It’s essential to make sure you and your family are prepared. It’s hard to focus on your startup if you are scrambling to educate yourself and prepare your kids, parents, partners, etc. There are a few good overviews, but this is one of the best from Scientific American.
Careful, clear overview from Richard Hatchett on BBC, who has worked in epidemiology preparation for 20 years. [Video]
From Italy, a strong statement about the role of social distancing.
“If people stay at home, we will avoid a catastrophe,” he said in an interview. “As doctors, we are begging you.” – Maurizio Cecconi, incoming president of the European Society of Intensive Care Medicine via Bloomberg.
One of the best things we can all do, is help shift the rate at which people are going to need medical care. Social distancing simply means having less contact with others – everything from working remotely, avoiding events, etc. If more of us do this, the resulting impact is shown below – you can increase the chance that you flatten out the curve for your community and avoid exceeding healthcare system capacity.
Real data from the 1918 pandemic. Phili went ahead with a parade, while St Louis canceled gatherings.
Still not convinced about social distancing? Here is the long explainer contrasting current CV-19 outcomes with and without social distancing.
Wartime CEO vs Peacetime CEO
Nearly 10 years ago, Ben Horowitz reflected on his experience after the dot com crash. And had the following to say about wartime vs peacetime CEOs. These are some of the highlights contrasting the last 10 years with where we are now:
Peacetime CEO knows that proper protocol leads to winning. Wartime CEO violates protocol in order to win.
Peacetime CEO focuses on the big picture and empowers her people to make detailed decisions. Wartime CEO cares about a speck of dust on a gnat’s ass if it interferes with the prime directive.
Peacetime CEO builds scalable, high volume recruiting machines. Wartime CEO does that, but also builds HR organizations that can execute layoffs.
Peacetime CEO spends time defining the culture. Wartime CEO lets the war define the culture.
Peacetime CEO knows what to do with a big advantage. Wartime CEO is paranoid.
Peacetime CEO aims to expand the market. Wartime CEO aims to win the market.
Peacetime CEO strives to tolerate deviations from the plan when coupled with effort and creativity. Wartime CEO is completely intolerant.
Peacetime CEO strives for broad based buy in. Wartime CEO neither indulges consensus-building nor tolerates disagreements.
Peacetime CEO sets big, hairy audacious goals. Wartime CEO is too busy fighting the enemy to read management books written by consultants who have never managed a fruit stand.
Key Person Risk
If someone becomes ill or is otherwise offline, is there someone else who can cover for them or has access to what they currently can access? It’s easy to forget that only one of a few people might have access to critical information from bank accounts to email administration. It’s worth revisiting how you manage credentials using tools like Lastpass. For 2FA like Yubikeys, do you have enough keys? Have you set up authenticator apps?
Situation Management and Operations
There is likely a need for structured, and explicit situation management teams. These teams should be put in place (up front) following a robust risk assessment process conducted by the organizational leadership group. The situation management teams are in place to:
- Monitor the latest information available from reputable sources
- Enact emergency response plans in the event of an escalation trigger
- Report with a regular frequency to the organization leadership group/ whole organization (and in many cases manages also the overall communication (internally, to customers and other stakeholder groups like investors)
Emergency management team size, meeting schedule, reporting schedule, and operational rhythm (hours of operation, time dedication, detail of situational awareness) should be tiered based on risk impact triggers.
Development of Company Specific Triggers and Action
Triggers allow situation management teams to execute operational processes without approval, which makes for rapid responses as situations escalate or otherwise change. These triggers should be established by the leadership group.
Personnel Ops Tracking
There should be a process of knowing where our people are and what that means for their health and safety. For distributed teams, we need more robust reporting and risk assessment regimes. We also need to consider the impact of a distributed node becoming completely ineffective.
It’s very useful to understand the simultaneous impact of slower sales and slower fundraising. So how and where does it make sense to spend? It’s hard to ramp up sales teams if customers aren’t spending but it may make sense to keep pushing on product milestones because this impacts existing customers and will better position sales in 6 months.
Some firms will opt to do nothing or slow roll decisions, but it seems there are enough teams who understand that disruption or slowdown is less of an issue, if you are investing in outcomes that are going to take a decade (for seed) to be realized.
Sequoia is more emphatic about this. Now is the time to reduce costs, fast.
