COVID-19 Tips for Startups

by Eric Migicovsky, Jared Friedman

YC Partners Eric Migicovsky and Jared Friedman discuss strategies for navigating COVID as an early stage startup. Questions from their discussion came from the Startup School forum. For more information about Startup School, visit


Eric: Welcome, everyone. My name is Eric Migicovsky. I'm the course facilitator for Startup School. I'm very glad to be here with my fellow partner, Jared. Jared, welcome.

Jared: Thanks, Eric.

Eric: We're gonna start today by answering some...talking a bit about the impact that COVID-19 has had on startups. We've seen, you know, quite a bit of impact over the last few months and we'd love to both talk about some of the things that we're seeing as well as answer your questions that you posted on the Startup School forum. Jared, do you want to take it over?

Jared: All right. Here we go. So I'm gonna share my screen and take you through, like, a really quick, like, four-slide presentation that was all inspired by the questions that were shared on the Startup School forum. So, thank you very much to everybody who shared those questions because this helped us come up with these topics to cover. Okay. So, advice about reacting to COVID. So, my first and most important piece of advice is you are more likely to overreact than underreact, and the correct thing to do for most companies is literally not to do anything. I'm working with probably 60 companies now in the summer '20 batch of Y Combinator and other than two or three that happened to be doing something that's specifically COVID-related, all the rest are just, like, running a startup, just like people who have been running startups for all of YC's history and very little is different. Eric, is your experience with your group for this batch the same?

Eric: Relatively the same. I think one of the biggest questions that I've gotten is around investors and how they are reacting to COVID. I think a lot of founders saw the impact that COVID had on the kind of broader economy and are worried, you know, what impact does that have on the early-stage investment world. And from what we've seen so far, the impact has been limited. It looks like the later stage investment world, Series C, Series D, and kind of private equity world has been reshaped much more by COVID, but early-stage deals like angel deals and seed deals, relatively unaffected so far.

Jared: Yeah, I would agree with that. There are, like, a small percentage of companies whose business really is being disrupted by COVID, and we'll talk about those in the forum posts. Like, my advice is, like, if you happen to be one of these companies whose business just got, like, hammered by COVID, then I would think about how you can be creative and leverage the disruption rather than fighting it. Like, if you were, like, the CEO of United Airlines right now, you'd be in a tough spot. Like, I don't know what advice I would give to, like, the CEO of, like, a major airline company. Like, that's tough. But fortunately, if you're on this call, you're probably not in that position. You don't have, like, a huge fixed infrastructure and fixed costs and, like, all this stuff that's hard to change. Like, you're a startup, startups are nimble. Startups actually do really well when there's a big disruption in the world, and, like, what is COVID if not a big disruption in the world? So I would be thinking about, like, how you can actually end up on, like, the winning side here.

Eric: Good example would be some of our travel companies. We, you know, have invested in many travel-related companies in the past. I just spoke with the founders of one company who previously were making software that helped group bookings at hotels, and let's just say that that whole industry is a crater right now, but what they did was they didn't give up and they took their expertise and the software they had already built and very quickly, like within the span of weeks, managed to turn their entire company into a contactless booking software for hotels. And kind of to Jarred's point, they have now seen massive uptake because every single hotel needs contactless booking or check-in, that's, like, a requirement for every hotel, and they were instantly ready, like, they were within three weeks ready to fill that need.

Jared: That's an awesome example. And, like, that's a thing that only startups can do. So, that's so cool that you guys are all startups. You can all, like, everyone who thinks that they don't have a move like that has a move like that somewhere. One, like, small thing that I think every company has to do is everybody has to get good at working and selling remotely. This is just a thing that every person now has to learn how to do well. And there's, like, infinite advice on the internet about how to do this. I don't think it's worth it for us to, like, rehash that advice, but, like, there's lots of articles about how to work well remotely. If you haven't read some, you should go read some. Eric, do you have other, like, any more useful advice on this topic?

Eric: One thing that actually came up in one of our Startup School kickoff sessions a couple weeks ago was how to build rapport over Zoom because we all are relegated to sitting in our desks and kind of making sometimes the first connections to potential customers or investors or partners or even new employees, it's all done over video chat now. So, this is not a skill that comes easily. I personally feel sometimes that I have to, like, overemphasize and over-communicate when I'm working over video rather than kind of my normal way that I kind of carry myself in person. And for some founders that are a little bit more quiet and less kind of over-communicators, it actually takes some time to get out of your shell and really practice, like, over-communicating over video.

