Coronavirus pandemic crisis response notes for founders and CEOs, 20.03.2020
We've gathered a bunch of notes on crisis assesment and response in recent hectic days, which we've sent to CEO's and Founders of our client's organizations.
We are making those notes public, in hope these would be useful in your assesment on how to respond to the crisis unfolding on a short- to long-term perspective.
1) Sequoia Capital VC firm message to their portfolio Founders & CEO's - https://medium.com/sequoia-capital/coronavirus-the-black-swan-of-2020-7c72bdeb9753
Having weathered every business downturn for nearly fifty years, we’ve learned an important lesson — nobody ever regrets making fast and decisive adjustments to changing circumstances. In downturns, revenue and cash levels always fall faster than expenses. In some ways, business mirrors biology. As Darwin surmised, those who survive “are not the strongest or the most intelligent, but the most adaptable to change.
We suggest you question every assumption about your business, including:
Cash runway. Do you really have as much runway as you think? Could you withstand a few poor quarters if the economy sputters? Have you made contingency plans? Where could you trim expenses without fundamentally hurting the business? Ask these questions now to avoid potentially painful future consequences.
Fundraising. Private financings could soften significantly, as happened in 2001 and 2009. What would you do if fundraising on attractive terms proves difficult in 2020 and 2021? Could you turn a challenging situation into an opportunity to set yourself up for enduring success? Many of the most iconic companies were forged and shaped during difficult times. We partnered with Cisco shortly after Black Monday in 1987. Google and PayPal soldiered through the aftermath of the dot-com bust. More recently, Airbnb, Square, and Stripe were founded in the midst of the Global Financial Crisis. Constraints focus the mind and provide fertile ground for creativity.
Sales forecasts. Even if you don’t see any direct or immediate exposure for your company, anticipate that your customers may revise their spending habits. Deals that seemed certain may not close. The key is to not be caught flat-footed.
Marketing. With softening sales, you might find that your customer lifetime values have declined, in turn suggesting the need to rein in customer acquisition spending to maintain consistent returns on marketing spending. With greater economic and fundraising uncertainty, you might even want to consider raising the bar on ROI for marketing spend.
Headcount. Given all of the above stress points on your finances, this might be a time to evaluate critically whether you can do more with less and raise productivity.
Capital spending. Until you have charted a course to financial independence, examine whether your capital spending plans are sensible in a more uncertain environment. Perhaps there is no reason to change plans and, for all you know, changing circumstances may even present opportunities to accelerate. But these are decisions that should be deliberate.
2) Peacetime CEO vs Wartime CEO note by by Ben Horowitz, General Partner of Andreessen Horowitz VC firm - https://a16z.com/2011/04/14/peacetime-ceowartime-ceo-2/
Peacetime in business means those times when a company has a large advantage vs. the competition in its core market, and its market is growing. In times of peace, the company can focus on expanding the market and reinforcing the company’s strengths.
In wartime, a company is fending off an imminent existential threat. Such a threat can come from a wide range of sources including competition, dramatic macro economic change, market change, supply chain change, and so forth.
3) Some advices for criris response from various internet sources:
Measures for crisis:
Layoff employees quickly. It sucks. You know what else sucks? Closing your doors for good and having no jobs for no employees.
Adapt to the market. If you need to reduce the amount of services that you offer then do so. If you need to provide completely new services than what you used to do then do so.
Example of crisis measures implemented by someone in a CEO/founder role:
He laid off his non-essential staff. He flattened everything out. If you were not a hands on employee then you had to go. Everyone he kept had to have a direct ROI back into revenue.
4) Some sources with recent updates about the state of the things in business:
https://www.teamblind.com/ - community of mostly tech workers, they usually have quite recent updates and insights on what's going on in tech sector.
4.1) Some subreddits, which occasionally have some recent insights on what's going on and impacts of the crisis evolving:
https://www.reddit.com/r/smallbusiness/
https://www.reddit.com/r/sales/
https://www.reddit.com/r/marketing/
https://www.reddit.com/r/Entrepreneur/
https://www.reddit.com/r/startups/
5) And a few more materials from McKinsey:
https://www.mckinsey.com/featured-insights/coronavirus-confronting-the-crisis
Hope this helps.
Stay healthy and safe through these turbulent times!