Ask YComb: Should I quit to do a startup during a recession?
I'm 23-years-old. I've been working at a tech company for 1.5 years. I have an idea for a startup that I want to do but I'm afraid the economy is going south. My mama always tells me the only reason why I don't appreciate my job is because I haven't yet experienced an economic downturn. She tells me I have no idea what it's like when you can't find a job because I was able to get this one right out of college. I have enough money saved up to survive about a year without a job. (I am going to pay for my own health insurance.) What do I do? Hunker down...or take the plunge?
65 comments
When you grow old you won't regret the things you did, but the things you didn't.
In my time I have done illegal raves, had sex with a porn model, started a bar in Ibiza, done drugs, started a crash-and-burn dot-com, and all sorts of other crazy stuff. But when I talk to my friends now (im in my mid-thirties) they wish they had not held back, and just gone with their ideas.
So get going, you have nothing to lose... If it fails at least you tried, your friends will envy you for having the guts to try, and in 10 years you will have a great story to tell.
In my time I have done illegal raves, had sex with a porn model, started a bar in Ibiza, done drugs, started a crash-and-burn dot-com, and all sorts of other crazy stuff. But when I talk to my friends now (im in my mid-thirties) they wish they had not held back, and just gone with their ideas.
So get going, you have nothing to lose... If it fails at least you tried, your friends will envy you for having the guts to try, and in 10 years you will have a great story to tell.
+1 for sex with a porn model
Interestingly, a lot of people would probably say this is all very unprofessional, hurting my future chances, bad career planning and what have you. But my experience has been to the contrary: Because I have met a lot of different people and done a lot of different things I tend to have a broader perspective on things. And nobody has ever held anything I have done against me.
So my point stands: Just do it...
So my point stands: Just do it...
"Just do it..."
...with the porn model.
...with the porn model.
-1 for sex with a porn model; +1 for starting a bar. It's a wash
Reminds me of how Steve Jobs said Gates would be a broader guy if he had done acid.
Doing crazy, unconventional stuff is a really good idea. If you don't take risks, ever, you can really get messed up. But when it comes to drugs...I don't know, I wasn't there, I don't know the kind, the purity, the dealer, etc. It might have been a really bad idea. If you took a bad risk but turned out alright, that doesn't mean it was a good risk to take. It's like winning at Russian Roulette. But again, I wasn't there.
Plus, not all drugs were created equal. Steve Jobs doesn't think acid is so bad, and he didn't do too shabby.
Doing crazy, unconventional stuff is a really good idea. If you don't take risks, ever, you can really get messed up. But when it comes to drugs...I don't know, I wasn't there, I don't know the kind, the purity, the dealer, etc. It might have been a really bad idea. If you took a bad risk but turned out alright, that doesn't mean it was a good risk to take. It's like winning at Russian Roulette. But again, I wasn't there.
Plus, not all drugs were created equal. Steve Jobs doesn't think acid is so bad, and he didn't do too shabby.
I'm 34 and finishing my degree in CS after being married for 10 years and having worked as a nurse for the last 15 years. Why was I a nurse? Because my parents didn't think that there was anything to the whole "computer craze", and they thought that nursing was a good, solid profession. I almost dropped out of nursing school to major in CS. And, I spent most of my free time in the computer lab, hanging out with the geeks. Go figure.
I know that parents get awfully nervous about this sort of stuff. But... sometimes they just don't understand. Especially when it comes to technology stuff and the tech biz.
If you have the money, and can give a startup a shot.. go for it. What's the worst case scenario? The worst thing that can happen is that you'll have learned a lot about starting your own business, and you will have learned a lot about new technologies, and your savings will be gone. That's it. That's the worst.
I know that parents get awfully nervous about this sort of stuff. But... sometimes they just don't understand. Especially when it comes to technology stuff and the tech biz.
If you have the money, and can give a startup a shot.. go for it. What's the worst case scenario? The worst thing that can happen is that you'll have learned a lot about starting your own business, and you will have learned a lot about new technologies, and your savings will be gone. That's it. That's the worst.
Someone lacks imagination: there are far worse things that could happen. Also: am I the only one that finds it funny that you're leaving one of the more lucrative careers (nursing) as demand explodes in favor of a more blase job environment?
