- The coronavirus crisis is an unexpected blow to many enterprise startups. Some CEOs have experienced previous downturns, including the Great Recession in 2008 and the tech dot-com crash in 2000. Others are facing a major crisis as a business leader for the first ime.
- We reached out to 29 tech startup CEOs and founders to hear their fears and strategies as they navigate this global crisis. As Drift CEO David Cancel put it: “We are now wartime CEOs.”
- A few leaders vowed to try their best to protect their employees’ jobs, whether through pledging a “no-layoff” policy or asking workers to take pay cuts.
- Clari CEO Andy Bryne believes the market will bounce back, but that, in the meantime, his startup will be ruled by three words: “Embrace the suck.”
- Click here for more BI Prime stories.
For many founders and CEOs, the coronavirus crisis is an unexpected blow that could make or break their startups.
Some of them are drawing on lessons learned a decade ago, when they worked at companies that struggled through the Great Recession, the devastating downturn triggered by the 2008 mortgage crisis.
Others are looking back to an earlier collapse, when the dot-com bubble burst in 2000 and was followed a year later by the 9/11 terrorist attacks.
Still other leaders are grappling with a market crash and global crisis for the first time.
To help guide business leaders through this uncertain time, Business Insider reached out to dozens of startup founders and CEOs for their advice.
29 enterprise tech leaders shared their fears and game plans for navigating the storm:
SEE ALSO: Experts predict 15 gigantic tech mergers we could see in a recession, from Amazon buying Oracle to IBM buying Dell
Drift CEO David Cancel: ‘We are now wartime CEOs’
David Cancel, CEO of Boston-based digital marketing platform Drift, has dealt with downturns before. He was the chief technology officer of an online lead generation company during the dot-com crash in 2000 and led another startup through the Great Recession.
“We are now ‘wartime CEOs,'” he told Business Insider. “Wartime CEOs need to prepare for uncertainty by modelling a variety of financial scenarios, working with sales teams to focus on new and emerging opportunities, eliminating unnecessary spending — and focusing on the customer.”
Although startups are now in “uncharted waters,” he said, there are lessons from past crises that are relevant to what’s happening. One is to avoid being “obsessed with what’s going on in the outside world,” to the point of losing focus.
“The people I witnessed who weren’t as successful during hard times were people who were distracted,” he said.
XIX CEO Emil Mikhailov: ‘We will not lose anyone’
Emil Mikhailov is CEO of XIX, a visual AI startup based in San Francisco, which also works with a nonprofit organization fighting human trafficking.
This is his first market downturn as a startup CEO, and he offered a straightforward explanation to his employees on how he sees the situation.
“People are losing their jobs, companies go bust, the economy is going into the recession and it’s not clear what is going to happen,” he wrote in a company email that he shared with Business Insider. “The biggest risk for us and for others is to survive and weather the storm.”
He also said that while there will likely be “substantial” layoffs at startups because of the downturn, he has a “contingency plan” to avoid job cuts at XIX, including reducing costs through salary cuts.
“I want everyone to think about the pay cut you can comfortably take without compromising the needs of your families,” Mikhailov wrote. “DM me once you came up with the number. There are no right or wrong numbers — whatever decision you’ll take is the right one.”
His letter included the company’s new priorities. Number One is: “We as a team will not lose anyone. We will sacrifice short-term to make sure everyone is OK.”
Mikhailov told Business Insider that his biggest fear is letting down his team, friends, investors, and customers.
“I’m afraid that I won’t be able to pull it off this time and weather the storm,” he said. “My biggest hope is that this experience will make us, as a team, stronger and will build indestructible bonds.”
Clari CEO Andy Byrne: ‘Embrace the suck’
Andy Byrne is CEO of Clari, a hot cloud startup that helps businesses manage sales and marketing operations.
“There’s an expression that comes to mind: ‘Embrace the suck,'” he told Business Insider.
There will be moments in every major downturn or crash when things become “extremely difficult,” he said. But those are also moments when a startup can find ways to “be more creative.”
He’s speaking from experience. Byrne has observed every major crisis since the 1987 Black Monday crash to the Great Recession.
