Steve Blank, Serial Entrepreneur, Author, And Educator
Steve Blank is a legend in Silicon Valley. In addition to launching eight startups in 21 years, he’s also a well-known author and educator at Stanford University, Columbia University, and the UC Berkeley Haas School of Business.
Having worked in the realm of entrepreneurship for so long, Blank has survived some of the worst recessions in U.S. history and has first-hand experience of what it’s like to keep your business afloat under high-pressure circumstances—knowledge that’s directly applicable to the COVID-19 global health crisis.
In this interview, Blank shares his three-step process for what every business needs to do right now to survive the pandemic. He breaks down everything from calculating your burn rate to reassessing the way you work with your team. Blank also shares his own personal experiences with the 2008 recession and dot-com bubble.
If there’s any other type of content you’d like to see that would be valuable to you during this time, please don’t hesitate to reach out at [email protected] to let us know.
- Why Blank believes today’s entrepreneurs should listen to the advice of seasoned founders
- The three-step process Blank recommends to understand where your business is headed, from calculating finances to reassessing business models
- The biggest lessons Blank learned during the 2008 recession and dot-com bubble
- Why Blank believes in planning for the morning after
- The importance of high-level execution during times like today
- How to think about recalibrating in terms of retaining staff and hiring
- The importance of setting expectations—whether in your marketing or management
- Why this pandemic could be an opportunity to re-evaluate how you want to spend your life
Full Transcript of Podcast with Steve Blank
Nathan: So Steve, thank you so much for taking the time.
Steve: Thanks for having me. I wish it could be under better circumstances.
Nathan: Yeah, me too. So for those that are not familiar with yourself and your work, can you just give us a little bit of a background, like how did you get your job?
Steve: How did I get my job? Which one? I’ve had about three or four careers. I had my first career in the US Military during Vietnam. Most relevant for your listeners and viewers is I did eight startups in 21 years in Silicon Valley and box score was for IPOs in a variety of industries. And what was really most interesting and most valuable were two crater so deep, they left their own Iridium layer. In fact, one of them was the beginning of the learning that became customer development and then the lean startup.
And my last career has been as an educator, an adjunct professor at Stanford University, senior innovation Fellow at Columbia, and I’ve taught it at Berkeley as well. And so I now think, and write about, and teach the nature of innovation entrepreneurship. My classes at Stanford have become two US federal programmes. One called iCore or the Innovation Core, which our research universities use to commercialise science, and the other called Hacking for Defence, which our Department of Defence uses as the basis of innovation entrepreneurship. But besides that, I just been sitting at home eating chocolates.
Nathan: Yeah, wow. Well, look, I remember our last conversation. I’ll never forget, I asked you a question and I said, “If you want to build a hundred million dollar company, is it possible working 40 hours a week,” and your immediate response was no. Not possible. Not even possible. You have to be working 80 to 100 hours a week. Has that answer changed?
Steve: Well, you could be doing Bitcoin or dealing drugs. There are always boundary cases to every question. And so let’s be fair, there are outliers where somebody will raise their hand and say, “No, you’re wrong. This is how I did it on 10 hours a week.” But I think your viewers are interested in the bell curve and usually, it takes a lot of work to make stuff happen because if you remember, a startup is creating something from nothing. It’s an irrational act and it’s usually an irrational act that requires passion, and violence, and aggression, and a lot of hard work and a lot of hard work of a dedicated team.
And the reason why is you’re not only trying to solve a lot of unknowns, you’re typically competing, if it’s a good idea, with a hundred other people with the same good idea. And so it’s not just your idea, it’s your ability to execute and that operational execution is what matters. I still remember a good number of my startups. Finding product market fit was step one, but relentless execution was the rest of three and a half years. And so not understanding that and the amount of passion and commitment necessary, this isn’t a sit-at-home-and-clip-coupons job. And as I said, you could probably have some great fascinating guests who broke that mould and I’d be interested in hearing those stories. But for the rest of you, after 40 years still haven’t found any shortcuts to this.
Now, the good news, by the way, just let me add, for those of you who are listening and viewing who are founders, if you’re treating this like a job, then you have to realise this is the world’s shittiest job. Founding a company is not a job. Founding a company is a calling. Artists or religious people are called to a profession. And so if you’re not called to be a founder of a company, if you just think this is an easy way to riches, those days, if they ever existed, are certainly over as per March 15. I mean, those days are gone.
