Managing Through Downturns – Perspectives from Ollen Douglass and Jeff Cherry

Rob Runett: Good morning everyone. This is Rob Runett with Motley Fool Ventures and I want to welcome you to our Covid-19 webinar with Conscious Venture Labs and Motley Fool Ventures.

Just a quick housekeeping note before we introduce Jeff and Ollen and get started, in Zoom, there’s a Q&A button and so that’s how we’ll be doing questions today. So if you see at the bottom of your screen, just click that Q&A. I’ll be looking at the questions and then popping on screen every so often and asking the questions of Jeff and Ollen, but I just want to turn it over to Jeff Cherry and Ollen Douglas to share their perspectives on everything that’s going on in this environment today and then really just make this for you and make it about the questions that you have. So I’ll just kick it off to Jeff and Ollen.

Ollen Douglass: Hello everyone, this is Ollen, Jeff is with us here, he’ll be turning his camera on in a second.

Jeff Cherry: Hi guys.

Ollen Douglass: How’s it going?

Jeff Cherry: Can you hear me? Can everyone hear me?

Ollen Douglass: Yes and everyone can see us as well I think, so we’re just going to keep the screen up as the backdrop or actually might get into stop the screen share so you can see a bigger picture of us.

There you go, very good. So, what we want to do today is, we have about an hour. We want to go through a few questions just kind of give you guys our insights and thoughts on what we’re seeing in the markets today and then open it up for Q&A to make sure that we can answer as many questions as we can. Just to kind of start this off Jeff, can you kind of give us your thoughts on the current environment and how to put this in perspective of what we see?
Jeff Cherry: Yeah, first of all Ollen, thanks for doing this with us and suggesting this. It’s a great idea. I know you guys did this for your portfolio companies or something similar earlier in the month, so really appreciate you sort of jumping on with us today.

I think that for everyone, I know that there’s a lot of anxiety out there and rightfully so. When we’re looking at what’s happening in the public markets, what’s happening obviously in the private markets, it’s a little more opaque at the moment, but I think there’s enough information out there if you look around and I know that you and I have been having discussions with our colleagues to see where we think the environment’s going to be like and I think it’s going to be a tough fundraising environment, I’m talking mostly right now about fundraising for the next 18 to 24 months.

We talked earlier in the week and one of things that you mentioned, which I thought was a great point that VCs have bosses too. Lots of the entrepreneurs don’t think about that, but obviously we have limited partners that we have to respond to and those limited partners are looking to people like you and I to make sure that our business models are sustainable, so they’re giving us more scrutiny in times like this, worried about lots of those LPs are in the public market, so they’re worried about their overall financial position, so I think that, that’s something that’s going to be a headwind over the next 18 to 24 months.

I’ve talked to a lot of funds over the last few days. People out there who already have money are obviously still going to invest. There’s some time considerations on that. People are still looking to put money to work, but I think they’re going to be much more selective as they move forward. The evaluations are going to come, depending on which side of the table you’re on, either you think they’re coming back to Earth or they’re just going to get lower, but I think that the folks who are writing the checks are going to be more selective. They’re going to look for all those companies that are the most capital efficient. They’re looking for “companies that aren’t vanity projects, that are solving real problems.” I think that, that’s something that for all of the entrepreneurs on the line and everyone that we deal with, they have to take that into consideration.

I think the other thing, particularly for our companies and funds like ours, is that smaller funds are probably going to be harder hit and people who are raising money right now, are going to find it a little bit more difficult. I think that everyone in the ecosystem needs to sort of take all of those things into consideration.

Ollen Douglass: I think those are great points, Jeff and you really described it and just a couple of things that I would add to that is you’re hearing a lot of talk about the stock market now and it actually really matters to the private companies when you think about the role that large corporations play in a venture capital ecosystem. They’re the marquis customers that so many of our startups want to do business with. Honestly, they’re involved in the M&A, they’re the ecosystems sponsors for lots of conferences and other things that we go to and a thing to keep in mind, they’re also big outsources of R&D, which means just kind of business partners and the thing to keep in mind is that almost all of that spending that big companies who are startups is discretionary and in difficult times, it’s one of the first areas to be cut back.

And just kind of thinking about how we define those difficult times, if you look at the numbers and the market and the drop that we’ve seen historically, historically there’s about a 70 percent chance that we head into a recession that could last six to 18 months and typically what you see during those downturns is those large corporations go through different cycles. The first cycle is kind of what we’re in now, where a lot of you are hearing people are just pulling everything back. They just need to have… We’ve all been in this situation in our personal lives where things go crazy and you just say, “Everything just has to stop. I don’t care. Let’s just stop everything so I can figure out what’s going on because not everyone wants to just run into these volatile situations blind.” That’s what you’re probably experiencing now and unless your start up is core to that business and to the problems that people are facing right now, it’s highly unlikely that anything is going to happen.

