So, to all start-ups out there, amidst Covid-19 pandemic, are you running like the fastest gazelle or the slowest?
Covid-19 pandemic is the greatest test since World War II. If you are an early stage startup CEO like I am, your problems have multiplied in the last few weeks. With the myriad of challenges you face every day from fundraising to pushing customer traction waiting for the day you will achieve the ever desired hockey stick sales curve, another elephant has yet again imposed itself. Venture Capital funding dropped by at least 50 per cent between 2008 and 2010 after the 2008 global financial crisis and 25 per cent drop was recorded in pre-money valuations. Currently, Sub-Sahara Africa is facing possibility of an economic depression for the first time in 25 years with World Bank projecting it at (2.1 per cent) to (5.1 per cent) from a growth of 2.4 per cent recorded in 2019. Kenya is expected to record around 1.9 per cent GDP growth (McKinsey) in 2020.
Some good news, this pandemic like many others before, will come and go and its not if but when we shall revert to the new normal. In the mean time, how do you keep your startup from going under? How do you avoid pitfalls, which would render your startup one of the 90 per cent that fold within the first 5 years?
“Customers first, employees second and investors third” – Jack Ma.
Communicate to your customers, identify priority services that can continue and must continue in order to get cash inflows while drastically reducing on expenses. Engage customers since it’s a good opportunity to get feedback and pivot your product to address emerging customer needs. Startups are known for their agility and fast product iterations, look for that opportunity, test and roll out before the second wave of Covid-19!!
17 million jobs lost in the last three weeks in United States and as at December 2019, the Kenya National Bureau of Statistics (KNBS) stated well over 4 million youth were unemployed in Kenya. With a floundering job market and salary cuts, it’s imperative to be open and candid with your team. Communicate the company’s 1 month, 3 month and 6 months plan. Reassure them. If you have to let some go, prepare them early and be cognisant of their financial situation. Maintain an engaging atmosphere and make them fully involved even if they are working from home. Zoom and Microsoft Teams are useful tools for daily or weekly team meetings. Keep them focused and motivated.
Interesting enough, with the current layoffs and uncertainty, if you are sure of business in the near future and have closed some deals, this is a wonderful opportunity to hire skilled resources that would otherwise be too expensive and beyond your reach as a startup.
With VCs and investors in general adopting a wait and see approach, it’s a good time to polish your pitch deck and send it to a few contacts. A VC may just have the time to take a few extra minutes to read your pitch deck or business plan and call you. VCs would want to buy low when valuations fall and sell high when the economy recovers. There are companies that were founded or funded during 2008-9 financial crisis – Uber, Airbnb, Slack and Github just to mention a few and later became successful unicorns. CEOs do not get lucky, they create opportunities through hard work and smart decisions so continue to engage your investors and partners. Success is no accident or serendipity.
With free time on our hands, one would be tempted to binge on Netflix the whole day. Really?! Instead maintain a daily and weekly plan. A To-do list has always been a simple and efficient tool. This is a wonderful time to reassess what’s working and what is not. Why is the company’s growth curve flat for the last six months? What can we tweak to increase sales 10X? What are the emerging trends that can be incorporated in our solution? Now is the time to assess and re-assess. “Fear is our default programming, so if we don’t use discipline to stay in control, then we will fall”.
Instead of wondering why Houseparty is the most downloaded app in the recent weeks why not read a book or two. The average CEO reads 52 books per year. Research shows that if you dedicate 45-60 mins a day to reading, you can read 4 books a month. So, simply convert the time usually spent in the busy Nairobi traffic into constructive reading and you can easily hit 6-8 books a month (depending on your reading speed). I have so far managed 18 books, not bad for someone who used to read only two books a year, and I would gladly recommend Tuesdays with Morrie by Mitch Albom , 5 AM Club by Robin Sharma, Grit by Angela Duckworth and my personal favourite, As a Man Thinketh by James Allen.
In conclusion, run fast and and act decisively. Challenges and difficulties test the true character of an entrepreneur. So pivot, engage your customers and team or find innovative ways to drive sales; do whatever it takes because when this pandemic is over, when the sun comes up, your startup should be well positioned for success.
“He who sweats more in training, bleeds less in war.“ – Spartan warrior credo.
– Observe social distancing, stay safe and stay healthy.
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