If you can make it now, you’ll make it anyhow

My friend Samir Hunsi is pointing to a 2001 New Yorker article by James Surowiecki called, “Let the Bad Times Roll” about BusinessWeek & Fortune magazines being launched in 1929 and 1930 — and other successful ventures that started during economic recessions and depressions (3M, General Motors, Chase, Bell Telephone, I.B.M., Texas Instruments, General Electric, Microsoft, and Sun Microsystems). He compares Fortune’s & BusinessWeek’s Depression Era launch with the boom-time launch of Industry Standard magazine that attracted a pile of startup capital and was thick with ads, but lasted only a few years.

Seems rather counter intuitive, doesn’t it?

However, Surowiecki notes that some companies succeed because of economic hard times rather than in spite of them. Why? Because the absence of money keeps startups from overexpanding and overreaching.

Quote:

“Companies are like human beings: hardscrabble beginnings beget hard-minded men. Consider little Andrew Carnegie, toiling as a bobbin boy in a cotton factory, or the young John D. Rockefeller, tending turkeys and salting away copper coins. Or think of any number of today’s moguls whose humble upbringing you can read about in the pages of Business Week and Fortune—but not, alas, in the pages of The Industry Standard.

I guess that’s true if by the word “pages,” he means web-pages.

  • As one of the very few people – in fact I may be the only one at this point – who worked at the Industry Standard and now works at Businessweek, I’m hoping that this bit of motivational history continues to hold true through the rest of this ongoing, eight-year long depression in business magazine advertising.

    I’m always a little bit skeptical of these up by your bootstraps hardscrabble stories, though. Plenty more businesses never made it through the depression, plenty of people born in hard times never became billionaires, etc. The exciting few who overcame adversity make a great story but I fear they are the exception that proves a very different rule. Question: do a higher or lower proportion of new businesses or new publishing ventures fail during bad economic times? Certainly fewer new businesses are started in bad times but is the success rate higher? I don’t know, but I’m not optimistic. At least not until a VC asks to fund an idea of mine…

  • At the time, I didn’t know it, but Hammock Inc. started during a recession. Indeed, when I look back, I break out in hives at how crazy it was to start it.

    Another thing: the companies that now own Fortune and Businessweek have thoroughly purged any bootstrap mentality.

    I tend to agree with the premise of your comment, but let me play devil’s advocate and challenge some of it:

    1. Becoming a billionaire is not the motivation of those who start the vast majority of small businesses. Independence (both financially and personally) is the motivation.

    2. Lots of new businesses are started in bad times. Getting laid off is an incredibly motivating factor to get one to try out the idea they’ve always dreamed of. Success rates may be lower, but that may be a by-product of “getting something out of my system.”

    The last thing one should wait for when considering launching a new business is a VC who wants to fund it.