📉 Navigating the downturn
Hello! Adam Thornhill here. ‘The Podcast Guy’ saving you 10 hours a week.
Enjoy the 109th Podup, with special thanks to ChatGPT Consulting (by yours truly).
Today, we’ll dive into the best insights and ideas from All In Podcast.
Higher interest rates are here to stay. So what does this mean for your business? Chamath Palihapitiya urges you to reassess your financial planning, advocating for you to be default alive or have sufficient runway to last through 2026.
The state of the market
The markets are taking a bath. Growth stocks are off significantly. Interest rates are going to stay higher for longer, which means risk capital will be less available and valuations will be going down.
David Sacks
How startups should respond
I told my portfolio CEOs ‘Let’s get enough cash to last through the middle of 2025.’ I was wrong. Now you need to have enough cash to last through Q1 2026, and maybe even mid-2026.
I have to redo an entire justification to these CEOs for why they need to cut even more people and expenses. I don’t know where we’re going to find another year of burn in most of these businesses.
It was much easier to say the sky was falling this time last year than right now. People are exhausted of constantly hearing this message of cut more. I don't know where to start with that conversation.
Chamath Palihapitiya
Why it matters
This downturn demands immediate attention and action from startups. The reduction in available risk capital and lower valuations mean startups must be prudent with their expenses and financial planning.
Your saving grace? AI. Most businesses can’t confidently say what their new normal for productivity looks like. Perhaps, this is because many businesses are yet to fully embrace AI tools company-wide.
Now is the time to adjust your expectations. Teams can expect close to 20% productivity gains if they're fully adopting AI. For many businesses, now is the time to cut further and make these savings a reality.
Next steps
Reassess your financial strategy. Even if you don’t believe everything Chamath has to say, it’s prudent to extend your runway or grow margins.
Analyze expenses. Conduct a thorough analysis of your expenses and identify areas where cuts can be made, however painful.
Engage with stakeholders. Communicate with your employees and investors to keep them informed about the adjustments being made.
Explore alternative funding. Investigate other avenues for funding to supplement your cash flow if you have a high burn rate.
Monitor market trends. Keep a close eye on market trends and be prepared to make further adjustments as the situation evolves.
Your thoughts?
Thanks to ChatGPT Consulting for making this post possible…
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Quotes were pulled at different points of the episode. Sentences were left out to make the narrative more concise. Podup is not associated or affiliated with any podcast.