Now is a Great Time to Join or Found a Startup
Posted by Bob Warfield on December 16, 2008
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.
7 Responses to “Now is a Great Time to Join or Found a Startup”
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Scott said
Bob, great post! As a start-up junkie, I’m really glad that I joined Socialtext when I did. I always think that it is a great time to be part of a start-up, but agree with your points that, in a down economy, now is an even better time.
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smoothspan said
Scott, as I look back over my career, the deals I joined in tough times have performed better too than the ones in frothy times.
Most of the people I talk to about whether this would be a good time to join a startup aren’t really startup people anyway, so they’re too afraid of failure.
So is this a Great Time or a Terrible Time to Found a Startup?| Zoli’s Blog said
[…] Now is a Great Time to Join or Found a Startup –says Bob Warfield, friend and fellow Enterprise Irregular. […]
5 career alternatives for start-up founders during the recession « Nickpoint said
[…] think it’s bad to start now. However many start-up founders including Kevin Rose; Bob Warfeild and Ross Mayfeild say it’s great timing. However the VC’s ain’t quite so […]
Nick Barker said
Hey Bob, I’ve been tracking your blog for the last year and this is my first trackback and comment and all on the same day! I’ve enjoyed reading your posts. Anyways this guy on the onstartups.com blog comment does not agree it’s a good time at all to start — http://onstartups.com/home/tabid/3339/bid/7800/More-Reasons-Why-Now-Is-The-Time-For-Hatching-Something-New.aspx. The debate continues to roll on.. Only time will tell
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