“One thing has been consistent: there’s been a beginning and an end,” he said. “The COVID-19 pandemic will end and the markets will bounce back. Knowing that should give us all comfort. Maintaining a mature emotional state during this crisis coupled with an optimistic vision for the future should give all of us the confidence needed to persevere.”
Uniphore CEO Umesh Sachdev: ‘Avoid burnout and prepare for the upswing’
Uniphore CEO Umesh Sachdev recently moved to Silicon Valley where his 12-year-old customer relations automation startup just set up its new global headquarters.
He’s had the advantage of having tech legend John Chambers as one of his mentors. In fact, Chambers told Business Insider that the troubles Uniphore saw in February in its Asia operations were the early warning signs that made him realize that the downturn was about to hit.
Sachdev stressed the importance of communicating openly with employees and customers. It’s also important to “balance work with fun,” he told Business Insider.
“It’s going to be a long haul, so you want to avoid team burn out,” he said, noting how it’s important to keep employees engaged and connected. Uniphore has organized team activities, including a “Best Work From Home Environment” contest.
The crisis will not last forever, and startups should also look ahead to when the market bounces back, Sachdev said “Keeping your eye on the present and also preparing for the upswing so you are ready to move with speed is essential,” he said.
His biggest fear relates to Uniphore’s business. The startup helps businesses use AI to improve customer relations, particularly at call centers. The crisis has overwhelmed these centers, which could mean people who need help are not getting important healthcare information “in a timely fashion,” he said.
“One of my biggest fears is that our teams and our partners won’t successfully fulfill this big responsibility and be able to scale up fast enough to meet the rising demand globally for these systems,” he said.
Brightfield CEO Jesse Levin: ‘Avoid the herd mentality’
Jesse Levin is CEO of Brightfield, a New York-based workforce analytics company, and his biggest fear is the rise of a “herd mentality” where startup leaders try to navigate the crisis based on a singe playbook.
He’s particularly critical of the so-called “Black Swan” letter that Sequoia Capital published about a month ago as the coronavirus crisis was unfolding.
In the letter, Sequoia warned that “in downturns, revenue and cash levels always fall faster than expenses” and that, in terms of headcount, “this might be a time to evaluate critically whether you can do more with less and raise productivity.
Levin lamented that the Sequoia letter “became gospel immediately and resulted in deep cuts across the same companies that they had encouraged to over-raise and overspend.”
For startup founders and CEOs, now is the time to “reset your ambition to target a great return with more reasonable risk,” Levin said.
In a downturn that is in many ways more severe and unpredictable than past crises, Levin said startup CEOs should encourage their team leaders to be comfortable with uncertainty instead of intimidated by the blurry path ahead of them
“Ensure your leaders are comfortable with imposter syndrome,” he said, referring to the psychological pattern of doubting one’s ideas and abilities. “The pandemic recession has some attributes that are similar to past cycles, and many that are not. Thus, your leaders must exhibit confidence and clarity even when they don’t know what’s next.”
Another tip: focus on customers, accommodate their needs, even if doesn’t boost your bottom line in the short-term.
“Customers and prospects do remember who invested in them at the bottom of a cycle and, in my experience, do find ways to balance the karma scales when the market comes back, Levin said.
EnjoyHQ CEO Sofia Quintero: ‘We will survive, but things will be different’
Sofia Quintero, CEO of Los Angeles cloud startup EnjoyHQ which conducts customer research more efficiently, is drawing on memories of Venezuela, where she’s from.
She lived through economic meltdowns under the governments of Hugo Chavez and Nicolas Maduro, when the country was reeling from extreme poverty and crime. Quintero endured being robbed and kidnapped, before deciding to leave the country.
“The situation here in the US is very scary and it feels too familiar to me,” she told Business Insider.
Her biggest fear is not being able to secure financing for her startup, which has a team of six people, because of the pandemic. Even before the crisis, raising VC money as a Latina tech founder was hard, but finding investors now has become “a lot harder.”
But she’s drawing strength and lessons from her experiences in Venezuela.
“Having survived an economy that collapsed completely and having lived for years in those conditions, it gives me the feeling of, ‘I’ve done this before and I can survive,” she said. “I can put up with a lot of things and be uncomfortable again and start from scratch.”
