A founder’s guide to crisis management | Uri Levine (Waze co-founder, serial entrepreneur)

26:58Whatever you are going to decide, you're going to decide. You need to decide today, right now. And the reason is very simple, right? If you want reduce the burn, the expenses in order to extend the run rate. If you wait two more months, then it's going to become nearly impossible to do. If you wait six more months, then obviously this is impossible to do. So the longer that you wait, you actually lose options. The only ability to choose is today. This is one of the most challenging part of a crisis, right? You actually need to make a decision rapidly, like today. And there are few reasons to that.

27:42One number one is that if you don't, then you might lose options. Number two, and this is about communicating within the organization that decision. Look, if there is a crisis, everyone knows everyone knows and you don't do anything about it. This is not a good practice. Now, you might want to decide, no, we're going to keep on running full steam ahead until we hit the wall. Because by that, we increase the likelihood that we will have enough velocity to bypass the wall. But you need to communicate that with your team. Because the one that is really suffer is not just you, it's the entire team.

28:25They know that there is a crisis and they want to know that someone that holds the steering wheel is making the decisions. And if you don't, then guess what? You are then a sinking ship. And what's going to happen is that the top performing people that would leave. Let me do a quick summary of what you've shared to give people landscape and then let's keep going down this route. So there's basically two types of crisis. And these are, you know, there's like small crisis. I imagine someone's pissed off at something. These are how you describe major crisis. Like existential crisis for your startup rate.

29:02Is that the way to think about it? Right. Because it's only, you know, if an A player leaves, yeah, I hate it, but it's not a crisis. Yeah. Okay. Cool. So there's kind of two cash crisis, which is either a bunch of revenue disappears or investors bail or don't want to keep supporting you. Those are kind of the two major buckets. And then there's product market fit crisis. Could be a competitor launches could be the market changes, things like that. And within the cash crisis, so say you realize we are not, we don't have as much cash as we planned or need the three steps you just described. What is really being impacted?

29:39Just be really real with what is the impact to our business with this change? How long do we think this cash crisis will last? And how long do we have before we run out of cash, essentially? Yep. And then you need to decide. And then you need to decide on your action, right? And your new plan, right? And maybe it's a new strategy. If all of a sudden, I would say if this is about product market, if it disappeared, then this is a new strategy. And maybe it's about deciding on extending the run rate or keep on trying or whatever. And this is something that is really interesting. And we go back to COVID and I look at that, you know, two of my startups that that were in the travel space, right?

30:24One of them is we ski. And it's essentially, you know, the booking dark on of ski vacations. And guess what, COVID started and there was no more ski trips to Europe, right? But Europe was shut down completely. You know, the ski areas were shut down. And you know that I'm a habit ski, right? For me, that was a disaster on a personal level, right? And eventually, by the way, what happened is that I was back in Tel Aviv and I was unable to travel to Europe. And it was only in that somewhere in in 2022 that I was able to travel to the US with after vaccination and so forth. And in March, 2022, I actually mood myself to Utah to Salt Lake City.

31:15And I basically say, no, I'm going to ski every day that I'm not this and I skied until the end of the season. So what happened is that, you know, COVID started and we realized that we have a major problem. And the problem was actually the first thing that you face is cancellation, right? Because all of a sudden, out of, you know, very few cancellations per day, you ended up with hundreds of cancellations per day because this is it, right? And after you dealt with that, then the next question that we ask ourselves, okay, so how bad is it? How long it's going to last? Now, that was supposed to be the first year that we were profitable, right?

31:58So we did not have a lot of cash in the bank because we expected to become profitable this year. And we basically told ourselves, okay, this season is over. Next season is not going to happen. We don't know, but we need to plan for something that is going to last longer than that. And then we basically say, okay, how can we deal with it now? Because of Whiskey had a lot of strategic investors from the travel industry, right? In the travel industry? They didn't really care about Whiskey. They care about their own products, right? If you're a hotel chain, then guess what? You have no travelers. If you're an airline, guess what?

32:38You have no flyers. So anyone in the travel industry has suffered from the same problem. And the last thing on Earth that they care about is a starter that they invested at. And we realized that, okay, wait a minute. What? We don't have enough cash to survive for two seasons without revenues. We need to raise additional capital. Now, no one, no new investor is going to speak with us, right? Because there is no ski. So what are you talking about? And we approached the existing investor. By the way, I'm one of them, right? And we basically say, okay, you know what? We need your help. And everyone told us, so we are busy, right?

