May 12, 2020

How Entrepreneurs Can Survive & Thrive COVID-19 | Steve Blank on Starting Greatness with Mike Maples

Check out the Starting Greatness Episode Page & Show Notes

We are on the verge of dramatic changes
- “This is not a recession it’s a mass extinction event for a good number of businesses and industries” – Steve Blank
However, in crisis comes opportunity
- “For founders and employees who fight the good fight, there will be a morning after, the sun will come up”
Look at the top 5 things your company is buying to survive and what things you cut out from your budget
- You want your product to be on that top 5 buying list for your customers
In the last decade or so, startups forgot about revenue and profits, and instead went for blitzscaling but that is backfiring now
- “[Blitzscaling] worked great until it didn’t” – Steve Blank
  - Now is the time for startups to focus on revenue and hopefully profits
If you’re a startup CEO right now, survival equals 3 things:
- (speed of understanding) x (magnitude of pivots and cuts) x (speed of execution)
Before laying off employees, the founder and executives should cut their compensation to build solidarity among employees
- “I’d be thinking about how do I eliminate the free food before I eliminate the hourly worker salary” – Steve Blank
  - “If you’re going to go down, you might as well go down with people remembering how well you treated them”

Steve Blank (@sgblank) is an entrepreneur and author known for developing the customer development method that launched the lean startup movement
Host: Mike Maples (@m2jr)

We are on the verge of dramatic changes
- “This is not a recession it’s a mass extinction event for a good number of businesses and industries” – Steve Blank
  - However, in crisis comes opportunity
    - “For founders and employees who fight the good fight, there will be a morning after, the sun will come up”
Some of the biggest companies today were founded during the 2000 and 2008 recessions
- Great founders and employees are incredibly resilient and will meet the challenges
Questions entrepreneurs should ask themselves:
- How is the economy is performing?
- How are our customers are doing?
- How is the market is doing?
  - Try to assess which direction things will go
Use Zoom to see how people respond to your product
- If you record the session, you can watch how their facial expressions change and identify what they like and don’t like

Look at the top 5 things your company is buying to survive and what things you cut out from your budget
- You want your product to be on that top 5 buying list for your customers
In the last decade or so, startups forgot about revenue and profits, and instead went for blitzscaling but that is backfiring now
- “[Blitzscaling] worked great until it didn’t” – Steve Blank
  - Now is the time for startups to focus on generating revenue and hopefully profits
Venture capitalists are reevaluating their portfolios and reconsidering who they fund
- If you were supposed to get funding, try to get it sooner than later
  - “If you don’t have a year or two of cash, you need to take some action now” – Steve Blank
    - Downsize to cut your burn rate if necessary
If you’re a startup CEO right now, survival equals 3 things:
- (speed of understanding) x (magnitude of pivots and cuts) x (speed of execution)
  - “You can’t sit around waiting for people to tell you what to do or else the circumstances are going to overtake you” – Steve Blank
This is also a time to reevaluate your business model

OODA Loop: Stands for observe, orient, decide, and action
- The strategy comes from the Air Force but it can be used in business as well
  - Observe the current economy, orient where you want to go, decide to head that direction, and take action to get there
Having hope < Having a strategy
- Once your executives and investors agree on a strategy moving forward, you need to share that with your employees
  - People need to understand that it’s not the company’s mistake that business is down; the whole world has been impacted and is changing
    - “I don’t mean that you need to act badly, but you do need to act ruthlessly” – Steve Blank
Also, seek help from your employees. Ask them to contribute ideas to cut costs or create new business models
If you’re going to lay people off, do it all at once. That way employees won’t be anxious that they may lose their job next
- Before laying off employees, the founder and executives should cut their compensation; this helps build solidarity among employees
  - “I’d be thinking about how do I eliminate the free food before I eliminate the hourly worker salary” – Steve Blank
    - “If you’re going to go down, you might as well go down with people remembering how well you treated them”

Use this crisis as an opportunity to reflect on your life
- Perhaps you aren’t passionate about your company or job and want to do something else
- “Now’s the time for carpe diem” – Steve Blank