At some point, once people get a handle on where things are, companies are going to start to adjust to the situation and this is where you may have a chance if you have a business that’s really focused on efficiency or access and it’s an opportunity for companies to say, “I can run my business better or smarter using this solution,” you may get some bites at that point, that’s kind of months down the road and then there’s the longer-term, once we see who the winners and losers are in these big corporations that they start to turn their mind to growth and this is how I can be more offensive with our business.

One of the things we would say that you have to realize about this current environment is that if people aren’t already coming to you, they’re not going to come to you, right? The question of whether your business is core or not, you have the answer because you’ve seen it and if they haven’t come to you, you’d have to wait until this phase kind of gets to the point where people kind of understand the environment their in and are wanting to make their businesses more efficient or find us an option to reach new customers, they may come in. And if you’re one of those businesses where this really upends your model and you don’t really know how things are going to play, then I know you just really have to be honest with yourself about that and either you’re hunkering down for the long-term or you’re realizing that in the same way that there was some point in time where you thought, “This is the perfect time to launch this business,” the inverse to that, if that is true then there’s some environment when the inverse of that is true where this is not the perfect time to launch this business. Those are things that you kind of have to think about.

Jeff Cherry: Ollen, I think that one of the things that you said there and I think I want to make sure that people get their head around this idea a few that there’s 70 percent chance of us going into a recession. That’s real economy headwinds, right? Some of this is like you say, people are pulling back because of the uncertainty. They don’t know what’s going to happen, they’re just like, “Let’s stop everything because we just don’t know.” But on the other side of this, right now too, because of the way that we have to sort of interact with each other, that the real economy is going to take a big hit. It’s not just based on the externalities to the economy, the real economy is going to take a big hit, so I think that, that’s something for people to keep their mind on. And I think that it goes to like you said about the efficiency. I know that, that’s one of the main ideas of your strategy, right? Looking at companies that can provide those efficiencies, so I think it’s another thing for people to sort of hang their hat on.

Why don’t we pivot a little bit and talk about some of these programs that are coming out of the government, that are assisting companies in this environment. I know that there was both at the local level and the federal level, there’s been a lot of things passed, so can you talk about what you guys are seeing there and just in big picture what’s happening in that regard?

Ollen Douglass: Yeah, and this is a very fluid area, Jeff. It seems like every day new things are coming out, but the two big programs that every startup should know about, one is the act that has just passed and they still haven’t gotten through the implementation details, but the CARES Act and the SBA Disaster Relief Program, those are the two biggest and those are the two federal programs and just to talk about them very briefly and you can get this information at the SBA site, the CARES Act is about small business loans. It is a loan, but it’s a very accommodating loan.

You can borrow up to two-and-a-half percent of your payroll. It could be up to two-and-a-half percent of your monthly payroll is what you can borrow. It’s up to ten year terms. You can use it for payroll, rent, utilities and a few other things. The amount that you spend of that loan through the first eight weeks, if you do not let anyone go, that amount you can apply for it to be forgiven and the remainder becomes a loan that you have to pay back. The qualifications are fairly lenient in that you just need to demonstrate that your business is being affected by the Covid virus.

There’s a couple of resources that we’re going to send around for you after this, one is a link, our lawyers Cooley did a very good summary on it. I’m also going to include a link to a portfolio company of ours called StreetShares, we just made an investment in them, so I just wanted to disclose that, but they have actually created a tool on their website, streetshares.com, where you can go and put in just high-level information, not your details but high-level information and get a sense of whether you qualify for the loan or not. Obviously there’re more details than we can cover in this podcast.

The other thing I want to say is, any state where there’s been any kind of government mandated restriction on commerce is probably going to have their own program, so go to maryland.gov, go to virginia.gov, go to dc.gov, it’s right there on the main page, kind of small business assistance to help with this and then there’s also private companies that are stepping up in some form or fashion to help businesses as well. I know Facebook talked about a hundred-million dollar plan. Bumble is giving out $5,000 dollar grants. There’s a lot of assistance out there. I don’t know of any single place that has consolidated all the resources, but again, look at the SBA, go to your particular state.gov and see what programs are available. Jeff?

Jeff Cherry: I want to chime in on that too. I saw this morning there’s a good Goldman Sachs and there are 10,000 small businesses, has put up a resource as well, so there may be some more aggregation there and we can send that link out to everyone as well. Content McLaughlin on my staff has been reading through and she put together a first a draft of an overview a few days ago, so for all those portfolio companies you’re associated with, you can reach out to us and Content can send that to you. But also, talk to your accountants talk to your lawyers.

