from Hacker News

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

by karimf on 5/14/22, 7:55 AM with 137 comments

  • by hwers on 5/14/22, 10:41 AM

    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.)
  • by thesausageking on 5/14/22, 1:30 PM

    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.
  • by Aulig on 5/14/22, 10:33 AM

    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 :)

  • by coldcode on 5/14/22, 11:27 AM

    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.
  • by georgeburdell on 5/14/22, 5:32 PM

    > 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

  • by lifeisstillgood on 5/14/22, 1:41 PM

    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.

  • by devoutsalsa on 5/14/22, 11:04 AM

    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.
  • by tluyben2 on 5/14/22, 11:36 AM

    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.
  • by Traster on 5/14/22, 12:58 PM

    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.

  • by lkrubner on 5/14/22, 3:30 PM

    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.

  • by indus on 5/15/22, 3:59 AM

    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

  • by hardwaresofton on 5/14/22, 1:27 PM

    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?)

  • by jollybean on 5/14/22, 5:32 PM

    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.

  • by abhayhegde on 5/14/22, 11:47 AM

    Great article! But what's the aversion towards grad schools?
  • by ganyu on 5/15/22, 5:30 PM

    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.