This is post 6 of 6 recapping Reforge’s recent webinars on Leading Growth in Turbulent Times. You can watch all the webinars here.
For reference, here’s the table of contents for the series.
Leadership in Turbulent Times (this post)
This post focuses on insights provided during our CEO webinar by Cyan Banister (Venture Partner @ Long Journey Ventures, ex-Partner @ Founders Fund, & early investor in Uber, Postmates, Niantic, and SpaceX), Russell Glass (CEO @ Ginger), and Elena Verna (EIR @ Reforge & ex-SVP of Product & Growth @ MalwareBytes). You can watch the entire webinar here. Dan Hockenmaier (Founder @ Basis One) is also cited.
Fundraising will be difficult but not impossible
After high profile IPOs underperformed over the past year, investor sentiment shifted from a growth-all-costs mindset toward valuing solid unit economics and profitability. The impact of COVID-19 and the potential for a recession are reinforcing that mindset. As such, businesses without strong unit economics may struggle to access capital over the coming months. High CapEx businesses without a clear path to profitability may have an especially hard time fundraising.
The good news according to Cyan Bannister is that investors are still taking meetings and there is still a lot of capital to be deployed. Investors will be looking for strong indications that your product is a must-have, not a nice-to-have. That means strong retention and customer loyalty (which we discuss in post 2 and post 3). Regardless, anyone raising money over the next few months will likely have to accept lower multiples and valuations, meaning higher dilution.
Regardless, CEOs should continue taking meetings, building relationships, and getting feedback from investors. Russell Glass suggests that asking for advice is one of the best ways to build relationships with investors during a time like this. VC partners have visibility into a wide range of companies and a much broader view of the market than a single CEO. Asking them about what they are seeing and what suggestions they are offering their portfolio companies can be a good way to get to know a potential investor.
Communicate Transparently and Bring People Together
In any time for high anxiety, your employees want to hear from the CEO... even if you don't know what the future holds. A common mistake for an inexperienced CEO can be to become less communicative and try take on all the stress when they don't have all the answers. That will often lead to employees making up stories for themselves. A better approach is to acknowledge what's happening in the market and within your business. Tell employees what you and the executive team are doing to navigate the situation and how you will 'come up with a plan'. Ask for feedback and questions all along the way. This will not only provide a greater sense of security for the employees, it will help the CEO collect information and consider differing points of view.
This can actually be a time to rally the team. People want to keep their jobs, and they want the company to succeed. While you need to make greater accommodations for the disruptions in your employees lives, many people will be willing to work even harder to help get to the other side. Launch your rapid response team, provide a framework for your response, and you might be surprised by who steps up and how the team comes together during adversity.
Be Kind to Yourself and to the Team
This is an extremely hard time in many people's lives. To keep things in perspective, don't forget that millions of people are sick, and thousands are dying from COVID-19. Moreover billions of people are under shelter-in-place orders. Countless small businesses are closed at least temporarily but many of them will not reopen. Parents are homeschooling their kids while trying to work. And people stuck inside, isolated from their normal routines will suffer a variety of negative emotional impacts — that includes you.
It's okay if you need to take a break. It's okay if you're scared and stressed. It's okay if you don't know what to do — no one else does either. We're all just trying to get through this as safely as we can. So cut yourself some slack. You cannot protect and care for others if you are drowning.
Your team will make mistakes, especially if they are working longer hours and juggling greater responsibilities at home. Cut them some slack as well. When someone screws up, maybe let that slide or use it as a teaching moment. Perhaps, more than anything else, your employees want to know that you care about them. Thank them for their efforts, and look for ways to show them just how much you care. And remind them that like all dark times that have come before, this too shall pass.
Other posts about Leading Growth in Turbulent Times:
Leadership in Turbulent Times
If you have more questions or suggestions, please let us know on Twitter @reforge or connect with us on LinkedIn.