We are in unprecedented times. There really is no other metric. Nevertheless, this WILL end and when it does the innovators and entrepreneurs will lead the way. I managed companies through 9/11, the DC Sniper and the 2008 financial crisis. I am not comparing those events to COVID-19, but I can empathize when deals that have taken months or years are suddenly derailed with no idea when they might realign. So, what, as entrepreneurs and innovators, can we do so that when the world starts spinning again, we are situated on firm ground?
BUTTRESS YOUR FINANCES AS BEST YOU CAN
The Federal Government and Congress reached a $2 trillion economic stimulus package. This unprecedented stimulus will provide much needed cash for every state budget and will include rebate checks. The legislation also includes hospital funding relief and $10 billion in Community Development Block Grant funds to help municipalities. That is just the Federal side, on Monday, Maryland governor Larry Hogan announced a $175 million relief package to assist employees, small businesses, and nonprofit organizations affected by the coronavirus pandemic. This article from Inc. Magazine details specifics with links so utilize this resource. You may never again see business loans with such low interest.
As we all are staying home remember, too, that as a business owner you can take advantage of certain tax write offs. My Towson University colleague Barry Buchoff, assistant professor, College of Business and Economics confirms that the self-employed can take deductions on their mortgage, rent, and utilities. An employee also running a business can, on their Schedule C personal return, file for portion of mortgage, rent, and utilities for the business. An S corp can take the deduction and flows to individual returns while a C corp can take the deductions on the corporation’s tax return. Check out this IRS publication for individuals and this publication for small businesses. Work with your tax advisor now as they will know best.
We are experiencing a paradigm shift and we are through the looking glass. As management we have a responsibility to our shareholders, customers and employees to right the ship as best we can. As Don Rumsfeld said, “You go to war with the army you have, not the army you might want or wish to have at a later time.” For the foreseeable future this is the new reality.
Let’s look at some examples of pivots that are taking place right now.
Picture this: you just rocked your A Round of funding and not even a year later you get your B Round at five times multiple and are valued at $100 Million dollars. To add to that you have luminary investors such as Jay Z and Kevin Hart. Then not even two weeks later vast swaths of your market dry up overnight. That is what happened to my friends Shy and Jeff and their venture Hungry. Hungry is a food catering platform focusing on catering to the workplace—rather than same old boring meeting with food from Panera or Chipotle you get epic food cooked by name-brand chefs delivered to your office. Knowing the founders, I knew they were not going to sit still long—so in less than 10 days they pivoted and launched a new product across 6 major cities: HUNGRY@Home. Meet your customers where they are. Pro Tip: it doesn’t hurt when your investor, Kevin Hart, posts about your new pivot to his 87 million followers. I asked HUNGRY CEO, Jeff Grass, about the move “We’re excited about our new top-chef made, family style meal plan offerings called HUNGRY@Home. We delivery delicious & nutritious chef-made meals, ultra-safe, and at an exceptionally affordable price of only $12.50/person. When life gives you lemons, then it’s best to make lemonade!” Jeff and Shy are experienced entrepreneurs and true friends. I love seeing this innovative thinking.
Some edtech member companies of TU Incubator are also pivoting. David Cross, Ken Espinosa, and I are often video conferencing with these entrepreneurs on ways they can pivot and weather this storm. Here are but a few examples of our incubator companies pivoting.
INDUCK COLLEGE IMPRESSIONS
Founder & CEO Tucker Glotzbach has a company where high school students can research a potential college or university by reading interviews with different types of students currently at the college. In any given school a mixed-race female has a different experience from a white male who has a different experience than a LGBTQIA student. Great market differentiation, but with COVID-19 on-campus tours have all but ceased. So Tucker made the strategic decision to offer free trials for individuals and enterprises (think college consultants and independent schools).
When I asked Tucker about the pivot, he said, “I am part of a college counseling community on Facebook and I kept seeing counselors asking for recommendations of resources to help their students research schools from home now that campus visits are canceled. I wanted to help and also knew that in difficult times people are more willing to try out alternative solutions, so we created an extended free trial as a way to help students research schools that doubled as a brand awareness campaign. In seven days, we added nearly 200 trial accounts consisting of about 35% counselors and 65% students.”
