Startup Therapy Podcast

Episode #61


Ryan Rutan: Welcome back to another episode of the startup therapy podcast. This is Ryan Rutan joined as ever by Wil schroder startups dot com, Ceo and founder. So the intention for today was to talk about how founders communicate in a crisis. Once again, we're recording this still in the midst in the grip of, of the covid lockdown. So there's a bit of a crisis going on, so probably never been a better time to talk about this,

Wil Schroter: you know, it's not the first one though. And, and again, that doesn't make it better or worse and I'm not even gonna try to compare them, but I'll say this and I think this is worth noting This will essentially be the 4th time You and I have been through one of these. Um, just to count them back, the first one in nine-11, I think we should just talk a little bit about um what it was like responding in that crisis again in 2007, of course the financial crisis And then just for fun, we invented another one in 2015 where we bought a company that imploded overnight, not a global crisis, but in our world it was significant and you learn a lot about who your company is, your leadership are, is and really who you are in a crisis like this. And I think as each one has gone by, I think we've just learned to become less and less affected, you know, as far as your shock and awe and more and more focused about, okay, I kind of know how this story ends, let's make sure it ends better than it did

Ryan Rutan: last time. Yeah, like so many lessons and foundered um we know when to duck because we've already hit our head on that bar, right? It's just one of the, one of the things.

Wil Schroter: Absolutely. Um so just a quick progression, right? If you don't mind, just kind of just go back to the last few crisis is just talk about um yeah, how it hit us, uh just in general, you know, where our heads were at the time. Because I think what we'll do is we'll say based on all that knowledge based on all that experience really. Uh here's what we did well and here's what other folks can do to kind of share in that experience, to be able to to navigate through something as gnarly as this is because they're all horrible and they're all crazy and they all feel like the end of the world at the time, but the world goes on,

Ryan Rutan: the world goes on. Yeah. And they're all wild and crazy for different reasons to, which is what makes it interesting, right? I think there are some kind of commonalities that we can take away from it, but there's still so many dynamics to each of these, each of these situations, for example, you know, having being forced into working from home was was never an issue with any of the previous crises. And so each time they presented with some, some different challenges, whether they're, you know, existential or financial or you know, in this case. Geographic. Um, yeah, let's dig in, man.

Wil Schroter: Well, okay, okay. So again, just use a little bit points of reference here. So folks understand kind of the world we've lived in before. Again, 9 11 um, was such a tremendous crisis because it shook the world at its core. It happened immediately and it happened on live TV. Right? It was unbelievable to watch that event. Remember running into the conference room and everyone was huddled around the tv and like everyone else in the world, we watched the entire thing happening. I mean just like the amount of heartbreak, the amount of just shock of what was happening was unbelievable. And uh, you know, a lot of folks that will be listening to this, we're probably, you know, in, in nursery school when this happened. Um, it doesn't matter. The fallout from that was unbelievable. The whole world just shut down travel, especially in the US travel shutdown, Just everything all at once. And so at that time I was running an agency and we had $10 million dollars a month in payroll. Right? So this wasn't like, it was like a few people to contend with this is massive. And so we had with huge clients and all of a sudden within days of this thing happening, I get some calls where the client says, hey, you know, one big project we were working on things a little bit weird right now, no one's traveling, what have you? Uh let's just put the brakes for a second and I'm thinking, okay, put the brakes for a second at the end of the world. Um another client calls, hey, that big project we were working on, you know, whatever. And all of a sudden I'm afraid to pick up the phone. I mean like every client Is calling canceling uh and again, $10 million dollars a month, you know, you really can't get too many cancels and make up for that. And so the reason that one was hardest, right? I'd love to hear your thoughts, but the reason that one was the hardest was because it was the first time I had been through it. I had, I didn't know this stuff could happen,

Ryan Rutan: right? We'll put into context to, I mean, we were far closer to the start of our careers at that point as well. I mean it was, it didn't exactly take a major, you know, global crisis to throw a major wrench in the gears of my company at that point, I was running a small agency at the time. And you know, There were things like people quitting seemed like an existential crisis at that point. So you know, when, when 9-11 came along.

