This letter was written to our portfolio entrepreneurs — it includes a playbook (with helpful ressources about gov. aids,…) on how to survive the crisis. We believe it could be useful for any entrepreneur out there!
Dear entrepreneurs,
We just want to share a bit of love, a handful of business wisdom and an actionable playbook (incl. gov aids) to minimize the adverse impacts of this crisis.
❤️ A bit of respectful love ❤️
As if being an entrepreneur wasn’t difficult enough…
Under all likelihood, this coronavirus will be more than a mere unpleasant bump on your road; we are bracing for dire times.
First and foremost, stay safe. Your health and the wellbeing of your loved ones take precedence over any business considerations. And don’t contribute to the virality: stay safe and stay home.
As for your business, you will have to work extra hard and take extra painful decisions to survive this unfair period. We know it will be tough, be we also know you have extraordinary determination — otherwise you wouldn’t be here! You deserve our full and utmost respect for what you’ve done so far and what you have to do now.
We understand that you’ll have to drastically modify your plan and we are available to work with you to adjust them, as imposed by the situation. We’ll face this together.
We also know that, even though it cannot be compared to any other, this crisis shall pass, too. There will be an after, startups will thrive again — book the party in your agenda, the beer’s on us! Until then, let’s offer this little nasty beast the fight it asks for.
Resilience mode: ON!
🤓 A handful of business wisdom (that mostly sucks, we know…) 🤓
Entrepreneurs are structural schizophrenics: they must focus and be agile at the same time; they are conquering visionaries and data-driven realistic at the same time. Well, here comes another opportunity to prove your ambivalence: stay optimistic about the long term, but prepare your forces for immediate war.
Unless you are a biotech company working on a vaccine, your business will suffer. If you are operating in Horeca, your business will suffer like hell. In any case, you’ll be affected by overwhelming market uncertainty. You, as a leader, must adapt your plan, quickly. And we know most of you have already taken drastic measures. Praise to your lucidity and responsiveness.
📍P&L
Build a new budget now. Discard your previous one: it’s dead. Yesterday’s «worst-case-super-pessimistic-scenario-that-will-never-happen-but-proves-my-Company-has-a-huge-safety-buffer» is most likely today’s best guess. Postpone, axe, cancel, load balance. Don’t merely adjust. Turn the page. We know you are optimistic and we know you hate to sacrifice. We appreciate you for this too and we too believe that you’ll conquer again. But your Corona 2020 P&L must take the full measure of what’s happening: for most of us, it will be a top line massacre — and the full recovery won’t happen overnight.
📍 Must have vs Nice to have
Strictly focus on whatever critical pain-solver you are building. Everything else must go. This applies throughout your company functions (G&A, M&S, R&D, etc). This applies to your immediate product road map. This also applies to your GTM: focus on the buyer personas and distribution channels that axiomatically need you now and can pay for you now. It might mean a pivot.
📍Cash
Cannot be any more trivial than that but… count the money. Draw down all debt lines you can; postpone all payments you can; revise your clients payment schedule, optimized any tax, loan, subsidize you can. Your midterm fund raising strategy is also at stake: your next round is not going to happen as you planned it. Your safest approach is to forget it and stretch your cash until the next safe harbor: it could be breakeven — maybe with some extra help from you existing backers, or when the world recovers; the only reasonable assumption you should make is that no new investor will rush to lead your next round until the sun shines again. And if the assumption was wrong, then even better!
If it sounds like a catastrophic scenario, it’s because that’s what it is. But always remember that we are in this together and fighting the crisis with powerful measures does not mean we are pessimistic: science will prevail (perhaps AI will shorten the time to find a cure?) and we will soon be planning the post crisis, accelerating budgets again! Until then, let’s be leaner than ever.
📕 Actionable Playbook 📕
Our startup world is getting organized to fight the tiny nasty beast. Many tools, ideas, data, procedures, are made available and shared by various organizations, governments, VCs, entrepreneurs. We’ve created a space where you can find a curated list of such helpful resources. It’s also a place where you can meet and exchange; you’re not alone in this fight. We will keep the space up-to-date and, within reasonable limits (we are not experts in coronavirus crisis either), we’ll try to keep it tidy, efficient and responsive. Don’t hesitate to visit and use. And also to ask questions.
Please check the Playbook now; we will also maintain a companion, dedicated Slack channel (let’s meet there) to ease the discussion.
(Note to our friends outside France: the Playbook is in French as most government aids are available to French Companies)
We all know that the best Companies are the crisis-survivors. Well… let’s just build the best Companies!
The Elaia team
A special thanks to Marc Rougier!
