What's a good time to do my startup?
Recently this has come up a lot with potential founders. Questions like:
These are all legit questions playing heavily on the minds of those thinking about taking that big next step. Here are a few thoughts on factors to consider while making this decision...
Global Macros
The financial markets have been oscillating to say the least, and there have been quite a few predictions about a correction. ?Market movements and economic turns are extremely hard to predict and timing them is rarely a winning strategy. This movement could influence the overall availability of capital, but the reality is that there is always the "right investor" believing in the same thesis as a founder and willing to take that long-term bet.
[As a side note, globally venture capital financing set a record in 2021 with $621 billion in combined deals, more than double the $294 billion recorded in 2020 according to CB insights].
Another example of a global macro is what we are experiencing with the pandemic. It has led to fundamental changes in the way we think, operate and lead our lives. There is no ignoring the fact that the world has evolved – take for example the increased focus on remote work and collaboration. These types of “macros” are more critical than one that influence capital alone and in some cases have a direct bearing on the right timing and success – take a look at the adoption curves of collaboration products like Zoom or Microsoft Teams or even delivery services like DoorDash. Another trend worth noting is the need for independent or touchless operations given strain on logistics/ supply chain coupled with labor and workforce shortages
User Behavior & Tech Trends
What are behavioral patterns and how are they changing? Are there drastic changes than prior years? What are the drivers of change?
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Contactless payments/mobile usage is worth citing as an example. While financial entities were pushing the use of credit cards, some Asian countries like India went from cash to contactless completely skipping plastic payments. The key drivers: mobile penetration combined with broad, affordable connectivity. The same trend gave impetus to Uber’s success. Similarly, distributed computing coupled with blazing fast 5G networks with AI and ML only makes the case stronger for decision making at the edge giving rise to "intelligent edge". Real autonomous systems in mission critical scenarios are no longer just "POCs".
In today's world its hard to ignore the crypto trend that's playing out. Accepting this new modality is going to be the norm vs the exception. Similarly the metaverse is here to stay where the new world thinks digital asset then accompanied by physical assets. So if you are getting started in the fintech space you cannot sideline crypto nor can you be a D2C company and not have an answer to how you approach the metaverse. Unsurprisingly Goldman Sachs sees the metaverse as an 8 Trillion dollar opportunity.
Access to Talent
Great companies are built by amazing teams. Hiring and more importantly retaining talent is a true differentiator in the fullness of time. The great resignation or reshuffle is definitely an opportunity for both employers and employees.
As a startup there are going to be good days and there are going to be “interesting” days. It’s in those interesting times that the DNA of the team will get tested – resiliency, tenacity and hustle will matter. Steve Newcomb has written a fascinating essay on team building. His blog is one of the best reads out there. ?A lot is said about hiring but not enough about retaining great talent which is a costly miss. A+ players stick with A+ companies and teams. Treat them well and its a competitive advantage.
At the end of the day, companies want to drive an inclusive culture of autonomy and self-accountability. The journey is always on. Netflix in my mind has done the best job at putting this down on paper. I find myself going back to these principles time and again.
Long story short, while these factors are worthy of consideration, the best time to jump-in is when you believe you have a focused vision around building products or services that solve an unmet need thereby creating long lasting value for customers. You will always find the right investors, partners, team mates and figure out a way to ride the trends.
If you love the idea, have conviction, believe deeply, then JUMP IN!