Could the coming months and years usher in a new wave of technology-driven entrepreneurial energy and innovation in the economy?
Many technology professionals, affected by layoffs or the fear of them, are now looking into entrepreneurial paths instead of pursuing traditional full-time jobs.
While much of this shift involves “solopreneurs” engaging in gig work or independent contracting, there is a notable rise in new company creation.
According to a recent survey by Clarify Capital of 1,000 professionals laid off during the pandemic, 63% of tech workers report having started their own companies post-layoff.
Most of these new ventures, 83%, are within the technology industry. Interestingly, 93% of these entrepreneurs are now competing with the companies that let them go.
Startup activity has surged, with Accelerator Y Combinator reporting a 20% increase in startup applications in 2022 and a five-fold increase in January 2023 compared to the previous year, as highlighted by Aran Richardson in Yahoo Finance.
“Often the most challenging times lead to the most innovative ideas,” says Zaven Nahapetyan, co-founder of Niche.club and former engineering manager at Facebook.
“We are witnessing incredible technological progress through decentralization, AI, and virtual/augmented reality, alongside profound social and cultural changes.
This combination creates countless opportunities for new businesses. If you can afford to take the risk and start or join a new venture, my advice is to do it!
There is no better way to learn than by doing, and who knows if you’ll have the same opportunities in the future.”
However, starting a company or joining a startup involves risks and potential disappointments. Despite some startups cutting back, tech professionals who take this route often experience greater income and job security.
Respondents to the Clarify Capital survey reported an average annual income increase of $13,000, with 58% feeling more secure in their new roles.
Technology professionals didn’t necessarily launch their ventures immediately after being laid off—one-third started within the first six months, while 40% made the move between six and twelve months later.
Most ventures were bootstrapped, with professionals investing at least $20,000 of their own money.
Industry experts agree that tech professionals possess the skills and vision to lead the next wave of innovation but acknowledge that business acumen is also crucial.
“If you have a unique idea or see an unmet need in the market, go for it,” says Mike Jarus, chief architect at Intradiem. “But you need to be realistic; get-rich-quick schemes are rare successes.
It will require hard work. If you have a great idea, confidence in your abilities, and a grounded approach, you should give it a try.”
Experts provide the following advice to those embarking on entrepreneurship:
Temper expectations: Success won’t come overnight; it often takes years to build a company and a customer base.
According to the Clarify Capital survey, 82% of professionals didn’t acquire customers until at least four months into their business. “Building a successful startup takes years, with inevitable ups and downs in the market,” says Nahapetyan.
Define your business: Aspiring entrepreneurs should thoroughly test their plans in a competitive market.
Consider questions like, “What problem am I solving?” and “What need does my business fill?” and ensure you can explain your venture to family and friends.
Find partners with complementary skills: “Running a business is different from technical tasks like coding or data management,” says Grant Fritchey, DevOps advocate at Redgate.
“You need partners who can handle business and sales aspects. Great tech and ideas alone aren’t enough; you need to manage and sell your vision.”
Plan for scalability: The ability to scale distinguishes startup entrepreneurs from solopreneurs. “This is a promising time for startups, but founders must prioritize efficient processes early to grow successfully,” says Gabe Monroy, chief product officer at DigitalOcean.
“Scaling a business adds complexity, and ventures can falter without efficient, scalable practices. This includes adaptable infrastructure, controlled cash burn, and focusing on early customer feedback.”
Whether through contract gigs or full-fledged startups, many tech professionals realize they have valuable skills and ideas for today’s digital economy. Traditional employment may not always be the best way to leverage this talent.
