A financial nuclear winter may be upon us, but many startups will still survive and even thrive in this environment. Y Combinator’s Paul Graham argues that, in fact, now may be the best time to launch a startup. In an essay titled “Why to Start a Startup in a Bad Economy,” he notes that “what matters is who you are, not when you do it.”
The economy might be going down the tubes and investors are now gun-shy, but there will also be less competition. Investors and markets are fickle. Smart entrepreneurs need to adapt to the changing environment. And one of the best ways to do that is be able to survive on as little as possible. You need to become a cockroach. Graham’s advice:
Last year you had to be prepared to explain how your startup was viral. Next year you’ll have to explain how it’s recession-proof.
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. The cheaper your company is to operate, the harder it is to kill. Fortunately it has gotten very cheap to run a startup, and a recession will if anything make it cheaper still.
. . . 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.
Go forth, cockroaches and multiply.
(Photo by Mugley).