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Comment by smcl | Hacker News Reader

Please remember that PG is a financially very secure person, who is in the business of getting people on board with YC and committing to throw themselves 100% into tech companies that will individually more than likely fail.

If PG says "you should start a startup in a bad economy" it's simply a clever sales pitch, a spin on the current circumstances. Back in 2008 when this was posted it was presumably in response to the Global Financial Crisis (or "Credit Crunch" in the UK), I'm guessing it's being posted again due to the recent layoffs.

It may be the right time for you to take the plunge, but you should be reading this article with a clear head and remember that this is not an old friend giving you some sage advice, but someone who is incentivised to get you to take risks on their behalf.

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Your sentiment is overall very valid, however please also remember this was PG who wrote this in 2008 and YC was only 3 years in.

> I'm guessing it's being posted again due to the recent layoffs.

This was submitted again (by someone not affiliated with YC), but it's a repost.

Objectively speaking starting a startup in a recession / bad economy is actually a good idea. There are numerous examples of why this is the case, but the simplest explanation is that you get to follow a regular venture cycle that correlates to the highest returns. Since it usually takes about 7~10 years to get to $1b+ valuation, this follows a normal market cycle. There is a reason an unprecedented amount of software companies IPO'd 2020~2021, because valuations were sky high, and not because of those individual businesses were strong but simply because the market was hot. If you can ride that wave you can create incremental wealth for yourself, regardless of whether a VC is involved. In other words, timing is everything and starting when the market is at the bottom is good timing.

I didn't intend to imply there's anything untoward going on here re posted/submitted, it's the same to me and I acknowledge in my post that it was originally posted a long time ago.

Yeah. The alternative is to chill out at your current job and be able to pay your mortgage, and then start a startup when money is raining from the sky like it was in 2021. It's cyclical. Tech isn't dead forever, and what's a good idea today will still be a good idea in a couple years. You'll also be a couple years wiser, which is never bad.

or, someone will simply start your idea (assuming it's original and good) and be first to market. lots more nuances around first to market, but PG has a point. there's no right answer and it's all personal, but if you do have an awesome idea, and it makes sense financially for you, then there's no point in waiting X years. you're just throwing those years out. worst case, what, you get rejected from funding because of a grim financial future? it's still extremely valuable spending that time building your project and getting that awesome experience of pitching/getting rejected.

there's always an optimistic take to everything and a pessimistic one. if you're always taking the wait and see approach, chances are you're not going to do anything later, either. be somebody who does things and doesn't just sit around dreaming and waiting (like me)

eh, even original and good ideas aren't that valuable. Sometimes an individual can get lucky with a gimmick but a sustainable business is usually successful when a team of great people are both having and executing on good ideas on a daily basis - and still needs luck.

yep. further proving my point that building such a team equals time. and you need to start asap to do something like that, not just sit around wasting valuable years of your life

I can't figure out if you're being sarcastic, because if so, you're nailing it. If not, literally every single argument you brought up is against the consensus in the YC community, which doesn't mean you're wrong, but it still stands out as a massively contrarian position on this site.

The current fiscal environment is against the consensus in the YC community. The times they are a-changin'.

I'm not being sarcastic.

I get that people are concerned about their ideas being stolen, but honestly, you can probably come up with another idea. I think what most people who have their ideas stolen find is that it turned out to not be a good business, and someone else invested 2 years of their life on a painful slog to discover that. On to the next idea!

The advice could be for people that were laid off and face months of unemployment. Quitting your job now to start a startup might make less sense. But also, quitting your job now and getting a grant when stocks are undervalued, could be a good move too.

Also can also hack up an proof of concept or MVP during that time as well, a few hours a week at a time. Even if you don't complete it, you'll have that much more progress towards it when you decide to take the plunge later.

> Tech isn't dead forever, and what's a good idea today will still be a good idea in a couple years.

Just as a couple of concrete examples:

A paid-for app was a great idea in 2009, but a bad idea in 2013.

A dedicated handheld PlayStation was a great idea in 2005 but an awful idea in 2012.

Self-driving car companies were a great idea in 2017, but a bad idea in 2020.

I think the point is that technology changes and sometimes you need to strike whole the iron's hot.

Aren't you just seeing your failed business without actually having to fail? You have some idea to change the world, someone copies it, they failed miserably; how do you lose there?

There are so many things that were "before their time" and failed, like garbage-collected programming languages. C beat Lisp, because GC was too slow. Then Java beat C, because manual memory management was too dangerous. Being too early is almost scarier than being too late.

I think year here is also super important. In 2008, even without the benefit of hindsight, investing in tech is not a crazy idea. We had a real-estate/banking crisis and there was a lot of people looking to figure out where to put their money.

Tech in 2008 looked very healthy, and VC funding only went up from there.

We're looking at an actual contraction in the tech sector now. We can argue how about whether this is a small "correction" or something more major, but I think it is a good idea to not just blindly apply good market advice from 2008 to the 2023 landscape.

It probably is a great time for a startup, just probably not a tech startup.

> It probably is a great time for a startup, just probably not a tech startup

Well, it's not really an issue of tech vs. non tech anymore is it? A good chunk of the largest companies are now under the "tech company" bucket. It boils down at the end of the day in whether they invest heavily in tech or if it's incidental.

This mashes together companies as diverse as Tesla, Snowflake, and Airbnb together. The former is a car company with inventory, etc. The middle one is a SaaS company. The latter a travel company platform.

Ultimately, a few things are clear-- even after 5% interest rates get slashed (which looks increasingly likely to happen in 2024 and not 2023) investors are no longer interested in businesses that have no idea how they'll attain profitability. I would argue this is a good thing-- it now forces companies to be strategic in what they invest in.

How I read it is, during a good economy money will be more plentiful and investors will be more willing to invest in your startup. If you know it's easy to get investor dollars and every subsequent round of funding is almost guaranteed, you have the luxury of not being immediately profitable. It's much easier to peruse a business plan where you peruse growth and larger long term profitability at the expense of short term profitability when the economy is good because you are constantly getting investor funds and it's easier to sell new investors on your idea.

In a bad economy you don't have that luxury. Not only is there not as much cash to go around, investors are pickier with the cash that they do hand out. This means you can no longer pursue a business plan that sacrifices profitability for growth, you have to prioritize making money. Assuming your business succeeds, it will then be better prepared to get investor cash when the economy improves and can theoretically weather future financial storms better.

I realize this is a very idyllic way of looking at it and there are a million other variables that come into play, but I think pg is definitely looking at it in idyllic terms in his piece.

I agree with your caution. But the other side is that PG was right in 2008. Some of the big unicorn startups started around that time.

Survivorship bias?

Without data on industry wide startup failures year over year, impossible to say. But most likely yes.

Not necessarily. If you say starting a company is great because you asked 10 post-exit founders what they thought and they said “lots of work but totally worth it” that’s survivorship bias. Founders that didn’t survive wouldn’t say the same thing. If you’re saying that founding a startup in a down economy is a good idea because of a higher chance of survival that’s not survivorship bias. The non-survivors aren’t ignored, they’re included in the rate calculation.

With so much supply I'm not sure he needs to write articles to increase it.

When the economy turns, people get scared and want to take less risks. This is an attempt to nudge you to maybe take some risks rather than spend a bit more time upskilling and/or searching for a role in an existing company.

It's not technically wrong or anything, it's just business. But people sometimes forget that because we do get good, honest, selfless advice on here and it's sometimes hard to differentiate.

Keep in mind this article is 15 years old. It could get a driver's permit in most US states.

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