The conventional wisdom suggests waiting for economic stability before launching a new business venture. But according to “Shark Tank” investor Kevin O’Leary, that thinking might be entirely backward.
“The best businesses I’ve ever invested in started in times of absolute economic chaos,” O’Leary told me during a recent interview at Fortune’s Growth Summit in New York. His portfolio data reveals a surprising pattern: startups born during recessions or market turmoil consistently outperform those launched in bull markets.
This counterintuitive insight comes as economic indicators show mixed signals. The Federal Reserve’s latest Beige Book reports modest expansion alongside persistent inflation concerns, creating exactly the kind of uncertain environment O’Leary suggests might be fertile ground for entrepreneurs.
“When everything’s going to hell, that’s when true entrepreneurs shine,” O’Leary explained. “They find solutions to problems people actually need solved right now, not luxury wants that disappear when markets tighten.”
The numbers support his claim. Research from the Kauffman Foundation shows that over half of Fortune 500 companies were started during recessions or bear markets. More recently, Airbnb, Uber, and Venmo all emerged from the financial crisis of 2008-2009.
What makes crisis-born businesses more resilient? For one, they’re forced to operate lean from day one. “These companies never develop bad spending habits,” O’Leary said. “They’re built on efficiency and necessity, not excess and hype.”
Market disruption also creates opportunities. According to McKinsey’s Economic Conditions Outlook, major economic shifts typically result in significant market share redistribution, with new entrants capturing an average of 14% from established players during downturns.
The Harvard Business Review confirms this trend. Their analysis of business performance across multiple recessions found that companies founded during downturns were 8% more likely to survive their first five years compared to boom-time startups.
There are practical advantages too. Talent acquisition becomes easier as layoffs flood the market with skilled workers. Commercial real estate costs drop significantly, and vendors become more flexible on terms to maintain business.
However, O’Leary cautions that not all crisis-era businesses succeed. “The difference is discipline,” he emphasizes. “You need a product or service that solves a genuine problem and meticulous financial management.”
During our conversation, O’Leary cited several specific practices that distinguish successful crisis-era founders. They typically maintain 18-24 months of operating capital, focus intensely on cash flow rather than just revenue growth, and prioritize profitability over expansion.
“In good times, investors throw money at growth at all costs,” he noted. “In bad times, they want to see you can actually generate profit. That fundamentally changes how you build.”
This disciplined approach creates businesses with stronger foundations. Federal Reserve Bank of New York data indicates that companies founded during recessions carry 17% less debt on average than those started during expansions.
The current economic landscape presents exactly the mix of challenges and opportunities that O’Leary describes. With inflation concerns still lingering and interest rates at elevated levels, many potential founders remain hesitant.
But that hesitation itself creates opportunity. “When everyone else is scared to jump in, that’s your competitive advantage,” O’Leary argues. “By the time the economy looks safe again, you’ll be established while others are just starting.”
Recent Census Bureau data supports this view. Business applications actually increased during the pandemic uncertainty, with many of these new ventures addressing specific problems that emerged during the crisis.
For aspiring entrepreneurs worried about timing, O’Leary offers straightforward advice: “Stop waiting for perfect conditions that never come. The best time to start was yesterday. The second best time is today.”
It’s a perspective echoed by Donna Kelley, professor of entrepreneurship at Babson College. “Economic disruption creates white space where innovative solutions can flourish,” she told me. “Entrepreneurs who can identify shifting needs and adapt quickly gain significant advantages.”
As we navigate today’s economic uncertainties, O’Leary’s contrarian view offers both challenge and encouragement. Perhaps the question isn’t whether now is a good time to start a business, but whether you have the discipline and vision to build one that solves real problems regardless of market conditions.
After all, as O’Leary reminded me, “Nobody remembers when Amazon or Apple started. They just remember that they solved problems better than anyone else.”