That’s also the message she has conveyed to her team: “We will be able to survive this but we have to understand that things are gonna be different, things are going to be painful.”
ThoughtSpot CEO Sudheesh Nair: ‘Don’t go into a dark room to make big decisions’
Sudheesh Nair is CEO of ThoughtSpot, a fast-growing Silicon Valley data visualization startup.
He is a veteran of the dot-com crash and the Great Recession and, during both downturns, executive teams he worked with followed a tired formula that he said startup leaders should avoid.
Execs would “go into a dark room, make major decisions opaquely, and then communicate them in perfect, marketing-approved communications,” he told Business Insider. “The problem was, nothing was believable. It was too polished and no one had insight into the process.”
Instead, he believes that “transparent, authentic, and frequent communications” are critical in this crisis.
“Your team needs to know more than just what decision was made,” he said. “They need to know how a decision was made.”
He thinks companies — including ThoughtSpot — can come out of the downturn “stronger than before,” especially if they focus on key areas that tend to get less attention when the company is growing fast, like company culture.
“Think of it like a traffic jam,” he said. “If everyone is in gridlock and the ETA is 90 minutes before you can get moving again, you can either stay in your car, or pull over, get out, and have a meal so you’re refreshed and ready for the rest of the drive. COVID-19 provides the same opportunity for businesses to slow down and change course.”
Zuora CEO Tien Tzuo: ‘Keep moving forward.’
Tien Tzuo, CEO of subscription management startup Zuora, says that he’s leaning on advice from his “valuable mentor” Marc Benioff as he deals with the current crisis.
The Salesforce CEO stressed that startups should “keep selling and invest back in the business when times get tough,” Tzuo told Business Insider.
“Uncertainty can stop companies in their tracks,” Tzuo said. ” I fear that companies will freeze instead of moving forward.”
Instead, companies should look for opportunities to fine-tune their processes or even make big changes to their business model. While reining in expenses is important, so is being “smart about cash.”
“If you just cut and do nothing different, then you just hurt your business and your people,” he said. “Think of it as a great time to shift dollars to continue investing in people, customers and prospects: the business-critical groups that will make you stronger and prepared to scale when the economy rebounds.”
It’s also important to remember that “some of the best companies emerge from economic downturns,” Tzuo said, citing Salesforce, Google and JP Morgan Chase as examples.
Freshworks CEO Girish Mathubootham: ‘No one left behind. No layoffs’
“It’s important to ride the wave,” said Girish Mathrubootam, CEO of Silicon Valley customer engagement startup Freshworks and a veteran of the 2000 downturn.
“You want to look for opportunities to invest now in skills and initiatives that will pay off when we pull through this,” he said.
During this time of uncertainty, he’s adopted a “‘no-one-left-behind’ strategy,” he said.
“We have pledged a no-layoff policy,” he said. “We are paying salaries for all business house-keeping, food delivery and cab staff, even if they are employed by outside vendors.”
Freshworks is also offering free access to its software for companies with 50 employees or less.
Directly CEO Mike de la Cruz: ‘Now is the time for empathy’
Mike de la Cruz is CEO of customer operations startup Directly, and said that during the dot-com crash and the Great Recession he “learned how fast things can change and that taking action quickly and decisively determines your fate.”
That means moving quickly to protect employees and “finding new ways to help customers.”
“My biggest fear is the feeling of helplessness that could linger for individuals, families, communities and businesses, and what ramifications that will bring,” he said.
He said his wife is a mental health professional, with whom he has talked a lot about the challenges faced by his employees.
“Now is the time for empathy, and to go out of our way to help others,” he said. “It will take concerted action to overcome this crisis, and I’m excited to see new leaders emerging who are finding ways to help in the short term that build for the long term.”
Databricks CEO Ali Ghodsi: ‘Continue to hire the best people’
Ali Ghodsi, CEO of San Francisco cloud analytics platform Databicks, said his team has been preparing for a downturn and has raised a staggering amount of venture capital: nearly $900 million since 2017.
“We therefore find ourselves in the extremely fortunate situation of having well over half a billion dollars on our balance sheet,” he told Business Insider.
