Tips, tactics and cashflow strategies for startup survival during a crisis

We’re in unprecedented times and are likely at the beginning of a long journey back to normal  —  whatever the new “normal” turns out to be.

While governments rush to get debt-relief packages in place, the high-risk, high-reward tech sector will need something different. To survive, the community requires fancy footwork, hard choices and a lot of shared pain between founders, staff, investors, suppliers and customers.

With my startup Moonfruit, a DIY website and e-commerce platform I co-founded with Wendy Tan-White (now a VP at X) and eirik pettersen (currently CTO at Secret Escapes), we survived the 2001 dot-com crash, when the entire tech sector was decimated for years to come, as well as the 2008 financial crisis, when we were lucky enough to experience rapid countercyclical growth. These experiences made us stronger and ultimately led to our successful exit in 2012 and post-acquisition growth to $150 million ARR.

I’ve spent the last five years as a general partner at Entrepreneur First, raising $200 million of funds and advising hundreds of startups through formation, growth and fundraising — but right now I work with many of them daily on survival.

For most companies, I think this crisis will look more like 2001 than 2008, though there will be some who are lucky enough to grow through it. The good news is, having been through this before, I know there are things you can do as a founder or as an investor that can mitigate the damage. In the U.K., I’m in several conversations about making emergency equity funding more available, and I hope this happens all over the world too.

Here is a tactical guide to surviving the crisis.

Cultivating adaptability is a pandemic coping skill

It’s no secret that adaptability has become a critical trait for knowledge workers. To stay on top of a rapidly evolving world, we must assess new situations, make intelligent decisions and implement them effectively.

A 2014 research report by Barclays indicated that 60% of employers say adaptability has become more important during the last decade, and BBC called adaptability the “X factor” for career success in an era of technological change.

But even the most intrepid executive, entrepreneur or freelancer would be forgiven for struggling to adapt to a global pandemic. The impact of coronavirus has been unrelenting: hospitals at capacity, students sent home, conference cancellations, sold out inventory, markets in free fall and cities under lockdown.

Whatever you thought 2020 was going to look like, you were dead wrong. Box CEO Aaron Levie and Stanford professor Bob Sutton’s recent Twitter exchange said it all:

This moment requires us to learn new skills, develop new habits and let go of old ways of working. In the book “Range,” there’s a chapter about “dropping familiar tools” that details how experienced professionals will overlearn specific behavior and then fail to adapt to a new circumstance. This mentality affected everyone from firefighters to aviation crews to NASA engineers, often with deadly results, and underscores how hard it can be to adapt to change.

To help us cultivate adaptability in this unprecedented moment, I sought answers in unexpected places. Here’s what I learned.

Let go of your attachments

Adaptability is required first and foremost when circumstances change. It’s easy to get attached to certain outcomes, especially when they’ve been planned long in advance or have significant emotional weight.

Due to coronavirus, a couple I know is postponing their wedding originally set for April. Having tied the knot only a year ago myself, I can’t imagine how frustrating that must be for them. But it was the right decision; demanding that the show go on would have been dangerous for their families, friends and the public at large.

I recently spoke with my friend Belinda Ju, an executive coach with a longstanding meditation practice. Non-attachment is a core concept of Buddhism, the spiritual path she’s followed for many years, and I wanted her thoughts on how that idea might help us adapt to unforeseen circumstances.

“Attachment doesn’t work because certainty doesn’t work. You can’t predict the future,” she explained. Being attached to something means “seeing the world through a false lens. Nothing is fixed.” For Ju and her clients, non-attachment doesn’t mean giving up on goals — it means focusing on what you can control.

“You might have a fixed goal of needing to raise X million dollars to keep your team afloat,” she said. “But in the age of coronavirus, investors might be slower to respond. So what are the levers in your control? What are the options you have and the pros and cons to each one?”

Her points hit home for me. As a NYC-based startup founder, I was preparing to make several trips to the West Coast to raise the next round for my company, Midgame, a digital party host for gamers.

I like pitching in person, but that’s obviously not going to happen, so I need to embrace video calls as my new reality. By doing that, I can get to stocking up on coffee, cleaning up my work space and setting up a microphone so when I do pitch over video, I’m bringing my A game.

Be present

Another way to think about adaptability is that it’s the ability to improvise. In theater, improv performers can’t rely on prewritten lines, and have to react in real time to suggestions from the audience or the words and actions of their scene partners.

“ ‘Playing the scene you’re in’ is a principle from improv which means to be present to the situation you’re in.”

That’s what Mary Lemmer told me. As an entrepreneur and VC who spent a stint at The Second City improv theater in Chicago, Lemmer knows a thing or two about having to adapt. Today, she brings her insights to corporations through training and workshops.

She explained that as an improv performer, you may start a scene with a certain idea in mind of how it will go, but that can quickly change. “If you’re not present,” she said, “then you’re not actively listening and because there’s no script, you’ll miss details. That’s when scenes fall apart.”

When I was a PM at Etsy and we had a major launch, we’d get engineering, dev ops, product, marketing and customer support together in a room to talk through the final event sequencing. These weren’t always the most exciting meetings and it was easy to get distracted by email or chat. One time engineering announced a significant last-minute issue that almost slipped through the cracks. Luckily, someone piped up with a clarifying question and we were all able to work together to minimize the issue.

Lemmer argues that in improv, like in business, you can’t make assumptions about people or situations. “We see this a lot in board meetings. People start to assume ‘Sally’ will always be the proactive one or ‘Jim’ will always be the naysayer and tune out.”

