Rest, reassess, and reimagine your startup strategy, says Amit Somani of Prime Venture Partners
Amit Somani, Managing Partner at Prime Venture Partners
“It happens. Call it Black Swan, once-in-a-blue-moon, or a D-day moment, nobody could have predicted it. As all of us would agree that both in life, and in entrepreneurship alike, the only constant is change,” says Amit Somani, Managing Partner at Prime Venture Partners.
The current global crisis is once-in-a-decade, if not a lifetime, type of storm, and Amit feels there is only one thing we can do and are really good at doing -- adapt. He says we need to reset our work and home situations, reassess what is absolutely necessary and how we can get through this, and reimagine a brighter future, which does exist, once we get across this viral tornado.
Amit says entrepreneurs should remember that the business and the world will never be the same post COVID-19. Depending on the sector in which the business operates, the venture will be either deeply and negatively affected for a while (such as in the case of the travel industry), or be affected temporarily (like the cab industry), or the business might have a positive tailwind (like in the case of telemedicine or edtech). However, regardless of the category, a startup founder needs to reset the business.
“As the Stockdale Paradox suggests (and it was observed by long time prisoners of war), the ones who survive are those that confront their most brutal reality and yet have a belief that they will prevail in the end,” Amit says.
By the end of COVID-19, we might have lesser money, revenue, and resources, but we can have greater belief, more faith, and a more focussed action to get through these unprecedented times.
While enough has been already said about managing costs, brutally prioritising and keeping one’s chin up, Amit recommends entrepreneurs to do a pre-mortem. Doing so, he suggests that entrepreneurs should look forward and forecast why they have failed in the future. “That will help identify the most obvious and simple pitfalls. Just minimise or avoid those to the best of your ability,” he says.
Amit further adds that Charlie Munger’s ‘Invert, Always Invert’ is another mental model that tells us following common sense is far more important and valuable than seeking brilliance.
Amit says, “Be rigid about your vision and flexible about your plans.”
Often, as entrepreneurs, one thinks either in black or in white, in zero or in one, in true or false. Unfortunately, Amit says, the world that we live in is very probabilistic. Things are changing dramatically every week, if not every day.
However, we cannot wait for months together, nor bet the farm on some outcome, basis our current conjectures. “We need to have a view and keep iterating as we learn more. As Tetlok and Gardener observe in their book Superforecasters, the best decision-makers don’t treat their beliefs as treasures to be guarded but rather as hypotheses to be proven,” Amit says.
He says, we should have a view of the near future, that is, of the next three to six months, and keep updating our mental models on a regular (weekly) basis. He recommends entrepreneurs to build a two to six-months plan based on their current beliefs and asks them to do ‘scenario analysis’.
“Keep that plan as a living document and update it as required every week or so, basis any material information about the environment or your business,” he adds.
“We will get through this!” Amit reassures.
Humans and the way they interact with the world has changed forever since the beginning of the pandemic. Our role as citizens, parents, students, workers, family members, among others, are all going to be impacted as we come out of this situation.
But what about one’s business? Are entrepreneurs keeping their eyes and ears on the ground to what is changing? Are there trends that can dramatically alter a business’ products or services? Even if a company’s offerings remain unchanged, perhaps how one does their business, that is, sales, product, customer service, engineering, among others, would change forever.
Amit says one of his most favourite, simple but not easy, strategy exercises is that he recommends entrepreneurs to imagine that they were starting their company today, without any customers, products or employees.
“Knowing what you know now, and what we will learn through the next few months, what would you do if you were starting now and had no incumbency baggage?” Amit asks startup founders to exercise this with intellectual integrity.
He further says that one hack for this is to have someone, who is not involved or otherwise emotionally attached to the founder’s business, be a part of this exercise. Post this, he asks founders to do a venn diagram of what their business is and what they would do if they were starting up again.
Amit recommends that if a startup already has some offering and traction in what matters now and shall matter in the future, the founder should double down on it. Secondly, a venture would be in the reimagination zone if there are new behaviours or problems to solve, or ways to solve them. “This is most likely going to be the ‘Neglect’ zone, but could totally redefine your success in the future. Pay attention to this,” Amit suggests.
Finally, if a venture’s previous offerings or way of doing business is no longer relevant, founders will have to prune those without succumbing to the sunk-cost bias. An extreme case in this phase is that if there is no transaction, it is time for the entrepreneur to evaluate if they want to shut down, or perhaps sell their business and restart again.
“Reset, reassess, and reimagine to emerge as an anti-fragile business through this Black Swan event,” Amit says.
(This piece originally appeared in Google’s Playbook for startups. YourStory is republishing it with minor modifications).