Jared: Awesome. That's great advice. Also, like, if you don't have a good video conferencing hookup, like you have a bad internet connection and it's hard to do video conferencing, that is a problem. You should probably fix that because you're gonna be doing a lot of it if you're running a startup these days. And then, I guess my last point is just that this is a really crazy time. There's a lot of crazy stuff happening on the news, and it's probably going to affect a lot of you personally. It certainly has affected a lot of YC founders and their employees and their families. And, like, while your startup is important, like, it's definitely most important to prioritize taking care of your physical and your mental health, and so...

Eric: We say pretty often that startups are a marathon, they're not like a short 100-meter race and this is a good example of that, that your startup needs to both survive COVID and needs to be stronger on the other side of it.

Jared: Yeah. So if you feel like you're being distracted by everything that's going on, like, you're not alone. Other people are, too, and you should just make sure that you're taking care of yourself.

Eric: Yeah.

Jared: Okay. So, I came up with, like, a little bit of a framework for thinking about how various kinds of companies are affected by COVID. And I'm just going to talk through each of them. So the first is the companies that are building a COVID-specific app. So this is, like, you're building a contact tracing app. It's something that's really only relevant for a world that's in the middle of the pandemic. If you're in this boat, like, that's cool, the world clearly needs the thing that you're making now, awesome. My main piece of advice is just that if you want to do this as a for-profit company, like something that you plan to raise money from investors for, you need to have some sort of plan for how it transitions to something that continues to have relevance after COVID is over because even the most pessimistic investors don't think it's going to go on forever.

So, the next set of companies are companies who are doing something that has been positively impacted by COVID because there is this massive, like, consumer behavior change and you are, like, riding that wave. So this is anyone who's doing a delivery app, anyone who's doing something to facilitate work from home, anyone who's doing online learning. If you're doing something like that, congratulations, the world is now, like, working in your favor. And my advice is to take advantage of this opportunity. This could be like a once in a lifetime opportunity to ride a wave of change, and so you should be really aggressive, growing as quickly as possible. My other piece of advice for this is that all of these are good ideas now, but they're actually pretty obvious ideas to a lot of people, and so you should expect that there's going to be a lot of competition and that the way that you're gonna be successful here is by moving faster than the competition and winning the market before somebody else does.

The next set is companies that really haven't particularly been impacted and this is the majority of companies. If you're doing something like, I don't know, a developer tool, for example, you probably haven't really been affected by COVID in any particular way. The majority of the companies that I'm working with in YC now haven't really been affected. And like, in that case, you should just keep doing what you're doing and try not to be distracted by everything that's going on around you in the world.

The next set is companies that have had some negative impact. So, like, if you're building something that helps companies hire employees, that's probably, like, been somewhat impacted by COVID because while companies are still hiring employees, they're not hiring as aggressively as they were in the past, or they're not as willing to pay for it. If you're doing something like this, I think probably the right thing to do is to stay the course. You might consider tweaking your sales process, maybe offering a longer free trial, maybe reducing your prices. You might think about ways that you can sort of build up some potential energy so that when the world comes back to normal, you can, like, grow really quickly then. But yeah, you probably shouldn't make any, like, radical changes. And then the last set is the companies whose business, like, literally fell off a cliff in March. Like you're making a travel planner app and nobody is planning any travel, and so you can't get any users. And Eric, I'm interested what your advice for these companies would be. I would say, like, if I were in the shoes of a founder that was starting a really early-stage company that was doing something like this where you were just, like, flying right into, like, the wave...

Eric: Massive headwinds.

Jared: Yeah. The, like, massive headwinds, that would be a good time to think about whether maybe you should pivot, you know. If you don't have, like, a lot of opportunity costs to pivoting, now might be a good time.

Eric: Yeah. And there's some opportunities where you may be able to actually pivot into something that people need today in your space. Like some of the examples that we've seen in the early days of the pandemic, some of our companies were building software for restaurants, and there were no restaurants, restaurants were over, especially in-person dining. And many of them looked at ways that they could actually help those restaurants continue to earn money through delivery or through other means. So if you have some sort of in-depth knowledge of the industry that's being affected, then there might be a really quick way for you to pivot or adjust to help them out in the kind of current COVID world.