Wil Schroter: Yeah, that was your biggest issue was was not be able to hire fast

Ryan Rutan: enough. Yeah, yeah. And so, you know, at that point, um, you know, the, and we've talked to us in other episodes, the the emotional intelligence at that point, you know, the managerial experience at that point was just say lacking would be, would be giving me more credit than I deserve. But yeah, so you know, it was one of those things where when it, when it happened, it certainly wasn't my first thought. And I think that was one of the really interesting things about What happens in a crisis. And, and at that point, um, you know, it was a relatively small, I only had 15, 16 people working in the agency at that point, so it wasn't anywhere near $10 million dollars in payroll. Um but it was hours before I even gave a thought to how it might impact the business. Like time just stopped. I was, I had, I had gone to my, I don't remember why, but I had gone to my parents house um and it was making breakfast for him or something. I remember being outside on the grill, but I know it was morning, I think I was grilling bacon and eggs for some reason, I don't know why, but I was outside, my dad said, come inside. Um and and he said, you know, they, you know, a little plane ran into one of the, one of the trade centers and that was at that point, they had no idea what had happened, right? And so we're sitting there like, oh that's weird, you know, like, God, you know, you think, you know, even if you completely lost, like you find somewhere else to crash, right? And so then we were saying, gosh, was it intentional? Couldn't have been now. And as we're sitting there talking another 747 flies right in this kind of thing, and just the world stopped

Wil Schroter: unreal,

Ryan Rutan: right? So you know, in that moment in time my company didn't exist, I was just sitting there watching that television, like everything else ceased to exist. Um and it was, it was hours before, you know, I kind of shook myself out of it and then and then started calling, calling around to staff um because some of them had family in new york, and so it was like checking in, making sure everybody was okay. Um just super crazy times and luckily nobody was directly personally impacted. Um but yeah, it was, it was, it was wild and and then uh you know, similarly over the next day to three um client calls started coming and people were pausing or reducing um you know, to spend with us or canceling projects altogether. And you know, I think in total, you know, when, when all was said and done, we lost out on something like 35% of either existing, like recurring revenue and or future book revenue from that was all tied to that one specific event. Um and and like you said, you know when you're in the agency world, that's, that's that's a big chunk, right? And that that means having to make decisions around payroll and people on and, and you have no negative operating leverage.

Wil Schroter: Exactly. So what was interesting though, uh and again, I really want to frame all of this because I think all this is relevant uh is that we also got to see what happens after a crisis because I think knowing what's on the other side of this journey is as important as anything because at the time, Ryan, for both of us, we didn't know um what was going to happen after this, it was just so apocalyptic that we were kind of like, well jeez, you know, if, if this is the end, I guess this is just the end and I know at the time I couldn't wrap my head around because I didn't have the experience yet um that there was going to be a life after this and what I did in those moments would also extend through this life after this, it wasn't just ruined. And uh after the whole thing imploded in the stock market imploded and everybody got unemployed and all this crazy horrible thing that happened um people went back to business, but they did it differently right? The cost of everything plummeted, which actually became this enormous, you know opportunity. Um the mentality for everyone was, hey maybe we should build stuff that sustains a little bit, you know, and that, that always, that's always how it starts and then changes back to to go go times.

Ryan Rutan: I hired two of my best employees in the aftermath because they lost their jobs at one of the bigger agencies in town at the time. Um, so you know, there, there, there were opportunities and interesting things that came from,

Wil Schroter: there are in it passes. I mean, you have to remember that the world still wants to operate again, right? And even though we have a crisis and there'll be another one after that, these do go in cycles and, and founders who have been through this enough times, um, understand that this is the beginning of a cycle that we have to shift gears entirely, we have to just say, okay, I guess we're in this phase of how the business runs and then change all of our parameters to go meet that and then we know that we have to run like that for some period of time until we're allowed to go back to the way things were. But you know, for a lot of folks for me, when I was first getting into this, I was like, no, My job is to keep things exactly the way they were before all of this happened, you know, totally ignoring the fact that any of this stuff happened. And so if we had 700 employees at the beginning of this, I'm a failure unless we have 700 employees after this, if we have 600 million of revenue before this, I'm a failure. Like in retrospect that was just pure ignorance right? But again it was the downside of not having been through the cycle. And so again that's a little bit what we'll talk about if we fast forward a little bit, once again we hit 2000 to 2007, 2000 and eight we have the financial crisis is again this is all these are us based events. I'm trying to be mindful of the fact that they didn't necessarily affect everybody the same way,

Ryan Rutan: interestingly enough I can provide some context on that cause I leapfrogged that one. I was, I was in europe during that and then I came back to the U. S. At the tail end of the crisis here in the US um and just missed the kind of when things started cascading and crashing over there. So yeah, it was interesting timing for me.

Wil Schroter: We were raising money for a financial services company that essentially became again a different company entirely. But the same thing you see for like a firm and stuff like that,

Ryan Rutan: well timed, very well timed.

Wil Schroter: We're in the middle of raising as the financial meltdown happened. So it was one of those apocalyptic events again where we're in a position where we need more money more than ever. And the last thing available right now at the time, again, freak out moments etcetera. And a little bit of a better, you know, understanding of, of how this works. But again, major crisis and the company ended up going out of business on that one.