This is kind of attitude is problematic in a stable environment, but downright dangerous in an unstable situation where new data and events can quickly open up a new set of challenges and opportunities.

Early on, some experts thought the coronavirus crisis would stabilize globally by April. In early February, S&P Global stated that in the “worst-case scenario,” the virus would be contained by late May. A month later, that prediction already looked wildly optimistic.

Build mental toughness

Experts are saying now that cases may peak in May or June, which means everyone should be hunkering down for eight or more weeks of social distancing and isolation. A COVID-19 vaccine just started human trials, but testing in large enough sample sizes to identify side effects and then ramping up large-scale production still might not be fully available for more than a year.

In other words, dealing with this virus is not a sprint, it’s a marathon. A marathon no one signed up for.

Someone who knows a lot about this topic is Jason Fitzgerald. A 2:39 marathoner, Fitzgerald now helps people run faster and healthier as an author and coach.

When we spoke over the phone, he pointed out that running, unlike say basketball or gymnastics, is a sport where “you have to voluntarily want to experience more and more discomfort.”

Fitzgerald calls this ability to endure “mental toughness,” and it’s a skill we all can build. For runners, it requires doing workouts that scare them, putting in mileage that’s higher than they have in the past and racing regularly. It’s also about accepting and even embracing the pain of running hard.

The same is true for adaptation. We can train ourselves to respond better to change (we’re all getting lots of practice right now!), but developing new habits and working in new ways is always uncomfortable. As decorated cyclist Greg LeMond once said, “it doesn’t get easier, you just get faster.”

We also have to recognize that we won’t get it right every time. “The more that we get comfortable with poor performances, the more we can learn from them,” Fitzgerald said, noting that he’s had his share of bad races, including failing to finish an ultramarathon in 2015. “Sometimes you dwell on a bad race for a couple days, but then you have to just forget about it and move on with your training.”

Many of us are reeling from more cancellations, suspensions and complete one-eighties in the last month than in the last five years. But we can’t let ourselves stay bogged down by our feelings of frustration or disappointment. We accept our new reality, learn what we can from it, and keep going.

It’s clear that the people who can let go of their past plans and embrace the new environment ahead will thrive. Already we’re seeing companies pivot from live events to online webinars, and remote-first workplaces becoming the new normal. Shares of Zoom have risen even as the stock market has taken a beating and I’m sure other winners will emerge in the coming weeks and months.

But adaptability doesn’t just matter for individuals or even companies, it matters for governments. For China, Taiwan and Hong Kong, thanks to aggressive testing and quarantining efforts, life is returning, somewhat, to normal. New cases are on the decline and there’s hope of life returning to normalcy in the near future. Countries that bungled their response to the disease progression, including Italy, Spain, the U.K. and the United States, are now facing increasingly dire consequences.

Whether you want to survive a global pandemic, reach the next phase in your career or be selected on a mission to Mars, it’s hard to overstate the importance of adaptability in getting there.

Using AI responsibly to fight the coronavirus pandemic

The emergence of the novel coronavirus has left the world in turmoil. COVID-19, the disease caused by the virus, has reached virtually every corner of the world, with the number of cases exceeding a million and the number of deaths more than 50,000 worldwide. It is a situation that will affect us all in one way or another.

With the imposition of lockdowns, limitations of movement, the closure of borders and other measures to contain the virus, the operating environment of law enforcement agencies and those security services tasked with protecting the public from harm has suddenly become ever more complex. They find themselves thrust into the middle of an unparalleled situation, playing a critical role in halting the spread of the virus and preserving public safety and social order in the process. In response to this growing crisis, many of these agencies and entities are turning to AI and related technologies for support in unique and innovative ways. Enhancing surveillance, monitoring and detection capabilities is high on the priority list.

For instance, early in the outbreak, Reuters reported a case in China wherein the authorities relied on facial recognition cameras to track a man from Hangzhou who had traveled in an affected area. Upon his return home, the local police were there to instruct him to self-quarantine or face repercussions. Police in China and Spain have also started to use technology to enforce quarantine, with drones being used to patrol and broadcast audio messages to the public, encouraging them to stay at home. People flying to Hong Kong airport receive monitoring bracelets that alert the authorities if they breach the quarantine by leaving their home.

In the United States, a surveillance company announced that its AI-enhanced thermal cameras can detect fevers, while in Thailand, border officers at airports are already piloting a biometric screening system using fever-detecting cameras.

Isolated cases or the new norm?

With the number of cases, deaths and countries on lockdown increasing at an alarming rate, we can assume that these will not be isolated examples of technological innovation in response to this global crisis. In the coming days, weeks and months of this outbreak, we will most likely see more and more AI use cases come to the fore.

While the application of AI can play an important role in seizing the reins in this crisis, and even safeguard officers and officials from infection, we must not forget that its use can raise very real and serious human rights concerns that can be damaging and undermine the trust placed in government by communities. Human rights, civil liberties and the fundamental principles of law may be exposed or damaged if we do not tread this path with great caution. There may be no turning back if Pandora’s box is opened.

In a public statement on March 19, the monitors for freedom of expression and freedom of the media for the United Nations, the Inter-American Commission for Human Rights and the Representative on Freedom of the Media of the Organization for Security and Co-operation in Europe issued a joint statement on promoting and protecting access to and free flow of information during the pandemic, and specifically took note of the growing use of surveillance technology to track the spread of the coronavirus. They acknowledged that there is a need for active efforts to confront the pandemic, but stressed that “it is also crucial that such tools be limited in use, both in terms of purpose and time, and that individual rights to privacy, non-discrimination, the protection of journalistic sources and other freedoms be rigorously protected.”

