With Pialy Aditya, Sherrell Dorsey, Joe Percoco, and Brian Requarth
Building a company is difficult in the best of times — now add an economic pullback, a focus on belt-tightening, and shrinking fundraising options.
Sherrell Dorsey (CEO, The Plug), moderated a discussion with Pialy Aditya (senior advisor and board member, Republic, and general partner, WOCstar), Joe Percoco (co-founder and CEO, Titan Global Capital Management), and Brian Requarth (co-founder of Latitud). The upshot: Companies have to be resilient, focused, and relentlessly customer-focused to navigate volatile markets.
Sherrell asked the panel: What does a founder have to change during tough times—and what stays the same?
Joe says some things don’t change—especially the need to stay close to your customers’ needs and to make product improvements quickly.
But the shifting economy requires founders to be more “thoughtful about the bets that you take, in particular knowing that capital is no longer a commodity,” Joe said. “So you really need to focus on the things that you think are going to drive disproportionate value in your business.”
Being hyper-focused on the core drivers of your business is key. “Things got away from a lot of founders in the last couple years by doing too many different experiments,” Brian said.
Things got away from a lot of founders in the last couple years by doing too many different experiments.
So what does that mean in practice? Pialy’s advice is to focus on two things— the core product, and sales. “And that’s it. Nothing else.”
More from Pialy: Dial down on startup perks and experiments that aren’t core to the business. And look for strategic growth opportunities through partnerships and acquisitions. (In tough times, you might find some willing targets.)
Companies should reinvest everything back into their own customers and into their product, Joe said. Many of the businesses built during the bull market of the last decade were built on “low-calorie” growth—an overreliance on channels such as paid social media. “You build a product and then in theory, you optimize a few Instagram ads and then you’re growing. In reality, that’s not sustainable because it’s an inflationary channel.”
Most founders are looking to reduce headcount now, especially those who “overhired” during the last two years of surging growth, Brian said. But do it strategically, he added. If you cut, try not to make cuts to the product.
And make sure you address team morale by remaining transparent and communicative: Gossip can take on a life of its own, he said, and key employees are more apt to take calls from recruiters if they are not hearing regularly from their leaders in all-hands meetings and other forums.
The life of a founder can be challenging psychologically, especially during tough economic conditions. “I got rejected 110 times straight in (Silicon Valley), and it really makes you just look in the mirror and ask if you want to do this job,” Joe said. But it helps to remind yourself of the path taken by those that came before. “Nike almost died in its first decade,” he said. “Vanguard shrank for 80 straight months.”
Brian says founders have to learn to keep things in perspective. “As a leader you have to set the tone, but don’t carry all the burden.” His last company merged with a competitor, resulting in sizable layoffs, and he “internalized it. And that’s just the one-way ticket to mental health challenges.”
You can lean on others for support. “You’ve got an amazing team around you,” he said. “Don’t be afraid to ask for help.”
Cyclicality is a part of life. The next unicorns and decacorns are being built now.
Pialy started her company in the last recession, and points out that Uber, Airbnb, Slack, and Venmo all arose during recessionary times. “Cyclicality is a part of life. We were in this 13-year bull run and there’s no doubt that we’re now in a bear market. We do know that eventually the market will bounce back. So if you’re an entrepreneur looking to start a company, don’t be discouraged in times of volatility. There are great opportunities. The next unicorns and decacorns are being built now.”
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