Ryan Rutan: Yeah, which is interesting too. Right? I mean, so there's there's a big difference in those two scenarios, I mean, notwithstanding the the actual events behind them, but you know, when, you know, you talked to her before the world will go back to normal, that's fine. If you're running an existing business, you know, that might mean trimming way back, that might mean um you know, you know, changing operational structures, doing, doing a lot of things. But when you're at that nascent stage of a business and you're in the crisis, it can manifest very, very differently in the case of that company had to fold tents. Um it wasn't, you know, there there are situations where you can't just simply say, well we'll just, we'll just ride this out, we'll just sustain this um particularly because of the financial needs that you guys had in order to operate that company, because it was based on having available cash to deploy. Uh there wasn't really a good pivot around that

Wil Schroter: if I fast forward again, Ryan. And just, and we'll wrap up this context piece uh For 2015 um we by a company called virtual dot com, which is helping people find virtual assistants ze actual was amazing company, but had some financial mismanagement problems. Um, and shut down virtually overnight. In other words, everybody went into work on friday assuming everything was good on monday morning. Everyone was fired. Ah To be fair, this is just a bizarre situation. I will get into it some other podcasts. But for the 450 people that work there, this is exactly what apocalypse looks like. And so we absorbed the company the next day and we were in charge of dealing with everything that had just happened. Right. It was a complete nightmare. Uh, worked out great. You know, we ended up saving a wonderful company and that was the goal, but major crisis, major, major crisis. And and I think by the time we got to that one, this is 2015, we knew how to manage crisis. So I think part of what we'll talk about today is some of the tactics we employed to help manage this crisis. And then we'll then we'll fast forward to 2020 today, we're in the coronavirus crisis and talk a little bit about kind of how we've been managing through this one as well in the last two with, with coronavirus and with um, Ze actual Ryan, I've had the good fortune of going through it with you.

Ryan Rutan: That's right, That's right. And we got to do both of those together, still doing this one. Um, but yeah, it's it's so different. It's so different. Yeah, there's, there's one of the things that was interesting about the context of, of virtual two things really, I think one that it was localized to that company now for the people going through, it doesn't really matter, right? Because it was their whole world, right? It's, it's, it's crisis all the same. The, the, the other subtle difference there and this had nothing to do with, you know, the 450 people who were in the company at the time. Um, but for us, we got to decide whether we wanted to run into that forest fire or not. And I think at least in my case that, that gave me a different level of energy and excitement around doing it. Um, it felt more like we got to play the hero to some extent as opposed to being the victim of the crisis. And it's funny because fundamentally didn't change anything. We still had to do all the same work. We still had to do all, uh, you know, the long nights, the early mornings, the hard decisions, the work didn't change at all. The only thing that was different was the mindset. And I think it's just a great illustration of, you know, how you couch something, how you frame something can have a hell of a lot to do with how you feel about it. And in that case simply by saying, hey, let's get together, let's decide if we want to do this, we decided we wanted to do it and then we ran into the abyss willingly. Um And with a hell of a lot of energy, we came out the other side with a lot less energy uh worked.

Wil Schroter: Yeah. Let's talk about why it worked. Let's talk about kind of you know what we learned and given the fact that there's some crazy stuff going on right now and there will be more in the future. So again take this as just moment in time. Um Let's talk about what work. Um I would say top of the stack, you know, first things first we've we've definitely settled on the best way to approach the crisis. We're again we're talking internally focused by the way um is to cut the bullshit. Yeah, for sure Ryan in the agency days back in 2001 um we were in the business of spin, so to speak, you know business of creating marketing messages and everything was always great ah That I think internally our messaging was constantly trying to not cover up but you know, kind of put the best possible light on how things were going. And here's what's also interesting and again some older folks might appreciate this The way you communicate within a company has changed dramatically right back in 2001 C. E. O. S. Weren't writing personal blogs out in public about how they were dealing with, you know mental issues etcetera. Right? Like your last day on the job back then, right?

Ryan Rutan: I'm shaking my head no right now, just so that I can pretend, I don't understand what you're saying. So I don't have to admit to being an older person.

Wil Schroter: I'm just saying to the positive, the ability to have open discourse has changed for the better dramatically in the past 20 plus years. Yeah. So we have the ability and, and and if I made the expectation um, to shoot folks straight to really cut the bullsh it and my take on it is the moment the messaging sounds suspect. It sounds guarded, it sounds deliberately spun, it loses credibility, which loses its efficacy

Ryan Rutan: completely. It does. And

Wil Schroter: imagine on

Ryan Rutan: The backside of that in whatever that you whatever you don't illuminate, it becomes a kid's nightmare, right? It becomes 20 times worse in their imaginations than the reality. But if you leave any shade there, it will get filled with worst case scenarios and, and I think that's the other, the other side of it, in addition to just looking like you're bullshitting them, which feels bad. Um, you leave the rest of the, the actual truth up to conjecture, which is really, really dangerous, especially in a crisis

Wil Schroter: when she hits the fan, so to speak. I think the assumption has to be all of our team is talking and they're saying all negative things like, like, you know, it's worst case scenario across the board. I'm not saying it is, I'm saying, I think you have to build from that assumption. In other words, if you say, hey, you know, we've hit this little iceberg thing and it seems like, you know, ships, ships rocking a little bit, but everybody's fine, You know what I mean? Go outside and have a drink. Things are cool. There's people on the deck. Oh dude, we hit an ice cream. I

Ryan Rutan: had a drink, it spilled

Wil Schroter: all over the guy next

Ryan Rutan: to me before he went overboard.

