If you think that today’s down economy means that no company should be spending resources on creating and building a new market category, consider the situation facing one of the great category creators of all time.

The economy of 1975 through the early 1980s makes the current one look like a boom time. Around 1975, the Arab oil embargo sent oil prices up 300%, sparking inflation of more than 9% and sending interest rates toward 20%, Unemployment passed 8%, the highest since World War II. Companies hunkered down and many families struggled to get by.

It was also the beginning of the personal computer era. Bill Gates and Paul Allen famously picked up the January 1975 issue of Popular Electronics and read a feature on the MITS Altair 8800, one of the first commercial “micro-computers.” The duo decided they could write a BASIC interpreter for the machine, and formed Micro-Soft, short for micro-computer software. Over the next few years, the company set out to create and build the new category that they were named for: micro-computer software, soon to be better known as personal computer software.

By the late-1980s, Microsoft was the biggest and most powerful PC software company in the world. It dominated the category and set its rules, and would for a couple of decades. Today Microsoft is worth over $2 trillion. Yet if Gates and Allen had waited to invest in the category until the 1970s recession was over, we might not even know the name Microsoft today.

By contrast, in 2022 conventional wisdom amid a relatively mild down cycle has been that young tech companies need to prioritize cash, cut expenses, slim payrolls, and generally go into a foxhole and wait for better conditions. A lot of venture capital firms are telling their portfolio companies to do just that.

Which might be good advice for me-too companies trying to gain market share in someone else’s category. But it’s terrible advice for a company focused on creating, defining and winning a new market category.

Category creation can be hard. It means going your own way while others play it safe. It’s Gates and Allen ignoring any idea of writing software for then-dominant IBM or Digital Equipment machines, and forging an entirely uncharted path into this new category of software for just-invented, barely-functional micro-computers. Or, it’s Airbnb setting up a seemingly nutty business (renting couch space with a promise of a cereal breakfast in the morning) in the heart of the 2008 recession. When creating a new category, you have to work extra hard to convince investors, potential customers and potential employees to believe in what you’re doing. It is not the easiest way to bring in cash and cut the burn rate.

And yet, a down cycle is an opportunity. If a company can act to drive category creation while potential competitors are hibernating, it improves the odds of establishing leadership in an emerging category and leaving the others behind. New categories typically take years to catch on. So if a company gets a year-long head start, it can set the rules of the category in its favor, forcing every other company that enters the space later to play by those rules – to those companies’ disadvantage.

In addition to Airbnb, major new category creators such as Slack, Square and Uber were founded during the down cycle following the 2008 financial crisis. All of those categories would’ve been created eventually. If Uber had conserved cash and waited out the recession, Lyft (founded in 2012) might be the category leader today. If Square had waited, Stripe (founded in 2010) would likely have created the mobile payments category. The head start meant everything.

The bottom line is that category creation is not for the timid, and the timid don’t get scared by a down economic cycle. We’re in a moment when gutsy category creators can act and race ahead of any potential challengers.