Why to Start a Startup in a Bad Economy (2008)

http://www.paulgraham.com/badeconomy.html

by karimf • 4 years ago

199 133 4 years ago

Aulig• 4 years ago

I needed to hear this. I wouldn't say we're in a bad economy yet, but I was worrying about the future a bit.

I like the advantages pg mentions (like less competition), which are a great way to look at potential problems. There's always 2 sides.

Since I run my business (https://webtoapp.design) with relatively low monthly fixed costs (around 200€) I think I should be fine. I don't think I'll run out of money under these circumstances. So I'm already avoiding startup killer #1 according to pg, which has calmed me down :)

rmbyrro8• 4 years ago

Why's this being downvoted?

Plug? C'mon, let people get their work out folks...

hwers• 4 years ago

This whole “what matters is the founder” idea really discourages me. It’s such a VC perspective. The VC has a flock of people they pick from to invest in and if your traits doesn’t fit the necessary requirements you shouldn’t start a startup. And I’m sure it’s true too. It’s just that it feels like if you don’t have the grit etc necessary you’re just out of luck and out of this club and it’s not really something you can work on. (After all if it was something you could improve then it could be taught but PG et al seems to think - and I think they’re right - that it’s an innate thing.)

klysm• 4 years ago

Nah I think it is absolutely not innate. There are so many other factors at play into the success or failure of a founder beyond their innate characteristics.

mytailorisrich• 4 years ago

Not everyone can start a successful business. When you start you have your idea and yourself, and as the saying goes ideas are cheap.

So I think that the founder is key, indeed, and whether VCs are involved is not relevant. But of course this means that VCs will judge the founder, not just the business plan.

hardwaresofton3• 4 years ago

This whole “what matters is the founder” idea really discourages me. It’s such a VC perspective. The VC has a flock of people they pick from to invest in and if your traits doesn’t fit the necessary requirements you shouldn’t start a startup.

In an uncharitable interpretation, this is tech/VC returning to the mean -- this is the "good ol' boys club" (the sex of the person in particular is not important) that generally people talk about, and it's how society works most of the time. VC is not charity, they are incentivized to filter, and they do. That does not necessarily mean it's the same discriminatory environment but that depends on the person doing the searching and their ethics/principles/choices.

That said, YC is just about the antithesis of the aforementioned phenomenon -- they were one of if not the first to significantly drop the barriers to accessing VC. They took their program abroad and lowered barriers to entry for smaller international economies abroad. They've upped the amount given to founders and are running hot trying to accommodate huge incoming batches. They make founder school and other resources available absolutely free. YC's made it a breeze to work at any of their companies and get on the hundreds/thousands of rocketships they launch every year, VISA difficulties aside (there was also some mention of them working on a VISA "fast track"-ish path or something).

It’s just that it feels like if you don’t have the grit etc necessary you’re just out of luck and out of this club and it’s not really something you can work on. (After all if it was something you could improve then it could be taught but PG et al seems to think - and I think they’re right - that it’s an innate thing.)

This is an extremely reasonable thing to filter for -- judging startup ideas is hard/impossible, and with lots of reflection it seems that grit is one of the things that sets founders apart (clearly ideas don't, execution usually will but maybe sometimes doesn't, etc). It makes sense for all VCs to filter for these qualities.

Now where I do agree is that people who can game the system -- but maybe grit is hard to fake. At some point you end up just... acquiring grit, because the situation is hard.

Grit and perseverance can definitely be learned. What it takes to embed it in yourself and motivations may vary from person to person, but it can definitely be acquired most of the time, I think.

[EDIT] - forgot about free founder school and stuff on YT

sigmaprimus4• 4 years ago

I agree 100%,

I donate every year to charitable causes but VC is not charity.

This thread reminds me of my softer youthful years, I can still feel the despair while standing with my back against the wall at the school dance, wondering why and noting how unfair it was that I wasn't dancing with anyone...

yowlingcat2• 4 years ago

Great points here especially about YC, and but I want to highlight one that you missed which I think is most impactful, which is the innovation of a SAFE.

Early stage fundraising before SAFEs became a norm sucked. You had to deal with awful convertible note terms if you wanted a note, or deal with highly dilutive priced rounds; either way, there was so much friction on both sides. With the SAFE, you had a highly standardized instrument that both parties understood and which was very founder friendly. If investors wanted special things beyond that, they need to specifically carve it out into a side letter which spells out the special things they want. Just a different conversation.