33:24We have other problems to deal with. If we have our own problems, I don't see how is that going to become a good investment and then we basically decided that, okay, wait a minute. We're going to do a pay to play, right? A pay to play is actually sort of forcing new investors at the expense of the existing one. Right? So for example, doing a major down -round is sort of pay to play, right? Because if you're not participate, your position in the company is going to be diluted severely. And this is what we decided to do. And that was way more complex. I described that in the book way more complex than that because we also had, you know, safe instruments that we need to convert before we can actually do something like that.

34:12And that was really complex. But we ended up doing that. And today the company is actually very successful. After COVID, we used the time of COVID to actually improve the product. And as soon as COVID was over, then we started to grow rapidly and companies. It's profitable, is grown rapidly, is actually providing very, very good service to its customers. So to a certain extent, I would say we ended up getting out of this crisis successfully. But if you are in the middle of it and you ask yourself, so what are the chances that we will end up seeing being successful? It looks way smaller, way smaller.

35:02So what happened here is that you realize that, okay, this is not forever, right? So ski is going to come back, but we don't know how long. And therefore we assume that it's going to be for two seasons until it's coming back until 2022. And for that, we need to adapt, right? And so we resize the company to be very, very lean and small. And we raise just enough capital to survive those two years. And it ended up to be working very well, right? But in that sense, now if you would ask me how much luck was in there, luck is always good. I think that I heard that maybe the most significant real estate developers in New York is Silverstein.

35:51Right? And he built the World Trade Center and pretty much everything on the Hudson. And he was asked how he becomes such a successful developer. And he said, you know, tell you the truth. This is 85 % luck and 15 % skills and no how and so forth. And then he was asked, well, if he can change one thing, what exactly is going to be an estate? You know what? I'm going to replace the 15 % skills with additional 15 % luck. So luck is good. And for me, you know, I will define luck as opportunity meets readiness. Readiness is up to you. Opportunity not always beautifully said. I also agree with luck being so core to most people's success, most company's success.

36:38But you probably don't give, I feel like you're not giving people enough credit for the work, the hard work that's also involved in the, you know, the skills and time on the readiness. That's the readiness. Being ready to take advantage of opportunity. That makes sense. Okay. There's a bunch of stuff I want to dig into here. So one is, and this is something, it's kind of a tangent, but I think it's a core part of your, your advice on crisis, which is that it's always the founder's fault if things don't work out. Even if there's completely ad air control, even if the whole world is changing, it's still your responsibility in your fault.

37:16If things don't work out. I wouldn't say fault. I would say responsibility responsibility. You know, it might not end up beautiful. In some cases, you will die. But at the end of the day, you cannot rely on someone else. The fact that this is, you know, the interest rate is going up and the result is that it's becoming very, very hard to raise in the capital. The fact that this is industry wide. So what? You have only one company. You need to make sure that this company is successful. And later on, you know, if you fail, then you can rely to then basically say, this is my excuse. It was not just me.

38:02Not just me is not going to help you to become successful. Just me is going to help you to become successful. When you assume responsibility, then you are able to, you're basically basically saying, you know, what I control my own destiny. I'm going to make the decisions. And I control my own destiny. When this happens, you increase the likelihood of being successful. Regardless what happened to the rest of the market, then you don't really care. You also talk along these lines of you have this in your chapter, this section, I've never give up in a crisis and throughout your journey. This is by far the most important behavior of a startup CEO.

38:40You just talk about that because a lot of times it's like, maybe just stop, maybe just give up. You shared one example where it's like, I don't want to deal with regulation other companies. I'm just going to stop any advice there, just like, okay, maybe it does make sense just to stop and try to give investors money back versus, yeah, it's just part of your job not to give up. You know, I heard of cases that you basically say underlining assumptions didn't work out. And in our thesis is wrong. And therefore we would like to return the investors there their money. But the entrepreneurs never give up in the hand.

39:14And this is the the most successful behavior of startup CEO, right, never give up. Always keep on looking for ways to make it work, right. And so it is going to be a journey of failures, right. And in particular during crisis, but you still need to keep on trying to make it work even though it's way harder. So never give up is the most important behavior of successful sales of startup. The second one, by the way, is making decisions with conviction. This is true for all CEOs of all companies, not just startups. Now startups, those decisions are probably more frequent and there are a lot of them in the, but you're in crisis.

39:58All CEOs in the world needs to make hard decisions. And you need to make them with conviction because if you don't make them with conviction, then what will happen is that the team is not going to follow. The team is not going to follow them. You're not going to be successful. But they never give up. You know, you ask entrepreneurs. What will happen if they will basically tell you know we keep on fighting. One of my other startups in the traveling industry called Oversey back then they called Fairfly. And they, you know, the CEO told me that a cat might have nine souls, right. We are a cat in that sense.

