It has been more than a month, and life in Amsterdam has been slowing down and adjusting to the pandemic. Businesses have shut their doors, public gatherings have been banned, and strict restrictions have been implemented should you leave your house. Amid this global economic crisis, working from home, social distancing and self-isolation, we’ve been thinking about what some of the leading startups in Amsterdam have been up to? And how are they meandering through COVID-19 crisis?
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Speaking to different tech startups in a variety of sector and asking them about their survival strategies — in what ways the novel coronavirus outbreak has affected their opportunities, and how — we found out that they are discovering new ways to cope and be creative during these unprecedented times. They all are finding unique approaches to meet newly-shifted demands of their customers. Above all, they are still hopeful about a new future.
If you are running a startup and looking for some inspiration then go through these tips by Sabine Bartelse – Van Zeijl, Marketing Manager OneFit, Perry Oostdam, Co-Founder & CEO of Recruitee, Rajiv Laigsingh, Founder of Bringly, Marnix Broer, the founder of StuDocu, and Piet Hein van Dam, CEO and Founder, Clear.
‘A strong foundation, creative mindset and a flexible team’
Known as the ‘Netflix of fitness’ in the Netherlands, OneFit is a monthly subscription-based service that gives access to the best gyms and studios in the main cities of the Netherlands including Amsterdam, The Hague, Rotterdam, Utrecht and more.
On dealing with the coronavirus outbreak, Sabine Bartelse – Van Zeijl, Marketing Manager OneFit says, “OneFit is a sports platform which gives members access to 1200+ gyms and studios. Since March 15th, all the doors of our partners are closed, and we froze all the active memberships. After that, we managed with our partners and members to come up with something new. We are offering OneFit Live for a few weeks now.”
‘Stream unlimited live classes from your home and discover workouts from dozens of gyms and studios. Easily via the OneFit app and website.’
“This is a way our partners can still earn some income, and our members can stay fit from their home. We believe that as the crisis is not over yet, but for now ‘a strong foundation, a creative mindset and a flexible team’ should be our mantra for success.”
Founded in 2012 by Serge Brabander and ex-basketball player Camille Richardson, the ambitious startup has raised €5.2 million funding from leading investors like Peak Capital, INKEF and more. In 2016 and 2018, OneFit also expanded its wings to Germany and Spain.
‘Necessity is the mother of all innovation’
Clear, the healthtech startup from Amsterdam, which focuses on improving health through nutrition precision completed its first investment round during the pandemic. They scored funding of almost a million euros from investors headed by Healthy.Capital and early-stage venture capital and startup generator Antler. Other investors included Omri Amir (founder EasyToBook), Paul Veugen (founder and Usabila Human), Wouter Broekhof (founder of Wakoopa) and Peter Driessen (founder of Spil Games)
On raising a successful round during COVID-time and talking about corona times, Piet Hein van Dam, CEO and Founder, Clear says, “We’re suddenly experiencing a huge demand from healthcare including designing personalised diet programs to fight obesity. There is a correlation between overweight and corona mortality rate. Clear collects the data and evidence to personalise someone’s diet and support (health)-care outside the walls of the hospitals. Both very topical. These are all very important yet long term projects. From day-to-day, we see some participants postponing their Clear program, not having the (mental-)space to work on their diet during the lockdown. And others joining because of the lockdown, because they want to stay in shape (the trip to the fridge has become a short one).”
Further, he adds, “None of us knows if and how we will survive. We are only humble co-inhabitants of this earth. Yet, we must realise our role and mission as startups. We are collectively a part to recovery and drivers of new and more employment for the GDP growth. By far, the best thing to do right now is to drive your startup through this storm, and answer to the calling that we all had when we started our new venture: solve the world’s biggest problems. Necessity is the mother of all innovation. We have no excuses. We must find and be those exceptional people to get out of this crisis.”
Launched in September 2019, Clear claims that hundreds have signed up for the program, including Dana Albers (Dutch Olympic snowboarder), Yuri Leeflang (radio host and biohacker), and Radmilo Soda (personal trainer and known to the Dutch TV program Obese). Further, Clear expects to grow to 100,000 new customers in the next few years.
‘Now is the time to join forces’
The sustainable Dutch delivery platform Bringly makes its software available to retailers with a physical store in Amsterdam. In this way, retailers can transform their store into a local hub and deliver via bicycle couriers within 2 hours or the same evening. Further, retailers can also use their physical stores to process online orders and reduce the logistical pressure on distribution centres.
