The Situation Room #1: Observations from the Front Lines

March 25th, 2020 we were excited to host the very first episode of our new series of virtual meetups, the Situation Room. With us, we were fortunate to have Martin Dal, co-founder, and CEO of our portfolio company Spiio, live from his office in Nanjing, China, and Mikkel Hippe Brun, co-founder of Tradeshift and member of the byFounders Collective.

The recording is available on the series' website, and below the image follows a summary of the critical points of the episode.

China’s Response to COVID-19

• China’s extreme measures to “flatten the curve” and contain the virus has paid off; regions are gradually going back to normal.
• It’s been an intense time for everyone, “it felt like a war-zone.”
• China is in a unique position to implement far-reaching policies to limit citizens’ autonomy of movement
• Even though we don’t know that all information about the situation in China has been made freely available, actions taken by the government have effectively communicated the gravity of the situation.
• Mikkel: “Seeing the Chinese government extend the Chinese New Year holiday with two days made the gravity of the situation very clear. You don’t just give 1,4 billion people a two-day vacation unless it’s necessary. I think everyone can imagine the loss of productivity associated with such a decision.”
• Martin added that “This reaction to an infectious disease is unprecedented. The level of technology that they apply to contain this situation, the level of structure, the level of management that they apply to contain this epidemic has been exceptional on the verge of outrageous.”

Western Countries’ Response

• Western countries’ response to the pandemic has been slow and uncoordinated
• Time will tell what the effect this will have on economic life, as we don’t yet know how long things will have to be “shut down” for
• Mikkel and Martin both underlined that they’d feel safer with some of the measures taken by e.g., the Chinese and Korean governments, such as regular and frequent temperature checks of the population before being granted entry to certain public places.

What should the founders and leaders of small companies do?

Martin shared his three-step COVID-19 game plan:

1. Preserve cash in any way you can.
2. Maintain the mental well-being of your teams. These events we’re living through are historic and unprecedented. Check-in on your people frequently and make sure to maintain social contact beyond strictly to-the-point business meetings.
3. Only when the two first basic needs are covered, you might be able to find “loopholes of creativity” for further developing your business.

Mikkel added that “any responsible founder should have mapped out the scenarios by now. If not, do so urgently. Ask yourself: “what would my business look like if… e.g., my new bookings fall by 25% 50% 100%? What impact will it have, and what can I do about it?” Face these issues now and fight like hell to avoid the worst from happening.”

What can large companies do?

• One of the unfortunate effects of the crisis has been that many large multinationals rely on server centers to scan and process paper-based invoices physically. Having these centers shut down on a massive scale means they’re unable to pay their suppliers, even when they have the cash readily available.
• Considering global supply chains and all the jobs nested in them, the issue of maintaining cash flow becomes enormous and pertinent.
• Among the actions that big companies can take to alleviate the situation is to make advance payments to its supply chains, as done by Salling Group, Grundfos, and Novo Nordisk in Denmark. These moves may save countless jobs.

Final words

These are unprecedented times. The way we work may never return to what it was before. Now is the time when founders have a chance to show what they’re made of. Show that you care. About the company, about your employees, and about fighting the pandemic. As Mikkel pointed out, “some of the best companies were founded in downturns.”

Thanks to Mikkel Hippe Brun and Martin Dal for generously sharing your thoughts and experiences with our community! Thanks to all attendees for your attention and thoughtful questions. Hope to see you for next Wednesday, April 1st, for Situation Room #2: How to Mitigate Risk in the Face of Uncertainty!

Please share the series with your network as well, it is open to everyone! 🙏

See the additional episodes and sign up right here:

Situation Room Series