Hacker Bits, April 2016

These markets generally
take a long time to recover.
Longer than you think.
Scrub your revenues
Last week, an entrepreneur
pitched us, and his ‘current
customers’ slide was alight with
bright, trendy logos of bright,
trendy venture-backed companies.
You know what I saw? A
slide full of bright, trendy, money-losing,
may-not-survive companies.
(Luckily, in this case,
the entrepreneur referenced
these customers because he
thought VCs would like to see
that their smart startups use his
stuff, but he actually had a lot of
mainstream customers, too. He
has a new slide now.)
This, I think, was one of the
biggest surprises from the last
dot-com bust — we all knew we
had to cut our expenses, but
no one thought about what our
customers might be doing.
And guess what? They were
all cutting costs, too — including
those costs which comprised
our revenues. Or worse, they
were going out of business.
If you are in Silicon Valley
and your customers are mostly
well-paid consumers with
no free time, or other venture-backed
startups, well, I’d be
worried. And yes, it sucks, but
it is better to be worried than
surprised.
Focus maniacally on
your metrics
I know a few CEOs who delegate
the understanding of their financials
and their business metrics
to the CFO, and then stop
worrying about all that ‘numbers
stuff’.
Don’t do that. You have to
know your numbers inside and
out — they are your life blood.
You also have to know which
metrics drive the business, and
focus on them like your survival
depends on it — because it
does.
Figure out your canary (or
canaries) in the coal mine (by
that I mean the leading indicators
that tell where your business
is headed and whether it is
healthy) and watch them weekly,
daily, in real time or whatever
is possible. And, have a plan in
advance about what you will do
if/when the metrics go south.
Many of the best companies
to have survived the last
downturn became super data-driven,
and were constantly
course-correcting to make small
but continuous improvements in
their operations with what they
learned.
Hunker down
These markets generally take
a long time to recover. Longer
than you think. And, it might
get worse. So don’t plan for the
sun to start shining tomorrow.
Or next month. Or next quarter.
Or maybe even next year. Sorry.
Having just thoroughly depressed
you, let me say that I’ve
seen amazing transformations
by companies who adapt early
to the new reality. Severe budgets
give clarity. Smaller teams
often find greater purpose in
their work. Gaining control (by
becoming profitable) feels really,
really good. Watching your
competition (who didn’t read
this) die, feels — can I say it?
— well let’s just say that when
your competition goes out of
business, you often gain their
customers…and that’s a very,
very good thing.
Some of the greatest companies
were forged in the worst
of times. May you be one of
them. •
Reprinted with permission of the original author. First appeared at heidiroizen.tumblr.com.
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