Profiting During a Crisis Is Okay. Profiting From a Crisis Is Not.
Many startup founders are worried, at this moment, about being a “crisis capitalizer,” a “war profiteer,” an “ambulance chaser.” As an investor in startups, I’ve been thinking about how to offer them a more nuanced perspective by asking: How can businesses tell the difference between adapting to this environment in a healthy way versus taking advantage of others?
The short answer is: It’s okay, even noble, for businesses to thrive right now. Even if your company isn’t on the front lines of health care manufacturing ventilators or delivering essential items like groceries, your company is helping to keep people employed. Those employed people return as consumers buying things to keep the economy going during these very tenuous times. So set your guilt aside.
If you’re thriving in an unnatural way merely due to this crisis or you’re oblivious to the suffering your business may be causing, that’s when it starts to be a problem. For example, we’ve seen some bad behavior from businesses, including price gouging of essential goods and large or cash-heavy companies with access to private capital taking advantage of Paycheck Protection Program (PPP) funds aimed at small businesses.
So many businesses right now are in survival mode, trying to keep as many of their people on payroll as possible. They’re recalibrating their numbers every week, sometimes several times a week, in order to stay alive for as long as possible. Faced with social distancing restrictions, some are adapting: Restaurants are now moving to delivery and curbside pickup, and apparel companies are manufacturing and selling masks. Some are putting on armor: letting go of people so the rest of the company can make it to the other side. And others are gathering arms: borrowing new money, fundraising, and applying for emergency relief loans and grants administered by the government.
I don’t invoke the metaphor of violence lightly — this is, for many businesses, war. Normal business life, no matter how soaring the Braveheart speech your boss gives at the sales retreat, is about modest stakes, like hitting quarterly targets or getting a promotion. But this pandemic has surfaced the grim reality that this is truly a life or death situation, with as many as 43% of small businesses at risk of closing in the next five months if they don’t receive help.
When do new services, or adapted versions of what a business already offered, cross the line into the realm of exploitation?
Some founders are trying to be part of the solution more directly, either giving philanthropically or lending their (or their companies’) talents to responding to Covid-19. Venture-backed startups, in particular, may have skills that enable them to help with the pandemic response more than a traditional business might, whether that’s agility in building and scaling technology or knowing how to quickly mobilize communities of people who have never met in person. (And, no, your data visualization team proposing a better way of mapping things is probably not as unique as you think.)
Some startups are inventing new ideas to keep us safe and sane. With the rise in telehealth, mental health services are offering sessions by video; robots are patrolling Covid-19 hotspots, like warehouses, that otherwise place essential workers at risk; and there are virtual games keeping us socially close while we’re physically distant. We’re seeing how there is no longer a separation between work and home (and, for many, there never was), so new services are supporting our family lives or making our work life more empathetic.
My point is that it’s noble for businesses to thrive right now if they’re being intentional about what value they are offering. When do new services, or adapted versions of what a business already offered, cross the line into the realm of exploitation?
First, founders could start by being more aware of the experiences of others. There are so many forms of suffering happening right now. Take a deep breath and try to feel and see that. If you’re unaware, it’s a lot easier to make a cold business calculation about dollars and cents, but you always want to be mindful of the human cost.
That said, if what you’re doing is a way to make money from the crisis exclusively, then stop and think about whether the profit you’d take from that is fair or worth it. Did you start this business as a way of making money from the crisis? Are you serving your current customers or new ones? If they’re new customers, or if you have unnaturally high demand because of the crisis and are thinking about raising prices to capitalize on it, pause to ask yourself if you’re being an opportunist. (If it makes sense, consider offering your services at cost to customers helping in the Covid-19 response. Of course, in the case of many startups, offering at cost means offering services for free, at least for a while.)
If what you’re doing is a way to thrive during and after the crisis, and you believe your service has value, then go all in. We need you! As folks in the wider tech community have been repeating for the last few weeks, it’s time to build.
Maybe you’re trying to solve for how your customers’ work has changed — you need to allow them to deploy code without showing up in the office, for example. Are they willing to pay you to integrate Zoom? Or given social distancing and a now widely distributed workforce, perhaps you’re dreaming up the next Slack or Airtable. That’s all good. If your customers are themselves at the mercy of an explosion of demand (e.g., health care) — please help them succeed. Our society needs it, and they’ll remember you did it.
When in doubt, apply the Grandmother Standard — if you could be proud to tell her, that’s a good sign.
And remember: Tone matters. All the businesses sending their normal email outbound without any reference to the situation unfolding outside tracks as tone-deaf. Businesses using the language of fear to sell a service should raise red flags. Try to empathize with the recipient. Marketing isn’t about you, it’s about them.
Be attentive to others who are suffering, do things that would make your grandma proud, speak in a way that shows you are listening. If you can do that, then, by all means, please thrive in business. We need you, as we say, now more than ever.