COVID-19 is an opportunity
With all the COVID-19 mayhem going on, the potential scale of the negative impact this will have on society, business, and everyday life is yet to be revealed. There are doomsday predictions left and right — and for good reason. There’s no way around it, this will change our lives in a profound way.
The most immediate change is our behavior. Social isolation has already forced us to change the way we shop, travel, work and live, how we entertain ourselves, and how we spend our time. These are not borderline changes — these are changes that will affect our behavior indefinitely.
Startups needs to go through a revamp as well, and this crisis is an opportunity to stand out and beat the competition.
Great companies have risen from a downturn
Economic downturns and recessions constitute a tremendous hit to society and business. Although most businesses suffer inexplicable losses, some world-changing startups have prevailed through the historical crises.
- 1930s Great Depression: Disney (how we spend time)
- 1970s OPEC oil shocks: Microsoft (how we work)
- 2001 Dot-com bubble: Paypal (how we shop)
- 2009 Financial crisis: Stripe (how we shop again) and Uber (how we move)
COVID-19 is going to, globally, have worse implications than any one of the above, and as businesses and consumers change their behavior, the current situation naturally forces startups to change theirs as well— starting with focus.
COVID-19 is a catalyst for focus
In chemistry, a catalyst is a substance that increases the rate of a chemical reaction without interfering in the end-product. COVID-19 is a catalyst, which reveils the hidden and simply ignored insufficiencies within our society and businesses, and will increase that rate of technological adoption, especially in more rigid industries.
The biggest and most imminent change in startups is an increase in focus. From the customers’ side, money will be spent on the products and services that bring actual value, and almost having product-market fit just doesn’t cut it anymore.
The current situation forces startups to
- Solve an actual problem. Consumers’ and businesses’ time, effort and money will go to solutions that creat actual value.
- Concentrate on what they’re good at and cut down on various non-essential activities.
- Re-evaluate their marketing channel ROIs, making their marketing efforts less spammy, more concise and to the point.
- Decrease excessive spending. Money will gain back it’s value and the absurd rise in salaries and home prices will get a reality check.
- Rethink their business model. Cash is king. The disruptive cash vacuum machines that we’ve seen in the past decade will be replaced by businesses with good unit economics.
- Be transparent with employees. Everyone’s bullshit radar is on high alert and this is a time when people will gravitate towards good leaders that make them feel safe.
Startups will have increased access to human capital
Access to talent is one reason why startups flock to entrepreneurial hotzones like the Valley. Be where your people are.
Currently, most of us in the tech industry are learning quite the opposite. Remote work is our new lifestyle, and the mental boundaries geographical location has mounted on us are fading away. Suddenly, both your own conceptions as well as potential employees’ conceptions on where and how to work have changed.
For startups with a good cash balance, this is a never-before-seen opportunity to find new resources that you otherwise wouldn’t have had access to. There will be a wave of ‘recently available talent’, and you have a chance to search for potential employees from an increased talent pool.
Some startups will also have an increase in available grants and loans to apply for. Others will discover that a certain customer cohort has gained incredible traction in the recent month. The market for your remote work startup just leaped forward a few years. COVID-19 presents tremendous opportunity.
In general, this situation contributes to an overall increase in focus and available human capital. Startups will have increased resilience when it comes to resource and time-management and in the long-term, I’m confident we’ll be better off even though it doesn’t feel like it now.
Some industries will open up
Travel, sports, restaurants, schools and virtually (no pun intended) all events that require people to cluster together are negatively affected. Nevertheless, industries tackling remote work, gaming, and online delivery are some of the potential winners.
Last-mile delivery is one where the COVID-19 catalyst effect can be seen. People are suddenly ready to order and shop for a variety of products online they otherwise wouldn’t have.
We have already seen a shift in how people consume, which is a win for startups that rely on changes in mass consumer preferences. The awaited changes just arrived faster than previously thought.
Insight-driven startups will have an advantage
These changes in our society will enable insight-driven teams to learn faster than others what impact the crisis will have on e.g. their customers’ behavior. The faster you’re able to ‘re-learn’ how the world works, the better off you are in relation to your competition.
‘What do you know that others don’t, and how is your business based on this proprietary insight?’
This behavioral change is an opportunity, and startups should specifically focus on learning about the underlying factors on how and why our behaviour has changed. This is what it means to be insight-driven.
Knowing this change — and more importantly being able to forecast future change — better than your competitors is why insight-driven teams will prevail. They’ll have quicker reaction speed and are able to better adapt to this newly discovered world. There’s so much to learn, and now is the perfect time to gain an advantage on your competitors — provided you’ll learn faster.
The road to a high-functioning society
Most great inventions come out of necessity and currently, there is a need. The difference is that now, our needs are geared towards family, healthcare, education, safety, and stability — everything a high-functioning society needs in order to fullfill the definition.
Startups need to start solving real problems that bring actual value to customers. Nice-to-have businesses will cease to exist and you’re either 1) a can’t live without product, or 2) soon-to-be bankrupt.
This crisis will weed out the entrepreneurs who are here for the ‘hype and coolness’ of being a startup CEO aiming only for higher rounds and higher valuations. Therefore, the ratio of truly execution-oriented, insight-driven startups will increase. One could argue this is a welcome change after a decade of startup hype of astronomical proportions.
In the end, we can’t change what’s coming but we can change our reaction to it. Startups, make the hard decisions quickly and start seizing the opportunities this staggerinly unfortunate situation presents. Find your insight and execute better than your competition.
Stay healthy, stay safe.
