Do startup layoffs mean a recession is coming?

Codie Sanchez shares advice on how to prepare for a recession.

We’ve been hearing the sound of thunder far off in the distance for months. Now the storm may have arrived.

Will this be a reversal back to the culling we saw in covid’s early days? Will bitcoin continue to fall forever?

These are hard questions…

… but startup layoffs are a great place to start looking for an answer. They are over-levered (AKA not profitable and funded by VC firms), and that leverage means that when things get bumpy, they feel it first as their limitless credit card gets taken away. Thus far:

  • Cameo and On Deck both let go of 25% of their staff
  • MainStreet laid off ~30%
  • Robinhood cut 9% of their full-time employees

I don’t profess to have a crystal ball. But as someone who owns 26 companies and invests in startups, I can say that not preparing seems dumb.

I see two poles right now:

  • One side says, “There will be pain, but it’ll be short.”
  • The other says, “There will be pain, so learn to like it.”

My take?

There’s money to be made in every market.

Here’s what you need to ask yourself:

  • Do I have a plan for a recession that’s seeing a 30%-50% drop in sales?
  • What if, at the same time, costs are rising 10%-30% with inflation?
  • What can I do to grow?

Preparation is thriving instead of surviving. Good luck out there.

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