Are you asking the right questions?
By Steven Price
We launched 25madison as a business builder. Today, that means helping our portfolio companies navigate an avalanche of unique challenges arising out of COVID-19, any one of which could be fatal for a fledgling startup.
We are a hands-on team of experienced CEOs and senior executives who work alongside our entrepreneurs as they scale important new businesses. Our model of long-term partnership and incubation applies in good times but is truly differentiating in bad times. We’ve been there as the CEOs and executives of startups during difficult economic times. We know how challenging it can be.
While we did not see Covid-19 coming, our leadership team has seen decades of ups and downs — working at the Pentagon in the aftermath of September 11, running Sony Music during the North Korea hack, helping run Goldman Sachs Asia during SARS and numerous other first-hand experiences. We’ve learned some key lessons along the way, and we rely on our experiences and long-term perspective during these tumultuous and uncertain times. One lesson I learned, while working at the Pentagon in 2001 was that leaders don’t have all the answers right away. It’s careful — but quick — research and planning combined with flexibility to act in new ways that can make a huge difference.
Right now, we’re focused on expanding our support and advice for our portfolio of incubations and investments. All need to sharpen focus to ensure they can weather the coming months of uncertainty. Some need to right-size while others have a window to seize near-term growth opportunities.
As we work with our entrepreneurs to assess individual go-forward strategies, we ask a lot of questions. And while some of what we are facing in the wake of the coronavirus feels new and different, the steadfast, pragmatic questions we find ourselves asking are quite common. We wanted to share these publicly as they may be relevant to other early-stage entrepreneurs as they face the uncertainty ahead:
- What are the dynamics in the target market of your product or service? How is the customer faring and, in general, what are their prospects over the next weeks and months? Will they have any interest or focus on your product or service, or will it take a back seat?
- Is there a way for you to lend support to your customers or potential customers? It is at times like these that customer loyalty can be cemented.
- What is the effect of a recession on your product or service? Will there be more demand, less demand or potentially no short-term demand?
- How is your product’s use case altered in the short and mid-term?
- What are your funding requirements for the next 12 months? Can you ensure funding for that period?
- What immediate and short-term effects are there on your supply chain? Can you secure redundancy?
- What are the effects on the distribution channels for your product or service? Are there alternatives that could be lined up?
- How are your employees doing? What can you do, given the constraints you have, to minimize disruption in their lives?
- What steps can you take to tighten your belt to ride this out?
- Have you explored all forms of relief that may be available to your business (federal employee tax credits; small business interruption loans; landlord concessions)?
If there is a silver lining in this new reality, it is that we will see many great companies flourish in meaningful ways during a post-coronavirus world. Difficult times require that startups focus, pivot and build under pressure. For some companies, this means new offerings will be well-timed. For others, a pivot in business strategy may change the face of a company for the better. We will reach the other side of this slump, just as we did during the 1987 crash, the dot-com bubble, and the 2008 financial crisis. But for now, let’s focus on asking the right questions to inform the decisions we need to make today.
Learn more about 25madison at 25madison.com.