Here we go again? Maybe.
Gil Dibner

As of writing, the US stock markets are down about 15% since Trump announced his attack on the global economy. That’s enough evidence of two things: (1) most market participants were not expecting Trump to do anything this extreme, and (2) most market participants think his tariff policies are foolish and destructive. Following the election in 2024, I decided to withhold judgment and hope for the best. At this point, I am ready to judge. Trump is a menace to the American republic and a threat to global prosperity and stability. But that is politics - and this is not a political newsletter.

For founders running startups - the order of the day is to secure the rigging and make ready for heavy weather. As Ed Sim of Boldstart wrote in his outstanding newsletter, it’s “time to dust off that old post-ZIRP recession playbook.” Ed is absolutely right. We don’t know what is coming, but the wind has picked up and the horizon has darkened, suddenly and unexpectedly. As we all head off to prepare for the worst, I want to leave you with two optimistic thoughts:

The first piece of optimism is that we have all been here before. COVID ripped through the world, and we prepared for the worst. The ZIRP era imploded, and we again prepared for the worst. Now a global recession threatens, and we must yet again prepare for the worst. But if you are running a startup today and still operating, chances are you have already weathered at least one similar storm. You know the drill.

The second piece of optimism is that this situation is unlikely to persist. I find it hard to believe that, twelve months from now, the global economic outlook will be as bleak as it appears to be in this moment. Trump’s trade policy is an unforced error and a self-inflicted wound of the highest order. My disdain for him is matched by my faith in the ultimate wisdom of the American people to force their government to make better choices eventually. While there are plenty of reasons for fear and concern, there are also plenty of reasons for optimism that good people on both sides of the Atlantic will find a better way forward. I do not believe we need to prepare ourselves for an age of permanent darkness. The economic and political sun will shine again. Our role as politically engaged patriots is to work for better leadership wherever we are. Our role as business leaders, however, is to ensure that our organizations survive the coming period as best we can without compromising our values and our ethics.

We’ve got this.

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ENTERPRISE/TECH NEWS

The impact of tariffs. Trump’s latest announcement of new tariffs, including a baseline 10% on almost all imports and even higher rates for some countries, caused a severe market response - with “the S&P 500 declining 10.5% over two days, erasing around $5 trillion of market value.” The market tanking has led to substantial fears of an incoming recession. Goldman Sachs raised the probability of a US recession in the next 12 months to 35%, up from 20%. The tech industry will likely be especially hard hit. The stock market turbulence has led some tech companies, like Klarna and Stubhub, to pause their IPO plans. Additionally, many big tech companies depend on manufacturing from China and Taiwan. Both countries will now have tariffs north of 30%. “In the two days after Trump’s tariff was announced, Apple’s stock dropped 16 percent, Meta was down 14 percent and Amazon fell 13 percent… While “the dust hasn’t yet settled” on Trump’s tariffs, it’s clear already that “this is going to be disruptive,” said Sean Murphy, executive vice president of policy at the Information Technology Industry Council. The tariffs are set to raise costs not only on supply chains for device makers such as Apple, he said, but also on energy and infrastructure, which will hit software and AI giants. “Data centers, for example, are built with steel,” Murphy said. If companies knew the tariffs were here to stay, Kovacevich said, they could adapt by shifting production between countries. But so far, they’re a moving target, making long-term planning a fool’s errand.”

Israel’s evolving startup ecosystem. Tel Aviv’s startup scene is evolving. While VC remains a crucial driver, large companies are playing an increasingly important role. “A study by Dealroom and Tel Aviv Global finds that corporate involvement in the city's tech sector has reached unprecedented levels. Over 180 multinational companies, including Microsoft, Google, Amazon, and NVIDIA, operate R&D centers in Tel Aviv, drawn by its dense concentration of technical talent. This corporate presence is not just a passive endorsement of the city's innovation culture; it is actively fueling the next wave of technology growth… This dynamic has far-reaching consequences. The infusion of corporate capital provides stability in a volatile funding environment, particularly as traditional venture capital investors recalibrate following a global market downturn. Moreover, multinational R&D centers act as incubators for talent, with many of Israel’s most successful startups founded by former employees of tech giants. Wiz, acquired by Google for $32 billion, was built by veterans of Microsoft, while ex-Meta engineers have launched companies such as Noname Security, NOKOD Security, and Mentee Robotics.”

The Deel spy. Keith O’Brien, the man who allegedly spied for Deel while working at Rippling, has admitted to corporate espionage in exchange for $6k a month… and to coordinating directly with Deel’s CEO, Alex Bouaziz. This story keeps getting wilder. “At one point, when Rippling began to suspect that something was wrong, O’Brien claims, he was asked by Deel’s legal team to purchase a burner phone from Deel’s lawyers, destroy his old one with an axe, and shove it down his mother-in-law’s drain, according to the court affidavit. He further alleges that he was advised by lawyers for Deel that he should leave Ireland and fly with his family to Dubai, and that Deel would pay for his accommodations. O’Brien says that in March, he agreed to meet with Rippling’s legal team for an interview, and wrote that he was fearful of his safety “given the power and wealth of the individuals involved.” “I was getting sick of concealing this lie,” he wrote in the affidavit. “I realized that I was harming myself and my family to protect Deel.””

The state of AI. A recent survey found that AI adoption is underway across businesses - and increasing rapidly. According to the survey, 28% of businesses are already using AI, and another 45% have active implementation plans. Optimism is high: 87% of businesses expect AI to have a positive or transformational impact, and among early adopters, 51% say that impact has already been transformational. Investment is ramping up too. A third of companies planning to adopt AI expect to spend over $100,000 in 2025.

HOW TO STARTUP

Block and tackle. Jesse Pujji shares some solid advice for CEOs during this market turmoil. “Block and tackle. Keep those client relationships strong, take more meetings, do your job better. This won't last forever. Power through it. Focus on what you can control. Keep moving forward.”

Post-ZIRP recession playbook. As Gil mentioned, Ed Sim was right - it is time to bring back the post-ZIRP recession playbook. Founders should be going back to basics - preserving cash, extending runway, and doing more with less.

Retire the hoodie. Now that everyone is returning to the office, it may be time to retire a long-standing tech staple: the hoodie. “Whether we like it or not, clothes shape how others see us, too. Even in my remote world—where most of my professional interactions involve floating heads on screens—I ditch the hoodie for interviews and important meetings. Clothing sends a message. In a professional setting, a hoodie tells your boss, coworkers, or clients that you’d rather be anywhere else. That's perfect for a lazy Sunday—it's not so great for climbing the corporate ladder… The hoodie masquerades as an everyman’s garment, but in the office, it’s a rich man’s privilege. For the rest of us, it just makes it easier to be overlooked."

HOW TO VENTURE

Tariffs and VC. Fears around Trump’s tariffs are rippling through the VC ecosystem. Many VCs had expected the IPO market to open back up in 2025, but with rising market volatility and economic uncertainty triggered by tariffs, that optimism is now fading. “As an industry, we thought that going into 2025, the liquidity markets would be open,” [Tomasz Tunguz] said. Now, Tunguz said, investors are not seeing as many public market listings or acquisitions as hoped because stocks have been so volatile. “If it sustains—if we have 12 to 18 months of this environment—I would expect valuations to decrease.”

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