This is not an easy task, but a necessary one. So what can we do?

Ways to responsibly use AI to fight the coronavirus pandemic

  1. Data anonymization: While some countries are tracking individual suspected patients and their contacts, Austria, Belgium, Italy and the U.K. are collecting anonymized data to study the movement of people in a more general manner. This option still provides governments with the ability to track the movement of large groups, but minimizes the risk of infringing data privacy rights.
  2. Purpose limitation: Personal data that is collected and processed to track the spread of the coronavirus should not be reused for another purpose. National authorities should seek to ensure that the large amounts of personal and medical data are exclusively used for public health reasons. The is a concept already in force in Europe, within the context of the European Union’s General Data Protection Regulation (GDPR), but it’s time for this to become a global principle for AI.
  3. Knowledge-sharing and open access data: António Guterres, the United Nations Secretary-General, has insisted that “global action and solidarity are crucial,” and that we will not win this fight alone. This is applicable on many levels, even for the use of AI by law enforcement and security services in the fight against COVID-19. These agencies and entities must collaborate with one another and with other key stakeholders in the community, including the public and civil society organizations. AI use case and data should be shared and transparency promoted.
  4. Time limitation:  Although the end of this pandemic seems rather far away at this point in time, it will come to an end. When it does, national authorities will need to scale back their newly acquired monitoring capabilities after this pandemic. As Yuval Noah Harari observed in his recent article, “temporary measures have a nasty habit of outlasting emergencies, especially as there is always a new emergency lurking on the horizon.” We must ensure that these exceptional capabilities are indeed scaled back and do not become the new norm.

Within the United Nations system, the United Nations Interregional Crime and Justice Research Institute (UNICRI) is working to advance approaches to AI such as these. It has established a specialized Centre for AI and Robotics in The Hague and is one of the few international actors dedicated to specifically looking at AI vis-à-vis crime prevention and control, criminal justice, rule of law and security. It assists national authorities, in particular law enforcement agencies, to understand the opportunities presented by these technologies and, at the same time, to navigate the potential pitfalls associated with these technologies.

Working closely with International Criminal Police Organization (INTERPOL), UNICRI has set up a global platform for law enforcement, fostering discussion on AI, identifying practical use cases and defining principles for responsible use. Much work has been done through this forum, but it is still early days, and the path ahead is long.

While the COVID-19 pandemic has illustrated several innovative use cases, as well as the urgency for the governments to do their utmost to stop the spread of the virus, it is important to not let consideration of fundamental principles, rights and respect for the rule of law be set aside. The positive power and potential of AI is real. It can help those embroiled in fighting this battle to slow the spread of this debilitating disease. It can help save lives. But we must stay vigilant and commit to the safe, ethical and responsible use of AI.

It is essential that, even in times of great crisis, we remain conscience of the duality of AI and strive to advance AI for good.

The space in between: The stratosphere

We have airplanes and drones in our airspace and satellites in space, but what about the space in between: the stratosphere?

There are platforms, such as blimps, balloons and high-altitude long endurance (HALE) fixed-wing platforms that can duplicate functions now performed by drones or satellites in a more technically and commercially viable manner.

Commercial drones operate in our airspace below 400 feet. Commercial aircraft fly between 9-12km (30,000-39,000 feet). Satellites operate in low Earth orbit (LEO, 500-1200km), mid Earth orbit (MEO, 2000-36,000km) and geostationary Earth orbit (GEO, 36,000km).

But what about the vast space in between our air space and LEO? The approximately 488km of space known as the stratosphere, is, at present, largely uninhabited and underutilized.

The problem

Imagine if a platform wants to loiter over a single point on the Earth for an extended period of time, either to maintain situational awareness and consistent surveillance over an area of interest or maintain communications. For example, after a natural disaster, it would be invaluable and life saving to have eyes, ears and a voice in the sky monitoring and helping the afflicted. Or what if the platform were able to monitor a natural disaster before it made landfall to collect better data on the storm’s size, location and path?

Other reasons why it might be advantageous to have persistent real-time video from the sky is surveillance of vast maritime regions and borders, identification of objects of interest and monitoring events, including storms, fires and environmental disasters, on behalf of first responders and enforcement agencies.

Another example could be global internet connectivity. If platforms mesh together and talk to one another, they could connect the world below in a much more effective and efficient manner than ground-based fiber optic cables. It could monitor our oceans or protect vulnerable people from exploitation. And the potential military, intelligence and governmental applications are obvious and substantial.

In short, the applications are abundant and the potential market for this type of platform massive.

Possible existing solutions

Right now, the prevalent existing airborne platforms are drones and planes, and the prevalent existing space-based platforms are satellites. Each platform has various benefits, but none are optimized for many of the missions described above and, thus, do not necessarily accomplish those missions in the most efficient and effective manner.

