Lessons from 2008 that are Applicable Now
When you launched your startup, the last thing on your mind was an impending global pandemic.
And yet, here we are.
Despite the toll COVID-19 has taken on businesses of all sizes, many startups have a path to not only survive this crisis, but emerge from it with more loyal customers and a stable, or even healthy, bottom line.
Our panel of experts knows this firsthand. They were on the frontline of companies during the 2008 financial crisis and managed to bring them through it, with some seeing a successful IPO, acquisition, or merger.
To help early-stage companies successfully pivot, we recorded our interview with these five entrepreneurs and Core Members so that their skills can be put to use for a new era of global change:
- Raj Aggarwal, Co-Founder/CEO of Demand Sage
- Jeffrey Barnett, Former CEO/COO of DemandWare
- Jim Crowley, CEO/Co-Founder of Forge.AI
- Jessica DeVlieger, President of C Space
- Bettina Hein, Founder and CEO of HelloYellow
The video is full of insights from these successful company leaders and founders, ranging from their thoughts on how to become more customer-centric in a time of uncertainty to their opinions on if and when we’ll be able to start shaking hands again.
Here are three of the takeaways that stuck out to us.
Hug Your Customers (Figuratively)
The panel placed an enormous emphasis on being there for your customers during this time.
“I think we all know it’s tough to win new customers in a recession, so it’s critical to bear hug them, preserve that base, and minimize churn. And remember, your customers are going through their own crisis,” said Jeff.
One potential benefit to this downturn that Betina pointed out is that right now you’re customers and prospective customers won’t “BS you.” You’ll know quickly if you’re building something that delivers value.
The panel also suggested being more proactive in your relationships with customers – especially early on in a company’s existence. “Double down on employees and customers as your greatest asset to help you lean into what your future self can and should be coming out of this crisis,” said Jessica. “There certainly is opportunity in this crisis – it’s just a matter of rallying your most critical assets around what your opportunity is.”
During these challenging times, people the world over are looking for a sense of purpose. When so much is out of your team’s control, you have an opportunity to give them a clear role and rallying cry around your mission to serve your customers.
“You have this ability to try new things as an early-stage startup that a larger company doesn’t, and that might put you in front of an opportunity,” said Raj.
If the product can’t pivot quickly, Raj suggests trying out other ideas to see what resonates, such as messaging and communication with customers. If something is found, Raj suggested being “willing to go after it, particularly as an early-stage startup, where you have the ability to make that quick pivot.”
Jessica shared that her leadership team, having seen an effective shift to remote work, is beginning to brainstorm what new, more creative uses, there might be for their physical office space.
Don’t Dig Yourself Into a Discounting Hole
How much discounting is too much?
Startups face a tough decision during this crisis – too much discounting takes a direct hit on capital, while not enough can result in high churn.
Recommending companies consider temporarily adjusting pricing models rather than setting permanent expectations, Jim gave this advice: “You need to be worried about what happens a year from now, or two years from now – but your first mission is to get to a year from now.”
Consider how you can trade short term cash for long term value. Can you ask your customers to enter into a longer contract at a discounted rate? If you do give a discount, Raj pointed out that you should be explicit that it’s for a given timeframe. That way you have grounds to shift back to your value-based pricing.