Jared: Yeah. I'll give another sort of case study example like that of a company that was in this set. So, we have this company called Let's Do This, which was an app for finding marathons and races to join. So, they'd show you, like, a directory of all the marathons. And then in March, all the marathons got canceled and their business, like, would have literally gone to zero. And, like, an uncreative founder might have just like, I don't know, given up, laid everybody off, decided to just, like, pause the site for a year, I don't know. But what they did was they invented a concept of a virtual marathon, which is like, you put on, like, a GPS wristband tracker and you run a marathon and everybody else runs a marathon, like, in their city, and you can compete with each other without ever actually being physically close to each other, and that was, like, a great business and, like, a completely brand new, like, invention for the world.

Eric: And probably something that may continue after COVID as well.

Jared: Exactly.

Eric: Yeah.

Jared: Cool. Okay. And then my last topic, because this came up in a few of the questions on the forum is, like, how was YC changed? And the short answer is not much. The current batch is fully remote. Eric, how do you feel the remote batch is going?

Eric: So I've been a big remote proponent even before this. And before the impact of COVID had really been felt, me and another partner at YC were actually putting together a plan to open a remote track at YC regardless. And the idea was we have so many founders around the world who, if they get accepted into YC, you have to basically pick their entire life up and move it over to Silicon Valley for three months. This affects not just the founders' kind of personal lives, but, like, maybe they're getting further away from their customers. Maybe they have a competitive advantage in their existing market. So I just thought it was crazy that we kind of ask people to move all the way here just for three months. And so I think that COVID has really unlocked a new avenue for founders to take advantage of YC. If you are working on a business that has a very local component somewhere else in the world, like we funded teams that are building financial technology in Pakistan this batch, or we funded, you know, it's just a ton of companies that operate around the world.

The fact that YC is now remote and the fact that everyone in YC is on equal footing. Like even the companies who are in San Francisco don't get any kind of priority service from the partners, we're doing everything over Zoom just the way everyone is doing it. I think it's really kind of an opportunity for companies that want to take advantage of a connection to Silicon Valley without actually having to be here. And the impact that it's had over the batch has been, I wouldn't say that it's been minimal, there has been, you know, a lot of changes that we've had to implement. There's been some positives, like we've been able to capture...we've been able to get some speakers to speak at YC that we've never been able to get before because we've just asked them to come drop in for an hour over Zoom rather than schlep down to Mountain View for hours on a Tuesday night which has been great. And then there's been some negatives like we just, you know, there is something lost by not having, you know, a personal kind of sitdown with each founder that I kind of miss. But hopefully, at some point in the future, we'll be able to have kind of a combination of remote and in-person, blended, hybrid approach, but TBD when that will actually happen.

Jared: Yeah. and then as for the next batch, like we haven't decided exactly how it's going to work, but it will either be all-remote or mostly remote with possibly some in-person component but, for sure, like the remote path is not going anywhere. And then, like, a bunch of people asked about, like, how it's changing the companies that we fund, and I think the answer is really not in any way. We're still funding just as many companies as we funded before and we really haven't changed anything about how we think about what startups we might want to fund.

Eric: No. This is good because it kind of wraps this whole part together. Overall, the impact on early-stage investment from YC and from other investors that we've talked to has been quite minimal. Seed investors are doing deals, VCs are doing Series A deals, and people are quite optimistic about the future, you know, outside of a very small set of kind of industries, and in general, this is a great time to build. I think that the large companies, especially the large tech companies, are distracted. They have many things on their plates. They have employee... They have, you know, 5,000, 10,000 employees that they have to deal with, the dramatic shift to working at home. I can't really imagine working at a big company and, like, planning next year's product line. It sounds like a crazy proposition when there's so many other things that they could be worrying about. When I think about that, it just seems like such an awesome time to be a startup, to be able to work quickly and to work efficiently with a small group of people building something. There are still customers out there, there are still customers buying things and startups can serve that niche very quickly.

Jared: Cool. All right.

Eric: Cool. Let's...

Jared: Let's get to some questions.

Eric: Yeah. Okay. Let's see which ones we didn't hit already. Okay. Here's one. What is your advice on keeping bricks and mortar businesses alive like gyms and restaurants? Is there a way to maintain the connection between these physical locations and clients? Trying to think of any companies that we have in this domain.

