At VentureBeat’s Downturn Roundtable event this morning, Kleiner Perkins’ John Doerr came prepared with a list of the top things that start-up CEOs should do. He surveyed 18 of Kleiner’s companies, and here’s what they suggest [update: Doerr has since added an eleventh point]:
- Act now. Act with speed. Raise money. Get a loan, secure financing. Focus, cut or sell.
- Protect the vital core of the business. But use a scalpel not an ax. Be surgical. Protect the vital core of the company. Cut once, deeper than you think.
- Make sure you have at least 18 months of cash. Or more — on a conservative revenue forecast.
- Defer facility expansions. Don’t spend money on tech infrastructure, such as new software or computers. Doerr noted that Andy Bechtolsheim’s new startup, Arista uses Google Docs (free web office software).
- Reevaluate your R&D priorities.
- Renegotiate any contracts that you can. Everything is negotiable.
- Remember, everyone in the organization should be selling, from the receptionist to the engineers.
- Offer people equity instead of cash e.g. in place of bonuses. (You can do this with outside vendors as well).
- Secure your cash. Treasuries, or treasury backed securities, are more secure than money market funds.
- For your revenue plan, develop and obsess on leading indicators — e.g. bookings, unique visitors, conversions.
- Over-communicate with everyone – employees, investors, partners and particularly customers. Don’t sugar coat things, communicate your resolve.
Angel investor Ron Conway added a key twelfth point: Be open-minded to mergers and acquisitions. Always a good tip.