When Stanford announced yesterday that it would start its spring quarter 100% virtual, the reactions of my classmates ranged from fear to excitement. A lot of people, including myself, thought about how fun it would be to spend the quarter on-the-road traveling and working virtually. While that does sound fun, I would be remiss not to acknowledge the role that travel plays in community spread of COVID-19.
I imagine you’ve seen this infographic adapted from the CDC. To limit the spread of COVID-19, we need to limit all non-essential travel. For Stanford students deciding what to do for spring break and beyond, here is my advice: build something.
Why now?
While a recession is not certain, it does seem increasingly likely. The U.S. Federal Reserve cut interest rates by ½% last week, and the IRS is expected to postpone tax payments for many Americans. Federal Reserve Chair Jerome Powell shared that he sees a “risk to the outlook for the economy” in his latest update. Meanwhile, in China, Q1 growth is expected to lag around 4.5%, the lowest it’s been since the 2008 financial crisis (World Economic Forum).
However, with a recession comes opportunities for new businesses: a lower cost of goods and services and an increase in talented people looking for jobs. The Bureau of Labor Statistics (BLS) shows that in the five years from 2010–2015, over 100,000 new companies were established.
Additionally, with the social-distancing recommendations from the CDC and an increasing number of companies encouraging employees to work-from-home, the extra time from your commute, social activities, or the gym can be used to working on your idea. Instead of turning to Netflix to fill that time: build something!
What to Build?
Build a painkiller, not a vitamin. This long-shared mantra for building products applies now more than ever. Whether you want to build a product aimed at reducing short-term challenges that the virus may have imposed, such as a free app to connect hospitals to volunteers, or a longer-term company, use your skills to build something we all need. With the economy in flux, people are going to spend money on products they need, not the products they want.
Unit economics matter. Here in Silicon Valley, Sequoia’s Black Swan letter has been circulating non-stop since it came out last week. I would echo its advice: now is not the time to start building a billion-dollar unicorn that requires multiple rounds of VC funding to achieve profitability. Instead, pick an industry you know well, where you can grow slowly and make money from the beginning. Think about your unit economics and limit your expenditures. A few ways to do that include:
· Bartering for products and services. Offer your time or services to a friend who can help you build a prototype in exchange for a free version of your product.
· Crowdfunding or running pre-orders to ensure you get money up-front. (See the article I wrote about building a pre-order campaign based on the $1M Indiegogo campaign I ran in 2017.)
Leverage the trends that are emerging. COVID-19 is changing the way we think about work, and new trends are emerging. As companies test the work-from-home (WFH) model, we’re likely to see WFH become an increasingly common approach enabling even more distributed businesses. As people travel less and avoid large public gatherings such as concerts and sporting events, we’re likely to see home entertainment rise. And as human beings who need connection, I imagine we will see a host of social connection apps pop-up that help us bridge the distance and isolation.
So, for all my classmates and friends about to embark on an extended spring-break, I hope you will think about building a company 😊
