How COVID Has Disrupted The Way Startups Operate
As per Economic Times, 70% of the startups in India admitted that their operations were severely disrupted by COVID. Another survey by Nasscom, found out that 40% of the startups are struggling to keep their operations running, so much so that they’re planning to temporarily halt their operations or close down completely.
The COVID has not been easy for anyone of us, including the startups. With almost half the population asked to stay indoors, and the trade and commerce industry coming to a standstill, it was only natural for the startups to start feeling the heat of the pandemic situation.
The only way for the startups to survive this tumultuous time was to switch to remote working. However, this was a whole new set of challenges because growing a company while working remotely is no child’s play.
To dig deep in to this topic, we invited Sathya Wekan to our bi-weekly webinar. Sathya is an entrepreneur and an angel investor with a strong interest in B2B and future of work. He is also the Co-Founder of Wekan, a growth accelerator, and his angel investment list include brands like Citymall and Mitron.
This blog is an excerpt of what we discussed with Sathya in the webinar. You can click on the thumbnail below to check the recorded version of the webinar
To get a quick overview, follow this blog as we cover all the questions that we asked Sathya in the webinar, but before that, let’s learn more about our speaker.
Sathya has more than 5 years of experience as an entrepreneur and angel investor, he launched his newest fund early this year to back passionate founders that are disrupting the enterprise tech stack. He is focused on helping startups in India, and the US, to scale from Pre-series to Series A. Within a few months of its launch, they have already backed companies like Comake, CreatorStack, Locale who have raised capital from Tier 1 Vc funds like Accel, First Round Capital and Dorm Room Fund.
Earlier, he had launched a product accelerator where he served on many company’s boards, and the list includes names like - Ridekleen (a mobility startup that was later acquired by Cox Automotive) and Uncube (a prop-tech platform that later got an acquisition offer from Co-Works). The accelerator turned into an enterprise software solutions company which later got on board MongoDB (Nasdaq: DDB) as an investor.
Sathya holds an engineering degree in computer science from the College of Engineering, Guindy in Chennai. He has done his master’s in Management and technology from New York University. Sathya splits his time between New York, Chennai, and Bangalore.
That was about our guest speaker, let's hop on to the next section to find out what Sathya shared with us about COVID, and the disruption in the startup ecosystem.
1. With limited resources, and them being stretched due to the pandemic, what would be your note for start-ups to work on their early days?
Instead of dilly-dallying we thought of cutting to the chase, and taking this topic head-on. With this question, we wanted to understand Sathya’s views about what Startups should focus on their early days. With limited resources, and so much to achieve, getting started is a challenging job, but it is of the highest priority.
Sathya suggested that Startups should start their early days by working on the product-market fit. The concept of Product-Market fit stresses on understanding the needs and wants of the target audience, and then designing a model that will entice them to buy the product. Before we move on to Sathya’s answer to this question, here’s a quote from Andressen Horowitz’s 12 things about Product-market fit.
“The term product/market fit describes ‘the moment when a startup finally finds a widespread set of customers that resonate with its product’.”
Now, that we have an understanding of the concept, let’s check out what Sathya had to share with us.
Sathya - “You have a lot of things to work on when you start, but the single most important thing to focus on in your early days is Product-Market fit. PMF is not about selling your product but finding the ideal fit for your product among your consumer.”
2. Many startups took a hit on the revenue, but what were the methods followed to get the revenue engine up? Did the market do its trick or some catalyst was included in the process?
Many startups had their revenue impacted negatively during COVID. However, a lot of them revived, and in fact, increased their profits exponentially during this period. We wanted to probe more on this, and Sathya made it clear for us by sharing a few examples.
Sathya - “For many B2B companies, their revenue doubled and even tripled since everyone went online and continued their business. But, overall brands who kept their brand promise are the ones who took off much faster.
Let me share a few examples with you all.
Airbnb was planning to go public, but due to the pandemic, their revenue dropped, and they were facing a very difficult time. However, the brand ensured that they compensate for all losses incurred by both their hosts and guests. The company showed the way their brand culture is built by this gesture.
For people who got laid off, however unfortunate, they created an open database and promoted it to the market themselves to help them get a job.
I personally loved Delta Air and invested in them during the pandemic since I loved their service every time I traveled with them. The employees are happy, and they spoke highly of their company at all times. At the end, they managed to pull out thir business on a high soon as well.
Overall, companies who took care of their employees and made sure they took good care of them.”
3. Did you invest on any software to better the communication or infrastructure of the companies during the last year?
Last year was a paradigm shift for companies, and employees. Within a few months after getting hit by the pandemic, most of the employees started working remotely in different working conditions. Naturally, for a lot of us, the inclination towards specific tools increased during the year. So, it was obvious that we wanted to learn from Sathya about his experience on working remotely, and using new tools that helped him get work done faster.