Talking about online e-com and COVID-19 impact, Founder Rajiv Laigsingh says,” We saw a significant increase in registrations and same-day deliveries from both local as big retailers. The pandemic resulted in a shift to online orders. Some of our customers experienced even a higher peak in online orders than in December, last year. This also increased the logistic pressure on their warehouses. The traditional carriers couldn’t always cope with this peak, and thus a lot of deliveries were delayed with 3-4 days.”
“We, therefore, decided to open our software for retailers so they could start shipping the same day from their physical stores via professional bike couriers. This way, retailers could decrease the logistic pressure and ship quicker in a sustainable way, even during this pandemic.”
Laigsingh is convinced that retailers with a physical store can also benefit from the current circumstances. Due to the shorter delivery distances, a bicycle courier can deliver faster, more efficiently and more sustainably. “Now is the time to join forces and bring the store to the customer.”
As a tip, he shares, “It’s important to be creative, innovative and keep working together. This is the time to work together and add a significant value to your customers. We should rather focus now on adding value and helping retailers out than putting profit first. We’re all in this together and by working together and keep creating creative solutions, we feel this will also increase the chance of coming together successfully.”
‘Look for opportunities rather than threats’
StuDocu, an Amsterdam-based edtech startup that provides students with free study resources, is a household name among Dutch students. Founded in 2013, the Dutch startup is also active in Belgium, Germany, Spain, Canada, Australia and more. Sharing his experience on the pandemic, Marnix Broer, the founder of StuDocu says, “At the beginning of the lockdown and social distancing, it was a bit scary. When the country announced a complete shutdown of universities, we saw a direct decline in usage. However, after a couple of weeks, when they announced they announced online schooling, the usage increased dramatically. For example, in Italy, where we were growing around 80% year-on-year, our growth jumped to above 130%. Overall the coronavirus has a positive impact for us.”
He also adds, “Whether a technology company or not, one should look for opportunities rather than threats. Whenever companies perform in a crisis and keep investing in their business in terms of expansion into new cities/countries or diversifying their product – they come out of it, as strongest. A crisis is a perfect time to prove that you are a real entrepreneur. I know that it is a bit easy to say for someone who’s business is not impacted by the virus that much, but I do think it is the hard truth.”
‘Perform a financial stress test’
Another Amsterdam-based startup, Recruitee, as the name suggests, is a hiring platform that helps teams streamline their hiring efforts and stay efficient while selecting the right candidates. Founded in 2015 by Paul Smoczyk and Perry Oostdam, the Dutch startup aims to focus on their product, build a sustainable team and make the right decisions about the direction of the company during the pandemic.
Perry Oostdam, Co-Founder & CEO of the dynamic HRtech startup, says, “Yes, for better or worse, we saw a 25% more churn and contraction in our ‘small user’ segment (e.g. companies with <10 jobs live). However, in contrast to this – in the SMB segment, we are still seeing substantial deals coming through, indicating that we are also an economical choice for the upper market. Overall, it is safe to say that while hiring slows down, most companies are scouting talent pro-actively to prepare for an uplift again.”
On what advice they can offer other startups, Oostdam says, “Turn your financial planning upside down. Make a ‘worst-case’ scenario – or ‘stress test’ as we call it, to see what level of contraction and churn is green, orange or red. In our case, although we see higher churn numbers than usual, it helped put our most important metrics into perspective, keep our calm and focus.
Main image credits: mangsaabguru/Shutterstock
Did these survival strategies and tips inspire you? Are you fighting the crisis like a gladiator leader? Want to share your pandemic story? Write to us at email@example.com.
The post COVID-19: 5 Amsterdam startups share gladiator strategies and tips for survival appeared first on Silicon Canals .
“Winter is coming.”
This is the one blog post that I hope I’m completely wrong about.
With the Covid-19 virus a worldwide pandemic, if you’re leading any startup or small business, you have to be asking yourself, “What’s Plan B? And what’s in my lifeboat?”
Here are a few thoughts about operating in uncertainty in a pandemic.
