of employees to be really good.

5. Your bad employees rarely quit – For one thing, poor performers aren’t really all that motivated to look, as that might involve actual performance. For another, no one else is likely to recruit them. Your marginal and weak employees are with you for life unless you move proactively. In many years of running businesses, the only time this wasn’t true was during the dot-com bubble. At that time, every idiot could get a 15 percent to 20 percent raise here in Northern Virginia by changing jobs. And they did. Aside from that blessed time, weak employees are your most “loyal.”

6. You will be lucky and unlucky -In the fullness of time, you will be assuredly lucky and unlucky. And sometimes, things that appear to be bad luck will turn out to be good — the weak salesperson who turned down your job offer — or vice versa. You will have ups and downs, and you will win or lose things that you don’t deserve to win or lose. You will be unlucky and lucky, you just may never know when.

7. Avoid the myth and misery of sunk cost – See the item above about succeeding quickly. Don’t chain yourself to the anchors you lovingly create in pursuit of success. If it isn’t working for you or the business, let it go. Understand that it isn’t good money after bad money, it is all bad money. Fire that salesperson, let that manager go, stop selling that product, get used to moving on. You’ll make a lot of decisions in running a business. Accept that not all of them will be right.

8. Fill the pipe, always fill the pipe – The difference between good times and bad times is often reflected in how many of the opportunities, customers, etc. end up closing successfully. In good times, more deals close from a normal opportunity pipeline. In bad times, less deals close from the pipeline. So, fill the pipeline of opportunities, and always look to add to the pipeline.   Deals don’t close for a million reasons. Your only defense is to fill the pipe.

Bill Taylor

11:02 AM Thursday January 8, 2009

You know things are dire when one of the country’s most influential columnists devotes several articles (and a new book) to parallels between what’s happening now and the Great Depression.

Here’s Nobel laureate Paul Krugman in his latest New York Times column: “Recent economic numbers have been terrifying, not just in the United States but around the world…Banks aren’t lending; business and consumers aren’t spending. Lets not mince words: This looks an awful lot like the beginning of a second Great Depression.”

How do we, as leaders and company builders, react to such a depressing environment? One option is to go with the downward flow: to cut back, stop taking chances, downsize our ambitions. The other option is to stare the grim economy in the eye and use it as a catalyst for innovation and change.

Economic downturns are as much about psychology as about GNP, as much about withering confidence as about shrinking employment. As individual leaders, we have no control over whether banks will lend or consumers will spend. But we do control our own mindsets and “animal spirits” — the memorable phrase coined by an even more influential economist, John Maynard Keynes, in the depths of the Great Depression.

Here’s Keynes: “A large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive. . .can only be taken as the result of animal spirits — a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.”

Translation: If all you’ve got is a spreadsheet filled with red ink and grim forecasts, it’s easy to be paralyzed by fear. But if you’ve got some leadership nerve, if you can summon those “animal spirits” of which Keynes writes, then hard times can be a great time to separate yourself from the pack and build advantages for years to come.

In part this is a matter of faith — “a spontaneous urge to action rather than inaction.” But it’s also a matter of record. The Great Depression was in fact a springboard to a number of enduring product and business innovations that delivered great rewards to those with the courage to unleash them.

In a recent article titled “Design Loves a Depression,” Michael Cannell chronicled how the dark days of the 1930s were a golden age of design. A case in point: Designer Russel Wright, who, according to Cannell, “acted as the Depression’s Martha Stewart,” creating cheap and beautiful furniture that addressed a more frugal and informal consumer sensibility.

Wright’s official biography describes his legacy this way: “Russel Wright revolutionized the American home and the way people lived there. His inexpensive, mass produced dinnerware, furniture, appliances, and textiles were not only visually and technically innovative, but were also the tools to achieve his concept of ‘easier living,’ a unique American lifestyle that was gracious yet contemporary and informal.”

Cannell also highlights the legendary husband-and-wife team of Charles and Ray Eames (Ray’s full name was Ray-Bernice Alexandra Kaiser Eames), who, “in the scarcity of the 1940s,” produced “furniture and other products of enduring appeal from cheap materials like plastic, resin, and plywood.” During an era of limited resources, the work of the Eameses, in the words of the Library of Congress, “gave shape to America’s twentieth century.”

Cannell’s ultimate conclusion: “Design tends to thrive in hard times.”

And it’s not just design. A fascinating white paper by Bradley Johnson, director of data analytics with Advertising Age, makes the connection between dark times and bright opportunities in so many fields. The white paper, titled “Downtime Opportunity,” isn’t free (it costs $99 to download), but the insights are more than worth the price.

Johnson looked at the lowest point of the Great Depression (August 1929-March 1933), the Great Stagflation of 1973-1975, and the Carter/Reagan recession of 1980-1982. What’s remarkable about these three periods of economic trauma, he reminds us, is that the problems they posed inspired creative responses that reshaped markets for decades to come.

One representative example from the Depression: General Motors had to figure out how to maintain its upscale Buick brand in a sinking economy. The solution? Persuade consumers to buy a used Buick rather than a cheaper new car–a way to keep struggling dealers afloat and hold back the progress of rival brands. It was an unheard-of idea at the time–and it reshaped the automobile business and dealer economics to this day.

Johnson also reminds us that it was the upheaval in the airline business during the early 1980s–a frightening combination of severe recession and industry deregulation — that inspired American Airlines to introduce the exotic concept of the “frequent-flyer” program in May 1981. Sure, it was a creative short-term move to promote brand loyalty. But it forever changed the logic of competition in the airline business.

There are so many other examples of the power of “animal spirits” in a dispirited economy. Henry Luce launched the lavish and super-expensive ($10 per year!) Fortune magazine in February 1930, just months after the Great Crash. It was a counter-intuitive move that became an immediate success — and went on to become a publishing icon. Luce’s successors at Time Inc. launched the frivolous People magazine in March 1974, into the teeth of the worst media recession since the Depression. It too was a hit — and remains the leading magazine in America measured by ad pages and revenues.

Or consider this reminder from Johnson: “A deep recession can be a perfectly good time to launch an innovative company, putting the startup in a position to move when the economy recovers. Frederick Smith launched Federal Express in 1973 even as jet fuel prices were rocketing. Re/Max, now a major force in residential real estate, began in 1973, just as the housing market was entering a severe downturn…Bill Gates and Paul Allen started Microsoft Corp. in [the recession of] 1975.”

So here’s my message for 2009: Don’t let risky times dull your appetite for taking risk. More then ever, companies and their leaders have to offer a positive alternative to a demoralizing status quo. So why wouldn’t you move now to shake up your market and transform your company, especially when rivals are too timid to respond? All it takes is a good idea — and some animal spirits.

Great post!