That which can’t be measured can’t be managed. Tucker saw the change, he pivoted, he deployed, and then he measured the results. Well done.
Most people simply don’t understand finance. The stimulus package cited above is obtuse to most people. Ortus Academy educates users on financial intelligence. It’s not just the mechanics of money, it’s the habits and emotions that drive our financial behavior. So, given the current situation what do you do? Well, Ortus Academy CEO & Founder Aaron Velky opened up their paid content for free!!!! #teamhuman indeed.
Here is what Aaron said about this pivot, “We believe that it’s the right time to educate people and to play the long term game. Do we lose out on revenue? Yes. Do we do the right thing for people, for families, and for business owners? Yes. It really was a no brainer. Leadership is non-negotiable in times of crisis. Maybe in the long term we’ll build some believers and supporters.”
Ortus Academy is providing several services at no cost. For business owners, they are offering coaching calls at a low-cost, to help you navigate the challenges when things are on fire and make quick, sharp decisions. With so many businesses on fire, Ortus is stepping in as the firefighter to help owners make 2-4 week critical decisions.
They are also providing free webinars and workshops to individuals. They currently are focused on helping people deal with current situations, so the content is all about financial stability. With so much uncertainty, these workshops serve those who have been laid off or were forced out of work by closures, or for those that are dealing with shortness or changes in income, bookings, etc.
Finally, for families, their online courses, a suite called Money Club, is totally free so that the whole family can get educated right now from their living room. The course is normally $199, so it’s a great time to get invested in Financial Education for your kids.
“We believe that we can make meaningful change for people right now,” said Velky. “That’s our mission. Our objective is to share this out, and when people are able to navigate through the tough scenarios, we will have excitement around what we’re offering because they understand the value we offer. And if they don’t come back, we’ll know we stood up for them when they needed it most. It’s a win-win.”
If you visit their #TeamHuman page, you can learn more and you can contact the team about any of these services.
WHEN YOU PIVOT, KEEP THESE IN MIND
Any given pivot is hard but given the current circumstances this is bound to be epic. Entrepreneurship is hard. As you go through this journey here are a few items you should keep in mind.
Lean Startup. Build. Deploy. Measure. Learn. Edit. Build the next iteration. Rinse. Lather. Repeat. As innovators and entrepreneurs, the iterative process is how we all started, it’s more important now as many previous assumptions are currently out the window.
Failure. Always keep reminding yourself that if it doesn’t work you did NOT fail—that’s what people who have never done this call it—you just found a way that didn’t work. Almost 150 years ago Thomas Edison said it best about his thousand attempts at creating the light bulb, “I didn’t fail 1,000 times. The light bulb was an invention with 1,000 steps.”
Collaboration leads to a better outcome.You don’t have to do this by yourself and you shouldn’t do it by yourself. By staying home and practicing social distancing we are all bound to feel isolated. Reach out to colleagues, reach out to family, feel free to reach out to me. Collaboration is key, but social distancing and shelter in place doesn’t mean the death of collaboration. Make sure to check our tips for effective video conferencing.
Be transparent and communicate honestly. Many of you have employees and now your cash situation has been dramatically altered and most critical goals are out of alignment. A transparent, forthright and trusted founder and CEO who communicates and empowers the team to navigate these challenges will have an incredible long-term impact on culture and team performance. At Proteus we had to navigate 9/11 and the DC sniper. It was hard but we got through it and the result is we came out even better and many of the team are life-long friends. It’s Ok not have all the answers, but no one except a 7-year-old likes a surprise. Leadership is standing in front of the challenge and not hiding behind it.
I wish there was a process we could all follow and come through this fine, but there isn’t. We’re innovators. We’re entrepreneurs. Entrepreneurship is having no process and figuring out the process. So, remember that you have a skillset that already gives you an advantage. One of my favorite quotes about entrepreneurship is this:
“Entrepreneurship is living a few years of your life like most people won’t, so that you can spend the rest of your life like most people can’t.”
Reach out to me. Reach out to the TU Incubator team. We’re here for you. Most importantly, reach out to each other.