How startups should handle the downturn

The dot-com bubble and the Great Recession are the previous major tech downturns.

Experts are giving advice on how to weather the storm. Fourteen years have passed since the last major correction and few in our industry have gone through a full economic cycle. Good advice is tailored, specific and contextual.

Each company is different. Is a downturn affecting every company the same? It is not possible to say yes. Some companies have better balance sheets than others. I agree. Is it possible for companies to raise funds even in hard times? It's absolutely true.

The best advice for dealing with the downturn should be based on how efficient your business is. One of the categories is runway.

• Two years or more;
• Between one and two years;
• A year or less.

Stay aggressive,ruthlessly prioritize, and time to trim are the corresponding strategies for each.

The notes from an interview with the author of the letter, Mike Volpi, will be coming soon. The letter was re-formatted for our pages.

Great companies are born in difficult times

Some of the most challenging times have seen the growth of great businesses. Capital was raised in the aftermath of the dot-com bubble, and the company was able to distance itself from the competition. Even though it almost went out of business in its early days, the company was able to survive the storm. During the Great Recession, there was a rise in the number of users.

Turbulence requires a different set of skills from the founder. The days of growing at all costs are behind us. Control and management of the business are required in today's environment. The wheat can be separated from the chaff during these periods.

The first thing you need to do is make a hard assessment of your business.

• How much cash runway do you have?
• Do you have the proverbial product-market fit?
• Is your growth strategy cash-efficient?
• Have you evaluated and prioritized your engineering projects and marketing programs?
• What is your competition doing?

If you have two-plus years of runway, stay aggressive