Quadcopter drone

  • Pro: Cheap, close to the ground
  • Con: Can fly for only on average 30 minutes (unless you are using Impossible Aerospace’s US-1 that has over two hours of flight time), needs access to the ground below, small field of view from 400 feet, can be easily detected

Image Credits: Impossible Aerospace

Uncrewed plane

  • Pro: Larger field of view from 30,000 feet
  • Con: Can fly for only the number of hours fuel is available, expensive, can be detected

Image Credits: alxpin (opens in a new window) /Getty Images

Constellation of LEO satellites

  • Pro: Large field of view from 500-1,200km
  • Con: One would need hundreds or thousands of satellites in orbit for full-world coverage since the 90-minute orbits have access only over a single point on the Earth for ~15 minutes of the ~90 minute orbit; also, the satellite needs to be successfully launched from a rocket, escape Earth’s velocity and operate for years in the radioactive vacuum of space (which, while easier and less expensive than a GEO satellite, still requires a fair amount of effort and expense)

Image Credits: Spire Global

GEO satellite

  • Pro: Covers one-third of the Earth
  • Con: Large (school-bus sized), expensive (many millions of dollars), takes years (sometimes decades) to design/build/launch and does not provide the necessary low resolution or short latency

The solutions above are optimized for other types of critical missions. For example, drones are great for monitoring crops or inspecting infrastructure (as Drone Deploy software enables) or delivering emergency medical supplies (which Zipline and Google Wing are doing). Remotely-operated planes like General Atomics MQ-1 Predator have offensive military applications.

Constellations of LEO satellites in space, like Spire Global, can provide maritime, aviation and weather monitoring and prediction, or take photos of the world, as Planet Labs does. Lastly, GEO satellites can also be used for monitoring weather, communication and surveillance, but at a high level, not localized.

Possible future solutions

There are a handful of companies working on solutions specifically optimized for the mission of loitering over a single point. These solutions include balloons, blimps and HALE (high-altitude long endurance) platforms in the stratosphere.

Balloons


Image Credits: WorldView

Companies like Loon, WorldView and WindBorne use air currents in the stratosphere to loiter over a single point. Their platforms have no propulsion on board and the structure consists of two balloons, a lift and a ballast balloon. The lift balloon contains either helium or hydrogen and is sealed with special UV-coated material. They use a compressor to add or remove air from the ballast balloon so that it becomes lighter or heavier to make the balloon go up or down depending on wind speed and direction and which air current they would like to ride.

  • Pro: You cannot see these balloons from the ground with the naked eye or with most types of current ground-based tracking systems. They are fairly cheap, can be launched easily and can loiter over a single area for days or even months at a time.
  • Con: Without propulsion, balloons are difficult to navigate through intense stratospheric winds, so it might be hard to precisely navigate and keep the balloons over the specific area of interest. The balloons are not recoverable when the flight terminates, although when the balloon bursts and returns to Earth you might be able to recover the payload.

Blimps

Image Credits: MR1805 (opens in a new window) / Getty Images

  • Pro: They are fairly large so they can carry heavier payloads and provide more power to the payload. You can re-land the entire platform to either fix or recover the payload, and launch it multiple times.
  • Con: They can be seen from the ground because they are so large, which makes them vulnerable to being shot down. Companies like Sceye and Altaeros are using the Goodyear Blimp with some tech upgrades. Their airships either have propulsion or are tied to the ground below, so they can better control where they are going, and they have upgraded UV and ozone-resistant skin.

HALE fixed-wing

Companies like Zenith and Skydweller are working on high-altitude long endurance (HALE) fixed-wing platforms. These high-aspect-ratio aircraft (which means long but slender wings) are powered by sunlight hitting the solar panels on the wings. The power that is generated can either power the plane and payload or be stored in the batteries. Therefore, if enough power is generated and stored during the day to last throughout the night, the plane can fly indefinitely.

  • Pro: They can be precisely controlled by a pilot.
  • Con: They have limited power for the payload, as most of the power generated is needed to power the aircraft.

*TRL: technology readiness level

For all of these platforms, there will be additional challenges in the areas of manufacturing and mission management. The platforms need to be manufactured and launched cheaply, quickly and reliably. This takes time and money. Additionally, there are issues relating to who will monitor the platforms once they are in the stratosphere — the company that built the platform or the customers whose payload the platform is holding?

Another issue that platforms that operate in the stratosphere will face relates to who regulates the stratosphere. Obviously, putting and operating platforms in the stratosphere raises a number of regulatory and legal questions that will have to be resolved.

I believe there is enough room in this market (and certainly in the stratosphere) for all of these platforms to be successful. They complement existing platforms such as drones and satellites and, for certain critical missions, can be more effective and efficient than their counterparts that operate in the airspace or in LEO/GEO.

A former chaos engineer offers 5 tips for handling online disasters remotely

I recently had a scheduled video conference call with a Fortune 100 company.

Everything on my end was ready to go; my presentation was prepared and well-practiced. I was set to talk to 30 business leaders who were ready to learn more about how they could become more resilient to major outages.

Unfortunately, their side hadn’t set up the proper permissions in Zoom to add new people to a trusted domain, so I wasn’t able to share my slides. We scrambled to find a workaround at the last minute while the assembled VPs and CTOs sat around waiting. I ended up emailing my presentation to their coordinator, calling in from my mobile and verbally indicating to the coordinator when the next slide needed to be brought up. Needless to say, it wasted a lot of time and wasn’t the most effective way to present.

At the end of the meeting, I said pointedly that if there was one thing they should walk away with, it’s that they had a vital need to run an online fire drill with their engineering team as soon as possible. Because if a team is used to working together in an office — with access to tools and proper permissions in place — it can be quite a shock to find out in the middle of a major outage that they can’t respond quickly and adequately. Issues like these can turn a brief outage into one that lasts for hours.

Quick context about me: I carried a pager for a decade at Amazon and Netflix, and what I can tell you is that when either of these services went down, a lot of people were unhappy. There were many nights where I had to spring out of bed at 2 a.m., rub the sleep from my eyes and work with my team to quickly identify the problem. I can also tell you that working remotely makes the entire process more complicated if teams are not accustomed to it.