The startup’s leadership has been doing “The Sky is Falling” exercises for the past three years, gearing up for a short-term slump that could see the economy bouncing back in the summer to a “deep-long running recession.” Ghodsi says the company is “prepared for all these outcomes.”
Databricks’ game plan is to continue hiring the “best people” during the downturn, particularly for engineering and sales. The talent pool could be particularly hot as many companies are forced to layoff workers.
Celonis CEO Alexander Rinke: ‘Look out for employees’ mental health’
Celonis is a hot enterprise AI startup based in Munich that helps businesses, including big corporations, analyze and improve their networks. Despite the downturn, it’s not cutting jobs, CEO and co-founder Alexander Rinke told Business Insider.
“We are not laying people off,” he said.
His biggest concern is “the mental health of our people, many who live in smaller apartments in the city or have young children at home.”
Wisy CEO Min Chen: ‘Adapt or die’
Min Chen, CEO of Silicon Valley data analytics startup Wisy, was born in China but grew up in Panama, where she lived through the turmoil of the 1989 US invasion. She and her co-founders are “wartime survivors” who endured the violence and the disruption of that period.
“That experience, somehow, has prepared us for this crisis,” she told Business Insider. “We come from places where there was nothing, even in times of prosperity.”
Like other startups, Wisy’s biggest challenge right now is cash flow, but Chen and her cofounders hope keep their team together. While other startups have begun shedding jobs, they’re taking a different approach. “Instead of laying people off, we decided to all take pay cuts,” she said.
That adaptation feels critical: “Companies that die are those that couldn’t adapt,” she said.
In Wisy’s case, new opportunities have come up because of the crisis. An international organization that wants to use Wisy’s technology for tracing infections and anticipating outbreaks has invited it to apply for grants.
“Even if we don’t have the grant, we would help,” she said.
Podium CEO Eric Rea: ‘Local businesses aren’t getting the response they need’
Eric Rea is CEO of Podium, a cloud startup that helps small businesses track and improve customer conversations.
The downturn — and particularly the lockdown in many parts of the world — has taken a heavy toll on the company’s core market: small businesses, including mom-and-pop shops, many of which only have a few weeks worth of cash reserves.
“My fear is that we don’t give the scope of response that local businesses deserve and need right now, both from a government and innovation standpoint,” he told Business Insider.
Podium has focused on becoming as much of “a source of stability as we can by providing tools and information to help them get through this,” Rea said.
Automation Anywhere CEO Mhir Shukla: ‘Prepare for the new realities of work’
Mihir Shukla is CEO of Automation Anywhere, one of the dominant players in the robotic process automation industry.
He said the crisis will lead to big changes in the way people work, with the sudden shift to working remotely as the most prominent example. Shukla said there will likely be a need for “reskilling and training.”
Businesses should “prepare the workforce for the new realities of work,” Shukla told Business Insider.
Glassbox CEO Yaron Morgenstern: ‘Don’t just focus on survival tactics’
Yaron Morgenstern, CEO of Israeli analytics startup Glassbox, says that a key lesson he learned from the 2008 financial crisis is that companies need to think strategically even as they struggle to survive.
“Our major concern right now is that companies will only look for survival tactics instead of realizing long term needs,” he told Business Insider. “The key for a stronger future is investing wisely in strategic capabilities, many of which must be powered by a solid digital transformation.”
Sumo Logic CEO Ramin Sayar: ‘Lead with compassion and conviction’
“Fear is fueled by the unknowns, and the COVID-19 crisis is full of them,” said Ramin Sayar, CEO of Silicon Valley analytics startup Sumo Logic.
He harkens back to his experience in past recessions to surface a key lesson from the past: Companies must “take action immediately and not ponder or wait,” he said.
With that in mind, Sumo Logic quickly set up an emergency management committee to deal with the crisis.
“The last piece of advice I would give to all my fellow CEO counterparts is to lead with empathy, compassion and conviction,” Sayar said. “This is the time that your employees, customers, shareholders and community need resilient and decisive leaders.”
Sternum CEO Natali Tshuva: ‘Beware, because hackers never sleep’
Initially, Natali Tshuva focused on the safety of her employees and managing the transition to remote work when the crisis began to escalate about a month ago.