Beyond that, it's not just that the SAFE as an instrument revolutionized early stage funding, it's that YC made it the de facto norm. This, more than anything else YC has done IMO, has permanently changed the landscape for early stage founders. I'll always be thankful to YC for that.

tomhoward3• 4 years ago

This is probably my biggest topic of contemplation and experimentation.

The startup I co-founded was funded by YC the month after this essay was published. It was the same batch as Airbnb. We didn't tick the VC boxes. PG commented later that we were "so nervous" in the interview; he had no idea how much.

It was said that all the startups in our batch were chosen because we seemed particularly resilient. It's amazing how being told that by someone like PG will make it come true.

Our startup didn't make it as a "home run" success, and we found it hard to raise VC funding, partly, I think due to not ticking VC boxes. But the company still exists in a different form. It employs over 10 people and is doing really important work to help airlines recover from the effects of the pandemic. It could yet be a huge success, thanks to the resilience and determination of the people still there (I left about 7 years ago).

Thanks in large part to the YC experience and vote of confidence, I've been undertaking a very profound journey of self-discovery and growth, and have worked on several important and successful projects. I'm now exploring multiple opportunities to start or join new startups, some related to the work we were doing in our YC-funded startup, and others completely different.

I think the last few years has been a tough time to be the kind of founder who doesn't tick VC boxes; the whole startup world has been dominated by glitz and hype.

It feels like that's changed in the past week. It seems the latest hype era is over, and we're re-entering a period where resilience, resourcefulness and determination will be in strong demand.

Please don't be discouraged. If you really want to build something important and valuable, you'll find a way to do it, and you'll get the support and funding you need when you're ready. It may take a long time, but important work always takes a long time.

I hope you find the purpose and motivation you need to have a go. It really can be the most amazing, life-changing experience. Feel free to contact me (email in bio) if you want to ask or discuss anything.

Best wishes.

RMthrowaway• 4 years ago

I'm a little skeptical of the thesis because the company you're referring to survived by becoming increasingly VC friendly. It got leadership with connections to investors and pivoted to VC-legible products. There's only one person still there from the beginning, who is, admittedly, resilient and determined, but would also tick the VC boxes because he's just generally a stud

cercatrova3• 4 years ago

Looks like the site is Adioso, but I don't see a link to it on the Internet. A reddit post which you replied to says you shut it down for now [0], is there a link I can visit? Or are you talking about another startup that employs 10 people?

[0] https://old.reddit.com/r/travel/comments/owdpnj/it_seems_adi...

jandrewrogers• 4 years ago

Having grit is probably the single most important trait of a founder, and one of the few which could reasonably argued to be innate. Just about everything else is learned, often by doing, which is why you need grit -- the learning curve is long and steep. Grit is how you bootstrap your way to being good at the other parts of building a startup.

sigmaprimus4• 4 years ago

I think grit is obtained through adversity.

Hard times create strong people, Strong people create good times, Good times create weak people, Weak people create hard times.

What time is it?

gitfan86• 4 years ago

When they say "founder", they are talking about building BILLION+ dollar companies. They are talking about someone who is going to give up everything else in life if necessary to win at building a billion dollar company.

They are not talking about someone who is going to build a company with 5M in profit a year and live a balanced life. Almost by definition they are talking about an insane person.

Personally, I don't think it is a insult for someone to look at me and say. "That guy seems like he spends a lot of time with his family and traveling and staying healthy, he isn't good founder material since he is so busy with those other things"

Bubble_Pop_225• 4 years ago

When they say "founder", they are talking about building BILLION+ dollar companies

Last time I checked the most successful companies in American corporate history are:

1) Standard Oil

2) IBM

3) Microsoft

All 3 of them managed outcompete any other company in their field and were only stopped by the U.S. Federal Government

None of them ever needed VC capital. VCs are like sirens, they are bankers in disguise.

Given all that you might as well do like the 3 aforementioned GOATs and just go to a banker if you need money.

There is nothing wrong with debt. When you have to add a liability to the balance sheet you might as well add a liability that looks and feels like a liability instead of falling for the sirens who promise to make that liability into an asset. It ain't.

closedloop1292• 4 years ago

I would only consider the lack of grit unfair if you have passion for achieving a specific goal and you cannot achieve it due to the lack of grit. Is that possible? If you deeply want to achieve something, don't you automatically have the grit to achieve it?