Wil Schroter: Yeah, no, like I think the worst

Ryan Rutan: thing you can do

Wil Schroter: is say to yourself, I don't want to freak everybody out. So let's, you know, let's create this kind of spun version of the way things are now at the same time, you don't want to get on the P. A. And say, hey, titanic passengers, we're all gonna die, you know, good luck with women. Like it's yeah, yeah, stay, stay calm and try to find a boat. Like I'm not suggesting that you have to rile everyone up. But I think in the messaging, it has to come across more raw, more honest, more empathetic than any message you've ever had before because no messaging is going to get picked apart in read more than everything you say in a crisis. So if you have to defend it, you shouldn't be saying it.

Ryan Rutan: That's right. Yeah. I think if it, if it looks like a shield to to anybody, you're delivering it to, there's a big problem, the other side of that and this is what you're talking about a second ago is if you also hand them a sword, which they can then just use to eviscerate you, that also doesn't help. Right? So you need to be careful in how you deliver it again. It needs to be honest, it needs to be truthful. Um but you also don't want to just, you know, kind of throw things into the wind like, yep, everything's bad. Um This is a total ship mess. We have no idea what we're doing is might be honest, probably not the best message delivered in a crisis

Wil Schroter: when the whole covid thing happened, you know, internally we got about 200 people at startups dot com. Uh and you know, like everyone else people were freaked out, why wouldn't they be right? Uh Ryan, you, me, Ellie and a few other folks, we sat down and we said, you know, for some of us, again, we've been through this a few more few times before um Step one is to circle the wagons. Step one is to circle the wagons and make sure that all our defenses as strong as it can be. You know, that means cutting expenses that you can etcetera. But while we're doing that, you know, while we're strategizing, figuring that out, our staff is thinking, am I gonna have a job, right? Just tell me, you know, like don't tell me like, hey, you know, we're, we're looking at this or that just am I going to lose my job right now? I know that's easier said than done. Um, but don't overlook that. Like if you come up with some communication that says, hey, I just wanna let you know, there's been some challenges in, in the, the public health sector, etcetera. Like don't tell people stuff they know, like tell them what they're thinking, right? Um, we know these are challenging times. We know that you're concerned about, you know, caring for your families or, you know, your career, etcetera. Um, here's what we're doing to try to prevent that. Um, here's, here's what we're hoping for, you know, in those measures. Like we said, hey, there's a number of cost cutting measures we've taken, we've taken in all areas that don't affect personnel. And we're, we're monitoring by the day how revenue comes in, how expenses coming, etcetera to see if there's any other guidance that we need to make. That's it right now. We're not saying you won't ever lose your job. We couldn't possibly know that, but I want everybody to be armed with as much information as possible so they can see the same thing that I'm seeing. So even if it's unsure, at least they're seeing the same picture? You know what I mean?

Ryan Rutan: Yeah, I think it's really important. You know, you said something critical, which was that tell them what they're already thinking, right? So you don't want to just become a list of facts that they're already aware of. Um you know, you need to answer the questions that are already likely in their head. And that means, you know, spending some time to think about how are they thinking about this, right? Not just how is this affecting the company and what facts can I passed down to them, but how are they thinking about what they're going through right now? The other side of this is being able to think about how they're feeling, right? Because there's also a huge, I mean the empathy piece of this is perhaps, you know the most important right. If people feel like you have empathy and if you really truly do have empathy for them and you're delivering the information with empathy than the facts, uh don't change right. The facts may still be the same, they may be harsh, they may be may be hard to take, but delivered with empathy. It at least keeps people facing the same direction. Um and you can work together to solve this because you know, the other thing that's really important to remember the last thing you want in a crisis of external nature is to create an internal crisis because that's going to make navigating it exponentially harder. Probably impossible.

Wil Schroter: Yeah. And you want people to know that their herd, I mean this is at any stage of the business, but man, particularly now, right, There's nothing worse than a crisis than feeling like you're not being heard or considered, or you don't understand the decision criteria for the people that are, that have your, your, your future in their hands, right? Like if, if we're dealing with this crisis, the first thing in my mind is let's give everybody else the same decision criteria that we have. So they understand where we're coming from. You know, this is how we're making decisions.