40:44We have nine souls and they wait. The reason that I know that is that we already died nine times. We're almost died nine times, right. And so the reality is that you don't keep on as long as and for a second, I would say, look, there are only two reasons that you would like to give up. One is that your mission is wrong. Right. So the problem disappears. And if the problem disappears, your mission is no longer relevant or no longer valid. And you might want to consider it to give up. The other one is that if the team is not right and you are unable to change it. So you brought the epoxy, the investors into the board and they.

41:30And they start to control the company and obviously in many cases they create more damage and help. And you are unable to change that anymore. Then this is a good reason to give up. Other than that, never give up. Crisis, not crisis, hardship, no money to pay, have no, you know, anything that might happen. Anything that you might want to think that might happen will happen. I'm excited to chat with Christina Gilbert, the founder of OneSkima, whenever a long time podcast sponsors. Hi, Christina. Yes, thank you for having me on, Lenny. What is the latest with OneSkima? I know you now work with some of my favorite companies like Ram, Vanta, Scale and Watershed.

42:16I heard that you just launched a new product to help product teams import CSVs from especially tricky systems like ERPs. Yes, so we just launched OneSkima file feeds, which allows you to build an integration with any system in 15 minutes as long as you can export a CSV to an SOCT people. We see our customers all the time getting stuck with hacks and workarounds. And the product teams that we work with don't have to turn down prospects because their systems are too hard to integrate with. We allow our customers to offer thousands of integrations without involving their engineering team at all. I can tell you that if my team had to build integrations like this, how nice would it be to be able to take the software roadmap and instead use something like OneSkima and not just to build it but also to maintain it forever?

42:57Absolutely, Lenny. We've heard so many horror stories of multi -day outages from even just a handful of ad records. We have laser -focused on integration reliability to help teams end all of those distractions that come up with integrations. We have a built -in validation layer that stops any bad data from entering your system. And OneSkima will notify your team immediately of any data that looks incorrect. I know that importing incorrect data can cause all kinds of pain for your customers and quickly lose their trust. Christina, thank you for joining us and if you want to learn more, head on over to OneSkima .co.

43:28That's OneSkima .co. This idea I've never given up. It's very similar to Dalton Caldwell was on the podcast. He's a partner at YC in his whole. He has a famous talk. I guess YC and this was the title of his podcast episode was just Don't Die. That's his main advice to start it. Just Don't Die. Never Give Up. You might die. You'll never give up. Then Reborn. And to be clear, the way I start up dies is they run out of money. Is that the simplest way to think about that? That's the only way that they die. By the way, all the companies in the world right there are unable to pay their bills and therefore they die.

44:05Many of the tactics you share is just waste to not run out of money. Oftentimes it involves down rounds, creating strange cap structures just to keep it alive, losing equity percentage just to keep it going. That's part of the job basically and that's what you have to deal with. In many cases, we had to engage the employees. We don't have cash. What we did is that we diluted all shareholders in order to give employees way more equity. Five times more equity than they had before. We told them we need you to trust us and believe in the cause and believe in our ability to recover. If we don't, then everyone loses.

44:50But if we do, then everyone wins big time. This will be a way to actually reengage employees if you're unable to pay them the regular pay. That was the case in most of the startups that almost run out of cash. Occasionally you can do... If you will tell me that you're going to run out of cash next month and therefore you need to shut down. I would like to imagine that you have at least six more months of run rate. You don't know that, but this is through leadership. You basically tell your people, stay with me. You believe in the cause. You believe in my leadership. I still believe in the cause and I still believe in you.

45:41Maybe we're going to have some hard time. Maybe we're going to have some months that are unable to pay. Eventually we will get out of that. In many cases, most people will stay. Now, leadership, you don't build leadership during crisis. You might, but in particular, you build leadership through transparency, through recognitions of your team, as they talk priority. At the end of the day, you're going to be successful if your team delivers. In order for the team to deliver, then they need you to trust them to deliver. This is a really powerful device and I want to spend a little more time here, which is keeping people on board and engaged and motivated through a crisis.

46:35This kind of almost script you just shared is really great. Is there anything else that you found useful or any advice you could share for helping a founder keep the team on board, keep people excited, driven? These words you shared, I think, is a really good example of anything else. So during crisis, people will appreciate more than anything else transparency. If you hide information from them, then they don't trust you anymore. But if there is a crisis and look, if there is a crisis, then everyone knows that there is a crisis, right? It's not surprising for anyone. And this is where they expect your leadership the most.

