Discover more from Oleksii Sidorov
Do you think now is a hard time for startups? I have bad news for you
The party is over, thanks for coming, and don't forget your belongings
I recently got to rewatch this uber-popular video by Ray Dalio from a decade ago:
You'll be surprised how accurately it describes what has been happening in the economy over the past couple of years (with interest rate hikes, VC market drying up, and Silicon Valley Bank turmoil). So, I would definitely recommend it to everyone for a general understanding of the current world situation.
Moreover, it offers a glimpse into the future, considering that the cycle by which everything develops is quite standard.
This is especially relevant for us in startups because it hints that there won't be anything to do in this market for the next few years.
And I'm not even talking about Web3, where we’re working, the situation is already just as tough for any Web2 startups outside of AI (and soon for them too). And it will get worse because new funds are (not) being raised right now, which means there will simply be nothing to invest in the future.
Keep it in mind, not only if you're deciding to leave your job to start something on your own, but also if you work in an early or late-stage startup, invest as an angel, or are looking for a job in a venture fund, or even if you're selling services to startups. It will affect everyone in this chain because the high interest rates are here to stay, and it will be years before investing in startups becomes profitable again and startups will have money to spare. And for those who are already deep in the waters, it's only a matter of how long they’ll manage to stay afloat.
We have lived through an era when creating startups was so easy that it even crossed into mass culture. But not everyone has realized that this is not just a challenging period—the era is over.
Now it's yet another tough industry just like bootstrapped businesses, where people are at each other's throats, and only the most performant or the most resilient will remain. Remember stories like "I was a student, I got an idea, so I raised a million and hired a team"? It’s safe to say we can forget about them.
But hey, it’s a good time to buy public equity.
Subscribe to stay afloat through the storm, and share with friends who gave up their careers to get into startups following your advice. You can reply and tag me on Twitter—the only platform I will engage at.