Winning strategies for entrepeneurs and investors

Strategies for tough times:

Cut your losses early:  In times when the "tide lifts few boats," leaky boats should not sail very far from shore.  Far better to save your money and energies for a better day.  Conventional wisdom suggests batting for singles and doubles in tough times.  That might work in baseball, but not in entrepreneurial companies and venture investing -- these are home run sports in good times and bad.  History suggests what is a 15% of you investments produce 85% of your returns in good times only becomes 17% producing 83% in bad times.

Focus on your winners:  Whether the winners in a given sector over a given time period are 3X returners or 20X returners, they represent where all the returns are in both good and bad markets.  Making sure that you are allocating your energy and capital, both present and reserves, to make sure you can get your winners to the finish line is critical.

Go slow when the path is foggy:  Moving quickly without a plan or roadmap is a sure way to lose a lot quickly. So take advantage of uncertain times to see things more clearly and check twice before acting, but do not lose sight of the strategy that follows -- "be bold when others are frightened."

Be bold when others are frightened:  Once you have taken the time to figure out the path to follow, do so boldly; do not be swayed by the fact that others remain timid.  

Develop friends and partnerships:  Strong syndicates matter much more in tough times. Finding a group of co-investors willing to price and lead deals and fill out rounds is a critical skill in tough times and being either the entrepreneur that others want to back or the venture firm that others are willing to rally behind is worth its weight in gold.  

Rethink your exit strategy:  IPOs are significantly rarer in tough times; but M&A exits are also likely to mean lower prices and harder to obtain.  Figuring out how to be the scarece but valuable commodity is critical. Supporting just another company in a crowd of "also rans" is generally not a winning strategy -- better to go back to the first strategy and cut your losses early.

Stay close to corporate buyers:  Knowing what the corporate world wants, what it is willing to pay and figuring out to get strong corporate involvement in your company ahead of an ultimate buying decision are all key skills for good outcomes.  Having multiple strong corporate relationships is a wise strategy.  

Consolidate talent:  Great people often become more available in tough times.  Of course adding more hungry mouths during tough times requires significant courage. That being said, one lesson that we see being repeated again and again: those businesses which cut deepest and earliest in tough times in order to refresh their talent pool and refocus with sufficient runway are always the first and strongest coming out of a recession.

Take market share:  Figure out ways to increase your lead in tough times.  Having trimmed all of your own fat, find ways to diversify your own gene pool and find ways to strengthen your brand in times that are, by their nature, weeding out the weak.  Perceptions of growth, diversification and brand often become realities as markets turn.