This is Kristen O'Brien, Managing Editor at NFX, and this is the founder list. Audible versions of essays from technology's most important leaders selected by the founder community. This is the psychology of founders who Flint in downturns, written by NFX partner James Currier. In a downturn, The wise founder will know the first action needed is a pivot of the mind. The CEO's psychology is the greatest point of leverage in accompanying success or failure.
Leading my own VC backed tech startups successfully through the 20,021,008 downturns, I've noted how great founders shift their mindsets in psychology during a downturn in ways that drive survival and success. Executing mind shifts can be hard work because typically you must go against your optimistic instincts as a founder. You must also overcome the impulses of your employees and or board. We've noted 8 mind shifts of CEOs of companies that survived, then thrived despite downturns.
Once you've mastered your capacity for these mind shifts, however, you will be well positioned to manage through nearly any period of crisis that might come ahead. Mind shift number 1, realize that your own psychology will make or break your company. It's all in your mind is a cliche. Like many cliches, it's true. Tending to the founder's psychology is one of the things people don't talk about except in private conversations with trusted mentors or co founders.
During the darkest days, a founder needs to seek advice in time with the people that care about her or him the most and to establish a firm grip on their own mind. You, like all other founders, will need to go through the 5 stages of grief and out into creativity once again. It's freeing to understand how your mind reacts to crisis because it gives you a road map. You can choose to move through your adjustment quickly or slowly, but quickly is better.
I've seen founders grasp this fact and more from borderline manic to Zen. Once you realize that your psychology and the mastery of your mind may be the most important thing you can bring to the table, the fog lifts. This in turn gives your employees, your investors, and your customers confidence that everything is going to work out. Mind shift number 2. Acknowledge that it's worse than you think.
After spending years focused on driving exponential growth, it's typically hard to imagine the flip side, particularly for founders, who need to be optimistic by nature. When something goes wrong, the problems compounds such that nearly everything goes wrong at once. And the downslope is far steeper than human minds easily comprehend, including yours.
So take your initial estimates of how long it will take for your sales to recover when you will be able to raise capital again, etcetera, and double or triple your estimate. Get that you are returning to your earlier company stage so your thinking needs to return there also. For example, if you're a post series a company, you should accept that you're now a seed stage company again. Return your mind to that way of thinking and those priorities.
Mind shift number 3. From playing to win to playing not to lose. In a nasty downturn, you have to execute a mind shift from playing to win to playing not to lose. Only once you nail survival, can you switch back to win mode? Former Oracle CFO, Jeff Epstein, gives a great analogy. It's like you're running a marathon with a thousand other people and you're in the lead. Then a truck hits you out of nowhere. You're sitting on the curb, bloody, and broken.
Others are still running and your fighting instinct tells you to get up and finish and win the race. But what you really need to do is go to the hospital to heal and look forward to running the race next year. Jeff's right. You can win the race in the future, but no one's going to win the race right after the crash, so make the mental shift from winning to surviving and living to fight another day. Mind shift number 4. Embrace the crisis.
Mentally leaning into the crisis certainly helps you move more quickly from denial to acceptance and onto creativity. Further, there's a tactical reason to lean in. Crisis gives you a great advantage. It aligns all the stakeholders in your company Pete you cut through any BS that might have been slowing you down before. That's where you get the phrase, never let a good crisis go to waste from Churchill.
When there's a visible and agreed upon external crisis, ambient your employees care less about internal politics that don't drive sales or cut costs. Your board rallies around you to save their investment Your vendors and contractors bend over backward to over deliver. Your loyal customers want you to survive because they need your service.
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