Leo Gau home
via flickr/pagedooley

My series of notes on Y Combinator’s Startup Library:

Original: http://paulgraham.com/badeconomy.html

My notes

Takeaway: It’s the people that matter. Nothing else.

The state of the economy doesn’t matter much either way.

If we’ve learned one thing from funding so many startups, it’s that they succeed or fail based on the qualities of the founders. Which means that what matters is who you are, not when you do it. If you’re the right sort of person, you’ll win even in a bad economy. And if you’re not, a good economy won’t save you.

So if you want to improve your chances, you should think far more about who you can recruit as a cofounder than the state of the economy. And if you’re worried about threats to the survival of our company, don’t look for them in the news. Look in the mirror.

If you have a specific idea you want to act on, act now.

That doesn’t mean you can ignore the economy. Both customers and investors will be feeling pinched. It’s not necessarily a problem if customers feel pinched: you may even be able to benefit from it, by making things that save money.

Fortunately the way to make a startup recession-proof is to do exactly what you should do anyway: run it as cheaply as possible. The immediate cause of death in a startup is always running out of money. So the cheaper your company is to operate, the harder it is to kill. And fortunately it has gotten very cheap to run a startup. A recession will if anything make it cheaper still.

Customers may drop off individually if they can no longer afford you, but you’re not going to lose them all at once; markets don’t “reduce headcount.”

Good hackers can always get some kind of job. It might not be your dream job, but you’re not going to starve.

Another advantage of bad times is that there’s less competition.

It’s hard to say whether advantages like lack of competition outweigh disadvantages like reluctant investors. But it doesn’t matter much either way. It’s the people that matter. And for a given set of people working on a given technology, the time to act is always now.