Last month was the first month ever in which my project to help startups ,Teaching Startup, saw a noticeable spike in subscription cancellations.
We’ve always had dropouts, so to speak, in dribs and drabs starting in December 2020, our seventh month of operation. But in September of 2022 we had a 5x spike in cancellations. That sounds like a lot more than it is, because the baseline number of cancellations was always tiny. And while net new subscriptions still far outpace cancellations, I’d be an idiot if I didn’t put two and two together.
Activity is slowing down. Furthermore, on the little form that asks why the member is canceling, the majority of the responses, almost all of them, were either along the lines of “putting my startup on hold” or “can no longer afford it.
It’s 10 bucks a month(!) – meant to be extremely affordable in an area where affordability is never affordable. And while some of my members are in places around the globe where 10 bucks a month is a big deal, the vast majority of them are not.
So is startup activity slowing down?
Correlation Without Causation
Meh. It would also be suspect if I concluded that a slowdown in my passion project to change the way startups get advice was an indicator of a slowdown in general startup activity. Maybe I’m just off my execution game. I don’t have enough checks and balances in place yet to keep me from going all Gary Vee.
But a slowdown in startup is something I indeed feel in my gut, and anecdotally I’m seeing signs of it – whether it’s in a wave of LinkedIn title changes of founders taking regular jobs or off-the-cuff comments from my investor friends about a new softness at the top of the deal flow funnel. But they’ll also tell you that deal flow itself is still robust.
Who knows? I mean, if my business funnel was starting to soften I wouldn’t go telling you about it in a public blog post. Right?
Jamie Dimon says a recession is coming in 6 to 9 months. Bank of America says prepare to lose hundreds of thousands of jobs a month.
Wait. Things already suck, right? And the worst shit isn’t even here yet?
The weird thing about this downturn is that it’s causing great havoc in some market segments, and it’s not even noticeable in others. But in the aggregate, it’s hurting everyone, one way or the other. As someone who is about to write big, scary checks for twin daughters entering college, I’m shaking in my shoes watching their 529s and my 401k plummet.
At the same time, business is still good, both at my day startup and my side startup, but we keep hearing about storm clouds forming.
Are they really storm clouds? Or just a smoke screen.
I know I can’t connect the macro of an inflation-dampened economy to the micro of my business, because so much of it is noise. But again, I’d be an idiot if I didn’t do the prudent thing of searching for signals in that noise that could inform some potentially prudent action.
As long as it doesn’t keep me up at night or prevent me from making otherwise prudent decisions.
Great Leaders Keep Everyone Focused
I won’t use “prudent” again, but every responsible leader I know has a way of making sure they have their finger on the pulse of their customers, the market that surrounds those customers, and the economy that surrounds that market. That said, they also have a way of keeping their concerns, worries, and general panic close to the vest.
I worked through recessions in 2000 and 2008, and all of us just went through the wringer of the pandemic and lockdowns. If anything, we know resiliency beats doom-and-gloom every time, except when it doesn’t. And at that point, it’s better to be able to say we died on our feet rather than shaking in our shoes.
So yes, of course I’m worried about the economy. I’m worried about my day startup and my side startup and every one of those members who gave up on their dream or ran out of disposable cash (for the record, Teaching Startup also has a “scholarship” program that helps those folks). I worry about the future of my kids as they head into and then out of college and what their prospects are going to look like.
I worry about everything. But you don’t need to know that. And neither do the people who report to me or the people who depend on me. They’ll read this post, sure, I’m not trying to hide anything. But they also need to know that regardless of what happens, I got this.