5 lessons on how we transformed our startup into a survivalist company

Lately, we see more companies and businesses around us forced into distress by COVID and its aftershocks. We are also experiencing our own share of upheaval. Having gone through several shocks in the past, I found myself thinking  through some of the lessons that I’ve learned over the past few years.

There are five key lessons that are now helping our company to face uncertainty, diminishing resources, and an unstable environment. As I was thinking through some of these lessons, I found a strange similarity to what a human survival situation in real life looks like. This post is aimed for you founders out there who may be considering or forced to make that transition into a survival mindset. 

Lesson 1 – Be Opportunistic 
Just like when you’re stranded out in the wilderness, you have to make the most out of every opportunity which comes your way.  In the previous, well-funded startup mindset, you would be very picky regarding the opportunities you choose to pursue. In the survivalist mindset, you need to be on the lookout for anything that can be useful. For example, when our company got the chance to participate in some programs that could open us up to new types of customers, we decided to pursue them. Business development opportunities that we might have not considered in the past, now are getting a closer look. Our R&D team went to great lengths to reduce our cloud costs. On top of that, we managed to secure cloud credits from several vendors. The delicate line that founders need to be aware of is between pursuing tactical opportunities and chasing wild longshots.  We are talking about opportunities that are on your path and that you think you could turn them into near-term advantages moving forward.

Lesson 2 – Be aware of your limits 
In a survival situation, knowing your physical limits is critical for making the right decisions. Knowing how long you can live without water, without food, or if you can pass the night without fire means the difference between being able to continue, to tapping out. 

In the business environment, things are not all that different. In the business survival environment, cash is more than king, it’s life. 

Knowing your abilities, resources, and limits also means being very realistic about where they can get you. Take a good hard look at yourself, your team, and your resources. Be honest about how far you can go with them. If that picture paints a bleak outcome, then it’s time for Lesson No. 3.

Lesson 3 – Be prepared to stomach some gnarly stuff 
It’s not gonna be pretty, not by a long shot. As we were transitioning into a survival, cashflow-first operation, we had to make some extremely tough choices. Necessities like pay cuts and letting go of loyal, dedicated employees were some of the painful moves we had to take. We exchanged our roomy, comfy office to a shared co-working space and took a hard look at every expense on the profit-and-loss sheet. You can’t afford to get comfortable; far from it. Just like swallowing some very objectionable critters to help you gain a few precious calories in the wild, these decisions will not sit well in your stomach. However, not making those tough compromises is even more dangerous. 

OK, we got back to basics, enough to get us by. Now what? And where to?

Lesson 4 – Think in directions, rather than destinations

In a growth mindset, we’re used to thinking about specific milestones we want to reach. They are usually Annual Recurring Revenue (ARR) objectives we presented to the fund/investors as we were raising capital, and were overly optimistic. As a survivalist company, you have to adopt a different mindset.  It’s more of a  “directional” approach rather than a milestone or destination-based approach. For us, it meant looking at how every month we were getting closer to reaching a cash-flow positive position. We didn’t know whether it would take us 6,9 or 12 months to reach each one, and it really didn’t matter. As long as we were narrowing the gap by adding more accounts, and keeping those we managed to acquire, top line metrics like ARR goals by the end of the quarter seemed less important as guideposts. Here’s what we had to focus on: 

Lesson 5 – Catch your own meals. Anyway you can.

When you’re on your own, your ability to provide for yourself becomes critical. This is the area where true magic can happen. A company with very few resources, almost no marketing, or an army of sales executives, can repeatedly close deals. Again, it ain’t gonna be pretty nor elegant, but it will get the job done. We had to rely on our network of investors, advisors, heck even family members to help get some deals into the pipeline. As a SaaS startup, customer retention was just as much a part of securing cash flow and revenue as new customer acquisition. Founders have to continuously and clearly communicate to their employees what the company’s new focus and heading are. In his biography, Elon Musk describes how he had Tesla’s production line employees and engineers make sales calls when the company had to make its revenue goals to stay afloat.  

Conclusion

Eventually, you will want to transition from  a “survive” mindset to a “thrive” one. Surviving is never a goal on its own. No one, no employee, investor, or partner wants to take part in a company that just barely hangs in. Hopefully, the survival lessons practiced in the trenches will serve as a foundation for sustainable growth. 

We are still experiencing the shocks and aftershocks of COVID-19. It’s not clear which changes will stay with us and which will disappear. Companies that are able to transition into that survival mindset will be more resilient to whatever world we find ourselves waking up to. Yes, capital and runway are important, but without a changed mindset, focus on operational efficiency, and a desire to be self-sufficient, those security buffers can be quickly worn down.  Lastly, the most important element in any survival situation is the leadership’s attitude and mindset. You have to convince yourself, and then convince others, that you can and will get out of it. Just keep pushing forward.