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

199 points by karimf 4y ago

Aulig 4y 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 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 :)
- rmbyrro 4y ago
  Why's this being downvoted? Plug? C'mon, let people get their work out folks...
hwers 4y 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 4y 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.
- hardwaresofton 4y 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
  - sigmaprimus 4y 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...
- mytailorisrich 4y 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.
- tomhoward 4y 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 4y 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
- jandrewrogers 4y 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.
  - sigmaprimus 4y 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?
    - ant6n 4y ago
      It’s „weak people“?
    - moron4hire 4y ago
      Hard times create weak people. People aren't iron that gets tougher when forged in fire. People are bags of meat. People accumulate damage and damage creates scars. Scars are only "tough" in the sense that they are less easily damaged than the virgin tissue before. Otherwise, the function of the tissue is degraded in every other property. Stress causes health issues. Particularly traumatic stress causes (wait for it) Post-Traumatic Stress Disorder. All else being equal, a person with ulcers and anxiety disorders and depression and PTSD is a less capable person than one without.
      - sokoloff 4y ago
        The body’s response to exercise argues the opposite of your first paragraph.
        moron4hire 4y ago
        Sitting on your butt and punching keys at a startup for 60hrs a week is not anything like exercise.
- gitfan86 4y 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_22 4y 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.
    - nxmnxm99 4y ago
      Umm... that's because "VC" as an asset class has only existed for a few decades, and didn't come out of the fringes until around the dot-com bubble. So pointing at companies started decades earlier with massive first mover advantages as a call against VC is a bit silly. Perhaps instead talk about the % of VC funded decacorns over the last 10-15 years?
      - Bubble_Pop_22 4y ago
        > Umm... that's because "VC" as an asset class has only existed for a few decades, and didn't come out of the fringes until around the dot-com bubble Rockefeller and Gates wouldn't have wanted VCs on the cap table anyways, even if they were around back then. That's because they knew they had the means to repay the 27%something interest rate loan that a newborn Standard Oil or Microsoft commanded. People resort to VCs because they don't have the entrepreneurial arrogance to believe that the thing that they'll build is gonna be a hit. Actually given that any movement is a bottom-up movement...VCs exists solely because entrepreneurs have lost their entrepreneurial arrogance.
- closedloop129 4y 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?
  - solatic 4y 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.
    - moron4hire 4y ago
      Kirk didn't beat the Kobayashi Maru.
      - eropple 4y ago
        "Cheating is fine because I'm the main character and I'll get away with it" is not a bad summation of "hustle culture", though.
      - solatic 4y ago
        Depends on your perspective. If you think Kobayashi Maru is about measuring your ability to function under pressure, loss, and failure, then you're correct. Kirk's unwillingness to face failure made him fail. If you think Kobayashi Maru is about how the captain is supposed to react in an unwinnable scenario, then you're wrong, and you're not just wrong, Kirk is the poster-boy for exactly the correct approach. Ultimately, there are no real rules in war - only who survives. Business is different, but not that different. The annals of history are awash with the red ink of failed companies who insisted on letting the perfect be the enemy of the good.
- sigmaprimus 4y 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.
- dustingetz 4y 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.
  - cercatrova 4y ago
    I don't see how a VC benefits, they'd be throwing their own money at a peasant who might not be successful.
    - projectazorian 4y ago
      Most VC’s don’t fund peasants. Founders tend to be the children of lesser nobles, with a few social climbers thrown in to add spice.
      - cercatrova 4y ago
        Yes, hence why I was confused at the parent's line: > but they very much benefit from getting you to dream that you can, and your compliance I can't see how VCs benefit from selling a dream to peasants.
        projectazorian 4y ago
        The employees need to come from somewhere, and selling the dream helps with that. It’s also good investor storytime for the LPs, and great PR for prospective customers. Not to mention it boosts applications from the unconnected, from which you can find the most appealing diamonds in the rough - or, if you’re more underhanded, you can just pass their ideas on to someone in your network. This is the model Ivy League schools have practiced for decades; most applicants who get marketing materials from Harvard have no chance of getting admitted, and Harvard knows this.
        deleted 4y ago
        [deleted]
- yobbo 4y 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.
- heyflyguy 4y 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 4y 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.
    - sokoloff 4y ago
