recession
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Box CEO Aaron Levie says thrifty founders have more control
Once upon a time, Box’s Aaron Levie was just a guy with an idea for a company: 15 years ago as a USC student, he conceived of a way to simply store and share files online.
It may be hard to recall, but back then, the world was awash with thumb drives and moving files manually, but Levie saw an opportunity to change that.
Today, his company helps enterprise customers collaborate and manage content in the cloud, but when Levie appeared on an episode of Extra Crunch Live at the end of May, my colleague Jon Shieber and I asked him if he had any advice for startups. While he was careful to point out that there is no “one size fits all” advice, he did make one thing clear:
“I would highly recommend to any company of any size that you have as much control of your destiny as possible. So put yourself in a position where you spend as little amount of dollars as you can from a burn standpoint and get as close to revenue being equal to your expenses as you can possibly get to,” he advised.
Don’t let current conditions scare you
Levie also advised founders not to be frightened off by current conditions, whether that’s the pandemic or the recession. Instead, he said if you have an idea, seize the moment and build it, regardless of the economy or the state of the world. If, like Levie, you are in it for the long haul, this too will pass, and if your idea is good enough, it will survive and even thrive as you move through your startup growth cycle.
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All Raise CEO Pam Kostka on how the world isn’t ending
This isn’t the first economic downturn All Raise CEO Pam Kostka has been through.
“I was here during the dot-com bust and rush, and here during the financial fallout that happened, so we’re a little overdue for some corrective action in the market,” Kostka said. “While I’ve been through boom and bust cycles before, this one is more meaningful because life and death are associated with it.”
All Raise is a nonprofit that focuses on increasing diversity within venture capital, both from a decision-maker and a deal perspective. It recently released its annual report, and we covered how female-founded startups landed more deals than ever before in 2019, per PitchBook data.
After our piece looking at the numbers came out, however, some readers weighed in that our coverage missed the mark: In the headline, did we focus too much on progress and not enough on what is left to be done?
Because we’re both social distancing, I caught up with Kostka on the phone and got her take on how to report numbers around diversity without glossing over the work that remains to be accomplished. We also discussed how to stay optimistic during a downturn, potential innovation that might come out of COVID-19 and why diversity matters now more than ever.
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A founder’s guide to recession planning for startups
Schwark Satyavolu is a general partner at Trinity Ventures where he makes early-stage investments in fintech, security and AI. A serial entrepreneur, he co-founded Yodlee (YDLE) and Truaxis, both of which were acquired. Previously, he held senior executive positions at LifeLock and Mastercard. He is an inventor on 15 patents.
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We are living through one of the nation’s longest periods of economic growth. Unfortunately, the good times can’t last forever. A recession is likely on the horizon, even if we can’t pinpoint exactly when. Founders can’t afford to wait until the midst of a downturn to figure out their game plans; that would be like initiating swim lessons only after getting dumped in the open ocean.
When recession inevitably strikes, it will be many founders’ — and even many VCs’ — first experiences navigating a downturn. Every startup executive needs a recession playbook. The time to start building it is now.
While recessions make running any business tough, they don’t necessitate doom. I co-founded two separate startups just before downturns struck, yet I successfully navigated one through the 2000 dot-com bust and the second through the 2008 financial crisis. Both companies not only survived but thrived. One went public and the second was acquired by Mastercard.
I hope my lessons learned prove helpful to building your own recession game plan.
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