EntrepreneursVenture Capital

More advice on how to cope with the downturn

By October 14, 2008 October 24th, 2008 9 Comments

There has been a lot of advice dispensed recently on what companies should do to cope with the down turn. I posted some thoughts on this last week in response to Sequoia’s advice to their startups.

In a similar vein I thought you might find the following email sent by Rob Majteles to his portfolio companies. Rob has been working with us on a number of things in California recently and I have come to respect his opinion highly. He is a 3 times startup CEO turned angel investor. You can read more about him on his website – Treehouse Capital.

The email:

There are lots of people communicating their views of our current economic conditions and the advice they have re how best to compete in this environment. Most of this advice is about cutting costs – relevant and important, obviously … but incomplete in my view as the goal is always to win, not simply to survive. Great companies are built at moments like these – I’d bet more great companies are built in markets like these vs. when times are rich and resources are ample.

I offer my thoughts about what CEOs should be doing right now as a way to brainstorm with you:

(1) Yes, focus on costs and cash. Define your go-forward plan and then force yourself to cut another 10 to 20% of your expense structure than you thought possible. Don’t do this 3 or 6 months from now – the damage to your culture will be substantial at that point. Go deeper than you think you need to and do it now.

(2) More importantly, focus on what it takes to win.

a. Strategic focus, definition and differentiation are more important in times like these than in others. Your company has been doing more than it should be doing – all of us are guilty of this, we always fail to put sufficient wood behind the arrow that really matters. This is a terrific time to really and truly commit yourself to what matters and stop spending time and effort on what doesn’t.

b. If you find yourself emerging through this period with a plan to simply do a little less of everything you were doing before, you haven’t thought through what you need to do to win. You need a list of things you will no longer be doing …

(3) Get out of your office and talk to people. Customers, employees, investors – they all deserve to hear from you. Don’t email them. Don’t leave quickie vmails – talk to them, live if you can. Relationships that matter in business are built in times like these … ask yourself: Have you been reaching out to build relationships, do you have a plan to do this ?

(4) Your non-verbal communication will probably tell people more than your verbal communication – don’t slouch, frown, grimace or slink around. Stand tall. The environment sucks, everyone knows it. Don’t be a wuss here – stand up and let yourself be seen and observed.

(5) Make sure you are learning. Make a date with yourself 3 months from now and 6 months from now to go over a list of things you’ve learned about your company and its opportunity in that projected timeframe. If you can’t make such a list 3 and 6 months from now, you’re likely to be simply thinking about surviving, not winning and you won’t be worth a darn to anyone then.

I believe in you and I know you’ll be doing great things. Please let me know how I can help.

BTW – I am on holiday in China this week and will be posting less frequently than usual. This may even turn out to be it.