But as the CEO of an Israeli cybersecurity startup, Sternum, she’s now back to worrying about how bad actors could take advantage of the present situation.
“As cybersecurity experts, we know that hackers never sleep,” she told Business Insider. Her big fear is that hackers will “exploit the chaos in the healthcare sector as a result of the pandemic.”
Her company is remaining hyper-vigilant ot the safety of its customers.
Better Cloud CEO David Politis: ‘Be in lock step with your team and customers’
David Politis, CEO and founder of BetterCloud, said that “whether it takes weeks, months or quarters, we will get to the other side of this.”
Downturns force startups to become more efficient and to fix broken processes, he said. “It’ll take grit, it’ll take a different way of operating and it will be a test for all of us,” he said. “To be successful navigating these turbulent times you need to be in lock step with your team and customers.”
But, companies and teams that do that, and make it through this period, are “going to be stronger on the other side.”
Impira CEO Ankur Goyal: ‘Take a guess on uncertainties and assume the worst’
“This is a tough time for CEOs,” says Ankur Goyal, CEO of Impira, which uses AI to help businesses process and draw insights from their data. “We have the unenviable task of balancing the health and safety of our employees, delivering to our customers and investors, and running the business.”
Taking care of his employees is more difficult than usual, since everyone is working remotely, “I make a concerted effort to reach out every few hours to check in with team members,” Goyal said.
He also makes it a point to reach out to customers, partners and investors. “We are all dealing with a lot right now and a little empathy goes a long way,” he said.
It’s an extremely uncertain market, so it’s impossible to make assumptions beyond a quarter, he said. Startup CEOs may, at times, need to take risks.
“Take a guess on the uncertainties and assume the worst,” he said.
The crisis also creates opportunities to build a stronger and more resilient company.
“This is a clean slate and an opportunity to really get people aligned,” he said. “If you are able to navigate through this period, almost by definition you will come out a lot stronger. So keep that in mind and use it as an opportunity to build the extremely strong and resilient company you always wanted.”
Cyral CEO Manav Mital: ‘Focus on people’
The CEO of cloud security company Cyral, Manav Mital, understood the magnitude of the crisis when he heard about the dropping sales of peer companies.
“We assumed that we would not escape that fate and suffer the same pain,” he told Business Insider. “We continue to batten down the hatches: planning on growth to be completely organic over the next two-three quarters, not experimenting much with side projects.”
A veteran of the Great Recession, Mittal most important advice to fellow startups CEOs is to “focus on people.”
“In times of financial hardship, one can help by providing people with employment certainty, reducing costs of ownership for businesses, making teams more productive with automation, etc.,” he said. “But in an environment where everyone is worried about their health, businesses have to think about people above all else.”
UiPath CEO Daniel Dines: ‘Be agile or risk becoming irrelevant’
Daniel Dines, cofounder and CEO of robotic process automation startup UiPath, is familiar with market slumps. He launched UiPath in 2005 and “within two years, we were in the midst of the last economic downturn.”
“One of the things I learned quickly through that experience was that you have to be agile or risk becoming irrelevant,” he told Business Insider.
Like most other CEOs, he stressed the importance of communicating openly and consistently with customers and employees.
“It’s critical to communicate continuously with your whole company,” he said, citing the use of tools like Slack to keep employees engaged. “Openness and transparency are core to not only us as a company, but in everything we do.”
Bamboo Rose CEO Sue Welch: ‘Respond like the company’s survival is on the line — because it is’
Sue Welch is CEO of Bamboo Rose, a cloud retail services and logistics startup based in Boston, who is a veteran of the dot-com crash.
At the time, many startups failed to “truly understand what was happening” until it was too late.
“Many companies failed to marshal funds and resources to weather the storm,” she told Business Insider. “I was one of the CEOs that didn’t respond quickly enough.”
She said she learned from that mistake at Bamboo Rose. Her team started planning early and held daily calls to “ensure the company’s viability and survival.”
She said her biggest challenge is leading a team with employees who are not just working remotely, but are spread out across the globe.
“With employees on four continents in seven offices, it’s key for us is to keep our employees informed and to be as transparent as possible,” she said.
