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Some indie hackers are especially vulnerable in this recession

Last week I talked about why I think this recession will produce more indie hackers. But there are still a lot of indie hackers who are fighting to survive right now.

Most obviously at-risk are businesses in industries that have been directly impacted by the coronavirus. This includes pretty much any business that helps people travel or gather in large groups.

Airbnb is the highest-profile example. @AoverK, the founder of Growthipedia, used Airbnb's API to come up with an estimate of how much revenue they might be losing on a daily basis (assuming no tenants are currently staying in Airbnb units):

https://i.imgur.com/lldd7kM.png

Let those figures soak in for a second. And no, you're not misreading them: they're daily estimates. ūü§Į

Plenty of indie hackers have also been directly impacted by the crisis. Shay Gleason runs HelpStay, which helps users travel to other countries and exchange services, like teaching or farming, for living accommodations. As you might expect, Shay's business is struggling today:

The last two weeks have seen our business disappear… The travel/hospitality sector is one of the worst hit sectors due to the current coronavirus pandemic… We have some funds in the bank and we're hoping that these funds will see us through this crisis.

But these are the unsurprising cases. Other online companies that haven't been directly affected by the coronavirus are also having a hard time. This is due to second-order effects, which Electric Capital's founder Avichal Garg explains this way:

Avichal Garg on Twitter: "Revenue often falls as a second order effect ‚ÄĒ it takes time for the second order effects of unemployment, leverage leaving the system, businesses cutting back, governments losing tax revenue, etc. to materialize. Your revenue may be fine now but may not be in 6 months."

Falling advertising revenue is a good example. It works like this: layoffs and other effects of the recession have left people with less cash to spend on products, which has left the businesses that sell those products with less money to spend on ads. In turn, internet companies that rely on advertising revenue to cover their expenses are screwed.

Online media companies rely heavily on ads, so even though they're seeing spikes in traffic, most are hemorrhaging cash and some are going out of business entirely.

Leah Finnegan, the editor-in-chief of The Outline magazine, summed up the situation in the following eight words last week on Twitter: "farewell outline. we have all been laid off."

Even Vox Media, which is much larger and more established, has resorted to requesting donations from readers in order to remain solvent. Sam Parr of The Hustle ‚ÄĒ whom I discussed in a post earlier this week ‚ÄĒ has taken exception to Vox's request:

Sam Parr on Twitter: "God this is so stupid. A VC backed company asking for donations. Vox, if you think your product is great, charge money in exchange for the value you give customers. I know, it's a bold statement, charging people money for a product, but try it."

The second-order effects disrupting online businesses don't stop with advertising.

Amir Salihefendińá, one of the earliest guests on the Indie Hackers podcast, runs a popular to-do list company that generates revenue directly from users. But widespread layoffs and lockdowns have undermined people's reasons to be productive, and this reduced demand for productivity has meant¬†reduced demand for to-do lists. Hence this painful tweet from Amir:

https://i.imgur.com/zrP6FDn.png

It's famously difficult to know how individual changes in the economy will ripple through and affect businesses, because markets have so many moving parts. The coronavirus compounds this problem because we've only rarely encountered things like it before and the rampant misinformation about the virus makes it more difficult for companies to make informed decisions.

But entrepreneurs are resourceful. And I'm sure that helpful tools for navigating the disruptions in the economy will keep cropping up, like this collaborative Google sheet that maps out the ways in which broad changes in the economy are likely to cascade through the system and affect tech companies.

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    Prediction (at least for the next 4 weeks of the pandemic, but likely longer): platforms that enable creators will thrive.

    We're already seeing this with e-commerce platforms:

    Other examples include:

    • Email newsletters: ConvertKit, Substack, Sendfox
    • Podcasting: Transistor, Acast, Anchor
    • UI kits: Tailwind UI
    • Frameworks: Laravel
    • Forums: Discourse, Reddit, Mighty Networks, Telegram
    • Communities: MegaMaker, WIP, Indie hackers
    • Membership/donations: Patreon, TryGhost, MemberSpace
    • Hosting: Netlify and Zeit
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      Prediction (at least for the next 4 weeks of the pandemic, but likely longer): platforms that enable creators will thrive.

      For sure. I'm definitely in the "longer" camp; these platforms are selling picks and shovels in a gold rush with virtually unlimited gold.

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      Completely agreed. In the context of SaaS specifically, we've seen a significant uptick in established companies looking to cut unnecessary software overhead and new businesses looking for tools to help them launch new SaaS products more rapidly. I think we're going to see a new set of criteria / strategies / tools for Indie Hacking spawned largely out of necessity as a result of the economic downturn. https://www.indiehackers.com/post/the-new-rules-of-indie-hacking-through-a-recession-665aa5873e

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      I very much agree. Also what's interesting is that when companies like Substack remove the middle man from the equation (ie. a publishing company), the creators have the freedom to interact with their followers in an entirely different manner. They control their outcome. I think that this is going to start happening soon in the Fitness industry as well.

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    Thanks for sharing this.
    I'm doing my best to stay positive in during this period and, one of the things that help me with that is seeing this as an opportunity. I quit my job a month ago right when all this started (pure coincidence) so I'm going focusing my efforts in trying to identify those opportunities and try to create something that is disruptive and helpful for others. I really think this is the moment for indies!

    Good luck people
    Stay safe!

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    Thank you Channing, mostly for keeping us 'alive' with your post,
    Some of us ( entrepreneurs) surviving with multiple small incomes have been hit from all sides, I rent on short terms to back up my start up, and my start up , will now have to be re-designed loosing nearly a year of work...and I can go on and on with all the unfortunate consequences or I can use my time creativity and take the most of the uncertain times, at least temporarily. So after a period of 'paralysis' (I'm confined in Catalonia now 28 days without touching the street) finally committed myself with a timetable and use the time learning new skills ( that I always wanted but never had the time) thanks to all the online resources and freebits , that hopefully will lead us all to inspirational resources/solutions to adapt our ideas for the new times ahead.

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      Thanks for the added perspective.

      So after a period of 'paralysis'… finally committed myself with a timetable and use the time learning new skills

      You're not alone in this, and I'm glad you've found a way to start making progress again. It's good you've got experience building multiple income sources; that flexibility will come in handy if you can manage to stay resilient and up-to-date about new market opportunities.

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    This comment was deleted a year ago.

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    This comment was deleted a year ago.

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      Thanks! And you're thinking of my brother, @csallen (Courtland).

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        This comment was deleted a year ago.

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