Ryan Rutan: That context is so, so important, right?

Wil Schroter: Sure. And treat people like adults, right? Say, look, you know, if revenue hits a certain level, we're going to have to consider reducing expenses, which of course, you know, is going to mean layoffs or, you know, um, staff reductions, etcetera in and let people understand the causal effect on that. You know, if, if in this time I'm a retailer, jeez, heaven forbid, right? Uh, if I'm a retailer and, and, and I say to my staff, hey, we're going to have to, to, to slow down their business. Your best case, we'll see 50% you know, from our online business or whatever, where we are right now, um, with that we're gonna have to cut costs, that's, that's likely going to mean, um, some of your costs as well, right? And so, but these are our only options, we can only, you know, basically pay out as much expenses as we're getting it in revenue. And so here's how we're trying to make those decisions. Different businesses are going to have different conditions of what they can and can't share. But ultimately everything you're saying is just a bunch of words until people know exactly where they stand. And so they cut the bullshit is what's the fastest most plausible way we can get people on our side of the table to understand how we're developing this and make sure they understand their concerns are part of how we're making decisions.

Ryan Rutan: I mean, nobody ever likes to be told how to feel about the situation, right? So arming them with the information so that they can make their own decisions, understand where they stand in the crisis matters more at a time like this than than any other, um, you know, in our case. And and like you said there, there are differences in what can and can't be shared depending on the type of company, whether it's public privately held, even just the internal company culture. One of the things that I think went really well in our communication was, was not just letting people know that, you know, if we get to this point, we're going to have to cut costs. Um, we got specific about what kind of things we were going to do to play defense before that, right? Like here's some costs that we know we can cut, that won't impact any of you and we're doing all of those things first. So at least they all know that we're taking every possible step we can to defend any human costs first. Right? And now I feel like I'm talking into war terms, but but it it is a bit like that, right? And so we're, you know, we're we're willing to give up some positions in order to to to maintain our people and and that's okay. And I think it's really important to understand that the other thing that was great about kind of drawing the lines in the sand, was it made it easier for subsequent communications, Right? That first message that you sent out to the rest of the group where we, we sort of set out some parameters for here's where we are. Um this is the stage that we're in right now. This is the situation, these are the types of decisions that we've had to make, but we're not at stage two where we're going to make different decisions and you can kind of just let people know, hey, not much has changed. We're still in this first phase where, you know, any cost cutting is going to come from, you know, external contracting or marketing spend or something else that won't impact your life directly. And I think that was really well received and again, it makes it easier to then you've got that basis of communication and you can just kind of keep pinging on those same points and letting people know that either nothing has changed everything, still copacetic or we're moving closer to having to make different levels of decisions and then being specific about this as well. Um and and thus far that's been really well received

Wil Schroter: totally. Yeah, I also think you know one of the things that that uh we did particularly well in the 2015 period during virtual, which is a tough time anyway, but what worked well um despite the fact that it was a tough time was that we opened up communication to the top right? Like because here's my thought, I think that uh the moment you send out communication especially something that's not going well, the communication immediately gets parceled into all the different, you know, interest groups within the company, they jump into their personal chats and they come up with their own version of of what you just said, right? And whether you like it or not whether you think it happens or not, it does. The only way to pretty much break that up because it never goes anywhere good by the way where people are sitting in that group and like what he really means is this and you know what he's really saying is this, take it off the table and say look if you're not sure what's going on, here's my communication, here's my email, here's my, you know, phone number, here's my office, whatever, you know, whatever you're most direct communication is say there is no excuse for not knowing what's going on or having questions because you can, you can directly communicate with the decision makers. That could be your manager of the Ceo, whatever. Um and leave no room for interpretation that way. When someone decides that they have their own version of what reality looks like and they're, you know, kind of standing on their soapbox in the break room telling all the other employees what's really going to happen. People can call bullshit at him say, hey look, you know, Ceo said you could just ask him directly, have you asked him? No? Okay. Well then how do you know how this worked out particularly well, I used the virtual example cause that's actually, you know, we've been full cycle on that one. Um When virtual shutdown, essentially 450 people, mostly virtual assistants. Um all got let go. Um with almost no notice and pretty much no notice on a monday morning, needless to say they're freaked out. Thousands of clients freaked out. And so we had to communicate to a staff that we had just taken over like nine seconds ago. A bunch of people they've never met before in their lives had no relationship whatsoever and try to like address what the hell just happened. And so one of the things that worked particularly well was we sent out communications to all the folks to all the employees and we said, look, uh, if you're not sure, you know what's happening or if you're not sure where things stand or where our heads are at, here's our personal communication, just ask again. We know you don't know us from adam. Like we understand that we appreciate what you're going through right now. Um, you don't have to guess. You don't have to guess what's happening up at the top and create these conspiracy theories. Just ask. And if you're not asking, then that part's on you again. And you know, I don't want to pass the blame, but I want people to share the responsibility of making sure that they get the right communication. Well, So what happens, you know, when you said 450 people that just lost their job, most of them single moms, by the way. You get 450 very, very detailed emails, phone calls, uh, you know, video,