Walk 3.5 miles a night in my shoes, and you won't have to wonder why I'm changing careers.
Nursing is only lucrative in California and Boston. If you're anywhere else in the country, the pay is generally abyssmal compared to the responsibility and the stress. In what other industry can you work 12 hours straight and barely have time to go urinate, much less eat a lunch. At one point in my career I could eat a Big Mac in under 45 seconds. Why? Because I had to. That's literally all the time I had to eat.
I'm not leaving nursing to go work in a cube farm. I'm leaving nursing to be a serial entrepreneur. I'll be able to work 2 or 3 days a week, and spend the rest of my time coding and starting a business until I can get paid enough to devote full time to the business.
So, what is the worst that can happen to this young man? Taking a year off to live off of savings to start a web app. Please, if I have no imagination, tell me what your worst case scenario is.
Nursing is only lucrative in California and Boston. If you're anywhere else in the country, the pay is generally abyssmal compared to the responsibility and the stress. In what other industry can you work 12 hours straight and barely have time to go urinate, much less eat a lunch. At one point in my career I could eat a Big Mac in under 45 seconds. Why? Because I had to. That's literally all the time I had to eat.
I'm not leaving nursing to go work in a cube farm. I'm leaving nursing to be a serial entrepreneur. I'll be able to work 2 or 3 days a week, and spend the rest of my time coding and starting a business until I can get paid enough to devote full time to the business.
So, what is the worst that can happen to this young man? Taking a year off to live off of savings to start a web app. Please, if I have no imagination, tell me what your worst case scenario is.
Being technical and having industry knowledge is a powerful combination. I don't think the past career in nursing is sunk cost at all...just the opposite.
I'd be shocked if iamelgringo didn't have 50 ideas of products/solutions that would make nursing work easier for nurses, cheaper for hospitals, and safer/more consistent for patients. The only question is if he has the stomach to try to sell to the medical industry... (don't know if I would)
You're right. I do have about 50+ ideas. I would love to get out of the health care profession for a while, though. I think the key is in making Doctor's/nurses lives easier without having to sell to hospitals. Hospital budgets usually run on a 1-2% profit margin, so IT budgets are usually pretty thin, and their tolerance to failure is really very thin. We'll see what happens next year after I'm done with school, though.
I have talked to a couple of friends in a similar dillema. My take on the whole thing is that there are two kinds of people:
1. Those trying to find a reason to do a startup.
2. Those trying to find a reason to not do a starup.
"the choice has already been made, it must merely be understood" ...(from the Matrix)
1. Those trying to find a reason to do a startup.
2. Those trying to find a reason to not do a starup.
"the choice has already been made, it must merely be understood" ...(from the Matrix)
This came up recently. The answer is that you shouldn't worry about it, because you can't time the market. If you were really sure the economy was going to tank at a given time, you could just short a bunch of big stocks and make money that way. But no one really knows when or whether there will be a recession or how big it will be. So the best plan is just to ignore the economy.
http://news.ycombinator.com/item?id=88410
http://news.ycombinator.com/item?id=88410
Actually you can time the market, because:
* it is a dynamical system, not a random one, and theoretically can become predictable in the short term
* economic policy is very politicized and Central Banks do unreasonable things on purpose (like keeping artificially low interest rates).
So, combine the economic imbalances waiting to be resolved (like negative savings rate etc.) and a market crash that you see taking place right now - and you can predict start of a recession quite well.
* it is a dynamical system, not a random one, and theoretically can become predictable in the short term
* economic policy is very politicized and Central Banks do unreasonable things on purpose (like keeping artificially low interest rates).
So, combine the economic imbalances waiting to be resolved (like negative savings rate etc.) and a market crash that you see taking place right now - and you can predict start of a recession quite well.
> you can predict start of a recession quite well.
If true, you should be a trillionaire.
If true, you should be a trillionaire.
That's not exactly true. I was talking with a trader friend of mine last fall about the real estate collapse that was just getting underway (finally -- that's an event my coworkers and I had seen coming for at least a couple of years), and we both agreed without equivocation that there was going to be a recession this year. Knowing that in advance doesn't automatically give you knowledge of a profitable series of trades to make. For instance, if we'd both shorted the S&P 500 on that day, we'd have been crying uncle the very next day when it shot up 3%, or a couple of weeks later when it peaked even higher.
