How Founders Save Their Startups

When the going gets tough, it’s time to experiment

Been there, saved some, lost others

I’ve been through a number of the broader economic downturns. Obviously, I’ve run startups through the most recent COVID-related crisis, but also the Great Recession and the dot-com bust. I’ve withstood minor disasters that impacted either my industry, my field, or my markets. I’ve lost key employees at the wrong moments.

How to get into business-saving mode

There are a couple hard-and-fast rules that those better and more experienced leaders have taught me.

  1. Don’t panic. Obviously. But when things go south, panic can cause one leader to overreach and do something silly and another leader to freeze and do nothing at all. Survival mode should always be seen as temporary, and you should be looking to get back to growth as soon as possible.
  2. Focus on the problem, not the damage. Remember that the downturn in the business is the symptom, not the cause. If the root cause of the downturn is an economic crisis, the solution should focus on riding it out. If the cause is a market shift or competitor, the solution is about the response. If the cause is the loss of a key piece of the business, the solution is to quickly replace that piece.

How to execute a business-saving experiment

This is when even the best leaders solicit outside and out-of-the-box thinking. And this is where the best leaders make the best decisions — which, incidentally, is what leaders get paid to do.

The loser bucket

The idea is a loser, meaning it won’t ever produce revenue worth the effort. This is usually because of some physical or procedural hurdle that can’t be overcome without spending a lot of time or money making enough workarounds to get to revenue. In any case, you can spot a loser when either the customer adoption isn’t there or it becomes obvious that the solution is too costly to make it repeatable.

The promise bucket

The experiment has promise, but not right now. In other words, the idea itself might work, but it will take a lot of extra testing and more outreach to prove that it’s economically viable at scale. These are difficult decisions to make and hard experiments to stop, but they can always go on a back burner.

The learning bucket

The experiment was a learning experience, and there are some green shoots that may call for reinventing the idea and trying it again, quickly. Just as hard as it is to let go of an experiment with promise, it’s easy to fall into a trap of learning the same thing over and over. You can try an experiment a dozen different ways and get the same result, so it’s critical that the learning experience is more learning and less experience.

The spark bucket

Whether the experiment worked or not, there was a component to the idea that can be stripped out and reused in a completely different manner. The results here, in terms of revenue, should be promising, and the component should be a building block.

The pivot bucket

This is the most positive outcome an experiment can have, and almost always an outcome that will require the company to pivot to take full advantage of those positive results. Then it’s further decision time: How much of your existing business gets put on the back burner, and how much of a commitment do you make to this new experiment?

I’m a multi-exit, multi-failure entrepreneur. Sold ExitEvent. Building TeachingStartup.com & GetSpiffy. Former Automated Insights. More info at joeprocopio.com

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