I am amazed at how much “recession fear” is being used as an measure in startups and even larger companies to guide product decisions. I think it is important to go over a few things from my perspective as a product manager that might help other product managers in startups accurately assess the macroeconomic impact on their particular product.
- Fear based thinking aka Catastrophization – This is a very strong mental block that can paint a picture that is contrary to the reality on the ground. An example: Some Softbank Vision fund backed startups are under major pressure to perform and realize a clear path to profitability, so therefore every startup is in danger.
- Let’s define a recession: “two consecutive quarters of negative GDP growth.” So let’s look at the last reported numbers for GDP. Here are the most recent numbers for you:
- Q2 19 – 2.0%
Q3 19 – 2.1%
Q4 19 – Will be released Jan 30 20
- This would mean on Jan 30 we will get numbers that if they report GDP as being UNDER 2.1%, we will then have a possibility of a recession if the Q1 20 numbers are ALSO under the number that will be released on Jan 30. This is not to say segments of the economy do not shift over time, but rather is a measure of economic generation. Those are 2 very different concepts. Ask an AMZ worker and a retail store owner who failed to go digital as a great illustration on those differing opinions.
- Q2 19 – 2.0%
Macroeconomic evaluation needs to be based in reality
Why is it important to evaluate these conditions minimizing bias? To maximize your total net worth over time. If you make economic decisions based on a lack of objective evaluation, you will make poor investment and business decisions.
The current economic situation for most of the DOW and NASDAQ has been at a peak for the past
52 weeks. Highs are being topped every week for many companies. Does this mean that we have to see an economic contraction to see a single player suffer? No. Look at poor Boeing.
The economic impact on product decision making
Consider the sources for the news you are reading at all points. It is also paramount to classify sources of news that could be impactful to your specific product in a manner that allows you to present a well reasoned business case to support the decisions you make regarding the product and features as well as the marketing approaches and GTM (Go To Market) strategy.