Pete Ryan is our accountant at Ryan & Wetmore reached out to me right away and said, “I want to get on the phone with you next week because we’ve been looking at all these things and sort of work with you, me personally with Conscious Venture Lab to see what we might qualify for.” I would reach out to your support system in addition to us and Shift Ventures, reach out to your accountant, reach out to your lawyers. We have access to Cooley as well, so there’s a lot of programs out there that I think you want to make sure that you get in front of and start to think about right away and don’t wait. That’s one of those things, right? We’re in the middle of it now, so the time to act is now as well.

Ollen Douglass: Yeah, and I agree with that. Don’t wait. Earlier last week when I first saw the SBA program… And there are two, the CARES and the Disaster Relief are different. They had already been 11,000 companies that had gotten in line for the disaster relief program. And so Jeff, one more thing and then we can open it up to questions and answers, but I think there is definitely a move to provide assistance to companies that are looking for help to get through this, but there’s also things that companies have to do themselves or can do themselves to help get their financial house in order.

I think from the venture capital perspective, especially during this time and if you ever talk to a bank, they’re going to want to know what you’re doing to help your situation as well. I mean going to someone and saying, “I’m not going to change anything about my business, but I need you to put in more money,” is not going to be something that flies very well these days. So, Jeff when you think about, let’s say, if we can give kind of a couple of practical tips to people about what they could be doing right now to kind of help do their part to get their financial house in order, what are some of the things you would provide or say?

Jeff Cherry: Yeah, well I think that one of the things you just said about going to look for assistance, whether it be bankers or investors and not having a plan for how you’re going to move forward, you’re not going to change anything is a recipe for a disaster and what that says to me is sort of data, data, data, right? Are you on a sort of right now, spend this time to gather as much data about what you’re going to do next if possible. One of the first things that you’d say in a response to something you said earlier Ollen about if, “How are you being received by your community?”

Reach out and talk to your customers. Reach out first of all, let them know that you’re there, that you care, that you’re really caring now. Find out what their pain points are and you have to do this in a way I think that’s not about selling something to customers right now. It’s really about both Ollen and the Motley Fool and Conscious Venture Lab, Shift Ventures that we really do focus a lot on this idea of managing our business for stakeholders. So now is the time to reach out to those other stakeholders, both customers and suppliers and just get on the phone with them and say and figure out, “How you doing? How can we help? What’s going on? How can we get through this together? Because we’re all in this,” right?

The power dynamics are shifting a little bit because of this. Because everyone’s taking the pain at the same time and I think you got to think creatively about how you can support your customers now so they’ll remember and trust you in the future. I was on the phone with my partner Joe Mechlinski and one of our investors last week whose with Alpina Fund but who is also a module consultant and he said that he’s got the liberty and luxury to do this, but it’s a way of just thinking differently about where we are. He says he’s reaching out to his customers and saying, “How can I help you? What do you need? Don’t worry about paying me, just tell me what you need and what I can do for you.”

Sometimes that’s going to be actual work and sometimes it’s just going to be moral and emotional support. But he knows that those customers are going to remember him and trust him when we get through this because he came to them with an authentic perspective about how he could help. I think that’s one of the first things, gather as much data, talk to your customers, talk to your suppliers, see where they are. You never know what’ll come out of those discussions.

I think the other thing that we have to do and I know Ollen you may talk about some more specific things, but I want to say a little higher level is to make sure you stay in touch with your teams. Stay connected. One of the reasons that we wanted to do this is that Ollen and I and Rob are trying to stay connected with each other, but also trying to stay connected for with our portfolio companies and we wanted to reach out to you guys and we see a lot of emails coming across that, “Tell me what you’re doing. Tell me the information about how you’re going through this and we wanted to reach out to you and give you some information and would like to make sure that you guys know that we are there for you,” and I think that all the companies should be doing the same thing both with your customers, suppliers but make sure you stay connected with your team.

I think the other thing that’s interesting, we’re going to have, whether we like it or not, some time on our hands, so take that time to do things that you may have been putting on the back burner, to learn something new that’s going to be impactful for you in the future to really sort of take some time and think about the next iteration of your business. I’ll give you an example that one of the things that we’re working on right now and it seems obvious in the state we’re in, but we’re working on digitizing the entire Conscious Venture Lab curriculum. How do we take it online? How do we think differently about deploying the curriculum and we’ve been doing onsite, not only because we have no idea how long we’re going to be in quarantine, we’ve got another cohort coming up, but also we’re thinking about that as a way to expand our reach so we can expand the types of organizations that we can provide our content to, which might be another revenue stream.

