It’s generally accepted wisdom that a good time to start a software business is during a down market.
Most of us are old enough to remember how disruptive the 2007-09 Great Recession was. Yet with unemployment peaking at 10.6% in January 2010, that crisis may end up looking like child’s play when compared with the current global crisis, precipitated by widespread lockdowns to curb the coronavirus pandemic. Current estimates place the U.S. unemployment rate at 13.3%, with a peak of 14.4% in April.
In fact, some of the biggest names in tech today launched during the Great Recession, including Uber, Slack, Square, Mailchimp, and Kabbage, to name a few.
One company in the Localogy orbit that also launched during the last crisis is Duda, the website builder platform. In a recent interview with Localogy, Duda CEO Itai Sadan explains why conditions like those we have right now are ideal for starting a business.
“This is the best time to start a business,” he said. “It may be tough to get funding. But what isn’t tough to get are employees. There are a lot of people out there and this is the time to get people to help you out and build something in the software space. ”
Itai also noted that this is a great time to “iterate and figure out what will work.”
Catch more of our chat with Itai on starting a business in a recession below.
Is This One Different?
Of course, the current downturn has an unprecedented element — the pandemic. This begs the question of whether that unique factor makes this crisis different. Is this really a great time to launch a software business?
It’s a fair question, but early evidence suggests no shortage of new companies innovating in this environment. What is unique is that much of the innovation is directly related to the changes we are experiencing because of the pandemic. More contactless commerce. More work from home. And so on.
The conditions that make recessions more favorable to startups — cheap assets and labor — are if anything even more true in the current market than during previous downturns. Add to this that the pressure to establish a “cool” office to attract talent has gone away in the WFH era. The cost profile for a startup today is about as low as it gets.
There has even emerged an unfortunate new label: coronapreneur. Here’s hoping this phrase does not survive as part of the post-crisis “new normal”.
What Business Would I Start Today?
In the spirit of the consensus that this is a great moment for startups, we decided to ask a few of our favorite entrepreneurs to share their ideas on what business they would start if they were launching their first business today. Or, what business would they advise new entrepreneurs to pursue? Here are some of the responses we received.
Aaron Weiche, CEO, GatherUp
I would start another SaaS business. I love the model, the ability to create and build tools that businesses can use to be more efficient and grow. Taking software off the table, I’d love to run a pizza joint just for the love of pizza (plus it’s economy proof, ha!). And to invent new ways of selling pizzas via text, chatbots, and other fun tech!
Brian Kraff, CEO, Market Hardware
I would be looking at scheduling. I think we are only at the beginning of a large scale scheduling evolution.
Daphne Earp Hoppenot, Founder, The Vendry
I’d probably take a deep look at childcare. It’s an insanely broken market, especially where I’m from in NYC. And it’s an industry that will be greatly impacted if more people work from home, both in terms of real estate and flexibility. I honestly haven’t studied the market, but it seems like one that’s ripe for disruption, especially with the changes happening from COVID-19.
Brendan King, CEO, Vendasta
Today, with the COVID crisis, if I were to start something, it would be counterintuitive. Something like office sharing, time management collaboration software. I don’t think that work is going to easily go back to the way it was before. It seems to me that companies won’t need as much ‘office time’. That said, they will still need time to collaborate and bond as a team. I think there should be an app for that.
Ted Paff, Founder & Former CEO, Customer Lobby
I have been thinking about businesses around the career management software industry. I think there are some cool opportunities to reduce employee churn and improve happiness, as well as help people find where they are going a little faster.
Andrew Shotland, Founder & CEO, Local SEO Guide
If I were starting my first business, it would be “Idiot Husband.” It’s a machine learning/AI-driven app that asks you a few questions about your spouse and then buys all future birthday presents, anniversary gifts, Valentine’s Day, etc. Once it takes off, then you move on to Idiot Dad, Idiot Son, Idiot Friend, Idiot Boss, etc. The brand extensions are virtually infinite because there are always new ways for you to be a total idiot.
If I were advising an entrepreneur at the moment, I would recommend they investigate how to help children, particularly children from underserved communities, get deeper into technology. I heard someone once say that the ability to code is like having a superpower. I don’t think everyone needs to learn how to code, but the more conversant you can be in how technology-focused products, services, businesses, etc., are made, the more options you will likely have for how you spend your professional future.
Justin Sanger, CRO, OMG National
Today’s world has fundamentally turned the markets on their heads and extraordinary opportunities have presented themselves, specifically in the remote services space.