Ryan Rutan: which is exactly

Wil Schroter: what you want, Right? And you want that, that's exactly what you want. Like I, I, I didn't look at, Uh, you know, email inbound emails as a liability. I looked at as an opportunity because a lot of those folks, obviously they had no idea who we were because we just bought the company, but uh, it's, it allows you to just answer the questions directly, you know, and for most startups don't have nearly that big of a staff. If you have 28 people and you can't communicate with them all directly. The problem isn't the number of people you have.

Ryan Rutan: Yeah. Well, you know, it's interesting there though and I think that you do have to be careful of that even even if it's possible. So even if you have a company of 28, I've seen this go poorly. If you do a bunch of one off communication and there's any deltas between what gets said, that's part of what starts to create some of that back channeling. Oh, well, you know, they told me, you know, it was is going to be 20 oh, I heard 30. And so this becomes really, really problematic. And so I think that, you know, in the way that we executed search jewel and the way we're doing it now with Covid, um, we've been very clear about making sure that everyone knows they're all getting the same communication through large group communication channels like our slack and our email where we're sending out the large, you know, that the mass communication again very open, very detailed, very honest. And then we're opening that up for uh, for individual response because I think that's also very necessary. You can't leave all of that in a group setting. For example, we drop that in slack, we get some feedback there, but as always you're gonna get very different feedback in a public channel than you do in a one on one where people don't want to share how this specifically impacts in the context of their own personal lives of personal financial situation. Um, and so I think even if you do have the ability, if you're small enough, you might be a five person team, Maybe a 25 person team. It's still really important to make sure that there is at least some singular touch point for communication that everyone knows is consistent. Otherwise. I think you run the risk of of having a lot of opinion and a lot of conjecture get injected into what should just be objective fact.

Wil Schroter: Yeah. And, and, and I also, you know, recognize the fact that for a lot of people emailing the ceo or emailing their manager, you know, emailing kind of above their, their their reporting structure is intimidating. Right? So not a lot of people are going to do that. Um, but the importance is opening up those lines so that they can get honest and actionable feedback from people that actually know what they're talking about because I think I always feel this way in the, in the absence of open communication, you get lies, Right? You get 20 different versions of what the truth is, Unless you establish one Right? And the worst thing we can do is is leave a whole bunch of gaps in the communications and let people fill in the gaps on their own, that always ends 400%. The second is I don't believe in addressing the concerns of groups. And what I mean by that is, hey, everyone here, 20 different people have 20 different variants of what their concern is. Um, and I never, I'm never comfortable with hearing. Well everyone's saying this, no, not everyone has kids, not everyone has debt. Not everyone has has a second income at home. So it's not one universal problem. It may, it may bubble up to one common problem, But there's 20 versions of why that problem exists and it's my job to unpack each and every one of those. one

Ryan Rutan: 100%. Yeah. And circling back to to the open lines of communication piece. Um, I think there's something else that is necessary to your point. People aren't gonna email all the way up to the Ceo in a lot of cases. And of course this depends on how the management layers are. Um, I saw this executed really, really well when, when I was still running tech for a market research company, um, they went through an existential crisis where they decided to fire their, their biggest client, which was across the board, 40% revenue and some of them are country market level operations. It was 60, of the revenue. Um, so big deal, big big deal. Right? And, and it had a lot of impact. Um, it was a fundamental difference between, you know, that companies ideals and and the, and the parent company. Um, it was a good decision. It was a great decision, a long term, they've they've blossomed because of it, but at that time it was absolutely a crisis. And um in dealing with that, one of the things that they made sure to do was to give people as many options as possible for where to communicate, and most people chose to communicate directly with their direct manager person they were most comfortable with, which makes total, makes total sense. But the directive then from the senior management, the executive level, was that any time you get one of those respond and let them know that you're also copying in the ceo the CFO the CMO, whoever it was that should have been in that stack, um because they're gonna want to know about this too, and they'll have good input on this, so they automatically loop them in and open up the channel for those folks. Um And it worked really, really well, a lot of people that wouldn't have otherwise been comfortable reaching up to the top level of management where all of a sudden thrust into a conversation and and they went really well, and and it really did help to open up that communication from top to bottom. And in that company, you know, unlike ours, there were, I mean, managers had managers had managers, it was, it was a very short of draconian um management structure. It worked for them, but, you know, by, by U. S. Standards, it would have been, you know, far more management layers than than we would typically see. And certainly, you know, in startups dot com or we're damn near flat. It's it's a hell of a lot more management than we have. Um, and so it was really important to make sure you broke those layers down.

