9 Ways to Survive the Global Corona Virus Effect as a Startup
How sport-tech startups should defend and even score against the Coronavirus A wise old man told me many years ago in New York conference, that sometimes you need to live long enough in business to get lucky… This could be applicable also in order to survive a global crisis like this coronavirus also referred to … Continued
How sport-tech startups should defend and even score against the Coronavirus
A wise old man told me many years ago in New York conference, that sometimes you need to live long enough in business to get lucky… This could be applicable also in order to survive a global crisis like this coronavirus also referred to as COVID-19. As a graduate of the 2008 crisis, I have learned that every crisis, local and global, there are 3 key ingredients that need to be brought to the table: leadership, planning, and execution! In this coronavirus that could be over either in a few months or much more than that the most volatile stakeholders are indeed the startups. They need money to fuel their activities, and there is this minor inconvenience that in times like these, investors and corporate‘s tend to put on hold their decisions. Especially ones’ which are not directly related to the core activity, meaning that startups are going to suffer. Some people say that recession or a global crisis is also a filter to filter out the bad from the good ones. However, even if you are a great start-up you could find yourself losing in this battle.
As an entrepreneur myself I’ve been through this a few times and these are my recommendations for startups on how to survive this tsunami and be able to get out on the other side of the tunnel and lived to tell the tale. Previous experience shows that after a crisis of this magnitude, there is usually exponential growth and a boom coming out on the other side. The boom on the other side can even assist businesses who were looking to launch their products now, but the challenge for them is to be able to cross the tunnel:
- Create a winning plan B – One of the first lessons an entrepreneur should learn is don’t fall in love with your product or plan. In times like this, this idea is at least twice as important if not more. You are here to build a scalable business and therefore pre-empting the markets will be important. Very few startups have a credible plan B in case their milestones fail to materialize. It’s no coincidence that very few startups reach considerable success. Often time entrepreneurs will assume they can downsize and get a bridge funding from current investors. This may work in regular times but during a crisis, investors cut their losses quickly. A plan B should allow the company to pivot or sustain cash flow naturally until it can regain take-off speed. It could also include early fundraising at a more modest valuation, whatever the technology licensing, asset sales, or merger. Even Elon Musk had to merge his startup X.Com with Confinity to avoid the dot-com boom. You now know the company as PayPal.
- Cut weight to fight – When times get lean, so should you. you’ve got to know what you can live without. Every entrepreneur should be able to cut the small indulgences that don’t create growth. Knowing the difference between what’s discretionary and what’s essential is critical. When it’s harder to raise money, you must make sure your funding lasts twice as long as you think you need it. Entrepreneurs usually underestimate the length of the runway they need, at crisis times you need to be extra pessimistic about it. An average recession in the last 20 years lasts about a year, so having a runway of 2 years increases the probability of next funding and reduces the chance that you will run out money and/or out of time.
- Don’t lose your locker-room – Your team is crucial to weathering a storm. It’s OK to cut down on fancy high-tech indulges, but don’t take all of the fun out of the office, and don’t let the uncertainty get in their head. You need to provide strong leadership and support, and more than that – a plan they can buy into. Be as transparent as you can be about your company’s fortunes, the challenges that lie ahead, and how you plan to emerge from rough waters.
- Use your lightweight to attack quickly – In this time of crisis the large corporations are the first to slow down. This is the perfect opportunity for lean and mean startups to get inside the gap that the giants left when they reduced spending on research, product quality, and innovation.
- Timeout and game plan adjustment – When the market takes a timeout and waits in the bleachers, you need to become a Gregg Popovich by creating the perfect drill to take advantage of any situation. This downtime is a great real-time laboratory to fine-tune your product, business plan, and market. With this real-time data, you can quickly adjust your target market and product. It’s important to exercise agility during a recession since you will have a limited window to gain market entry. The standards will be higher, and the sales cycles will be longer. As such, you may need to go after the easier markets first, even if it is not your final goal. If your product is an in-stadium experience, maybe the Italian League is not the right target market for now…
- Keep your eye on the profit ball – As investors shed risk at these times, your pitch deck isn’t going to cut it if your business has multitudes of users but no profit-generating customers. And even if they won’t invest, the profit can keep you floating through this hard time.
- Keep your market position – It’s easy to focus on the inner work to survive the hard times, but it’s important that you won’t fade out of sight and out of mind. Keep up your brand awareness, communicating with your customers, your investors and the market. Engage with them – post newsletters, social media posts, try to get free creative PR. You need to stay in the news so that your customers remember that you are a player in the market, even if you don’t have significant growth yet. When the hard times are over, they will be more receptive to you if they have seen you around in the past months.
- Attack the Coronavirus – Like in Krav Maga, use the strength of the opponent to your advantage. Check how you can get in the gap that far east companies cannot supply right now. Try and give your customers extra products that are suited to the situation and help them with it, whether they are fans, clubs or associations, they are in deep need of tech solutions right now. Zoom Video Communications stock and revenues are on the rise, as a result of isolation. Clients may be out of reach, but keep them insight. Find solutions for the sports industry problems at this time and collect your reward.
- Become the captain – When business is dwindling use the extra time to strengthen your company’s public image and use the crisis to enhance it. Bring leadership. Donate to the public using your products and services, create events for your ecosystem to help each other to survive the recession and become a key player in the industry, gaining a lot of credit and PR.
Most importantly, take care of your family, your friends, and stay healthy!
Amir Raveh – Founder and President of HYPE Sports Innovation
About HYPE Sports Innovation:
HYPE Sports Innovation has built the largest global ecosystem in sports innovation. With over 40,000 members, including retail brands, athletic clubs, federations and academia together with over 11,000 startups, HYPE has an unrivaled capacity for outreach to global partners across all sectors in this highly diverse field.