Nathan: Terry got in touch with me. She shared with me your blog post around the survival guide to survive in these times if you are a startup founder. I also saw you post another blog post for CFOs, which I thought was interesting as well. So let’s jump right in. During these times, you’ve got an incredible amount of experience to share because you’ve been through a recession before as a founder.
Steve: Yeah. Most of the time, if you’re a young entrepreneur or just an entrepreneur, period, and a founder, the rule is to implicitly screw all those guys with grey hair. What the hell do they know? I’m inventing everything new and I’ve discovered sex and drugs and they’ve never heard of that stuff. This is the only time I would suggest to young entrepreneurs, you really, really, really want to pay attention to the people with grey hair who could tell you the mistakes they made, not their advice, but what did they get wrong during the last downturns that they wish they would have done.
And I got to tell you, and this showed up in the blog posts on my blog at steveblank.com, the biggest ones is the simplest is doing the math about your burn rate. That is how much are you spending every week and month and what’s your runway? How much do you have left? And if you’re a startup without revenue, that’s the only math you need to know. There is no revenue coming in. There are other startups that actually have early customers or potential orders. We’ll talk about that in a second. But for both cases, you want to calculate runway. That’s your survival.
And it used to be, you thought, well, if you were cashflow negative, well, if I meet these milestones, I’ll have another round. I don’t know what world you’re living in, but if all your assumptions are the same today as they were a month ago, you have your head stuck under a rock. Everything is now… it needs to be recalculated from first principles. Your burn rate is your burn rate, not really. So some of the things like rent, which we call fixed cost, they might not be fixed anymore. A month ago going to your landlord and saying, “I need a half price cut in my rent,” they would have laughed hysterically because it would have been a line out the block for your building or office space. Those are reasonable requests to make.
So number one is you need to do an assessment of externally what’s going on and internally what’s going on. Stop me if none of this makes sense or you want to interrupt. But the number one thing to do in an assessment is, believe it or not, before even your burn rate and your cash left in your runway, is how long do you think this is going to last? Now, your guest is going to be as good as any expert, but is this downturn going to last for three months, six months, a year, three years? You need to have an opinion and that opinion will matter because if it’s a short-term event, then you could just calculate this on a spreadsheet and not much needs to change other than slightly tightening down thing. But if you think this is going to affect your business for a year or more, then more extraordinary measures are going to be needed to be taken.
Number two is what’s going on with your customers in your market. Not just the overall economy but if you were selling enterprise software, are your customers even in business? Were they in travel and hospitality or airlines or the ones that are obviously hit? I don’t care what your VP of sales gave you as a forecast a week ago, none of it is valid. Or are your customers in retail or did you have a multi-sided market? No, we were getting lots of users, but we were dependent on advertisers. Well, are those advertisers still advertising or are they out of business or are they preserving cash?
So you need to do an external assessment and then you need to do an internal assessment. And I mentioned a couple of things is, what’s your burn rate, what’s our runway? Most importantly, do the customers we thought we have, are they still there? CEOs need to basically take a day with their exec staff and sit in a war room and say, “Okay, let’s do some of the basic math. All right, VP of sales, how are our customers doing?” And if they’re like any great VP of sales, they’ll say, “It’s okay. Everything is just… ” You want to get on the phone with them and personally call the top 10 customers or potential payers or whatever and you want to hear that the check is in the mail. And if the check is not in the mail, you want to figure out is there anything you could do to accelerate early payments? Discounts, buy-ins, whatever, bundles.
Number two is your you want to check with your CFO to figure out what are additional sources of capital that you could draw down? Are there bank loans? Are there government recovery dollars being spent? Have you talked to your VCs? Are they writing checks anymore? If you’re pre-seed, are people writing seed checks? If you’re a seed, they still writing As? And don’t take, “Oh, we’re right behind you.” We’re right behind you is like either naïve, lying through your teeth or clueless because VCs themselves are going through a lifeboat strategy. They’re also asking, “How long can this last and what are we going to do about our most valuable investments that are probably burning a tonne of cash?” How’d you like to be investors in Airbnb today who’s burning a tonne of cash, thought they were going to go public and all of a sudden, their business and revenue drops to zero?
