
Founder's Field Guide for Navigating This Crisis - bb92849281
https://firstround.com/review/the-founders-field-guide-for-navigating-this-crisis-advice-from-recession-era-leaders-investors-and-ceos-currently-at-the-helm/
======
ineedasername
_> Cancel credit cards and issue new ones so you can zero out expenses
quickly. This will end all recurring charges — and force the company to
explicitly re-subscribe to all essential services._

If this is required, you're absolutely mismanaging you spending already. It's
a nuclear option. If your accounting is so sloppy that you cannot, in the
course of a day, pull a list of recurring subscription-like expenses and
instead have to take such drastic measures, then you really, really, _really_
need to take that as a sign that your entire accounting needs are not being
adequately addressed. Maybe you don't have the right people handling that end
of your business. Or maybe you aren't listening to them on best practices
because you want to move fast. But if you're burning runway through such awful
spending habits, you are literally giving away equity in your business because
you can't be bothered to be a good fiscal manager, not to mention a
responsible shepherd of your investors' funds.

~~~
lanstein
Sure, and you can look at a list of recurring meetings and people can cancel
them. Or you cancel all of them and see which ones get recreated. One way is
probably more effective.

~~~
crazygringo
Good lord man. Why not nuke all the buildings in a city and see which ones
people want to rebuild?

No, a thousand times over no.

The existing meeting schedule is the carefully calibrated result of a thousand
different constraints running into each other and finding a workable balance.

Why would you destroy that?

Best-case scenario, you add a ton of busy work for everyone to re-create the
same thing, and everybody loses a quarter of a day trying to resolve who owns
which meetings and is everyone back on them.

Worse-case, you inject utter chaos as only half of the needed people show up
for key decisions and critical processes grind to a halt for a few weeks.

Sometimes I'm shocked at how cavalier some people can be about management.

~~~
ineedasername
_> Sometimes I'm shocked at how cavalier some people can be about management_

I find this attitude especially prevalent in the tech startup end of things
for a few reasons: Most startups start small enough that peer-to-peer
relationships and a personal stake & passion all mean that having staff in a
role solely dedicated to managerial work isn't necessary. As a result of this,
when they get larger, they undervalue the need. As a result of _that_ , as the
need arises, it is poorly done, furthering the sentiment that such roles are
wasteful of resources and time.

Outside of this "home grown" disdain for managers in tech, there's also the
problem systemic in modern business stemming from the idea of "scientific
management" that arose about 100 years ago and really gained traction in the
50's & 60's. Depending on your point of view, it's either fundamentally wrong
(in part or whole), or it has simply been poorly implemented in nearly all
cases. Regardless, it's what gave rise to the notion that "manager" was a job
like any trade, and people could be trained up and deployed as interchangeable
pieces in any business. (Which rather ignored the fact that even in trades,
there are specialties). It created a few generations of managers that thought
actual detailed knowledge of a business's operations wasn't necessary to being
a good manager.

I think we're, mostly, past that. (as in past the tipping point moving away
from it, not that it isn't still prevalent in some segments of business)

But the two phenomena are where I think the casual disdain comes from in the
tech industry for non-engineering managers.

~~~
ghaff
>But the two phenomena are where I think the casual disdain comes from in the
tech industry for non-engineering managers.

I don't disagree but I'd add that a lot of tech people are often (and often
correctly) focused on some narrow aspect of a problem. At the same time,
they're often not aware of or even outright dismissive of broader questions of
company strategy, market fit, etc. So they think decisions that are made in a
broader context than their particular project are clearly a pointy-hair-
boss/MBA/etc. problem.

------
Animats
Is it better to just shut down now? For his example business, a corporate
catering business, the answer is probably yes. That industry is going nowhere
for at least a year and may never come back. After the epidemic is over, many
people will still be working from home. (Commercial real estate is going to be
hammered. Watch them scream for bailouts.)

"The number one existential threat right now is running out of capital." No,
the number one existential threat is running out of _market_. If you're a
cruise line or a convention service, there's no market. Doesn't matter how
much capital you have, it won't help. On the other hand, if you're selling
work-from-home tools or face masks, you have plenty of orders and can get
capital.

~~~
nickff
You seem very certain about your predictions; do you believe you have some
non-obvious insight?

REITs, which own and rent out a great deal of commercial, industrial, and
residential real estate have already dropped in value, losing 50% of their
market capitalization in many cases. Most vacation and luxury related
companies have also dropped precipitously in value.

It seems you think the market is underestimating the damage; how much money
have you bet on further drops?