47:17This is where they expect you to be there for them and tell them that this is what we're going to do. And if A, B, C happens, then we will be successful. And if it's not, then we will die. And I want you to believe that we can deliver A, B, and C. And I want you to stay here for that part of the journey. And this is really, really dramatic. This is perhaps the most important part. But during crisis, the team is the one that is going to take you out of the crisis. And you need them more than ever. And guess what? They need you. When you talk about being transparent and open about everything, like how, what's an example of just like how far you recommend people go?

48:06Because you know, you could just be like, here's all of our data and metrics and numbers. Here's what our investors are emailing me. Like how, how real do you recommend people get? I know it's hard to just summarize in a couple sentences, but what's a good way to illustrate that? So number one, don't sugarcoat. Right. So you basically, you don't need to share all the feedbacks from all the investors. You can tell them, look, I met dozens of investors in the last couple of weeks. And they're all saying no. Or, you know, we had a signed term sheet and the investor disappeared. Okay. That's fine.

48:42It is what it is. Look, the fact that it's ugly, if you don't tell that it's ugly, it's still ugly. And so I would share the essence. And if we have metrics, then what I would like to do is believe that everyone is aware of the metrics of the key metrics of the company. This is something that in general, I would say, oh, in the lobby of the office, we should have the key metrics displayed for everyone to understand. This is what we stand for. This is how well we are executing anyhow. And so when they will see the numbers drop, they know that the numbers drop. And this is something that I would in general, I would say, look, key metrics, they should be shared anyhow.

49:29And so in particular, during the crisis, we should keep on sharing them. Definitely not hiding information. So if you have a major customer leave or investor disappear, right, or we are unable to sign a term sheet, right? And so this is the highlight. This is the major issue in the details themselves. It's less critical. Now, if people ask the answer, if someone asks, okay, so how many investors have you met that said, no, then start counting thirty seven, right, be specific. And that's a great answer. I want to come back to something you said that I think is so important, but so hard, which is to act fast.

50:19If I was a founder, something changes in the market. It's easy to say, okay, you need to cut burn, you need to go raise money down around, it's so hard to do. To lay people off, to do all these challenging things for your company. Can you again just help people understand why it's so important to act fast? Talk about optionality goes away, just like what actually happens there if you don't. So I'll give you an example, right? So let's say that you have, you're almost run out of cash, right? And you have, you believe that you're going to raise capital in the next two months. And if it not, then you run out of cash, right?

51:03So, so one of the things that you might want to do is extend the run rate. One other thing that you might want to do is actually tell the people that we will be running out of cash in two months. And number one, I want you to help me, even if we run out of cash, because there are good chances that we eventually will be able to raise capital and recover that. And number two, in order to, you know, in order to get your support and believe in the company, I am going to offer you more equity. So the more equity is of something that I will do twice, right? Once today, once you realize that this is going to be challenging.

51:52And then again, if we need to ask people to reduce their salary or do something dramatic around that. And the first one is actually preventive action, right? So you shared and know how you shared the challenges that we are going to face. And you demonstrate generosity not out of you have to, but you demonstrate that. And then you essentially dramatically increase their loyalty and their commitment. And when you will need them, they will be there. So this is one example. The other example is about calculating end of cash. And this is really, really important, right? So let's say that you have run rate of X month, right?

52:49Six months, right? If you reduce burn by 50 % today, and you simply increase your run rate to a year. If you don't do it today, and you wait three more months, then you only can do that for the... So the first three months, you burn the same way that you did up until now. And now you reduce that to half. So you have six more months, right? Total of nine months. If you decided today that you need 12 months, and you don't act today, you will never have 12 months.

53:31Now, is that the only way to do that? No, it's not the only way. But it's one of the ways that, by the way, most companies will do. So they will reduce burn rate today, in order to extend the run rate. Is that going to be more helpful? Don't know. Really depending on the case. If you would ask me if you reduce the run rate, increase the run rate. So now you have 12 month raised new capital. Is that going to have higher likelihood of remaining with the current plan and growth in raised capital within six months? I don't know that. But this is exactly the decision that you need to make. That's a really great way of putting it.

54:19Just the math means the leverage you have now to extend run rate runway is so much higher. The sooner you make the decision. And the key, just going back to your kind of algorithm of deciding if we need to act in this way quickly is first think about what's being impacted. Then how long is this impact in the last and then how long do I have before you run out of money? And those questions is your advice for deciding. Do we let people go now? Do we raise money now? There is always, by the way, there is always alternative for let people go. I, in general, I would say letting people go is probably better than reducing salary for every one.