We can expand the types of folks that we can get to be a part of the program because everyone is not as gracious as Ollen and Rob and let us spend the whole day with them and take up their whole day, but if we’re doing things on video, we might get even additional mentors and consultants that we’ve been looking for or wanting to work with.

I think it’s a great time to take a little bit of a step back ourselves and say, “What could I be learning now or what could I be doing differently or what could I be building a plan for that was on the back burner for a while that I have a little bit of time now to focus on.” So, I think those are a few things that we’re advising people to do.

Ollen Douglass: Now, I think that’s great, Jeff, and the thing I just wanted to reiterate from what you said is, which I think that’s critical is how can we get through this together. I think that’s really the key as you look at this. You and your business are hurting, but it’s really, really important during this time to realize that there are a lot of people in that situation and as you’re reaching out for someone they may need something that’s a little bit different than what you need and that’s a great opportunity to work together to figure out how you can kind of help each other and now is not the time to kind of be a lone wolf either and this right along with Jeff is saying, reach out to those advisors that you have. Reach out to other CEOs. It really is important to try to figure out how to make it through this together and it’s a very tactical step, the other thing that we’re asking our portfolio companies to do is run some scenario analysis.

Again, you know the initial reaction to your business because of this. Now is the time to be creative, now’s the time to really think about how you can be resilient and be flexible as a business, but we ask people to take a hard look at where they were, let say at the end of February or January, I guess before all this crashed. Do some projections like, “What would it take and how would you plan to get through the end of June?” That’s kind of one milestone we’re told and another one is, What do you need to get through the end of the quarter? Whether you believe you have capital raising plans or not, really take a hard assessment and make sure that you understand what it would take to get through June? What it would take to get to the end of the year and what are the triggers that are going to force you take some steps? The relief I think it’s great. If you think about the CARES Act, it’s really interesting in that they’re going to provide you relief for two months. So let’s say if some magical purpose they can get you that money April 1, that’s covering you through May 30th and then you’re dealing with the same situations.

I don’t think that eight weeks… And eight weeks forgiveness is great if you get out eight weeks and then you start to run the time there, it does give you some time. I think people should look at that money whether they get it or not, I don’t know if it’s unlimited, I don’t think it is, two trillion sounds like a lot until you start divide it up and then you divide it up to people. There’s three-hundred-million people in the country. I think it’s kind of short, but the fact of the matter is my recommendation would be, if you think you’re going to get some of the CARES funding, think about that as an amount of money that holds you until you could put a solid plan in place. It’s not going to be the solution all by itself. There’s no way that we could stop commerce for two months and then have it instantly turn on at the same level that it was before in the same way. We all know that there are things that are going to change forever as a result of this. So that’s the other tactical thing. Do your planning, make sure that you aren’t counting on this relief money to save you. It’s going to give you a lifeline. It’s going to give you some room to think and put together some plans, but it’s not going to solve your problems.

Ollen Douglass: With that Jeff, I think we will invite Rob back on and ask if there’s anything you want to add to that and then we’ll just kind of take-

Jeff Cherry: I think that’s good. Let’s get some questions if there are any out there Rob.

Rob Runett: Yeah, so just as a reminder, the Q&A button at the bottom of your screen, go ahead and as you have questions, please add it there and I’ll pop on screen and ask. Just to get started, a bit of a hypothetical however, if you’re already in the midst of a raise, but you’re seeing everything that’s going on in the landscape and you feel like you may have to pivot and do a pretty serious pivot because of everything that’s going on, how do you talk to your existing investors and how do you talk to prospective investors about that so that you’re being transparent? But just give us some tips perhaps on how you’d handle that type of scenario.

Ollen Douglass: Well, I’ll start with a quick one of the beauties of the situation that we’re in right now is at this point, no one is surprised. If you’re raising and you have questions about how your business model is going to be affected by it, so do your investors. So there’s not a secret conversation and again, back to what Jeff says, reach out to them, talk to them. I know that for example we’re still doing deals, but the nature of them has changed. We are a little bit more conservative. We are asking for people to demonstrate their relevance in the current environment, how they’re going to get through it? For those long-term projections, we’re asking people to revisit those long-term projections knowing that business has stopped and if it’s going to start up what’s going on. And even for those businesses we have a couple that are in the healthcare area that things have really picked up almost immediately from this, even talking to them about what does this mean for their business model. Is this a temporary surge? Is this a long-term surge? There’s a lot of things, but it all goes back to what Jeff said, “You gotta have those conversations.”

