The best start-up of the COVID year

On May 3, as the world prepared for the worst, Eric Ries said: “It’s the best time to do a startup.” Let’s say that you know: in 2011 one of his books, The Lean Startup, sold over a million copies, which may seem few if you don’t consider that it was not a novel, but an essay on how to make a successful company. The reasoning made by Ries in May was not original but historically founded: moments of crisis are almost always perfect for launching into a new business. Because new needs emerge, certainties and leadership that seemed eternal collapse, hopes arise. Without so much poetry, it will be enough to remember, as is always the case in these cases, that General Motors, IBM, Disney, Toyota were born in times of crisis. Last, AirBnb, founded in 2009, with the Western world in deep recession.

The opportunity to test Eric Ries’ prophecy came on Monday and Tuesday. Y Combinator’s 31st Demo Day was scheduled: for those who don’t know, a “demo day” is a day in which the best startups of an acceleration program present themselves to potential investors; and Y Combinator is perhaps the best accelerator in the world.

The one from which the most successful startups came out. The peculiarity of this Demo Day was not the pandemic: even that of March had taken place with the coronavirus advancing and the cities closing: but then the acceleration program had previously taken place, in presence, in person; and only the final presentation took place online with a short video recorded in which the various founders explained why their startup will be the next “unicorn” (valuation of a billion dollars).

In this case, however, the acceleration program took place entirely online and the presentation of the startups was live: the founders of the 220 startups in the running, connected from twenty-six countries, with different time zones, had one minute and one slide to convince venture capitalists via Zoom. One minute, one slide: when the summary is said.

How did it go? Very well, it seems. It must be said that the current administrator of Y Combinator, Michael Seibel (former co-founder of Twitch, sold to Amazon for over a billion), had decided to greatly enhance the tools to interact and collaborate online (there is a social network within the community which curiously is called Bookface).

And as far as we have seen, interactions and investments have not dropped. But something has changed: the goal that was given to startups to raise funds, This: focus on profit not only on growth. It’s a big change: in the last decade the rule was just to grow the market share and patience if the startup burned all the profit every year; now, says Seibel, we have restarted from the 2009 rules, those of the recession. Think about earning. Solid fundamentals are needed to resist.

In short, the 220 startups of summer 2020 will be resilient startups while it will take time to understand if there are unicorns among them; for now we can say that covid-19 has obviously addressed the focus of startuppers. And therefore many new businesses are aiming for online education, smart working, ecommerce. To the world as it is emerging from the great global recession underway.
Whatever happens, Seibel said, “it takes something special to embark on a new venture during a pandemic.” We need a great desire for the future. We hope to see it from us too. We hope to notice it, and not to ignore it. It’s a virus, too, but it usually saves the world.

By Domenico Greco

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