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Chris Hladczuk
Fri Oct 07 2022

How to recession proof your startup in 5 steps (so you don’t hit a bankruptcy brick wall)

1. Find your Wedge

Wedge = a product that clearly beats the competition

Wedges make you feel like you’re not “selling” something.

Customers respond with…

“How have I not found this before?”

Wedges siphon off customers from your competitors.

Ask: “What’s a feature that only needs a 30 second explainer until a customer sees the no brainer”?

If you don’t have one, obsess to find it.

Once you find it, focus 1,000% on your wedge.

Wartime building begins by compounding focus on profitable wedges.

2. Raise “Too Much Money”

At Meow, we have over $25 million in the bank.

This is well over 10 years of runway.

Are we “overcapitalized”?

Maybe.

But the worst time to fundraise is when you need to fundraise.

Get ahead to secure dollars today to avoid desperation tomorrow.

3. Lean and Mean

You know that phrase “low man wins”?

In sports, the lower you are to the ground, the more leverage you have over opponents.

In times of turmoil, low startups win.

Low startups are nimble and lean.

Low startups move quickly.

They pivot quickly.

They adapt to crazy markets quickly.

Your goal?

Get leaner and meaner on your hiring needs.

Ruthlessly focus on the highest leverage hires and forget about the rest.

4. Fix your Finances.

Recession proof startups kill fancy trips and wasteful events.

They cancel unused software subscriptions.

Better yet, audit your finances.

One idea:

Pay one person on your team 10% of all dollars saved in unnecessary costs.

Trust me they’ll find creative ways to save you money.

5. Diversify Growth

Crazy stat:

50% of all venture capital dollars were spent on Facebook and Google ads.

Startups spent a decade dumping money into Google and Facebook.

But algorithms change all the time.

And “good” ad spend today can bankrupt you tomorrow.

So what’s your solution?

In personal finance, you diversify your portfolio.

In startups, you recession proof by diversifying customer acquisition.

But the real secret sauce?

Building an epic product.

The quickest way to fail is burn marketing dollars chasing a crappy product.