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The inevitable physics of economics is upon us, and what goes up must come down, and we appear to be headed for the down part of the equation.
All is not lost. During the Great Recession of 2008, a number of new services were launched.
When I think about recessions, I remember an electrician saying something while he was working on my house. I asked him if he was worried about the economy affecting his work, and as he drilled another hole for the wiring, he looked up at me. The hacks are weeded out by a bad economy.
If your company is burning cash and lacks basic business principles, you are in for a rough ride. Maybe you were. If you have a good idea with a solid foundation, you can ride out the storm.
Operator Collective founder and CEO Mallun Yen refers to his business as painkillers, so the question is: Are you building something essential at the core of your customer's business? She calls it vitamins if you are building something less essential.
The companies that are building painkillers rather than vitamins are well positioned to weather the macro conditions that are out of their control. "Painkillers include products that increase revenue or significantly lower costs in a tangible way."
She said that if the startup is helping companies work smarter, it can be in any category.
For instance, we have one company we are investing in that enables customers to significantly increase their sales by enabling them to do things in a way that hasn't been done before. It is a pain point that will only increase for companies across the board as more data is stored in the cloud and corresponding queries and other analysis need to be run.
Many companies will experience short-term market fluctuations, but CapitalG expects many to grow and thrive over the coming years.
Some of the greatest companies have emerged stronger than ever in the face of weakened market conditions. I'm bullish on startups that help enterprises harness the power of their data. Data can help enterprises rein in costs and generate more money over the long term, which is a recession-proof business sector.
The managing director at Madrona said that regardless of what is happening in the macro environment, they are sticking to their plan.
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