10 Principles For Surviving Hard Times In Any Startup

Devil-in-business“The devil in the details” is a quote that we have all heard, and clearly applies to startups, where success in the long run is all about execution. But for you as an entrepreneur trying to get started, the devil is really in your mind, where you must prevent drifting, and maintain that confidence, commitment, and passion, to achieve your business dream.

This is highlighted well in the classic book finally published just a few years ago, “Outwitting the Devil,” annotated by Sharon Lechter. It was written way back in 1938, by the famous author of “Think and Grow Rich,” Napoleon Hill. It was too controversial to publish then, due to religious connotations, but still has key lessons for every entrepreneur today.

The premise of the book is an interview with the Devil, where he admits that he dwells in idle minds, and finds it easy to control the minds of drifters. Drifters are people who do little or no thinking for themselves, and allow themselves to be influenced and controlled by other people and circumstances.

In an interview, the Devil confesses that all people need only follow some key principles to outwit him (adapted a bit here for entrepreneurs):

  1. Do your own thinking on all occasions. Pursue your own dreams and your own thinking. Listen to others input, but make your own decisions. For success, entrepreneurs have to overcome any human tendencies toward laziness and indifference, which lead to procrastination and drifting.
  1. Decide what you really want from your business. Set your goal, and create a plan for attaining it. Be willing to sacrifice everything else, if necessary, rather than accept permanent defeat. Drifters chase a business idea for all the wrong reasons, and then give up easily, like get rich quick, or to please someone else.
  1. Analyze temporary defeat, no matter of what nature or cause. Extract from it the seed of an equivalent advantage. In business, it’s commonly accepted that you can learn more from failure than from success, if you choose to learn.
  1. Be willing to give before you receive. Other entrepreneurs and investors will more readily help you, if you have helped them first. In addition, you dramatically increase your odds of success if you learn the business domain first, before you try to lead in it.
  1. Recognize that your brain is a receiving set. Curb your output, and be an active listener, by providing feedback, an optimistic attitude, motivation, and a concern for people. A key part of receiving input is listening to what is not said.
  1. Recognize that your greatest asset is time. This is the only thing except the power of thought which you own outright, and the one thing which can be shaped into whatever material things you want. Budget your time so none of it is wasted.
  1. Recognize that fear generally is a filler. Fear rushes in to occupy the unused portion of your mind. It is only a state of mind, which you can control by filling the space it occupies with confidence and passion in your ability to overcome obstacles.
  1. When you ask for help, do not beg. Take full responsibility, and don’t be the victim. Make sure you earn any help provided, and don’t forget to properly thank your benefactor. In a startup, there is no entitlement to funding, or to a second chance.
  1. Recognize that business is a cruel taskmaster. Either you master it or it masters you. There is no half-way or compromising point. Never accept from a business anything you do not want. You can refuse, in your own mind, to accept it and it will make way for the thing you do want.
  1. Remember that your dominating thoughts attract. To become the master of your destiny, you must learn to control the nature of your dominant, habitual thoughts. By doing so, you will be able to attract into your life anything you choose. Your thoughts create your reality.

I couldn’t help but think that these points are still so relevant today in our own pandemic recovering economy, even though they were written during a comparable challenge over 70 years ago. I guess we all should take comfort in the fact that even though we live in a world of constant change, some things about human nature will always be the same.

Can you outwit the Devil today to succeed in your dream?

Marty Zwilling
Startup Professionals Musings

Sophie Hill on the changing face of retail and surviving 2020

Threads is not your average startup and, really, it’s not a startup anymore. It’s over 10 years old, employs more than 150 people and successfully bridged the Series A gap in Europe closing a round of $ 20 million back in 2018. And so far, it’s surviving 2020. 

COVID-19 has put retail — and the rest of us — on a roller coaster. For some it has minted millions, with captive audiences realizing that they really, really hate that couch and it’s finally time to replace it. For others, like Neiman Marcus, J.C. Penney and J. Crew, it has meant bankruptcy. Bankruptcy filings for 2020 are clocking in at 424, according to S&P Global, and look on track to upset the total filings in 2010. 

Threads finds itself heartily in the black on this one.

“We’ve definitely had a challenging year. When we look at Threads’ business model we’re set up to respond very quickly and we have had a strong year. We’re very much in the luxury sector, we specialize in the luxury clientele and we have not seen a decline in our existing customers,” Threads founder and CEO Sophie Hill explained as she joined us at TechCrunch’s Disrupt 2020 virtual conference.