Beacon cofounder and COO Mark Higgins: ‘Flexibility is king’
Mark Higgins, cofounder and chief operating officer of Beacon, a cloud platform for banks and financial services firms.
Beacon’s customer-base is taking a beating in the downturn and Higgins said his team’s “long experience working in trading businesses” has highlighted one lesson: “Flexibility is king.”
Beacon’s engineers are focused on quickly making platform changes to help customers deploy the tools that would help traders “manage robust real-time risk.”
HqO CEO Chase Garbarino: ‘Call as many customers as possible’
Chase Garbarino is CEO and cofounder of HqO, a commercial real estate platform. He said his main worry is the impact of the downturn on small businesses, which are taking the hardest hit from the market crash.
“Big business is well organized and tends to do ok in getting the ear of the government when bailout time comes, but small businesses and average workers often get left out in the cold,” he told Business Insider.
That’s bad news because any recovery is “highly dependent on saving small businesses and those they employ,” he added.
He stressed the importance of taking action quickly to respond to the crisis. “Cutting expenses is always the easiest place to start, particularly anything you can cut that will help you save jobs,” he said.
You also need to think long term, noting that the best companies “forge strong partnerships” when times are bad, he said.
“It’s easy to be good to people in good times,” he said. “It’s hard in tough times, but the ROI is much higher in the long run.”
He offers this tip to founders and startup execs: “Call as many customers as possible and just listen to their challenges and see where they can help without an agenda.”
Zeit CEO Guillermo Rauch: ‘Focus on building online communities’
Guillermo Rauch is CEO of Zeit, a San Francisco startup in stealth mode focused on Next.js, the open source software framework Rauch developed to help developers build faster applications.
Rauch is known for holding a successful online tech conference in December as the coronavirus crisis was just getting started. He sees the crisis leading to a shift in the way tech events are held and expects a stronger emphasis on online events and “online community building efforts.”
“Tech events will probably never die,” he told Business Insider. “But I’m not sure that they are going to be able to ever justify themselves within B2B tech startups’ marketing budgets like they once did.”
Zenefits CEO Jay Fulcher: ‘Time is not your friend. You must move quickly.’
Jay Fulcher, CEO of human resources platform Zenefits, says that the current crisis feels worse than the dot-com crash or the Great Recession.
“The personal toll and anxiety far exceeds prior recessions,” he told Business insider. “That said, the underlying economy is far stronger than 2008.”
He stressed a key lesson from the past downturns: “Time is not your friend. It is critical to be decisive and move quickly in response to a situation like this.” He echoed the view of other CEOs on how this crisis can break a startup or make it stronger.
“Most companies are judged by how they weather stormy seas, not calm waters,” he said.
In the same way that 9/11 led to dramatic changes in travel and security, he also predicts that the pandemic will cause a big, permanent shift in how we work.
Talkdesk CEO Tiago Paiva: ‘We are at the crossroads of life and business’
This crisis has actually created an opportunity for San Francisco startup TalkDesk, which enables customer support workers to take calls from home.
“We all expect that any shutdowns will be temporary, but it’s also becoming clear that moving to a remote workforce will allow companies to survive, if not thrive, through the COVID-19 pandemic,” said CEO Tiago Paiva. “The companies that were still using an on-premises system for their contact centers are recognizing the inherent inflexibilities made them ill-prepared for operating in a crisis.”
The current situation has revealed how quickly a disruption can change everything.
“Everyone is concerned about the human element,” he told Business Insider. “We are all at the crossroads of life and business.”
Lightbend CEO Mark Brewer: ‘Plan for the worst-case scenario’
Mark Brewer, CEO of San Francisco cloud startup Lightbend, said he “survived and learned a lot” from previous crises. One lesson is that when times are bad, “speed is much more important than precision or accuracy.”
Brewer said that startup CEOs should brace themselves for worst-case scenarios. “Whatever you expect the downside to be — decrease in bookings, churn metrics — assume they will be 30% worse,” he said. “And plan for it.”
And even though startup CEOs may be focused on day-to-day struggles, they need to always think ahead.
“Have clarity on what you want the company to be when the market comes back,” he said. “Is there an area of investment or spend today that isn’t critical for that goal?”
If so, cut it.