This is the thing you want to watch. In some cases this may be new deals getting delayed, but it’s also possible that contracts might be cancelled or scaled back. This is a helpful perspective from Tomasz Tunguz – What I Expect in the Next Few Months in Startupland.
It’s essential to keep investors in the loop. Investors are quickly going to run out of resources – not necessarily money, but certainly time. And they’ll want to understand which teams have a plan and are best positioned to survive and thrive.
The most difficult thing for founders is to switch from a plan focused on growth, to a plan focused on survival. And for many companies, revenues are likely to stall or decline and then burn will go up because expenses have not been managed. Now is the time to cut costs. Really. Right now. Slow incremental corrections won’t cut it.
How are investors going to react?
Assuming a good percentage of investors continue investing, in the Bay Area, investors are stocking up for a protracted period of time away from the office and some have already explicitly said they won’t be taking in-person meetings.
Example from Homebrew on Mar 2.
But for a lot of investors, the time together is essential, so it may take some time to adjust. It’s clear the intent is there, but can investors get to the end of the process on video chat?
Here is Semil on the question –
Currently, it seems investors are 50/50 on keeping face to face meeting commitments by switching to virtual. What’s lost from non-physical meetings may be at least partially recovered in video. This may mean more “speaking with your hands”, more facial expressions, and more checking in on how the other person is feeling about the interaction and information being shared. One baseline rule is to insist on video and not audio meetings. If someone dials into your zoom meeting with their phone, consider the following script:
You: “The plan was to meet virtually in lieu of physical so video seems to make the most sense”
Them: “Video doesn’t work for me right now”
You: “We’re both trying to figure out whether we should be working together so it makes sense for us to find a time where at least a video conversation works for both of us. What do you think?”
The main question is how many investors in your pipeline will be willing to run an entirely remote process? It’s not clear but so much of the process is already online or remote, so we expect some investors to adjust. Others may begin a process and then wait until travel resumes or limit investments more regionally, so they can rely on personal transport options.
The biggest adjustments are likely timezone related. For example, if you want to give maximum flexibility to West Coast investors and you are in the EU or Israel, you may have to do some late night or early morning calls if you want to offer the maximum flexibility for investors. The more time slots you offer, the sooner the meeting can happen. This is already happening for some customer and investor meetings, so the main adjustment will be to do this for most meetings.
If you have a term sheet or expect one soon, it’s worth considering what you can live with. Change usually causes investors to pause and reconsider – ongoing negotiations might just result in folks doing nothing as they wait to learn more about how the epidemic plays out.
It’s not at all clear that we are in a situation similar to the 2008 financial crisis. However it is reasonable to expect that sales forecasts will have to change because a lot of businesses are going to opt to do nothing in the coming weeks and months as they try to manage their own COVID-19 responses. At the same time, it’s hard to know how fundraising will be impacted. Some VCs may simply continue to deploy because they’re taking a 5 to 10 year view on their investment and they expect COVID global impact to follow China, where companies like Apple are indicating that work is resuming.
Example from Funding in the time of Corona Virus
Traction came to define the last 10 years. However, investors recognize that there will be many companies building great businesses that will grow more slowly in the coming years. There is some evidence that investors will start to look for other signals like churn – i.e. is your product or service a “must have” (low churn) versus a “nice to have”.
Perspective from 2008
Maybe the best comparison we have right now. In short, number of rounds dropped a little.
But the real casualty was valuations and sizes of rounds, especially in seed.
More details from What Could the Venture Market Look Like in the Coronavirus Era..
Another way to look at fundraising is from YC dataset which gets to funding and survival rates. Take a look at the Summer and Winter funding and survival rates via The Y Combinator Database: The Definitive YC Company List | YCDB.
Why 2007 is the most important year ever (Source: Thank You For Being Late by Thomas L. Friedman)
A lot of very significant things happened in 2007:
- Facebook (late 2006)
- Google bought YouTube
- Intel went off silicon
- Cost of DNA sequencing
- Total size of cloud computing
Closer to 9/11?
“This feels more like 9/11 than 2008…” – Goldman Sachs CV-19 investor update 3/16
It’s worth understanding that post 2001’s terrorist attack, VC funding dropped even further than post 2008 lows. Look at 2002 and 2003 compared with 2008 and 2009.
To be completed
Small business loans are available and are being made available. (High level overview of Federal and by State + SF and NYC summary by Susa Ventures, Natalie Arora here)
This is a comprehensive list for US Federal and State programs.
