How to Steer a Startup Through a Major Downturn
MARK SELCOW, COSTANOA VENTURES
We’re now in the fourth significant financial crisis of the author’s career:
The first was in 1987. He had just graduated college, gotten his first job, and opened a Schwab account. Then the market dropped 23% in one day. Although he was fortunate in that he had little to lose, it was still jarring (yet educational).
The second was the tech crash of 2000, where he had sold his first startup, BabyCenter, to eToys, which went bankrupt because they lacked capital to fund their operations post-crash.
The third was the global financial crisis in 2008. The second company he co-founded, Merced Systems, faced the end of our fiscal year with a big number to hit and a pipeline of buyers who were cancelling projects. We acted quickly and decisively, reduced burn to protect the business, pulled together as a team, made it through the crisis, and continued growing the business until we sold it in 2012.
Today’s COVID-induced market correction is different from the other three, but like the others, its duration and depth of impact are currently uncertain. None of us knows how this will unfold. That’s how it felt the other times too.