So Is It a Good or Bad Time to Found a Startup After All?

• Now is a Great Time to Join or Found a Startup –says Bob Warfield, friend and fellow Enterprise Irregular.

• Now is a Terrible Time to Join or Found a Startup  -says Charlie Wood, friend and fellow Enterprise Irregular.

Now what?  Who is right?  And the debate does not stop here, it sparked a pretty good discussion in the Enterprise Irregulars group.  In fact I was facing the same dilemma advising a startup-CEO friend the other day.  But I really think launching a new business as Founder or joining one as an employee are two very different animals, so I’ll split the two and talk about Founding (or join as co-Founder) here.  I’ll try to some up the pro’s and con’s here:

It’s a Great Time:

• The recession is “like a treadmill EKG for companies” – survival of the fittest
• Can hunker down, develop now unnoticed
• Cheap resources: hire “rock stars at rock-bottom prices” ( OK, that sounds good, but I actually don’t believe in putting on too much of a squeeze, you get employees that way, not team-members)
• Your competitors won’t get funded either
• The recession won’t last forever, and when the tide comes and all the wannabe’s jump on board, you will already be a seasoned survivor, in fact a potential M&A target.
  

It’s a Terrible Time:

• How will you get funded? (you won’t)
• You won’t be able to sell (who’s buying?)
• How do you pay yourself? (have reserves for a year?)
• In other words, how do you survive financially? (this sums up the previous points).

It’s a Great Time and a Terrible Time – my take:

• It’s a terrible time to leave a safe job to launch a startup.
• It’s always a good time to start a bootstrapped business on the side while keeping your job (you need to look at the current job, contracts, IP ownership, whether your job performance would be impaired ..etc.)
• It’s a great time to launch a startup if you are not employed anyway.

Let me expand on that last point.  Unemployment is at a record high and growing. It’s close to impossible to get hired now.  Anyone can get the axe, and it’s not your fault, it’ the economy.  If you find yourself out of a job, and have been doing the kind of ongoing, active outbound marketing, self-branding I’ve discussed before – perhaps you already are on somebody’s wish list and get a job offer soon.

If not, and you’re now scrambling to update your resume, reach out to contacts, browse the job sites and apply for posted jobs – I’m sorry to be the bearer of bad news, but it likely won’t happen.   I know you need income NOW, not some long-term solution.  I know it, because I’ve been there, done that.  And I can’t tell you how much I regretted looking back on wasted 6-8-10 months, chasing job opportunities that just did not materialize when I could have actually created something in that period.

So think about it this way: job search is a full time activity.  You can “feel good” about doing your best, chasing phantom opportunities.  Or you can have a working prototype, a service … a small business of your own half a year from now.  Yes, it will require living on reserves for an extended time.  But you will likely be forced to anyway – might as well make the best of it.

Update (1/9/09):  Read Sramana Mitra’s Advice For Laid-Off Engineers @ Forbes.

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