      If you had a choice to invest in founders who had such clarity, commitment, and grit that “they’d mortgage their house” vs a choice to invest in founders who were “in it as long as things keep going well”, which would you pick?
      - Bubble_Pop_22 4y ago
        Do they face the same constraints with their LPs? Does CALPERS or the Texas Teachers Pension Fund require an Austin based VCs to mortgage their house? Hardly. Founders who have been around a long time know the game. Founders are disposable soldiers , VCs are Lieutenants and GPs/Asset Owners are Generals. It's that simple. And it's okay. The BS part is when Lieutenants feel the need to conceal the truth or make motivational posts such as the OP . The absolute worst is when a soldier manages to be decorated in battle...all the Lieutenants become absolute fangirls and ask him for autographs and pictures whereas they treat other soldiers like crap. Of course such behavior is in the hope to impress the Generals.
- sixie6e 4y ago
- solatic 4y 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 4y 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 :)
- scarface74 4y 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-matching https://www.holloway.com/g/venture-capital/sections/pattern-...
- acchow 4y 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.
devoutsalsa 4y 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.
- rmbyrro 4y 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.
  - devoutsalsa 4y 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!
    - rmbyrro 4y ago
      I'm not sure that was the intention or not, but from my perspective, your experience reinforces that people are still quite cheap. What's really hard is building a product/service that solves a big enough problem, is marketable and you can sell. If you don't have those skills, it's quite expensive to develop them. Way more expensive than salaries, even well paid engineers.
deleted 4y ago
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coldcode 4y 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 4y ago
  Why impossible?
  - steve_adams_86 4y 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.
    - coldcode 4y ago
      Yes the data was not really there, I knew how enough to build the search part, but without sufficient raw data (i.e. not scraped or just via API without being able to search it directly) it would not have been possible. But that was a long time ago now. Oh well it was only a week...
- rmbyrro 4y ago
  I don't understand, aren't there many successful travel search engines doing something quite similar to that?
tluyben2 4y 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 4y 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.
  - sigmaprimus 4y 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!
abhayhegde 4y ago
Great article! But what's the aversion towards grad schools?
Traster 4y 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.
- rmbyrro 4y 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_ 4y 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 4y 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.
    - rmbyrro 4y ago
      Ah ok, the comment referred specifically to B2C, not B2B.
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sixie6e 4y ago
- lvl102 4y ago
  Yet, we continue to have innovations and standard of living across the world is rapidly increasing…hmmm.
  - geranim0 4y ago
    Yes, and that can't go on forever. We are abusing our planet faster than its recovery, and unless we discover a way to make a lot more energy, at some point people are gonna die by the millions. Just don't want to be there when it happens.
  - DethNinja 4y ago
    But this isn’t true for everyone. My skills and productive output is increasing each year but life quality and discretionary income just keeps going down.
- rmbyrro 4y ago
  For sure. Living in a cave and hunting pigs is the only honest way of living. That's what you're doing, right?
hardwaresofton 4y ago
RIP bountii[0][1] which was mentioned in the past [0]: https://www.ycombinator.com/companies/bountii https://www.ycombinator.com/companies/bountii [1]: http://bountii.com http://bountii.com (now owned by a SEO/click farm?)
thesausageking 4y 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.
- scarface74 4y 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.
  - DragonStrength 4y 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.
    - scarface74 4y ago
lifeisstillgood 4y 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 4y 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.
- rmbyrro 4y 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.
  - lifeisstillgood 4y 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
    - czbond 4y ago
      Our you have this belief that companies are started mostly by people with money. A high number of the founders I know were all broke as heck to get to company success with no personal or family money.
      - lifeisstillgood 4y ago
lkrubner 4y 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 4y 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.
georgeburdell 4y 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
- abhayhegde 4y 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?
  - georgeburdell 4y 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.
    - abhayhegde 4y ago
      I see. So what you are saying is that the career opportunities did not justify the opportunity cost. Thanks for sharing! As a prospective PhD student, this helps me gauge the worth better.
indus 4y 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 https://reactionwheel.net/2015/01/80s-vc.html
ganyu 4y 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.

