Five reasons why a recession is a good time to start a company

Was that meant to be funny? All but one of the points essentially say it's good to start a company in a recession because it's really really hard, and if you somehow manage to survive, you'll end up tougher, leaner, and meaner. Here's a tip, guys: start your company at a time and place where there are no constraints and even the biggest idiot can be successful.

So... starting a company during a recession is a good thing because it will force you to adopt best practices? What about just adopting best practices during a boom? Wouldn't that be MORE advantageous?

Seriously, how is adopting an advantageous behavior an advantage if its sole purpose is to offset a disadvantage? It isn't. If you're not frugal, your not going to be able to start your company in a boom, much less a recession.

I think that some of the better startup ideas would actually do better during a recession than otherwise. If your product or service reduces a business cost or opens up an untapped (monetary, social, or other) revenue source, people and businesses will be more likely to use your product/subscribe to your service during a time when business is slow. The two things you need as a startup are attention and early adopters. If business slows, both businesses and people have more downtime (which is just more attention in the attention pool that you can vie for) and are more receptive to novel solutions to their tight budget. (Your startup is novel, right?)

In short, businesses that increase market efficiency in novel ways seem, to me, more likely to succeed during a recession. This is so obvious that I'm surprised the article didn't mention it.

None of those are unique to a recession: you should be frugal, you should look at your ideas again, etc. Top reason to start a company during a recession: your competitors will go bust.

Best reason: Because if you start in a recession, you have better odds of being acquired with a rediculous valuation during a boom cycle.

Good things come out of recessions, but a high valuation is rarely one of them. Anyone want to guess what Flickr's valuation would be today?

http://siteanalytics.compete.com/bebo.com+flickr.com/?metric...

Starting a company in a recession is also a good idea because your industry is less likely to be filled with professional BSers and "wave riders" and your natural talents can shine through a lot better with the lack of competition.

Good time to start a company, what about the rest of the economic front? If a startup is being frugal, does that invariably mean the people who use services are going to be frugal?

Thanks for all the comments - I wrote a follow-up to this article and posted it on my blog. http://www.16thletter.com/2008/03/21/more-on-starting-a-comp...

One reason why a recession is a good time to start a company: Because the well-funded riff-raff drops out sooner.

This one got a double serving of Kool Aid.

A lot of people do start companies during 'downtimes'. Off the top of my head: sixapart started when both Ben and Mena got laid off. Flickr was pretty much the same story IIRC.

Also could get one more attention -- maybe -- because the media won't necessarily expect anyone to be doing anything positive. Recessions are one big moan, and the 'yipee!' of a startup will stand in stark contrast. IMHG (in my humble guesstimation).