Also, there's a difference between knowing something and being willing to risk losing a ton of money if you're wrong.
To support pg's point, unless your product takes a couple of lazy weekends to slap together, there's really no way of knowing where the economy will be once you're ready to go live.
And for that matter, weren't a number of successful dot-coms founded in the middle of the 2001-2002 recession? It seems to me that if you've spotted a good opportunity, the gyrations of industrial giants shouldn't really matter much to you. Even if your customers are businesses, your product should offer better value for less money than something they're already using, recession or no. A recession will, if anything, make them more receptive to such a product.
Also, there's a difference between knowing something and being willing to risk losing a ton of money if you're wrong.
To support pg's point, unless your product takes a couple of lazy weekends to slap together, there's really no way of knowing where the economy will be once you're ready to go live.
And for that matter, weren't a number of successful dot-coms founded in the middle of the 2001-2002 recession? It seems to me that if you've spotted a good opportunity, the gyrations of industrial giants shouldn't really matter much to you. Even if your customers are businesses, your product should offer better value for less money than something they're already using, recession or no. A recession will, if anything, make them more receptive to such a product.
My point is that "predict" means very little if you can't pinpoint with greater precision than a year.
I agree with all those saying recession isn't a big concern.
I agree with all those saying recession isn't a big concern.
predictions overlap hope mixed with feelings which is surpressed by logic vs risk, therefore acting on a predictions is a tottaly different task.
the economy is a complex system and is affected by things like positive feedback, phase shifts, emergence etc so its not that predictable
Having a job is no guarantee of security during a downturn. With a startup, you have more control over whether you succeed or fail. If you have one year of savings, you should be fine either way. But if there is a downturn and it lasts more than a year, you're SOL. If you take that year to develop something valuable, you can deal with the macro economy on your own terms. Given your situation, I don't think the economy should be a big factor in your decision. Even if you make a product for an ailing sector like real estate, if you can help them either save money or make more money, you'll do fine.
I started a company (http://www.electric-cloud.com/) right after the dotcom crash. I partly did this because I knew that going out and finding a job would be hard, partly because I also knew that it was going to take a while to get the product right, and partly because I really wanted to. Once we got funded we had job security for a few years, and we could weather the dotcom storm while creating cool software.
I can see where electric cloud could help for some big c++ project like OpenOffice, but has anyone found it useful for web applications (seeing as they tend to use dynamic languages)?
So if you look just at the build acceleration part of Electric Cloud then you are correct in thinking that the low hanging fruit is around large projects that use compiled code. But the definition of 'large' turns out to be important. You've mentioned a single large project (OpenOffice), but we see a lot of large projects that actually consist of tens or hundreds of small variants (the canonical example is a cell phone company that compiles variants of the the same code for different target hardware). This adds up to a lot of time (although each individual build may be relatively short).
On the web application side we do have customers because quite a lot of them are actually writing in languages like C++, C# and Java. Build acceleration is helpful there. For companies that are doing something like PHP then our build management tools (Electric Commander) are more appropriate since they are used to coordinate deployment of a large site.
On the web application side we do have customers because quite a lot of them are actually writing in languages like C++, C# and Java. Build acceleration is helpful there. For companies that are doing something like PHP then our build management tools (Electric Commander) are more appropriate since they are used to coordinate deployment of a large site.
It will never be easier or safer for you to start a startup. In five years, you might have a family to support (not necessarily so, but odds aren't against it), and the decision becomes remarkably harder to make when your own needs aren't the only ones to think of. That "one year" of savings will last a month or two if you have kids.
There are many businesses that are recession-proof, and many that can still pay you a salary during a downturn, though your current job isn't necessarily in one of those businesses (and your startup might not be in one of those businesses either). Without a lot of experience, it may not be immediately obvious to you what businesses will weather the recession well and which will run into trouble.
Having a job now does not mean you'll have a job in six months if the recession hits hard. Don't imagine that your job is permanent if things go badly for your current employer. There are no guarantees in anything. At least with a startup, assuming you build something people want, you'll have something people want in your possession rather than just a last paycheck.
