Thread by @dunkhippo33

Today I want to talk about antifragility. @Alex_Danco wrote an excellent piece on it a couple wks ago and I've been mulling on it since then.

alexdanco.com/2020/03/12/ant…

1) First what is antifragility?

2) Antifragility is basically something that thrives in chaos or disorder. This is hard to imagine because many things do not. This is important to grasp, because in these times, antifragile companies will win.

Other companies will not. Let's get concrete...

3) Most early startups will build some product, maybe sell to some customers, and maybe raise some money. And most of these startups are not profitable in the beginning.

So when the music stops and your customers stop buying and you can't raise money, what happens?

4) Many of these startups won't make it, because they can't bring cash in the door. This is why we think times like these are bad times.

But some startups will actually thrive during these times. Even *more* than in a "healthy market". Why? What are they doing?

5) These antifragile startups have a few qualities that are going for them:

a) great cash management & frugal
b) great sense of their numbers -- to the detail
c) opportunistic

6) Let's talk about each of these. As they say, cash is king. If you have *any* cash on hand, you are in great shape. It doesn't even have to be a lot.

Now the management part - if you're not profitable, the best startups will be cutting burn and increasing cashflow immediately

7) This means move mon payments to quarterly or annual pre-pay (even at a discount) to increase cashflow. Move liabilities w/ service providers for later. Maybe even ask employees you want to retain if they'd be willing to take more stock in exchange for decrease in salary. etc

8) Cut unnecessary costs that are not directly related to your focus. Try to do more w/ less. Charge for online events to get more rev in the door if your customers are not paying for your core prod. Etc..

9) You have a LOT of levers beyond raising more money & cutting ppl. Think creatively. Optimize for *cash*.

10) Secondly - understanding numbers. Do you know what the money flow coming in and out is like? All founders should know this off the top of your head. The best startups don't have to look this up. This allows you to really know what levers affect what.

11) Lastly - being opportunistic. This is the really interesting one. If you can just "survive" you can actually be opportunistic.

In good times, your competitors who raise a lot of money may "win". In bad times, those same competitors are stuck in a rut.

12) They won't be able to raise. You may be able to acquire others for $0. You may be able to pick up business for $0. Your CAC in ad channels may decrease because there's less competition. If you have cash to even just stick *around*, you actually *thrive* in this environment.

13) Think about this. It's the co that probably hasn't raised much that thrives in these times. The cos that were likely overlooked before. And the ones that weren't capitalized to compete w/ bigger players that are more nimble & can even win.

14) That is a narrative violation. But when I think about some of the best entrepreneurs I know, they didn't have much to work with but were good at all 3 of these things. And they watched all their well-funded competition fold and picked up their assets for cheap.

15) So you may not feel like things are going well. But if you can just do these things and basically *survive*, then you are in good shape. AND, just remember to keep your eyes peeled and become opportunistic and you'll be able to thrive when ppl tell you it's impossible.