Knowledge is power — especially in times of uncertainty. While new updates are constantly emerging related to COVID-19, we wanted to share the experience of people who have already gone through one crisis. Lyuben from LAUNCHub Ventures and Vassil Terziev form Eleven Ventures shared everything they’ve learned so far on how to deal with uncertain times with our startup community.
About Lyuben — General Partner, LAUNCHub Ventures
Lyuben was the Founder & CEO of Netinfo from 1998–2007. He admits that the 2000 dot-com crash was pivotal for how he managed the company and what they’ve achieved. In 2008 he sold Netinfo to Sanoma International for $50M (a substantial amount at that time) just before the financial meltdown. He’s been an active angel investor since and has been working with many founders from LAUNCHub Ventures’s portfolio.
Lesson learned from Lyuben Belov:
STRENGTHEN THE TEAM. Now is the time to change what needs to be changed.
Use the crisis to your advantage and put in place everything you’ve always wanted to change. This could be everything from processes and team dynamics through to leadership and culture. You can even instill totally different DNA in your company.
At Netinfo, Lyuben and the team managed to come out of their crisis even stronger by having a strong dedicated core team. They doubled their revenue, expanded to new markets, and exited the company in 2008.
“We shifted the way we operated as a company — I would say — it was time to grow up as a company. We focused on efficiency and cut everything that was no longer serving us. We changed the whole company DNA — every deal had to be profitable, which resulted in substantially increased margins.”
BACK TO FUNDAMENTALS. Laser focus on your metrics.
In order to come out of a crisis stronger, you need to go back to fundamentals — make sure your margins improve and you increase profitability. To do this, be as capital efficient as possible and strive to improve unit economics. The SEE & CEE region (LAUNCHub’s core market) is well positioned with access to great talent, but also has the power to retain that talent in a capital efficient manner. Have a laser focus on your metrics and you have the chance to weather the storm.
ADJUST YOUR STRATEGY TO THE NEW REALITY. Your competition will either make mistakes or be in a situation to not move fast or to the right direction.
In times of crisis, there are enormous opportunities to adjust your strategy and become stronger than your competitors.
“There is a huge chance that your competitors are either doing the wrong thing, or not in the position to do the right thing. Keep an eye out. Adapt fast. Gain more market share.“
ADAPT FAST TO THE CHANGING ENVIRONMENT. Know where to put on the brakes and where to press the pedal to the metal.
This is a great opportunity to take a step back and think about your product, your strategy, and define new market opportunities. Act fast on protecting your user/client base and capital position. When identifying new market opportunities (new segments growing faster than anticipated, change in consumer sentiment) you can press the pedal to the metal.
About Vassil — Partner, Eleven Ventures
Vassil Terziev is a co-Founder of Telerik (one of the biggest exits in CEE), Campus X (a leading ecosystem for tech companies and talent) and Telerik Academy (the first private tech-ed organization). At Telerik, he played an instrumental role in growing the company from a small startup in Bulgaria in 2002 to a leading global enterprise software vendor with 9 offices in 7 countries and more than 130,000 customers, including more than 450 of the Fortune 500®. Vassil is an active angel investor in the CEE & SEE regions and partner at Eleven Ventures.
Lesson learned from Vassil Terziev:
SAVE THE COMPANY. It’s critical to show discipline.
- Have 3 budgets (pessimistic, neutral, and optimistic).
- Cut everything that isn’t critical. Try to postpone payments and pay smaller vendors before you pay the bigger ones. Smaller companies have less “fat” and need your support more than bigger ones.
- Be reasonable with hiring — hire as much as your financial results permit you to. In general, a crisis is a great time to attract talent that you wouldn’t be able to find or afford otherwise. So while the natural reaction is to hit the brakes on hiring, you should be on the lookout for great people to strengthen the team.
SAVE TEAM MORALE. It’s the one thing that you can’t restore once broken.
- Cut from everything except people, if you can afford to. People will remember how you treated them (and their colleagues) in tough times. Rather than firing people, cut the remuneration of everyone so that you go through the pain in solidarity. Start the cutting from the top and move downward.
- Be extremely transparent in your communication — your team needs to see confidence from leadership.
“Act like an adult and treat your employees like adults. A crisis is not a time when you should obsess about someone’s hurt feelings. It’s about doing what’s right not about being liked.”, Vassil Terziev
POSITIVE STATE OF MIND. Disinfect the mind as much as your hands.
- Those who used the time of crisis to prepare will be the big winners. Work 3x harder in times of crisis. Do all the housekeeping that you were postponing — code base, processes, administrative stuff, etc. It will give you a flying start when the sun starts shining.
- Call EVERY single customer if you can (if not, call the more important, bigger, or just those who have been loyal or helpful throughout the years). Thank them for the business and ask them what you can do for them in these times. Use it both to help and to learn. It will pay off down the road.
- Every crisis is painful, but it represents an even bigger opportunity for those who survive and are properly prepared. Remember that it’s tough for everyone in your company and industry, and in other industries. But, it will pass!
SHOW CARE AND SOLIDARITY ON EVERY LEVEL
- What you do today will define you for many years to come.
- Adopt the products of your peers, if you can.