There's only one topic on everyone’s mind in the tech startup world right now… How do you survive an economic downturn?

All the leading investment firms have issued tough advice to founders based on extremely gloomy economic forecasts. We know for sure, there will be less venture capital sloshing around for quite some time.

How will you respond?

Wait... WTF happened?

Founders’ and investors’ interests are ostensibly aligned, but it’s worth highlighting again where they are not.

Investors need companies to grow fast (ideally exponentially) or die quickly. Either outcome is OK given the protection offered by their portfolios. Investors only need a handful of winners – and it’s best that the losers “fail fast” so they take up less time and energy.

Founders, on the other hand, are generally happy to pursue a less risky, winding road to success because, for them, the prospect of business failure is rather more painful (and can have serious consequences for both their mental health and economic wellbeing).

Over the last 14-year economic cycle, the excess of venture capital created conditions that encouraged a culture of over-exuberance. Unrealistic founder and investor expectations led to companies massively over-hiring and attempting to achieve top-line growth through insane ad spends that became as addictive as crack cocaine.

The resultant high burn rates naturally lead to a high dependence on closing further funding rounds (on less favourable terms!) to stay afloat. Now, with capital being less readily available, companies with weaker balance sheets are facing some tough decisions.

Think different

We Are Human are not professional investors but “entrepreneurs who invest”, operating from a different paradigm. As a “values-based” company we are interested in driving  sustainable growth and regeneration, which are inherently organic and emergent.

Nothing could be more in tune with natural principles than growth. After all, it’s essential to the circle of life. Perhaps growth IS the purpose of life? We all want longevity and if you’re not growing, then you’re dying. So, despite the hard times, we must continue to grow.

“Growth is the only evidence of life”
John Henry Newman

Growth can only occur when environmental conditions allow it — the result of complex, natural eco-systems in symbiosis. ‘Systems thinking’ enables bold ambitions to be realised as a result of the compound effect of small, thoughtful, inquisitive actions and experiments within a cycle of sensing, measuring and learning.

We created Method to help more founders scale to achieve massive impact, but that does not mean hiring like crazy and high burn rates!

The scale that really matters is the number of people that are delighted by your product and/or service, and the positive impact your organisation makes in the world.

Brave new world

Early-stage companies should view this downturn as an opportunity to build their companies in a way that makes them fundamentally more resilient to change in the economic landscape.

Here are 10 commitments you can make right now to fine-tune your business and ensure it is operating optimally:

1. Clarify and restate your business purpose and goals.
2. Reaffirm your leadership beliefs and principles.
3. Celebrate your customers' success to build an engaged, passionate community of interest.
4. Commit to systematically capturing empirical evidence and synthesising insights to inform product and service hypotheses.
5. Analyse your team dynamics (including its cognitive diversity) then ensure you have a lean, effective organisation model.
6. Interrogate and validate your business model(s) regularly to identify commercial risks and opportunities.
7. Clarify your top strategic priorities quarterly then connect and align your entire team towards shared company-wide objectives.
8. Define and commit to a simple set of communication rhythms, protocols and behaviours.
9. Cascade objectives down to an individual level then coach your team to world-class execution.
10. Nurture intrinsic motivation by discovering and developing your team's talent, passions and aligned purpose through mentoring.

Investor cliché: “In good times focus on growth metrics. In bad times focus on profitability.” A responsible business does both at all times.

Resilient, efficient organisations can grow sustainably and ethically, even when capital is harder to come by. It’s about building responsible businesses that unite ambition and flair with operational rigour and diligence.