Lack of grit should be more a problem for people who see startups as a job where they are team-leads and they need some level of perseverance to overcome obstacles.

Still, why shouldn't grit be trainable? It's just that VC make money by selecting founders with grit. In a sense, they corner the market by investing into the best. Why should they destroy their moat by flooding the market with viable founders?

solatic4• 4 years ago

why shouldn't grit be trainable?

Grit is not trainable in the sense that one can add it to a grade school curriculum and reliably graduate people with grit. Fundamentally, grit is formed by coming up against obstacles, failing, and getting back up again and perservering. No curriculum on the planet can standardize the experience of failure - even the Kobayashi Maru was beat by Kirk.

sigmaprimus4• 4 years ago

This whole “what matters is the founder” idea really discourages me.

Yep that is one of those pesky traits...not getting discouraged from rejection.

I think everyone should at the least start their own business, even if just to become a better employee in the future through their failure and gaining perspective of how difficult starting and running one successfully is.

Before this turns into a rant about how soft the world has become and I share my unacceptable opinions, I will just say that if you allow fear of failure to keep you from making the attempt you fail by default.

dustingetz2• 4 years ago

Startups are a game of kings, courts and conquerers. Everything written by a player is propaganda, it was written with intention to further an interest. No one gives a fuck if a peasant can become Alexander the Great but they very much benefit from getting you to dream that you can, and your compliance.

cercatrova3• 4 years ago

I don't see how a VC benefits, they'd be throwing their own money at a peasant who might not be successful.

dennis_jeeves1• 4 years ago

That's a pretty accurate way of putting it.

yobbo• 4 years ago

"Grit" is another word for the ability to distinguish between surmountable and insurmountable obstacles. Otherwise we would have to believe that insurmountable obstacles don't exist. If you believe an obstacle is insurmountable, it is rational to give up.

Therefore, grit can only be identified (or distinguished from irrational belief) in retrospect.

heyflyguy2• 4 years ago

Don't let it discourage you, because it's motivation to discover what they're trying to key in on. For us and our investors it was whether we'd mortgage our houses (hypothetically) to keep the business afloat and see the vision through.

As it turned out, we started in Feb of 2020, with much of our sales pipeline (over 2mil) disappearing in a day and a half when things shut down. So we didn't mortgage our houses but we buckled in, reduced expenses, found alternative revenue streams and survived.

We are here today and executing on our original vision after going through all that. I did end up selling my house to fund my family while we navigated everything, and it was not easy.

Now our investors treat us well because we did that. If you asked me ahead of time if we had the grit to do that I would think almost certainly no. When you're in the thick of it (And especially if you PG'd something), it changes perspective.

For me, it was really a life lesson of don't raise money or take a chance unless you really believe in it and there's a fuzzy path to victory. Sales fixes everything, even if you have to temporarily pivot.

You have it in you, I promise.

kleinsch• 4 years ago

What an awful criteria. Your investors aren’t mortgaging or selling their houses. They’re just giving you other people’s money. Unfortunately, in a bad economy investors will hold all the cards and will be able to pressure founders into questionable life decisions.

solatic4• 4 years ago

It’s such a VC perspective

Ideas don't execute themselves. Problems are everywhere and ideas are a dime a dozen. Reddit is full of armchair generals. Companies are ultimately run by people. They live and die by whether the people running the company can build a solution, sell a solution, recruit people to expand the solution, and keep the people they have come to depend upon. Everything else - even money - is secondary.

krono• 4 years ago

Reddit is full of armchair generals

So is the local pub. Sometimes what they say is based on some inside information, a unique perspective, or otherwise makes a lot of sense. There can be actual value in those comments, even if the commenter themself doesn't recognise this or simply isn't in a favourable position to exploit it. Dismissing all that's said off-hand is rather wasteful :)

scarface743• 4 years ago

Let’s be more blunt, VCs pattern match. If you don’t look like Zuckerberg, you’re much less likely to get funding.

https://www.holloway.com/g/venture-capital/sections/pattern-...

acchow• 4 years ago

After all if it was something you could improve then it could be taught but PG et al seems to think - and I think they’re right - that it’s an innate thing.

But who will do the teaching and how can anyone figure out who it can be taught to?

