Once upon a time, Box’s Aaron Levie was just a guy with an idea for a company: 15 years ago as a USC student, he conceived of a way to simply store and share files online.
It may be hard to recall, but back then, the world was awash with thumb drives and moving files manually, but Levie saw an opportunity to change that.
Today, his company helps enterprise customers collaborate and manage content in the cloud, but when Levie appeared on an episode of Extra Crunch Live at the end of May, my colleague Jon Shieber and I asked him if he had any advice for startups. While he was careful to point out that there is no “one size fits all” advice, he did make one thing clear:
“I would highly recommend to any company of any size that you have as much control of your destiny as possible. So put yourself in a position where you spend as little amount of dollars as you can from a burn standpoint and get as close to revenue being equal to your expenses as you can possibly get to,” he advised.
Don’t let current conditions scare you
Levie also advised founders not to be frightened off by current conditions, whether that’s the pandemic or the recession. Instead, he said if you have an idea, seize the moment and build it, regardless of the economy or the state of the world. If, like Levie, you are in it for the long haul, this too will pass, and if your idea is good enough, it will survive and even thrive as you move through your startup growth cycle.
Indeed, lots of good companies have been built during recessions. Jyoti Bansal, who founded Harness and Traceable, was also founder at AppDynamics, a company he started in 2008, and later sold to Cisco in 2017 for a cool $3.7 billion. As Bansal told TechCrunch last month when he was launching Traceable, good ideas don’t have to wait for the perfect time:
I started AppDynamics in 2008, and this was just a few months before the Lehman Brothers crash [and the start of a massive worldwide recession]. In hindsight I felt like that was one of the best things that happened to me. It shaped who we were — very customer obsessed, heavily focused on building the best product in the market and building a very strong culture inside the company, and that made us very successful.
Digitize everything
Levie said he sees opportunity here too to digitize just about everything, and if the current situation has taught us anything, opportunity is knocking if you are just willing to listen. “I’ve seen ideas for dozens of really interesting startups just in the past few weeks, where if you had pitched the idea two months ago, people would say, ‘no, no one’s gonna do a virtual yoga studio that you pay for.’ And now all of a sudden, you’re like, holy shit, that’s a unicorn idea,” he joked in the interview.
He added that there is never a perfect time to raise, and if there is, it’s going to be different for everyone depending on your idea and the times you are pitching it, but the pandemic is certainly bringing its own kinds of opportunities for founders.
“We are now in this new normal that we’re emerging into, where there are going to be amazing opportunities for new startups to emerge that will go and digitize lots of parts of the world that maybe previously hadn’t gone digital. And so for a company like that type of company, maybe it’s a great time to raise.”
Box’s Aaron Levie says it will take creativity and focus to get through this crisis
Focus on product
If you’re not one of those companies, you may need to hunker down and focus. That’s the advice that seed investor Ed Sim from BoldStart Ventures had for founders when my colleague Alex Wilhelm and I spoke to him about the state of seed investing in April.
“If you just closed your seed round, it’s a good time to hunker down and not get distracted with all the go-to-market stuff right now,” Sim told TechCrunch. He went on to say that his firm has suggested that approach to some of its early companies (“go-to-market” is startup slang for sales and marketing efforts that take a company’s product to potential customers).
In a survey we did with enterprise investors on the impact of COVID-19 on their portfolio companies, Hope Cochran from Madrona Venture Group said she was also advising her portfolio companies to take a conservative position and see how things play out:
From a business planning perspective, reforecasting was urgent as they looked at their customers’ viability and their ability to continue to sell in certain channels in this environment. The impact of this revenue uncertainty led the companies to take a hard look at their overall cash position and make sure they were positioned for economic risk — often leading to difficult choices or evaluating ways to have access to more capital.
Enterprise investors remain flexible as they navigate COVID-19
Keep on trucking
Of course, being a startup is precarious even in the best of times, and only a small percentage make it to where Levie has led Box, a public company with an annual revenue run rate of over $734 million. Not everyone will get there, and he says that in times like these, some startups may be forced to make compromises they wouldn’t have normally made.
“Unfortunately, there will be some companies where they’re not necessarily benefiting from this environment, and they will need capital to survive. And in those cases, again, you might not have a choice. And so you might have to take the terms that are available if survival is at stake,” he said.
At the beginning of the current crisis in March when less was known, Levie had this advice for startups: “It’s about extreme focus right now. It’s about extreme discipline. It’s about making sure that you’re maintaining your culture during this time,” Levie said. All of that very likely still applies today.
Overall though Levie remains optimistic about the future, pandemic be damned. “It’s so hard to give advice generically because you can fall in many camps, but I’m very optimistic that there’s going to be some very exciting companies that get created today because so much about the world is changing at such a pace that is just unprecedented,” he told Extra Crunch Live.
Aaron Levie: ‘We have way too many manual processes in businesses’
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