The Great Re-Evaluation
The Covid-19 pandemic that we are all facing has been, first and foremost, a great personal tragedy. So many lives have been lost and so many people have suffered. I suspect it will scar our collective psyche for many years to come. In addition to this assault on so many people’s physical health, there has also been a significant assault on our mental and emotional health. This pandemic has been unprecedented in our lives and has caused us much turmoil, resulting in an increase in stress, feelings of helplessness, isolation, loneliness, and depression.
In addition to the immense human toll the pandemic has taken, we have all experienced the economic devastation it has caused. And it’s far from over.
Covid-19 has caused us to re-evaluate many things, from health policy to economic policy, from our country’s safety nets to its leadership and disease preparedness. It is my true hope that this re-evaluation will result in positive changes in our society. I believe that this great re-evaluation can and should extend to the private sector and, for purposes of this discussion, to startups in particular.
Of course, a startup’s first priority in these times is to ensure the health and safety of its employees. Its second priority is the organization’s preservation. Reducing expenses and lengthening runway is paramount in order to live to see another day, as the saying goes. Eliminating all non-essential expenses, reducing payroll, raising capital, securing grants and loans like PPP and EIDL, and seeking abatement or deferral of certain expenses like rent are all tactics being deployed by smart management teams across the country.
But management also has an opportunity to re-evaluate its company from the ground up, to perform a complete reset, to be creative and re-envision the company. We are in an unusual time, when assumptions are changing, the way we do things is changing. These shifts offer companies opportunities to adjust, to better meet their customers’ needs, to become more efficient and to position themselves to grow post-pandemic.
First and foremost, management should evaluate whether the company is providing a product or service that its customers love and would be loath to live without. Is it truly addressing its customers’ pain points in a significant and meaningful way? Is it indispensable to its customers? Its customers are, of course, hurting too during this challenging time, faced with their own financial hardships. This represents a unique opportunity for companies to reach out and connect with its customers on a very human level, thus strengthening their relationship. This connection can then facilitate a discussion of the companies’ relationship, the customer’s use of the product, features it desires (and those it can do without), what would make the product truly indispensable, and more.
Responding to the immediate needs of their customers, many of our portfolio companies have expanded the scope of their products and added features to accommodate the realities of this pandemic. Some have, for instance, added an online component to their product which was previously exclusively an offline product. Startups should incorporate these new features that will be valuable to its customers post-Covid into its regular product.
This is also an opportunity for companies to look inward and critically review its processes as if the company’s existence relies on it, because it does. Think of what areas of weakness and opportunities for improvement a post-mortem might identify if the company didn’t survive. This type of bottoms-up operational re-evaluation should be comprehensive and thorough. It should include input from all stakeholders: customers, employees, suppliers, investors, and board members. It should review customer service, marketing, personnel, its market and product-market fit, processes for product development and quality control, financing strategies and financial reporting, board, and investor relationships and more. It should discover and eliminate inefficiencies in all areas of its operations, including the organizational chart itself, review and reconsider its supply chain, pricing, and speed to market. Everything.
The current crisis also presents an excellent opportunity for companies to strengthen relationships with their employees. Crisis builds camaraderie. And this is an unprecedented opportunity to hire high- quality talent. Salespeople, engineers, designers, developers, managers and more suddenly find themselves out of work. Competitors have had to lay people off. If a startup has the need and sufficient cash, this crisis can afford an opportunity to upgrade or supplement a company’s employee roster with top talent not usually available. During the 2008 recession, a company I founded hired a salesperson who was laid off from a competitor and went on to become our top performer for several years.
If a company lacks sufficient cash, this is the type of environment that lends itself to more creative compensation structures, including more equity, higher commissions, and structured, incremental increases in cash compensation. And if a company does not currently feel comfortable adding to its payroll, as many will not, it would be prudent, at a minimum, to reach out to, and establish relationships with, talent it may have an opportunity to hire in the future. Building these relationships now could pay dividends in the future as the company resumes a growth posture.
Many of our portfolio companies are using this opportunity to add top talent to their teams, offer their services virtually and diversify their supply chains. Following are other examples of how a few of our portfolio companies have re-evaluated and launched new innovative initiatives to better position their companies now and post-crisis:
Bluedot has concentrated its go-to-market strategy on Contactless Solutions for “on-the-go” restaurants and retail, where demand has increased. It also published digital e-books and content, including an industry-leading study of 1,600 respondents across the US on consumer sentiment and expectations around contactless solutions.
EvaBot launched Eva for Remote teams and has re-evaluated its online marketing and found that it can achieve better economics by shifting marketing channels.
HigherMe has been more data-driven in its decision making, created more redundancy in its teams instead of relying on individual knowledge silos, strengthened HR policies for management, improved continuous recruiting processes instead of ad hoc reactive hiring, invested in Diversity and Inclusion efforts in hiring and development, identified areas to streamline and further automate and increased cooperation among its team by adopting a customer-centric pod approach.
LeagueSide identified new opportunities in digital sponsorships and facility sponsorships that are resonating with its customers, is running training programs across its sales and marketing teams, launched the Save Youth Sports initiative resulting in a lot of exposure and good will, created team OKRs that align with company OKRs and held its first hackathon.
Perch Interactive is working on a set of technologies that better position the company for a touch-phobic world, including “point-and-explain” gesture recognition, virus resistant screens, mobile phone integration, and a greater messaging focus on reduced sales associate interaction.
In every crisis, there is opportunity. As the saying goes, “if you rest, you rust,” and a rusty enterprise risks becoming obsolete. I urge startups to take advantage of this unusual opportunity to re-evaluate and improve all aspects of their companies. Those that do will emerge from this crisis stronger and better positioned to meet stakeholders’ needs and grow at an accelerated pace.
Phil Nadel is the Co-Founder and Managing Director of Forefront Venture Partners (www.forefrontvp.com). Follow him on Twitter: @NadelPhil or on Medium at https://medium.com/@pnadel.
