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Notes from 2008: How Startups Can Make It Through This Economic Recession

In 2008, I founded Clio with my lifelong friend and perpetual business partner, Rian Gauvreau. We were eager to harness the entrepreneurial spirit we’d cultivated since dreaming up “Newton-Gauvreau Aerospace” in the third grade. And when we learned about the challenges law firms were facing, we knew there was a tremendous opportunity to bring the cloud to an industry traditionally hesitant to adopt technology–and transform the practice of law–for good. 

We officially launched Clio at the American Bar Association’s TECHSHOW in March 2008, to great interest from conference attendees. We knew we were on to something impactful, and Rian and I quit our jobs to focus on Clio full-time. 

But later that year, the full brunt of the 2008 economic crisis hit. Suddenly, finding financing for our new business became incredibly difficult, and we were forced to become a lot more resourceful to keep Clio moving forward.

Right now, many startups are having a similar experience. The economy shrank at an annual rate of 4.8 percent in the first quarter of 2020, marking the worst showing since 2008. For those who’ve poured their lives into their business, this will undoubtedly feel frustrating and disheartening. But here’s the truth: You can get through it. We got through it over a decade ago, and today Clio has expanded beyond my wildest expectations. Below are my most important takeaways from that time. They’ll help your startup not only survive this recession, but will position it to thrive on the other side of it.

 

Be an irrational optimist 

The current economic landscape is challenging, and it’s going to make running your new business even tougher. To get through, you’ll need to cut company spending, adjust business goals, and make hard decisions. But ultimately, it’s crucial that you stay optimistic and keep your eyes on the future, for the sake of your team. 

The odds of success for startups are low even at the best of times, so if you’re not irrationally optimistic, you’ll likely give up. You need to convince people to bet on you—customers, investors, and your team. The startups that make it through will be those that face challenges with enthusiasm, so their team members can hold on to a brighter vision of your company’s future on the other side of this pandemic. 

The odds may seem impossible, but as a company leader it’s up to you to stay pathologically optimistic and ignite confidence in your staff. Of course, you’ll still need to accept the hard, sobering fact that we are in an economic downturn. But alongside that awareness, staying relentlessly optimistic in the face of what might seem like a hopeless situation will give your company the fuel it needs to survive.

 

Experiment—and act on insights quickly

Creating a business strategy that’s successful for you will always be a trial-and-error process. But in this financial climate, you’ll need to create some discipline around the strategies you’re trying out, and move quickly based on what you learn. 

It’s absolutely crucial to invest in and experiment with new strategies to see what works. Maybe it’s a six-month stint of paid advertising on a social channel, or the development of a new hybrid job role that blends marketing and administrative duties. What matters is knowing when these strategies are and are not providing return on investment, and developing concrete guidelines to decide what to do next. 

If the social ads aren’t proving successful after six months, take a critical look at what adjustments can be made—or stop spending money on ads altogether if you can’t invest in improving them. If your new marketing/administrative employee is enjoying the balance of their duties but feels overworked, consider hiring a freelance receptionist, copywriter, or designer to help with the workload. 

These strategic experiments are critical for finding out what works for your organization; it’s key to double down on those that are successful and cut your losses (early) when an approach isn’t proving to be beneficial.

 

Spend it like it’s your own

As an employer in today’s job market, it’s easy to feel like offering the best perks is essential to attracting the best talent. But the best corporate culture isn’t driven by the flashiest perks. To attract talent, you need to provide benefits that matter—those that show a high level of support and understanding for your employees. 

A good rule of thumb for you–and your team–is to spend company money like it’s your own. In the midst of a recession and global pandemic, the benefits you offer may change, but the intention behind them doesn’t have to. For example, maybe your daily salad bar and snack offerings are out now that your office is closed, but you can invest in sending a sourdough starter from a local bakery to your entire team so you can all learn a new skill and still “break bread” together. 

Developing this scrappy mindset at the start of your company’s journey will be beneficial in the long run. Starting Clio around a recession instilled a “spend it like it’s our own” mindset in our early employees, and this mentality has become part of our DNA. It’s now our superpower, giving us the ability to stay financially in—and ahead of—the game, no matter the economic situation. 

 

Don’t be too hard on yourself

The economic situation we’re facing now is unprecedented. Not only are we managing financial setbacks, we’re also facing an entire cultural shift in how we work, communicate and live. While the situation in 2008 was dire, COVID-19 is testing businesses in ways we could have never imagined or prepared for. Which leads me to my last point: Don’t be too hard on yourself. 

We’re all navigating a new business landscape with a multitude of competing priorities. Stay focused and grounded, but give yourself moments to reset. Make time for the things you enjoy, like reading or cooking, to stay balanced. A clear and level mindset will translate into the strong leadership your company needs from you to be successful in the long run. 


Jack Newton headshot

As the CEO and Co-founder of Clio and a pioneer in cloud-based legal technology, Jack Newton has spearheaded efforts to educate the legal community on the security, ethics, and privacy issues surrounding cloud computing, and has become a nationally recognized writer and speaker on these topics. He co-founded and is President of the Legal Cloud Computing Association (LCCA), a consortium of leading cloud computing providers with a mandate to help accelerate the adoption of cloud computing in the legal industry, and is the author of The Client-Centered Law Firm, a bestseller that’s helping law firms thrive in today’s experience-driven era.

Jack has been recognized as EY’s Entrepreneur of the Year, and Clio has been recognized by many national and international awards for its culture, management, customer support and rapid growth rate, including Deloitte’s Best Managed Companies, Deloitte’s Technology Fast 50, and Canada’s Most Admired Corporate Cultures. He was also named a 2019 Fellow to the College of Law Practice Management, sits on the board of ROSS Intelligence, an AI-powered legal research provider, and is an investor and advisor to early-stage legal tech startups.