Mar 31, 2020 · 38m · startups-for-the-rest-of-us
Episode 490 | How Founders Should Be Thinking About the Current Crisis
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Rob Walling and Dr. Einar Volset provide startup founders with pragmatic frameworks for navigating economic downturns and global crises, detailing actionable tactics across cash preservation, operational adjustments, and mental resilience.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Rob holds 65.1% of the talking time here. How this is scored →
Rob as informed peer 6.6 Guest teaching 3.1 Guest disagreement 1.4 Rob pushing back 1.3
speaking balance: gold is Rob, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 18:20 Einar challenges incremental budget cutting
Einar firmly pushes back against the advice of making sequential 20% budget reductions, arguing from past recession experiences that small cuts severely erode team morale compared to a single deep reduction.
Hardest push from Rob ▶ 20:09 Rob defends data-driven leading indicator monitoringRob tempers Einar's call for aggressive preemptive cuts by explaining his operator philosophy of closely tracking leading indicators like daily trial signups before making severe staff reductions.
Biggest teaching moment ▶ 22:25 Einar re-evaluates B2B enterprise sales timingEinar reframes the assumption that outbound sales must halt during a crisis, detailing how lean cloud software can successfully displace expensive legacy on-prem contracts when clients are auditing expenses.
Rob holds their own ▶ 9:07 Rob details SaaS revenue resilience versus one-time salesRob draws on his direct experience running software companies during the 2008 downturn, explaining the exact divergence in churn and retention between recurring SaaS and one-time licensing models.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Rob as informed peer | Guest teaching | Guest disagreement | Rob pushing back | Why |
|---|---|---|---|---|---|---|
| Economic Reality: Recessions, Bear Markets, and Stimulus Responses | 7 | 4 | 1 | 2 | Rob Walling and Einar Volset engage in a collaborative macroeconomic discussion, contrasting bear markets with economic recessions using historical data. Rob cites historical statistics from Fidelity Investments regarding recovery timelines and post-trough market gains. Einar contributes with specifics on legislative relief packages and projected unemployment numbers. | |
| SaaS Resilience and Revenue Impact Compared to 2008 | 8 | 2 | 1 | 1 | Rob outlines how SaaS models behave during economic contractions based on his firsthand experience operating businesses during the 2008 crash. Einar agrees with Rob's analysis, noting he was focused on B2C mobile apps in 2008 rather than B2B SaaS. Rob explains how recurring revenue cushions against the sudden 80% drops common in one-time software sales. | |
| Point 1: Mental Health and Avoiding Panic | 6 | 2 | 1 | 1 | Rob discusses managing psychological anxiety and founder mental health, drawing on insights from psychologist Dr. Sherry Walling. Einar chimes in agreeably about managing extreme viewpoints and finding perspective. The dynamic remains conversational and completely aligned. | |
| Point 3: Strategic Expense Reductions and Navigating Team Cuts | 6 | 5 | 3 | 2 | Einar offers a clear counter-perspective regarding expense management, arguing against incremental 20% cuts in favor of a single decisive early cut to preserve company morale. Rob shares his instinct as an operator managing by leading indicators, while recognizing Einar's point on preventing morale erosion from ongoing layoffs. | |
| Point 4: Evaluating Sales Channels and Marketing ROI | 6 | 4 | 2 | 1 | Einar nuances the question of pausing outbound sales campaigns, pointing out that B2B SaaS displacing expensive on-prem software may actually find strong sales opportunities during cost-cutting periods. Rob adds his operator perspective on pulling back speculative marketing spend while prioritizing high-converting channels. | |
| Point 5: Taking Care of Self, Team, Community, and Customers | 6 | 2 | 1 | 1 | Both host and guest exchange practical and personal advice on supporting teams, families, and customers through generous terms and flexibility. They emphasize giving founders permission to operate at lower productivity while managing remote work and family constraints. | |
| Point 6: Preserving Cash and Timing Future Opportunities | 7 | 3 | 1 | 1 | Rob and Einar discuss capital preservation and when founders should look to acquire assets or deploy dry powder. Rob compares macroeconomic leading indicators to SaaS operational metrics like trial conversions, while Einar explains why attempting to time market bottoms is counterproductive. |
Statements from this episode (12)
Walling: The US and developed world will enter a recession
“I think to start, Aynar, I don't see, personally, I don't see any reality where we don't slip into a recession, at least in the U.S. And probably most of the developed world.”
Volset: US policymakers are out of stimulus bullets after relief bills
“From where I'm sitting, it seems to me like, at least in the U S both the fiscal and the stimulus response. So this would be both what the fed has done in terms of unlimited quantitative easing, printing money basically to keep the markets going. And this, the…”
Walling: S&P averages 47% gain one year after bear market troughs
“The interesting thing is, in the year after the trough of every bear market since 1929, the S&P has gained an average of 47%. That's according to Fidelity Investments.”
Walling: Invoicing software sales dropped 80% month-over-month in 2008
“I had a one-time sale invoicing software, and sales plummeted 80% one month to the next, because there was no recurring revenue, right? Your revenue craters when you have one-time sale products.”
Walling: SaaS revenue declines gradually in downturns unlike one-time sales
“With SaaS, it's much more likely that your revenue is, that your growth is going to stall, and you're either going to, your trajectory is going to flatten, or your revenue could completely flatten out or even start declining, but it should be a more gradual de…”
Walling: Major podcast app usage dropped 25% early in the pandemic
“There's a major podcast app that its usage is down 25%.”
Volset: Companies making one deep early cut outperformed in prior recessions
“I feel like certainly in prior recessions, you know, 2008, 2002 1001, I think the companies that did the best are the ones that, you know, did a deep cut early, but then didn't have to do anymore.”
Volset: Downturns create strong sales opportunities for cheaper cloud alternatives to on-prem software
“And if you're up competing against some entrenched
Very expensive on-prem software, and you are sort of the lean, slightly cheaper, or even much cheaper, although not too cheap, obviously, cloud provider, that might be the, that might be a great, great time to…”
Walling: Would aggressively cut marketing and sales spend early in a downturn
“If I were still running Drip today, I would take a long, deep, hard look at any type of marketing or sales efforts we were doing, and I would be cutting earlier rather than later.”
Walling: Offer struggling SaaS customers discounted data-retention plans
“Can you work with them to keep their data around? Can you, whether you comp them or you give them a big discount or you give them a, you know, here's 10 bucks a month just to keep your data. Like this is the time to kind of be understanding and to help one ano…”