We’ve all heard that fundraising got much harder, valuations are down, customers are cutting costs and no one will pay big $ for nice-to-have products. It’s objectively scary out there.
However, I’m here to say that there's something very exciting about being a founder in this tough market.
The odds are more stacked against us, but I think people forget that they were already stacked against us (us = any startup). 90% of startups fail, and in the top US ecosystems, only 1.5% get to an exit of $50m or more.
I’m here to say that there's something very exciting about being a founder in this tough market
One of the main reasons I became a founder is the challenge, so difficult market conditions only make being a founder more enticing. Any person that has played competitive sports knows it's more fun playing against a really good team and giving it your best fight.
Tough times bring focus and clarity
The shift has given us founders incredible focus and motivation. Since the expectations are higher, both from customers and investors, we need to be even more focused on what it takes to survive as a business. In practice, this means making sure our metrics are continuously improving, solving real problems for our customers and iterating a lot faster on product to get to something that people are willing to pay for, even in a down market.
At Varos, some examples of what we’ve done are: clearing our roadmap of anything we feel isn’t critical to get us to hit our goals, shortening our sprint cycles and increasing the cadence of user feedback sessions.
Startups also get clarity on how good their product actually is and which clients stick around, which leads to critical insights into what they should do next.
Because of all this, the culture has shifted towards hard work and hitting actual business performance targets — as opposed to telling a good story to investors or extravagant employee perks. This is a very healthy progression and will lead to a wave of great companies.
Increased accountability from employees
I’ve noticed that our team is rising to the challenge and understands the macro environment well.
They see their friends being let go from companies. It’s a huge motivator to change their mentality and say to themselves: “the expectations on me to bring more results as an employee are significantly higher”.
Whoever wins in this environment will be here to stay. And companies that may have been staying alive just because of a strong fundraising environment will be forced to drive significant value to users, which may actually save them in the long run.
Whoever wins in this environment will be here to stay
It’s not easy, it’s mentally tough on all of us, but founders are a competitive group and we live for these moments.
Game on, wishing us all luck.