Early-stage startup planning in uncertain times

Andrew Hill
Mar 26, 2020 · 5 min read

Originally published on our new blog https://blog.textile.io/early-stage-startup-planning-in-uncertain-times/

This morning I wanted to update the Textile team on how the coronavirus is going to impact planning and development at Textile. In the face of all the change that is coming, it’s more important than ever to protect a healthy runway, remain vigilant of market shifts, and be creative and adapt as the world changes around us.

Below are some notes I collected to prepare this internal meeting. I wanted to share these notes with other startups trying to figure this out. While the notes may come across a bit gloomy, our internal outlook is pretty optimistic. Armed with the right questions to ask right now, we can be sure we are safe and working on the right problems. I hope this information can help you and your company get to the same place. The next months will be tricky, but you can get through it! If you read these and want to ask any questions, feel free to grab some of my time.

It’s bad out there. Next month will be worse.

You can be successful through these times, but you must adapt, and you must move quickly.

  • It’s bad both in terms of the spread/impact of the virus and in terms of the markets.

A healthy runway is a healthy company

Many different factors can impact the health of a startup, but a healthy runway is what keeps you alive and your employees secure.

  • Even without a recession, startups fail when they run out of funding (source).

Private markets are going to change quickly

The environment for raising new funding rounds is going to change for the worse, and probably get very bad very soon but then improve over time. You do not want to be forced to raise a financing round in these conditions.

  • VC funding is going to change in ways that won’t be as favorable as they have been in recent months. Some VCs will fail, most deals will be less favorable, and investment strategies will change (source).

We don’t know yet if we need to respond to market changes or societal changes

Your company needs to begin a long-term process of re-evaluating what you know and what it means for your business plans and product.

  • If we start containing the virus in three months, you need to prepare for the recession. If it takes three years, you probably need to build a different company. (source)

A different market in the short-term

We do know that companies are going to react in the short-term by reducing spend on new technology, spending less time on speculative development, and focusing on projects that add certainty to their own existence.

  • Identify ways that your product can help other companies build a bigger lifeboat (e.g., save money). (source)

Ensure security, strike at new opportunity

Be smart, not scared. Get all your ducks in a row now so that you have the certainty and confidence to grab new opportunities as they become clear.

  • All of the above indicates that it might be time to take a defensive, conservative POV as a startup. This is wrong.

Important questions to ask today

  • If nothing is different about your startup today than it was in January, why not?

If you are leading a startup today, chances are you haven’t led (or even worked) at a company weathering a recession before, let alone a global pandemic. Remember that none of your team likely have either. It’s time to go to battle together! Learn, adapt, and be decisive and you’ll do incredible things.

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