Reasons to start your startup in a bad economy

I have recently had a discussion with a friend who wants to start a technology startup and was absolutely overcome with fear on how a bad economy will affect her and her business.  We talked about all of the issues that she would have to face…the biggest one of them was financing.

After reading Paul Graham’s blog post & watching Kevin Rose’s video today, our discussion was confirmed….technology companies with a sound idea and quality founders really make startups recession proof and in fact, a recession may actually be a good time to start your startup.

Here are some points to take away from Paul post:

1. Technology progresses more or less independently of the stock market. So for any given idea, the payoff for acting fast in a bad economy will be higher than for waiting.
2. Startups often make things cheaper, so in that respect they’re better positioned to prosper in a recession than big companies.   The cheaper your company is to operate, the harder it is to kill. Fortunately it has gotten very cheap to run a startup, and a recession will if anything make it cheaper still.
3. Another advantage of bad times is that there’s less competition.
4. As a founder, you’re an investor….you’re buying stock with work..and like any investor you should buy when times are bad.

You should also watch Kevin Rose’s video where he explains how he used these points four years ago when starting up Digg.com

Like I told my friend don’t fear, be smart, build a business model that is sound, and leverage the opportunity!