But if you’re an investor, you can’t afford to let that go out of business because that’s a good chunk of your portfolio’s value. Does that make sense? And then you want to take all that data and you want to call up your investors, either your seed investors or if you’re lucky enough to have VCs and say, “Here’s our assessment. What do you see in the rest of your other companies,” because while you’re seeing one company, hopefully, they’re getting data from 10 or 15 and you want to correlate that data and all you want to do is check in and make sure that you’re not off and share with them what you’re seeing because then you want to go to step two, which is, okay, what’s our new business model and what’s our new operating plan?
And by business model, it might mean, do we need to find different customers? Do we need to find different channels? Again, clear example, if we were in brick and mortar retail, we clearly need to find a different way to get our products and services to customers. If we were selling to them, are there other targets we need to go to? Is there other parts of our business like our warehouse or supply chain or software that could be repurposed?
You know, one of my startups was doing onboarding for large companies. Well, for three quarters or seven-eighths of the world, that’s not a problem right now. But it turns out for another part of the economy, like in retail for Amazon and big retail chains who are actually hiring hundreds of thousands of people in the US, that is a problem. So where do you move your business model? And while you’re thinking about business model, the other thing you need to think about is cash management and that’s the job of your CFO. You need to be thinking about how do we manage a new operating plant? For both new business model and how do we operate in the new world where the first assessment, step one, was done with a C-level only sitting in a room assessing what the world looks like. In step two, I would open this up to everybody in the company. All ideas are welcome.
Somebody has an , “How come we’re not selling to X or how come we’re not selling the Y? Or here’s a way we could reduce cost or here.” Everybody should have an all hands feeling that they’re a part of this, but at the end, the decisions are going to be made by the CEO. But on this one, I would be getting the collective intelligence of the entire company because everyone’s job is going to be dependent on figuring and this is survival in a lifeboat strategy.
And for the CFO, as I mentioned this, drawing down all kinds of resources and cash. And if you’re big enough to have a head of HR, congratulations, they have a new job, and it’s not job satisfaction, it’s going to be handling layoffs, which is depressing. But it’s going to it that is probably the most expensive part of your company and it needs to be done with compassion with as much kind of cash that you could afford to give them and, for god’s sake, if you’re truly running out of money, do not run it down to zero because that to me is a big X on any CEO’s career. Oh, I thought it was going to turn around next week. It never does. Never run your payroll bounds to zero.
And if you happen to be in one of those companies that actually have opportunities to grow in this market, you want to understand that there’s some world-class talent that’s hitting the streets that you were never able to get in any other time and I would overstock that talent. Overstock because they ain’t coming when… so think about it. It will be a morning after. There will be a recovery. So even if you’re cutting back but you’re not going out of business, I’d be thinking about what would I wish I would have kept when recovery happens? So if you’re cutting, make sure you don’t cut those people or projects that you might want to dial them down but how do I keep them so when the recovery does happen, I’m willing to… I’m able to grow or just out compete because I kept those resources. And if you have the ability to grow, lots of great people and lots of great resources are going to become available. How do I stock up on them in a way that no one else could grab them now? That’s a huge competitive advantage.
And then the third and final step is, and this is the one if you ask most people my age, what you got wrong, it was the inability to execute quickly and take immediate action. It’s clear this is not going to be better next week or next month and each country is going to deal with their economy as they see fit. But I think most people are agreeing that shelter in place and lock downs of businesses are going to continue for more than a while.
The biggest mistake I’ve seen people make is A, not executing quickly and B, if they had to do layoffs, not laying off enough people upfront. Oh, we’ll lay off five, then we’ll lay off 10, then we’ll lay off 20 then we’ll… that’s the morale destroyer and productivity destroyer for a company because everybody is looking over their shoulder understanding that you haven’t made enough cuts and wondering who’s next. The alternative is to do it all upfront and people will feel miserable, like they should, but then they’ll understand they have jobs and their jobs are going to be there and they just need to work hard to preserve the health of the company.
