This post is my summary of Sequoia's "Adapting to Endure" presentation.
Hyper-growth & Profitability:
The era of rewarding hyper-growth at all costs is coming to an end. The focus is shifting to companies with profitability.
The path to success is medium to long-term growth while improving profitablility.
What works in any market?
Consistent growth and disciplined financial management that translates into improving margins.
It’s important to continually ask yourself two questions:
What decisions do I plan to make
What decisions do I wish I would’ve made if I had 6 months of cash left?
Face reality, adapt fast, have discipline rather than regret.
To prepare yourself you must:
- Confront reality.
Maintain unwavering faith that you will prevail, but also confront the brutal facts of your current reality.
- Confront fear.
Snap out of fear. Don't let fear cripple you. Figure out the solutions to your problems.
- Choose courage:
Make the hard decisions. For example, you may have to lay off employees. You're not here to make friends. You're here to build a lasting business.
- Crisis → Opportunity.
Change allows opportunity. With change, the strong can become weak and the weak can become strong. See the opportunity clearly and be prepared to seize the moment.
Prepare your team:
To prepare your team, you must:
- Start with Why
- Reaffirm mission & values
- Showcase Leadership
- Customers, employees, investors need to be reminded of why they joined you & your vision.
- They're looking to you for direction and action.
- Align your team.
- Ask for commitment.
Prepare your company:
To prepare your company, you must:
- Focus on cash & cash flow.
- Have a daily cash, cash flow, and cash runway report. Zappos is a good example of this.
- Create Financial Degrees of Freedom:
- Best: Earn more from Customers
- Good: Improve unit economics
- OK: Cut excess, you should've done this.
- If necessary: Raise equity or debt.
- Concentrate investments in your future.
- Focus on the most important & leveraged investments. (I thought of The Power Law from Zero to One)
- Constraints → Creativity.
- Recognizing your constraints allows you to focus on coming up with a better solution than throwing money at the problem.
Be authentic, human, balance optimism and realism.
Be both motivational and inspirational.
- Be communicative
- Have conviction
- Be confident
- Be calm
Simplicity scales, complexity doesn’t. Be quick. Speed is one of the best business strategies.
Double down on your top talent. Seek alignment, not agreement.
Tighten up your value proposition and solve real problems.
Three reasons people buy regardless of market conditions:
- To drive growth
- To save money
- To reduce risk.