Social isolation and a declared national emergency have had an immediate impact on industries that cluster people; conferences, trade shows, airlines/cruise ships and all types of travel, the hospitability industry, sporting events, theater and movies, restaurants and schools. Large companies are sending employees to work at home. Large retail chains are shutting down their stores. While the impact on small businesses and workers in the “gig-economy” hasn’t made the news, it will be worse for them. They have fewer cash reserves and less margin of error for managing sudden downturns. The ripple and feedback effect of all of these closures will have a major impact on our economy, as each industry that gets impacted puts people out of work, and those laid off workers don’t buy products and services.
It’s no longer business as usual for the rest of the economy. In fact, shutting down the economy for a pandemic has never happened. Millions of jobs may be lost in the next few months, as entire industries get devastated, something not seen since the Great Depression of 1929-39. I hope that I’m very wrong, but the impact of this virus social and economic effects are likely to be profound, and will change how we shop, travel and work for years.
If you’re running a startup or small business, your first priority (after your family) is keeping your employees and customers safe. But next the question is, ‘What happens to my business?”
The questions every startup or small business CEO needs to ask now are:
- What’s my Burn Rate and Runway?
- What does your new business model look like?
- Is this a three-month, one-year or a three-year problem?
- What will my investors do?
Burn Rate and Runway
To answer the first question, take stock of your current gross burn rate i.e. how much cash are you spending each month. How much are fixed expenses (those you can’t change, i.e. rent?) And how much are variable expenses (salaries, consultants, commission, travel, AWS/Azure charges, supplies, etc.?)
Next, take a look at your actual revenue each month – not forecast, but real revenue coming in each month. If you’re an early stage company, that number may be zero.
Subtract your monthly gross burn rate from your monthly revenue to get your net burn rate. If you’re making more money than you’re spending, you have positive cash flow. If you’re a startup and have less revenue than your expenses, that number is negative and represents the amount of money your company loses (“burns”) each month. Now take a look at your bank account. See how many months your company can survive burning that amount of cash each month. This is your runway – the amount of time your company has before it runs out of money. This math works in a normal market…
The World Turned Upside Down
Unfortunately, it’s no longer a normal market.
- All your assumptions about customers, sales cycle and most importantly, revenue, burn rate and runway are no longer true.
- If you’re a startup, you’ve likely calculated your runway to last until you raise your next round of funding. Assuming there was going to be a next round. That may be no longer true.
What does my business model look like now?
Since the world today is no longer the same as it was a month ago, and likely will be worse a month from now, if your business model today looks the same as it did at the beginning of the month, you’re in denial – and possibly out of business.
It’s the nature of startup CEOs to be optimistic, however you need to quickly test your assumptions about customers and revenue. If you are selling to businesses (a B-to-B market) have your customers’ sales dropped? Are your customers closing for the next few weeks? Laying off people? If so, whatever revenue forecast and sales cycle estimates you had are no longer valid. If you’re selling directly to consumers (a B-to-C market,) were you in a multi-sided market (consumers use the product, but others pay you for their eyeballs/data?) Are those assumptions about payers still correct? How do you know?
What are the new financial metrics? Receivables – get on top of them. Days of cash left?
You need to figure out your actual burn rate and runway in this new environment now.
Is this a three-month, one-year, or a three-year problem?
Next, you need to take a deep breath and ask, Is this a three-month problem, a one-year problem or a three-year problem? Are the shutdowns of businesses going to be a temporary blip in the economy or will they drive the U.S. and Europe into a long recession?
If it’s just three-months, (looking more unlikely by the day) then an immediate freeze on variable spending (hires, marketing, travel, etc.) is in order. But if the effects are going to reverberate in the economy longer, you need to start reconfiguring your business. You need a lifeboat strategy. That’s a fancy phrase for figuring out what are minimal things you need to keep your company alive and what to leave behind.
A one-year problem means taking a knife to your burn rate (layoffs and elimination of perks and programs to reduce your variable expenses,) renegotiating what previously seemed liked fixed expenses (rent, equipment lease payments, etc.) and putting only the essential elements for survival in the lifeboat.
[Update: Read the detailed financial advice to CFO’s here.]
If you were selling online versus in-person, you may have an advantage (assuming your customers are still there.) Or you change sales strategy.
Whatever your product/market fit was last month it’s no longer true and needs to change to meet the new normal. Does this open new value propositions or kill others? Alter the product?
And if it’s a three-year problem? Then not only do you need to jettison everything that isn’t essential for survival, it probably requires a new business model. In the short term, explore if some part of your business model can be oriented around the new rules of social isolation. Can your product be sold, delivered or produced online? Does it have some benefits if delivered that way? (See the advice from Sequoia Capital here.) If not, can your product/service be positioned as a lifeboat for others to ride out the downturn?