That said, I'll tell you what I wish I'd known at 23: Have fun. Do exactly what you most want to do. If that is starting a company, traveling the world, starting a band, writing a novel, getting another degree, or some combination of these things, do it. You will never be in a better position to do exactly what you want to do.
Your mother worries about you, and thinks about basic needs first. You live in a time and society in which basic needs are all but automatic: you can work two days a week at a crap job and make a subsistence living as long as you're single and live frugally. You can always get a crap job if you need it later. Since you're college educated and presumably a nerd, you're even better placed...contract work pays enough to get by on a few days a month.
As mixmax pointed out, the old saying that you won't regret the things you did but the things you didn't do is probably as true as any truism ever said. When you're 30 you'll begin to get a sense of this...I suspect that when you're 40 you'll have an absolute certainty of it (I'm not yet to 40, so I don't know for certain...but I passed 30 a few years ago, and it only seems more true each day).
There are many businesses that are recession-proof, and many that can still pay you a salary during a downturn, though your current job isn't necessarily in one of those businesses (and your startup might not be in one of those businesses either). Without a lot of experience, it may not be immediately obvious to you what businesses will weather the recession well and which will run into trouble.
Having a job now does not mean you'll have a job in six months if the recession hits hard. Don't imagine that your job is permanent if things go badly for your current employer. There are no guarantees in anything. At least with a startup, assuming you build something people want, you'll have something people want in your possession rather than just a last paycheck.
That said, I'll tell you what I wish I'd known at 23: Have fun. Do exactly what you most want to do. If that is starting a company, traveling the world, starting a band, writing a novel, getting another degree, or some combination of these things, do it. You will never be in a better position to do exactly what you want to do.
Your mother worries about you, and thinks about basic needs first. You live in a time and society in which basic needs are all but automatic: you can work two days a week at a crap job and make a subsistence living as long as you're single and live frugally. You can always get a crap job if you need it later. Since you're college educated and presumably a nerd, you're even better placed...contract work pays enough to get by on a few days a month.
As mixmax pointed out, the old saying that you won't regret the things you did but the things you didn't do is probably as true as any truism ever said. When you're 30 you'll begin to get a sense of this...I suspect that when you're 40 you'll have an absolute certainty of it (I'm not yet to 40, so I don't know for certain...but I passed 30 a few years ago, and it only seems more true each day).
"My mama always tells me the only reason why I don't appreciate my job is because I haven't yet experienced an economic downturn."
That's a good reason, but not the only one.
Maybe you don't appreciate your job because you have a startup inside of you just bustin' to get out. Not even the greatest job or economy could help with that.
That's a good reason, but not the only one.
Maybe you don't appreciate your job because you have a startup inside of you just bustin' to get out. Not even the greatest job or economy could help with that.
When I was 15 I decided to move away from home and get my own life. Since 15 is a pretty young age to be moving out my mama told me that I would never succeed and that I would come crawling back after a month. That I would ever make it on my own.
Moving away from home was one of the best decisions I have ever made - I got to decide when to work, when to play, and when to sleep. And I have never looked back.
I think that you are in the same position. So take the plunge.
Moving away from home was one of the best decisions I have ever made - I got to decide when to work, when to play, and when to sleep. And I have never looked back.
I think that you are in the same position. So take the plunge.
15? Was it a Mark Twain story?
Sorry to be ignorant, but what's a Mark Twain story ?
Don't be sorry. You were doing the porn model when these guys were reading Mark Twain, remember? :-)
http://news.ycombinator.com/item?id=101755
http://news.ycombinator.com/item?id=101755
:-)
[deleted]
If you're looking for excuses not to do a startup, you're kidding yourself. Actually starting one up is going to give you incontrovertable evidence that you shouldn't be doing it, and there's no way you're going to be able to work through it. Leave entrepreneurship to the crazy people and get back to your job.
If the US (I assume you are from the US) goes into recession, is there the possibility of you losing your job anyway?
Could the recession work in your favour? Goods will become cheaper, interest rates will be cut, there will be people to hire because unemployment will rise, etc. So if you have money saved up, it could actually go further.
Although VC investment may slow down during recession, developing through the recession will set you up for prime-time when the economy picks up and VC's want your soul...I mean invest.
