This is Wartime

No matter what happens, start planning now

I hope that the last few weeks were just a blip. I hope that the news cycle calms down, market volatility settles, and this seemingly inevitable trade war between the US and China never fully materializes.

I have no idea what will happen. There is so much uncertainty that it's impossible to even know the relevancy of this article when we publish it next Thursday, April 17th. I would like to hope that the worst is behind us.

But while I try to remain optimistic, I do not operate on hope anymore.

I’ve had to lead companies through three of these kinds of moments: the financial crisis, COVID, and the end of ZIRP. Each one came with its own challenges. Depending on the kind of company you are, the services you offer, the location you’re in, and how you’ve financed your company, your experience navigating moments of crisis will be different.

Operating on hope is one of the biggest mistakes I’ve made, and I’ve seen many others make in the past. We say, “Let’s wait and see, it can’t be that bad, right?” We keep saying that until we’re face to face with some very hard facts and lose-lose decisions.

So do not delude yourself: this is wartime. Stop watching the news, assume the worst and start taking action now.

Here is what I wish I knew earlier in my career, and which I had reminded myself of later on when facing these kinds of moments.

1. You are now a wartime CEO

Nobody is coming to save you. Everyone—customers, vendors, partners, investors—is dealing with their own fire. Wishful thinking will not help.

These are the hardest chapters of being a Founder or CEO. I know that it is exhausting; I’m tired of it too. The last five years have had no shortage of challenges, and we don’t need another one.

But it is your job, and no one else’s, to lead your company through this. That doesn’t mean panic. It means clarity and conviction. No one ever feels ready for wartime, but leadership is about showing up anyway. If you’re sitting there waiting for a break, I hate to say it: this probably isn’t it.

I am offering no real advice here, other than to get in the right headspace for war.

2. Expect every function to feel the impact

In the next few weeks you will find that your sales cycles are now longer, prospects will have become far more price-sensitive, and they won’t want to commit to long term agreements.

While you will first feel the pain here, it won’t just be in new logo sales. Every other part of your business will be impacted too.

Customer renewals will become more challenging, your employee sentiment will suffer, fundraising will become harder, and board dynamics will be more difficult. Each part of the business will be impacted differently, but just because something hasn’t shown up yet doesn’t mean it won’t.

For example, churn is a lagging indicator. Customers have contracts. Unless they go out of business, they probably won’t cancel until their next renewal. But when that wave of churn hits, it will be right on top of you.

You need to be proactive and paranoid. Just because the numbers don’t look bad yet doesn’t mean you’re in the clear. Insist that every leader should assume their job just got twice as hard, and that they put into plans to prevent the worst from happening.

This is not the time to use a fancy new AI tool for predictive sales forecasting — this is the time to directly go line by line through every opportunity with your sales team. This is the time to personally review every customer relationship with their CSM to understand their health. If you are used to quarterly reporting, move to monthly. If you normally do monthly reporting, move it to weekly.

3. Make your contingency plans now

It takes time, sometimes months, to put together thoughtful plans and models. It’s better to have plans on the shelf, ready to go, than to be forced to act impulsively when you have no choice.

I would suggest that you and your CFO begin to work on three plans:

1. The Control Your Own Destiny Plan: What if you had to be profitable immediately? This plan will feel brutal. It will feel like you are cutting to the bone, because you probably are.

2. The Runway Extension Plan: What would it take to extend your runway 12-18 months, and how would this impact your business and growth plans?

3. The Clean-Up Plan: This plan trims the fat without materially impacting the business.

Hopefully you will never need to execute either #1 or #2, but you should consider immediately actioning #3. Your company almost certainly has some unneeded initiatives, and underperforming employees. Begin the process of identifying and managing out your bottom 10% of employees right away.

If it becomes clear down the line that you do need to make drastic cuts, act once, and go deeper than you think. You can recover from one painful cut. But multiple rounds will crush your team. I know from experience.

