A founder’s guide to crisis management | Uri Levine (Waze co-founder, serial entrepreneur)
1. Assume Full Responsibility
Assume full responsibility for your company’s success, as this mindset allows you to control your own destiny and increases the likelihood of success, regardless of external market conditions.
2. Never Give Up
Always keep on looking for ways to make it work, even during a journey of failures, as this is the most important behavior of successful startup CEOs.
3. Make Decisions with Conviction
Make decisions with conviction, especially during a crisis, because if you don’t, the team will not follow, hindering success.
4. Expect Crises
Do not expect to avoid crises, as founders will inevitably face them; instead, focus on how to deal with them when they arise.
5. View Startup as Crisis Journey
Understand that building a startup is inherently a journey from one crisis to the next, which helps in mentally preparing for and navigating continuous challenges.
6. Solve a Problem to Create Value
Focus on solving a problem as the simplest and most effective way to create value, which is the core of the entrepreneurship journey.
7. Problem as North Star
Focus on the problem as your North Star to make fewer deviations from your course, increasing the likelihood of success and making your story more compelling to customers.
8. Focus on Customer Problem
Frame your value proposition around solving a customer’s problem (e.g., avoiding traffic jams) rather than technical solutions, as customers who care about the problem will actively help you succeed.
9. Validate Problem with Strong Emotion
When validating a problem, seek strong emotional responses from potential customers who correct your understanding or express intense dislike for the problem, rather than just knowing someone else with it.
10. Continuously Re-evaluate Decisions
Regularly ask yourself if, knowing what you know today, you would do something different; if the answer is yes, then implement that change immediately rather than waiting.
11. Act Fast to Extend Runway
To extend your run rate by reducing burn, act immediately; delaying decisions, even by a few months, significantly reduces your options and makes it nearly impossible to achieve your desired runway.
12. Analyze Cash Crisis Quickly
When facing a cash crisis, immediately determine what is impacted, how long it will last, and your remaining run rate, then make decisions today to avoid losing options and communicate transparently with your team.
13. Maintain Sufficient Runway
Maintain plenty of cash in the bank, ideally around 18 months of runway (or 2-3 years if risk-averse), as this makes it significantly easier to deal with inevitable crises and pursue new opportunities without constant fundraising.
14. Focus on Value, Not Just Fundraising
Aim for a longer runway to avoid constantly focusing on fundraising, allowing you to prioritize creating value for your company and customers.
15. Communicate During Crisis
In a crisis, everyone knows something is wrong, so communicate decisions and plans to your team to demonstrate leadership and prevent top performers from leaving.
16. Prioritize Team Communication
Communicate openly and transparently with your team during a crisis, as they are suffering too and need to know that leadership is making decisions, which helps maintain trust and prevents top talent from leaving.
17. Be Transparent with Team
During a crisis, be transparent with your team about the challenges, as hiding information erodes trust and may cause them to leave, while openness fosters loyalty and commitment.
18. Share Crisis Essence, Not All Details
When being transparent during a crisis, share the essence of the major issues (e.g., investor rejections, lost term sheets) without sugarcoating, but you don’t need to divulge every minute detail unless specifically asked.
19. Share Key Metrics Always
Always share the company’s key metrics with everyone, especially during a crisis, so the team understands the situation and can see how well the company is executing.
20. Answer Direct Questions Specifically
If team members ask specific questions about the crisis, answer them directly and specifically, as this reinforces transparency and builds trust.
21. Consider Alternatives to Layoffs
When needing to reduce costs, consider alternatives to layoffs, such as reducing management salaries or implementing a company-wide salary reduction, as these can maintain team commitment and loyalty.
22. Management Leads by Example
Management should consider giving up their salaries during a crisis, as this demonstrates strong leadership, can contribute to cost reduction, and significantly increases the commitment of the rest of the organization.
23. Avoid Trivial Cost Cuts
When reducing costs, avoid trivial cuts like stopping office coffee, as these create dissatisfaction and demonstrate an inability to make hard decisions, rather than significantly impacting the budget.
24. Navigate Product Market Fit Loss
If you lose product market fit, first determine if you are still relevant, then evaluate if you have the assets (tech, team, know-how) and energy to pivot, and present a new path to investors who typically prefer a new attempt over getting their money back.
25. Pivot Decision Framework
When considering a pivot, first validate the new problem/value proposition, assess if you have a significant advantage (tech, team, know-how), confirm your passion and energy for the new journey, validate it with your team, and then seek new capital from investors.
26. Know When to Give Up
Consider giving up only if your core mission becomes irrelevant because the problem disappears, or if the team is fundamentally wrong and you are unable to change it.
27. Address Job Unhappiness Proactively
If unhappy at work, first try to change the situation for three months; if unable to improve it, then leave, as you deserve to control your destiny and not be unhappy.