It's easy to be pessimistic in light of war, layoffs, and the collapse of the climate, but economic downturns frequently produce the most resilient businesses.
Entrepreneurs have had a tough year. Marketing and discretionary spending have been at a standstill, top-tier leaders have been harder to lure away from secure corporate jobs, and funding has been scarce. People don't like economic downturns, but when you're trying to start a global business from the ground up, they feel like a typhoon.
But if we look at things over time, there are good reasons to be optimistic. The most exciting and generation-defining startups have historically been those established during difficult times. Consider Facebook, which debuted in 2004 amid the dotcom bust. During this time, Google also raised funds and continued to expand despite the overall economic slowdown. Square and Stripe, two examples of fintech firms, were established following the 2008 subprime crisis, which shook public trust in mainstream finance.
What could cause this? First, different kinds of entrepreneurs are drawn to different economic cycles. When there is a lot of money, investors meet a lot of founders with "momentum": people who are riding a wave and can quickly switch jobs if things don't go their way. However, there is a distinct group of business owners who start new businesses after a downturn. They usually have a meaningful vision that they will always achieve, and they tend to pursue it relentlessly. They and their employees will naturally be more invested in the company's success as a result of fewer job opportunities. People who are able to consistently carry out their tasks benefit from this level of dedication, which creates businesses that are better positioned to take advantage of opportunities when economic conditions improve.
The lack of competition is another advantage of starting a business during a recession. There may be a dozen other businesses competing with you in almost any industry during bull markets. However, there will be fewer people vying for a piece of the action during a recession. Because of this, there is a lot of room for motivated business owners to take advantage of the first-mover advantage and win the market.
Last but not least, it's easier for post-crash businesses to find the employees they need. Attracting and keeping the right people to help you grow is often a founder's biggest problem during an upturn in the business cycle. Because of the abundance of opportunities available to them, talented workers frequently switch employers. However, if there are fewer well-funded businesses competing for talent, you may have a better chance of selecting the right executive.
These factors demonstrate why we can anticipate the establishment of the most revolutionary businesses of the coming decade in 2023. The many crises that have afflicted us over the past few years will directly affect the kinds of businesses that will flourish: Coronavirus, the conflict in Ukraine, record temperatures and rapidly spreading fires brought about by environment breakdown.
For instance, anticipate an increase in businesses seizing opportunities in the pharmaceutical and health care industries as a result of the pandemic and pressure on global health care systems. These will include mRNA vaccines for other diseases like malaria and diabetes and AI-powered medical technologies that address the systemic issues of national health care systems.
The climate and the environment are another important trend. Today, many business owners are getting ready to tackle environmental issues and their second-order repercussions head-on, focusing on energy, transportation, manufacturing, finance, and others. Security, autonomy, and stability have also come to the forefront as geopolitical tensions rise, from China to Ukraine. New businesses in strategic sectors like defense, hardware, cybersecurity, energy, and food will benefit from this new geopolitical environment.
In 2023, businesses addressing society's enormous challenges might not appear to be world-beating at first. They will need to be tough, creative, and lean. But in a decade, you can be sure that everyone will be talking about them.
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