199 points by karimf 4y 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 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 :)

rmbyrro 4y ago
Why's this being downvoted? Plug? C'mon, let people get their work out folks...

hwers 4y 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 4y 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.
hardwaresofton 4y 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
- sigmaprimus 4y 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...
mytailorisrich 4y 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.
tomhoward 4y 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 4y 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
jandrewrogers 4y 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.
- sigmaprimus 4y 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?
  - ant6n 4y ago
    It’s „weak people“?
  - moron4hire 4y ago
    Hard times create weak people. People aren't iron that gets tougher when forged in fire. People are bags of meat. People accumulate damage and damage creates scars. Scars are only "tough" in the sense that they are less easily damaged than the virgin tissue before. Otherwise, the function of the tissue is degraded in every other property. Stress causes health issues. Particularly traumatic stress causes (wait for it) Post-Traumatic Stress Disorder. All else being equal, a person with ulcers and anxiety disorders and depression and PTSD is a less capable person than one without.
    - sokoloff 4y ago
      The body’s response to exercise argues the opposite of your first paragraph.
      - moron4hire 4y ago
        Sitting on your butt and punching keys at a startup for 60hrs a week is not anything like exercise.
gitfan86 4y 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_22 4y 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.
  - nxmnxm99 4y ago
    Umm... that's because "VC" as an asset class has only existed for a few decades, and didn't come out of the fringes until around the dot-com bubble. So pointing at companies started decades earlier with massive first mover advantages as a call against VC is a bit silly. Perhaps instead talk about the % of VC funded decacorns over the last 10-15 years?
    - Bubble_Pop_22 4y ago
      > Umm... that's because "VC" as an asset class has only existed for a few decades, and didn't come out of the fringes until around the dot-com bubble Rockefeller and Gates wouldn't have wanted VCs on the cap table anyways, even if they were around back then. That's because they knew they had the means to repay the 27%something interest rate loan that a newborn Standard Oil or Microsoft commanded. People resort to VCs because they don't have the entrepreneurial arrogance to believe that the thing that they'll build is gonna be a hit. Actually given that any movement is a bottom-up movement...VCs exists solely because entrepreneurs have lost their entrepreneurial arrogance.
closedloop129 4y 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?
- solatic 4y 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.
  - moron4hire 4y ago
    Kirk didn't beat the Kobayashi Maru.
    - eropple 4y ago
      "Cheating is fine because I'm the main character and I'll get away with it" is not a bad summation of "hustle culture", though.
    - solatic 4y ago
      Depends on your perspective. If you think Kobayashi Maru is about measuring your ability to function under pressure, loss, and failure, then you're correct. Kirk's unwillingness to face failure made him fail. If you think Kobayashi Maru is about how the captain is supposed to react in an unwinnable scenario, then you're wrong, and you're not just wrong, Kirk is the poster-boy for exactly the correct approach. Ultimately, there are no real rules in war - only who survives. Business is different, but not that different. The annals of history are awash with the red ink of failed companies who insisted on letting the perfect be the enemy of the good.
sigmaprimus 4y 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.
dustingetz 4y 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.
- cercatrova 4y ago
  I don't see how a VC benefits, they'd be throwing their own money at a peasant who might not be successful.
  - projectazorian 4y ago
    Most VC’s don’t fund peasants. Founders tend to be the children of lesser nobles, with a few social climbers thrown in to add spice.
    - cercatrova 4y ago
      Yes, hence why I was confused at the parent's line: > but they very much benefit from getting you to dream that you can, and your compliance I can't see how VCs benefit from selling a dream to peasants.
      - projectazorian 4y ago
        The employees need to come from somewhere, and selling the dream helps with that. It’s also good investor storytime for the LPs, and great PR for prospective customers. Not to mention it boosts applications from the unconnected, from which you can find the most appealing diamonds in the rough - or, if you’re more underhanded, you can just pass their ideas on to someone in your network. This is the model Ivy League schools have practiced for decades; most applicants who get marketing materials from Harvard have no chance of getting admitted, and Harvard knows this.
      - deleted 4y ago
        [deleted]
yobbo 4y 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.
heyflyguy 4y 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 4y 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.
  - sokoloff 4y ago
    If you had a choice to invest in founders who had such clarity, commitment, and grit that “they’d mortgage their house” vs a choice to invest in founders who were “in it as long as things keep going well”, which would you pick?
    - Bubble_Pop_22 4y ago
      Do they face the same constraints with their LPs? Does CALPERS or the Texas Teachers Pension Fund require an Austin based VCs to mortgage their house? Hardly. Founders who have been around a long time know the game. Founders are disposable soldiers , VCs are Lieutenants and GPs/Asset Owners are Generals. It's that simple. And it's okay. The BS part is when Lieutenants feel the need to conceal the truth or make motivational posts such as the OP . The absolute worst is when a soldier manages to be decorated in battle...all the Lieutenants become absolute fangirls and ask him for autographs and pictures whereas they treat other soldiers like crap. Of course such behavior is in the hope to impress the Generals.
sixie6e 4y ago
solatic 4y 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 4y 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 :)
scarface74 4y 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-matching https://www.holloway.com/g/venture-capital/sections/pattern-...
acchow 4y 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.