Could the recession work in your favour? Goods will become cheaper, interest rates will be cut, there will be people to hire because unemployment will rise, etc. So if you have money saved up, it could actually go further.
Although VC investment may slow down during recession, developing through the recession will set you up for prime-time when the economy picks up and VC's want your soul...I mean invest.
I'm a fellow hacker, no economist, but I'd say that now is probably a good time. The state of the economy is going to be irrelevant until you go for the first big investment, at the very least. That's typically quite a bit of time down the line, by which time you'll be catching the economy at its best, during an upswing. If your first big investment is really early on, chances are you're onto something pretty significant, in which case the economy isn't going to stop you anyway.
~phil
~phil
This is a really common thought, and I have a lot of friends discussing the same thing. Basically in simple economic your opportunity costs decrease during this time.
If you are considering this, save your money and begin reducing your costs. If a _major_ downturn happens, you can likely live quite cheaply during those times.
If you are considering this, save your money and begin reducing your costs. If a _major_ downturn happens, you can likely live quite cheaply during those times.
Because during a recession very few people will do startups and when the economic situation will be better you will be among the few that developed value that can be turned into money, advantage over competitors, ...
I was in a similar situation and my STRONG advice is to kill it working nights and weekends on your project before you quit. You need tons of inertia...3 things you should have before you quit:
1. some demo/prototypes done 2. a 15 slide business plan 3. one other person that will dedicate him/herself on the level that you are planning.
You will have a newfound appreciation for stability if you do your own company no matter what the economy looks like.
1. some demo/prototypes done 2. a 15 slide business plan 3. one other person that will dedicate him/herself on the level that you are planning.
You will have a newfound appreciation for stability if you do your own company no matter what the economy looks like.
I started to write a comment, but it got too long so I just blogged it.
How to quit your job and build a startup.
http://shelfmade.wordpress.com/2008/01/22/how-to-quit-your-j...
How to quit your job and build a startup.
http://shelfmade.wordpress.com/2008/01/22/how-to-quit-your-j...
Go with your gut. If you're too scared, it's probably not right for you at this time. If you can't stand the thought of staying in the corporate world, then you should pull the trigger and pursue your dreams regardless of anything else.
If you can keep your job and hack on the weekends, you can seed-fund your own damn self.
Less worry about money will also allow you to work on what you enjoy, without the constant spectre of "How am I going to monetize this?"
Less worry about money will also allow you to work on what you enjoy, without the constant spectre of "How am I going to monetize this?"
I'd say wait until you're 40, then you'll have 17 years worth saved up.
history tells us that recession is a time when creativity is at a all time high and you have a lot less competition. go for it.
You don't sound like you have much to lose, but don't forget that most the people here have a bias towards starting startups vs keeping a steady comfortable position. Even if you do have a good idea, I think you should only really do your own startup if you think you are the type of person who can get it done without a lot of help or if you have confidence that you'll be able to get the help you need. You might want to try and find people who can help you (potential customers, investors, partners, etc) before making a final decision. If you find yourself having trouble getting people to help you early on, that should tell you something.
Recessions come and go.
If you can find a sustaining revenue source ealy on, by doing something thatXs truly new and useful, I canXt see a reason why not start a startup even during a recession.
Actually, if what you sell really benefits users, specially if your users are other companies, youXll probably find many of them.
Finally, during recessions, thereXs a lot of great talent available on the market.
ItXs good to remember that most of GoogleXs growth as a company happened during the "nuclear winter" of the web after the bubbleXs burts in 2000.
If you can find a sustaining revenue source ealy on, by doing something thatXs truly new and useful, I canXt see a reason why not start a startup even during a recession.
Actually, if what you sell really benefits users, specially if your users are other companies, youXll probably find many of them.
Finally, during recessions, thereXs a lot of great talent available on the market.
ItXs good to remember that most of GoogleXs growth as a company happened during the "nuclear winter" of the web after the bubbleXs burts in 2000.
oops... "bubbleXs burts" -> bubbleXs burst.
