Advice for founders in crisis
Y'all... what a week.
News, opinions, and theories about the SVB collapse have permeated every corner of my world, and I imagine many of you are feeling the same.
I had a different article planned for this week, but given that we are all (probably) distracted by and focused on the bank situation right now, I felt it was important to switch directions.
Today I wanna talk about two things:
1) advice for founders when they are in crisis
2) suggestions on diversifying your accounts
My hope is that these two topics are valuable to the founders in your portfolio, and also perhaps for yourself, your families, etc.
Advice for founders in crisis
My teammate Elizabeth Yin has seen plenty of crises over the course of her career.
She's helped countless founders navigate fire sales, employee drama, co-founder breakups, financial crises, security hacks, mental health breakdowns, and even physical violence.
So her advice around how to handle a crisis is well thought out.
Here is an excerpt from an article she published this weekend for leaders in crisis situations (edited lightly by me):
"Over-communicate. Then communicate some more."
One of the biggest mistakes I see organizations make during a crisis is their failure to communicate swiftly and with poise.
Often organizations want to find all the facts and think about the right words to say. They want to focus on solving the problem.
This is a big mistake. And it’s a mistake that happens all the time — such as in this crisis with SVB, or during COVID, or when employee allegations about abuse or harassment emerge, etc.
It is important to own your communications and use them to get ahead of a situation that is spiraling downwards.
It’s not so much about what the comms actually say but how they make people feel. The feeling you want to convey is:
1) you've got this under control – leadership is on it and people can count on you
2) if you don’t have all the answers, you will get the info and keep people informed as you go along
3) your door is always open to chat.
If this isn’t done swiftly, even if you are actively working on a solution to a crisis, people will lose faith in you because they are unaware of the steps you are taking.
It is much more important to communicate something — anything — quickly and update your comms as you go than to try to write the perfect thing 4 days later.
The best time to do this is in the first 24 hours of a situation emerging.
See the rest
She shares more in her article, which you can see here.
She even includes specific points you / your founders can include in comms to investors and/or employees.
Diversifying your accounts
I am NOT a financial advisor... or anything resembling an expert on finances.
Heck, I'm still figuring out how to convert fractions into decimals (getting better every day).
But when I read Elizabeth's 5-part tweet thread on diversification, her points made sense even to my english-major brain.
Here are the two points that stood out the most:
- Be FDIC-insured. Most banks are FDIC-insured up to $250k per account. If you have more than that in your account, move the rest to another bank that is also FDIC-insured.
- Focus on safety over permanence. You may not be able to get into your ideal bank immediately. If you need to move cash around, prioritize getting your cash into FDIC-insured banks first. Once the chaos has died down a bit, you can figure out a longer-term solution that works for you and your business.
The last few days have been an emotional rollercoaster for the Hustle Fund team, our LPs, many of our portfolio founders... even our families.
Sending much love to anyone who is dealing with the SVB fallout and/or suffering through anxiety, frustration, and fear.
Remember to be kind to yourself, and be kind to others. This is a cluster for sure, but we also have an opportunity to support others in a dark time.