devoutsalsa 4y 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.

rmbyrro 4y 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.
- devoutsalsa 4y 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!
  - rmbyrro 4y ago
    I'm not sure that was the intention or not, but from my perspective, your experience reinforces that people are still quite cheap. What's really hard is building a product/service that solves a big enough problem, is marketable and you can sell. If you don't have those skills, it's quite expensive to develop them. Way more expensive than salaries, even well paid engineers.

deleted 4y ago

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coldcode 4y 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 4y ago
Why impossible?
- steve_adams_86 4y 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.
  - coldcode 4y ago
    Yes the data was not really there, I knew how enough to build the search part, but without sufficient raw data (i.e. not scraped or just via API without being able to search it directly) it would not have been possible. But that was a long time ago now. Oh well it was only a week...
rmbyrro 4y ago
I don't understand, aren't there many successful travel search engines doing something quite similar to that?

tluyben2 4y 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 4y 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.
- sigmaprimus 4y 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!

abhayhegde 4y ago

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

Traster 4y 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.

rmbyrro 4y 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_ 4y 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 4y 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.
  - rmbyrro 4y ago
    Ah ok, the comment referred specifically to B2C, not B2B.

deleted 4y ago

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sixie6e 4y ago

lvl102 4y ago
Yet, we continue to have innovations and standard of living across the world is rapidly increasing…hmmm.
- geranim0 4y ago
  Yes, and that can't go on forever. We are abusing our planet faster than its recovery, and unless we discover a way to make a lot more energy, at some point people are gonna die by the millions. Just don't want to be there when it happens.
- DethNinja 4y ago
  But this isn’t true for everyone. My skills and productive output is increasing each year but life quality and discretionary income just keeps going down.
rmbyrro 4y ago
For sure. Living in a cave and hunting pigs is the only honest way of living. That's what you're doing, right?

hardwaresofton 4y ago

RIP bountii[0][1] which was mentioned in the past [0]: https://www.ycombinator.com/companies/bountii https://www.ycombinator.com/companies/bountii [1]: http://bountii.com http://bountii.com (now owned by a SEO/click farm?)

thesausageking 4y 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.

scarface74 4y 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.
- DragonStrength 4y 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.
  - scarface74 4y ago

lifeisstillgood 4y 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 4y 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.
rmbyrro 4y 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.
- lifeisstillgood 4y 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
  - czbond 4y ago
    Our you have this belief that companies are started mostly by people with money. A high number of the founders I know were all broke as heck to get to company success with no personal or family money.
    - lifeisstillgood 4y ago

lkrubner 4y 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 4y 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.

georgeburdell 4y 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

abhayhegde 4y 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?
- georgeburdell 4y 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.
  - abhayhegde 4y ago
    I see. So what you are saying is that the career opportunities did not justify the opportunity cost. Thanks for sharing! As a prospective PhD student, this helps me gauge the worth better.

indus 4y 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 https://reactionwheel.net/2015/01/80s-vc.html

ganyu 4y 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.