• by Dave Morgan , Featured Contributor, April 6, 2023

Last evening, I had the great pleasure to speak to the current founder class of the Entrepreneur Roundtable Accelerator. It is the 24th class for the New York City-based seed accelerator and I remember vividly speaking to class No. 1 back in 2011.

As a third time startup founder going back to late 1994 –- Real Media, TACODA and now Simulmedia –- I am acutely aware of how important advice, counsel and mentorship can be when you are early in your journey. The past ten years have been boom times for tech startups, so most of the questions and conversations at these talks have been about topics like how to pick the best investors, how to recruit great talent, and scaling businesses and operations.

Unsurprisingly, last evening’s conversation had a quite different tone. It was all about building and managing startups in a downturn. Fortunately for them, none of the entrepreneurs were in denial about the current economic environment and some of the challenges those conditions would have on their entrepreneurial dreams.

Here were some of the topics that we discussed:

Downturns are amazing times to start businesses.

The best time to have a company that is pre-revenue is when revenue is hard to generate. Plus, being small and nimble can be a real asset when times are tough for other companies. You can get office space cheaply. Talent is more available. And would-be, large legacy competitors leave open big market opportunities as they scale back on their new product initiatives.

Solve problems that save customers money.

During downturns, most consumers and companies are looking to save money and are not generally as optimistic about their ability to generate more revenue or buy more expensive things if they just had another tool, platform or service at their disposal. This is the time to be truly empathetic with your target customers and, as Intuit Founder Scott Cook has famously preached for decades: “Fall in love with your customers’ problems, not your products.”

Conserve cash.

When money gets expensive, scarce and hard to wrangle out of investors, it is the time to learn how to be a miser. For many, this is a new skill, since the past decade plus has been one of low/no interest capital, boom times for startup fundraising and limited oversight between funding cycles as a dramatically expanding venture capital and private equity industry focused as much on competing rather than just building great businesses.

That has all changed. As Ben Franklin penned centuries ago, ”A penny saved is a penny earned.”

I can’t wait to see where these entrepreneurs are in a few years. Given the strength, tight focus and timeliness of the ideas and questions I heard yesterday, I have a lot of confidence that ERA 24 will produce some great companies.