“Tough times never last, but tough people do.” ~ Robert H. Schuller
During a study at Harvard in the 1950s, Dr. Kurt Richter placed rats in a pool of water to test how long they could tread water. On average, the rats gave up and sank in 15 minutes.
Interestingly, the researchers would pull the rats just before they gave up due to exhaustion to dry them off, feed them, and let them rest. To then put them back in the pool of water.
While the rats could only survive for 15 minutes in the first round, how much do you think they survived now?
Another 15 minutes?
10 minutes?
No!
60 hours…! Just because the rats knew they would be rescued, they never gave up hope.
What can describe the above – Resilience
Resilience as a trait has segregated the brave from the ordinary, and history backs the claim:
The financial downturn of 2007 -09 was one of the worst periods, but at the same time it were the golden years for those who had the resilience:
- The first generation iPhone was launched in the US markets in 2007, followed by the App Store in 2008 and 2009 saw a huge influx of App Store Applications developers.
- Most prominent startups of today’s time including Uber, Venmo, Snapchat & Instagram were created between 2009 – 2011.
The startup ecosystem is currently going through a “Funding Winter,” which has an influence on both the likelihood of raising funds and valuations to the founders in the short to mid term.
Thus bringing back the importance of optimum valuations, strong fundamentals & focus on key areas.
Going Forward…
While the ecosystem is talking about “Funding Winter” for founders, it is an opportunity for investors to have larger options in choosing investable opportunities in the startups as the business sentiment has shifted from being “Grow at any Cost” to “Sustainable Growth”.
Startups have already started looking at metrics – as in , increased margins, risk diligence, unit economies , to name a few.
While the funding winter won’t last for long, the focus on building a differentiator while having discipline in operations, managing expenses and runway period will act as a key takeaway for the ecosystem.
Interesting times ahead…
Author:
Kanuj Jadwani
(Insights from Brijesh Damodaran, Karan Gupta & Dr.Archit Shah)
