I Lost $400k ARR and Tested Positive for Covid-19 on The Same Day
GrowthHit Founder, Techstars Mentor, Bestselling Author
March 13, 2020. I’ll remember this day as Charcoal Grey Friday in honor of my Costco sweatpants (thanks mother-in-law) and it being the hardest day of my career at GrowthHit.
Please note that this is NOTHING in comparison to what healthcare workers and victims of COVID19 are going through right now. It’s just a snapshot in time for me to reflect on.
Wife (text): “I need to lay down.”
Me (text): “Getting up. I can watch the girls.”
It was noon on a Friday.
My legs were weak and I was shivering through my sweatpants.
As I sat up in bed, I caught a glimpse of the notification on my phone. I already knew the email bomb that was waiting for me.
But, this breakup email didn’t phase me. I was immune to them at this point. Because . . .
In the past 48 hours, my growth marketing consultancy (GrowthHit
) lost $400,000 in ARR (annual recurring revenue). I tested positive for COVID19. And we lost our childcare.
LOSING $400,000 IN 48 HOURS
How did this happen?
Lets start with the money.
At GrowthHit, some of our clients are startups that just raised a round of funding or they’re in the process of fundraising. This means their cash runways are short and their budgets are tight.
Translation = They’re extremely fragile when the economy comes to a halt.
The result: 6 clients paused (or stopped) working with us.
- 3 clients were cutting all costs
- 2 clients lost VC funding
- 1 client went out of business
Not to mention our pipeline of $300,000 in leads that instantly dried up. We went from almost hiring two people to vetting our P&L to save every last dime.
As this is happening, I couldn’t even build up the energy to make a plan for my company.
I was huddled under the covers because I was the sickest I’d ever been. But, it wasn’t from the lost business.
I tested positive for COVID19.
I’M A STATISTIC
After two cross-country flights in two weeks, the travel caught up with me in the worst possible way.
The exposure to Sea-Tac airport just weeks before Washington became the epicenter of the virus didn’t help.
I was self quarantined in my house and away from my family.
That was until my wife developed a fever that surpassed mine.
Which leads to our immediate crisis. Something that quickly became priority #1 over my business and our health:
Our daycare closed.
My two daughters (2.5 and 6 months) were now running wild in Seattle.
My business was imploding. I had COVID19. My wife had a 102-degree fever.
But that didn’t matter. We had no childcare. It was time to step up.
DO YOU WANT TO BUILD A SNOWMAN?
It was time to be Super F*ing Dad.
Technically, it was time to be Prince Hans of the Southern Isles
. (Frozen reference people.) These little girls deserved some attention that wasn’t Daniel Tiger on a tablet or a box of Goldfish crackers.
I dragged my unshowered self into the living room and tagged my wife out so she could rest.
The oldest (West) was ready to build a snowman and I was going to help her.
It was on!
Step 1: Zombie-dad (yeah, me) puts the Anna Dress on West (2)
Step 2: Dad puts Wests’ hair in a bun with the pink ribbon (not the purple ribbon)
Step 3: Dad gives Wren (5 months) a clean-ish teething ring (and some tickles) in her bouncer.
Step 4: Fire up FROZEN 2 on the TV.
West and I went on to deliver what some call the most moving 7-minute reenactment of FROZEN this decade.
As my business was failing and my bowels were weakening, I had found myself twirling my 2.5-year-old daughter in the air to “Let it Go”.
Oh, the symbolism.
But, this is exactly where I needed to be. Talk about perspective. A toddler’s uncontrollable giggle can cure almost anything.
For a brief moment, I forgot that my business was falling apart and my body was about to collapse.
After some PB&J sandwiches (no crust), I sipped imaginary tea with West who gave me some life-changing advice:
Daddy, your hair smells.”
But, what she really meant was:
Dear Father, get better and save your company!
An hour later, my wife tagged me out and I collapsed under the covers for a Zoom call with my team. They had questions and I didn’t have answers. I couldn’t think.
All I could do was rest and hope my fever came down.
PLEASE MAKE IT STOP
The weight of what was happening was resurfacing. And I wasn’t up for the challenge. Not today.
