with Founder Institute CEO Adeo Ressi
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In this specially live-broadcast podcast episode, Founder Institute CEO Adeo Ressi spoke on to a livestream audience of 650+ attendee entrepreneurs about how startups can plan for coronavirus impacts and the expected economic recessionary period to follow.
9X entrepreneur and startup investor Adeo Ressi encourages founders to be smart, rather than afraid in these unstable times, but also to consider substantially changing their financial practices in the short term in order to prepare themselves. Ressi discusses the many challenges the COVID19 pandemic is causing for businesses globally, but also outlines opportunities that are emerging, as well as strategies for startups to survive in a likely recession.
Adeo Ressi addresses directly:
- The big unknowns for startups: how long is coronavirus likely to last, and how bad is the COVID-19 impact likely to be?
- How to survive the stay-at-home mandates, and general considerations for both pre- and post-revenue startup financial management.
- How and when to ask for the 'Coronavirus Discount' from suppliers and vendors - be generous, and remember to give back.
- Why an enormous problem is a collective test, and how founders can take the opportunity to examine their impact in the world.
- Opportunities for improvements and innovation for startups combatting coronavirus directly.
- and more!
If you are a founder building a pre-seed stage technology company towards achieving traction or funding goals, apply to the Founder Institute accelerator in a city near you.
The following includes a transcript from this Founder Insights podcast episode – these transcripts are produced by a third-party natural language processing algorithm, and are not checked word-for-word by humans for complete accuracy—so, there may be some errors or typos!
Adeo Ressi 0:02
Hello, everybody. My name is Adeo Ressi, I'm CEO of the founder Institute. And we're here today to talk about the corona virus. And I'm sure guys, you've heard a lot about the corona virus, maybe too much about the corona virus. And what we want to do today is not go through all the doom and gloom, but talk about some of our experiences to help startups with this pandemic. And we've sort of seen the movie before, because we operate in 200 cities around the world and we operate in places like China and Singapore and Hong Kong, and Italy and Korea. So the virus has played out in places where we operate and in fact, it's gone all the way through to the other side, where we've seen The end results. So we operate in 200 cities around the world we operate where the virus has hit earlier, we've watched what's happened in these cities. And what I'm going to talk to you today is more of a positive vision and some things that you can do if you're running a company right now, plus some ideas that you could build businesses around for the current market environment. So let's get started. Alright, so humanity faced an invisible threat. around December of 2019. We shared information, we're able to identify it as a virus. It was contained within China, but very quickly, humanity took unprecedented action to stop this virus from spreading because it really left China just in January. So that's only a month and a half ago, and schools are being closed things are happening all around the world. And we're doing all of this
to save the weak and the sick, who are the primary victims of this unfortunate virus. And we've done this massive amount of human mobilization in a matter of weeks. And even when people are quarantined or asked to stay home, we have a ton of tools, technologies, automation, that allows for supply chains and other things to continue functioning in such an environment. So our ability to be awesome is being tested. Right? On a human wide scale between countries, China, Iran, Italy, South Korea, so many countries, right ability to be awesome is being tested. And you know, listen, thankfully, we're awesome, right? Like, I'm not saying that things are going well, and it's easy right now. But if you look at what we've been able to achieve, it's awesome. I mean, this would have never happened 50 years ago, 20 years ago, I'm not even sure 10 years ago. So we are really testing our ability to be awesome and delivering. So let me talk briefly about our experience. Then I'm going to talk about some things we've observed. And then I'm gonna start up tips and then general ideas. So we started hearing about a virus in China at the founder Institute in December of 2019. It might be a pandemic. At that point, it was unnamed. It was like a SARS like thing It wasn't called a Corona virus, even though it technically is one because they didn't really know what it was. By January, it started spreading in China and Hong Kong. And that's when we realized, oh boy, this might affect our operations. And we started tracking it bi weekly, and we put some informal plans and policies in place, really saying, okay, we're going to cut travel and we were already starting to cut events and cut different things that people were going to but you know, it was like precautionary. Then in February, Iran exploded on the scene. Italy started growing. big events were being canceled. You know, I had a number of keynotes all around the world canceled, canceled canceled, which was all great. We said we need to start tracking this weekly. We put a formal plan in place. No travel. We were delaying programs in different cities with outbreaks. And we were starting to cancel events. And then obviously now in March, the pandemic is upon us in our headquarters office. It's shelter in add place in where we live. It's been called a pandemic. We're looking at this daily working on a daily we've created a new formal process. We've published our policies. We've called people to submit their plans to deal with a virus so we can share these plans out. And different startups can use different plans. We launched a portal founder well, being calm, to help founders with things like sharing information and getting best practices, as well as dealing with mental health and well being in this crisis. We moved all of our programs worldwide online. We've announced the public health fellowships so that anyone starting a business and we'll be talking about a bunch of businesses later, that needs help can enroll in any of our incubation and acceleration programs anywhere around the world for free, and they're being run virtually now, but eventually they'll move back into physical presence. And we've actually created a plan so that you can get your own startup plan for the coronavirus and edit it as you wish. And you don't have to spend 30 hours researching a lot of stuff that you don't really need to know about.