One thing I will warn just very quickly, I know some people have maybe watched the news and they’ll see for example, Cheesecake Factory sent a note to their landlord saying they were not going to pay. I would caution people that, while that is probably factually correct, I guarantee that wasn’t the first conversation that Cheesecake Factory had with the landlord. That’s the part that makes the news and there are certain things about being a public company where you have to kind of disseminate information broadly at the same time, but that was not the first conversation. No landlord was surprised to get that letter. And again, because everyone is kind of in the same boat, trying to strong arm people is probably not going to get you as far as you would hope.

Jeff Cherry: Yeah, the only thing I would add to that is 100% percent correct. Transparency, transparency, transparency. We talk about this all the time in the Conscious Venture Lab that don’t try to hide the warts because investors are smart, they know what’s going on out there. They’re going to appreciate your coming to them and saying, “Hey, here’s what we’re seeing.” They know that you’re paying attention. They know that you’re doing the work and start having those conversations early and often and have a real plan. If you have to make a pivot, have a real plan. We’ve had two discussions so far… Well, actually I’ve had more than that, but particularly applicable to this, you got one of our portfolio companies, Hungry Harvest, obviously, this is a boon for them, but they got to understand, is it going to be a permanent boon, is this going to keep going? How many of those customers can they keep? What’s the surge going to look like? They’ve got their own issues that they’re dealing with.

And then we’ve got other companies like Revase, for example that they’re sort of giving part of their model is off the table right now because they can’t go into senior centers and deliver flowers, right? So I think that it’s interesting that people still want flowers because they’re stuck at home and you never know what might be applicable in terms of you being essential to your customers, but definitely have that conversation with your investors early and often.

Rob Runett: Some questions are coming in to reflect back on 2008, 2010 period and then prior to that in terms of kind of the dot-com bust. Let’s go back to that one first and really both questions are about how do strong companies sort of weather the storm when you get into these type of financial situations, so talking about what is it about your company that can help you weather this kind of storm and then as you think about the last recession, 2008, 2009 period, some of the successful companies that came out of that, what were some of the trades that were most important for them during that period of time

Ollen Douglass: And I don’t have a deep dive analysis on all this, but I do think that the trait that you’ll find for those companies is adaptability and the ability to run lean. Again, capital is uncertain at best during these times and so the startups that are born out of the crisis are the ones that are looking at the situation and miss all of this difficulty, finding opportunities, they’re finding unmet needs. When we talk about our fund, we talk about scale efficiency and access and access is the idea of people creating solutions to address unmet needs in the marketplace, usually for large audiences and some of those in times of crisis like this, those unmet needs really get a spotlight shown on them and I think the successful companies are ones that can adapt, can run lean and are really focused on solving a problem that others have overlooked.

Jeff Cherry: Rob, will you repeat that question for me. I want to make sure I’m answering exactly what you’re getting at?

Rob Runett: Yeah, no worries. Really just kind of reflecting on, we can talk about what happened during the dot-com bust and just talk about some of the strengths and what were some of the-

Jeff Cherry: Ah, okay.

Rob Runett: … any kind of patterns of the startups that survived that and then looking back at the more recent times, 2008, 2009 as you think about the companies that were the success stories that sort of came out of that period, what did they do right during those times?

Jeff Cherry: Look, I think that the dot-com bust, which I went through, it was frothy, right? There was a lot of money out there, which probably maybe not unlike the period we just came through and people were giving money to again, those sort of vanity projects that everyone’s excited, the exuberance, irrational exuberance happening at the time, so I think there was some of that. You got to sort of be honest with yourself about, as Ollen said, that you’re solving a real problem.

I think the other thing and I was having a discussion with Joe Mechlinski about this a few weeks ago about the companies that made it through that, that made it through when we were on Wall Street during the financial crisis, the companies that made it through, they were realistic about where they were and what they needed to do in terms of pivot. They were also very realistic about what their real strengths were and how those strengths could be applied in the environment that we were in. I think that those are two things you have to really sort of think about. So, “What are you really good at?” And, “How can that thing that you’re really good at, be applied in this environment and the environment to come?” And then be honest with yourself about whether your business can withstand these sorts of acute shocks based on what you’re trying to do and maybe what you’re good at could be turned towards something that’s more essential, if you will and this might give you an opportunity to take a look and find out what that is.

Rob Runett: All right, thank you for that. Let’s talk about how some companies are handling this. There’s a question that talks about sort of sudden and extreme layoffs by some well-known unicorns and how will that response impact how VCs are going to look at scaling and staffing in the future. Will they try to manage growth tighter in the companies that they invest in? Are they going to be looking more closely at leaderships experience? What are some of the potential outcomes that our founders should be thinking about there?