And at the same time, the last thing that I’ve seen companies fail at in these kinds of crises are not over communicating. You need to be sending out messages every day to your company. Every day. So when you were doing an assessment, hey, we’re assessing what’s going on, we’ll get back you in a day. Then the next day, here was our assessment, we’re now going to figure out what our new business model is and we’ll have your input after three or four days. Here’s our new business model, here’s what we’re going to be doing. And then when you’re working through this every day, here are the key numbers, here are the key customers, here are the key orders, here’s whatever, here’s what we see going on, here’s whatever. We’re all in this together and we’re going to come out better and stronger. But that needs to be communicated from the CEO either in writing or town halls or whatever format.
So the worst thing, just to summarise, is there’s an axis, a spectrum of what a startup CEO could do. One is panic with your hair on fire, “Oh, the world is ending,” and the other is, oh no, this will pass and let’s not do anything. Both of those extremes, I think, are a real mistake. This is an event that’s never occurred in probably the modern capitalism at all. This is not a downturn. This is an engineered downturn to save hundreds of thousands of people’s lives. And we’ve made a conscious decision to crater our economies to do that. Therefore, it’s happening overnight. It’s not some gradual stock market’s going down and unemployment is slowly going up. People work in one week and then entire industries are shut down the next. So that’s my advice on the high level. Sorry about this soliloquy.
Nathan: It’s all good. Look, I’ve got a tonne of notes here. So we’re talking… in Australia, it’s the 27th of March. You’re in California, right? San Fran?
Nathan: So it’d be the 26th of March. Do you think it’s going to get worse before it gets better?
Steve: Last week in the United States, 3.3 million people applied for unemployment insurance. I think that’s, I don’t know, 20 times more than any week ever. If that continues for three or four weeks, there’ll be more people unemployed than in the last 75 years in the United States. So I think we need to separate the worst in maybe three components. One, what’s the stock market’s going to do? Well, okay, that may or may not have some effect on your business. Two, is more importantly, what’s the virus going to do to the health of our family, and our communities, and our country. The numbers for Italy and Spain and even the US aren’t looking so good because they’re still looking like one of these. And then three is, what’s the state in the health of our local economy? And that is a self-inflicted thing we’ve done to preserve life and safety.
And so to answer your question, I think the trajectory for economies and layoffs or go in this direction that is downward as we’re shutting industries now and those are going to have massive ripple effects because, let’s just use an example is, other closing retail stores and restaurants in the United States and you could say, “Well, I’m not in that business. I sell to enterprises, so it doesn’t matter to me.” But you need to think about it, “Well, wait a minute, those people buy from my customers. They no longer have jobs. Well, how’s that going to affect my customers? Oh, well, they might have to cut back because their customers aren’t customers anymore.” Does that make sense? And so, if you’re a founder, you need to start thinking about ripple effects and when they’re going to hit you. It might be oh, everything’s just fine. I just got another order. Well, maybe your customer hasn’t died, but their customers no longer have paychecks.
The other thing people, at least in the states, have yet to come to grips with is it’s shutting down the gig economy. No one wants to stay in an Airbnb, so Airbnb is cratering. And no one wants to get in an Uber, in a closed car where 50 other people have been touching surfaces and the driver might be sick because if they’re not driving, they don’t have a paycheck. So all of a sudden, all these gig economy players are being hurt. So the answer is yeah, I think it’s going to get worse.
Nathan: And when you talked about laying off staff, and runway, and the internal assessment, and cost to cut, and cash flow management, and burn rate, and runway, is that off the premise that you should have 18 to 24 months reserves?
Steve: Well, in a perfect world, you would. If you’re an early stage startup, that’s not what you have at all. Sometimes you might have it and congratulations if you do. two years is a great cushion at the current burn rate. But if it assumed the set of revenue numbers, behind that, you might not really have two years of cushion. But if you do, congratulations. Even if you have 18 months, congratulations. But if you’re a normal startup, you may be running on six months, nine months or a year’s worth of cash and you were making a set of assumptions about financing that happened after.
Let me emphasise that you’re making some critical assumptions that fall on financing or some liquidity event might happen. I will contend that those statements are no longer true. Maybe that’ll happen, but you cannot believe that your investor’s math are still the same. You don’t know. And so the first thing I would be doing is checking in and then checking in constantly. How are they doing? Are they writing new checks? What kind of startups? Are they changing their strategy? And in these first couple weeks, they might tell you no, nothing’s changed. But you know what, if this continues, trust me that investors are going to be changing strategy. Does that answer your question?
