Episode Summary
Executive Summary: In this special episode of This Week in Startups, host Jason Calicanis and guest Eric Ries (author of The Lean Startup and founder of the Long-Term Stock Exchange) discuss navigating startups during the COVID-19 pandemic. They emphasize putting people first, maintaining social distancing, and using the crisis as an opportunity for innovation. Ries provides tactical advice for founders on preserving runway, considering layoffs or salary cuts, and pivoting to new revenue streams. The conversation also explores broader societal implications, including the need for a new political philosophy that combines science, shared prosperity, and entrepreneurship.
Main Topics: Human Impact and Social Responsibility (Priority: 5/5): Discussion on the human toll of the pandemic, the importance of social distancing, and the need to support frontline workers and vulnerable populations. Startup Survival Tactics (Priority: 5/5): Practical advice for founders on managing cash flow, reducing expenses, and making difficult decisions about layoffs or salary cuts. Pivoting and Innovation (Priority: 4/5): Encouragement for startups to find new revenue opportunities during the crisis, using constraints to drive creativity and rapid experimentation. Long-Term Stock Exchange (LTSE) (Priority: 3/5): Overview of LTSE's mission to promote long-term thinking and multi-stakeholder capitalism, and its delayed launch due to the pandemic. Societal and Economic Future (Priority: 4/5): Reflections on the future of capitalism, the potential for universal basic income, and the need for a new political philosophy that prioritizes science and shared prosperity. Test and Trace Strategy (Priority: 3/5): Explanation of the test and trace approach to controlling the pandemic, leveraging technology and smartphone data.
Key Arguments: Social distancing is effective and must be strictly followed to flatten the curve. Startups should prioritize people first, treating employees, suppliers, and customers with compassion. Before resorting to layoffs, founders should explore new revenue opportunities and consider shared sacrifice (e.g., salary cuts, equity swaps). The crisis reveals that many expenses considered necessary during boom times are actually waste; lean startup principles are more critical than ever. Capitalism needs to evolve to include multi-stakeholder approaches, with a focus on long-term value creation and shared prosperity. Test and trace, enabled by smartphone technology, is essential for controlling the pandemic and allowing economic restart.
Data Points: Quarantine duration: 20 days - Jason Calicanis mentions being in day 20 of quarantine in San Francisco. Runway recommendation: 18 months - Eric Ries advises startups to aim for 18 months of runway to survive a crisis. Option exercise window: 30-60 days - Typical window for employees to exercise options after leaving a company; Ries advocates for extending it to 5 years. Angel University donations: $15,000-$20,000 - Donations raised from the first Angel University event for coronavirus relief. Screening questions effectiveness: 80% - Jobs with one or more screening questions get a qualified applicant in 24 hours (from LinkedIn ad).
Pivotal Quotes: "The actions you take now as a leader will define you for the rest of your life." — Eric Ries: Emphasizing the importance of ethical behavior and compassion during the crisis. "We need a new political philosophy and a new economic theory for the twenty first century." — Eric Ries: Calling for a reimagining of capitalism and governance post-pandemic. "Let's never waste a crisis. Let's get through this together and let's come out of this and really give some conscious thought to the society we want to live in." — Eric Ries: Encouraging listeners to use the crisis as an opportunity for positive societal change.
Implications: Founders must act decisively with compassion, prioritizing people and long-term reputation. The crisis accelerates the need for a more inclusive, multi-stakeholder capitalism. Startups that pivot quickly and embrace lean principles may emerge stronger. Society may see increased support for UBI and technology-driven public health strategies.
About This Week in Startups
Jason Calacanis covers startups, tech, markets, media, and all the hottest topics in business and technology. He also interviews the world’s greatest founders, operators, investors, and innovators.