New York City Programs:
- NYC Assistance & Guidance for Businesses Impacted Due to Novel Coronavirus
- NYC Employee Retention Grant Program
Similar to Fundraising in many ways. Like fundraising in 2008, you can see a real slowdown in a few ways. First, we’re all consumers and we’re all likely to make some adjustments. Take a look at what happens around 2008 for US consumers.
Business spending is impacted as well. Here’s an example from construction.
Estimated demand for architects vs actual number of staff positions in the US through 2008 financial crisis.
If you have something customers want, it’s likely you’ll continue to see growth, but there may still be some uncertainty and delays in the coming months.
B2B in C19
We’ve started to host discussions on B2B strategies. Notes are here – B2B in C19
Work from home
Is perhaps the simplest intervention to enable social distancing. Most teams will need to make some adjustments, but there are a few great resources to help figure out remote work including GitLab and Basecamp’s Remote Book.
This is a good example of internal communications from a fast growing tech company with a team of 50-100 people.
Contractors and Third-party Providers
Understand your exposure to contractors and the effects of a shutdown in a remote location. If your contracted tech development is located in another country, you need to have a plan for maintaining services if that country is impacted. Where is your technical and corporate knowledge held, who has access and the capacity to ensure your services continue?
Remote interview processes are already quite common and many organizations already conduct remote interviews. If this is not current practice thought should be placed around its implementation. Ideally, travel and face-to-face processes should be minimized.
Consideration should be given to travel restrictions and quarantine times for candidates travelling internationally to take up positions in new countries. It is likely that HR will be required to coordinate with the Situation Response Team to coordinate this.
Care must be taken that employee selection discrimination procedures are consistently articulated and stressed. Organizations can be exposed to significant legal and reputational risk if they are found to be discriminating based on race or country of origin.
Delayed Supply Chains
Run outage scenarios to assess the possibility of unforeseen impacts.
Expect the unexpected, especially when core suppliers are in the front line of disruptions. In the case of the coronavirus crisis, China’s influence is so wide-ranging that there will almost inevitably be unexpected consequences. Inventory levels are not high enough to cover short-term material outages, so expect cause widespread runs on common core components and materials.
In 2005, Hurricane Rita struck Houston and western Louisiana, causing widespread shutdowns of oil refining assets located in the region. What came as a surprise to consumer-packaged-goods firms some six months later was that petroleum-based packaging was in short supply because of Rita’s impact on supplies of the raw materials needed to make these materials. Many firms scrambled to redesign packaging using old-style paper and cardboard.
Map upstream suppliers several tiers back. Companies that fail to do this are less able to respond or estimate likely impacts when a crisis erupts. After the 2011 Sendai earthquake in Japan, it took weeks for many companies to understand their exposure to the disaster because they were unfamiliar with upstream suppliers. At that point any available capacity was gone. Similarly, develop relationships in advance with key resources — it’s too late after the disruption has erupted.
Create business continuity plans. These plans should pinpoint contingencies in critical areas and include backup plans for transportation, communications, supply, and cash flow. Involve your suppliers and customers in developing these plans.
Redesign with second sources. This supply-chain design provides backup capacity for supply, production, and distribution outages. The backup capacity spreads the risk of a disruption across two sources (as long as the disruption does not also affect the second source location). Consequently, it is better to have a second source outside the primary source region.
Redesign to source locally. This design calls for a company to have production facilities with local sources of supply in each of its major markets. Like the above option, it spreads the risk. Since these sources are dispersed, the economies of scale are lower and the capital costs are higher, but the transportation costs are lower.Closed Offices and Physical Spaces
From malls to offices, lots of spaces are shut down. For some, it’s easy to work from home. But what if your customers or partners rely on physical spaces?
Coinbase published their decision-making and communications guide for how they will approach office closures. More at Coinbase Coronavirus Planning and Comms.
It’s hard to see all of the changes that will come from CV-19. Some changes aren’t surprising. Any public spaces are going to suffer, perhaps for a protracted period. This is what restaurant reservations look like –
But we know from China, that food delivery companies have played a critical role and we’re starting to see the same thing play out in the US and EU. This has had some impact on startups already This is just some of what we’re seeing from the Urban Us portfolio –
EVA is seeing surging interest for their drone delivery services. Kiwibot has adapted to delivery food alongside medicines and medical equipment. Food for All is working on ways to provide more affordable food options. Coord is working with cities to change how they allocate curb space. Without in restaurant dining, there is less need for parking, but much more need for pick up or delivery spaces.