Nathan: Yeah, it does. So take me back because you said you’ve done eight startups in 20 years. Any of those startups, any stories from previous recessions where you said you wish you had have cut from faster and did a bigger cut in terms of conserving cash and payroll? How long did it last and did you have to pivot? Can you share some stories there?
Steve: So the biggest one I saw was dot-com crash. I had just retired, so I got to watch this as an outsider. But I watched a company, which was Epiphany, that had 800 people, act like the downturn was just some transient problem. And the reason why in that company was pretty clear, in hindsight, is that we had hired a CEO who was a world-class executed, I mean, world-class. New process procedure and we had gone from zero to $125 million in real revenue in three years. I mean, we left a rocket ship.
Yeah, so it was a great company and he was a great guy to take it to a billion dollars. But our customers had disappeared. But it felt like he was doing… I don’t know if you’ve ever seen the cartoon Roadrunner where the Roadrunner is running on the cliff and then the cliffs ending, but he’s still running on air and doesn’t understand that until he drops a tonne of bricks. Well, that’s what happened to not only Epiphany but almost every other startup in that space. They kind of assumed that the world would continue in execution mode. But in fact, it required cutting the company… and I remember going through our venture capitalist at Kleiner Perkins and saying, “This thing needs to be cut back from 800 people to 80,” and they kind of laughed. They said, “Oh, Steve, this is going to recover in 90 days. This is temporary phenomena.”
Well, it was nuclear winter for three years. I mean, three years. And luckily, the company got a different CEO, our VP of sales, Karen Richardson, who managed to pick it up out of the rubble and at least sell it off for some reasonable price that wasn’t embarrassing. But the lack of understanding that just because the last… for example, today, we’ve been in a bubble for the last decade, right? Everything’s gone now. Unicorns and money and like if you had an idea, it was fundable. It’s hard to imagine a world where that’s not true. And the point is it’s time to imagine that. Literally, in the US, there are millions of people this week without jobs. Millions. I’m sure that same effect is going to happen at scale in Australia. And so you need to imagine what that world looks like.
So to answer your question, the biggest one was just thinking that oh, this is a temporary blip and because we had been in this rocket ship, not understanding that the classic what come goes up sometimes needs to go down. But the other thing to remember is there will be a morning after. I mean, there will be recovery. It’s not like everything’s dead forever, but how you handle it will prescribe how you come out of it.
Nathan: So when you talk about execution and executing quickly, that’s something that is, I think, of value to a lot of people, especially if they are having to pivot their business model or change who their customers are or work on a particular project that might have legs in this particular market because everything has changed. What advice would you share to rally your team to be able to execute at a really high level? Because everyone’s remote now. Right now, everyone likely would be working remote and that’s a new playing field in of itself for leaders.
Steve: Yeah. I think I’ll go back to the thing I said earlier about communicate. So I think every morning or sometime during the day, maybe sometime during the day because people will now get up at 10 different times, but there ought to be a shared video or live town hall from the CEO. I would not make it very long, but I would make it a daily 20-minute hey, here’s what we’re doing. Here are the results. Here’s whatever. And make sure there are some curated questions and by curated you don’t want this to get out of control. So you want people to be able to send in questions, but you don’t want the morale to be destroyed by a couple people who sometimes will do that if the town hall is large enough. But you want to constantly communicate and have people feel that that you’re working hard.
And by the way, the other thing I didn’t mention, in a startup, it’s the C-level staff who’s taking a regular salary, that needs to end. It’s a big idea. They need to communicate that they’re taking a haircut on their pay. And if you’re not willing to do that, then you might as well quit and go home because you’re really not committed to the survival of your company. And it shouldn’t be 10%, it doesn’t have to be 90%, but it should be something that’s meaningful that you can announce to your staff because there are other people who aren’t going to have jobs. And so the first thing before I will be laying off people is I’d be cutting the salaries of everybody by some percent to see if you could keep the people who could least afford it. If you’re laying off janitorial staff and you’re keeping 100% salaries for every engineer, you really ought to think about the social impact that those are the last people who are going to get work again.
