Recession. A big scary word.
When the economy shrinks, there’s less for everyone. Less money in the money stream. Fewer jobs on the job tree.
When markets slow, growth slows.
But not for startups.
Recessions are macro-level events.
They affect the market as a whole.
If you’re at market scale (think Google or Amazon), then they affect you greatly.
Google (~30% of online ad revenue) and Amazon (~40% of online retail spend) are the market.
They’re macro-level companies.
But startups aren’t macro-level.
Macro-level changes aren’t evenly distributed.
Even if the system as a whole is trending one way, parts of the system can trend the other.
Global temperatures have risen ~1C since 1900 [1].
But 2022’s winter storms brought record-lows in many American cities [2].
These aren’t contradictory.
Recessions are no different.
Just like the climate, it’s possible for some areas to cool while others experience record heat.
Startups just need to go where it’s hot.
Macro changes cause migrations.
Rising temperatures in Burgundy threaten the world’s greatest Pinot Noirs.
But that same warmth in England is helping them produce quality sparkling wine for the first time in history.
Startups should be planting in England, not farming in Burgundy.
What does this mean for founders?
For the first time in a decade, Google, Amazon, and Microsoft have hit the PAUSE button on their growth.
They’re not throwing piles of money at every tech hire in the country. They’re not investing in new, risky industries.
They’ve shut themselves in the cave, hoping to wait out the winter.
The biggest predators in the woods are sleeping.
As a founder, recessions shouldn’t scare you.
Change runs through your veins.
Fuck the Macro. Embrace the Micro.
