At this week’s Coffee and Jam, we asked Ben Kepes, founder of Cactus Outdoor, long-running startup investor, and influential tech blogger; Tip Piumsomboon, Principal at Blackbird Ventures; and, Laura Reitel, Callaghan Innovation’s Startup Programme Manager, how startups could spot opportunity, pivot, and thrive in the post-COVID world.
You can watch this webinar below.
There was broad acknowledgement from the panel that we are on the cusp of a financial shakeup the likes of which we have never seen. It’s not the Great Depression, the GFC, or the Canterbury Earthquake. It’s global, it’s deep, and the impact is unknown.
This statement may sound borderline apocalyptic. No one, least of all business owners, wants to hear that an economic downturn is on its way. Having said that, there is no business entity more nimble, adaptive, and with the ability to move faster towards opportunity than an early-stage startup. So, let’s look at how we can turn this challenge into a turning point for your venture.
The strain of immense change challenges businesses to innovate. To survive, one must pivot, plan ahead, empathise, and build networks to the point where, when normalcy returns, you emerge stronger than you were before.
What should startups do right now?
Don’t be a unicorn. Be a camel.
Camels are tough as nails. They can go for 3 weeks without food or water. Able to carry heavy burdens across the most hostile terrain with relative ease, these adaptable creatures can break into a sprint at a moment's notice.
As a startup, you want to aim for camel-like levels of resilience.
Achieving this goal can involve many things. Ben suggests asking yourself this simple question: can I cover my businesses core needs? In times of economic downturn, it’s the fundamentals that need attention. Are you meeting your obligations as a business owner? Can you pay your employees? Are you maintaining your connections with customers?
Think in decades, not in weeks.
Tip Piumsomboon emphasises the importance of long-term planning. Look forward - way forward. Think about the sector you are in now and where your capability lies. Where is the sector going to go? For instance, expotech is driving so much disruption in so many sectors, what is it doing in yours?
Can you imagine the place your venture occupies in this completely disrupted sector 10 years from now?
Laura Reitel suggests using your imagination to pull together a list of possible scenarios and the steps you can take to prepare for them. Understanding what could happen ensures your business is better prepared for the twists and turns that accompany times of change. Having a plan also helps with peace of mind, which is crucial to maintaining a healthy business/ mindset.
Tip also emphasizes the need to look after your customer relationships. Listen and ask questions If your customer is saying they can’t do something, find out why and dig deep for the problems that they are experiencing. Your ear should be focused on understanding your customer’s problems as opposed to listening for an opening to overcome an objection and start the sales pitch again.
During downturns, customers are your best resource. Tip suggests taking the time to dig deeper into the reasons behind requests, thereby understanding what customers are looking for and if/ where demand might be shifting. Doing this can help with long-term planning. It also helps strengthen those vital support links that help keep your business afloat.
Should I pivot? How?
It may sound like startup jargon, but pivoting is an integral part of the startup lifecycle. Tip makes the point that there are 2 different types of pivot. The first is the necessary pivot. It comes out of pushback from a market that doesn't want your product (maybe you’ve started your journey too soon and without any real market validation). The second type is
a re-application of your product where there is wider and more powerful potential.
Here are examples of successful pivots and the key takeaways from each.
Pivot type 1 - kill your darlings.
The terminology is commonplace in the fields of publishing and cinema. It relates to a tendency of writers to grow attached to certain parts of their work. Often, it’s these very characters, moments of dialogue, or other elements that the writer is attached to that hold the piece back. This is something the writer is unlikely to notice, because of their attachment. So too with startups.
Mish.guru is a key example. Believe it or not, this brand management platform began life producing 3D printed horseshoes as one of its co-founders was passionate about horses. About 2/3 of the way through an accelerator program, the Mish.guru team discovered obsession with horses was keeping them in a sector where their business had little chance of succeeding.
After an immense pivot, the team emerged as a brand management platform, operating on social networks like Snapchat and Instagram. Today, names like MediaWorks, The Bank of Ireland, and Princeton University are among their clientele.
Unique passions can be the driving force behind startups. But, they can also cloud our vision and make us blind to new ideas, markets, and relationships.
Pivot type 2- take the moonshot
Let’s turn to CANVA, the tool of choice for would-be designers who want eye-catching content without having to tackle the Adobe Suite. The idea behind CANVA started when Melanie Perkins, a then 19-year-old design tutor, saw students struggling with the steep learning curves inherent to most mainstream design software.
To solve this problem, she set out to create Fusion Books, a platform that allowed students to design their own school yearbooks using simple tools and a library of templates. Perkins soon discovered that there existed a real demand for an accessible, online design tool. So, she pivoted. 5 years later, CANVA had over 10 million users, offices in 3 major cities, and is valued at over 1 billion USD.
Perkin’s story emphasises the importance of reading market signals and pivoting accordingly. Being proactive, doing your research are essential parts of pivoting, and seeing the bigger picture are essential parts of pivoting. Now, more than ever, listen to the market by listening to your customer base, you may learn something that encourages you to make successful changes to your business.
Could you be your own customer?
Along your startup journey, have you had to clear any unnecessary hurdles in order to complete seemingly simple tasks? If so, chances are you’re not the only one.
Take, for instance, the ambitious pivot of Syncio. Syncio began as an internal tool servicing another startup, an ethical fashion marketplace called Ethi. Before long, Ethi was experiencing difficulties with inventory management, listing, and order management.
Syncio was built to automate these processes. Before long, the team behind Syncio realised other merchants shared similar issues. The team made Syncio available to anyone. Syncio now powers the online stores of such notable brands as GAP, Volcom, and Alice McCall.
Take note of the obstacles you face, as they could be opportunities in disguise.
Post lockdown: where will COVID inspire growth?
Trying to predict post-crisis market outcomes is often difficult. The unprecedented nature of our situation means this is even more true. Nevertheless, speculation is a natural part of business. So, with that in mind, here are some areas where we may see growth once lockdown abates.
Hierarchy of needs.
Ben draws attention to Maslow’s Hierarchy of Needs in suggesting that the market for luxury goods may take time to reboot following COVID. In times of crisis, individuals and collectives tend to focus wholly on securing their basic needs of food, shelter, and clothing. So - we’re not saying it’s all about those sectors but - the point is that - if your product is a ‘nice to have’ and not a ‘need to have’ you might be in for a tough time.
Getting out and taking care.
After being cooped up for a minimum of four weeks, it’s likely that Kiwis will have an increased desire to get outside. Each of our speakers predicted a rise in demand for outdoor activities such as wilderness tours and eco-tourism.
Moreover, there’s nothing like a terrifying push-back from mother nature to inspire respect and decisive action on her behalf. Our speakers also predict an upswing in demand for environmentally friendly and sustainable businesses, practices, and initiatives.
Finally, mental health and personal wellbeing took centre stage as New Zealanders moved into lockdown. Given our pre-existing mental health crisis, the current situation is likely to result in an increased emphasis on ensuring the mental wellbeing of people and communities. Businesses and initiatives who cater to these needs are, therefore, likely to boom.
Opportunities across the board.
Now, more than ever, leaps and bounds in remote work technologies like video conferencing, live streaming, and social networking, have widened the talent pool dramatically. For many employers, a workforce is no longer restricted by distance.
So too with networks. Adaptations due to COVID have since showcased how ideas, relationships, and stories can travel further and faster than ever before. Naturally, this has the potential to change how businesses operate, communicate, and collaborate.