And you might want to think about how do you support them versus how do you support someone who says, “Well, I deserve my current salary and you can’t cut it.” Those are the probably the people I would let go now because there will have to be lots of sacrifices by everybody and there will be some people who won’t get their head around that. To be honest, I’d be figuring out how to jettison those people just to make a point is that we’re all in here to be in here at the end. If we’re all not going to make some sacrifices, then we’re not going to make it together and you want to try to protect the most vulnerable of your company. So while the first instinct might be well, let’s get rid of our janitorial services and we don’t need X or Y, I’d be trying to figure out how to support some of those people. Does that make sense?
Nathan: Yeah. What about your A-players though?
Steve: So you got to understand, there are going to be a lot of A-players on the street. A lot. And so now’s also the time to think about recalibrating your staff. We were in an environment where hiring was incredibly hard because there were a limited number of A and A-plus players and they were all being chased by not only the big guys, but other startups. That’s no longer the market. I think a lot of people are going to get their expectations reset to what this new normal is and I think smart CEOs will figure out about how to reset that as well.
If people go, “Well, I’m special, you can’t do that,” the first time you jettison one of those, I think everybody will get the message that says, “This, ain’t last week.” Does that make sense? I mean, I would be truly thinking about how to send the we’re in it together messages, we’re going to do anything it takes to survive and keep everybody employed. But if we can’t, we’re going to protect the vulnerable and if you’re not with me or if you think you know you deserve some special treatment, welcome to the new job market because we’re going to change a bit here.
And you sometimes hear the phrase a wartime versus peacetime CEO. This is now wartime. Unfortunately, that gets the analogy kind of wrong because it’s a little insulting to people who have served. In war, if you screw up, it’s not that your salary gets cut or you get laid off. You measure that by killed in actions. But what they do do is they train for the fight all the time. That is they’ve been practising this their entire careers. You as a CEO are, for the first time, dropped into a wartime situation where you’ve had no practise, and you’ve run no simulations, and you haven’t done battlefield drills before. But you need to act like that very quickly.
And so that same behaviour that worked in peacetime is oh, we have to have buy-in from everybody, and there has to be consensus, and there has to be open meetings, those days are over for now. And if you’re not willing to act that way and communicate why, it’s not that you want to be dick, but somebody has to say this is not normal times. We’re going to treat everybody with respect, but we’re going to operate with minimum latency and decision-making and we’re all going to figure out whether we could get through at the other end and if there are people who are uncomfortable operating that way, this is now not the time to keep them in the company.
And by the way, this is one guy’s opinion but I have seen companies try to juggle prima donnas when the plane’s on fire. Those are the first people I’d push out the door. It’s like either sit down and help me fly the plane or get out and take a parachute. Have a good time. But we’re going to get this thing on the ground and we’re all going to do it together or feel free to leave. And I don’t mean to overemphasise that, but the behaviour of the CEO, the founders, and the employees all need to treat this seriously. It’s not just the CEO’s problem. It’s everybody’s problem. That’s why I said brainstorming a new business model and seeing new opportunities and new opportunities to preserve cash is everybody’s job.
Nathan: Yeah, I really like that. I’m curious around expectations of team during a time like this. Is it unfair to expect your team to work more than 40 hours a week?
Steve: Are you joking? I don’t know any startup where the team is working 40 hours a week. Is Australia something different that I didn’t know about? Is that a …? I thought you were going to say expect working more than 80 hours a week. Yes, that’s unrealistic. Seriously, are you starting to get out unionised in Australia? Did I miss something?
Nathan: No, no, we got an office in New York. Since we spoke, we’ve been getting some good growth, Steve. So we’ve got a remote team in our office in New York. I’m just trying to be thinking and mindful of my listeners. Of course, you know what I mean. You know where I’m going with this.
Steve: Yes. Listen, I would expect people to work hard or harder than they were during the layoffs, but I would expect CEOs to be incredibly cognizant that they’re doing it. Juggling a couple of kids, a wife who’s going crazy, trying to keep bandwidth going and need to take walks and whatever. So yeah, I expect the work to be staggered in a way that gee, you all can’t be there 9 AM because the kids have online lessons or you got one computer being shared by six people in the household and whatever. Sure, you need to accommodate that. But there still needs to be some output here that is commensurate with keeping the company afloat.
