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I really liked this note that came through TechCrunch.  I think it offers a lot of good tips for the small business owner.  It's a good, quick read and something to reflect on...


The First-Time CEO’s Recession Survival Guide

Posted: 30 Nov 2008 05:19 AM PST

Editor’s note: The following guest post is written by Glenn Kelman, the CEO of Redfin, an online real estate broker.  His industry went into recession a year ago, so he’s had a little more time than most startup CEOs to think about how to deal with the current downturn. Below is his advice to his fellow entrepreneurs.


Startups can be the most conservative organizations in the world. We spend so much energy nurturing our delicate egos against naysayers and self-doubt that we can hardly admit mistakes. This is especially true of first-time CEOs. Thousands of new web companies were born in the last few years, and many of us just got the job.

We set off with the same directions: tackle a big problem, listen to customers, work hard, pinch pennies, hire sloRedfin CEO Glenn Harris Kelmanw, fire fast. Still good advice. But I think we’ll have different advice for one another once we’ve come through this downturn, about how we had to change to survive. Since real estate crashed before the overall market, Redfin (my online real estate company) has had a year’s head-start sorting out which changes seem to be working for us.

Not that we don’t still have a long ways to go.  We’re still on track for our first profits in 2009, but we’re going to have to fight to make it.

The time we have left to succeed or fail is really just the measure of how long it took to adapt to our downturn. If I had been more experienced, we’d have adapted faster. Here’s the survival guide I’d give my former self, the one just starting to face the storm:

1. Compete With Your Successor

I often think about what my replacement will do after I’m fired. She won’t have emotional commitments to decisions that I already regret. She’ll look at everything as an outsider—as a customer—refusing to tolerate problems that have lasted so long I’ve forgotten they’re there, re-considering initiatives we already passed over for want of imagination or energy. And she’ll have nine or even twelve months of leeway to build the business, so she can think long-term. Worst of all, she’ll get credit for turning Redfin into a successful, thriving business. I think, “I hate her! I hate her!” And then I try to be her.

2. Act Like an Owner

You’ve probably spent most of your life hating your boss, pleasing others (so you can blame them later) and spending other people’s money. These are hard habits to break. When I was still settling into being a CEO, I wasted a lot of time driving initiatives designed to please others, acting as if someone wouldn’t let me do what I wanted to do with Redfin. My moment of clarity came when a board member said, “as far as I’m concerned, you’re the owner of this business.” And he was right: you won’t own all the proceeds if the company succeeds, but you’ll certainly own a failure in its entirety. This sparked several reptilian impulses:Arnold Schwarzenegger hunting the Predator

- “I can’t blame anyone else if this sucker goes down.” This made me feel powerful and savage, like Arnold at the end of “Predator.”

- “If it were all my money, I’d invest it in Redfin today — but there’d be some big changes around here.” We’re making those changes now. (This is about focusing on the part of the business that you really believe in.)

- “If we had to get our wallet out every week for that expense, would we?” (This is about focusing on the part of the business you don’t believe in.)

3. Get a Board You Connect With (Not Just One With Connections)

Startups have so much size anxiety that nothing can stop us from recruiting big shots onto our boards. But first-time CEOs need someone we can talk to about practical details, too. So in our case, Redfin chairman Paul Goodrich recruited Marc Singer for his experience with businesses run out of the cash register: restaurant chains, bean-bag manufacturers, installers of electronic animal fences. I used to be dubious that we had anything to learn from these companies. Not anymore.

Now I catch myself gazing at a parking-lot coffee cart and thinking, “what a great business” (it’s more profitable than most venture-funded startups). Marc has cultivated a nuts-and-bolts, make-money-now execution focus at our company. Willem Dafoe in Spiderman, Addressing His Board Before Being FiredBut there’s another benefit to working with him: it was easier from day one to think out loud with someone I wasn’t so anxious to impress.

Where I’d always imagined my board conversations would be like Richard Gere’s in “Pretty Woman” or even Willem Dafoe’s in “Spiderman” — conversations with Marc were more like telling a guy on a Greyhound bus about a bad breakup, where it all just came pouring out. In tough times, you need a board you connect with more than a board with connections.

4. Run Weekly Revenue Meetings

A job applicant from Amazon suggested holding a weekly revenue meeting, which has been an immediate hit. We focus on what we can do to drive revenue from week to week—tactical stuff, like hiring another field agent or changing a call to action on our site. We catch glitches that could otherwise last all month.

5. Automate Bad News

Bad news travels slowly—or sometimes just sits in your stomach—unless you pump reports straight out to the board, on revenues, traffic, customer service. Add spin if you like, but in a separate note so you don’t hold things up. This helps you avoid the-dog-ate-it board meetings.

6. (Just Ask to) Meet Your Peers

My natural tendency is to avoid meeting people outside of Redfin. I tend to measure my own work in keystrokes, and I begin to miss my computer after I’m away for 30 minutes. In hard times especially, it’s easy for a startup to become like a teenager’s basement bedroom: insular, stale, reeking of dude. Yet there are very few hours that have raised Redfin’s value as much as meetings with other entrepreneurs. A year before our cash-evaporation date, one CEO told me to start raising money. Another told us to get on the stick about our Google search rank. For someone wary of most consultants and experts, these meetings are one of my only sources of new information. And it’s important to gather new information: line managers have to focus on the jobs in front of them, but executives should be awake to what’s happening in the larger world. Anyone will meet you if you just ask for her help.

7. Create Simplicity

When Obama first heard the proposed slogan “yes we can,” his reaction was: “too simple.” But a leader’s job is to create simplicity. Over the past year, our real-estate executives slogged through ambiguous data on conversion rates, close rates, tour fulfillment. Decisive meetings felt like a math test where we ran out of time. Yet it never occurred to me to stop, step back and be precise and insistent about what we needed to know to make a decision. When something is hard to explain, you don’t understand it and you make mistakes. It’s a cliché to “keep it simple, stupid,” but the real challenge is to make it simple, mastering complexity instead of ignoring it. Entrepreneurs instinctively want to speed things up. What’s really hard is knowing when you have to slow them down.

8. Go on the Attack

Your competitors are hurting too. Be the aggressor, not the victim.

9. Be a Roman

What disgusted the ancient Romans about barbarians was their lack of discipline. Oxford Professor Peter Heather writes, “As far as a Roman was concerned, you could easily tell a barbarian by how he reacted to fortune. Give him one little stroke of luck, and he would think he had conquered the world. But, equally, the slightest setback would find him in deepest despair…” This is why, 2,000 miles from home, several hundred Romans could slaughter several thousand barbarians.

Startups are founded by barbarians. But to survive the ups and downs, you have to make yourself into a Roman. The most talented entrepreneur I know nearly self-destructs on the 18-month birthday of each of his ventures. By that point a startup isn’t brand-new anymore, and it isn’t Google either. The closer you get to becoming a real company, the less glamorous reality seems: you’re grimy from clawing for money and breathing hard now from exertion, which would be fine if you could convince yourself you’re not the only one struggling. Everyone struggles. Keep fighting.

10. The Journey is the Destination

Startups alternate between nostalgia for the garage and millennial longing for a lucrative exit. But what I always keep in mind is how disconnected and purposeless I felt before Redfin or my earlier startup, Plumtree. All I ever wanted was to get into a situation where I could win. Everybody has that dream. Even though you’re a second-string Little Leaguer, you dream that you’ll find a way into the World Series, that, with the game on the line, you’ll manage to hit just one major-league pitch. And if you do hit it, I promise you won’t be as happy as you were the moment before you swung. If you’re still playing, you can still win. And playing’s the thing. Enjoy it.

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