Why the Pandemic Startup Apocalypse Never Happened
For many companies, unexpected circumstances became the perfect storm for massive growth
“Coronavirus is the black swan of 2020.” So began the ominous letter that venture capital firm Sequoia Capital sent to the founders and CEOs of its portfolio companies on March 5 of last year. In many ways, the note was prescient, published roughly a week before the rest of white-collar America shuttered their doors and pivoted to remote work.
I remember receiving a similar pandemic-panicked email in my inbox around the same time as the Sequoia note. It essentially declared: “Nobody is allowed to come into the office until further notice.” I was in a meeting with approximately 20 other people, and you could tell when someone had just checked their email. Each new reader would immediately start glancing at everyone else in the room in search of runny noses or any other indication of which co-worker was to blame for turning the meeting into a superspreader event.
Businesses worldwide began closing their doors that month and everyone in the entrepreneurial community started predicting the Great Startup Apocalypse. Many seasoned startup observers — from venture capitalists to economists — were expecting destruction of cataclysmic proportions, bigger than that of the dot-com boom and bust of the early 2000s or the financial crisis of 2008. “We suggest you question every assumption about your business,” Sequoia Capital wrote in the aforementioned letter that would soon go viral in the wider business-tech community. The 49-year old VC firm, with hugely successful investments ranging from Oracle to Reddit, outlined six core areas for portfolio companies to focus their attention on: cash runway, fundraising, sales forecasts, marketing, head count, and capital spending. In other words: hunker down, get lean, and prepare to weather the storm.
Fast forward nearly a year, and the predicted extinction-level startup event of the decade doesn’t seem to have materialized. To be clear, I don’t mean businesses overall didn’t suffer: By the end of the year, $523 billion of the Payment Protection Plan was disbursed to help keep small businesses afloat. Even so, nearly 98,000 mom-and-pop stores, making up 60% of temporarily closed…