"Downturns are good…the pretenders are gone."

Do you agree or disagree? From the New York Times today…

“A downturn can be a very good time to build a company,” contends Michael Moritz, the Silicon Valley venture capitalist. “The parvenus and the pretenders are gone. The only people who want to start a company in a time like this are the ones with the greatest conviction.” See here.
(PDF here in case.)

You know, those who love it madly. That’s who they think will survive the process in this economy.

Your take?

About the author

Kim Klaver


  • It’s a good sensible point, and – for this business – a nice wish.

    Sadly though, the reality is different.

    You don’t have too go far to trip-over those who’re touting NM as ‘a recession-proof business’. (Of course, it isn’t – and stats show a 2-year decline.)

    That’ll of course fuel the influx of… er… how shall I couch this…? ‘less than sensible people drawn to this business by the hope of quick money’.

    Great… more idiots. Just what we need.

  • I’d like to see the statistics that show a 2 year decline in NM. I’m not aware of anyone collecting that aggregate data but maybe I’ve missed something.

    Read Shane’s Illusions of Entrepreneurship

    “The median startup is a business that’s capitalized with about $25,000. The financing of that business comes from the entrepreneur’s savings. The business is a retail or personal service business, a hair salon or a clothing store, that kind of thing. The founder doesn’t have expectations of a very high growth business, in fact [the entrepreneur is] probably thinking a goal of $100,000 a year of revenue is a good goal.”

    That’s not silicone valley stuff. That is NM stuff. The data in Shane’s book will support the belief that we DO see growth in these kinds of ventures when the economy is bad.

  • >I'd like to see the statistics that show a 2 year decline in NM.

    Most recent DSA stats cover 2007, from which: 'decline in sales and salesforce numbers as weak economy causes numbers to slip… a decrease of 1.3 percent and 4.3 percent, respectively.'

    So, 2007 is down on 2006. Apparently because of a weak economy. As 2008 was a helluva lot more 'dramatic' than 2008, I'll bet my Sinatra collection (including the Dorsey boxset) that when they're published the 2008 stats will also show a decline.

  • Thanks for the DSA citation. Frankly I don’t see a major cause of concern in those numbers. US sales are down, but hardly a crash. And global sales are still up. This business should NEVER be presentated as a quick fix or panacea – the “idiots” that present it as such will always be with us. I still believe this is a time of TREMENDOUS opportunity.

  • No, it’s not a cause for concern – but a need for realism.

    The 2006 stats were high – and re-adjustment is natural.

    My gripe is with the those who, whether through cynical deception or enthusiastic naivete, pitch NM as ideal – even in circumstances when it’s not. And, in view of the current situation, there’ll be even more of that happening now – sucking in the wrong people for the wrong reasons.

    So, who wants to help write ‘Goodbye get rich quick, hello get smart now’? (Serious request that – if you’re interested, contact me.)

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