Earlier this month, I had the privilege of speaking on a panel at the Foley Emerging Technology Conference entitled “Prospering in a Volatile Market: an Investor Perspective” along with way smarter investors than myself, including Paul Maeder, Nina Saberi, and Michael Skok. If you’d like to listen to the session, it’s archived on that first page/link.
As we were putting the panel discussion together our intrepid moderator Gabor Garai broached the topic of whether economic downturns create particularly more stressful times for entrepreneurs. The question made me stop and think for quite a while.
The topic came up again earlier this week when I was addressing the Northeastern University ACM chapter as we talked about, among other things, “what to expect” when starting a start-up.
Here’s the thing: start-ups are inherently risky, and risk creates stress. There’s no way around those two facts.
Sometimes risk creates fun stress – like when you’re about to bungee jump off a bridge. Mostly though, risk creates garden variety “stress stress”. Are you going to be able to make payroll next week? Is some competitor about to crush your nuts? Are you going to make the quarter’s numbers? Is the product going to work? Is your top engineering team looking to leave? And so on and so forth.
Some things are absolutely “more stressful” in a downturn, such as raising money, and closing sales. QED. However, while I won’t argue it’s a zero-sum game, there is a yin-and-yang as it concerns the stressors created by the economic environment.
Successful technology start-ups usually exist longer than the peak or valley period of most economic cycles. If you were crazy enough to start a newco in the early 90s, you had a tough time raising money and getting going. Once you hit the late 90s, the economic world was nearly inverted. Now you were frustrated you couldn’t hire great people or find decent offices or keep track of the dozens of copy-cat businesses VCs were funding daily! Your stress level didn’t materially change between those two time periods – the types of stress just changed.
The nice thing about economic cycles is that you get to pick when you start your company – you can effectively “pick your poison” 🙂 .
Start-ups are stressful. No way around it. If you don’t like stress, go find a nice 9-5 at the RMV or something.