For those new to a tough economy, here's my story from 2008:<p>I was laid off from the digital agency I worked at. I had been trying to find a new job for a while but no one was hiring at the income I needed to pay the mortgage on the house I just bought.<p>So, I started my own digital agency. I tried to think of ways to make their model better/faster/cheaper. Better: I would routinely measure the impact of my work. Faster: I would do it myself, no teams slowing things down. Cheaper: I'd charge half of what my old company was charging.<p>The business grew considerably despite the economic tough times. Everyone was looking for great work at cheap rates and I was willing to work long hours (8am - 3am for a few months to get off the ground).<p>As the economy improved I hired a team, raised my rates and worked reasonable hours again. After 5 years it was a successful enough venture that I was able to sell the business.<p>It's possible to make a great living in a bad economy, but you need some luck, some skill and a lot of hard work in my experience.
This is easy to say when you have capital or access to capital. Having lived most of my life quite poor, I find it somewhat frustrating to hear things like this. When you can't afford food, rent, health insurance, etc, the last thing you're thinking about is dumping your life savings into a new business that has a 90% chance of failure.
There is one word missing from this post that contains a whole lot of the argument on the environment side: <i>chaos</i>.<p>Those who learn to thrive in chaos are most dangerous out there, for they have this contrarian impulse to rise when there's blood in the streets. If you recall a history lesson or two, that's how the most egregious powers are made —in wealth or might or legacy.<p>Right now, some of us are down —the situation is draining, energy-wise— whereas others feel invigorated, a drive to take action, make a move.<p>How we respond to chaos thus creates a big divide among us in times of major perturbation. There's this shift of potentials in the system, and kinetics go crazy, and some flee/freeze (seek security, refuge, maintaining the status quo, conservatively preserve what's left, etc) while others feel compelled to fight (to defend, protect, help; but also attack, kick in the disruptive nuts, solve problem, seek victory). For those, it could be the perfect storm to attempt a moonshot — I find there's a really unusual proportion of such stories among famous successful figures in virtually all fields, but I wonder if it's not survivorship bias + myth building + my own filters.
If you want try start a startup in a bad economy come to my country, Argentina, and you will have de full package. Sometimes I read comments or blog post about the risks or the "bad economy situation" in first-world countries and a little smile on my face appears. If you really want to test yourself come here.
><i>What if you quit your job to start a startup that fails, and you can't find another? That could be a problem if you work in sales or marketing. In those fields it can take months to find a new job in a bad economy. But hackers seem to be more liquid. Good hackers can always get some kind of job. It might not be your dream job, but you're not going to starve.</i><p>Probably true but I think I would prefer the safe bet over the risky one. Why would I pass up on a 100% chance to make 100k when someone is offering a 0.01% chance to make a few million?<p>If the job was remote, maybe my mind would change. But VCs are
asking us to cram into cities with $4000 rent for reasons they can't explain.<p>And most startup interviews these days are theater.
I think how true this is depends on how you're starting your business (specifically, how you're funding the startup).<p>I've personally had greater success with starting business when the economy is down than when it is up. As near as I can tell, it's because the field tends not to be as crowded. It's easier to get attention to your business when there are fewer startups competing for attention.<p>Since I've always avoided using investment money or loans to fund ventures anyway, a down market doesn't impact me as much as it does with many other approaches.
Ok, no. This is a bad meme. Read the comments here and you can see why.<p>You know what startups came out of the 2008/2009 recession? A car sharing company. A rooms-for-lease company. Many, many different delivery companies and a sh*t-ton of gig economy jobs.<p>Do you know what they all have in common? Taking advantage of people's weak economic situation. That's the sort of company that comes out of bad economies. The ones that take advantage of people being in poor economic situations.<p>But starting something that matters? You have to do it when customers can actually buy your products. And that takes a GOOD economy.<p>I can't wait to see the slew of low-quality companies that come out of this next upcoming, inevitable recession
<i>Fortunately the way to make a startup recession-proof is to do exactly what you should do anyway: run it as cheaply as possible. For years I've been telling founders that the surest route to success is to be the cockroaches of the corporate world. The immediate cause of death in a startup is always running out of money. So the cheaper your company is to operate, the harder it is to kill. And fortunately it has gotten very cheap to run a startup. A recession will if anything make it cheaper still.<p>If nuclear winter really is here, it may be safer to be a cockroach even than to keep your job. Customers may drop off individually if they can no longer afford you, but you're not going to lose them all at once; markets don't "reduce headcount."<p>What if you quit your job to start a startup that fails, and you can't find another? That could be a problem if you work in sales or marketing. In those fields it can take months to find a new job in a bad economy. But hackers seem to be more liquid. Good hackers can always get some kind of job. It might not be your dream job, but you're not going to starve.<p>Another advantage of bad times is that there's less competition. Technology trains leave the station at regular intervals. If everyone else is cowering in a corner, you may have a whole car to yourself.<p>You're an investor too. As a founder, you're buying stock with work: the reason Larry and Sergey are so rich is not so much that they've done work worth tens of billions of dollars, but that they were the first investors in Google. And like any investor you should buy when times are bad.</i>
I get what he's saying, but the majority of the richest people in history were born ~20 years before the early American Industrial/Steel boom or ~20 years before the internet was popularized. Macro is important from a population level perspective.
I’m working on ideas for a new startup and this is a very different economy than three weeks ago. The Dow is down 24% in that time. Overall, I think my chances are better.<p>Raising that friends and family round might be tougher, since some people are feeling less rich than they did. Others will be looking for a hedge.<p>I’m targeting B2B SaaS, and there’s certainly going to be some purse string tightening. But I imagine there will still be room for low-cost tools with a 10x ROÍ, which is the surest way to be successful, anyway.<p>The biggest advantage I have going is flexibility. Right now I can turn on a dime, which a public company, or even a Series B, can’t really do.
A timely reminder (was that really only 12 years ago?).<p>But (maybe a big but), recessions are not all created equal. Seems the unknowns are a lot different this time around.
Brilliant post that inspired me to do this research when I was at ReadWrite:<p><a href="https://readwrite.com/2009/04/30/what-do-vcs-say-and-do-in-early-stage-today/" rel="nofollow">https://readwrite.com/2009/04/30/what-do-vcs-say-and-do-in-e...</a>
Exactly what I needed - thanks PG. Didn't really know what to make of the current situation.<p>Another gem that always gets me going:
<a href="http://www.paulgraham.com/vb.html" rel="nofollow">http://www.paulgraham.com/vb.html</a>
If you don’t want to start a startup, just invest in one.<p>One that is derisked and not yet IPO.<p>But usually only accredited investors can do that. Another way that the Federal government helps the rich get richer.<p>PS: The JOBS act changed that with Rule 506b but you have to convince startups to use it