The life of tech entrepreneurs, startup founders, and generally people working in the tech/innovation/digitization industry, irrespective of their role, is full of stereotypes, starting from how they look, how they work, how they spend their free-time (do they even have free-time?), and finishing with their eating habits and other aspects of their lifestyle. Not without a reason. This industry is full of super-smart (sometimes so smart, that already arrogant), creative people which are innovators, adventurers by nature, ready to take risks in order to create new business models, products, or services which can drastically improve peoples’ lives (a.k.a.disrupt). Such kind of endeavors is driven by the desire to think differently and the inner energy which questions the current state of affairs (a.k.a.challenge the status quo) in a particular aspect of human life, the process of how things are being done, how a particular company, or business works, you name it. Furthermore, in order to successfully change one of the above-mentioned points and, at the same time, build a business model upon it, an incredible amount of dedication, hard work, and initial capital investments are needed. So, no wonder that starting a startup in a garage, working long, late, but (!) flexible hours, not caring what to wear during the business meetings and trying to raise the next round in flip-flops, coding the features for the next product release somewhere on Bali, and going to your company’s open space (if there already is any) by an e-scooter or a longboard, in order to have a free smoothie and play table soccer before (and after) a strategy meeting have become standard attributes of a stereotype of the tech industry lifestyle.

For many startups, growth for no matter what has become the only key success metric. They are concentrating all of their resources and keep raising new investment rounds, in order to secure a constant growth of the user base, often paying no or too little attention to making any profits, the business model in general, increasing their operational excellence and, thus, securing their sustainable existence. And you know what? With COVID-19, I think their time is over!

COVID-19 is this kind of black swan that has already dramatically, unprecedentedly disrupted most of the aspects of the life of humankind and the economy in particular. And this at global scale! Most of the world’s leading managers from governments, banks, insurance groups, hedge, asset management funds, and other financial institutions already see a recession far bigger than the financial crisis of 2008 as a base case scenario. Many of them forecast an economic downturn similar to the Great Depression which will last for years to come. Almost all industries, from construction to real estate, from transportation to tourism, from manufacturing to hospitality and retail are strongly affected by the global economic lockdown. In this new reality, where the time of reopening the economy remains unknown, the prevailing number of companies are cutting costs, in order to increase liquidity by undertaking such measures as freezing the less profitable business areas, decreasing marketing budgets, optimizing the production levels to the fallen demand, furloughing employees and pausing the innovation projects which by nature are of high risk.

The same refers to the VC industry. Softbank, one of the most powerful VC funds in the world with its $100 billion Vision Fund, has recently reported that it expects to have up to $24 billion losses. This means raising capital will be much harder in the upcoming years, both for the funds and of course for startups. Lots of startups will close sooner than later now and most of them will need to rethink their spending strategies in favor of operational efficiency instead of free smoothies, table soccer, and team buildings in fancy resorts. Here it is worth mentioning, that most of the startups anyhow fail for the reasons which need a separately dedicated blogpost, but relying too much on the investor’s money and caring too little about generating profits while keeping a sustainable growth in focus is definitely among those reasons.

So, what does it all mean?

First of all, it is still the best time to start your own company. Yes, the economic crisis caused by COVID-19 will make it harder to raise money, but don’t forget that such companies as Uber and Airbnb were also started after the financial crisis of 2008. Every crisis is a time of huge opportunities and this is what it takes to be an entrepreneur — turning challenges into opportunities.

Second of all, COVID-19 is another great proof that fully remote work with teams distributed around the world is possible and a whole bunch of new (and not any more so new) modern online tools, such as Jira, Confluence, Microsoft Teams, Zoom, Slack, Trello, Miro, Figma, you name it, make working on the next unicorn-startups easier. What if social distancing and working remotely will be the new norm for the years to come?

Third of all, raising money will still be possible. If you have a strong and experienced team with complementary skills, your product solves a real problem of a broad group of people, you have a solid business model, a plausible plan on how to scale in the next 2–3 years and which goals to achieve, and a strong focus on how to effectively achieve those goals — you will certainly close the next necessary round. VCs will need to increase their operational effectiveness as well, and that means they will need to focus harder on finding strong teams with the potential to become “the next big thing”. The times of COVID and in the years to come will make the competition tougher and only the fastest, the most flexible will get out of these times stronger.

Last but not least, there is nothing wrong about drinking smoothies, playing table soccer or video games, doing yoga before, between, or after work, have flexible working hours, and work from a beach on Bali or in Thailand — as long as it works for your team, your customers, and you achieve the desired results. There’s just a very high probability that these kinds of expenses will be significantly reduced in the upcoming years, as more businesses will try to survive. So, it is important to keep a healthy balance and not to lose focus on the sustainable growth of your business.

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