Sathya: Yes, we did purchase a couple of tools during the pandemic. I am a power user of Notion right now, and this happened during the last year. I feel Notion is a lot more powerful as collaboration software, and that’s the reason why I end spending 25% of my time with Notion.
The other one, that I am happy to talk about, is a company I have also invested in - Comake. A key feature I love about Comake is its dashboard that offers a unified view. Basically, you can compile different data points from different accounts/applications, and then bring them together to present in a unified dashboard. So, you don’t have to worry about spending time in looking for information in different apps, Comake consolidates all of them for you, so that you get all the details you want, in one place.
4. Remote vs In-office vs Hybrid - what’s your pick?
This was a follow-up question. COVID has challenged the way we work, and its impact is likely to linger for a long time. The one question that will contest many companies for some time now is what mode of working they should follow; will be back to office, remote or a hybrid version. Sathya had a preference for one of them, let’s check out his views on this question.
Sathya: “I will go with the Hybrid model any day. We, as humans, cannot completely settle down to one model, and the option to have that flexibility between working from office and home is something that will make its way in a big way in the future.
Social interactions are really important, and the office space offers the same. But, the option to stay at home, and save commute time has made us more productive. So a right blend of both will help us good.”
5. Did you hire new people? What are your thoughts on the virtual hiring process?
Many companies started scaling their team even while working remotely. Again, the recruitment process is not the same; it has become more virtual, and hiring managers have to be extra careful about hiring the right candidates. While this is another challenge, this might be a new trend too. Sathya increased his team headcount during this time, so he was the best person to answer this question.
Sathya: Yes, we did hire a few people, and I made a few new investments on VC’s during the last one year too. The entire process went online, and I still haven’t met my Chief Product officer till date, though it has been almost a year.
I made sure we spent enough time to understand the different angles - cultural, professional, and from an attitude perspective. There is no silver bullet towards hiring the right people, and only time can answer if you have picked the right person for the job. But, you should do the fundamentals right, and if you feel they tick all boxes, go ahead and hire them.
The best outcome of Virtual hiring is that it has helped us to hire talent across the world. What matters equally is to ensure they fit in with the existing team once they are hired.
6. The pandemic seems to be a warning sign of what the worst companies can expect - What are your learnings from this experience? What should companies do to sustain such cases in the future?
Difficult times come with its learning; this pandemic has highlighted the shortcomings of many companies, which is more like a blessing in disguise. If the learnings are take in positively, then companies can benefit from it in the long run. Sathya agrees with this thought, and had wonderful points to share with us.
Sathya: “In the initial days, companies focus too much on their growth, and it is important to achieve the growth cycle they aim for.
However, every 6 months, they need to retrospect. Some companies begin to deviate as they see a bit of potential from their core offering, and they don’t see it through. When the economy fall, they cut out the extra, and start focusing on the core offering again.
Companies do have to experiment, innovate to grow large but at the same time they should retrospect time and now to identify the areas where they can optimize cost.”
7. Although we want to say “post-covid,” we are not there yet, the second wave is still on - so what’s the market scenario off late? What’s your advice as a VC for new startups of today
We’re still in the clutches of COVID, and the second wave is strong too. A few businesses managed to open their offices, but they couldn’t continue it for a long time. The vaccines are now available, but it will still take a long time for the situation to subside. With so much going on, we wanted to understand from Sathya about his thoughts on the current market conditions, and what advice he has for the startups to sustain.
Sathya: “I have two things to share here.
This is the best time to be a SaaS entrepreneur; over the next ten years, you will find this market grow crazy. People are moving on cloud and the current revenue has disrupted only 20% of the market, and there is still 80% left for the SaaS companies to tap in.
The second thing is VCs are back and investments have started flowing in. The market is back up and running with companies adapting to a matured remote work culture. So, if you have a good idea, then don’t hesitate to take it to the market, the market is ready for it.
Summing it up
Startups are experiencing a lot of turbulence at this moment. The market is haywire and their team is mostly working remotely; this has put their growth plans in jeopardy. However, COVID has come up with some opportunities too, and to explore them we invited Sathya to our webinar.
Sathya shared advices from his own experience on what startups should focus on early days, why a few startups are generating a lot more revenue than expected, what learnings startups can gain from this pandemic, and how they should plan in sustaining in the post-COVID era.
Additionally, he also shared his views on a hybrid working environment, hiring the right people in the team, and new tools that have improved his productivity. Once again, if you have not checked out the recorder video, go ahead and do that ASAP.
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