Launch a start-up in a failing economy? – Microsoft and Apple did

Microsoft was founded in 1975, while Apple was founded just a year later in 1976. Since then, the companies have fought tooth and nail to gain the upper hand in the world of technology, and both are hugely successful companies. And what do they have in common? They both launched during an economic slow down.

The economy is in a real mess right now. I didn’t really need to tell you that did I, as you can’t pick up a newspaper or turn on the TV without being told the same thing. The failing market is likely to be already affecting you in some way, and it’s also affecting Silicon Valley and the tech companies who have been riding the bubble for so long.

But, while tech companies are likely to be dropping like flies over the next few years, especially if the economic depression is as bad as some analysts are predicting, that doesn’t mean there will be no new start-ups. And as Paul Graham points out in an essay, a failing economy isn’t such a bad time to launch a start-up. After all, both Apple and Microsoft were launched in the mid-seventies, the period when we experienced the last great depression.

Graham knows his stuff, being a venture capitalist himself at Y Combinator along with a few other people. His essay is an intelligent look at how and why start-ups fail and why launching one in the midst of a bad economy isn’t as stupid of an idea as you might have imagined.

His biggest point is that the economy isn’t the be-all and end-all. Start-ups succeed or fail mainly on the strength of the founders and the idea behind the company. In the same way that some people think they can get rich out of a tech bubble, and are clearly mistaken, it’s also a mistake to put off launching a start-up because the economy isn’t quite up to scratch.

There are actually some advantages to launching a start-up in a failing economy. People are being laid off from their current jobs and you’re much more likely to be able to persuade good people to join your big, new idea. Venture capitalists are also looking for something new, much preferring to dump money in an upcoming project than something already failing.

The essay is well worth a read and, if the assumptions made in it are true, then this economic downturn could lead to companies as big and important as Microsoft and Apple emerging from the gloom. Maybe.

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