Wil Schroter: Yeah. And some of those constituents are the managers. You know, letting managers, you know, if there are a couple layers down, be able to kind of, you know, bubble up and say, hey man, like what's what's really happening here? Because I'm not sure I'm getting the full story. I think the point is you've got to take the I'm not getting information components off the table. You have to overshare. And probably the way that, that you might not even be comfortable with In an effort to get everybody on the same side of the table, which brings me to our 3rd point, which would be getting everybody on the same side of the table by way of that. Finding a rally point. I think that if you're the general and your commanding this army and you're getting shelled, if all you keep talking about is the fact that you're getting shelled, it's kind of game over for you that doesn't end well right. What, what you need to be as, as the general in this case is you need to be saved. Those shelves are coming from that hill over there. We need to go charge that hill and take that over right? Like you need to create a rally a focal point, no matter how dire the situation is to say, survival comes from this objective, Everyone focused on this objective And we may not get there right. The survival may maybe look guys, we can't, we can't hit less than 50% in sales if we hit less than 50% in sales, uh, it's gonna be game right? And maybe we don't get there. But what a colossal failure on behalf of management, if we don't illustrate exactly what that rally point is, what each person in the organization can do to get to that rally point and most importantly, the progress by day, by the way, hey, end of today, here's what we got done, shoutouts to this person, this person and this person goal is now still this, everyone keep charging were one

Ryan Rutan: hedgerow closer.

Wil Schroter: Yeah, yeah, I mean, this is a different, this is wartime type management, This isn't the same as we are doing a week prior to the crisis, right? Everything has to change. This is a completely different level of communications, of focus of management and determination. And I think, uh, I think, I mean, you tell me, but we were very specific about what folks needed to do when, when things went sideways. Um, and I think folks really appreciate it.

Ryan Rutan: Yeah, I mean, I think making sure that, you know, you, you do explain that there will be changes, right? And there are consequences to the changes. Um, but here are the marching orders, here's what we need to do. Here's how you can put some of your destiny in your own hands and and take action, right? And I think that always feels good. Um as you were going through that, I was thinking back again on the example that I gave early around how different I felt about the crisis of virtual because we ran into that willingly. Now whether you run into it willingly or not, I think it was really just a question of motivation, right? It wasn't necessarily that we chose to do it, but the motivation level going into that crisis was very different. And so I think that's the rallying point gives you something to be motivated towards. Um, particularly if you can, you can be as objective as possible and quantify, you know, these, you know, if you can really point out, it may not be quite as simple as saying that's the hill, the artillery is coming from, let's go knock the cannon off the hill and we'll be fine. Um, but being able to be very objective and and quantify the rallying point and saying like, look, we need to achieve this so that this happens or so this doesn't happen. Um, right now, if we can maintain a 70% sales volume, everybody can keep, you know, full pay, full benefits Nothing has to change. Right? If we slip into 50, range then then that's a different story, right? That's a hell of a motivation right? And it's a clear target. They know exactly what they have to do. There are

Wil Schroter: Different thresholds and how specific we can be about those, those rallying points, we can say we need to save $20,000 and hey, we need every idea possible for people to come in in every single case when we've made that call that rally. Um, in the different situations that I've been in, I have been amazed at how many people came out of the woodwork because everyone does want to help because let's face it, all of our jobs depend on it And said, Hey, you know, we could actually cut this, this, you know, one sas cost that, that, you know, we end up spending $5,000 a year. It doesn't sound like a lot. And I'm like, look man, at which point, you know, we're trying to cut every expense possible every every day. And I think, Right? And I also think there's some psychology and I think for the folks that are saying, Hey, you know, this is saving $400, I guess it's not a big deal. And they find out it is a big deal, the first thing in their mind is, hey, let me see where else I could do that, Right? You know that yeah, exactly, 400

Ryan Rutan: Matter does 200 matter? Does another five

Wil Schroter: 100 matter, yep. Look, it sort of does, and you know, in certain organizations, independently big you are in your cost structure. You know, $400 may not matter. But I think the spirit of it matters, even if even if the dollar volume isn't going to necessarily change the outcome of the business, I think getting the entire staff on our side of the table, our side being leadership saying, here's what we're all dealing with. This isn't about leadership, you know, kind of running everybody off off of a cliff as lemmings. This is all of us in this together. Here's how we're thinking about the problem here is the decisions we're making based on that and here's where you can help. And I think, look, if it doesn't work, it's because we all didn't make it work, not just because leadership made bad decisions and look, you know, in in spite of all that things may not work out. You know, it doesn't always work out. I've had plenty of cases where it hasn't worked out. Um, but I think what we've learned and Ryan, I am, I'm proud of this experience is that going into the crisis, we know what to do. We know it might, it may not, you know, may not save us, but I feel like we're, we've got to pretty solid playbook and approach for kind of how to navigate it? It is,