Ollen Douglass: Yeah, Rob and so when I see those sudden and extreme layoffs, for me, those are companies that had aggressive growth plans and possibly even seen some traction, but it was based on their business environment that they were in and then all of a sudden, the environment has changed and so they’re acting quickly. To some degree, they’re a little bit ahead of their skis, you could say, but I don’t know if it was widely kind of anticipated that we would be in the environment that we’re in now.

I think from a VC perspective, what we’re really looking for is for companies to be adaptable. We have a framework, and just kind of a mental framework, I would say where we’re looking at companies, how they were doing, how were they doing before the crisis hit? How relevant are they to be able to continue to grow or during the crisis? And then afterwards, does the crisis fundamentally change their business proposition? And for those that we could look at, they were doing well beforehand this crisis has shut down and then we do believe that the environment will not be materially different for them during the change.

As a VC, I can get my head around trying to fund them through this difficult environment. But for those  who were struggling beforehand or this crisis fundamentally changes their business model, there’s going to be lots of conversations to be had. So as a VC, if there’s any benefit that comes out of this, every company that survives it will have this on their resume and on their badge that they went into the Covid-19 crisis of 2020 and they were able to build a company and become stronger afterwards. So I think that ultimately, VCs are looking for how companies adapt and this will be part of the resume of experiences that they’ll look at for future companies. Have you been through a downturn and how did you deal with that?

Jeff Cherry: Yeah, I think that, that’s right on the adaptability is really important, right? And I’m also going to give you a little bit of a different angle or a different lens through which you can look at your company coming through this. And I haven’t done any analysis on this, so this is opinion, but in some instances in terms of some of those seemingly unicorns that had billion dollar valuations that had to adapt through this environment and layoff lots of people, some of them were doing it because they were focused on particularly on growth and not on profitability or maybe even not on profitability, not on cash, right? When we’re doing public equity investing and we are investing in companies that will focus on a stakeholder model, we look at lots of different metrics, but one of the things we looked at was this whole notion of cash flow return on equity.

Now I’m not saying that everyone should be looking at that in business of your stage, but the reason we looked at that is public equity invest at the time because we always saw cash as king, right? That’s going to get you through the rough times and it tells us about how you manage your business. So I think that some of this, you might want to look at in addition to the ability to be adaptable, so look at how fast should you be going? It’s not the sexiest thing, but you might want to take a look at this and say, “If I grow a little bit slower, my valuation might be less, I might raise a little less money because some of the VCs I’m talking to want me to go out there and grab eyeballs and grab market share, but slow and steady might win this race.

You have to be able to hold both of those things in your head at the same time and make decisions about which one best suits your business and your industry, but I think it’s something you can’t discount, right? You have to think about this in the future, that if we come through another one of these and you’re able to say, “You know what? We’re going to be okay for the next six months because we’ve been growing pretty steadily, we’ve not been out over our skis.” That’s another type of adaptability you might want to think about.

Rob Runett: Okay, next question is about acquisition versus holding tight to your existing customers. The question is, should you continue marketing as usual or should you just focus on those current customers?

Ollen Douglass: Yeah, there’s probably two parts to that, marketing as usual. There are probably certain marketing messages that aren’t appropriate now. I think one of the things that people are looking for it for right now from their companies out there to make sure that their sensitivity in their marketing. We ourselves in that obviously are not going into details, [inaudible 00:38:32] had some things that we were planning to announce that we’re just putting on hold because they don’t seem aligned with the times. I mean, a lot of people are struggling on various levels, physically, mentally, emotionally and so in your marketing you want to make sure that you’re sensitive to the times.

Also, for other types of marketing, maybe you should continue or stop, you should be looking at your marketing metrics and if you can find messages that are appropriate and still work and you’re still getting the return on them, then I don’t see any problem with continuing to market, but again, you absolutely possibly need to have marketing success metrics so that you know what kind of business you’re getting out of the dollars you’re spending. Again come up at two things, one don’t and one do. Don’t be tone deaf and do know your numbers, but then if you can do that, then I would continue to market.

Jeff Cherry: Yeah, I couldn’t agree more. I don’t have much to say on that, other than if and your Conscious Venture Lab portfolio companies, if you have a relationship with Evan Lutz, he’s very busy obviously, but it might be a good time to reach out. He’s spending an inordinate amount of time on this one issue. What’s our message, how much should we be spending, make sure they’re spending wisely, what are the metrics we’re looking at and looking at those metrics on an hour-by-hour, if not a day-by-day basis to make sure that we’re getting the right message out there. So I think it’s a little bit of art and science to this should we be.

I also think there’s value to it as we talked about earlier. Talking to your existing customers, seeing what you can do for them, being transparent for them, being caring for your existing customer base is an important thing now. I think one, appropriate message, care for your existing customer base, spend wisely based on your metrics.