There are many articles about best practices aimed at a general audience, but engineering teams have specific challenges as the ones responsible for keeping online services up and running. And while leading tech companies already have sophisticated IT teams and operations in place, what about financial institutions and hospitals and other industries where IT is a tool, but not a primary focus? It’s often the small things that can make all the difference when working remotely; things that seem obvious in the moment, but may have been overlooked.

So here are some tips for managing incidents remotely:

There were many nights where I had to spring out of bed at 2 a.m., rub the sleep from my eyes and work with my team to quickly identify the problem… working remotely makes the entire process more complicated if teams are not accustomed to it.

We must consider secure online voting

The list of states delaying primaries and elections is quickly increasing, with New Jersey adding local elections to the list. Even Congress — in a break from tradition — is rethinking what it means to vote safely in this new paradigm, stirring calls for remote voting for its upcoming legislation around the pandemic.

This debate, however, lacks important context: Many U.S. citizens are already voting online at home and abroad. In fact, 23 U.S. states and the District of Columbia allow some voters to return absentee ballots via email, while five others permit some voters to do so using a web portal.

We are election officials in two states that require us to offer an online method to some of our voters. For these voters, the argument is not an academic one, but an issue of necessity — traditional voting methods simply don’t work for those living abroad, deployed in the military or those with disabilities. As election officials, it’s our duty to stand up for the constitutional rights of our citizens, whatever their circumstances, and the reality is that online voting dramatically improves the opportunities for these two groups to engage with our democracy.

We should not be debating whether online voting should exist, but rather asking: What is the most secure way to facilitate electronic voting? Because it’s already being done. And because it’s needed by some voting groups — whose volume might expand in the near future.

As a country, we currently have three million eligible voters living abroad, and only 7% cast ballots in the 2016 elections, according to the Federal Voting Assistance Program’s biennial Overseas Citizen Population Analysis. This same analysis found that removing logistical barriers to voting would raise participation by 30%. A different analysis separately found that while nearly one million active-duty military are eligible to vote, only around 23% of them actually did in 2018.

The traditional system of mailed-in absentee ballots and centralized polling places is failing these voters, and they aren’t alone among the disenfranchised. The turnout story is also grim for the 35 million U.S. voters with disabilities. An October 2017 Government Accountability Office report also found widespread barriers to disabled voting, such as machines that could have made it impossible to cast votes privately. It’s no wonder that, as a 2017 Rutgers University study found, disabled voting participation has declined in each of the last two presidential elections, dropping from 57.3% in 2008 to 55.9% in 2016.

New technologies offer promise to expanding and securing access for overseas citizens and voters with disabilities. Consider MacCene Grimmett, who is, at 106, Utah’s oldest voter. When she was born in 1913, women did not have the right to vote. Homebound since she broke her ankle two years ago and unable to hold a pen steadily, she was able to cast her ballot last year thanks to an app on a mobile device. The technology empowered her, helping her execute — independently, anonymously, securely and with dignity — her most basic duty as a citizen.

Pilots and tests are happening at different scales in localities around the country, and early results are demonstrating positive outcomes. In 2019,Utah County’s offering mobile-phone voting to overseas citizens resulted in a marked increase in participation rates. In fact, turnout rates for voters using the app overseas were higher than for those who went to the polls in-person on Election Day. Oregon also successfully permitted its citizens to use app-voting in 2019.

Importantly, all pilots include the ability to rigorously audit the results so we can ensure 100% accuracy along the way.

The challenge, ultimately, is how to continue leveraging technology in a secure and innovative way to maximize access. Safety is paramount: We are deeply aware that we live in an interconnected world where foreign adversaries and other malicious entities are using information technology to try to undermine our political system. It’s our responsibility to understand the environment in which we operate as we forge ahead.

But while these concerns can be valid, they should not outweigh both the necessity and potential benefits of internet-based voting. Just as we cannot place blind faith in the infallibility of our technologies, we also cannot fall into a senseless, all-encompassing mistrust that would both disenfranchise millions of voters and shake trust in our elections.

Rather than making sweeping judgments, we need to weigh each case individually. Why, for example, should Iowa’s failure, which involved poor training, lack of testing and trouble reporting caucus results on one specific technology platform by a political party adversely affect whether a disabled Utahn or an Oregonian soldier can cast their vote — and verify it — by app?

Expanding voter participation by ensuring ballot access for all citizens is paramount to protecting our democracy. In the 21st century, that will necessarily include electronic methods, particularly as we face challenges with voters abroad and contemplate emerging challenges at home like COVID-19, where large public gatherings — and long lines — spark new threats to consider.

We must continue trials and experiments to broaden access for voters, while hardening the system and making it more resilient, and that means beginning with small-scale pilots, seeing what works, stringently auditing the results and then employing that knowledge in new rounds of testing. App-based voting, for example, is already more secure than returning a ballot by email, and it also preserves voter anonymity in a way that email makes impossible (because whoever opens the email to hand-copy the vote onto a paper ballot for tabulation knows who sent it).

These are the everyday successes that internet-based voting is producing right now. And they ought to be driving the discussion as we move forward slowly, responsibly and confidently.

Attract, engage and retain employees in the new remote-work era

When looking for answers, where do people first turn? For many, it’s Google.

During the first half of March, we saw Google searches for “work from home” reach a 12-month high, garnering at least 50% more search interest than the anticipated peak, which usually occurs within the first week of January. This number will continue to grow as outside circumstances evolve.

