What does it mean to be a CEO in the age of COVID-19?
Soldo CEO Carlo Gualandri joined us at WFA Summit to talk about his experience guiding a B2B FinTech through the COVID-19 crisis
I’m Salomé, and my job is to work closely with The Family’s CEO Alice Zagury in supporting our portfolio of ambitious entrepreneurs. I recently had the pleasure of moderating a talk at our Work From Anywhere Summit by Carlo Gualandri, CEO of Soldo. You can watch Carlo’s entire talk on Startupfood, or keep reading for highlights & tips on managing a startup through a crisis!
In startups, there are certain ways that things “should” be done. You are expected to push to grow as fast as possible without being worried about survival and you should fuel that growth by spending the money you have raised. This is what your VCs expect you to do. They fear failing to scale more than failing to survive, it’s the way venture capital works. Grow or die trying… If you don’t like it, then don’t raise VC money.
But then COVID-19 hit and all of a sudden entrepreneurs had to take a very different approach to running their companies. Because at least one thing was very clear from the first days of the crisis: capital markets in March had completely changed from months prior. The wind shifted 180 degrees and the idea that entrepreneurs could access funds from capital markets to fuel growth was no longer a given. Fear had kicked in, and uncertainty on how to price rounds had made closing a deal very risky. “Wait and see” was a safer course.
At Soldo, we’d just raised our Series B round in summer 2019 and so luckily when the crisis hit we still had money in the bank — but that was just lucky timing. Other entrepreneurs weren’t so lucky, and for them there really wasn’t much that could be done, especially in the first months of the crisis.
However for anyone who was lucky to still have access to funds like us, you had to adjust quickly because the storm came fast and nobody knew how long it would last.
But before acting, I asked myself a question: in this ‘new normal’ does it make sense for Soldo to survive? Will our mission still be relevant? Will someone need to build what we’re doing all over again if we’re not able to make it?
As a CEO, you need to be honest when you ask yourself these kinds of questions. You’re obviously always going to try whatever it takes to survive, but knowing the answer means knowing what you will be up against (and possibly you’ll know if you have a chance).
For us, as a FinTech trying to solve the problem of pay and spend management which companies all over the world suffer from, I thought the answer was clearly yes. If we didn’t survive, then someone else would just have to come along and build it all over again, spending the same money and taking up the same time.
Even more, I realized that the need for what we do will be even greater because COVID-19 accelerated the need for efficiency and cost control in all companies. So we needed to survive, it would just be an enormous waste otherwise.
But we had to act fast. One of our biggest use cases is business travel, which obviously shut down completely, pretty much overnight. Half of our revenues were gone, and that hole isn’t just about revenue, it’s also about growth.
In a crisis like this you have to switch mentality completely and go into hoarding mode. That means cutting every cost (like everyone did), but then you have to cut it again and again because you’ll find that you’ve never really cut costs until you’ve done it about 3 times. You never cut to the bone the first time, there’s always natural resistance to getting there. You and your team cannot really believe that it will be necessary to cut that much because it takes time to metabolize the shift from growth to survival.
We started with cutting external costs, as the priority during a crisis has to be to circle the wagons, protecting the people and infrastructure inside the company. You have to cut providers and put good relationships on hold, and that’s not easy. But it’s necessary, because your first responsibility is to make sure your employees are ok. They’re the ones who believed in you, they’re the assets you’ve spent the most time and money on developing, they are more important than anything else.
We next focused on new products and new markets which could not only increase revenues but fuel growth. We leaned into the changing spending behaviors of companies. A crisis always shifts people’s habits drastically, and you have to identify how those new habits can be served by your business. That’s how you can focus your company’s energy on making up for what’s been lost, creating new offers and exploiting new opportunities, including ones that were created by the crisis itself.
As soon as you can guarantee your company’s survival through a crisis, you must start looking for ways that you can prosper in the post-crisis moment because one thing is not going to change: you still have to grow, you are still in a race.
As heroic as it might have been, nobody will give your company a prize for simply surviving. You need to grow again, otherwise you won’t raise the next round and you’ll have just delayed your demise, not averted it.
For us, COVID-19 is bringing in a huge transformation in companies’ digitalization and mindset. Inertia had always been a limiting factor there, and fortunately the crisis is alleviating this.
And again, this is opening up many more opportunities where we can work to understand and make the most of our new future.
The hardest thing for us to understand as people, and so the most important thing for a CEO who needs to make good decisions, is that the world of tomorrow won’t be the world of yesterday. Maybe outside events make your message more likely to get through, but don’t sit back and wait, you’re still going to have to adjust that message. You can’t simply rely on a crisis to have perfectly aligned you with your customers’ needs. You have to re-center on what will be, and let go of much of what was.
