Is it time to start a business?
We are overloaded with opinions, prognoses, value judgments or notes which, in recent weeks, almost in their generality, refer to a common denominator: we are facing the worst economic catastrophe in modern history in the world.
I do not intend to go against what is evident. There is much data that, even in this column, I have provided to confirm that it is indeed a crisis whose magnitude we cannot yet measure. But in view of the situation, there are two options: the first is to join in diagnoses, criticism of government and political actions and endless complaints about how bad the outlook is, or to assume that reality, design a plan and act accordingly.
Let us start from the premise that the markets are in a historical decline, capital is becoming more selective and consequently less accessible which will cause many companies, especially micro, small and medium-sized ones, to go through a perfect storm and therefore it is foreseeable to see massive layoffs. So, taking into account all of the above, is it a good time to start a business?
It is no secret that starting a business is complicated and of course in an environment like the present one, greater challenges will arise, but it is precisely resilience and the ability to free up obstacles that make a good entrepreneur. The more chaos you see in the immediate future, the more opportunities there are; to show this, let's take a look at some cases of companies that emerged in a "moment of recession".
In 1929 Disney Co. was founded, a company that last year reported sales of almost 70 billion dollars; in 1971 FedEx was founded whose sales reported last year also reached 65 billion dollars or what about the recent cases of companies like Uber, Whatsapp, Slack, Square, founded in 2009 or Instagram and Pinterest, among others founded in 2010 right after the recession of 2008.
So that it is not a question of stopping all intention to start a business. It is clear that ideas carried out by capable entrepreneurs, with a scalable, innovative, disruptive business model, with multidisciplinary teams and a clear strategy, manage to overcome unimaginable adversities; what is imperative is that those who decide to start at this time, do so without disconnecting from reality and understanding perfectly the current world and the restrictions that we have already discussed.
This pandemic will definitely change our reality, the way we human beings interact and even our consumption habits. It will bring very relevant challenges for industries such as tourism, automotive, construction and manufacturing that will need to innovate and in some cases, pivot business models to adapt to the new realities; but it will also bring opportunities in other sectors such as e-commerce, food, personal care, information technologies, and the medical and pharmaceutical industry.
We will continue to do our part. Looking to invest in companies and entrepreneurs that comply with what is stated here because even in the midst of the tsunami, we are convinced that: it is time to become entrepreneurs.
Ian Paul Otero is Managing Partner of Redwood Ventures.
Follow him on twitter: @iotero