Allowing the innate trait to emerge naturally avoids needing to solve these difficult problems.

devoutsalsa2• 4 years ago

I started my company in 2009. It was great to have lots of great people able & willing to work for cheap because I could barely afford to pay anything. It worked out well.

rmbyrro8• 4 years ago

Compared to the revenue a successful product and sales process can generate today, people are still quite cheap.

If your product solves a real problem that is painful, there's big enough market paying for it, and you know how to reach thid market and sell, you can pay a good engineer year salary in a week of sales.

devoutsalsa2• 4 years ago

I was starting a recruiting business w/ a consulting model (charge for time, not commission on placements), which is a cutthroat, competitive business. I needed big fat margins because I had to grow the business w/ cash flow, and I started from -1000 USD in the bank. I got one customer to pay me 5000 USD in advance for one job, and that was how I got traction. I needed help, and my first hire was a woman w/ a STEM masters from a good school, and she needed a job. I paid her 15/hour while paying myself 12/hour. Things were tight for a really long time!

coldcode2• 4 years ago

I tried to start a travel company once. It didn't even get started at all because it I begin to plan the first week of Sept, 2001. Sometimes bad timing is as bad as a bad economy. In retrospect what I was wanting to do was impossible anyway; building a search engine for vacations using raw airfare/hotels/cars data + geographical info (I had experience with reservation tech and high volume search). Oh well, I never tried again.

arjvik• 4 years ago

Why impossible?

steve_adams_86• 4 years ago

I think it was close to impossible at the time for a start up. Not today, but a crazy amount has changed in 20 years. Access to this kind of data has really opened up.

I remember how expensive a lot of this stuff was back then too. Access to an API for fairly trivial data could have a meaningful cost to a business back then. Tying all of this together, especially with useful geographical data, would probably have been very expensive.

rmbyrro8• 4 years ago

I don't understand, aren't there many successful travel search engines doing something quite similar to that?

tluyben2• 4 years ago

My best startups were started in 2001 and 2008. I am doing a new one this year again. It is a good time for sure; enough choice of colleagues and employees and competitors (especially the growth oriented VC funded) dropping like flies.

antupis• 4 years ago

Yup I think right now is like best time found company, if you can get funding semifast you can start hiring when layoffs begin.

sigmaprimus4• 4 years ago

If you can get funding semifast...

That is the problem with the current times, people are selling off sure things like bonds and precious metals just to maintain liquidity and meet margin calls right now.

I agree now is the best time to found a company, yesterday was better and tomorrow is almost as good as today! Very much along the lines of the best time to plant a tree!

abhayhegde3• 4 years ago

Great article! But what's the aversion towards grad schools?

Traster• 4 years ago

I feel like the headline mis-states the actual case - and implies something that people believe but probably isn't true. Which is that it's better to found a company in a recession. I don't see any reason to beleive that, and it's certainly not the case for most companies.

The obvious thing though is that the only really important things are: Are you reliant on discretionary consumer spending, and are you dependent on investment capital. If either of those two things are true you're going to have a tough time during a recession.

rmbyrro8• 4 years ago

Unless you find a way to print dollars, I don't see much option besides those two. What would be the alternative to revenue or capital to pay the bills?

imachine1980_• 4 years ago

If you are a tool to cut spending for companies maybe not as bad tool for automatically reduction billing in aws,as trying to sell 500 headphones.

lelanthran• 4 years ago

> Are you reliant on discretionary consumer spending, and are you dependent on investment capital. If either of those two things are true you're going to have a tough time during a recession.
Unless you find a way to print dollars, I don't see much option besides those two.

Selling to government, selling to business (B2B). If you're starting a company that does either of those two things, the risk is generally a lot lower because you'll have your first customer before you even start the company.

hardwaresofton3• 4 years ago

RIP bountii[0][1] which was mentioned in the past

[0] https://www.ycombinator.com/companies/bountii

[1] http://bountii.com (now owned by a SEO/click farm?)

thesausageking• 4 years ago

Is the economy actually bad? Tech stocks are down recently, but are still above where they were 2 years ago. Unemployment is under 4%. I don't understand all of the doom and gloom in VC and startupland.

scarface743• 4 years ago

Because VC funding is by its nature a Ponzi scheme hoping they can throw enough money at a business until it looks like it might be a viable profitable business to the “bigger fool” in the future (“$x is a gazillion dollar market. If we just capture 1% then we can be worth billions”). That “fool” can either be some other tech company that acquires it and let’s it whither (and the founders post a message about “our amazing journey”) or the public markets.