I just wanted this week to be over. I wanted my head to stop throbbing. I wanted the email bombs to stop dropping.
Running a business can be stressful. Especially, when you toss in the added layer of raising young kids. Balancing client demands and toddler tantrums while trying to stay cool is an art. I can manage that. But, nothing prepares you for this.
Balancing client demands and toddler tantrums while trying to stay cool is an art. I can manage that. But, nothing prepares you for this.
As a bootstrapped founder, you work so hard to build up your recurring revenue so you can reinvest in new hires, site upgrades, SaaS tools & systems. It’s a slow grow compared to the VC model. But, it’s damn fulfilling to take nothing and turn it into something. I didn’t take a dollar from anyone to grow this business and I’m proud of that.
I’ve never thought about quitting but that day f*ing hurt. But quitting means that I would have to get a real job. That ain’t happening.
I knew I needed sleep. I knew my team was good. I knew that our clients loved working with us. I just needed to turn off my phone and go to bed and get better.
Surprisingly, I slept like a baby that night.
The only good night of sleep I would see for a while.
30 DAYS LATER
Fast forward 30 days from Charcoal Grey Friday and this feels like a different universe.
I have experienced 50,000 emotions in that short timeframe. As a paranoid founder, I already work pretty hard but this situation put me into overdrive.
Honestly, I couldn’t stop my mind from wandering down a dark path about my business so I channeled that into work.
It’s April 14th and my partner just slacked me this: We’re on pace for our best month ever for new clients.
We have signed agreements with 4 partners in the past 14 days as we work to replace the business that had to put us on pause or cancel.
But, how did we do that when the economy stopped and our lead pipeline dried up.
HOW WE CLOSED $250,000 IN 30 DAYS
Here’s my summary on how we started getting momentum. Eventually, I want to make this a separate post but here are the cliff notes:
Do the Math: I’m extremely conservative with our cash reserves. This means I’m somewhat prepared for a doomsday . . . just not this extreme. I’ve developed two scenarios based on our cash flow: 1) Dooms day: we lose all clients and 2) Current State: Keep our existing clients w/ no growth. This helped me project the actual runway we have in two scenarios. I felt much more in control of our new landscape after this.
Seek Advice from Advisors:
I knew I couldn’t do this alone. I tapped the shoulder of founder friends, advisors, mentor hacking
and executive coaches to help me tackle this problem. Their input was invaluable.
Stopped Consuming, Started Creating: I wanted to lean on the side of taking action. I decided to document and share all my thoughts along the way to my little community.
Over-communicate: I did daily chats with my COO and was transparent with my team and our sales and pipeline. Now isn’t the time to hide. Instead, enlist your smart people to help. That means giving them the right information.
White-Glove Service for Existing Clients: After losing $400k ARR, we went above and beyond to be strategic partners to our existing clients. It’s not about margins but being great partners.
Do the Opposite of the Majority:
We decided to double our ad spend and capture more leads. While overall demand is lower and people are pulling back, we decided it’s about playing offense
. CPMs are lower and there are still companies that need our help. Let’s test.
Double Down on What’s Working: Webinars. Paid ads. Free Audits. Those things work for us. We decided to go all in on what’s proven and known. No time for try and stand up unproven tactics.
Timing & Luck: I did a growth marketing talk a year ago that seemed like a waste of time. But, luck would have it that one of the attendees was interested. And they just so happened to reach out in April. Hallelujah.
BUT, I’M STILL PARANOID
We aren’t out of the woods yet and this post isn’t to be written as a celebratory final chapter. I am still paranoid as ever. All of this can change in 48 hours . . . as I have quickly learned.
Instead, this post is me capturing a crazy moment in time that I hope to look back on as one that truly paints the picture of what happened. Too often, you read blog posts about the Monday morning quarterback version of a career. Those stories hide the honest truth, the uncertainty, and the thought process that went behind making decisions in real time.
Hope this helps anyone else that’s trying to navigate these crazy times. Please share your story so other people can learn from you and not feel alone.
TLDR: Hardest Day of My Career
Lost $400k. Got sick. Childcare closed. Frozen duet with toddler. Rest is best. Closed some deals. Still paranoid AF.
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