Jared: So, to be clear, this is a question that's coming... This is from, I hope I'm pronouncing it right, X-Fitness, which is a fitness platform for online fitness training. And I would say that this is a great example of a company that can actually just tweak what they do in order to benefit from what's going on right now, rather than, like...rather than fighting it. So, like, instead of trying to do deals with physical gyms that are shut down, can you go after the people who were working for those gyms who are now stuck at home making less money, and offer them an opportunity to make money doing online fitness training?

Eric: Yeah. So that falls into one of your categories of industries that are affected, but there might be, like, a slight variation on your theme that you could get out into the world today. Cool. We've got another question from whipcart, "How can I move my business forward when I can't go out and talk to users in person?" This company is working with farmers in India. I'll take this one. So I think that, like, I'm a massive proponent of talking to users and talking to customers. It is, it is more difficult, like one of the secret hacks that I always loved telling founders about is the ability to just walk up to someone's office or walk up to someone's business and kind of talk to them directly. That is not available right now, but consider this, we're all spending an inordinate amount of time in front of our computers, usually at home. I think some of us are probably spending 8 to 10-plus hours in front of our computer now. If you get a phone call, it's very likely that you may want to get up and get outside and maybe go for a walk and talk to someone. This could be a great opportunity for founders to just give their users a phone call and see if you can break through the kind of digital noise that we have to deal with and just talk to them. I really encourage founders to ask for a phone number during the setup of, like, a new user signup flow so that you always have the chance to just, like, dial their phone and see if they're home.

Another thing that I've noticed is more and more companies forming a connection to their users over chat. This is another way of kind of breaking through the noise, breaking through the email, breaking through the calendar. If you just text someone, again, through their phone number ideally, or through their WhatsApp, the odds are is that the person's just going to respond. It's a very casual, very kind of intimate format. And if you say, "Hey, I'm the founder of the product that you're using, do you have any feedback, or are there any features that we should build? Or what can I do to serve you better?" That's kind of special. Like, a big company like Google is not gonna text all of their users and have an actual person on the other side respond. So in these cases, there are digital ways that you can replace that in-person conversation and we've seen some companies, I wouldn't say that it's like they're forming better, you know, connections, but they can certainly form a lot more by not having to drive around and talk to all their users in person.

Jared: Yeah. An interesting thing that I saw from some of the companies that are selling to industries that are particularly affected by COVID is that actually, they're finding that it's easier than ever to talk to their customers. Like, if you're selling to restaurants, for example, it might be hard to close a sale right now, but it's way easier than it ever was to get a restaurant owner on the phone because before they were running around like crazy trying to keep their restaurant alive. Now they're sitting at home wondering how they're going to, like, get it back online. And they've got plenty of time to answer your sales call.

Eric: Got another question from Idea Flow. They're a platform for building two-sided marketplaces. They feel like churn is up because of the economic uncertainty. What can they do to creatively retain customers and maintain revenue? Any thoughts there?

Jared: So, if you're selling to a customer and their business has just been, like, destroyed by COVID and they're, like, reluctant to take on a new contract, I think this is actually, like, a great time to use some basic sales tactics around giving discounts, giving free trial periods, like working with them to get them on board and, like, they'll probably really appreciate something that you would have done anyway. If you make it seem like you're giving them this really special deal, they'll be really appreciative even though it doesn't really cost you anything. And when their business comes back, they're gonna be like your most loyal customer.

Eric: I love it. Another question here, what sort of routines, services, or resources should we use to stay coordinated and working in the same direction as we're all remote now? As Jared mentioned, there's tons of advice on how to work remotely, feel free to read as much or as little of it as you want. The only thing that I'll leave you with is the advice of a founder who actually ran a remote company before all of this. His name is Wade and he runs Zapier which is a large remote-only company. I think they have several hundred employees and the remarkable thing about them is they actually publish their entire guide of how they work online so you could actually just download the Zapier guide to remote work if you choose to. But the essence of that is there's a lot of tools that you could use that you could start using, but they found that just classical tools like email, Slack, video calls are basically enough. And the more tools that you add, the more complexity you add, and if you can really keep it simple, you'll have less stress and less kind of confusion. And basic tools more often than not kind of fill the need. Okay. Kind of talked about some of the new opportunities. How about this one? How do you handle situations when your remote team hits a wall or progress just becomes really tough? You can't really be there. It's, like, hard to be the CEO that comes behind them and kind of, like, sits people down, gets everyone into a war room, it seems a little bit different.