Ryan Rutan: it's, you know, the other analog here will is the acquisitions that we've gone through right in, in the first couple of those, there was a lot more figuring out how to go through that process. What does diligence look like? What are the questions we need to ask? Um, and if you recall like with with virtual, by the time we got into that one, it was far easier in a lot of ways because we sort of just said like, hey, let's go figure out if we want to acquire this company, let's, let's, let's get moving. We didn't have to hand out a bunch of orders. I just remember kind of everybody in the team going into action and doing the things that needed to happen. Um, and very much the same thing with, with this crisis. It wasn't, it wasn't like we had to go around the horn and say, Hey, do you think we should find some, some cost cutting measures? People came to the table the day of, right, the day we sort of knew this was going to have a major financial impact. Everybody showed up with. Like here's, here's what we're thinking about cutting from our side. Um, here's what the impact that, that's going to be. And so it's fantastic. And I think that a big part of that goes back to this, this question of motivation, right? And so when we can put a motivation of people's hands that make them feel like they're having an impact, turn them into the hero instead of the victim. It makes a huge, huge difference in their ability to execute on that and the energy, the passion that goes into it. Um, and that cannot be overlooked. It's especially at times like this, we need that extra gear and and we need people to be able to take action on their own without having to be led through everything, you know, by hand. For example, the difference in me going to, you know, one of, one of my direct reports and saying, okay, I need you to cut $1000. Um come back to me and tell me what you're, what you're cutting out is very different than saying, hey, um you know, we're looking at cost cutting measures, let me know what you think you can do on your side, right? And if they come back with less than I need, I may have to go back to them. But if I can leave a little bit of the autonomy in their hands where they get to feel like it's their decision, they get to make the choice and in reality they do get to make the choice. Um it goes way better, right? And everybody feels better about it. You feel like you're contributing to something again, that that that focal point and being able to rally towards that as a group. Um, but being able to know that your individual effort in all of that mattered, as opposed to just being cannon fodder lemmings off the cliff is a big deal

Wil Schroter: at its core, when it comes to crisis, when it comes to a point where, you know, you've got to make some tough calls and you've got a lot of people that, you know, maybe constituents in the process, what matters is you're transparent, everyone believes that what you're saying in the direction that you're giving is the truth and it's something that they're willing to get behind and look, man, even if the ship goes down and it often goes down, to be fair, I've been on one of those ships that are more than a few of those ships that have gone down, um, at least we're going down together, right. At least we're going down fighting and we both believe in the outcome. I think it's like, you know, any kind of team, whether you're playing sports that, you know, you're, you're in a military exposition, whatever, like you're, you're all in it together and even if it doesn't work so long as you're in it together on the same page, you're at least willing to give it a fight. You know what I mean?

Ryan Rutan: It's funny you say that and it brought a very specific memory back, um, you know, playing playing youth soccer and we lost a lot of games, but I only remember a couple of the losses. And the thing that I remember about those losses is the same in every case, but one of them was hugely disappointing because it was the championship in a tournament. Another one totally insignificant game, but the entire team was at each other's throats, everybody was blaming everybody else for what was happening. And again, it wasn't a consequential game, it didn't really matter. And yet, what I remember about that loss was how everybody was on each other's case, um, at halftime after the game, giving each other's ship at the next practice, it really hurt and it really hurt that, you know, the team performance. Um, but yeah, so, and there were other times for, you know, as long as we felt like we gave it our all and everybody was together losing together felt better. Now, I'm not suggesting you lose, don't go and shut down just to figure out if this is if this is a good feeling, um it's not. Um, but it certainly hurts less if if you maintain kind of team cohesion and everybody's on the same page. Again, if you're running towards that rally point and and it still doesn't work, at least you're running, you know, that feels better every time. That's a wrap for this episode of the startup therapy podcast, this is Ryan Rutan, on behalf of my partner Wil Schroder and all the startups dot com family thanking you for joining us and we hope you'll continue to join us, Be sure to subscribe, rate and comment on ITunes or wherever you love to listen to startup therapy. You can find all of our episodes at startups dot com slash podcast. If you're looking for more amazing resources to launch or grow your startup, be sure to head to startups dot com and check out startups unlimited. It's everything we have to offer from our online university to our amazing community of experts and founders and even all the tools we've built like biz plan, fungible and launch rock. It's everything a founder needs visit startups dot com slash begin that startups dot com slash b E G I N. You'll thank me later. Mm hmm.

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