Surviving & Thriving During A Pandemic
At a post-9/11, 2001 investment conference, a company CEO presented a single-slide deck — a picture of a train wreck. Sequoia released an infamous investment memo at the start of the ’08- ’09 financial crisis. The key takeaway? “The world has ended.” In March of 2020, Sequoia released another memo following similar talking points. “No, really this time, the world has ended.” So, why do I have renewed hope for innovation and startups despite the effects of COVID-19?
I was investing in Silicon Valley post-9/11 and during the Great Recession, and what I saw was companies hoping to fit into one of two buckets: Survive or Thrive — and to avoid the dreaded third bucket of Perish.
Companies that I invested in during ‘01-’02 and ’08-’09 went on to become some of the most successful I’ve worked with, including several what are now called unicorns ranging in exit value from a few billion to over $30 billion. Why have hope now? Because I see the same potential for exceptional companies to grow within the current COVID-19 environment.
First, seek to thrive – create a new business model or pivot/optimize your existing business model to one that provides a must-have solution within the pandemic, and for what the world will likely look like post this time period.
If you cannot thrive today, but it’s likely that as the height of the pandemic passes things should improve — seek to survive. Preserve the core of your existing business and whichever team members are absolutely critical for your startup to weather this storm.
You can see this economic downturn as the world ending or a more innovative world just beginning
Take two Ohio Innovation Fund portfolio company examples of thriving:
Aware is a collaboration management and monitoring tool for next-generation collaboration platforms such as Workplace by Facebook, Microsoft Teams, Yammer, and Slack. In the onset of “Stay at Home” orders across the United States in mid-March, the company saw more demand for its product in 45 days than it had in all of 2019. Aware was positioned to lead the shift to remote work and risk management, which was initially forecast to progress over 3-5 years. With COVID-19, the shift accelerated and was a necessity overnight, and Aware leveraged their technology to accommodate the rapidly increasing demand.
ScriptDrop is a prescription delivery service partnered with Kroger, Albertsons, Publix, Rite-Aid, Giant Eagle, and thousands of independent pharmacies across the United States. As COVID began to spread, demand for safe, contactless prescription delivery skyrocketed. The ScriptDrop team sprang into action and accomplished one and a half years of product development in the span of two months in order to satisfy demand.
I don’t mean to suggest that there hasn’t been or won’t continue to be incredible stress, however, diamonds are only formed under extreme pressure. While everyone is feeling this strain, there are several positives in the current environment similar to those in past crises:
1) Talent is more available — Hiring top talent is much easier in a downturn as many companies are cutting costs across the board, including laying off employees with high impact and potential. Now is a great time to build or improve your core team.
2) The gift of time — Time to think, plan, hire, connect, and build a strong stakeholder network for your company with less distractions due to the environment we find ourselves in. Take advantage of the most valuable commodity you have — time.
3) Value creation efficiency — The biggest bang for your buck in terms of a dollar invested to dollar created happens during downturns. Unnecessary marginal spending goes away thanks to a renewed commitment to getting more done with less, and importantly, out of the box, breakthrough thinking is at a high point. Tough circumstances bring out the best in human ingenuity and creativity.
This economic downturn is starkly different than those previously experienced by the US as a result of significant underlying economic issues — for example, the tech and housing bubbles. In this case, there is no fundamental economic issue, pushing us into uncharted territory with the exact ways the world will be impacted post-COVID-19 yet to be fully determined.
Overall, this pandemic has brought to light the inefficiencies and challenges inherent in our current systems, and adversity could become an opportunity if we can find solutions that will better prepare us for whatever the future will bring.
You can see this economic downturn as the world ending or a more innovative world just beginning.
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