Which Startups Are Resilient to Recession?

Which Startups Are Resilient to Recession?

A downturn doesn’t destroy startups. Rather, it separates the startups that are in recession-proof arenas from the startups that didn’t think about the economy at all. Silicon Valley is no longer a pinata full of cash; you can’t just take a whack and bleed green. You need to be thoughtful about your enterprises. Well-run companies will thrive. The others will perish.

Lean it up

Strip your tech, drop your weight. Startups that were getting fat need to lean it down; they need to pare down to the barebones now. Now is not the time for rapid expansion or hyper-scaling. It’s time for hunkering down and building real muscle. Start cutting areas that you can cut while still retaining your core technology, talent, and identity. You don’t want to be the people scrambling to pick up talent later, but you also don’t want a thousand excessive tools and utilities that you really don’t need during a time when you can’t build strong scale.

Build homes, not castles

Focus on the major pain points of companies and create technologies that they need. Okay, a decade ago, you could make millions solving some minor “problem” that a company had or giving them some luxuries that they didn’t want. But now you have to concentrate on the issues they have. And they’re going to have a lot of problems. Think about what’s going to happen to people when the economy crashes? How can you help them lean it up themselves?

Learn from success

Hey, Amazon’s doing great isn’t it? Walmart, Amazon, anyone who sells stuff online, really. But who isn’t doing great? Oh, Facebook, Twitter… social media. It turns out that during a recession, companies that don’t produce anything of value don’t do great. Take a look at the companies that are posting record profits during these recessions. It has to do with the technologies that are making it easier for people to survive during a recession, doesn’t it?

Make less go further

Don’t just lean. Think about what you can do to grow your client base from within. Think re-selling, re-targeting, re-marketing, rather than raw expansion. What other problems can you solve for your customers? How can you help them succeed? Their success is your success, after all. It’s easier to sell to people who already love you. And, as Amazon has discovered, clients are more likely to stay onboard if they rely on you for multiple things. How many people still have Amazon Prime because they don’t want to lose Prime Video or Prime Music?

Look to the debt/credit/finance industry

And finally, look, it’s a raw deal, but the reality is the industry that’s gonna be doing great is in debt, credit, and finance. At minimum, diversify your interests. Fintech booms when deals go bad, and there’s no way around that. Forge partnerships within industries that are going to last. The real estate bubble, for instance, might crash, sure; but it’s not going away.

Alright, so you’re on your way to building a mobile app to disrupt—which industry? Choose a lean one. A recession doesn’t have to stop your startup in its tracks, but you’re doing it wrong if it isn’t changing at least some of what you’re doing. 

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