Tough decisions should be part of any entrepreneur’s job description, but COVID-19 has forced many to chart new territory.
Luggage storage startup Stasher’s business model relies on tourists needing to stow their luggage somewhere safe while in a destination.
With bookings falling to zero, the Stasher team initially thought putting the business into hibernation was the best strategy, but then changed course.
Jacob Wedderburn-Day, co-founder and CEO of the startup, says it decided instead to do some product work rather than furlough staff.
This did not include co-founder Anthony Collias, however.
Wedderburn-Day says:
“At the beginning of April at least we hoped it might be a short-term thing, in which case we didn’t want to lose momentum. We wanted to continue to improve the app and the website and I’ve always been a lot closer to that than Anthony, so we said me and a few engineers will stay on and do that and we’d pause everything else.”
Early action
One of the questions Stasher has asked itself is whether its core product will still be needed once the current crisis subsides.
"The market is what has changed, and I do wonder if there will still be that fit in how ever long it takes," Wedderburn-Day says.
"It's not going to be this year because people are limited in their ability to travel. We are looking at alternative revenue streams and new lines of business but we don't have anything concrete yet. We are confident - it may take a long time - but eventually people will start to travel like they used to and the service will be just as necessary."
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Despite hope the crisis might be short-lived, the Stasher team took early action to protect the business, including putting everyone on a four-day week.
Wedderburn-Day says he saw the Sequoia’s Black Swan note the day it came out in early March, and the next day he received a call from one of his mentors.
“He sensed something quite dramatic was going to happen and that it was better to be prepared for a worst-case scenario, which even then we drastically underestimated.”
He adds that on top of the team cutting their hours, he worked on getting on top of cashflow to be ready to give updates to investors.
“From very early March, I was braced for this and I think people thought I was overacting for the first two weeks and said it was unnecessary. Then, suddenly, it really hit the fan.”
Measures taken have ranged from cutting all marketing to giving notice on a newly furnished office.
Funding cushion
One element that helped Stasher is the $2.5 million in funding it received in January.
Wedderburn-Day says that “growth first” was always the mantra, but now that has shifted to survival, with the only goal being to still be in business next year.
Stasher is not under the illusion that there may be further tough decisions ahead, but for now, Wedderburn-Day says the funding should help it through.
“Even if we made no money for the whole of 2020 we would still have cash in the bank.”
What happens after June, when the furlough scheme ends, is harder to predict, he adds. It’s likely the four-day week will remain in place, and because Stasher is a small team, it would be difficult to lose anyone.
“Otherwise we’re being practical. It’s funny to think of all the things we were spending money on then which now seem quite excessive now it’s so cost-focused.
“It’s important to be cost-conscious, but I do hope we can see a return to a more social way of doing business at some point because I think that’s what really suffers.”
There is also no illusion for a speedy recovery for travel generally, and Stasher more particularly.
Predicting the unknown
Wedderburn-Day believes the company is going to be hit hard.
“From what everyone is saying, the first wave of travel I imagine will be quite domestic and quite rural. Domestic isn’t a problem for us; it’s the rural element we’ll struggle with. When urban travel comes back, and if that happens in six months, which I hope it will, fantastic - we’re back in business. We’ll see, nobody really knows.”
Despite the touch decisions, he’s managing to stay positive.
He attributes that not only to the timing of the funding but also to a sort of “delusional positivity” required when you’re an entrepreneur.
“The fact that we know we have the runway does give me a lot of confidence. If we were coming up to fundraising this summer, it would be a very different story. We would probably have put more drastic measures in place.”
Overall he feels the company will survive but says it's going to be an "interesting ride."