This search behavior reflects the world around us. Today, employees and employers alike are grappling with the new norm — at least for the short-term — which is working remotely. While having a remote-ready model in place was once viewed as a competitive advantage to attract talent, it’s now a must-have to keep organizations afloat.

With vacant positions costing organizations around $680 daily, the impact that interrupted recruiting efforts can have on a business’ bottom line is jarring. As such, HR professionals were early adopters of successful remote communication practices, learning lessons that can be applied across the business to successfully make personal connections without being in-person. Employers are doing all they can to address their existing employee base at this critical time, while also working hard to maintain their hiring efforts.

Having the right technology in place to sustain work-from-home practices is more important now than ever before. There are four steps that employers can take to successfully integrate and adapt successful virtual hiring technologies into their business continuity plans, considering all outside circumstances, and without sacrificing their productivity and unique company culture.

Prepare and plan. Employers have an obligation to provide their people with clear direction in times of disruption.

When is it time to stop fundraising?

No one wants to prepare for their fundraising round to fail. Many founders spend months (or even years) getting their businesses to a point where they’re ready to pitch investors. But there are times when, no matter how hard you try, you’re just not going to be able to close a deal.

With the current COVID-19 pandemic, the entire VC community is in a state of uncertainty, and there is no clear answer when it comes to the question, “can I still raise funds for my company?” However, there’s hope for early-stage startups. We used the 2020 DocSend Startup Index to track Pitch Deck Interest among investors and found that last week, despite seismic changes across the country, pitch deck interest has only been 11.6% lower than the same week in 2019 so far.

We will be monitoring the Pitch Deck Interest Metric in the coming weeks, but if you’re an early-stage startup and you were planning to raise, there is still opportunity to come away with a term sheet. But if things don’t go as planned, how do you know if it’s time to give up or if you just need to push through?

According to recent DocSend data, you’ll know pretty quickly if it’s time to call it quits. While the average founder who was successful in fundraising contacted 63 investors during their process, startups that weren’t able to raise funds stopped at 27. Why stop? Because the founder listened to the feedback they were getting. If you hear the same concern or piece of feedback twice you should take it to heart, but if you hear it three times you probably need to stop and rethink things.

time spent reading pitch decks

The Pitch Deck Interest Metric declined 11.6% compared to the same week in 2019

According to our study on the fundraising process of pre-seed startups, founders who were unsuccessful in raising had just nine meetings. That should give you enough feedback to know if you have a deal breaker in your deck.

But negative feedback doesn’t mean all is lost. In fact, of startups studied in the 2020 DocSend Startup Index, 86% reported that they were going to try to fundraise again after addressing the feedback they’d received.

Now might be the perfect time to rethink your fundraising approach

Many founders will have kicked off the new year with a new fundraising round. According to the data we shared last year, March, October and November were the months when VCs were reviewing the most decks.

But the COVID-19 pandemic has ground to a halt many industries, and there are even warnings that this will affect the next two quarters in regards to fundraising.

We’ve reviewed the data in our 2020 DocSend Startup Index and we’ve begun tracking the Pitch Deck Interest Metric. With San Francisco under a shelter-in-place order and many VCs scrambling to adjust their processes to an all-remote world, we saw pitch deck interest drop 11.6% when compared to the same week in 2019. While there has been a drop in interest so far, there is still a lot of activity, and VCs seem to still be reading pitch decks.

We will be monitoring the Pitch Deck Interest Metric in the coming weeks, but if you’re an early-stage startup and are in the middle of your fundraise, or are about to fundraise, there are some things you can do to help insure your startup is ready for funding before you meet with any (more) investors.

time spent reading pitch decks

The Pitch Deck Interest Metric declined 11.6% compared to the same week in 2019

Expectations have shifted and will continue to do so

If you were about to kick off a fundraising round, you should have been prepared to contact 50 or more investors, have 20-30 meetings and spend somewhere around 20 weeks before you signed your term sheet. That’s a lot of time and energy to invest, especially when the economy is poised for a downturn and you’re most likely needed in other parts of your business.

If you’ve already started your round and are wondering if you should push through, I’ve written a piece on knowing when to quit and recalibrate versus when to push through (Extra Crunch membership required).

Many factors play into navigating a successful fundraising round, and the expectations of investors are constantly changing — specifically when it comes to the pre-seed round.

Investors are now looking for market-ready products and want to see pitch decks that feature the content they’re expecting. We expect to see this focus intensify over the coming months as VCs have more time to spend not just to review pitch decks, but on due diligence for companies in which they plan to invest. Our new report outlines advice for pre-seed startups that are looking to adjust their fundraising strategy.

Focus on an MVP, not just a great PowerPoint

Our analysis reveals a shift in the level of readiness required by institutional investment to receive pre-seed funding. In the past, pre-seed startups could get by with just an MVPP (Minimum Viable PowerPoint). But now, investors are placing their bets on pre-seed startups that have already entered the market and developed an alpha, beta or shipping product.

In fact, 92% of companies with successful pitch decks had either an alpha, beta or shipping product, where only 68% of companies with unsuccessful pitch decks presented the same type of product readiness.

stage of product development mvp vs mvpp

As the economy moves closer to a downturn we can expect VCs to be more cautious with their investments. The current data already shows a preference for companies that have live products; it’s worth the time and effort to be product-ready coming into a pre-seed round or if you’re a startup ready to tackle the round again with a fresh perspective.