Despite predicting slower growth, Threads is actually attracting new customers, many of whom have been hesitant to make the jump into digital, proving that the luxury market, and customer, is as robust as ever. “We have seen customers purchasing goods at our higher-value price points, which is actually down to the fact that the stores are closed.” 

While this might be the final nail in the coffin of brick-and-mortar retail, it’s bigger than that.

“People have been forced to go online, who might not have gone there as a first choice. Many people have found it easier than expected and a real lifeline in lockdown. I think that will hugely change trends,” Hill says. With an ever more competitive retail market, what can help brands stand out? 

For Threads, it’s all about the customer. That means meeting them where they are, be it WhatsApp, WeChat, Instagram (though we’ve yet to see the brand appear on TikTok) and delivering a seamless customer experience that centers on two key values: convenience and personalization. Above all, agility breeds resilience. 

Learn what channels are showing high engagement, the discovery process for new platforms poised to take the market and strategies retailers both big and small can use to stay ahead of the curve in the interview below. 

Startups – TechCrunch

Surviving Capital Raising During Marketplace Disruption From COVID-19

COVID-19 has wreaked havoc on financial markets around the globe, which presents a formidable challenge for startups when it comes to raising capital.

While investors generally hedge risk during uncertain and unpredictable times, the current financial turmoil doesn’t automatically mean the game is over for fledgling companies. It does, however, mean that entrepreneurs are going to have to think more strategically about how to win over wary investors.

With several months of dealing with the pandemic already under our belt, many companies have been able to quickly shift operations to minimize fallout. In fact, even investors are taking note of the operational shifts that are now causing new innovations to rise out of the ashes from the tenacious and persistent startup community.


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In essence, while the demand in some sectors may be on pause, the aggressive need in other sectors is strongly on the rise, especially as entrepreneurs are rolling out contactless technologies, health and safety solutions and even consumer products and goods that allow people to better enjoy their time at home.

That’s why even in the midst of a recovering economy, believe it or not, startup fundraising is still very much thriving. Yes, it’s true that VCs, angel and even retail investors are still very much interested in funding “the next big thing.”

Interestingly, most savvy investors also understand that downturns can often result in some of the most lucrative opportunities that they may encounter. Historically, some of the best fund performances occurred between the onset of a downturn and the early stages of the recovery. The 2008 financial meltdown, for instance, presented opportunities to invest in companies with disruptive innovation like Venmo, Airbnb and Uber – which are all now leaders within their respective industries.

When you consider current global conditions, there are still many great startups innovating in ways that will meet the emerging demand for health and safety solutions or even the demand for “creature comfort” solutions needed at home. Moreover, any early stage enterprise delivering a solid offering that will be relevant even after the environment stabilizes, will continue to be a formidable contender in the marketplace for receiving investment funding as well.

In fact, online accelerator programs have recently provided virtual demo days that bring together 100s of VCs and private investors who are still very much interested in funding current and future advancements, with entrepreneurs continuing to raise millions of dollars in capital from these such events. Outside of virtual accelerators, some conferences are going digital, too.

This shift to a remote financial raising format has also leveled the playing field for those who don’t live in Silicon Valley or New York, making it easier for anyone to participate, regardless of their physical location.


Related: 7 Ways the Paycheck Protection Program Flexibility Act Can Help Your Business

Investor shift from unprofitable unicorns to profitable acquisitions

Capital raising, especially for key sectors servicing the healthcare industry, remote work and on-demand services, is anticipated to continue to remain strong and we will likely see significant valuation jumps across these areas.

However, capital intensive startups that originally had models that could only become profitable after four to five years of massive additional capital injections will not be as strong in the short term, and many will likely fail if they don’t make massive cuts immediately. Many investors will also shift in the downturn to be more short-term return focused, versus long-term risk.

While a percentage of private investors will focus on existing portfolios and only invest in companies with traction, foregoing early stage deals, the winners in the markets according to Warren Buffet are typically those who can afford to wait out market flux and the same is true for those who will continue to take the high-risk investments in early stage startups.

Future investing: Considerations for startups

It’s also important to keep in mind that investing in startups will still be data-driven and reflect the yearly climate, which means it may look a little different than it has in the past. Amid the pandemic, the needs and demands of the market have changed dramatically. Future needs can be extrapolated – at least partially – based upon the data surrounding these trends.

One huge change is that remote work and education have become core operational models almost overnight as a response to health concerns. Most experts now believe that solutions and innovations in these areas will outpace many other sectors for the foreseeable future. Furthermore, many companies have reported preliminary results finding that remote work solutions are not only working for them, but they are considering longer-term flexibility in order to reap cost savings from changing property needs.