~~~
vkou
> It seems you think the market is underestimating the damage; how much money
> have you bet on further drops?

Given that the fed is printing money hand-over-fist, and throwing it at the
market, it's quite possible for the market to become completely disjointed
from the main street economy.

If it weren't for the printing presses working overtime, there wouldn't be any
talk of any v-shaped recovery. Instead, we'd all be panicking over the
unemployment numbers.

~~~
katbyte
> we'd all be panicking over the unemployment numbers.

I'm not sure why you aren't? capital might help companies stay afloat but they
won't be hiring till theres work again.

~~~
vkou
Main Street is panicking, Wall Street doesn't seem to care. Look at the
valuations.

------
colinrand
One of the hardest parts of leading a startup (or any company really) in a
major downturn is managing your employees expectations for their career
growth. Many of them will have joined a rapidly growing company - ones with
the most rapid career path opportunities - only to see the rug pulled out.

Imagine joining a company as a software engineer with expectations of becoming
a lead and then a manager?

Imagine joining as a manager and expecting to grow your team from 5->50?

Managing these expectations as an executive and coaching your team through the
crisis is a vastly underappreciated skill. We focus too often on what your
equity will be worth as a means of motivation.

Convincing a talented engineer whose equity went from $1m->zero overnight that
all it takes is 'grit' to make through to the other side, that's when
experienced management pays off.

~~~
JoeAltmaier
And its not all deception. For all those that are convinced to stay on a
sinking ship, there are a few that flee only to discover they missed the big
payout.

I know one who was an early Tandem employee. He left because he had only a
Masters' degree, among all those PhDs. They never respected him, never
considered him for responsibility nor much equity. So he left to pursue
another degree. Later of course had he stayed, he'd have been a millionaire
many times over from even the little equity he'd had.

Another was working on a 3270 emulator for the PC, only to have IBM announce
their upcoming product just as his was about to release. So he left the
floundering company to get an MBA. Later they pivoted to release the network
part of their software as Banyan Vines, which was a worldwide best-seller.

And so on.

~~~
veeralpatel979
By Tandem do you mean the YC-backed virtual office startup
([https://tandem.chat](https://tandem.chat))?

~~~
icedchai
More likely this Tandem, the fault tolerant computer company, from the 80's:
[https://en.wikipedia.org/wiki/Tandem_Computers](https://en.wikipedia.org/wiki/Tandem_Computers)

~~~
JoeAltmaier
Yes

------
transitivebs
This is an excellent resource for early stage founders like myself at this
time.

My personal key takeaways:

\- Locomotive effect may propagate later stage disruptions onto early stage
businesses. Macro shifts will affect micro-level economics sooner or later.

\- Doing nothing is a decision and in this climate it's often better to react
and plan aggressively starting now.

\- Runway matrix & scenario planning are great as a reference. Make these
assumptions and gameplan a living doc so you revisit them from time to time.

\- "$1 today is much more valuable than $1 in two years" especially in a
recession

\- "Especially in a downturn, people want to give money to companies that
don’t need the money.”

\- Many of your potential customers will be laying off engineers, so focusing
on a "buy instead of build" message can really help your sales pitch.

\- Expect fundraising rounds to take much longer (6 months plus) for the
foreseeable future

\- Don't forget the personal side of things and how everyone's family may be
affected in unexpected ways

\- To shine a light on potential and reframe your mindset, ask yourself: What
are the unexpected opportunities that have come out of this chaos already?

------
smallgovt
The most useful takeaway for me was: “In 2008, the average Series A company
raised $4M on a $28.5M post. In 2009, it was considerably less with an average
of $3.5M on a $14M post — half the valuation of the year before. And there
were 30% fewer Series A rounds overall."

Battening down the hatches and cutting costs is common sense.

But, actually quantifying how much harder your next raise will be is helpful.
Congrats to anyone who wasn't depending on it!

------
Swizec
Got positive unit economics? Great! You get to live. Work on that cost of
acquisition and overhead.

Got negative unit economics? Hope you don’t need that next round any time
soon. Good luck

Profitable business? Consider hiring folks laid off from the first two options

~~~
closeparen
>Got negative unit economics? Hope you don’t need that next round any time
soon. Good luck

But a slowdown in business activity will actually prolong your life...

~~~
zuhayeer
The worst way to die is slow and with false hope