Rethink your deck

That said, even if you do have an MVP, rethinking your pitch deck may be something else to consider. Here’s a good test. Using your pitch deck, spend three to four minutes (that’s all the time you’ll get from a VC) to pitch your business to a friend or family member who knows nothing about your business. Afterward, ask them for a one-sentence description of your company. If they’re not clearly describing what your company does and the problem it’s trying to solve, you probably need to rethink your pitch deck.

According to our recent report, a “less is more” attitude toward creating a compelling pitch deck for meetings could mean more success in pre-seed fundraising.

Your pitch deck will be your main calling card right now. As community events are being replaced with online gatherings during the COVID-19 pandemic, we can expect to see less one-to-one engagement at these events. So pitching a VC in person is not likely to happen anytime soon. Whether you’re sending them a cold email, or getting a warm intro from a portfolio company, you’re going to need to lead with your pitch deck.

Despite the product taking a more prominent role in the fundraising round, the pitch deck is still a focal point and should be tailored to tell your story in the most effective way, as investors are spending less time evaluating them. On average, investors are spending just 3 minutes and 21 seconds on the pitch deck and the average deck is just 20 slides.

If you are in the process of reevaluating your pitch deck, it could be helpful to make sure your slides feature the right content in the right order. Investors spend nearly 50% more time on the product slides in successful pitch decks and over 18% longer on the business model in unsuccessful pitch decks. Additionally, investors spent more time on solution slides in successful decks than unsuccessful decks.

time spent on successful decks

It’s a numbers game… to a certain extent

Another area that could benefit from reevaluation is the number of investors contacted, meetings held and the number of weeks spent in a funding round. Generally speaking, the average amount of investors contacted for successful fundraising rounds is 56, resulting in 26 meetings. On average, successful pre-seed startups will spend 20.5 weeks on fundraising.

When it comes to fundraising, there are diminishing returns for investor outreach. You shouldn’t need to send your deck to more than 60-70 investors and have more than 20-30 meetings. If you’re doing more than that, the ROI on your time just isn’t worth it. Because the current crisis is affecting VCs’ willingness to invest, you’re better off finding a small list of investors who are active and targeting your pitch to them. If you’ve reached out to more than 70 investors, but you’re still faced with a wall of “nos” you’re better off pausing your fundraising and addressing the feedback you’ve received so far. For more on when you should quit and reevaluate versus push through you can read my article here (Extra Crunch membership required).

how long does a pre seed round take

Another area pre-seed startups should evaluate is the number of founders of a company. Our data shows investors still prefer teams of two-three founders, though our data shows that being a solo founder is preferable to having too many founders. For teams of five founders, they averaged earning $195,085 while founding teams of three garnered $511,522.

This may be the right time to find a co-founder. With many people working from home or out of work, this could be the opportunity to take your idea and bring on the technical founder you need. There are online groups and events popping up everywhere in response to social distancing. If you’re worried being a solo founder is going to hold you back, you may want to invest time in those new communities.

meetings and amount raised

Get some perspective

For many startups, especially if you are not in Silicon Valley where a substantial amount of funding happens, the process of fundraising can be very opaque. DocSend’s purpose in analyzing this data is to bring some transparency to the process. This in turn provides perspective.

But what founders should do, if they haven’t done so already, is to get some additional perspective. Talk to experts outside your immediate circle of influence. Don’t have a mentor or advisors? Find them. Get a different take on your product idea or the market conditions. Especially now that community events are going virtual, location doesn’t have to hold you back from joining the startup community and finding people to offer feedback on your product or company.

Fundraising is both an art and science. Combining the insights from our data with the benefit of your own community can help you get back on your feet and pitching your company with hopefully a better outcome.

Canceled conferences will force startups to focus on scalable lead generation

Described by Sequoia Capital as the black swan event of 2020, the long-term economic fallout of the COVID-19 pandemic on startups is still to be seen. However, one effect which is sure to disrupt the MO of many early-stage startups is the cancellation of events and conferences.

According to Forbes, more than 35.3 million people who were planning to attend an event have been forced to change their plans in recent months. And while some might lament being forced to leave their Metallica T-shirts and 2020 Summer Olympics flags in the cupboard, many startup founders are biting their nails at the prospect of lost leads and connections from events and conferences.

The silver lining: Forcing founders to wean themselves off conferences and events as a “go-to” business development tactic might not be a bad thing in the long run.

Based on my experience, many early-stage startups waste lots of time and resources doing the rounds at events without clear aims, using up lots of the founder’s time, without driving much business value. At an early stage in a startup’s journey, every tactic used needs to drive real ROI and ultimately be driving new business opportunities.

So let’s look at why missing out on events might not be the end of the world, and how startups can focus their time, energy and resources on more scalable and consistent lead-gen activities.

What’s my beef with startup events and conferences?

It is worth clarifying early on that conferences and events can provide valuable ROI in terms of lead generation and business development to startups that approach them in the right way.

The silver lining: Forcing founders to wean themselves off conferences and events as a “go-to” business development tactic might not be a bad thing in the long run.

Getting involved in events as speakers, taking part in panels or showcasing projects via pitch competitions offers the “Golden Ticket” that grants access to the speaker’s lounge, side events and dinners. This facilitates conversations with the most important investors, journalists and potential partners and clients in attendance on a level setting, rather than having to bustle for attention with the rest of the masses on the conference floor.

Aside from increasing the probability of real business development opportunities, taking part in a conference normally includes a free ticket, if not accommodation and travel costs being covered too.

