Ask YC: Is there a recession/depression coming?

@nickb: That Morgan Stanley report is what prompted this post. I think it is prudent to question the source, however.

@shayan: My team and I have 6 months of savings, meaning we can pay the bills for 6 months before we either need income or investment. Do you think that is long enough?

@skmurphy: This makes a lot of sense to me, there are a few anecdotal stories about 2002-2003 being a great time to have started a company. And theres that report that ~50% of pre-1999 companies are still around. Good point.

After thinking about it some more I came to several comclusions: 1. I am very unhappy at my current job. I'm young intelligent (or so I think), hard working, and I have big dreams. I am capable of doing much more with my life than this job.

2. If my startup fails, I can blame it on the economy.

3. Maybe it is a bad time, and maybe it is a mistake to start a company right now. But its a bigger mistake, even a tradgedy to be afraid of the unknown. I won't let my life be run by fear.

I'll keep the YC crowd posted about our progress ;-)

But I would say in general you would spend about 6 months developing your product, and having something ready anywhere from a good working alpha version to something more of a working prototype and work in progress. I hardly doubt there are too many companies that can start generating revenues (let alone profits to spend on living expenses) within six months from the day they start.

So I would say the best way to do this is to start working on the idea before you quit your job, try to get a prototype or something together, and start looking for funding. I think in your case at the end of six months you will def need outside money (again since I doubt you'll be generating revenues by then and you are out of savings).

So regardless, if you do quit, I would recommend you looking for money right away. The worst thing to ever do is to ask for money when you need it, and when you are under pressure. Take your time, do your shopping, find out how interested people are in your product and try to raise some smart money before your time is up.

and please do keep us in the loop, and good luck to you

But second, even if you were sure that a recession was coming, you shouldn't let it affect your plans for starting a startup. Yes, funding does tend to dry up somewhat when the economy is bad. But if you look at startups that succeed vs. those that fail, the quality of what they built has much more effect on the final outcome than the state of the economy when they were getting started.

So this is yet another case of founders worrying about the wrong things. Recessions don't kill startups. Making mediocre stuff kills startups.