Leadership – Plan, Communicate and Act with Compassion
Revise your sales revenue goals, product timelines and create a new business model and operating plan – and communicate them clearly to your investors and then to your employees. Keep people focused on an achievable plan that they clearly understand. From the perspective of having lived through the last three crashes, I’ve observed the biggest mistake CEO’s made was not making draconian cuts to expenses quickly enough. They dripped out layoffs and cuts holding on to favored projects with magical thinking that somehow this was just something that would pass. You need to act now.
If you’re in a large company considering layoffs, the first option should be to cut the salaries of the higher paid exec/employees to try to keep the people who can least afford it, employed. (Good things will come to CEOs who first try to save everyone on the ship before they jump in the lifeboat.) If/when people need to be laid off, do it with compassion. Offer extra compensation. If in the worst case you see you’re running out of cash, under no circumstances run it down to zero. Do the right thing and have enough cash on hand to offer everyone at least two weeks or more of pay.
One of the key elements of survival is access to capital. As a startup or small business you should realize your investors are also asking themselves how this pandemic will affect their business model. The cold hard truth is that in a crash VC’s are running their own “What do I save in the lifeboat?” exercise. They triage their deals – first worrying about liquidity of their late stage deals which have the highest valuations. These startups typically have very high burn rates and funding for those could fall off a cliff. You and the survival of your startup may no longer be their priority and your interests are no longer aligned. (VC’s who tell you otherwise are either naïve, lying through their teeth, or not serving the interests of their investors.) In every major downturn inflated valuations disappear and the few VC’s still writing new checks find it’s a buyer’s market. (Hence the term “Vulture Capitalists.”)
Some investors have only lived in a booming market when valuations only went up and investment capital was plentiful. But investors with grey hair can remember the nuclear winter after the past recessions of 2000 and 2008 and can offer some historical patterns of crashes and recovery to CEOs running early stage startups – some who weren’t born when the crash of 1987 hit, were 10 years old in the crash of 2000 and 18 in the last crash of 2008. Keep in mind, that today’s circumstances are different. This isn’t a bear stock market. This is a conscious shutdown of most of our economy, trading jobs for saving hundreds of thousands of lives, that’s causing a bear market and a likely recession.
Data from the last large crash in 2008 had seed rounds recovering early, but later stage funding cratered and took years to recover. (see the figure below showing quarterly VC investments before and after this crash – part of this post from Tomasz Tunguz.)
This time around, the health of the venture business may depend on what hedge funds, investment banks, private equity firms, sovereign wealth funds, and large secondary market groups do. If they pull back, there will be a liquidity crunch for later stage startups (Series B, C…). For all startups in the short term, the deal terms and valuations will get worse, and there will be fewer investors looking at your deal.
As a startup CEO you need to know if your board is going to be screaming at you for not radically cutting burn rate and coming up with a new business model or, will they be yelling at you to stop being distracted and stay the course?
And if the latter, I’d want to know what skin in the game they have, if they’re wrong. It’s pretty easy for VC’s to tell you that they’ll be right behind you when you’ll need a next round, until they’re not. Unless your investors are matching their orders for “full speed ahead” with a deposit into your bank, now is not the time to be railroaded into a burn rate that is unrecoverable.
Prepare for a long cold winter.
But remember no winter lasts forever and in it smart founders and VCs will be planting the seeds for the next generation of startups.
- This is a conscious shutdown of our economy, trading jobs for saving hundreds of thousands of lives
- It’s likely going to cause a recession
- The Covid-19 virus will change how we shop, travel and work for at least a year and likely three
- It’s inconceivable that you can have the same business model today as you did 30-days ago
- Put in place lifeboat plans for three-month, one- year and three year downturns
- Recognize that your investors will act in their interests, which may no longer be yours
- Take action now
- But act with compassion
Six years ago, I took a chance and switched careers from a gold trader to a tech entrepreneur. This change meant altering my focus from concentrating on myself and my trade to becoming an innovator at the forefront of an emerging industry. While changing careers is always a transition, the real challenge was scaling a vision into a viable business. The lessons along this journey have been invaluable in preparing me and my extended team to face today’s economic uncertainty.
