In between panic and denial

Mixed feelings in Startupland

Our society seems to be split at this moment, with the general sentiment swinging from one extreme to the other: from unsubstantiated optimism to irrational pessimism. A behavior that increases the confusion we all swim in.

On the one hand, the media started to obsessively talk about an economic crisis. Nothing increases the ratings as news of an incoming apocalypse and what a feast this is: first a pandemic, then an economic crash, and an announced famine caused by the severe drought. 2020 is throwing everything at us!

Just as pessimistic, financial investors pushed the breaks. They are reluctant to closing new deals, waiting for better times, for more clarity or, at least, waiting for prices to go down.

On the streets, people partake in the bleak views. Many lost their jobs, others fear for theirs. All are cautious, reevaluating their savings, and bracing for impact. They are not in a spending mood, and this is the very fact that already tilted the balance and determined the future course of events in the broader economy.

On the other hand, most operators are in denial.

Real estate developers spread self-induced optimistic messages trying to convince the world (and themselves) that the demand is still there. Indeed, real estate is a high-inertia industry — the prices of homes drop slower than it happens with those of other assets. But one thing is sure: no one stays in line to buy a house when all around people die of a mysterious disease, and all news is apocalyptic.

Car dealers also cling on prices and refuse to start offering significant discounts even if the buyers completely vanished.

Corporations of all sorts, from banks and telcos to large manufacturers and offline retailers, seem stunned. They’ve always been slow to react, but now they have a new excuse: the social distancing. “Everything will return to normal once we are allowed to roam free. No need to panic. People will keep talking to their mobile phones, buying things, and eating food.” Their morale seems unbreakable. But a wise man once said: “Good morale in a bad organization isn’t worth much.”

In Startupland, founders are caught in between panic and denial.

They are obviously terrified and unprepared for the new reality. Most of them were too young in 2008 and have no recollections of what happened then. So they keep talking about imagined new opportunities brought by the current crisis, their hesitant voices unable to convince anyone.

With shallow startups pivoting left and right, only those with a strong a valid value proposition keep front and center on their track to build something meaningful.