Trickling into your iPhone and mine are journalistic headlines of Dante-level fear. Opinions, well-informed opinions, (and others) leak into even the sturdiest optimism and leech like poison in a sponge.
With headlines like “Recession Is Inevitable”, “Shock Waves Strike Global Economy”, and “Putin Is Still a Soulless, Soggy, Sock Stuck Under Hell’s Washing Machine” – gloomy is an understatement when it comes to forecasting in business.
And here I am— a Venture Capitalist. In my line of work, if I can’t pick out the gloomy future from the bad, I don’t eat. As high as investing rewards are, there’s a meridian trench of lows, jaws open wide, to catch me if I fall.
I’ve got a lot at stake here and I’m here to tell you that right now is the best time to start your business.
I’m so certain that I won’t just give you one reason; I’ll give you four.
- You’re Following In The Greats’ Footsteps
Of the top 10 largest companies by market cap (as of me writing this), just under half started in a recession. The other half were founded each within a three year range of one. Those are just the top ten. You’re in legendary company.
A startup-founder’s journey is a marathon. Follow business trail-blazers rather than sideline nay-sayers. Action always pays more than paralyzing doubt. It especially pays when your competition stagnates in the latter category
- Venture Partners Are Sitting on Capital
According to the U.S. National Bureau of Economic Research, the “2008 Recession” began in the last months of 2007. You’ll notice from this graph that during those early stages, VC spending actually grew and did not reach a significant fall until the end of the year.
After economic booms, VC’s are dragons perching on capital and looking to spend it. Even in recessions, they have to deploy it eventually. Any good VC lives 10 years in the future. We know that even the deepest economic cycles even out over time.
The thing is, we know this, but startups don’t. Look at this data from the Austin Chamber of Commerce. Overall, during recessions there are dips in the number of startups created in the United States. People overestimate risk during recessions.
Your competition is scared. While they’re shaking, scared, you’re entering the VC dragon hoard and taking what’s yours. We’ll be happy to make money with you.
- Your Company Will Hit a Recession Anyway
The dragon taming epics of business aren’t glamorous. Contrary to what tv and self-proclaimed gurus may tell you, a company takes 10 years to mature.
This graph shows major U.S. recessions over the past 50 years. Taking into account every one, we average one about every six years. Odds are, somewhere along your startup’s path you’ll hit a recession anyway.
Get in early. Get as much traction as you can so that you’re prepared for the next one.
- Headlines are Fickle
I don’t need to remind you that American political headlines are polarizing. But the problem with any story is that no matter the truth or misinformation behind it, it shapes perception.
This graph is from 20 Myths About Religion and Politics in America. On the left is American perceptions on how others view abortion. Clearly polarized. The right graph shows actual American opinion. Clearly not polarized.
We believe the headlines that we see. Then we overestimate extreme negatives or positives. But when we look at actual data, it’s not eye-grabbing, and perhaps even mundane.
Ink and pixels oscillate between extremes. We gravitate to ideas that ratify our worst fears or biggest hopes. This is headline astrology: not ratified, not predictive, not accurate, but it sure gives terrible reasons to justify behavior.
The fate of your business is not mapped in the headline stars. Founders carve their own path with gritty, determined work.
Have faith in the data. Have faith in your vision. Start right now. Nothing great is better off started tomorrow.