Advice for founders in uncertain times
The best sanity check from a group who has been through previous economic downturns
There’s no shortage of news in the market today about a potential economic downturn. We gathered the best sanity check from a group of experienced operators and investors who have weathered uncertain times. Sharing their unfiltered, level-headed, direct advice.
Three common threads emerged:
Conserve cash
Continue to invest
Stay curious and see the opportunity
Conserve cash
“Be miserly with cash….conserve, conserve, conserve.” Shellye Archambeau, Fortune 500 board director, strategic advisor, former CEO and author
“I’m seeing many founders increase their options by extending their runway to 2+ years. Some are also planning to reach break-even in that time. That way they can fundraise when the conditions may be better.” Catherine Stewart, Advisor, Board Member, and COO
“Revenue growth will slow but it's better to survive a recession than hit a wall by trying to grow fast but then run out of cash.” Stacey Bishop, Partner at Scale Venture Partners
“Focus on the right KPIs. The past few years have been too centered upon the amount of capital raised and speed of growth. What ultimately matters is the company's ability to generate cash. Begin thinking about profitability early and make sure you have a model that works before injecting outside financing.” Julio Horacio Arguello Lacayo, Founder, JH Arguello & Co
Continue to invest
“Improve on a path to profitability and focus on increasing organic growth. Consider diversifying revenue streams and customer segments. Build your cash reserves while you can and stretch the money for longer runways in order to be more capital efficient. Lastly, figure out what moves the needle. This is a moment in time. But also an amazing opportunity.” Ashley Ramirez, Partner, Halogen Ventures
“Customers will be even more dependent on mission critical products that help drive revenue or increase efficiencies. Continue to invest in areas where you can demonstrate strong ROI for your customers.” Danielle Waldman, Vice President, Silversmith
“It's important to keep investing in initiatives that deliver a strong ROI since more revenue will also extend a company's runway.” Catherine Stewart, Advisor, Board Member, and COO
Stay curious and see the opportunity
“Despite low amounts of funding for women back in 2008, some incredible women co-led companies such as Houzz, Kabbage and many more came out of the Great Recession of 2008. Female-led businesses represent a massive opportunity and we’ve seen first hand how they are returns focused and figure out ways to be scrappy with cash. Here’s what I’ll say, Women are a powerful force in the economy. Companies owned by women and people of color have proven through the last recession that they have the ability to stimulate the economy.” Ashley Ramirez, Partner, Halogen Ventures
“Make sure you are focused on a painful, must solve, problem. Strengthen your customer relationships/serve focus. No matter what the circumstances, treat people with dignity and respect.” Shellye Archambeau, Fortune 500 board director, strategic advisor, former CEO and author
“Despite the uncertain times, stay curious. Constantly ask your customers for feedback and ways to make things better. Listen, adjust / iterate, repeat. Everyone is nervous, and the more you can make customers feel heard and comfortable, the better.” Ashley Aydin, Principal, Vamos Ventures
Those who have been through prior recessions and downturns know to address the tough decisions quickly and make sure to look for the opportunity when there is uncertainty. Return to first principles, generate cash, and keep going.