55:05But let's say that you need the cost reduction of 30 % rate. One of the options is let 30 % of the people go. And that option is actually reduce salary by 30 % for everyone. And it's going to have the same impact rate. Not exactly the same impact on the balance sheet and on the P &L, but not necessarily on the organization. If the organization feels that they are committed to each other, they will prefer the second way. If this is more of individuals, then obviously they will prefer the first way. Is there a different way? What about if management gives up on their salary? That might make the same impact rate.

55:56And definitely the demonstrations of leadership, right? And by the way, increasing the commitment of the rest of the organization. So in that sense, I would say there are multiple ways of reducing the cost. But in general, this is always about impacting people. If you look at the startup and you look at the budget, 70 % of the budget is people. Maybe 75 % of the budget is people. Everything else is nickels and dines. If you're going to tell me, oh no, we are going to start the supply of coffee to the office. And this is how we are going to reduce cost. No, this is how you create dissatisfaction with the team.

56:42And you reduce cost because some people would leave because of that. Not because of lack of coffee, but because of inability to determine and to make hard decisions. So end of the day if you need to reduce cost, that means people. That was really good advice and really good set of options to consider. Versaling people off. So most of what we've been talking about right now has been the cash crisis route. We've spent a little time on the product market fit crisis route, but I want to spend a little more time there. So for the cash crisis route, you have these kind of three questions. And then it's like, cool, this will tell you how quickly to act and how severely to make cuts.

57:22In the product market fit route, is it essentially if you've lost product market fit, it's to pivot? Is that basically the question? And then it's a question of where to pivot and what to do? So the first question is, am I still relevant? And probably the answer is no. And then the next question that you basically say, okay, do I want to pivot right? And for that, I would say, if I would start today, is this is what I'm going to do? And if the answer is yes, then do it. I mean, in many cases, you say, wait a minute. I already have the organization and I already have money in the bank. And this is what I'm going to do instead.

58:07I wouldn't necessarily do that. The way that I would look at it is different. So because the other alternative is basically to say, wait a minute. All of my underlining assumptions are gone. They are wrong. I lost product market fit. The value proposition that I had is wrong. Or it's no longer valid. Or no longer relevant. And therefore, I need to start from scratch. To really have the assets to become successful on the new path. And the assets could be technology that you already developed. Could be the team that you already built. Could be the know -how that you have in that specific market that gives you a significant advantage.

58:58And if any of those is really, really significant, then it's possible that you want to pivot. People basically say, you know, major fuck up. All of our underlining assumptions are gone.

59:15And because everything else, if it's not, then that's part of the journey of failure. If you'll tell me, oh, we tried this product or we tried this featuring, didn't work, then this journey of failure. This is going to be your journey. But once you figure out product market fit, if it disappears, then people with this one option, shutting down is another option. And for shutting down, there are two things that you need to ask yourself. Do I have the energy to keep on going? Like, maybe you basically say, I spent the last seven years trying to do that. And now it's gone. And you know what I need some time of.

59:53And the other one is that we really have the assets to become dramatically successful. Conteorize one of my startups that I started back in 2012. And back then we called that FIX. And we were dealing with financial fees in Israel. And we were actually pretty successful. And then we decided, okay, wait a minute, Israel is a small market. Let's move to the US. And we moved to the US. And one day the CEO came to me and say, look, we need to focus. I cannot do both. So we need to pivot. And we start the Israeli operation completely in order to focus all of our efforts on the US operation. And then we realized that the nature of the beast is different.

1:00:41And therefore we need to relook for product market feet. And eventually we found that with a, with a regulations of the Obama administration. And that was our product back in 2016 or 17. And then the administration have changed. And now it's going to change again. And they changed the regulation. And overnight we figured out that and we were actually on being a successful path. And we had to reinvent ourselves. Now what we basically say is, look, we have. We have the energy to keep on going. We have something, a thesis that we believe might be relevant for us. We have the technology that conserved the thesis.

1:01:32And we have enough cash to write out. And we went back to the board and we offered them two options. Number one, we give you your money back. And number two, this is what we're going to try. And the interesting part is that investors don't want their money back. They did not invest in order to have their money back. They invest in order to make a significant impact. And obviously they don't want to go back to their investors and tell them, guess what? And so we had all the support to keep trying something else. And since 2018, we are actually being pretty successful on this path. And all of a sudden, companies 12 years old.

1:02:15And we pivoted twice. And now we are, you know, end of the day helping Americans to retire richer, helping financial advisors to support you on your 401k plans, on retirement saving plans. And the result is pretty significant. So this company is on a path of being successful. But we almost died twice. And look, all the CEOs in the ward, if you ask them, have you nearly died already and they will tell you, yes. And then the next question would be how many times and they will tell you multiple times. And if they are not, that means that they are simply too early on their journey. That's such an important point.