The retail investors don’t have any desire when the stock market is tanking to buy stocks in money losing former unicorns. The investment bankers who organize the IPO also won’t see the initial “pop” that allows them to make a quick profit.

Of course the employees who sacrificed real compensation in cash or RSUs in a public company in lieu of statistically worthless “equity” come out on the short end as the companies repeatedly delay an IPO waiting for the “environment to improve”.

All this to say, if you want to be a founder, go for it. But unless the startup you are thinking about has enough funding to compensate you as an employee at market value in cash, skip it.

DragonStrength2• 4 years ago

But unless the startup you are thinking about has enough funding to compensate you as an employee at market value in cash, skip it.

Yes, and the good new is these companies have been paying significantly more cash in the last few years. It may not be enough to justify moving or staying in the Bay Area, but many small companies are paying the same remote, which seems like a better deal than the big tech companies in the short term, if you're looking to cut costs while their equity is down.

There's a lot of bad jobs out there right now, but if you're not in a gambling mindset, there are some good opportunities to improve your overall financial position.

mjthrowaway1• 4 years ago

Yes, it’s bad. Gas and rent are very high. People are broke and not spending. Everyone in retail, including myself, is feeling it.

treeman79• 4 years ago

And food. Stuff is almost double from a couple years ago.

Local restaurants that survived Covid are shutting down due to cost of food. Others are adding x% to food bill to cover cost. Things are rising so fast they don’t want to keep ordering new menus.

silisili2• 4 years ago

Sorry to hear that. I have no idea how most people afford rent. I do OK, and rent hikes the last 2 years were making me nervous. I cannot imagine how someone making retail/service wages are even surviving. I really wish the government would or could do something to help here.

Comevius2• 4 years ago

I would argue that the supply chain is the economy, and the rest is fantasy if and when money can't make the supply keep up with the growing demand.

Innovation used to save our bacon, but now you have to innovate just to stay in the same place. Just pouring money on the problem doesn't work, it increasingly won't with climate change.

So we are between a rock and a hard place, inflation and recession. Choose your adventure. If the future could vote it would vote for curtailing demand across the globe.

SkyMarshal• 4 years ago

I would argue that the supply chain is the economy,

Agreed, though that includes not just the supply of things, but the supply of money as well, which is also being reduced as the Fed raises interest rates.

victor106• 4 years ago

I would argue that the supply chain is the economy, and the rest is fantasy…

An increasing and rapidly growing part of the economy is Services and Services are not that dependent on supply chains.

Also supply chains were disrupted mainly due to the world economy being overly dependent on China and China being shutdown.

In the long run this might actually be bad for China as countries pass laws to not be so dependent on China.

lordnacho• 4 years ago

It's what's on the horizon that matters. Interest rates look like they're coming off the floor, and that will have an effect on those kinds of investments. When rates were zero it made a lot of sense to have a punt on VC. Once they come off zero they might not be back for a long time.

ryanSrich• 4 years ago

Generally things are pretty bad yeah.

- housing issues are reaching levels we’ve never seen. Not just buying, but renting is becoming exceedingly difficult for some. The fed raising interest rates so far has done nothing to level home prices.

- supply chains are crumbling. It’s nearly impossible to find a new vehicle. Used vehicles are selling for more than new ones. It’s yet another bubble that will burst miraculously.

- gas prices are still through the roof. It’s not uncommon to see $6/gal on the west coast (in any of the three states).

- the baby formula shortage is actually much worse than people realize. It went from hard to find to literally no one has any over the course of 7 days.

- stocks and crypto are tanking. Yes, some stocks aren’t seeing it as bad as others, but it’s not insignificant.

- food prices are increasing, and it’s very noticeable walking around a grocery store. Meat is $1-3/lb higher than it was 6 months ago. Certain produce is either not available or marked up 1.5-2x what it should be.

Now, a lot of these are going to get much much worse. The government seems content with really doing nothing other than seeding billions to countries not named the United States.

I think it’s fair for financial analysts and investors to be in full on bear mode.

rkk3• 4 years ago

The fed raising interest rates so far has done nothing to level home prices.

They've barely raised rates! 0-1% federal funds rate is not a normal range, especially when inflation is ~10%

PuppyTailWags2• 4 years ago

The government seems content with really doing nothing other than seeding billions to countries not named the United States.

