Paul Graham explains Why to Start a Startup in a Bad Economy.

This makes sense to me. And it squares with my personal experience. I've seen three economic downturns in my working life. I was an employee for one of the downturns and worked for myself through the other two.

I learnt the hard way that working for myself in a downturn was more secure than being an employee for three reasons:

First, being self-employed meant my income was dependent on a dozen or so separate sources. Some fell over, but they never all fell over at once. On the other hand, as an employee, my entire income halted when my employer got into trouble. Putting all your employment eggs in a single basket doesn't make sense in a recession.

Second, I've discovered my decision-making is good. My judgement is not perfect, but better than average and, more importantly, better than most of the managers I've reported to over the years.

Third, when the upswing comes, I'm in a position to make the most of it. I've found larger companies tend to stay traumatised and are too conservative to take the opportunities that arise as the economy picks up.