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Financial Crises 101, By a Dot-Com Bubble Survivor

By Guillermo Pepe - Mamotest
CEO

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By Guillermo Pepe | Creator and CEO - Tue, 08/16/2022 - 13:00

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We’ve all been following the news and, let’s face it, everything looks bad. Indexes are down, inflation is up, the market is crashing, and Jeremy Grantham, a legendary investor known for his pessimistic view, although he did predict the 2008 crash — recently stated the US stock market is in its fourth “superbubble” of the last century. It seems the downfall is not a matter of if, but when. So, what should we do?

During my plus-15 years as an entrepreneur in Latin America and Europe, I faced all kinds of crises — global, regional, local — including the bursting of the dot-com bubble in the early 2000s. At the time, I was creating an e-learning company that had raised $3 million. The bubble bursting was a direct blow.

As the Led Zeppelin song goes, “Good times, bad times, you know I’ve had my share.” I am afraid there are no big secrets — less so magical recipes — to cope with a global financial crisis. From my own personal experience, it mostly comes down to this: assume strong(er) leadership, stick to your vision, and trust your gut feeling. Needless to say, don’t let the sound and the fury of apocalyptic futurologists dishearten you.

But how exactly can an entrepreneur achieve this when the entire world around one’s company seems to be collapsing? Here are some basic survivor guidelines:

1. Keep calm and accept the ups and downs of life. They will always be there and though navigating deep and treacherous waters during the “down moments” is certainly crucial, it is just as essential to keep a cool head when you are up, riding the smooth, swift waves. Life has its own cycles and all businesses will inevitably present problems and obstacles along the way. Sadly, I’ve seen plenty of entrepreneurs who assumed they would never crash and burn because they had managed to raise US$10 million with only a demo of their startups. This is not just a rookie error. Some of the big Silicon Valley tech lords have been tricked into thinking they were immortal, too. My advice? Don’t presume you are the best when you are “up,” nor agonize that you are the worst when you are “down.”

2. Work on your mindset as you would do on your business plan. “Believe good things will happen and they will. Believe bad things will happen and they will.” It might sound incongruous to the previous point but they actually complement each other. Yes, the world’s twists and turns do not depend on us. And yet, how we face that swirl is absolutely up to us. Knowing and taming and nurturing our mind so it becomes fertile soil where bright ideas and strong will can grow is vital. Many times, this does not imply encouraging logical and rational patterns; it has much more to do with letting your instinct and your creative thinking thrive. Would a fish swim against the flow if it wasn’t for an innate energy and that it somehow knows there is a unique reward on the other side?

3. Question your own concept of success. In the late ‘90s, Richard Branson published Losing My Virginity. I remember being struck by how such a successful person mostly wrote about his failures and downfalls. However, the inspirational myths in the Silicon Valley Parthenon of heroes still sound a lot like this: “By the time he was 22 years old, he founded the company that made him a billionaire before turning 25.” It seems that, if your startup does not become a unicorn (very) fast, you are doing something wrong and you should be ashamed. In reality, people like Mark Zuckerberg are rare — as in “five out of 7 billion people in the world” rare. Their achievements are amazing but not replicable. “To win once, I had to lose a thousand times,” Winston Churchill said. Among us entrepreneurs, 99,9 percent have received a hundred blows before our first victory, and that is OK. What is more: it is healthy and edifying.

4. Apply a necessary dose of reality distortion. An entrepreneur does need a mission in which to feverishly believe as he needs air to breathe. And so, he will not yield and will eventually find alternative paths to keep moving forward until the completion of that mission. I am certain that crises do have one boon: they quickly discriminate between “missionaries” and “mercenaries.” In times of bullish markets, startups and entrepreneurs are everywhere. However, in bearish times such as today, only the genuinely built companies and passionate people stay to face the storm.

5. In the end, do not forget what — and who — is really important. It might sound cliché, or even corny, but in times of crisis, the positive impact of meaningful relationships is absolutely vital to our overall well-being. We all tend to take our loved ones for granted and this could be especially true when it comes to career-focused profiles, such as Tier 1 entrepreneurs. Even so, never forget that family and friends are the ones who will keep you emotionally afloat, mentally sane and even properly fed during hard times.

One final note

It is my belief that we are facing some of the biggest changes in human history and this is all happening in an astoundingly brief and vertiginous period of time. The combination of key factors, such as a tragic climate crisis, a global pandemic, a shocking war, a polarized world, a growing number of countries trying to close up their economies, the scourge of high inflation, a disgraceful concentration of wealth and inconceivable amounts of data traveling at the speed of light, mean we are now forced to live with unprecedented and terrifying levels of uncertainty.

Needless to say, it is really impossible to foresee what the future will bring. However, we can be certain of one thing: who we really are, what inspires us and moves us forward, in spite of it all. In a business ecosystem that too often is dazed and confused by rockstar entrepreneurs who invest more time boosting their LinkedIn profiles rather than trying to make the world a better place, the only way not to lose our way is to become guardians of our humanity.

I am certain that we have that humanity in Mamotest. And so, we face this crisis, as any other crisis, as it is: a possibility for change. Plus, I have faith that we are ready as never before to deal with that change. Though this might be one of the most confusing moments in our history, it is also an era in which we have the best technology and resources at hand — and, when these are paired with our humanity, everything is possible.

Photo by:   Guillermo Pepe

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