Ultimately, this means that mobile solutions with the capacity to enable work and education needs from anywhere will be here to stay – and innovative startups in the educational/tech space have tremendous growth potential.

Innovative healthcare startups are another key area in which investors may have a higher likelihood of experiencing strong and rapid growth. The market is currently demanding many COVID-19 related products, such as better testing capabilities and protective equipment and devices. In addition to this, patients suffering from many different conditions are seeking better ways to access healthcare in a way that minimizes exposure and risk.

The healthcare industry was evolving to embrace telehealth solutions prior to COVID-19, but the pandemic likely means these solutions in the MedTech and healthcare arena must be made available faster, and they will likely be here to stay.

And while COVID-19 presents an opportunity for many sectors, it is hitting others much harder, such as food, hospitality and transportation. Many companies across these industries are currently facing the prospect of suffering massive losses. Current challenges that make it more difficult to gain market traction under the old operational model are forcing their hand. That’s why these organizations need to digital adapt and to do it quickly.

Fortunately, there is also space for innovation and service-delivery transformation in many of these industries. Those companies and startups that are determined to find safer and more convenient ways to still meet the desires of their customer base can find massive success.

Efficiency will also gain more attention as companies struggle with tighter profit margins. Some companies that may have previously considered automation will now want to take a harder look at it before hiring back their staff. We likely will be looking at a much more automated workforce by 2021 as businesses have been forced to transform their business model.


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Attracting the right investors in a challenging financial climate  

Unfortunately, there are no sure-fire methods that will guarantee that any startup can secure funding in today’s market.

However, you can consider some of these elements that will remain attractive to investors under current market conditions, including:

  • Companies with the ability to disrupt or transform their industry, particularly those that excel at what they are doing, and have a proven track record of success working as a team.
  • Innovation services that enable remote work and education, such as contactless and automation technologies.
  • Solutions that benefit health, safety and wellness for consumers as consumers are becoming more health conscious.
  • All types of goods, whether B2B or B2C, as long as they are unique, have a solid profit model, and have a proven track record of sales.
  • Those offering solutions in remote business and education to help put people back to work and retrain them into new careers and skills.

In addition to the growing importance of these specific concerns, entrepreneurs must continue to stay true to the basics of having a strong operational proposition, a solid business plan and sound market strategies. Another key component is understanding the human capital of the startup, including the knowledge, skills and competencies of the startup team. The human capital component is often a huge predictor of future success that investors will continue to seek.

Companies that can meet these criteria will continue to succeed at finding funding, even during the most challenging economic circumstances.

In addition, entrepreneurs and investors who drive change and who can make a positive impact in the current world can also find great financial success together. These elements are the key to surviving capital raising during marketplace disruption.

The post Surviving Capital Raising During Marketplace Disruption From COVID-19 appeared first on StartupNation.

StartupNation

Strategies for surviving the COVID-19 Series B squeeze

A generation of companies now needs to forget what it has learned. The world has changed for everyone, and nowhere is this more true than in fundraising.

I’ve been investing in technology companies for over twenty years, and I’ve seen how venture capitalists respond in bull and bear markets. I’ve supported companies through the downturns that followed the dot-com bubble and the global financial crisis, and witnessed how founders adapt to the new environment. This current pandemic is no different.

A growth company that only a few months ago was shopping for a $ 20 million, $ 30 million, or even $ 40 million Series B, with a choice of potential investors, must now acknowledge that the shelves may well have emptied.

VCs who were assessing potential new deals at the beginning of the year have had to abruptly adjust their focus: Q1 venture activity in Europe was under its 2019 average, and the figures for the coming months are likely to be much worse as the pipeline empties of deals that were already in progress.

The simple reason for this is that VCs are having to rapidly reallocate their two principal assets: time and capital. More time has to be spent stitching together deals for portfolio companies in need of fresh funding, with little support from outside money. As a result, funds will be putting more capital behind their existing companies, reducing the pool for new investments.

Added to those factors is uncertainty about pricing. VCs take their lead on valuation from the public markets, which have plummeted in tech, as elsewhere. The SEG index of listed SaaS stocks was down 26% year-to-date as of late March. With more pain likely ahead, few investors are going to commit to valuations that founders will accept until there is more certainty that the worst is behind us. A gap will open between newly cautious investors and founders unwilling to bear haircuts up to 50%, dramatic increases in dilution and even the prospect of down rounds. It will likely take quarters — not weeks — for that gulf to be bridged and for many deals to become possible again.

Startups – TechCrunch

Keep Navigating Through the Rapids: 5 Tips for Surviving a Recession

To say that we’re in a trying time for business owners, big and small, would be an understatement. But don’t lose hope. With patience and resolve, you and your business can still come out of this headstrong.

