Why the recession can separate startups protected from the recession from “hacks” – TechCrunch

The good news? Well-run companies can still thrive

Inevitable physics the economy on us – what goes up has to go down – and we seem to be heading to the bottom of the equation.

But not all is lost. If you need a reminder, Venmo, Instagram, Uber and WhatsApp everything was launched during the Great Recession 2008.

When I think of the downturn, I remember what the electrician said while working in my house during the dotcom break. I asked him if he cared about his economy, which affected his work, and when he drilled another hole for wiring, he looked at me and said, “No. A bad economy just weeds out hackers. ”

If your company lacks basic business fundamentals and burns money, you may need to pay. But then again, maybe you always have been. But if you have a well-founded startup based on a good idea with a solid foundation, you will probably be able to overcome any storm.

The question is: are you creating something substantial at the core of your client’s business that is The team of operators founder and CEO Malun Yen calls painkillers? Or are you building something less essential that she calls vitamins?

Analgesics against vitamins

“Companies that create painkillers, not vitamins, especially solutions that are technically difficult or difficult to develop, or that are waiting for fundamental but not yet major shifts in the industry, are particularly well able to withstand macro conditions that get out of control. . Painkillers include products that significantly increase income or significantly reduce costs, ”Ian told me.

She said these startups can be in any category as long as they help companies work smarter, which is even more important in an uncertain economy.

“For example, we have one company we invest in that allows customers to significantly increase sales by allowing them to do things that weren’t there before. Another is a significant reduction in cloud infrastructure costs – a sore point that will only intensify for companies around the world as more data is stored in the cloud and relevant queries and other analysis are needed. ”

Derek Zanuta, general partner of CapitalG, said that while many companies will experience some short-term setbacks due to market fluctuations, his firm still expects many companies to grow and prosper in the coming years.

“Some of the largest companies were founded or emerged stronger than ever, during weakened market conditions. I’m particularly focused on startups that help businesses harness the power of their data. If used well, data can help businesses both curb costs and generate more money, making it a recession-resistant business sector in the long run, ”Zanutto said.

Soma Somasegar, managing director of Madrona Ventures, said his firm is investing in smart applications, adding that no matter what happens in the macro environment, they stick to the plan.