22 June 2020
Startup Flight #6: The one thing I learned from having a tech scaleup during the COVID-19 crisis
Hi there! My name is Charlotte and I’m Co-Founder & CEO of Equalture (a hiring software that leverages gamification to debias hiring for SMBs) and living in the most beautiful city in the world: Rotterdam. Being an entrepreneur for 4 years now and building my second company together with my twin sister, I get a lot of questions from other founders and people thinking about starting their own company.
Since I believe that every single founder experience can be helpful to other founders, I decided to translate these frequently asked questions into a blog series: Startup Flight.
In this sixth blog: The most valuable lesson I learned after this first month of fighting for my company during the corona-crisis.
The Startup Wipe-Out.
That’s how another founder I spoke to last week described the current crisis in which the world is right now. Economies are hit extremely hard, and since startups/scaleups are the most vulnerable companies (given their growth stage and need for funding), it’s likely that many startups won’t survive the coronacrisis.
Just like the real Wipe-Out experiences, some will fail instantly. Some of them fail halfway. And some of them will actually make it. So yes, maybe it’s bold metaphor for this situation, but not as bold as the situation in which we are right now.
So how to succeed this Wipe-Out? Is it just a case of luck? Or do we depend on decisions made earlier without taking this crazy pandemic into consideration? If you would ask me, my answer to both questions would be no. You don’t need luck. And you don’t need to stick to every decision made earlier. You need to act, show creativity and take some risk. Just to make sure that your company won’t turn into a nice-to-have.
Last month you were a must-have. Now some companies will call you a nice-to-have.
So, to make my (bold) statement even more specific: This is the Startup Wipe-Out in which the nice-to-haves will fail and the must-haves will succeed.
(Luckily enough) I closed €1M funding for my company Equalture last month — which I’m extremely thankful for since we’re in the luxury position of not having cash flow issues in the next coming months.
Anyway, during this fundraising period (sept 2019 -feb 2020), our Recession Strategy was an important topic to cover. Equalture is (at this point) a predictive hiring software, so therefore we’re a cyclically sensitive product. And that’s more than fine, as long as you’re aware of this. And we definitely are.
So during this fundraising period I spent a lot of time thinking about our recession strategy. Do we then still have the product that companies are looking for? What companies to focus on then? And how do we position ourselves then in terms of sales and marketing?
This led us to a solid plan. Our end game: We help companies build great teams by (i) identifying, (ii) selecting and (iii) developing the right people that allow your business to grow. And that’s more than ‘just’ hiring. This is about being fully aware of your entire team in all different ways so that people actually become a pillar of your company’s strategy. We want our product to take the People Seat at the Strategy Table. And once we have reached this point with out product, we are definitely a must-have.
Two scenarios we didn’t take into consideration.
By the time we closed our funding in February, we had a pretty solid plan to make our company recession-proof. Because let’s be honest, we all expected a recession somewhere in the next two years, right?
Unfortunately, we didn’t take two scenarios into consideration:
- A crisis starting next month instead of next year;
- A pandemic causing this crisis.
The first one is just bad for timelines, not so much for your ideas. The second one, however, is also bad for your ideas. Because the COVID-19 crisis changes people’s mindset over night. It makes us scared and reluctant. So let’s say that in a ‘normal’ financial crisis people are 50% more cost-aware and 50% less decisive; now that number changes to 90%. So we now have to deal with a mindset that is completely new for both ourselves and our (potential) customers.
And that 50-to-90-shift is where people will tend to perceive your product as a nice-to-have more easily.
Eliminating the noise and focusing on the core.
To be able to deal with the two unforeseen scenarios mentioned above, I believe you need to master:
- Creative thinking (to conquer your timeline-issues);
- The ability to focus on the ‘why’ rather than the ‘what and how’ (why did we start this company and why do we firmly believe that companies need this product → this helps you put the 50-to-90-shift into perspective).
So that’s what we tried to do. By making use of the creative thinking ability of our entire team (shout out to my amazing crew!) we came up with a plan to (i) ensure a short-time cash inflow while (ii) building the features that will make our product recession-proof.
And for that second task we used our ability to focus on the core.
I always like to philosophize about these things during the evening. Funnily enough I’m very structured and task-focused in the morning, while brainstorming is something I’d rather do at the end of the day.
So I asked myself the following question (of course in the evening): Why did you start this company? And the answer to that question was because I firmly believe that companies can only succeed through an amazing team. So I wanted to build a software that could help companies build their team that aims for the moon. And given my experience of being a recruiter myself, I learned that data is your golden ticket to do so. So we built a software, using neuroscience and Artificial Intelligence to let data do the talking.
And this is not depending on a recession. During times when things aren’t so easy, your team is even more important than ever — because now you probably have less people while facing bigger challenges.
So that’s our core. People are important. Always. And therefore our product should contribute in every possible way to building the right team.
So this is what I learned from this crisis:
A period of crisis forces you to focus on your core. Your end-game. And although all other circumstances might be far from ideal and even causing worries about your company’s viability, being able to and forced to focus on your core why is always the best way to gain your right to exist.
These times are tough. For us, for you and for all other entrepreneurs out there. It’s the way you deal with it, however, that’s gonna determine whether you get out of this stronger or not. And I truly believe that this situation only makes us stronger and allows us to serve our customers even better.