Why to Start a Startup in a Bad Economy • Hacker News Board

Re: Why to Start a Startup in a Bad Economy

#91

Post by Ezra » Fri, Oct 17, 2008, 4:14 AM UTC

sutro wrote: post #86

zhyder wrote: post #27

Earlier quoted context omitted.

Technology doesn't evolve independently of a market for it. While "make something people want" is true in any economy, the problem is that what people want changes with the state of the economy. So startup founders need to reassess the market for their products (building iPods or building pacemakers?), and I'd guess many will decide this is not the right economy for their startups, and some will now discover new oppo…

I've often thought that the mantra make something people want should be amended to make something people want to pay for . It's an important distinction. It's the difference between Richard Stallman and Steve Jobs, between Linus Torvalds and Bill Gates. I have great respect for all of those individuals, but I don't look to Stallman or Torvalds for business inspiration. I don't doubt that all YC companies have made so…

Neither Stallman nor Torvalds are scrambling to pay rent.

So it depends if you want to be "well off" (Stallman), "obscenely rich" (Torvalds), "shockingly rich" (Jobs), or "embarassingly rich" (Gates).

And I think that most would, given the choice, rather be the BDFL of a project they obviously enjoy (Torvalds), than spend all day in meetings, or managing management, or whatever Gates has done for the last decade. Unless you're a masochist, or a megalomaniac.

And besides that, lightning has to strike the same place 200 times before you make it to the 99.9th percentile.

"I'm trying to make a living; if you're trying to make a killing then you're stuck in the system."

Re: Why to Start a Startup in a Bad Economy

#92

Post by cmshop » Fri, Oct 17, 2008, 4:31 AM UTC

If I would develop something that could help people with their education, it should probably be recession-proof. Also, while US may suffer recession, some other countries probably still enjoy economic growth.

Re: Why to Start a Startup in a Bad Economy

#93

Post by nostrademons » Fri, Oct 17, 2008, 5:13 AM UTC

mattmaroon wrote: post #89

fallentimes wrote: post #84

Earlier quoted context omitted.

But don't you think they'd witness a similar discount in the valuations?

Of course, but they've already achieved independent wealth, why risk it? Extra money to them is just icing on the cake at this point. Investing is basically a hobby for them, and when their money starts to evaporate, it's the first thing they will (and should) cut out.

Do angels really risk money that they can't afford to lose? I'd think that most of them would sock away enough to remain financially independent in safe investments, and then do their investing with "play money".

Re: Why to Start a Startup in a Bad Economy

#94

Post by robak » Fri, Oct 17, 2008, 5:59 AM UTC

What about having savings instead of "investor funding" ? If you have developed a great product why in the world would you like to share your company with VCs anyway ? Why you need somebody to invest in your company ? I mean come on people, you can save $10k in vacation as a college student waiting tables and have 100% pie for yourself. I don't understand the logic here. Never did.

Re: Why to Start a Startup in a Bad Economy

#95

Post by shinvee » Fri, Oct 17, 2008, 6:32 AM UTC

Thanks PG. I've have the same idea about this economy problem and startup. This article gives me to lots of passion! I'll send this link to all of my co-workers.

p.s. Can I translate this article to korean?

Re: Why to Start a Startup in a Bad Economy

#96

Post by mattmaroon » Fri, Oct 17, 2008, 6:39 AM UTC

nostrademons wrote: post #93

mattmaroon wrote: post #89

Earlier quoted context omitted.

Of course, but they've already achieved independent wealth, why risk it? Extra money to them is just icing on the cake at this point. Investing is basically a hobby for them, and when their money starts to evaporate, it's the first thing they will (and should) cut out.

Do angels really risk money that they can't afford to lose? I'd think that most of them would sock away enough to remain financially independent in safe investments, and then do their investing with "play money".

They probably don't risk money they can't afford to lose. But if you figure an angel invests 20% of his money in startups, and the stock market comes along and reduces his total net worth by 20%, how much is he going to invest now? How much if he invests 10% in startups and the stock market hits him for 30%?

It may not be 0, because he may have had other expenses and investments that he prioritizes angel investing over, but it probably won't still be 20%. The total dollar amount he'll be willing to stick into high-risk investments will probably decrease.

I'm talking on average, of course. Each individual will vary according to their net worth, lifestyle, investment philosophy, etc.

Re: Why to Start a Startup in a Bad Economy

#97

Post by natrius » Fri, Oct 17, 2008, 7:30 AM UTC

dmoney wrote: post #88

emmett wrote: post #79

Earlier quoted context omitted.

From the Alexa top 20 global ( http://www.alexa.com/site/ds/top_sites?ts_mode=global&la... ): Yahoo - users before revenue, success Google - users before revenue, success YouTube - users before revenue, undecided Microsoft - revenue before users, although their internet properties consistently lose money. Not really an internet company. MySpace - users before revenue, success (MySpace is profitable already) Facebook…

Your comment makes the page scroll horizontally. It's bad Feng Shui.

Install the Stylish Firefox extension and add:

    @-moz-document domain("news.ycombinator.com") {
        pre {
            white-space: pre-wrap;
        }
    }

Re: Why to Start a Startup in a Bad Economy

#98

Post by vptes1 » Fri, Oct 17, 2008, 8:01 AM UTC

you are absolutely right, my friend. i'm starting up right now, and am looking forward to the challenge.

Re: Why to Start a Startup in a Bad Economy

#99

Post by raquo » Fri, Oct 17, 2008, 8:06 AM UTC

aaronsw wrote: post #19

This article seems to ignore the main argument I've heard: exit strategies are fewer in a recession. IPOs are out of the question and few companies are in an acquisition mood. So instead of growing fast and selling out before you hit your plateau, you have keep your traffic climbing until the market picks back up. That's really hard, esp. since founders have a tendency to get bored. I expect many will start something…

Existing startups will probably have a hard time trying to decrease the burn rate and at the same time growing traffic.

On the contrary, potential startup founders will have more reasons to think of their projects as businesses - trying to grow revenues, not traffic. And to get revenue, you have to solve real problems.

Re: Why to Start a Startup in a Bad Economy

#100

Post by dimitar » Fri, Oct 17, 2008, 8:10 AM UTC

natrius wrote: post #97

dmoney wrote: post #88

Earlier quoted context omitted.

Your comment makes the page scroll horizontally. It's bad Feng Shui.

Install the Stylish Firefox extension and add: @-moz-document domain("news.ycombinator.com") { pre { white-space: pre-wrap; } }

Thanks a lot for this tip! I sense that I am going to use that extension a lot.