This is a great time to join or found a startup.  Why?  Because a bad recession is like a treadmill EKG for companies, and especially for small companies.  It puts everything under so much stress that when you see a consistent source of good news, you know that company is strong.  In good times, the rising tide lifts all ships.  How do you know whether that sock puppet selling dog food on the Internet is really a good idea, or just the product of the Bubble?  There are no sock puppet opportunities that do well in a bad economy.

The key question to ask yourself is whether you have enough visibility to tell whether a company is doing well.  This will vary based on the position you’re hiring for, but just the fact a company is hiring is a signal of some sort.  Another is that the company just raised money in this climate from a recognizable VC firm.  I’ve been keeping a list of those to monitor myself to see how the companies do.  In terms of founding a startup, the question is going to be how quickly you can get to an indicator in this economy.  You have to either raise money or sell something.  Only third party credibility will do.  If you’re hunkered down building software and living on canned goods, you have the benefit that there probably aren’t competitors being funded, but you don’t have the third part read on your own success.

I joined my last company Callidus software in November, 2001, right after 9/11.  That was a bad economy.  I saw a middle-stage startup that was able to sell multi-million dollar software to telcos.  At that time, everyone thought all the telcos were going bankrupt, and some did.  So I knew that if a troubled business like a telco couldn’t wait to buy a multi-million software license in those hard times, that company was a pretty good bet.  Sure enough, we went public in 2003, about 2 years after I joined. 

It was the best possible time to look for a job.