On the flip side, in my experience, going to startup events and conferences as a lowly attendee offers very little tangible ROI, and can accumulate into a considerable expense too. However, as Forbes contributor Sophia Matveeva puts it, even a $10 event is expensive if it doesn’t offer ROI, “because the opportunity cost of events is not just money, it is also time.”

The value of attending events has to be assessed in relation to the time commitment required. If a meetup lasts three hours and includes an hour’s travel, and a large conference is a full-day commitment or even two days in a different location, the opportunity cost of the conference should be carefully weighed against time that could be invested in other lead-generation activities.

Can we approach events/conferences in a data-driven manner?

Unless founders track and assess the ROI from events in the same way as they would any other lead-generation tactic, the chances are that a pocketful of useless business cards and some branded swag (and possibly a hangover) will be the only returns from the time and resources invested.

Unless founders track and assess the ROI from events in the same way as they would any other lead-generation tactic, the chances are that a pocketful of useless business cards and some branded swag (and possibly a hangover) will be the only returns from the time and resources invested.

So how can we assess the value of events in the same way as we would, for example, paid ads? First, founders should be placing metrics on each individual event, such as:

1) Source of lead: Was this via speed-networking, or by reaching out via an event app?
2) Customer acquisition cost (CAC): What were the total costs of this event? Yes, beers count.
3) The number of leads: Only count warm leads. Business-card confetti at speed-networking doesn’t count.
3) The number of those leads closed: How many paying customers did this event lead to?
4) Lifetime value (LTV): How big were these tickets?
5) Sales cycle: How long did the lead take to close?

Assessing the value of particular events via metrics is possible, but it would take a long time. Founders would need to record data over the course of a year, allowing them to highlight which events on the calendar offer the highest chances of returns for the next year. However, the reality is that this requires time and resources, which many early-stage companies simply don’t have. Testing the effectiveness of events also requires trying different tactics, including:

  • Paying for a booth
  • Becoming a sponsor
  • Increasing the number of representatives in attendance
  • Paying for a ticket with increased access to side events, etc.

Testing these tactics makes sense for larger-ticket businesses that can expect $50,000+ returns from successful events. But for startups, the chances are that after blasting through lots of time and resources, they will most likely only highlight one of the 10 conferences they attended that offered real ROI. For any other lead-generation activity, this would be considered a massive failure.

Why aren’t events scalable lead-gen activities?

Making lead generation scalable requires monitoring the success rate of different tactics, doubling down (scaling) the activities that are working and putting fewer resources behind those that are not.

This requires founders to be in control of the levers in the sense that they have the ability to add more, reduce or adjust the scale at which different activities are utilized.

This is not really the case for events, for a number of reasons:

  1. Conference organizers control the content tracks/side-events/activities that take place during the events themselves. Unless they are organizers/sponsors, founders have few ways to exert influence at the events they attend.
  2. Even if a founder does highlight a certain event that brings in lots of leads, there are still a limited number of events that offer access to the right target audiences and cover themes related to particular verticals/niches within their geographic region.

Focus on more scalable lead-gen activities

In my opinion, it makes more sense to focus on lead-generation activities that offer startups more control. There are many different ways for startups to experiment with different tactics within more established inbound and outbound techniques:

Inbound lead generation:

  • Content marketing: Monitoring traction of webinar versus e-book, long-form versus short-form
  • Blogging: Trying different content formats, keywords and themes
  • SEO: Changing keywords, titles, themes and user intent
  • Paid ads: Testing different platforms, target users, content styles and themes

Outbound lead generation:

  • Direct emails: Sending emails at different times, including different content formats
  • Targeted social media messaging: Targeting different positions in a company, on different platforms
  • Cold calling: Using different amounts of representatives, targeting different target users

With the aforementioned techniques, there are fewer limits on how many different variations of these techniques startups can experiment with. They are also a lot more flexible in terms of scalability, meaning startups can invest as much or as little in each technique as they please. You can spend $10 on paid ads, or $1,000. You can have two sales representatives, or 200.

When deciding how to best spend lead-generation budgets, founders should ask themselves:

  1. Can I control the levers? i.e. the tactics I am using within these tactics.
  2. Can I scale to the capacity I need to; is there room for exponential growth?
  3. Can I control the rate of scale over time?

The final point is arguably the most important, but often overlooked. Startups need to be able to control the pace at which they scale, meaning they can increase activity when things are going well, but also reduce activity if things aren’t working out, or — in the case of COVID-19 — if the company needs to tighten its belt due to unforeseen, or uncontrollable circumstances.

The best way to drive sustainable growth is by establishing sustainable internal systems and processes. If you think of a business as an engine, we don’t know what the machine can handle until we test its capabilities. We have to be able to scale processes, as this is where we will find the weaknesses in the system. However, we also need to be able to back off when we do find the weaknesses without causing further damage.

Startups need to “stress-test” lead-generation techniques gradually. If a startup is investing $100 in paid media and achieving five sales-qualified leads (SQLs) per month. The next step is not to go “hey, it’s working,” and chuck $1,000 at it. The sensible next step would be to scale up the tactic by investing $200 and aiming for 10 SQLs per month.

Summing up

So, with events and conferences canceled for the foreseeable future, and a high probability that many event organizers will not be able to recover from their losses this year, startups should use this forced pause to re-assess their processes and strategies.

As they say, slow but steady wins the race. The end goal should always be to achieve consistency in processes that are scalable. When startups approach processes in a data-driven, consistent manner, it offers the chance to scale exponentially over time.