I don't know how passionate you feel about your startup idea. I would take the plunge, as if I hunker down, my startup will never take off for sure. As others are mentioning it would be valuable lesson at worst. Your risk minimization instincts are making you think about recession and stuff. In my view, economic environment would only add very marginal risk to the risk that you would already take by going for your startup. I wouldn't be rash, but I would take the plunge.
I think you "probably" should go for it, however, my advice is to at least attempt to write a business plan, do some financial calculations, etc. Try to figure out at least some of the hidden costs (time OR money) that will bite you as you start your company.
Also, one thing that saved my bacon was having an actual customer pay me money for what I was doing - and give me feedback as a result; some things I thought were valuable, were not valuable to the customer.
Also, one thing that saved my bacon was having an actual customer pay me money for what I was doing - and give me feedback as a result; some things I thought were valuable, were not valuable to the customer.
I blame the press for all this, if noone reported this crap noone would be selling their shares etc. I have seen some real scare mongering going on in the press in the uk for weeks.
In short if you have enough money to last you for year then go for it. You could always freelance for extra money if needed.
In short if you have enough money to last you for year then go for it. You could always freelance for extra money if needed.
Are you serious? Hedge funds and investment banks do not really base their decissions on what press writes.
yes because they cause consumers to stop spending and therefore these hedgefunds etc go with it. would you invest in a retailer if you were being told that there was a recession?
that is not true. Hedges are especially mindful of the winds of change that news can bring about.
Do it. Dude, you're 23, have skills, qualifications and are presumably smart. If things don't pan out, you've got the rest of your life to sort yourself out (just don't take on too much debt!).
Now if you were nearing retirement, had no money and financial support, that'd be a different story.
Now if you were nearing retirement, had no money and financial support, that'd be a different story.
Is your mama 90 years old? What economic downturn did she live through?
If it is a compelling business/startup based on a great product then you should start it. Nevermind the recession.
HP was founded during the great depression. Sun and Adobe were started during recessions.
HP was founded during the great depression. Sun and Adobe were started during recessions.
i would try doing it on the side for a while and then quit when you physically cant manage doing both any more. You could use your wages to pay for outsources to help you build a first release e.g. designers, logo etc. In my view we all waste 50% of our day being unproductive so you might as well get paid for that bit. Also it takes a long time for a site to start ranking in search engines etc and getting traffic so that's another reason to build something slowly first.
Dude, quit your job.
I think you should. If you lose your job because of recession, it makes your decision making even easier.
Read the 4 Hour Workweek by Timothy Ferriss. It will give you some useful perspective on this.
i don't know you, i don't know your idea but even if i did i would still have innuficient data to answer such question.
the only thing certain is that the doing a startup is totally different from a normal job.
you must be ready for a serious commitment.
the only thing certain is that the doing a startup is totally different from a normal job.
you must be ready for a serious commitment.
I think it entirely depends on what kind of website / startup you're creating.
yes, I think you should.
don't be too discouraged by the economy. do you really want to make a major life decision based on what your parents think they know? and learned before the internet? at the very least, research the topic yourself.
but also, it's not good to have a boolean choice. you can make it less so, on both ends. you might be able to reduce your hours at work, in a potentially temporary manner (they might not like that idea at first, but if they want to keep your hours up, then obviously they don't want to fire you, so you have some ability to negotiate. reduced hours, for them, beats none by a large margin). and you could start on your startup in spare time, to learn more about
A) will it work B) how long will it take to finish C) how much you like working on it.
you can also research competitors, look for cofounder now, and other things, without some permanent "taking the plunge".
but also, it's not good to have a boolean choice. you can make it less so, on both ends. you might be able to reduce your hours at work, in a potentially temporary manner (they might not like that idea at first, but if they want to keep your hours up, then obviously they don't want to fire you, so you have some ability to negotiate. reduced hours, for them, beats none by a large margin). and you could start on your startup in spare time, to learn more about
A) will it work B) how long will it take to finish C) how much you like working on it.
you can also research competitors, look for cofounder now, and other things, without some permanent "taking the plunge".
dont give up on your day job, and dont give up on your startup.
find room for both, and if you find that you are still in love with this project after a month or two, then you have that much more information (and money) to go out and finally leave your day job.
find room for both, and if you find that you are still in love with this project after a month or two, then you have that much more information (and money) to go out and finally leave your day job.