Jared: Yeah. I think that's probably one of the things that gets a little bit lost over video conferencing. And I do think it can be a little bit harder to keep up your motivation levels when everyone is working remotely. And a lot of people have had their personal lives impacted and there's a lot of depressing news every day. And so, like, that's, for sure, something to, like, really work hard on.

Eric: Yeah. To over-index on.

Jared: Yeah.

Eric: I found that there are some things that we're doing even here at YC that's kind of nice. We organize a lot of optional, but good times for the team to just come together and talk about things that aren't work. It's hard to replicate the in-person experience of sitting down at lunch and talking about what you did over the weekend. Sometimes you have to kind of force it. You have to just, like, feels awkward and it feels a little bit weird, but you just have to bite the bullet and say, you know, "How are you doing? What are you working on? What are you...what projects are you working on? What books are you reading?" Here's one, EverScreen [SP]. They're an indoor fitness tech company that had been bootstrapping for a while. They say that they personally don't feel like they have product-market fit, but COVID has just completely transformed the indoor fitness market, and the founder is starting to feel a bit of FOMO. How does COVID impact investing decisions on companies that aren't quite ready, but are in the markets that are really taking off with COVID?

Jared: Yeah. So did the founder of Extra Screened, like...this is your lucky day, you've been working on indoor fitness and, like...

Eric: Everyone wants to do it.

Jared: Yeah. Like, you just got dealt a good hand. And so, yeah. I'm sorry, go ahead.

Eric: I think the key here is you gotta move quick. As you've noticed, like, there are a lot of players moving into this space. And take advantage of the, like, core reason why startups tend to beat larger companies time over time and it's because they can build product and get it out the door in, like, two weeks. So if you have a team that's capable of doing that, I would set your goals, set your sights on, like, a very short-term goal, like launching or getting your first 20 users. And just, like, focus on the short-term and don't get kind of distracted by what other people are doing around you and just say like, "I want to take advantage of this opportunity. I want to build something quick and see if people want to use it."

Two more questions. Okay. How does YC adapt in finding and funding different companies during COVID? So, we have adapted a little bit. Previously, we had a process of flying teams into the Bay Area to interview them in person before we accepted them. We eliminated that right after COVID hit. We performed all of our interviews remotely, and I'd say it went pretty well. Like, we were a little bit worried about being able to make sure that we could kind of, like...really get a sense for how the founders carried themselves. We'd been doing that in person for 15 years and so it only felt natural to continue that. So it was a bit shocking at the beginning to do all of our interviews over Zoom, but generally, I think we picked a great set of founders for this batch, and I'm excited to sit down and meet a bunch of founders from all around the world during the next set of video interviews for YC. Do you think that anything's changed about the companies that we've invested in, Jared, or sectors? You took a very good look at some of the companies that were popping up to combat COVID-19 and to build tools and services and therapeutics around that, I guess we'll continue to do that.

Last one. "My prelaunch startup could help people with social distancing, but that isn't its true purpose. Would you launch a spinoff targeting social distancing, or would you launch the product that's intended?" Trying to imagine exactly how the product would work. But Jared, you kind of brought this up a little bit during the intro. COVID-19, you know, knock on wood, will hopefully not be around for forever. And at some point, we will revert back to kind of the normal or at least the new normal. Starting a company is a multi-year, sometimes a decade-long effort. The best ideas are the ones that tap into kind of a fundamental need that people will have over a long period of time. I'm having trouble saying that we'll never need social distancing because at this point, you know, here in the Bay Area, it still seems like wishful thinking. But yeah, I think it would be hard to build a company solely around something that may, again, hopefully only impact us for another year or so.

Jared: Yeah. But if there's some way that you can use your social distancing product to gain a lot of traction really quickly and then have several related products that you could sell the same customers, I'm not sure what that related product would be, but it seems like the person who posted this question had some idea in mind. That could be a really cool strategy.

Eric: Yup. And again, it kind of hearkens back to some of the other companies that we've seen that have made very quick pivots or very quick adjustments, take advantage of the current climate, and then maybe that's actually going to be the way that the world works in the future. Cool. Jared, thanks very much for joining me. I think we managed to get through quite a few questions from the Startup School community, but if you have any more, please feel free to comment on the forum or send us an email or send us...