So I would say on the whole, we've been pretty good and that global reality is we've got to plan for the worst and hope for the best. Okay. And we need to be smart, not afraid. And this is particularly at all this panic and you know, Ilan musk tweeted Corona virus panic is dumb. Here's the reality. The Corona virus is not dumb. It's a very serious thing that we really don't know how deadly it is, but it looks to be pretty deadly. And panic on the other hand is not wise. This is something we can control. Okay, if you want to stop the coronavirus shelter in place for three or so weeks, and then employ really good sanitary routines. And this is if it's already spreading.
If it hasn't spread yet, there are other things you can do. So don't panic, just be smart. And then we can easily get through this versus getting through it in a more hard way. So here's what we've seen happen in the different cities where we operate where the coronavirus has come and gone or is present It hits could be one case 10 cases, whatever. governments do some sort of response, that response has a result. they adapt the response. And then it's usually been containment.
Now, I can't say what's going on in Iran, because we don't operate there due to. There's a restrictions for American companies to operate in Iran. But we would love to if the restrictions didn't exist. So I can't speak for what's happening in Iran, but all the other countries where we have operations and people containment happened, or is happening, hopefully in Italy. So from all the research that I've seen and people that I've spoke with, you need them to be vigilant and hopefully we can find vaccines and a cure.
Right. So that's the future. But there's a head response, a result, you adapt based on the results, and then you can contain. Now, the big questions for startups are, of course, how long will it take and how bad will it be? Look, I can't say, I'm not an expert, but I will say what I've seen and heard firsthand from people that I've spoken to on the ground in these cities. And this is what I've seen and heard.
So cities and places like Hong Kong and Singapore, that took very decisive actions very quickly. There CDC is were alerted when Wu Han was still like, I think there's a weird pneumonia, Hong Kong and Singapore equivalent of CDC We're looking at what the situation and so they were able to contain the epidemic in weeks and life in Singapore has returned to normal life in Hong Kong is more restricted. They're less freedoms then but they were had other issues, right. They were rioting, and then they got the pandemic. So, but Singapore is back to normal. You look at Italy, to some extent, South Korea and the US. The responses have been slower. So Korea kind of took very similar responses to what we see Italy and America doing. And it's taken them months but they've kind of gotten over the hump is what the data is showing. And life there too, is slowly going back to normal.
So I would say you're looking at like a two to three month period of impact. If you're selling Country region kind of hits it like a Singapore, Hong Kong, and a few more maybe six to nine months of impact if you're less responsive, like a South Korea, Italy, United States and it could be much more. Okay, because there's an assumption that we do contain it in these arguments like South Korea seems to have done.
But this is what at least the experience that we're seeing and hearing about firsthand tells us Okay, so this isn't some hopeless zombie apocalypse. Let's talk about startups because many of you are thinking of starting a startup and many of you are running a startup. So what is this two or three or 69 months mean? You will talk about people capital and impact. Now, people, your team's gonna have to work remotely if you can support it, one of two things is going to happen, guys Either, and it's not going to happen everywhere, but I would assume most places, the government's going to tell you to work remotely. So working from home is going to be the new reality for a number of weeks and or months, I would assume anywhere from three weeks on the low end, two months on the high end, and in some cities and places, this will be mandated by the government. Okay, you could get fined or arrested for going out.
So you got to start thinking about remote work. Now, if you're not working remotely already. Practice, it's coming. Then when you are working together, social distancing, you need to have air filters and rooms where people are working closer together. It's not really understood if it persists in the air on surfaces, and how long it looks. To be quite a while in both, but I'm not going to speak to the exact science because I've read a number of different studies that differ. But social distancing works, right. That's how the second part of how Hong Kong and Singapore both defeated it or brought it under control. So you might need to rearrange your offices and put filtration systems in place, maybe not leave interior air circulation on etc. Last but not least, sanitation or sanitization, having you know, people wipe down their stuff, frequently, their hands, washing hands, all this stuff, not picking your nose. These things are important, but beyond people, you're going to need money. And so you need your people and you need money. Now, if you're breakeven or profitable, and as a startup today, you want to make sure that you have three months of cash on hand, as if you had no income.
Right now, of course, that won't happen, there's going to be a dip, right? But the economy was really strong. We just stopped it when everyone went to go, quarantine. So we'll bounce back. So just have three months of cash as if you had no revenue on hand. And that will allow you to go through the death. And then second, I would be looking on top of that, to do general expense cuts, okay, and say, Hey, rent vendor, I want a 20% discount. It's probably good practice for you to do this anyway. And this extra 20% buys you more time. Right and it's good practice. Now if you're a startup on who is unprofitable or pre revenue, I'm going to say you probably want six months of cash on hand and possibly more. And you probably want to do a harder like 25% expense cut. And you want to try and turn on your revenue engine in the next few as soon as possible. But I would say two to four months now, you almost want your initial revenue to be shitty. Let me give you a framework to think about things. If you can get your revenue working, when everyone is on a mandated vacation.
