YC Pioneering Library's "Why start a business when the economy is depressed"

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It is clear that the current economic situation is very bad, and some experts are worried: will it be like the middle of the 70 period of the Great Depression?

Microsoft and Apple were created at the time.

For entrepreneurship, the economic downturn does not mean the loss of weather. Of course, I'm not saying that a recession is good for entrepreneurship--in my view, the facts are boring: the economic situation has little impact on the success or failure of entrepreneurship.

YC has invested in many startups, and we have learned that the success or failure of entrepreneurship depends on the quality of the founders. Yes, the economic situation will certainly have an impact, but it is too weak compared to the founders ' factors.

The key to success is not in the moment: As long as you are capable, you can succeed even in a bad economy, but you cannot avoid failure even when you are in the right direction. Some people think: "Now the economy is depressed, I still don't start a business at this time." "There are people, they will be in the economic bubble think:" If I venture now, must be rich! "Both of these ideas are wrong.

If you want to improve the probability of success, then instead of worrying about the economic situation, it is better to think of what kind of entrepreneurial partner. If you're worried about what might be a threat to your company's survival, the answer is not in the TV news, but in the mirror you're facing.

In other words, isn't it a better choice for any start-up team to move on when the economy picks up? If you're starting a restaurant, that might make sense. But if you're starting a tech company, it's not. Technological progress has little to do with the stock market, so no matter what your ideas are, "fast" returns are higher than "wait". Microsoft's first product was a BASIC interpreter designed for Altair--a product that meets the needs of the times--if Gates and Allen choose to act later in the next few years, it may be too late.

Of course, what you're thinking doesn't mean what you're thinking--people are constantly generating new ideas. If you plan to implement a particular idea, act now!

But that doesn't mean you can be indifferent to the economic situation. Users and investors will be strapped for cash when the economy is depressed. On the user side, there's not much of a problem: if you can make a product that helps people save money, you might even borrow it for a profit. Startups tend to be more affordable than big companies, and from this point of view they are better suited to go upstream in a recession.

Investors are more problematic than users. Startups usually need a certain amount of external financing, and in tough times investors tend to be more likely not to inject capital--but that's not the smartest thing to do, even if it's for their own good. "Buy at a bad time, sell when it's better" is known to all. The reason why investment is always inconsistent with intuition is because in the stock market, the so-called "boom" means that people think that the current is a good opportunity to buy, if you want to benefit, you should be a "counter market investors"-unfortunately, only a few people can do this.

That makes sense: Why in the 1999 investors would scramble to buy stocks of bad startups, but in 2009 they would be deterred by a handful of good companies.

You have to get it. After all, this is not news: startups have to adapt to the vagaries of investors. Any entrepreneur in any country, ask them if they think investors are "fickle" and watch their faces. Last year you had to explain to investors why the company was "barbaric" and you had to convince them why your company was able to resist the recession.

(None of this is a bad thing.) Investors ' mistakes are not in their standards, but in their tendency to focus on a certain point but not see the whole picture. ）

Fortunately, the job your start-up has done to fight depression is indistinguishable with the job of a normal economy: be as frugal as possible. For years I've been telling entrepreneurs that the surest path to success is the cockroaches that make up the corporate world. Running out of money is tantamount to declaring the company dead immediately. The lower the cost of operation, the higher the likelihood of survival. The good news is that the cost of running a start-up is already cheap, and the recession only makes it cheaper.

If the economic winter falls, being a startup cockroach may be more secure than keeping the "nine to five" job. Customers may indeed be left behind by the pinch, but you won't lose all your customers at all. But the market and the employer can be different: The boss can cut you down with one thought.

What if you quit your business but failed and can't find a job? If you are a sales or marketing person, this may be a problem-it may take months to find a new job in a slump. But hacker is much more flexible: good hacker always have food-though not necessarily a dream job, but not starving.

Another advantage of the recession is that competition is falling. The train of technology always starts regularly, if the other people are holed up in the corner, then you are the only one who rides in the car.

You are also an investor. As a founder, you are actually working to buy stocks--larry and Sergey become billionaires not because their work is worth billions of dollars, but as their identity "Google's first investors". Just like any investor should do in a recession, buy it.

I talked about "stupid investors" in the previous paragraphs and talked about their fear of investing in startups when they were in a slump. I think depression is the best time to invest. Do you agree? But the conscience of words, some entrepreneurs are really not good where to go: depression, then go to study Bai. This depression, I'm afraid, these people are still the same virtue. The fact that the previous paragraph was true is precisely because most readers do not believe in it, or at least not to practise it.

In short, a recession may mean the right time to start a business: This is the advantage, the hesitant investor is a disadvantage, and it's hard to say who has a bigger impact, but none of them are the most critical-people. For those who are working on some kind of technology, I just want to say that the best time for action is always the present.