Looking out a bit further, it seems clear we’ll see some large stimulus actions from national governments. Here’s an example from like South Korea’s Green New Deal. It’s too early to understand implications but the reference to the post depression New Deal seems apt. Globally we’re going to be looking for large investments that can create jobs and secure better and new needed infrastructure. If other countries follow GND models, there will be new opportunities for climate-focused teams.
Where demand for current products or services may stagnate or fall, it’s clear there will be new opportunities.
As a starting point, see personal prep. Your team should all feel that they are personally prepared before they can focus on work.
It is worth considering adopting a more flexible remote work policy and/or culture (the difference being that you can have a policy that says it’s ok to work remotely but have a de facto culture that says it is not). Or encouraging small teams to meet together without needing to come into the full office. That said, no matter how relaxed your policy is, short of going fully, mandatory remote, there is likely to be a point at which some employees and contractors will prefer to work from home at a point when the rest of the company is still coming to the office, and it will be important to carefully consider how to respond to this.
Employees are also likely to have anxiety about the impact of coronavirus more broadly on the economy, the company, and themselves, and this will have an impact on the mood in the office. It might be a good time to emphasize transparency and stability.
Illness and Sick Days
There should be a plan in place for what the company will do if a significant number of employees get sick and are unable to work, particularly if they get sick at the same time or close to it.
National Law Review has been publishing on the subject for a few weeks now, regarding employer obligations.
Isolation, Cohesion and Mental Health
While encouraging remote work is an obvious and well-publicized course of action in response to the escalation, plans must also incorporate the maintenance of employee cohesion and mental health. Physical separation requires a greater focus on rituals to maintain team cohesion and coordination. It also requires a more robust consideration of mental health frameworks – particularly in contexts where complete societal interaction is significantly reducing. WHO has summarized some measures https://www.who.int/docs/default-source/coronaviruse/coping-with-stress.pdf?sfvrsn=9845bc3a_2. It is also part of good leadership to support your team during this situation.
There have already been reports of racial discrimination in both developed and developing countries. This is typically targeted at those of an Asian background and can impact everything from staff-to-staff interactions, sales processes, and recruiting.
We need to be clear about where we stand on this kind of behavior and communicate our values clearly with objective information. We also need to develop processes for instances where discrimination occurs.
Video here for best practices. May want to add a few purell dispensers around the office as a reminder.
Wipe down work areas regularly
There is some evidence suggesting the virus may stick around for at least a few hours, if not more, on surfaces. May also want to wipe your phone down on a regular basis.
Encourage flu vaccination
This will decrease health burden on hospitals and also prevent people from getting the flu and thinking they have COVID-19.
However, the flu vaccine will not prevent COVID-19 because they are two distinct diseases. (COVID-19 is more similar to SARS in it’s genetic makeup/way that it affects the human body.)
Again in 2021
As Elad Gil points out, similar outbreaks had two pronounced peaks. Even if we’re confident in a vaccine, that process is likely to take at least a year, so it’s likely we’ll go through a similar process a few months after things appear to return to normal. It’s one of the reasons China appears to be aggressively tracking people’s status each day. For example, a quarantine status app (i.e. have you completed 14 or so days) is used to determine if people can access public transit.
1918 Spanish Flu had two predominant waves of virus spread.
Novel Coronavirus (COVID-19) – Reddit has become one of the most comprehensive resources for CV-19
Sequoia guidance on making fast, decisive decisions about your startup to ensure you can navigate the next 3-4 quarters as we understand economics impact of Coronavirus – Coronavirus: The Black Swan of 2020 – Sequoia Capital Publication
Bain on CV-19 – Actions to take now.
Plan from Stripe, effective from Mar 2 Stripe Newsroom: COVID-19 precautions for Stripe employees and customers
Elad Gil – as a good startup overview as well as more context – Coronavirus (COVID-19) PSA for Startups
Coronavirus tech handbook – Coronavirus Tech Handbook
This guide is the work of collaboration across many people, teams, SMBs, and researchers. As new information comes to light, we will update this content. Our hope is that this guide serves as a one stop shop for helping you understand how to run your business remotely during Covid19 and beyond. JetBlue Ventures played a key role in helping aggregate many of the links.