David Selinger

Anticipating that a financial crisis like the one we’re currently experiencing wasn’t far away, I’ve run my company, richrelevance, on a zero-fat budget, raising small rounds of capital to ensure our team built the discipline to operate with small budgets. Yet, anticipation of the downturn does not make me immune to the shift. External risks in every business have changed. None of us will go through the next 18 months without significant impact.

But many entrepreneurs who saw the now-famous “Sequoia deck” unfortunately took its conclusions to be a tenet of truth and acted on it — perhaps too hastily. The folks at Sequoia are smart, but they aren’t necessarily smarter than you or me at running our businesses. This is the crux of the issue: While this market shift is, in fact, a 5- or 6-sigma event, what we do with that information is still within our domain.

Reacting blindly to a situation is wrong — being reactive is bad for your business. There’s a process to responding to urgent situations, much like triage in a hospital, and by understanding, analyzing, acting and repeating we can surmount these challenges. Now is a unique time when you can deepen customer relationships by advising them, seeking input, sharing ideas, etc. Below are four steps to responding the current economic situation without being reactive.

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Abigail Johnson

Over the last few weeks, we have all heard admonitions to startups (and all companies) to tighten their belts, be realistic about their businesses and hunker down for the long term. This is certainly good advice (in this market, and probably most of the time). But a few other things should also be stressed: He who wins in a down market wins. Some people will cede ground. Be prepared, tactically and strategically, to grab it. Because major changes are happening in the market today, truly transformative companies will be able to gain a significant foothold.

In any market, but especially in a tough market like this one, communicating aggressively is key. You want to keep all of your constituencies informed about what’s happening and how you are progressing. I know that you are probably wondering how you can both extend your runway and maintain or even increase your communications. This is not an easy formula, and every company needs to treat the question differently. However, here are a few guidelines: Continue »

I’ve read a lot here about how to hack a funding term sheet, or how to navigate the confusing terms and conditions in the legal contracts startup founders must sign. But what about rent? It’s probably one of your biggest operating costs, and in the current spirit of cost-cutting, there are several ways to squeeze cash out of your commercial real estate agreement, too. I started Rofo to help entrepreneurs do this, but I’ve shared my top “lease agreement hacks” here. They will save you plenty of headaches and money — and possibly even help you generate new revenue streams for your startup. Continue »

Paul Polak, a Pop!Tech 2008 featured speaker, has been starting businesses since he was 15. He’s now 75, and says he has succeeded — and failed — with more ventures than he can count. Polak’s first was a strawberry distribution operation in his hometown of Millgrove, Ontario. Later Polak prospected in real estate and oil and made millions. In 1981, he invested the proceeds into a nonprofit incubator of sorts called International Development Enterprises.

Most of the ventures Polak has debuted out of IDE have one thing in common: They specialize in delivering low-cost engineering solutions to “micro-businesses” in the developing world. The most famous is the $25 treadle pump: a simple, foot-powered irrigation system that millions of farmers in India, Cambodia, Ethiopia, and Nepal have used to bring themselves out of poverty. Irrigation allows farmers to grow crops irrespective of season. When they can diversify, they are no longer subsistence farmers. They become businesspeople.

Since his customers are the poor, Polak is called a social entrepreneur. But he’s hardly the sort to sacrifice profits for “do-gooder-ism.” In fact, Polak won’t invest in a venture that can’t pay for itself in a year. One year! It’s a high bar by venture capital standards, but Polak says a one-year break-even is one of his top three “don’t bother” rules, along with a market opportunity of at least 1 million customers and having conversations with at least 25 of those prospective buyers.

Polak knows a lot about building successful businesses in dire economic circumstances. It’s a skill set in high demand these days, and Polak often lectures at Harvard’s and Stanford’s business schools. In addition to his three “don’t bother” rules, Polak points the way to success using 12 Steps to Practical Problem Solving, “because business is problem-solving…no matter what market you’re in.”

This week Polak shared his ideas with hundreds of business elites at Pop!Tech. He also sat down with Found|READ to flesh-out his wisdom, tailored to startups. It’s below. Continue »

Late last week, my partners and I here at Polaris Ventures hosted a summit for all of our portfolio companies in and around the online advertising sector. In addition to the some 20 portfolio executives that attended, we brought in a handful of senior industry execs to share their experiences, among them Joe Gillespie, EVP of CBS Interactive CBS/CNET; Michael Barrett, formerly of Fox Interactive Media; Carolyn Everson, EVP of MTV Networks; Scott Kurnit, founder of About.com; Stewart Bogarty EVP at Universal McCann; and Polaris entrepreneur-in-residence Brian Grey, who was formerly with Fox Sports Interactive.

Although our meeting had been planned several months ago, the fact that it came on the heels of some highly publicized admonishments by certain VCs to the CEOs of their portfolio companies to slash costs in order to survive the financial crisis provided an interesting backdrop. In particular, attendees of our summit overwhelmingly agreed that expense cutbacks are only half of the story when it comes to surviving the ad recession — the other half is figuring out how to build revenues. In no particular order, here are some tips that came out of the meeting:

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This week I was in Camden, Maine, attending Pop!Tech, an annual gathering of thought leaders in technology and design launched in 1996. This year Pop!Tech inaugurated a three-day bootcamp for social entrepreneurs, called the Social Innovation Fellowship Program, the latest addition to Pop!Tech’s year-old startup incubator, Accelerator.

The purpose of the program was to tutor 16 social entrepreneurs, most of whom run nonprofits, in “go to market” strategies. But many of the 22 lecturers delivered advice equally relevant to for-profit startups. (Fans of Y Combinator should check out Accelerator.)

Particularly useful was a primer on branding by Cheryl Heller, the founder and CEO of Heller Communication Design in New York. Most companies invest hundreds of thousands of dollars to produce successful branding campaigns. Heller’s three-hour session gave Pop!Tech’s social entrepreneurs a good dose of that value for free. Now you’ll get it, too. Continue »

Someone recently pointed out to me that “a crisis is the ultimate teachable moment.” Startup founders have long known this. Whether you find yourself dealing with a sudden lack of access to commercial loans, the collapse of a funding round, a management change, or even a failed product, you can help yourself work through such unpredictable — yet probably inevitable — business challenges by being prepared in advance with a response plan. One of the most important areas of your preparation, but one that is often overlooked, is your communications plan.

Maintaining clear and consistent communication with your staff, investors, customers and your partners can make all the difference to the success or failure of business in crisis, says Wendy Lane. She is founder of the public relations and marketing firm Lane PR based in Portland, Ore. Over the years Lane has helped clients, cope with all kinds of crises: from bankruptcies, to public political snafus, and in once case, a violent tragedy at a place of business. (Believe me, this sort of crisis puts the stock market turmoil into perspective, fast). Continue »