4. Make it easier for customers and prospects to say yes

Your customers probably want to buy or keep your product. That usually doesn’t change just because of macro events.

But your customers are also dealing with the same uncertainty that you and your team are facing. Your buyer is getting pressure from somewhere—their board, CEO, CFO, or manager. Make it as easy as possible for them to defend their purchase:

• Be flexible with pricing and packaging.

• If you can afford it, offer extended payment terms.

• Offer free implementation - often a buyer wants your product but can’t afford the implementation. Offer to cover it or provide support from your own team.

• Arm your buyers with materials to pitch your product’s value internally. CFOs are now involved in every purchase that your buyers will make. Make it easy to say yes.

Do the work now to understand your customer’s biggest impediments to buying your product, and then try to solve it.

5. Focus your messaging on cost savings

Products that thrive in a downturn are those that help companies reduce costs. The ROI must be clear and measurable.

If you can prove you save money during tough times, the sales and renewal conversations get much easier. Can you help your customers:

• Consolidate vendors?

• Automate manual work?

• Cut software costs?

• Justify a team of 10 instead of 15?

There are many ways to do this, but make your value proposition about savings. If you can clearly show, “We help you cut $X,” everything gets easier—renewals, upsells, and net new deals.

6. Renegotiate everything

Your vendors are likely in the same situation you are. They want to keep you as a customer, and they know that everyone will be tightening budgets. So every vendor and every contract is probably negotiable, even if you don’t think so.

So get in early and push on every contract – costs, terms, whatever you need. Your vendors need customers and will likely work with you. Be the first in line.

Vendors are more flexible when they think it’s a one-off. Don’t be embarrassed to say your business needs extra time, money, or features to get through this. If they want to grow with you later, they need to support you now.

7. Keep your team informed (and grounded)

Your team reads the news, scrolls social media, and hears about challenges at other companies. They’re worried about their jobs, their spouses, and the company.

Silence creates fear. Clarity builds trust.

Overcommunicate, be transparent, and be vulnerable.

Vulnerability may feel counterintuitive, but pretending to have all the answers or acting like you’re unaffected by the stress won’t help. Vulnerability actually increases the chances your team will come to you with ideas or feedback.

One key thing: don’t promise anything you can’t guarantee. Here’s a line I’ve used before when asked about layoffs:

We’re doing what we can to avoid cuts, but I can’t promise we won’t make them. There’s uncertainty for our customers, and therefore for us. We’re monitoring it closely and we’ll share as soon as we know more. Right now, there are no planned cuts.

It’s honest. It respects your team’s intelligence. It’s vulnerable.

8. Stay close to your investors

Keep your investors in the loop about your thinking and your planning.

You need to show them you’re not burying your head in the sand. They can offer perspective since they’re looking across dozens, if not hundreds, of companies. Ask what they’re seeing elsewhere and whether there are tactics that might work for you.

If you think you might need their help, make sure that they know that now. Many investors are actively triaging their portfolios to decide who they’ll support short-term. Others will not be able to help, and it’s better to know early.

Either way, your investors are an important part of the puzzle.

9. Secure capital while you still can.

If you have venture debt or access to other cash, get it into your company’s bank account immediately. You can always pay it back.

Remember: this too will pass

Sometimes it takes months. Sometimes quarters. Sometimes years. But cycles always end.

I know this is not very comforting, especially if you are tired from being in the driver’s seat for a while. But the goal is to keep your company in the game long enough to see the other side.

For some, it’s about surviving long enough to make it and eventually thrive. For others, it’s a wake up call to run more efficiently. And for some, this is the moment to seize a massive opportunity, just like Peloton did early in COVID.

If you’ve been here before, this will feel familiar. If this is your first time, welcome to the other side of being a founder/CEO. It’s not the fun side, but it’s where the most important leadership happens.

Let’s hope it’s a blip. But in case it’s not, prepare like it’s war.