Coronavirus April 3, 2020

The recession might end up producing more indie hackers

Channing Allen @channingallen

For all the problems they create, recessions can produce positive byproducts. Case in point: I think we're seeing the ideal conditions right now for a wave of new indie hackers to enter the market.

First, consider the latest US unemployment numbers:

unemployed

These jobless claims are so massive that if even a tiny fraction of the newly unemployed choose to start their own businesses, we'll see a surge of new founders.

I'm not alone in thinking this. Here's a prediction @tylertringas (founder of Earnest Capital) made on Twitter this week:

https://i.imgur.com/6LC5Kdc.png

The cool thing about the IH community is we can see this happening in real time.

@Kevcon80 discussed his very real expectation of being laid off this week, along with his contingency plan in entrepreneurship:

I’m now more motivated than ever to start making some money on the side. It’s a nice slap in the face to remember that I’m not in control of my financial fate right now.

Kevin's in great company. Some of the most inspiring indie hackers we've interviewed have bounced back from layoffs to bootstrap successful businesses, like Ketan Anjaria of HireClub ($25k/mo), Kean Graham of MonetizeMore ($1M/mo), and others.

Here's John Doherty of Credo ($32k/mo) on starting his company:

I had… been laid off by the company I was working for in San Francisco. I had approximately three months of financial runway plus my wife's salary, but I needed to pretty quickly generate revenue. Fortunately I had long wanted to see what this company could become, and being laid off gave me the opportunity.

Granted, we can't know that first-time entrepreneurs will opt to bootstrap their businesses rather than seeking cash from investors. But we can be more certain than normal. These are also trying times for VCs, and the adjustments they're making lessen the appeal of fundraising for new companies.

Founders are reporting that it's not just more difficult to close funding rounds, but also less lucrative since VCs are offering lower equity.

So it's no surprise that even Paul Graham, the co-founder of Y Combinator, is advising founders to deprioritize fundraising:

Paul Graham advises ramen profitability

This shift towards sustainability doesn't only apply to new businesses. The economic winds favor a similar change in priorities for high-growth startups that have already raised money.

Indie.vc founder Bryce Roberts suggested this week that the profitability-focused companies in his portfolio are thriving relative to the growth-focused startups he's talking to.

I also found a pretty telling blog post in which the VC firm Sequoia Capital advised their startups on how to weather the recession.

Here's my quick summary of the post: trim expenses, reduce headcount, manage growth without a huge marketing budget, and try to chart a course to financial independence.

In other words, follow the indie hacker playbook.

  1. 6

    YES! how could it not?!

    IH is perfectly positioned to be a welcoming and safe place for folks to try a new thing... and even build the project, community, and/or business of their dreams!

    i'm so fucking stoked!!!

    1. 4

      i'm so fucking stoked!!!

      You and me both, brotha

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        right now, IH seems stable and put-together... there's very little "more" that needs to be added... or, at least from what i gather.

        is there anything that the core team has thought through in terms of these strange times and any obvious opportunities?

        would love to be a "fly on the wall" to your weekly product meetings!

  2. 3

    Nice summary Channing and 100% agree. Indie Hackers will thrive and multiply through this.

    1. 1

      With great inspirations to guide them ✊

  3. 2

    Definitely - March was one of my best months for boilerplate sales - lots of people starting new projects. Of course, not completely driven by a looming recession and isolation is probably a factor too but I believe this crisis will make people re-evaluate many aspects of their lives and make changes, with careers likely to be at the forefront.

  4. 2

    I see a lot of positives from this as well. I love the idea of anything that helps propel innovation through individual entrepreneurship.

    On the flipside;

    Both the signal to noise ratio and general product fatigue are likely to get much worse.

    Just like the proliferation of "no-code," which while bringing some amazing ideas out that would not have made it otherwise, also brings certainly no shortage of duds, time-wasters, and disappointments, many of which just hang around out there on the internet and app stores indefinitely. It's getting harder to discern sometimes who is active and what has been abandoned.

    Mostly, it just means we continue to have to work harder to stand out.

    I was surprised to hear that you had a dip in traffic recently, @csallen on the latest podcast release. I too, am expecting to see a lot more indiehackers in the coming weeks and months.

