Startup management in a deteriorating market

by Adam Spector May 12th, 2022

As a founder, every day is filled with anxiety, whether things are going great or running into challenges.

You’re trying to get things working, you’re scrambling to gather user feedback and iterating, and running and dodging to find product market fit (PMF). If your business is hockey-sticking, congrats but that means operations are breaking, and you’re scrambling to fix things.

The stress and anxiety is always there... it just takes a different shape!

The past few weeks introduced a whole other level of external risk. The stock market is in freefall. Valuations are plummeting. VCs are pausing deployments. Startups that raised massive rounds just a few months ago are laying off employees.

This. Sucks.

Where to from here?

Ok... enough moping and cynicism. Time to pick yourself up and get back to it. That’s what we founders do. We find a way. There is always another path. Tomorrow will be better so long as you keep plugging away. However, the basic overhead of keeping your business running has not gone away.

Normally you probably would have solved operations one of two ways:

  1. put it on your back and work harder (we call that “Heroing”) 🦸‍♀
  2. hire someone FT to take care of it (offloading or outsourcing) 🙋‍♂️

Those solutions do not work in this market... you absolutely need to work harder, but it’s more important than ever that you focus on product & customers. Get that shit working. Yesterday.

You should not hire more full-time back office folks — that’s what you do in a bull market (although even then you shouldn’t as that's the old way of thinking). This is the time for efficient solutions.

In times of stress like this, operations should be farthest from top of mind. We hope to help with that.

Running your startup when cutting costs

We love to help startups scale. Maybe you just raised $Xm in the last few months and it’s business as usual — amazing, and we are here to support you in this growth.

But if you’re rethinking plans - layoffs, cutting costs, or more - here are 5 suggestions to get you through these dark times:

  1. Stop using humans to do work that technology is better able to solve. We’re in tech so this should be obvious but it’s crazy to us how many founders still think the way to solve an operation puzzle is with people power. AbstractOps automates much of your back office work, which means you no longer have to act as a “Human API.”
  2. Delay your HR or Finance or X hire. AbstractOps can sub in for many HR, finance, and compliance responsibilities with our trained experts. We’ve sadly had to help our clients lay off big teams (including the teams that would otherwise oversee layoffs).
  3. Rationalize your spend. We can pull reports from QBO and Ramp to make sure that you are not wasting money.
  4. Clever tips to help extend your runway. We aggregate the best of breed knowledge from across all of our customers. This is the advice and know-how you can’t get anywhere else (not even Google - would you trust it anyways?), tested, and audited for value. Examples include: a) Treasury with Mercury + Meow to earn more on your cash, b) Asking your lawyers for a temporary 20% discount, c) Lower cost accounting and bookkeeping options that actually still deliver. Much much more (literally, hundreds of lessons learned and routinely updated).
  5. Compliance savings: States don’t care that there is a downturn... if you drop the ball on filings and notices, you’ll get fines; we’re watching to prevent these, or at worst quickly negotiate them or pay them to avoid further penalties.

A bit more about AbstractOps

We built AbstractOps to enable every business to manage their company better than world-class, well funded businesses. None of them use software to automate, manage, and synchronize their back-office (HR, Finance, and Compliance) operational headache.

Time saved on non-differentiating tasks means more time invested in growing your startup. Time saved not having to recruit, train and manage operations folks is huge. These are roles you as a founder are not an expert at so can you really be sure you’ll be amazing at hiring, training and managing? ⏲️

Money saved on operations people. We love operations people. Heck, we are operations people! Here’s the thing, operations people without scale are expensive. A good Chief Operating Officer is at least $200k a year (we’re only talking early stage, price goes up from there!). A delightful Head of HR is $150k. A CFO...there goes another $175k. Even a Chief of Staff is $150k. This isn't even including equity or benefits. 💸

How much of their work is low-value vs strategic? All the low-value (but absolutely necessary!), rote, repeatable, work - such as clicking buttons in Gusto or Rippling and entering data into Carta - doesn’t require an expensive full-time person.

For $400 a month, a team of 20 can have software automate much of the CoS, COO, CHR, and CFO’s work. If you already have a team, make them more efficient with software. Software to standardize and centralize all the back-office work is valuable no matter the market.

$4,800 a year vs $200k a year = a savings of $195,200. That’s probably a few months of burn and you get software that creates a strong foundation for long-term scale. Win win!

We know the answers. We’ve been there, done that. We always have more knowledge than any internal operations team since we learn from across our customer base. They - and you - no longer have to research the same question every other startup has already researched. What.a.waste. of time and money.

Your team can now do more valuable work and less pushing paper, “human API” connectivity, non-specialist work. Get back to focusing on what matters (building product & earning customers). Don’t reinvent the wheel.

Managing your startup in a deteriorating venture market means saving as much money and time so you can invest them both in only the most important activities.

AbstractOps is here to help.

Adam, Hari and the AbstractOps Team

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