My keynote at the LAUNCH Angel Summit is now online, with the whimsical Jason Calacanis: video.
And some thoughts on this slide, which I have updated over the past 13 years as the DJIA companies have changed:
The supermajority of U.S. business giants were founded during an economic recession.
Why might this be?
1) To build a business for the long term, it’s better to focus on iterating with customers than racing to please some capital provider pushing for hyper-growth.
2) Meaningful change depends on disruption. With stability comes stasis, and the big just get bigger. Market disruption is needed for new entrants and new ideas to have a chance. It is an essential pre-cursor for progress. What better time to disrupt an incumbent that when they are distracted with broad market disruption? For example, Tesla launched in the peak of the Great Recession of 2008. What better time to compete with the incumbent gas-burning car companies a when they are going bankrupt and selling off assets?
3) It takes a dedicated founder to start a business when the sentiment is sour, in contrast to the arbitrage-seeking opportunists in boom times.
4) It’s easier to build a team with less competition for talent.
5) And keep in mind that the pace of innovation continues unabated through economic cycles (e.g. humanity’s capacity to compute). The recombination of ideas is not only exogenous to the economy, it is the fountainhead of economic growth.
I spoke with the NBER last year about the economics of AI. This is the group that declares the official start and end of recessions. Someone took notes.
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