Aaron Goldfeder.

My startups seem to be timed with market collapses and Silicon Valley venture capital firm Sequoia sharing some kind of “end of days” message.

Last time it was the Great Recession and the classic “RIP Good Times” Sequoia deck complete with a heartwarming image of a knife in a slaughtered pig.

In May 2008, I quit my cush job at Microsoft and was a doe-eyed wantrepreneur with a grand dream to raise piles of money and perhaps buy a company to jumpstart. We founded the company and then ran right into a brick wall. The market died along with my startup delusions.

With a lot of grit, we eventually grew into a successful enterprise SaaS analytics company in the clean energy space. We raised $30 million, became market leaders in our niche, built an amazing team and were acquired last year. Our products, and more importantly, our culture still thrive today.

This time it’s the COVID-19 crash and Sequoia’s “Black Swan” email that features an ominous-looking virus molecule taking over the Earth.

Fortunately, my next startup is forming at the AI2 incubator. We’re a few experienced founders, operating in stealth mode, funded by the Incubator. Our technology leverages very recent breakthroughs in NLP AI to solve a problem that drove me insane while running my last company. And since it’s great for distributed teams, cost savings, and agility—we’re even more eager to get to market.

While being in the incubator makes it immeasurably easier, this crash made me want to share some of what we learned while building in a recession.

Culture of grit from Day 1

When you start in a crater, you never get fat.

We outfitted our first office with furniture that we bought from a failed startup down the hall. Yes, the desks would spontaneously collapse, but jumping to save a colleague in the middle of the workday just led to bonding.

We didn’t make expensive hires. In fact, we often just didn’t hire at all. We waited until things were overloaded, let them stretch to a breakpoint, and only then reluctantly hired. And we didn’t hire strategic, fancy people. We hired people who could build stuff, sell stuff, or operate stuff.

All of this fed into an authentic, frugal, and results-driven culture that lasted the life of the company. When the world melts down, there is no room for slop and there is no time to play startup house. It was always an advantage that our culture biased towards having grit and running lean.

Brilliant, high potential, loyal people will enter your life for cheap

Until now, hiring for tech in Seattle has been awful. It’s old news that wages have been high but it’s the rate of growth that really hurts. In a recession, that runaway growth will shrink.

And, thousands of brilliant new grads and, sadly, newly underemployed people are entering the job market. The aura of entitlement gets replaced with one of hunger. Brilliant, high potential, hungry people are suddenly ready to show you what they can do if you just give them a shot.

Last time around, we hired a brilliant ecologist, who was previously a biologist at NOAA and had a master’s degree in ecology … to answer our phone! She scaled, too; by the time we were acquired, she was head of operations overseeing finance, legal, facilities, HR, deal diligence, and more. She was with us for nearly a decade.

We hired a former firefighter, who had run an IT consultancy, had been a journalist, and had an MBA … to also answer the phone! He was our head of product when we were acquired.

We did this over and over again and enjoyed the satisfaction and privilege of helping people grow their careers with us.

An unkillable cockroach

Because we emerged from a crater, we were cheap, gritty, and determined to succeed. We were unkillable. And our competition was largely weak in comparison.

We didn’t really have many startup competitors. Most people were too rational to start a new company in that environment. Some tried and failed. New companies that did find traction were so focused on their own approach that they were too busy to worry about us.

And in tough times, bigger companies triaged. They cut non-essential activities, which means they didn’t innovate. So, they didn’t bug us either.

By the time incumbents noticed us, we already had early customers that loved us. We weren’t going away. We were a cockroach that had crawled out of a nuclear wasteland and they simply weren’t going to kill us. We used those early clients to build a successful and loyal customer base that carried on for the life of the company.

Culture of customer love

We started out hungry and so we *really* loved our customers. They were our lifeline to cash and we needed them to prove to investors we were the real deal. Failure was never an option. Treating them with arrogance was unthinkable. We were old school in serving them well and making them feel appreciated. We taught those values to each new hire we made and that culture stayed with our company all the way through.

The annoying thing

Ok, let’s get real. There’s a number of ‘a great time to start a company’ posts out there written largely by investors that probably aren’t worried about paying the bills.

As outlined, I do think there are tremendous advantages to draw from. However, I’d personally rather start a company while we’re not in a tragic, crisis time. And pitching over Zoom if you don’t know the investors already? That seems hard. I’d rather live in the land of $10 million seed rounds on high valuations with just a PowerPoint. C’est la vie.

Tough as that may be, recessions are often short-lived but the advantages above can last throughout a company’s life.

Looking ahead

I’m excited about the road ahead. We plan on ethically aligning with this market shift and of course coupling it with wisdom from doing it another time around.

Soon enough things will be getting better and better. And we see our thesis through a long-term lens based on years of experience in the space.

There were dozens of iconic companies founded in the last recession that were highly successful. That will happen again and we’re planning on it for ourselves. Like our hometown quarterback says, “Why not us?”

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