And so yes, you need to be sensitive to that, but the expectations also need to be how do you want to contribute here and how can you? And if you can’t, then that’s a set of decisions that need to be made. But I think the expectations for all employees is you’re still at work though there are extenuating circumstances about how work itself might be arranged. I guess the general message is this is not business at all cost now. It’s obviously you need to preserve your family, your health, your community’s health, your country’s health, et cetera.
But at the same time, if you’re going to get paid, a company has to continue to exist and you have to decide as an employee whether you want to participate in that or not. And now more than ever, your full participation as much as you can as critical. And as a CEO, you need to have expectations that everybody’s on boar, and we could put the little asterisk in any way they can. I would be incredibly loose about how they do it or did they get on the computer when the kids and family are asleep? Who cares if that’s not critical? But they all need to be on board? Did I answer your question?
Nathan: Yeah, yeah, you did. So we talked a little bit about running remote. You talked about having like a daily stand up and, as a CEO and leader, really communicating where you’re at almost every day if you can. Anything else there on running remote teams? Do you have any experiences you can share, just around the execute piece? Because I agree it is so important now whether you’re in a business that needs to pivot and rework your business model or even you’re in a business that perhaps has some opportunity. Execution is everything in this market.
Steve: Yeah. Just by the way to follow on and bridge your last question to this one, the other thing I’ve mentioned besides communication, I’d offer remote therapy to your company as well. That’s a cheap benefit because there’s a lot of anxiety for everybody, people who are dealing with children, you’re worried about your parents, older family members and friends. And work life balance has gone out the window and things that you used to do to deal with stress like going to the gym or having social events, well, those have gone out of the window as well. And people who had drinking problems or drug problems, all the AA and NA meetings have been cancelled. So those who are in recovery now don’t have a normal support system.
And so mental health is really crucial and I want to double down on what I said before is we’re all in it for the keeping our jobs in the company, but we’re not going to do this if we all melt down. And so CEOs ought to think that remote therapy and keeping your employees healthy and sane is equally important. And let me just add to that is for employees who have kids, getting a corporate account on some kind of virtual school, if they don’t already have one, and making sure that you offer resources for their kids and their family, I would be doing that at the same time. And I’m sorry, did I answer your question or did I go back to the last one?
Nathan: You did, but still really love to know around any experience running remote teams when execution is so important.
Steve: No, I have not and I wish I did, but I don’t have any personal experience doing it.
Nathan: Okay, that’s cool. Thank you. Thank you for being honest, Steve. What about marketing? Talk to me around your marketing and your messaging. How should you change it? Should it change at all? Should you cut marketing? Some people say that you should keep it going. Now’s not the time to stop. I read in your blog post that you should.
Steve: Well, the people who are saying that you shouldn’t stop are the and your PR agencies. Of course, they should stop, but they should stop doing what they were doing a month ago. And so this goes back to assessment. Not stop all advertising. I mean, think about advertising, right? Number one job is to create end user demand to drive it into your channel. So, first of all, we got to make sure those end users are still around. So it’s part of the assessment. What are they watching? Are they home? Are they now watching Netflix? What are the media I could reach them on? What blogs are they reading or what websites or what et cetera?
Two is do they even care about my product or service right now? And so, while you’re advertising folks and your PR folks, when they tell you full speed ahead, please send us more checks, it’s a lot more subtle than that of like, wait a minute, is this still relevant here? And the answer is for a good number of industries, it might be but maybe the messages are completely different. Maybe the messages are hey, we’re on hiatus, but we’re building ventilators for hospitals, if I was a large manufacturing company or, hey, we’re still selling product. We don’t want to sell you this, but we’re giving out free masks or gee, we’re supporting this food drive for laid off employees or whatever.
I mean, think about what message you want to communicate now, which might help you to build your brand or help your community or whatever. But the odds of your messaging being identical from a month ago, I find that really kind of glib. It might be some cases, but again, if you were Amazon or whatever, it might be you don’t need any advertising at all. You’re just trying to keep up the demand. Or if you’re now, I don’t know how it was in Australia, but telemedicine was really limited by our national laws. Those laws have all disappeared, where you now could do telemedicine in a way you never could a month ago. Gee, I would be doing advertising to tell people about new services that were available a month ago that they thought weren’t possible. Does that make sense?