You're amazing. Right, hats off to you. Your revenue will do great when people are back to work. Right? So if you can get your revenue engine started now it's the like a testament To your awesome ability so get your revenue artist engine started now and the 20 to 25% of savings that you're going to need to ask for. It's called the corona virus discount. You heard it here first, right? You want to be able to get a discount from your suppliers from your vendors. And here's what I would say. Don't fire someone if you can avoid it. Ask for the coronavirus discount. And you know what, when the epidemic passes, bring it back, pay them their proper amount, right? We're all in this together. It's going to be hard times for everyone. People will take the discount if they know they'll go back to normal. And last but not least as a startup think about impact
how can you contribute to the dialogue: are there solutions to the problems that people are facing that you can provide? And how, as your organization, can you improve, right? Because this is a test of our awesomeness, right? So be awesome, improve, do things that you can be proud of. And again, this is an opportunity for all of us to do better. And speaking of opportunities, I'm going to close and then with some opportunities, and then open it up to questions. So I see three areas of opportunities, commitment, innovation, and adaptation. So on the commitment front, we need to start thinking about ways to stop the spread. And so AI spread modeling. The big thing right now is the Imperial College. In the United Kingdom, did a study with AI, and basically came to the conclusion that we can stop the virus out a few thousand deaths in a big region, like 2000. With the containment, self isolation strategy, great. Well, there must be other ones, right? Why don't we do AI modeling and figure out 50 other ways to stop the virus and try that? Because self isolation kind of sucks. So let's model other things and let's model how to stop it in places where it's got out of control like Iran, and Italy. We need symptom tracking solutions. I'm tracking the symptom of my children and myself, because we have the cough in an Excel spreadsheet. You know, my daughter sneezed, I'm like, oh, sleaze, of course. productive cough and sneeze are not symptoms of the disease. But God forbid she gets a fever, I'm going to be worried. a chatbot for diagnostics I've seen actually two or three of these come out. They're very good. One is carbon health. And there's another one. I'll share the link later. But yeah, that would be great. more of them. People tracking so that if one of my team members has a child into preschool, and a parent got tested and has the virus, well, there's no communication line with this fear of whether the child has the virus bah, bah, bah, bah, bah, we need tools to make that happen. And then smart corporate policies and adoption of those policies tracking so we publish policies that everyone can use. Go to founder Well, being.com and you can see our policy okay. On the innovation front, there's a ton of stuff. So the virus stays on surfaces for a long time, days, and certain kinds of surfaces like metal, but it's very susceptible to ultraviolet light and other things.
Why aren't there infrared tools and ultraviolet light stuff that you can just wave like a wand and sanitize? Let's say airplanes. Health Worker protective gear, like getting a mask is like finding the rare Pokemon. That shouldn't be that hard, right? We need innovation here. vaccine development, delivery, manufacturing, you know, we're going to give a billion shots to people can people take a vaccine as a pill, we've got to start innovating around this stuff, guys, especially if we want to save lots of lives. standard of care low cost ventilators low cost oxygen, so On Demand hospital beds, like people are turning hotels in the hospitals, why aren't there pods that are like er, er, bed pods. And, you know, er, in a modern world and ICU are things that have fluctuating demand. And we're, unfortunately in a time of massive climate crisis, so there's more fires. There's more natural disasters, hurricanes, floods, er beds on demand and ICU beds on demand are probably a necessary part of our future until we start fixing the problems of the world.
Okay, and then adaptation. I'm working from home we need zoom, all these things to make working from home more productive. newsrooms can come other ideas on how to work from home can come at homeschooling. My kids are out of school. I am making lesson plans. I assure you as an adult I am okay at making lesson plans for startups. I'm great for kids. Okay. safe food delivery solution sanitisation best practices therapy and stress coping. And the list goes on. There are a ton of opportunities today. So as I opened with and I'm going to turn it over to questions now our ability to be awesome is being tested. We can always be more awesome, right? We can always be more awesome. One way you can be awesome right now, as a leader in a company as an individual stay home. Right? Especially if the virus is spreading in your city, stay home. It makes a big difference. And I'm grateful that we can be together and opportunities like this and discuss important topics like the corona virus and still maintain hope for the future building technologies and other solutions that are needed for this and other things. We have the opportunity to make this work well for everyone and save a lot of lives in the process. And it's because of technology that this has been possible. And it's beautiful that we care. So what I'll say to everyone is, stay home, please, especially if you're in the midst of an outbreak and if you do go out, buy, buy the best practices. If you need help. We'll do whatever we can to help you you can email we have health@fbi.co as an email address there it's monitored. If you need help with your business, help with your mental health, even just some best practices on what to do with your company. or ideas on what to business to start. We're here to help. So with that said, Thank you everyone, very much, everyone.
Dustin Betz 24:10
Thank you again to everybody for listening. Remember, if you haven't already, subscribe to the founder insights podcast on Apple podcast, Spotify or wherever find podcasts are found. And if you are a pre seed stage entrepreneur, go to FI.co/join/podcast to see if the founder Institute accelerator is enrolling in acity near you. Thanks everyone. Be healthy.
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Graduates of the Founder Institute are creating some of the world's fastest growing startups, having raised over $1.75BN in funding, and building products people love across over 200 cities worldwide.
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