1:03:05It came up, I just had Toby from Shopify and the podcast and he said exactly the same thing. That just like the number of times Shopify almost died, people will have no idea. It's important to know that's very common. It's, yeah, and I'm a good friend with Harley Finklisland, the president of Shopify. And he told, you know, we exchanged horror stories about nearly dying, right? And we're still here. Just never give up. To double down on this pivot point real quick, so the things you should list, look at to help you decide if a pivot is a good idea. You shared, you have some tech that might be helpful in this new direction.

1:03:45You have a team that's really well suited to this new idea or you have some knowledge. Is there anything else just like what's that list of things you should look at to see? To come up with ideas slash decide this is a good idea for us to pursue. So, you know, going back to basic, right? But now you already running, so you probably have already validated the problem or the value proposition. So you, when you're about pivoting, right? So when you start, you think that, okay, I have this brilliant idea. And what I really encourage people is first of all, go and validate the problem, right? Speak with people and understand their perception of the problem.

1:04:22And only then start to think about the solution. Now, this is still not the case in most startups. But this is falling in love with the problem, not the solution. And for a few reasons, right? And maybe number one reason is the look in the partnership journey is about creating value. Simplest way to create value is solved, that's it. Simplest way. And I like simple. But then in addition, when you focus on the problem, then the problem is going to serve as the North Star of your journey. And when you have a North Star, you're going to make less deviation from the course and increase the likelihood of being successful.

1:05:03But by and large, your story is going to be way more compelling. If we will be here in 2007 and I will tell you that I'm going to build an AI crowdsource based navigation system, you're going to say, oh yeah, very interesting. But you don't care. If I will tell you that I'm going to help you to avoid traffic chips, then you do care. When your customer care, they want you to be successful. And when they want you to be successful, they are going to help you to become successful. And so this is going back into pivoting the same way, right? First of all, validate what's your value proposition? What's the problem you're going to solve?

1:05:40Now in most cases, you already validated that because you, you know, in the market for some years and you had dialogues with customers and you already realized that and maybe you already told yourself, you know what? In my next startup, this is what I'm going to do. And so it's possible that you already validated. And if you haven't, then this is exactly the time to revalidate the value proposition. So this is the first thing that you need to do. And then the second thing that you want to do is ask yourself, do I really have a significant advantage here? Do I really have the team that technology that know how to make a leap frog here and really lead the market?

1:06:22And then the other part of it is, okay, do I have the energy and the passion to go and do it all over again? Because this is going back to square one, right? Trying to figure out product market fit and then figuring out business model and then figuring out growth and so forth. So then tired the entire journey from scratch. And if you answer yes to all of those, so you have the very significant value proposition. And you think that you have something that is going to accelerate you dramatically because of the know how the technology, the team. And the next thing that you're going to do is validate it with the team.

1:07:04In your underlying assumptions, the team is going to continue. Maybe. Maybe not. This is exactly the time that you would like to validate that. And the way that you're going to validate that is you basically say to them, guess what? We are fucked. Right. Our our underlying assumptions are no longer valid. And this is our new opportunity and we can go this path or we can die. And let's see what people leave. They believe in the new path. And this is a good idea. In many cases, by the way, it's possible that the new path will come from them. They are the one that are closer to the customers. They are the one that are closer to the technology.

1:07:44They are the one that are probably no better than you. If this new path is actually valid or not. And if this is the case, then you go and do it. The last the last one that you want to look, even if you don't have the money for it. Let's say that you don't have plenty of cash in the bank. Go back to the investors and go back to raise capital. Because now you actually have a very significant advantage. You already have a technology. You already have a team. You already have the know how. You already second time entrepreneur because people is like restarting from scratch. Or you are already multiple times entrepreneur.

1:08:26So you are way more attractive today than when you were a few years back. And so go back to existing investors and new investors and raise more capital for this new journey. I like this algorithm. I was writing down as you're talking. So basically when you're deciding to pivot, looking for opportunity to pivot, step one is find a problem validate. There's a problem that exists. Step two is figure out if you have the tech team or know how that gives you an advantage to win at solving this problem. Then ask yourself do you have the passion and energy to be spending your life in the many number of years attacking this problem.

1:09:04And then make validate your team wants to also go after this problem. And then check with your investors and try to get money to fund you going after this problem. Yep. Awesome. And I like this order right now. Some people will tell you, oh, my order is different. And I will say, if this is the right thing or the wrong thing, but I think that one of the reason that I say this is the order is look. When you validate the problem and the value proposition, even if you don't have the passion, if it's being validated, your passion will be built up. Because then you feel, you speak with potential customers and you tell them, this is what I'm thinking of doing.