    Are you planning any changes reflecting of this potential surge?

    1. 1

      the signal to noise ratio and general product fatigue are likely to get much worse. … [tools like no-code bring] no shortage of duds, time-wasters, and disappointments, many of which just hang around out there on the internet and app stores indefinitely. … Mostly, it just means we continue to have to work harder to stand out.

      Good observations. It's largely a matter of perspective how "good" or "bad" this accelerated gold rush to create web products will be. Consumers will have to sift through noisier and more dud-heavy product catalogs, and producers will have more competitors and a taller order to stand out.

      The trippy thing about entrepreneurship is that the fundamental algorithm that makes it run — "start with a problem" [1] — applies to all problems, even the problem of too much entrepreneurship. Think of that old cliche about how you should enter the pick-and-shovel business during a gold rush.

      So if catalogs like the iOS App Store get too crowded with mediocre, commodified apps, a market gap opens for a product that curates the options.

      If a new batch of entrepreneurs with no technical backgrounds enter the field, resources that help them navigate the path to profitability become invaluable.

      (Not that these particular off-the-cuff ideas are all that financially promising. My point's more that every wrench thrown into the entrepreneurial machine is also an entrepreneurial opportunity — almost by definition.)
      ___

      [1] This is a deliberate oversimplification. Check out Courtland's How to brainstorm great business ideas for a fuller picture.

      1. 2

        Excellent insights here. I particularly like this one:

        "If a new batch of entrepreneurs with no technical backgrounds enter the field, resources that help them navigate the path to profitability become invaluable."

        Just so happens I was on that path with our product at StartupHeroics already.

        I am definitely not counting on this crisis to improve the odds of success on what we are providing, but I am very intrigued to see the effect.

        I've been working on a platform for online entrepreneurs to get started learning (or jump in at any time) as well as at least for now there is still the human connection as well (mentoring) but I am very cautious about changing my offering to reflect the crisis.

        My main concern is simply not wanting to even be possibly considered profiteering.

        I'm seeing a lot of it (not a lot per se in our communities like indiehackers and nocoders) and it's just gross and sometimes downright infuriating.

        But here I am, advising and mentoring mostly early-stage startup founders already, just not too sure if I want to change direction at all because of this.

        I definitely want to find ways to add value wherever I can and I've put myself out there to assist others who just got laid off or whatever looking to try starting off on their own, but I haven't taken it any further.

        The hardest part though of sorting the wheat from the chafe for people just getting started with no tech background is simply keeping up with everything new that comes out on a daily basis. It's just terribly time-consuming and only getting worse.

        Again with the signal-to-noise ratio...

        1. 1

          The hardest part though of sorting the wheat from the chafe for people just getting started with no tech background is simply keeping up with everything new that comes out on a daily basis. It's just terribly time-consuming and only getting worse

          I am spending 3 -4 hrs every day just playing catch up with all the amount of information being generated. I wonder, how IH manage a full-time job along with side hustles and keeping up with everything.

  5. 2

    Completely agreed with this outlook. Thanks, Channing.

    If you're a developer looking to launch your own SaaS, feel free to reach out - I'd love to help you on your journey 💯

  6. 2

    About 1 1/2 years after the highest unemployment rate (after 2008) in the United States, Offerup was founded. About 1 1/2 years after the highest unemployment rate (after 2008) in Spain, Letgo was founded. I choose to believe those are not spurious correlations but rather support what you're saying. It's also something I've been keeping in mind with what I'm working on.

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      Agreed, I think you're onto something.

  7. 2

    Completely agree. Combination of hunger (literal and figurative) plus opportunity - just need to navigate now in measured steps. Reminded of the Shopify origin story.

    1. 1

      Hunger + opportunity + more accessible tooling than ever.

      1. 2

        Exactly. In the span of 48 hours, one single intermediate developer just installed Chargebee and Mixpanel and we are 75% integrated. What would have been a team of developers for sprints on end... is now me sitting at home, watching my kids in the yard, while my Mixpanel dashboard updates with login and signup reports (refreshing constantly!)

        And I am still in my pajamas.

        1. 2

          Oh. And most of the team have full time jobs.

  8. 1

    Can you teach me how to become an independent hacker

  9. 0

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