This is a letter that we published to the Elementum portfolio founders on March 26th, 2020. Elementum is an early-stage deep tech venture capital firm based in San Francisco, CA.

TL;DR

1. Your startup team is experiencing greater uncertainty than it ever has. To the best of your ability, figure out what you know, what you don’t know, and what you can’t know.

2. Focus on the essentials. Essential products, essential markets. And the essentials of how you are wired.

3. Honestly assess where you are. Elementum is offering to help you with this assessment. We’ll take a 25 minute call over the next few weeks with any VC-backed technology entrepreneur if you think our counsel and advice will be helpful.

Dear Technology Startup Founder,

What a week, what a month, what a year.

In the short span of this new decade, we find ourselves in a new paradigm. Worldwide pandemic. Instant financial crisis. Difficult ethical dilemmas and tradeoffs that will impact millions or billions.

You are leading a technology startup to make a difference. Surprisingly, this could be your time to make that difference. So what should you do?

Before we get into the startup advice portion of this missive, the first and most important thing is to care for those around you and those who need your help. As world citizens, it’s of the utmost importance that we each be safe in taking all the steps we can to prevent the spread of Covid-19. Once we have fulfilled these duties, we can turn our attention to our startups.

And like every other issue your startup has faced, the approach is the same: Work the Problem

Managing through uncertainty

In the wake of the dot-com bubble burst, McKinsey published this piece on developing a strategy in the face of uncertainty.

To summarize their levels of uncertainty:

Level 1: A Single Known Path

Level 2: A Few Discrete Possible Future Outcomes

Level 3: A Wide Range of Possible Future Outcomes

Level 4: Impossible to Predict Future Outcomes

We have all now moved from Level 1 or Level 2 uncertainty to Level 3 or, more likely, Level 4 uncertainty at least for the next few months.

No doubt, uncertainty is through the roof in an unprecedented way.

Our counsel to startups now is to not obsess about that uncertainty, but to identify what you don’t know and then build from what you do know and what has not changed:

(1) Your talents as a leader, technologist, sales-person, designer, marketer. These are the same that they were a month ago. And if you are nimble, they will be just as valuable tomorrow as they were yesterday.

(2) The underlying technology that you have built or are building. Markets will change as customers will have different needs in the coming months. But your technology works the same way yesterday as it will tomorrow.

(3) Your company culture. Just as you are the same person you were before this moment in time, so is the core asset of your company — the people. The current chaos is creating both an opportunity and a necessity for you to lean on the foundational strengths of your existing culture as you “level up” in new areas.

If you build your next quarter and next year plans on these three knowns, you’ll be in promising position to weather this storm, no matter how long it lasts.

That being said, everything else may change and you should be ready for that. Business models, product offerings, sales process, go-to-market strategies, working-from-home policies. It’s all up up in the air now. Sure, some things will land right where they started. But we wouldn’t bet the company on it.

Focus on the essentials

We’ll probably look back at 2018 and 2019 and many of the products in the market and think “Wow, people really spent money on that?”

VCs have long talked about painkillers (good) versus vitamins (bad). While no less cliche, it’s doubly true now. What are the essential products or services that will keep businesses alive and thriving in the coming years? Things that will either: (a) save so much money that businesses can’t operate profitably without them; or (b) add so much revenue that a business would be foolish not to explore using them.

You may be used to thinking about return on investment in terms of a certain percentage efficiency gained or a certain multiple. Now’s the time to be thinking 10x minimum, maybe 100x. Those are essential products.

The other essential to focus on is what fundamentally drives you. The passion that drove you to incorporate in the first place — reinterpret that passion with the call to essential products and don’t settle for anything less.

Honestly assess your company

Our job as VCs is to be one of the chief coaches, mentors, cheerleaders, therapists, and most importantly truth-tellers to our portfolio founders. In normal times, we tend to stick to our knitting by advising primarily our portfolio companies.

But in these crazy times, as one way to help the broader technology start-up ecosystem, we’ve decided to open up our calendars more than normal to help you assess where you are. Perhaps an outside perspective would be helpful.

If you are reading this, Elementum is inviting you to a 25 minute Zoom video conference with all three of our partners (see our backgrounds here) to help you assess your startup. That is, if you aren’t sick of being on Zoom yet!

This is an invitation we are making organically — it’s a friends-of-friends and friends-of-friends-of-friends type of thing — we’ll push this letter to our portfolio and let them forward as they see fit. If you are interested, click here to fill out our intake form and then you’ll receive an email with our calendar availability to schedule the time.

We look forward to hearing from you.

— The Elementum Team

Anticipated FAQ

Why are you doing this?

Most recently, as we’ve talked to entrepreneurs outside our portfolio, we’ve noticed a heightened request for straight talk about leading a startup in such anxious times. We just want to be helpful.

This invitation for meetings is in response to the immediate needs of startups for honest assessment and strategic perspective. There is no anticipation that this would lead to an investment from our fund.

Is there a cost?

No. Just the 25 minutes of our time together.

What stage should my company be in?

Our expertise is in counseling, coaching, and sitting on boards of venture-backed technology startups from inception through IPO. If this is you, it’s probably a good fit.

What do you need from me?

Just fill out this form and then you’ll receive an email with a calend.ly link where you can schedule time directly with us.