1:09:56And this is how it's going to help you. They will say, yes, I need that. Can you do it tomorrow, right? Then all of a sudden you get excited about it. And usually when I tell, when I speak about consumers, then I tell people, look, when you go and speak about the problem, if the answer that you are going to get is, oh, I know someone that had this problem, don't follow this path. If they will tell you, no, no, no, no, this is not the problem. The problem is and they will give you their version of the problem. This is where you want to follow that. The certain point, if you speak with enough people, you would have the sense that you are being sent on a mission.

1:10:37And this is where your passion is going to go through the roof. And so don't start with the passion, let the passion be built. I totally feel that I have friends who started this company, Zip, which is a procurement, a really good procurement platform. And I don't know if they are growing up wanting to be building a business that helps procurement experiences be better, but in there, and they pivot at six times before they pick this idea. But they threw that, I think, found how big of a deal this was and how much happier people can be in their day to day with a better product and got excited about it.

1:11:12Now that's what they're building. The best thing happened when you tried to validate the problem is that you speak with someone and they will, they will tell you in a very strong emotional world. I hate that, right? Or something like that. Yeah, this is exactly what you're looking for. You're looking for something that people will engage emotionally and with strong emotions. Someone once subscribed as you want to look for their pupils to dilate when you talk about this problem. There's a quota of down as you were talking earlier that I think is really great. It's kind of a framework for the way you used it to help you pick which direction to go.

1:11:49But I think it's a useful framework in general for companies and founders is ask yourself a buyer to start today. What would I have done and what would I do if I were to start this company again today? I think it's such a powerful thing to always think about. Even when everything's going great. I agree. Today is the first day of the rest of your life. And this is pretty much everything in your life. So ask yourself knowing what I know today, what I do, something different. Now if the answer is yes, then do something different today. Don't wait until next life, or next company, or next relationship, or next something.

1:12:27If you're basically know today that you should be doing something different, then change. I think that's extra important because somebody will do that probably and compete with you and put you out of business. And it's better that you do that first. But this is proof for everything in your life. If you are working in a place and you are not happy and you suffered there, then I would say, you know, the guidance that I give to my children is very simple. If you're not happy at your working place, then ask yourself, is there something that I can do to change that? Then try to change that for the next three months.

1:13:10If you're unable to change that then leave. You don't deserve to be unhappy. And you need to control your own destiny. For me, quitting your job, you know what it means? You fire your own job boss. That's what it means. You fire your boss by quitting. That's it. That's empowering. I like that. Okay. Just, okay, two more questions. One is I want to close the loop on the way story. So you talked about how Google launched a competitor, basically, free -turned -by -turn directions. That was the business you were building and used. Essentially, at the change direction, what did you actually do? How did you decide and realize this?

1:13:56So we didn't change. We, we back in 2010, we were simply not good enough. We were still in the product market for iterations and iterations and iterations. And we were not good enough. And we kept on building and we kept on iterating and iterating and iterating. But we almost ran out of cash, right? And then we had this lucky day that Microsoft decided to invest. And so we had Qualcomm and the, you know, the funny part is that I had this dialogue with Qualcomm competitors and they told me that they're not sure why is that important for them. And I read some plays that they did not invest at Twitter at $55 million.

1:14:40And this is exactly what I told them. May I remind you that you did not invest in Twitter at $55 million valuation. This is where it was today. And, you know, obviously, a different story, but that was the fear of missing out the formal. Yeah, I was going to say it's formal. But the result was that we had enough cash to keep on trying and keep on iterating and iterating and iterating. And eventually we ended up to be very successful. So that was not about pivoting or changing directions or doing anything dramatic. We basically say, okay, we will need to reduce cost dramatically. We decided that we are not going.

1:15:25By the way, what we did is we reduced the salary of the management only. And to a certain extent, I would say people didn't even know. We decided in the management meeting that this is what we're going to do. And if we push come to shovel, then we will do the next step and the next step and the next step. But we were eventually able to raise capital. So in that sense, the nearly die was a matter of state of mind. But we did not run out of cash. We raised capital just before that. The story is actually really illustrative of a point I was thinking as you were talking, which is that product market fit crisis often also leads to a cash crisis from investors not wanting to invest.

1:16:12In many cases, yes. In many cases, you get a double whammy. But to a certain extent, I would say, no, product market fit basically means that you go back to square one. So you the other alternative that you have. And by the way, it's also valid is if you are unable to convince your existing investors to reinvest in the company in order to build the new part of the journey, the new, the new journey, then you know what? Shut down the company and restart a new company that is doing exactly that. And that's a bigger threat for investors, right? Because they are not part of the new journey. Now, they might want to say, oh, we, you know, the company owns the IP.

