Key Ingredients for founders dealing with the Covid-19 situation
In the last days, when COVID-19 really hit the western economies. I talked to a large number of excellent founders. Some of them were devastated because, despite the extremely good work they have done for years, an external and uncontrollable event is threatening their venture within a few weeks.
During those days, some of the long-established VC firms that had gone through several crises produced (or updated) great posts on how founders should adapt their startups quickly to the new financial landscape.
However, the more posts I read, the more I was missing advice on how to change the founder’s mindset to a new reality that might last for years. Entrepreneurship is, by definition, a lonely game. It is the art of making possible what other people think is not. It is the art of defying the odds. These days, more than ever, founders need to be as mentally strong as they can get. As a Spanish founder who launched two startups through the Great Spanish Depression (2008-2015), I thought my learnings about the right mindset when “the going gets tough” could be valuable to the founders’ community. In this post, I’m sharing what was the recipe that kept me going, as a founder, during the last crisis in Spain.
Train your Growth Mindset: become Ultra-Resilient
Around 2010, I came across a book, Mindset, published by Stanford University psychologist Carol Dweck. According to her, individuals can be divided into those who believe their success is based on innate ability (Fixed Mindset), and those who believe their success is based on hard work, learning, training and doggedness (Growth Mindset). According to Dweck, those with a Growth Mindset “don’t mind or fear failure as much because they realize their performance can be improved and learning comes from failure.”
But why does this Growth Mindset matters to you as a founder going through a recession? Because as a founder, the only thing you know for sure is that you will face setbacks. The only question is when will they happen? So, following Deck’s model, individuals with a Growth Mindset are more likely to continue working hard despite setbacks. And the more setbacks you overcome, the more chances to win you will have.
Basically, a Growth Mindset will help you to build Resilience and to have more chances to win the lottery of the startup world. Precisely this week, one of the investors of my portfolio companies, a former entrepreneur, shared with us that he won his market because he was the “last man standing in the last crisis”.
One easy way to train your Growth mindset is to look for inspiration that can help you face the setbacks. In my case, during the Spanish Great Recession, I read everything about Jack Ma, the founder of Alibaba, a company with a market cap more than $500bn today. He is a great example of resilience and success through failure.
Understand (and accept) luck
A few days ago, I came across a tweet (encapsulated in a chat) discussing the role of Luck; the author is a mission-driven founder I know and respect very much, Freddy Vega, co-founder and CEO of Platzi.
When I read it, I realized that Freddy understands well something that took me a while to understand: Because of the hidden role of luck in life, we are continuously fooled by randomness; even the most improbable events will happen by random chance.
If you think about it twice, an epidemic like the Covid-19, was just a matter of time. So, understanding (and accepting) the role that Luck plays in our lives is key for founders to deal with setbacks. Why? Because those external factors we cannot control can radically change the outcome of our venture (e.g. Covid-19). And the sooner we focus on those factors we can control, the sooner we will be overcoming the setback.
So, like Freddy says, “luck plays a frustrating big role in startups” and it is an external factor that founders cannot control. Again, the sooner you acknowledge this fact, the sooner you can focus on what you can actually control.
At this point, if you are not yet convinced of the enormous role luck plays in your life, take a look at how Eric Schmidt, Google’s former CEO & Chairman, regards luck as a necessary ingredient to become successful; or read the first two chapters of the classic book “The Hidden role of Change in the Markets and in Life”, authored by Nassim Taleb. I bet you will change your mind afterwards.
“I would say I’m defined by luck, and I think almost anyone who’s successful has to start by saying they were lucky.” — Eric Schmidt (CEO & Chairman of Google)
Focus on the Process, Not the Outcome
So, now that we acknowledge that no matter how hard we work or how excellent we perform, Luck could always be waiting for us and ruin our plans. Hence, the only way to deal with that fact is to focus on the process as opposed to the outcome (which is never certain).
For instance, as of today, March 28th, there is no way we could know. at this stage, how deep the Covid-19 crisis will be. No one knows for how long the isolation measures will be needed, or when the vaccine will be ready. So, the only way to deal with this uncertainty is to focus on doing everything that is in your hand to make your company survive the longest. By doing so, if the outcome goes south, you will have no regrets and you will move fast to the next adventure. Russo and Schoemaker encapsulated this concept brilliantly in his book “Winning Decisions”.
Game recognizes Game: entrepreneurial people
As I said before, Entrepreneurship is by definition a lonely game because it is the art of making possible what other people think is not possible, the art of trying when others don’t. So, especially when navigating times of crises, surround yourself with a community of individuals who understand, or at least, respect your game and will support your effort. Every founder needs comfort at some point.
Also, don't allow pessimists or nay-sayers to grow in your startup team; I want to emphasize this last advice because it will have an impact on your odds. The only reason why optimists have more chances to win is simply because they keep trying when the pessimists quit.
I hope this recipe will help you deal with the crisis of Covid-19 and to train your mindset to win. Entrepreneurs are, by definition, optimistic. So are you!
That’s all folks. May the Force and the returning clients be with you!