These are hard times for all of us. The pandemic is taking a global toll on our health and our economy. It is a time of tremendous uncertainty. Why would you possibly start a company during such challenging times?
First, there is a history of great companies being started in hard times. Going back more than a century, GE and IBM, Fortune 100 companies today, were founded during the 1890s, a time of great upheaval and tough times with a major banking crisis. In fact, the original J.P. Morgan of banking fame, Director of the White Star Line who built and operated the Titanic, was instrumental in steering the U.S .economy from the brink of collapse in the late 1890s. Read more about J.P. Morgan and how he affected the Titanic’s demise in our book, The Titanic Effect.
The Walt Disney Company was founded as Disney Brothers Cartoon Studio in the 1920’s and incorporated under its current name in 1929, the start of the Great Depression. Microsoft was founded in 1975 during a major recession and time of stagflation, a combination of high inflation and high unemployment. Fast forward to the “tech bubble” period around the turn of this century, which witnessed the reboot of Apple with the iPod, iTunes, and eventually iPhone. This time was also the origin of Salesforce and Indianapolis’ own ExactTarget, an innovator in email marketing, who was acquired by Salesforce in 2013 for $2.5 billion. The more recent great recession of the 2008 - 2009 timeframe witnessed the birth of high fliers like Uber, Venmo, Airbnb, Pinterest, Instagram, Slack, and many others.
Why is this a recurring phenomenon? How do crises enhance the ability of startups to succeed? Here are a few reasons:
Clarity and Focus. Scarce resources and challenging times lead to a ruthless prioritization of what really matters for your startup, your customers, your investors, and other stakeholders. You can focus on what really matters.
Opportunity Cost. When a person is fully employed, perhaps even overemployed, it is overwhelming to think about starting a new company because they don’t have capacity. But during times of no travel, no commute, and perhaps even the loss of some or all hours, people may have more time on their hands. Now, the opportunity cost of not creating a startup becomes too high – available time is being wasted. So, they choose to create something new.
Talent Availability. Sadly, these crises also lead to a much higher level of availability of talent. If you can identify and bring on this talent early in the recovery, you will get great human assets and also earn their loyalty. This talent will help you get off the ground and be positioned for future growth.
Poised to Scale. Those companies that launch or survive times of crisis have positioned themselves to leverage a leaner market and scale in the inevitable upturn.
Here are four things that leverage the ideas in our book that you can do to launch or survive today and in the coming weeks and months:
Focus on Serving Essential Businesses. Right now some businesses have been deemed “essential.” They will have strong and urgent needs. Be their partner and enable them to do their work. It might be hard to get their attention. But if you fix their pain points, they will be receptive.
Make it as Easy as Possible for Customers to Work with You. After you identify their pain points during the crisis, make your sales process as ‘self-serve’ as possible. Remove any bumpy parts of your process. Give them multiple ways to do business with you - talk to a representative, email, complete an online form, even text you. It might mean adopting new technology into your processes.
Look for “Crossing the Chasm” Opportunities. While some industries such as travel and dining are suffering mightily, others are moving from relatively low penetration to rapidly becoming mainstream. These include virtual healthcare/telemedicine, virtual meetings like Zoom, food and meal prep delivery, e-education, e-sports, and others.
Plan a Virtual (Re)Opening. If your business is non-essential, now is the time to get ready for when this crisis passes. So make a plan. If it’s 1 month, 3 months, 6 months out, how are you going to be ready to serve customers again? How do you let them know you are here—or back? Survive for today, but plan for the upturn.
Our book is all about navigating the uncertainties that are characteristic of the startup world. Yes, there is perhaps no time of greater uncertainty than today—but that should not deter you from launching your startup. This is also a time of great opportunity. Be careful to make decisions that minimize the debtbergs you create across the human, marketing, technical, and strategy oceans so you survive and emerge stronger on the other side of this crisis.
If you have a question about how our framework applies to your startup, please feel free to email Todd at tsaxton@iu.edu or Kim at mksaxton@iu.edu . Be well and best wishes to all the entrepreneurs and innovators out there. Keep navigating!