1:17:02Then know how is the people owned by the people not the company? I don't avoid the crisis. You know, a lot of this advice is here is you have a crisis. Here's how to deal with it. Any advice for how to avoid falling into a crisis as a founder? Number one answer is no. Don't worry, you will face crisis. And if you worry, you're still going to face crisis. Number two is that look, it's way easier to deal with the crisis if you have plenty of cash in the bank. So if you can raise capital and maintain higher level of cash in the bank, it will help you to go through the next crisis. But it's not going to avoid it.

1:17:51So always be funded. It's a good advice. But in general, you do not prepare for the next crisis because you don't know what kind of crisis is going to be next.

1:18:03And you can assume that there will be the next crisis, right? Trust me, there will be the next crisis. And then the most important part is that you analyze that fast, then you act fast. But you cannot prepare for it because you don't know where it's going to come from. And this is really, really important. The best preparation is that if you have plenty of cash, in general, I would say if you have plenty of cash, then this is going to help you for many things. We say plenty of cash, if you have any advice, there's kind of common advice. I've had 18 months of runway. Is there anything there you'd recommend for our founders?

1:18:44And then this is really depending on the CEOs, right? And their race cataties. Some of my CEOs prefer to have two to three years of front weight. Basically, say, this is my comfort zone. I know that I can restart if I need to. I know that I can suffer major crises. I know that I can go into a new direction if I want to. I know that I can expand and try something completely different if I want to. And this is not necessarily as a result of a crisis, right? So maybe you're basically saying, here is an opportunity, and I have the cash to do that. The general general rule will be around 18 months.

1:19:25Are you okay with 12 months? Yeah, if you risk takeer, bigger risk takeer, then you can survive with 12 months. But the challenge is that, look, if you have shorter period of time, then you don't have enough time to exit. If you need to focus on fundraising all the time. And you want to focus on creating value and not just bringing cash into the company. Yeah, obviously the downside of raising more runways, you're giving away more company, but it's always a straight off. How much to sell, how much money to get. Being a founder, what a tough gig. And I'm going to come back to this quote you had that I shared at the beginning of the podcast, which is building a startup as a journey from one crisis to the next.

1:20:13Yeah, it goes back into how the other three dimensions of a startup, right? It's a roller coaster journey with ups and downs and ups and downs. And it's a journey of failures because we are trying to build something new that no one did before. So we tried multiple things for that. Albert Einstein used to say that if you haven't failed, that because you haven't tried new things before. And it's a long journey. It's a very long journey. In particular, the longest part is until you figure out product market fit. And now I add the fourth dimension of that, that this is a crisis from one, this is a journey from one crisis to the next one.

1:20:50Yeah, and you've done how many companies have you started 10 last time? Yeah, about a little bit more than that. A little bit more than that. It's a, you know, not a whole of them are going to be successful, but most of them are. In some form, and you just keep doing it. You're a glutton for crisis is what I'm hearing here. You know, I, I'm not there for the crisis. I'm there for the value creation. Yeah. Or is there anything else that you wanted to share that you think might be helpful to get into before we wrap up? I really like this podcast. And hopefully, you know, in my mind, this is my mindset of a teacher, my destiny is about value creation.

1:21:46And if this podcast or this book, this one, can help people to become more successful, then I fulfill my destiny. Orium, so delighted to be helping you fulfill your destiny. Two final questions. Where can folks find the book? When is it for sale? And then just how can listeners be useful to you? The book is going to be published in about a month from now. Yeah, and it is already available for pre -order on Amazon. But later on, it will be on bookstores throughout the US and Canada and so forth. What's the date? It'll be published because we're recording this. Maybe it's coming out around the time we publish this.

1:22:25So what's the date? I mean, I think it's February 15th. Okay, great. I think this is coming out right around there. So perfect timing. I'm so perfect. Thank you. And you can follow me on LinkedIn or you can go to my website, to relivein .com. And I want you to read the book right. And of the day, you know, you ask me at the beginning, what do I want to accomplish? Do I want people to have by the book or read the book? And I told you, look, everything that I'm trying to do in my life is about doing good and doing well. So buying the book is doing well -tarred fit and reading the book is the doing good part of it.

1:23:08And I want you to read the book. That's so good. Laurie, thank you so much for being here. Thank you. Appreciate it. Bye, everyone. Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcasts, Spotify, or your favorite podcast app. Also, please consider giving us a rating or a leaving review, as that really helps other listeners find the podcast. You can find all past episodes or learn more about the show at Lenny's Podcast .com. See you in the next episode.