I think this isn't quite accurate for a variety of reasons, much of it is that the federal government actually has significantly limited control of the above + what control it does have it has to pass through a hostile senate to accomplish.

- The federal government cannot force local government to build housing to increase supply, it can only try to incentivize, and housing can't be built fast enough to offset current demand

- The federal government cannot factories, particularly overseas ones, to produce more

- The federal government can, at most, go through a faster approval process for foreign baby formula; it cannot force current domestic makers to produce formula

- The federal government literally doesn't control crypto that's what the attraction of crypto was lol; its bombing is entirely crypto's fault; and the stocks have been pushing back against government regulation for ages already

- The gov't cannot set food prices

So precisely what do you expect the government to be doing here?

mdp2021• 4 years ago

It’s not uncommon to see $6/gal

You'd be "relieved" to know that some places in Europe saw 8$/gal in the past weeks.

lr4444lr• 4 years ago

In terms of raising money, which is a major concern for startups, yes, it's bad.

cmrdporcupine2• 4 years ago

When you have the high priests of capitalism demanding old-school industrial policy and state planning and intervention, you know the economic model in place since the Reagan & Clinton years... may have jumped the shark:

https://www.youtube.com/watch?v=Q-5US4J03Wo

I'd say we're in the mid-stages of what might be called an "economic crisis"; that doesn't necessarily mean riots in the streets and stocks plummeting to zero. But it means severe transformations that will displace the way things are done.

In most crisis it's usually the working classes who suffer first and most deeply. And that's been happening for some time; long prior to COVID, probably dating back to 2008. Once the upper and uppder middle classes start saying things like what you see above, you're already in the trenches and now shit's gonna get real.

Maybe.

Simp4Zuck• 4 years ago

The main thing is some companies doing hiring freezes & layoffs. Twitter has started rescinding some offers, Meta implemented a hiring freeze, Coinbase & Robinhood stock are in serious pain, etc. This kind of stuff is making most speculate that tech is about to be in a lot of hurt, especially for less profitable companies.

ransom1538• 4 years ago

IMHO The people that come out ahead here (for good or bad) are large locked debt holders. EG. You have a 700k mortgage that you locked in 2020 at 3%. Each month inflation eats away the loan - and the bank can do nothing accept eat it. Property has already inflated 10-15% in a year. I don't see interest rates that low for a decade -- that group of people lucked out. I don't see a huge home construction boom due to supply constraints - so those investments are pretty secure.

The people that get screwed are cash users/holders and maxed 401k holders. EG People about to hit retirement paying rent. Young people working two jobs to trying to pay bills. There will be nothing but rent hikes for years - shrinking ETFs, with tight restrictions to become debt holders. As usual the poor guy gets shafted. :(

soared• 4 years ago

Does inflation help mortgage holders if their income is not increased at the rate of inflation?

moistly• 4 years ago

The Wiltshire 5000 indexes basically the entire US market. Take a look at its chart. It has lost more than a year’s worth of gains. I think if you look deeper, you’ll find that almost every public company is on the decline.

marcosdumay• 4 years ago

Whatever is your opinion of the current economy, it's about to get worse. Investment is drying up, and that has a delay before reaching the factors most people care about.

mr90210• 4 years ago

Bad is relative…

lifeisstillgood3• 4 years ago

Give 100 random HNers a salary for five years and say "start and grow a company"

Amazingly they will all have grit. They will be working full time on starting a company because it's just the day job.

will those 100 companies succeed? who knows depends on markets, products etc.

Founders are no different from early employees, so make them early employees.

lbotos• 4 years ago

I don't get your point? I think you are saying "early employees become future founders"?

As a former early employee, I was different from a founder in that I wanted to help build something, I didn't want to lead building something. Founder got more equity because of it. No problem from me.

The founders skills had to be way wider and more diverse than my own, and I got to stretch a bit, but still hone my core skill set.

rmbyrro8• 4 years ago

For likely >80% of HN readers, entrepreneurship is not their day job.

Signing for a job and showing up mon-fri is not nearly the same as building a business from the ground.

lifeisstillgood3• 4 years ago

I think I am feeling jaundiced - I just smell another "elite" class brewing. Turns out the thing distinguishing the elite from the masses throughout history has been money. Often money in order to for example train in warfare (ie knights or samurai) but money just the same

czbond3• 4 years ago

Ever started a company and stuck with it for a long while? Yeah - founders without funding are VERY different than early employees, do not kid yourself.

