[HN Gopher] How are startups shaped by macro conditions at birth?
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How are startups shaped by macro conditions at birth?
Author : Bostonian
Score : 32 points
Date : 2023-12-02 16:25 UTC (1 days ago)
(HTM) web link (papers.ssrn.com)
(TXT) w3m dump (papers.ssrn.com)
| Bostonian wrote:
| Discussed at
| https://marginalrevolution.com/marginalrevolution/2023/12/do... .
|
| From the abstract: "While funding conditions cannot explain
| differences in outcomes, a labor market channel can: recession
| startups are better able to retain their founding inventors and
| build productive R&D teams around them."
| gumby wrote:
| This is has been an article of faith long and extensively
| remarked on over many cycles: tech crashes of 83, 01, etc and
| financial recessions and shocks like 87, 90, 01, 07). Their list
| of references seem to show that this specific question _hasn 't_
| been rigorously examined though, which is somewhat surprising.
|
| Those references also show that the data are available so it's
| it's a shame the authors only looked at 07/08. Looks like the
| first author worked on this while a grad student. Perhaps they
| will expand it into a book.
| raziel2701 wrote:
| What I took from it is that if you're a startup that got its
| funding during a recession (meaning there's lots of laid-off
| people floating around), you get to collect very talented,
| skilled R&D people. Hence if that's the situation for your
| startup you would say that being a recession start up is great.
|
| I think that's the specific conclusion I could get from it, the
| paper is very heavy and there's tons of caveats because every
| recession is different. But yes, if you are good/lucky enough to
| start a start up during a recession that has reduced labor
| demand, then you get to pick from a very talented pool.
|
| Currently, I'm not sure if we had a recession last year, the
| labor market stayed strong despite the market correction and very
| public layoffs. I guess when everyone and their mother is calling
| for a recession it's just not going to happen? Yields are
| uninverting, historically I believe this is a strong signal of a
| coming recession, and the markets are calling for interest rates
| to start getting cut in March of next year. So I guess we'll see.
|
| The other question that I found very interesting is: Do start ups
| born in a recession come to be because the idea and quality has
| to be very good? Or do they come to be because above-average
| confident people are the only ones willing to put their ideas out
| there? Or a combination of both?
| bobthepanda wrote:
| Economists have predicted 9 out of the last 5 recessions, so
| the saying goes.
|
| That being said overall market movements take a while to shake
| out; the mortgage bubble was first pointed out as early as
| 2006. People have been calling out China's property bubble
| since the 2010s.
|
| For tech at least I get the impression that the labor market
| out there is tough.
| deadbabe wrote:
| The title made me think this was going to be about speculating
| the optimal time to birth a baby so they can be well positioned
| to create a successful startup by the time they reach full
| maturity.
| ttul wrote:
| I started my first startup in September 2001. We got amazing
| people for nothing and free office space. Post-2008, my series-A
| failed to produce any sales because the market was simply gone.
| But at least I could find and retain good engineers. I would be
| afraid to start a company today.
| xvedejas wrote:
| What part of today would have you worried? My start up is
| having a great time finding people (amid tech layoffs) and our
| office space is heavily discounted due to WFH/high office
| vacancies. Our sales are going well also (our industry has been
| booming). It seems to me like a good time as any to build a
| company.
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