Take it from me, a veteran rafting guide and founder of Blue Ridge Chair Works, a made-in-the-U.S. furniture brand based in Asheville, North Carolina. I navigated the 2008 recession, coming out stronger than before, so now I’m not fazed by the imminent downturn of our current economy.

Here’s why: the economic meltdown that started in 2008 was like staring down the top of the biggest rapid I have ever run. All my skills, knowledge and beliefs were put to the test. I was keenly aware of what was going on around me at the time. It was chaos. Businesses big and small were closing their doors every day. I was searching for answers like everyone else. “How do I navigate this mess?” “How can I take advantage of the situation?” “How can I stay on my line through the rapid?

Over the course of my career, I’ve developed a set of guidelines and survival tips inspired by experiences from both growing a business and guiding people through dangerous, whitewater rapids.

Today, I’m letting you in on five of those things that helped me come out of the 2008 recession strong, in hopes it will help you keep swimming during this current crisis, too.


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Dropshipping

During the 2008 recession, my answer was to try my hand at what’s known as “dropshipping.” Dropshipping is when customers place an order through a retailer, who transfers them to the manufacturer to ship the product directly to the recipient. This allows retailers to sell items they do not have inventory of.

Although it was labor intensive, I spent time cultivating multiple relationships with e-commerce traders and retailers, shipping all the product myself from one central location. Doing this helped me spread brand awareness across multiple marketing platforms. It also kept me in good standing with retailers, who’d later be able to pick up wholesale inventory like before.

I really focused on large numbers of small transactions. I wanted to let the people who were good at it sell my furniture online and work out of my inventory, at practically no risk for them. Who would turn down an offer like that?


Related: How to Make Passive Income with a Dropshipping Store

Explore international markets

The 2008 recession put immense pressure on online retailers, meaning I had to think on my feet like many other entrepreneurs. I recognized the decreasing value of the U.S. dollar on the world market, specifically in Japan. I also noticed this made expensive U.S. goods a real bargain in other parts of the world.

Hitting the ground running, I quickly formed strong and committed partnerships with foreign export, due to the quality of my business model and product. I studied and learned about exporting and Japanese business culture.

From this point, and the years following, my international sales actually outperformed my domestic sales.

Balance your markets

To avoid putting too many eggs in one basket, I made sure my company had well-balanced distribution in several markets. In turn, this helped provide us with steady cash flow even through economic downturns.

For my model, I spread inventory over foreign trade and e-commerce (through my own site and wholesale dropshipping), corporate or sponsored pieces (co-branded with other businesses logos), and traditional brick-and-mortar stores. By doing so, I’ve effectively secured insurance plans if one or multiple of those methods fall through.

Go local

Blue Ridge Chair Works is proud to be 100 percent made in Western North Carolina, and we utilize as many local suppliers as possible in our supply chain.

I’ve made this a priority for a number of reasons:

  • Using local suppliers keeps money flowing in the local economy
  • You form personal relationships with the people you rely on for your supply chain (i.e. the delivery man, the seamstress, etc.)
  • It’s easier to troubleshoot problems when everyone is a short drive or phone call away

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Learn from nature

To me, navigating the business world is just like running a class five rapid. You know the rules at the start. You accept the challenge. You can scout the rapid before you run it, see the obstacles in front of you, plan your route and try to stay on the line of least resistance. If you break the rules or get thrown off your line, mother nature reminds you. The boat flips, and you swim the rapids ending up banged and bruised at the bottom.

Hopefully, you learn from the swim not to make the same mistake again. I have swum many rapids in my lifetime.

A bonus tip

Keep your passion! Sometimes you have to get in the trenches or bite the bullet, but each time, you learn something new. Apply yourself, be observant, be vigilant, and don’t forget there’s always a light at the end of the tunnel. Had I not kept sight of that, my company wouldn’t be where it is today.

The ever-changing state of the world (and what it means for our businesses) is the scariest whitewater rapid any of us have ever seen. How we navigate the twists and turns is just one part of the journey. I hope my story shows that even if that’s the hardest part, it doesn’t have to be the end.

The post Keep Navigating Through the Rapids: 5 Tips for Surviving a Recession appeared first on StartupNation.

StartupNation

5 tips on surviving the crisis, from Europe’s startups

We have never lived through a pandemic of this size in our lifetimes, so it’s particularly difficult to know how to take action. We can’t ask our predecessors, nor can we ask Google. We truly are out on a limb here. The only way to move forward is to put our heads together and share what we see is working – and not working – in real-time.

