On 23 April, Wamda hosted its second webinar titled 'Navigating COVID-19: Recessions, the runways for innovation?,’ featuring Jason Nadal, founder of Centrado Advertising. Nadal explored the lessons we can learn from past recessions, and how founders can pivot in the face of crisis.
Reflecting on the financial collapse in 2008/2009, Nadal explained that crisis led to the creation of tech-based business models and the gig economy, which set the stage for the startup ecosystem to thrive across the world.
“If you take a look back at 1998-2000, it would cost half a million dollars just to get a startup up and running. Fast forward to now, it costs around $450 to get a startup off the ground.”
Highlighting the emergence of unicorns like Airbnb and Pinterest which were founded in the wake of the 2008 recession, Nadal explained that the Coronavirus pandemic could spur innovation and the creation of the next unicorns.
"With unemployment rates going upward as a result of the 2008 financial crisis, people started to think about things they can do at home – which later led to the establishment of Pinterest where its founders were only starting out by providing people with the means to look at things in a creative manner. The company was later followed by 10 million users from all over the world."
Stay in Lane
For startups attempting to survive the current situation, Nadal recommended they adapt quickly to the evolving business climate which “provides an opportunity and a runway for innovation and growth”. Those that make drastic amendments to their business model as an attempt to weather the economic slowdown need to be consistent and remain true to the company’s value proposition.
“This does not mean you should not pivot right now on certain things,” said Nadal. "Now is not the time to go for IT related tasks for some organisation while you work in fintech. This is completely off scope.”
Consistency is key to attracting investment and customers alike during these times, said Nadal. “It is more important now than ever in this gig economy in this time, is to really focus in on what you are doing and have clarity around that, so that your investors, employees and most importantly, your customers can have a very clear understanding what you are offering to them and how they fit into that story.”
In addition to consistency, Nadal said that having an impactful brand that is willing to add value to its customers must be foremost in a business owner’s mind.
He further warned that some brands can come across as tone deaf to the situation that people live in, which eventually can inflict long term damage to the brand’s reputation. “'When you communicate with customers, you do it clearly with action and intention that benefits them, telling them that you're there for them.”
"Pivoting is about being creative and planning and understanding what is driving your customer base right now. When big companies attempt to pivot they look at the means through which they can cut out the non-essential costs to preserve cash for as long the crisis stays. As for a startup, your pivot should be figuring out where you are wasting money, how to repurpose people, and what are the non essential parts about my platform,” he said.