Rob Runett: Okay, next question is just about for all of us in the startup community, thinking beyond just financial resources, what are the types of policies and support should we be advocating for right now with local, state and federal government, as well as the business community at large?

Ollen Douglass: I’ll let you start with that Jeff.

Jeff Cherry: Yeah, it’s a tough question. Look, I think that a lot of that’s being done and I don’t know in the startup community how much time you are able to spend on that in terms of advocating for additional resources. I mean, obviously I think the most important thing you can do right now is to make your business more relevant and that’s going to help you moving through periods like this because I think that the problem, one of the issues is, the next shock is not going to be the same as this one. So, some of that advocacy is on a case-by-case basis.

Now, having said that, I think there are certain things that I believe in, which I don’t know that everyone believes in, that would be valuable if we were thinking about how do we provide healthcare for employed people in the United States and paid medical and family leave and some of those issues, right?

I think I’m not going to put my political views on stage here, but I think that you all have to think about what you think is important in that regard and that’s what you should be advocating for. There are certain things that I think that we as a society and we’re going to see some of this through this whole episode that we need to do a better job at. I think that the healthcare system is clearly showing some cracks in how we deal with the gig economy workers, we’re going to have to sort of get a handle on that because this is not going to be the last time that something like this happens, but it’s going to be different so I think there are some… If you’re going to advocate for things, they should be some of those things that stretch across different shocks to the system and make us all more resilient. I think healthcare and how we treat our gig workers, how we think about leave are some the things that I’ve been thinking about.

Ollen Douglass: Yeah and I think, just think about the world we’re in now where if you’re not a digital company, it’s really, really difficult to survive and there is a digital divide that’s going on that we don’t talk about. You hear people applaud how everyone has access to a smartphone, like lots of people do, but what they don’t speak about is how does a growing population, where that’s their only access to the internet is through a smartphone and what that means about the cost of phones and the cost of telephone service for something that’s becoming a necessary utility. Just advocating to make sure that internet access is widely available even beyond the phone. When you look at the number of people that have computers in the house or laptops, it’s a huge divide that’s going on in the country.

I do agree with Jeff a little bit in that if this is not kind of the primary focus of your business, advocacy may not be something that goes to the top of the list right now, but there are lots of people that are focusing on it and I think that this will give a lot of energy to some of those causes to make sure that we’re not inadvertently leaving out people behind or excluding them.

Rob Runett: Okay, just a reminder, if you have any other questions, keep adding. We’ve got a little bit more time. Just keep adding those to the Q&A. We’ve got a couple more that I see so far. One is, how can we demonstrate our adaptability and grit without compromising our initial mission or progress and traction?

Jeff Cherry: Well look, I think that the best way to demonstrate that is look, you got to be vulnerable and be transparent. You talk to your suppliers, talk to your investors, talk to your partners, talk to your employees and if you’re making a pivot, make it clear about why you’re doing it. I think that what people will get will recoil at if they think that you’re being just opportunistic as a way to benefit yourself and not really thinking about the future of the business.

I think that you demonstrate your grit and your adaptability without compromising where you are by being transparent, having all the information, making really reasoned arguments about why you want to make a change and also getting feedback on that, right? Get as much feedback as you can, both during as you’re making the decision and be open to listen to other perspectives. I think if you do all of those things, you take all of the information in and then you say, “Okay, here’s what I heard. Here’s what we decided to do and here’s all the reasons why.” And you continue to have those discussions all along. People will respect that.

Ollen Douglass: Yeah, and I agree with what Jeff is saying. If you demonstrate that adaptability, really in the grit fire how quickly you respond to changes. I will say, one example that I’ve just heard in this call is Jeff talking about the Conscious Venture Lab and thinking about digitizing their entire curriculum. That’s adaptability. These things that we’re doing now, these video calls that are ad hoc, I’m in my room here, Jeff’s in his room and these aren’t high production video shoots, but this is going to be the norm. People aren’t going to just stop doing these a couple of months from now. The world is changing in some significant ways and one of the ways you demonstrate your adaptability is how quickly you can look at your business and make sure that it’s still relevant in the coming ages. And then the grit one is a little bit harder to see. Most of the time, the grit happens behind the scenes when the camera is off when no one is looking, but where you’re working really hard, you and your team to provide great solutions to your customers.

I do know, if the past crisis are any indication, the companies who try hard to be good citizens if you will, during this time, their customers appreciate it and they remember it and when business returns to normal, even if it is the new normal, when business returns, those companies that have demonstrated who they are during this crisis will probably see reactions that are kind of proportional and directionally aligned with who they showed they were during this time.

