The J Curve Newsletter. Notes for founders on perseverance in a bear market

As an entrepreneur, you need your game face on at all times especially during bad times. So I wanted to start with my one of my favorite quotes:

Coping with tough market environment requires managing both cash burn and emotional burnout. Here are some ideas on how to do both:

Cash burn

Ground yourself in the reality. For growth stage startups in Latin America raising venture capital in the next 2-3 years will be extremely hard as big check investors like Tiger and Softbank pulled out of the region and the local growth equity market hasn't fully emerged just yet. If you already have deep-pocket investors in your cap table, attempt to raise a flat or down round to extend the run way. If you can raise debt financing, go for it. If not, you will have to implement 'do or die' operational mindset (thank you to Victor Santos, CEO and founder at LivUp for phrasing it so correctly in our interview for The J Curve) and assume that venture capital as an asset class does not exist.

Focus on what you can control. While you can't control macro, there are things you can control:

• The size of your workforce. Consider taking a difficult decision to eliminate the roles that are not mission critical for the core business operations. Temporary reduce or suspend the salaries to he leadership team, and possibly equity component in return.

• The quality of your customer base. Scrutinize the types of customers you currently have. Double down on selling into the most high-quality profitable segment. Intentionally churn somewhat ok kind of customers or customers whose very existence in the market like today's is in danger. Offer some sweet deal to your best company as an incentive to switch to annual contracts or pay upfront.

• Customer Acquisition Costs (CAC). Ditch paid social (Facebook / Meta) and paid search (Google). Prioritize direct and unpaid channels like text and email blasts, referrals, partnerships and quality content marketing.

Keep the main thing the main thing. In a bull market startups and mature tech companies alike are constantly innovating and experimenting to grow and stay competitive (here's a good read on Amazon's culture of experimentation). Today is a different story. Pause or outsource all non core projects and services. Focus and relentless prioritization is a definitive trait of the founders who survive through the storm. Remember this quote by Antoine de Saint Exupery: "Perfection is achieved, not when there is nothing more to add, but when there is nothing left to take away."

And lastly, don't be afraid to disappoint people. In the state of uncertainty, clarity is a real gift.

Burn out

As Elon Musk said in this interview, "running a startup is like eating glass and starring into the abyss". Managing emotions in adversity is the toughest leadership exercise. To make it less challenging:

Rely on your team. Make transparent communication with you leadership team your top priority because you can't and shouldn't carry all this burden alone. Challenging times offer an excellent opportunity to bond and test who is resilient, flexible and really committed to the cause. Bad apples will churn but those who stay will last for good. 

Build your support system. Connect with founders that go through the same experiences and can offer valuable advice or genuine support. Knowing that you are not walking alone gives so much strength and confidence when we need it the most.

Give back through mentoring young entrepreneurs in your community. There's no better way to calm the restless mind than to feel the good that you are doing in real-time. 

Find a hobby. It's so important to remember what it feels like to learn something for the first time. The beginner's mindset is something we loose in our daily grind but if reinforced, it sparks curiosity and creative thinking. 

Take care of your wellbeing. Daily exercising is a great way to boost your energy level, take your mind off of work and stay disciplined. Daily meditation (I personally prefer Transcendental Meditation and been practicing it for years) is the best way to regain the clarity of thought that I know of. Remember, if you can't take good care of your health and wellbeing, you can't take good care of your business. So prioritize you.

Thanks for reading, 

Olga 

ps: When you sign up for the role of startup founder and CEO or are forced to navigate through a tough market environment, you should know what you are getting yourself into. Best way to do it? Read The Hard Things About Hard Things by Ben Horowitz. It's a book of choice for the majority of tech founders I invested in or interviewed for The J Curve podcast.