The outbreak of COVID-19 and its global economic effects have reached South Africa. While the second order effects on our local economy and society are hard to predict, it generally takes months or even years to recover from “black swan events” like this one. We believe that there will be a “new normal” over the upcoming months:
- Raising funding will become significantly harder
- Sales will slow and many companies will miss their revenue targets
- There will be layoffs at many companies
- Companies (both big and small) will close
- Most companies will be forced to operate remotely for a time
- Our society will change in unpredicted and unprecedented ways
As we enter into this “new normal”, we are now holding ourselves to strict operating principles to ensure that we solidify our business and seize these opportunities.
OfferZen’s operating principles for thriving in 2020
Create clarity that drives action
Times of uncertainty require a balance of careful analysis and decisive action: Uncertainty consumes ongoing mindshare which leads to inactivity. Teams that don’t feel like they are getting things done become unhappy which exacerbates an already tough situation.
To combat this, we’re making bold decisions that enable us to execute hard.
One such example is with the tech events we support: Over the past years, we have been sponsoring a huge number of tech events in South Africa, that are now either already prohibited or at an increasingly high risk of being cancelled. Every time we want to support an event, we liaise with the organisers, sign contracts, brief team members who are attending and organise or even custom-design swag, a stand and banners.
Currently, we are in limbo to see if certain events will proceed or not. This creates the risk that we spend time and resources on events that will eventually be cancelled. That’s why we made the hard call not to sponsor any new real-life-events until the pandemic is over.
This decision is now freeing up our events team to execute their mission of bringing the tech community together with more focus: We immediately started testing online events as an alternative - which worked surprisingly well!
What could have been a time of lethargy and stress has been transformed into a fierce energy in the team to discover new ways of connecting the community.
Invest only in what matters most
We haven’t raised any external funding for OfferZen which has forced us to be conscious of profitability and cash flow from day one. I believe this mindset will serve us well in the coming months. Even so, it’s quite easy to accumulate unnecessary expenses over time.
When it comes to cost cutting, it can be tempting to drag out decisions to avoid pain. But doing it sooner is almost always better than waiting.
“If you’re going to eat shit, don’t nibble.” - Ben Horowitz
Reassessing our revenue and cost projections
We’re trying to get as lean as possible, bolster our runway and ensure we have enough cash in the bank to execute on our growth plans. Over the next month we’ll be running a company-wide cost-saving mission.
We already ran an initiative called “Save 350k” last year which involved asking every team member to look for ways where we could save money: Over a period of about 30 days we cut our burn by over R200k per month. You’d be surprised by just how many online services you’re subscribed for that nobody is using anymore! Beyond the immediate saving, it also made our team more cost-conscious.
Reassessing our marketing strategy to be more valuable to our community
Our marketing is another example: OfferZen relies on a mix of marketing channels including events, online content and performance marketing such as Facebook advertising. In order to refocus our spend on what matters most, we are planning on drastically scaling down spend on performance marketing and will instead be growing our content team. Not only does this reduce our burn but it’s also more aligned with investing in the tech community: online ads don’t add value to our community, while content like articles, podcasts and videos with insights do.
While we are looking at ways of reducing our burn - we’re also simultaneously increasing investment significantly in several areas. In principle, we try to invest in things that make our team more productive or that fuel our business growth. For example, we will be supporting everyone in the team to get fibre at their homes so we can operate fully remotely.
Embrace the opportunity
While this all may feel scary for you and your business, we believe it can be a real opportunity for the tech community because:
- Your competitors will struggle, be indecisive, and possibly even close doors. Now is the time to take more market share.
- If you’re innovating and have a good plan and model to win during this time, you’ll likely be able to attract better talent than ever before.
- Because you’ll (likely) be remote, your company will be able to access both talent and customers you’ve never accessed before.
- Tech teams have been working with online collaboration tools like Github, Drive, Miro and Slack for longer than anyone. This gives you a head start.
- Tech businesses are by nature leaner and more iterative, making you way more adaptive in times of change.
- The demand for technical and automated solutions to existing problems will increase.
- Tech businesses are great at turning real world problems into businesses, and there are now a whole category of new problems to be solved.
If you’re a programmer and there’s a piece of software you feel inclined to build to help you and your friends coordinate anything or communicate in some way while you’re all stuck at home, that’s probably a valid startup idea.— Paul Graham (@paulg) March 14, 2020
Rally as a team
In addition to taking proactive precautions around our office, we’re also focusing on being mentally prepared. That’s why the entire OfferZen team meets regularly, shares the latest outbreak & economic projections and tries hard to think and act together as a company.
As a practical example of this: At our all-hands-meeting this week we discussed the inevitability that members of the team or people we care about will get COVID-19. While these conversations can be uncomfortable, I’ve found that considering worst case scenarios like this inoculates people against their fears.
We’re also talking a lot about “putting on our war paint”. These are different times, when things look different, and we should treat them as such. “Putting on your war paint” is our analogy for acknowledging this - getting the team to realise that we’re in this together and that we need to focus and work hard at winning now, more than ever.
Support the tech community to do these things
While we figure out how to do these things, we’re going to continue to focus on helping the tech community grow and thrive. We’ll be sharing what we learn and working with the best companies in SA to find out how they’re approaching our new world and sharing it with you. We’re also busy bringing together the organizers of several local tech events to share learnings and figure out ways in which we can support them going forward.
Times of hardship lead to opportunities. It’s time to band together as teams and as a community. It’s time to take decisive action, knuckle down and grow when everyone else is wondering what to do. It’s time to put on your war paint.