Rob Runett: Yeah and I think following up on that, there’s just a question that asked about any other sort of key attributes or key specific traits that you value from both of you that maybe even you’re seeing right now and some in some of the startups that you’re working with. Just any others along the lines that you’ve shared so far that can really help our founders on the call just kind of double down on some of those.

Jeff Cherry: Yep, I would say that once I heard Gary Vaynerchuk on a talk and someone asked him what’s the biggest mistake that he sees entrepreneurs make and he said that they think they’re entrepreneurs, but they’re really not and the minute things get tough, they crumble and they throw in the towel. That’s harsh a little but, I think there’s some truth to it as well, but I would say it with a little bit of a different tone. I would say, “Try not to panic, first of all.” I’ve had some discussions where they’ve started off in terms of all of the things that are happening and all of the things that could go wrong and all of the things I have to get right to get through this and while it’s valuable to have that picture in your mind, you also have to think about, “What’s the one next thing I need to do?” And break it down.

That’s one of the things I see that helps people panic because I think that your emotional state is going to be one of the things that helps you get through this. I think that, sort of being able to say, “All right, we’re in a tough situation, we could have to shut this thing down,” and that might be there right answer. It might be okay as Ollen said earlier, if this is a perfect time to start this business, this also might be the perfect time to fold this business, I don’t know. But I think that doing it with a sense of we looked at all of the potential paths through this, we did things in a methodical way and we got to a point where we decided that the next thing to do was this, that’s something that people are going to respect and I think that people will look at you in the future and say, “You know what? I like the way,” it’s almost like Ollen just said just now, “I like the way that you handled that.” The outcome is less important at this point because we all know that there are going to be varied outcomes.

But if we look back and say, “Yeah, the outcome was crappy and I hated the way they handled it, then it’s going to be hard to move forward.” If we look back and say, “Yeah, the outcome was crappy, but man do we really appreciate the way that you handled that.” Then we’re going to be there to support you in the future I think.

Ollen Douglass: Right and I would agree with that and just to paraphrase and probably butcher Maya Angelou, she said something along the lines that, “I won’t remember what you said, but I will remember how you made me feel.” And I think that’s something that you definitely want to keep in mind now. People will remember how you handled yourself during this time. That’s what’s going to stick in their minds regardless of what decision you make.

And oh, that’s one thing, to the question that you asked, I just remembered, some of the specific things that we’ve seen people do, people who had kind of offline focused products, that had digital versus offline have found ways to go digital, launch a new digital version of what they’re doing almost within weeks. There are people who have had processes, some of it that had a long process, some of it relevant to what now, but certain aspects of it very relevant.

Now, like I mentioned StreetShares for example, they do loans to small businesses, but they found out that the very first step of their process is exactly what people need right now to see if they can qualify for the small business loans or this is the CARES Act, so they productized just that. They put it out there for free for people to use just to see if their business qualifies. Those are some of the specific things they’re doing, but really that same theme is, “How can we be relevant to what we think people need right now?” And those are the ones that we’re kind of noticing the most.

Rob Runett: Okay, so I don’t see any questions in the queue, so what I’ll do at this point is just ask Jeff and Ollen if you have any wrap up comments and then we will close it up from there. But Jeff, Ollen, if you have anything else that you’d like to add before we close?

Ollen Douglass: I’ll start and I’ll leave the final notes to Jeff, so thank everyone for joining, we really appreciated this. What I think we will do is, I’ll get together with Jeff and Rob afterwards for all the participants. I think there are a few links that we could send around afterwards to everyone just to kind of summarize some of the resources that we mentioned on the call so that way you will have them. We’ll try to get that email out today or tomorrow if we can. But again, thank you all for joining us, for joining us for the conversation and feel free to kind of reach out to ourselves to Jeff or I and we’ll help in whatever way we can.

Jeff Cherry: Yeah, thanks to Rob and Ollen for again suggesting this and jumping on with us and taking the time to do this. Thanks to everyone who joined. We had some companies that we invited from the application. For the current cohorts, I thank you guys for jumping in here. You can hopefully see some of the support that you might be getting if you get involved in the Conscious Venture Lab and I reiterate what Ollen said that, please reach out to us. We’ll get that data to you on some of the resources we said. Reach out to me, reach out to Ollen, reach out to on our team, Marianna and Content. If you need some help or have some questions, we’ll get that information out there, but we’re all in this together. We’re going to try to get through it together and do the best we can to support you guys and hopefully we’ll all make it out unscathed to the other side.

Rob Runett: Thanks Jeff. Thanks Ollen. Thanks everyone for joining, stay safe, be well and let us know if there’s other ways we can help. Thank you all. Bye.

Ollen Douglass: Take care. Bye-bye.