During a recent Twitter Space, M13 Partner Anna Barber and I looked back at the dot-com crash in search of lessons operators can use to avoid missteps founders have made in past downturns.
In our chat, Barber spoke about how founders can better align with investors and employees while managing uncertainty, the dangers of growing too quickly, and the economic, social and emotional impacts created when so many companies close their doors at once.
Many entrepreneurs have been encouraged to believe that smooth storytelling and good social skills are enough to convince investors that things are moving according to plan. They are mistaken.
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Instead of instinctively going into survival mode, she said founders should ask themselves existential questions like, "Why did you start this business? What are the fundamentals? Who are your customers? What problem are you solving?"
"At a time like this, trust is more important than ever," said Barber, adding that she tells entrepreneurs to stay in close touch, "particularly around bad news."
Before problems arise and between regularly scheduled meetings, entrepreneurs should get comfortable with asking for help and advice. Reaching out to share an update or ask questions sends a strong signal that you're not waiting for someone to give you direction.
"Tell them what you need. This is what we're here for: to roll up our sleeves and help problem-solve with you. Nobody expects any of this to be smooth sailing," said Barber.
Thanks very much for reading TC+. Have a great week!
Editorial Manager, TechCrunch+
Use predictive marketing to cut CAC at your PLG B2B startup
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Startups that cater to business customers are in an uncomfortable position: new users won't convert into paying customers for weeks.
As a result, marketers tend to make reflexive decisions too early on ad campaigns because they lack sufficient data.
Instead of using "early CAC or return on ad spend (ROAS) metrics that rely on historical averages," contributor Ido Wiesenberg created a simulator that lets teams "estimate the likelihood of a campaign's ability to yield high ROAS over time simply by entering a few numbers."
3 ways to implement a product-led sales motion to unleash PLG's revenue potential
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Robust product-led growth strategies rely on customers to fuel growth and acquisition, but "the traditional top-down enterprise sales model just doesn't work with the self-serve, freemium user bases of PLG," writes Stephen Moock, head of sales and success at GTM platform Calixa.
Sharing consolidated user data with product and sales teams will reveal patterns and insights that help identify product-qualified leads who are more likely to convert.
To take advantage, sales teams need to "recalibrate" their approach.
According to Moock, "your free offering, and the features customers get when they upgrade to paid plans should both create a natural conversion path to your enterprise offering."
Here are the industries ripe for innovation under the Inflation Reduction Act
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The Inflation Reduction Act is the most comprehensive climate legislation the U.S. has ever passed, and according to climate reporter Tim De Chant, entrepreneurs are already expressing "optimism and confidence."
Looking at sectors as far afield as EVs, property tech and CRM software, Tim spoke to founders about the potential impacts and benefits of the new law, which includes $433 billion in new investment and $739 billion in offsets.
"Established companies and later-stage startups will probably see the most immediate impact," he reports.
"Starting this year and next, property owners will get access to a series of tax credits that will help them electrify buildings and improve their energy efficiency."
The case for US venture capital outperformance
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A land war in Europe, cautionary moves by the U.S. Federal Reserve and ongoing supply chain shocks are just a few of the many factors creating instability in global equity markets. But some analysts are still optimistic.
According to John Zik and Shachi Shah of EQUIAM, a late-stage VC fund, "the technology and innovation supercycle narrative remains unchanged, and many companies are poised for growth."
Looking ahead to the next 6-12 months, the duo "identified two distinct potential outcomes for the U.S. private technology sector:"
Scenario 1: Additional pain before recovery
Scenario 2: Broad economic upturn