A Prozac economy for entrepreneurs? No way, no how!
David Wessel’s recent article in the Journal, “A Prozac Economy has its Costs,” asks: If we were able to invent the economic equivalent of Prozac – something that would take away the high-highs and the low-lows of our current economy (think the tech bubble of the late 90’s and the current recession) – would we elect for a prescription? Would we, given the choice between a dynamic, volatile economy with painful depressive phases, and a more mellow economy with fewer crises but a slower growth rate over the long term than its manic doppelganger, settle for a calmer existence? Though my understanding of economics is limited to my college-level macro and micro courses, from an entrepreneur’s and VC’s point of view, I think my answer would be: give me manic any day.
We can look back at the tech bubbles and shake our heads at the off-the-charts valuations and methods, the “dot comification” of every business, but one lasting legacy of the tech bubble is that it made the public aware of what the Internet was capable of, something we take for granted and build on today. The current recession, painful as it has been for VCs and entrepreneurs alike, has been a crucible for the entrepreneur industry. Weak business ideas will fail, money not wisely spent will be lost, and only the best and most resilient of companies will be funded or survive. But isn’t that the whole point of entrepreneurship, to take a chance against the odds? There is one outright benefit for start-ups who are trying to make it happen in this economy: while financial capital may have dried up, the all-important human-capital ranks have swelled. You now have the ability to go out and build a team of highly skilled individuals to make your idea a reality, when these very same people would not have given your start-up offer a second thought a few years ago when the six‑figure corporate jobs beckoned. The start-ups that build great teams, use smart money, bootstrap all they can, build solid products, and grow their customer ranks will be the high-fliers when the economy rebounds. But I digress. My point is that we almost need the crazy highs and the despairing lows – it’s what challenges us as thinkers, risk-takers, and entrepreneurs. Returning to Mr. Wessel’s article, I almost had to smile at entrepreneur Peter Jungen’s, simple yet resounding reaction to the notion of calmer economic waters: “No! Capitalism means lurching from crisis to crisis and getting stronger every time.” Prozac for an entrepreneurial economy? I don’t think so.