Nathan: Yeah, it does. When you talk about execution, because I really think this is an important piece, even selfishly for myself and our team and everything we’re doing at Foundr, what are your thoughts… you said that at Epiphany, you had a really strong CEO that was really strong on execution, systems, processes. Do you think at this point in time, people should be focused on processes, and systems, and all that side of the business?
Steve: First, you have to have a model that you could operate a process against. I mean, you think about it, this is now the time where your crazy people actually need to be brought back into the company. And what I mean by that is on day one, in any startup, it was the founders who were trying to find product market fit and trying to testing X and testing Y and doing all kinds of crazy stuff until you found product market fit and you said, “Okay, enough of the crazy stuff. Now, we found how to do that, let’s just build KPIs and OKRs, and people have jobs. It’s repeatable. We could write job specs, et cetera.” for a good chunk of startups right now, you’re back to the crazy times because you need to find a new business model.
So the new business model needs to come first and then you build new processes. So if you think you have, in this new normal, a working set of product market fit that could scale and generate revenue and generate business, then yes, build the processes on top of that. But if those have changed, having old processes and old job specs are actually the things that are going to sink your company when people go, “Well, I’m just doing my job,” and you go, “Your job is no longer relevant.” Well, it says so right here in my job spec. Well here, give me your job spec. Rip, rip, rip. Good. Now let’s find a new job for you. Does that make sense?
And by the way, here’s the bad news, is that people who you hire for execution have a real hard time with uncertainty and you are in an uncertain time. Most people come to work for execution. Tell me what to do. Oh, there’s my spec. I’ll do that. I’ll do the best job I can and I’ll give you my 40 hours or whatever it is. But now you’re going to tell them, “No, no, no standby. We’re trying to figure out what the new job is.” And that’s going to discomfort a lot of them, but that is what’s required now. But as long as you communicate, it’s okay to be nervous. It’s okay to feel a little… we are going to figure this out, but we can’t be doing the same thing that we were doing last week, and so the jobs are going to change. Does that help?
Nathan: Yeah, it does, hundred percent. Well, look, we have to work towards wrapping up because we’ve been speaking for almost an hour, mate. I could talk to you all day about this stuff. It’s funny how time flies and yeah, look, it’s been an incredible conversation, a lot of gold shared and a lot of practical advice that people can take away in this current time and economic climate. Was there anything that I’ve missed Steve, anything that you would have liked me to ask you otherwise that you want to share with listeners and viewers?
Steve: Well, especially for your founders is when economies looked down, entrepreneurs look up. There’s going to morning after here. It’s going to recover. But it’s going to be incumbent to you as the leaders to help figure that out. The other thing I’ll suggest to every one of your listeners and viewers is that it’s crisis like this that help people reevaluate how do you really want to spend your life. Is this what you want to do with the rest of your life? In the United States after 911, the terrorist attack on the World Trade Centre, a lot of people decided that giving back to the government, to their country, et cetera was actually a lot more important than building the next fart app or something else, and decided to make massive career changes.
I think as people are sitting at home and thinking about as they’re trying to figure out what their job is remotely and founders are trying to figure out how to keep alive, there might be some bigger thoughts that are worth having about, you know, there’s only so many days and hours left in the rest of your life. Is this how you want to spend it? And I think this is a good time to evaluate that because you never get a memo that says that. So we will get to the other side and I’m looking forward to speaking to you and your viewers in much more happier times.
Nathan: Yeah. No, that’s really great advice. Thank you so much. Well, look, Steve, last question is where’s the best place people can find out more about yourself and your work?
Steve: So I have a website called steveblank.com. Steve B-L-A-N-K.com. There’s more articles and enticement good wherever wanted and it’s my experience both as an entrepreneur and as an educator and just some fun stories as well.
Nathan: Amazing. Well, look, thank you so much for taking the time to speak with me and share all your experiences. I think this is going to really help people, so I really appreciate it and yeah, hope you stay safe in these crazy times, mate, and your family’s okay.
Steve: All right. Stay safe, stay healthy.
Key Resources From Our Interview With Steve Blank
- Visit Blank’s website