Since the first reported COVID-19 case in Europe two months ago, numbers have soared, shutting borders in a borderless economic union, disrupting some of the biggest economies and grinding lively cities to a halt. With the economy in disarray, startups are bound to feel the pinch of uncertainty and seek ways to sustain their business. As my past struggles as a startup entrepreneur are not unique to me, I wanted to share a few lessons that other startups, small businesses, and budding entrepreneurs can use to navigate the current unpredictable economy.
Sustaining Business Through Strategic Approaches
When it comes to sustaining one’s business throughout uncertain periods, there are two approaches that have proven to be useful throughout my entrepreneurial journey. They are categorized as hard and soft which can be applied together to navigate today’s uncertain economic climate and ensure the longevity of your business.
Minimizing Operating Costs
Firstly, hard approaches consist of more tactical structural solutions implemented to reduce costs to support the running of the day-to-day business. Cutting costs to minimize losses is straightforward and can be done through reducing expenditure, cutting production costs and going digital wherever possible. With a significant number of people already working from home, businesses should consider switching to flexible office spaces as a cost-effective method of maintaining efficiency.
Look Out For Government Stimulus Packages
Additionally, entrepreneurs should keep an eye out for government stimulus packages as another hard approach that can provide much needed monetary relief. Across the world, trillions are to be pumped into bolstering countries’ healthcare systems and sustaining industries impacted by border closures, lockdown, and home quarantines. In Germany, for example, an approved coronavirus stimulus package has included a hefty €600 billion for business loans and for buying direct stakes in companies, and an additional €156 billion to finance higher social spending. Other governments are also showing leniency by relaxing costs around business operations, allowing companies to suspend payments of selected social charges and taxes to minimize the impact on companies.
Invest In Employee’s Wellbeing
On the other hand, soft approaches should be implemented alongside hard methods to ensure good employee wellbeing amidst times of economic and employment uncertainty. Approaches such as investing in employee wellness and boosting morale that aid productivity and motivation throughout these indefinite periods of working from home and increased anxiety. At a time when businesses are slowing, an unmotivated team may aggravate the already sluggish output, adding more concerns for the strength of the business.
Consequently, having a strong leadership team to make strategic choices whilst practicing compassion and sensitivity to the varying needs of your employees is vital when steering your business through unfavorable economic conditions. Through my experience with my team, finding time to listen to their concerns and needs is a simple gesture that goes a long way.
Maintaining Innovation & Entrepreneurship
In periods of economic lull, it is best to use this time to evaluate the work that has been done thus far and recalibrate your focus as a company going forward. Often when the economy is healthy and businesses are booming, we tend to be occupied with the execution of work, leaving little time for reviewing and planning. However, this is vital when looking to maintain the health of a company. I do this through the three ‘R’s: reflection, research, and relations.
Reflect On The Wins, As Well As The Failures
When working towards solving a problem, we are often overwhelmed by a solution-oriented approach, throwing multiple darts to test which hits the bullseye. In such cases, coming together as a team to reflect on the triumphs and stumbles and evaluate the most effective approach can help sift through to find strategic solutions better catered to the needs of your company.
Research, Research & Research
There is no better time to learn about your customers and competitors.
Now is also the best opportunity to focus on more time-consuming research. Through market research and surveys, your business can make the best of the situation by landscape mapping and better understanding customers’ needs. In today’s shifting economic woes, research should go beyond merely finding new solutions but instead, understanding the shifting audience and market demographics to give you a lead ahead of the competition and the constantly changing corporate climate.
Build Relationships & Be Engaged In Discussions
By taking time to build stronger relationships with other industry leaders can form beneficial ties and potential business partnerships. While many corporate events and trade shows have been canceled or postponed, continue connecting (virtually) to other industry professionals to keep up with everything from new trends to technologies, placing you ahead of the curve when the economy recovers. This is an opportunistic time to find new technologies, understand new ways of solving problems and seek smarter solutions to adapt to a new reality.
While there are a lot of unknowns ahead of us, adversities are the best litmus test for our flexibility and resilience, positively challenging us to broaden our horizons, and forcing ourselves to become more innovative and entrepreneurial. Being startups and small business owners, we have the benefit of agility that other larger and more established companies do not, giving us the competitive advantage to restructure, recalibrate and re-innovate as and when we can and need to.
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The post Startup Survival Guide: How To Succeed In The Current Economic Crisis appeared first on StartUs Magazine.