Early employees go out and get a job; founders live through hell, making their lives very difficult to get to where they can hire. I know of many that went from tech salaries to living below poverty for years to make things work. [at least for those not funded in the valley]

lkrubner• 4 years ago

There are different ways to measure a bad economy. For instance, there are formal measures, such as GDP, and under that measure, the economy formally shrunk in the USA in Q1. Which is bad, but not catastrophic.

There are some informal measures that are also interesting. There is the feeling you get on any particular street, the vibe of a place, whether it seems fun or dead or boring or even dangerous.

Last week I had lunch with a friend who I had not seen since 2019 (I've been doing a lot of post-pandemic catch-up recently.)

I'm in New York City, up on 98th, UWS. I like my neighborhood but I've often thought of moving to one of the really cool neighborhoods. My friend lived down on 72nd, much closer to everything cool. I asked him if he still liked 72nd.

"Oh, I've moved back down to Chelsea," he said. "Where I lived 6 years ago."

Wow! Very cool! And how is that, I asked, full of envy.

"There are so many homeless people. The streets feel dangerous now. When I get off the subway I have to think about how to walk home, otherwise I get very aggressively asked for money."

That was a shock.

On a related note: two months ago I needed to get some writing done. I've some long-term guests at my apartment, so I can't think straight there. I decided I'd rent a hotel room, go relax, shut out the world, and focus on writing. I got a room at the Marriot down in Tribeca. This is 2 blocks away from all of the events that I described in my book "How To Destroy A Tech Startup In Three Easy Steps."

I remember this area as somewhat industrial, but also popping with startups and co-working spaces and some very cool hotels, like the Ace. And some great restaurants, kept alive in part by the startup workers and entrepreneurs. Some of that vibe probably comes through in the book.

Now it was dead. Very dead. Almost all of the restaurants were closed. The streets were shockingly empty.

Several things occurred to me:

I no longer know which neighborhoods in NYC are "cool". I no longer know where the best restaurants are, where the coolest people hang out, where the best bars are, where the most interesting people want to hang out. The whole city is alien to me.

That long decline in crime, from 1993 to 2020, is over. That automatic feeling, which lasted (in NYC) 27 years, that each year would safer than the last year, is gone. The certainty that even a rough neighborhood will be safe in a few years is gone. Just the opposite now. Some of the coolest neighborhoods are getting rough.

All of the above combines in ways that make it more difficult to network, to get a job, or to recruit people for a team, or to talk to investors, or to talk to someone who knows investors, etc. The whole chain of meetings and friendships and networking has been disrupted. It will take some time to put all of that back together. Or to put that differently, it's not just the supply chain with China or India or Mexico that is disrupted, for millions of us, it is our personal supply chain that is disrupted.

jollybean• 4 years ago

I think a better essay would be :

'It doesn't matter that much at which time in the economic cycle you start your startup'.

Because for most of the relevant inputs, it doesn't matter that-that much.

georgeburdell2• 4 years ago

When times get bad, hackers go to grad school.

Aint that the truth. A PhD from 2009-13 wasn’t a bad way to spend 4 years for me, but it definitely set me back personally and financially

A PhD is basically a years-long nerd snipe

abhayhegde3• 4 years ago

I understand how doing a PhD is a big opportunity cost. But is it that bad a choice financially though? I mean are the opportunities later not lucrative enough?

georgeburdell2• 4 years ago

Hard to say, but my first job out of grad school was as a process engineer at Intel. The pay grade for a fresh PhD was called "Grade 7", while that of fresh MS is either a "Grade 5" or "Grade 6". The thing is, grade promotions take maybe 2-3 years, so all other things equal, not only did I lose money by not being industry each of my PhD years, I could have been at the same grade level more quickly.

Yes, there are career paths that are only attainable by having a PhD, but those are really only for the top PhD students, so an elite group of an already elite group. The rest of us join career tracks that are accessible by lower credentialed employees by grinding out an equivalent industry experience.

indus• 4 years ago

Venture Capital moves us between a distribution crazy entrepreneur to a hacker who sits down and creates, instead.

Though there’s a lot of chatter about funding the current situation, but this rodeo ain’t for the first time[1].

[1]https://reactionwheel.net/2015/01/80s-vc.html

ganyu• 4 years ago

It's not a bad economy right now. It's not even close to one. It's just the end of the beginning of the a recession.

Why to Start a Startup in a Bad Economy (2008)

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