For this reason, after a few weeks of quarantine have passed, we’ve been asking startups across Europe just how they are managing to stay afloat, and what practical, hands-on tips they can offer others. We’re not talking about generalised remote working tips here – that trend was covered aptly a few weeks ago, and we’re all up-to-date. Instead, we wanted to share practical day-to-day survival strategies that could be applied to any sector, so that startups can benefit without all having to go through the same test-fail-repeat process.

So without further ado, here are some tips from your fellow European startups. 

Time to seriously innovate

Rally your team to keep pushing and innovating. It’s not the time to just continue with daily monotonous tasks, and freeze up. It’s time to think outside the box and come up with new ideas, even if they don’t follow your existing business plan. Get the ball rolling with an internal hackathon one afternoon, with all team members participating and working in teams.

“Tough times can make you freeze up or rally as a team. Your team will fight with you if you give them a reason and a direction, now more than ever! So don’t talk about brushing your teeth and putting on pants for the video conference – this is the time to do groundbreaking things!” – Alexis Priftis, CEO and co-founder of Instabox.

“Make sure you, your team and your business do not freeze during times of crisis. It seems almost redundant for me to express the need to keep improving your product, but the fact is that some companies slow down R&D, because they rather ‘sit’ on their money. You have to keep sowing if you want to reap anything and harvest in the future, even though the harvest might be disappointing.” – Yeelen Knegtering, CEO of Klippa.

Think about what your customer needs now

The previous point flows nicely into this one. In what direction can you innovate? One way is to think about what your customer needs now. Offering free services and bonuses on top of your existing products is a solid marketing trick, but can this crisis take you in the direction of completely new products or services? We’ve already seen fintechs like Starling Bank bring out new customer-centric products, like the Connected Card. What can you create?

“Crises are times when technology accelerates due to necessity and not only convenience, so it’s a good time to explore new technologies that help deliver more value to the customer while increasing your startup’s robustness.” – Rolands Mesters, co-founder and CEO of Nordigen.

“Ongoing communication and engagement with your customers is key no matter what but especially in the current climate. Let your customers know what you’re doing to help meet their needs and how you can best be of service to them regardless of your inability to support them in person.” – Erik Gatenholm, CEO and co-founder of CELLINK.

Set up a coronavirus task force

It’s likely that your team is sharing global news updates on a daily basis to try to predict what will happen in the outside world, but have you officially dedicated time as a team to brainstorm and predict the different outcomes for your business? If your team is large enough, you could put certain members in charge of running through different scenarios for your business, reporting back with a weekly update as the circumstances change.

“Knowledge is power, so we designated a Taskforce to analyze every possible scenario, because constantly reframing the understanding of what’s happening is essential to learn and adapt in this unpredictable environment.” Federico Mattia Dolci, CEO and Co-founder of BOOM.

Cut working days before people

There’s a wealth of government schemes out there offering special pandemic-level support for startups, as well as calls for public funding, and support from existing investors. However, if it comes to it, you might be looking at reducing the size of your team. Many startups are opting instead to work fewer days, and therefore shave off salary costs, so that when the crisis is over they don’t have to spend more resources re-hiring to build the team back up.

“We’re a small team, so to avoid making any layoffs, we’ve all agreed to drop to 4 day weeks – this saves 20% of salary costs and avoids us losing anyone, since we’ve worked so hard to assemble this team. As founders, we’re cutting salaries 50% and redirecting our usual business development efforts into managing finances and motivating the team during this period. We can still work on improving the product itself and we need to redirect our usual business development effort into useful groundwork for the future.” – Jacob Wedderburn Day, CEO of Stasher.

Resolve kinks to improve efficiency

What kinks have you noticed in your company’s processes, policies or procedures, that you never seem to get round to resolving? Ask your team to see if there is something they’ve never addressed directly. A lot of startups that spoke to us are blocking out spaces in their day to finally get these tasks or issues resolved. Doing so may make working more efficient, which will be useful if you end up reducing working hours.

“Make time for things which are otherwise pushed aside or delayed like for instance developing the right level of policies and procedures; reviewing the archiving systems; improve user stories and epics, review organisational practices, etc.” – Bart Vanhaeren, co-founder of InvestSuite.

Conclusion: A united front

One thing that’s become clear over the last few weeks, and especially when gathering research for this article, is that the startup community in Europe is really pulling together and supporting each other at this time. From virtual hackathons that are innovating for the crisis, to our flooded inbox with advice from you to share – thank you for collaborating! If you have any survival tips to pass on, or know of any cool innovations that have popped up through hackathons, send them over to charlotte@eu-startups.com so we can spread the news.

EU-Startups