Uri Levine: recommendation

Transcript context

…Okay. So first of all, you've shared all these types of crisis, I think it might be helpful to do a quick taxonomy of the types of crisis founders face. You shared regulation changes, competitors coming at you, investors not wanting to invest. So two types of, abstractly, two types of crisis. One is that I would call that a cash crisis. So all of a sudden your cash program or plan is being jeopardized, for losing a customer, disappearing investor, not meeting your expectation, dramatic price change in the market and so forth. And the other one is lose of product market fit. So all of a sudden whatever you have is irrelevant anymore and you actually need to go back to square one. For the first type of crisis, if this is a cash crisis, then what you really need to ask yourself, and in any type crisis, first of all is what is actually being impacted? Is that my run rate, is that my product, is that my revenue stream? If I'm still relevant? With Order.chat, we were irrelevant, that's it. And so the first thing that you need to do is what is really being impacted? And then the second thing is how long it's going to last? Is that a temporary thing? Is that forever? Is that the new future? And then you ask yourself, okay, so how much run rate do I have? And you re-plan accordingly. And I'll give you some examples, and this is really important, because let's say that you're a company that we have $5 million of revenues a year, say 400,000 per month, and your burn rate, your net burn rate is 200,000. So you actually at the end of the year, in order to run for a year, you need about two and a half million dollars to run. If you lose half of the revenues, and you only had two and a half million in the bank, you now have six month to run. So obviously you need to re-adapt. Now, one of the things that you might say to yourself, "I'm going to remain on the same course and I'm going to deal with the crisis in five month from now." Or you can basically say, "No, I'm going to change my expense to adjust to the current revenue stream that I have and still have 12 month of run rate." Whatever you are going to decide, you are going to decide, you need to decide today, right now. And the reason is very simple, if you want to reduce the burn, the expenses in order to extend the run rate, if you wait two more month, then it's going to become nearly impossible to do. If you wait six more month, then obviously this is impossible to do. So the longer that you wait, you actually lose options. The only ability to choose is today. This is one of the most challenging part of a crisis. You actually need to make a decision rapidly, like today. There are few reasons to that. Number one is that if you don't then you might lose options. Number two, and this is about communicating within the organization that decision. Look, if there is a crisis everyone knows, everyone knows, and you don't do anything about it, this is not a good practice. Now you might want to decide, no, we're going to keep on running full steam ahead until we hit the wall because by that we increase the likelihood that we will have enough velocity to bypass the wall. Now you might want to decide, no, we're going to keep on running full steam ahead until we hit the wall because by that we increase the likelihood that we will have enough velocity to bypass the wall. But you need to communicate that with your team because the one that is really suffer is not just you, it's the entire team. They know that there is a crisis and they want to know that someone that holds the steering wheel is making the decisions. And if you don't, then guess what? You are then a sinking ship. And what's going to happen is that the top performing people, they would leave.…

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