Should I care about the macro environment as a founder?

She was hands holding one another in front of two laptops with financial graphs

Just last year, we were all talking about mega-valuations and there were endless articles about how startup prices and the stock market were hitting new highs. Now, inflation is rampant, the Fed is raising interest rates, and everyone is talking about how an inverted yield curve means a recession and market crash is on the horizon.

Meanwhile, you’re just trying to build your company.

As a founder, it’s important to keep track of business and technical milestones for when to launch certain initiatives, as well as when and how much to fundraise. These internal events have massive impacts on pacing of hiring and what to prioritize. But what about these macro events?

Let’s be real—it makes a difference

Medium is full of founder #inspo posts about how all you need is love determination or faith or whatever to make your startup succeed. That’s important. So is not running out of money in the middle of your go-to-market plan.

Whether you like it or not, the broader economic climate impacts you. Your customers’ willingness to buy and investors’ willingness to put money into your company all are affected by the overall economy. It’s not your fault all hell broke loose this year when you needed to show massive traction or raise money, but it obviously still affects you.

However, it’s equally true that you can’t control it. It’s a base level risk that can unfairly impact your company at any time (in either positive or negative direction).

Don’t try to be an economist

What I would suggest you do not do is to organize your company around your macro forecasts. Take it from me—someone who is now in technology and startups but used to be someone who did macro forecasting as a profession—it’s hard. A lot of smart people put a lot of time, effort, and money (to the tune of billions of dollars for certain financial institutions) into it.

You’re not going to be brilliant at it while juggling hiring, building your product, managing customers, shaping company culture, and everything else you’re supposed to do as a startup founder.

That doesn’t mean that you should ignore it.

Just because you aren’t a meteorologist doesn’t mean that you should entirely give up on dressing appropriately for the weather—which is what VCs and founders seem to advocate.

The smarter thing to do is listen to the weather forecast, know that it isn’t entirely accurate, and maintain some flexibility.

Sometimes, you should bring an umbrella

…even if it doesn’t ultimately rain. If times are good, you should raise more money than you think you need. If times are bad, you could wait or you can raise now (even if at worse terms) just in case it gets worse.

It’s hard to perfectly predict the future, but most people aren’t entirely clueless about when a market is hot or cold. It’s difficult to call the top or bottom of a market—not to call where it roughly is.

So, given that, what you should do today depends on your industry, runway, and a bunch of other factors.

If you’re really low on cash but are just “waiting for the market to recover” in order to raise, you’re essentially betting it all on red (or, to use the same analogy, just really using the power of positive thinking to prevent rain). If you’re sitting on a huge warchest of cash, maybe you can wait —especially if you can afford to be wrong about the next few months and wait until next year.

Regardless, it’s silly to throw up your hands and “just build your startup.” There’s enough randomness in startups that a confluence of bad luck can spell death. There’s no reason to blithely walk into the unknown without taking some precautions.

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