An uncertain economy threatens startups–but caution and pessimism have no place in the tech industry
New businesses are the secret sauce for economic growth, catalyzing innovation, and shaking up industries. Globally, startups create nearly $3 trillion in value (more than the GDP of France) and attract billions in venture capital funding. And it’s not just about the money. Startups are also responsible for driving tech advances that make our lives easier, safer, and more productive.
However, with economists and CEOs predicting a recession ahead, the “firehose of money” pointed at startups, as one investor put it, is drying up. As VC funding slows, and consumers cut back on spending, startups and new businesses are feeling the pressure–but that doesn’t mean winter is coming for the tech industry.
In fact, tough economic times can be a differentiator for savvy startups. Several of today’s most recognizable tech platforms launched in the aftermath of the 2008-2009 recession, which forced innovators and entrepreneurs to take risks and adapt their business models.
If you’re reading this op-ed during the workday, it may have come your way via Slack–a company that got its start in 2009. WhatsApp and Instagram were also created at the height of the 2008 recession.
You may be thinking, well, of course, these companies survived–they’re huge! But it’s not just the big household names that found success in a recessionary period. In 2008, Goal Zero founder Robert Workman launched his company’s first product, a portable solar power generator. The company has since deployed its products across the globe, bringing light and power to villages in Africa, South Asia, and the Caribbean, as well as areas of the U.S. living without power after natural disasters.
For many founders, success can also mean acquisition. In 2008, serial entrepreneur Carmichael Roberts co-founded MC10, a manufacturer of flexible electronic sensors. Just over a decade later, the company sold its digital biomarker business to medtech giant Medidata, expanding the use of wearable sensors for clinical research.
So to those who are pessimistic about the future of our industry, I say: You’re getting it wrong. Tech founders are used to tackling seemingly impossible challenges. Our industry is meant to hack its way out of problems.
The reality is that even in a boom cycle, some 75% of startups will fail to return investors’ capital. Building and scaling a new company is a major challenge. Those that succeed all have one thing in common: the ability and willingness to embrace change and transform their business. Startup founders have a “ninja mindset” that allows a company to navigate a volatile market environment, understand what their customers want, and capitalize on opportunities at lightning speed.
After CES, the world’s most influential technology event went all-virtual in 2021, skeptics questioned our decision to move ahead with an in-person event. And while some companies chose not to join us in Las Vegas, overwhelmingly, exhibitors–particularly startups and small businesses–cited the CES platform as critical to their business.
It’s natural for startups to be cautious, especially when times get tough. But being too cautious can mean missed opportunities to grow your business and propel life-changing technologies forward. Don’t use a bad economy as an excuse to pull back. Instead, embrace change and learn to pivot fast.
Gary Shapiro is president and CEO of the Consumer Technology Association (CTA), the U.S. trade association representing more than 1,500 consumer technology companies, and a New York Times bestselling author. He is the author of the book Ninja Future: Secrets to Success in the New World of Innovation. His views are his own.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not reflect the opinions and beliefs of Fortune.
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