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February 16, 2025 • 1hr 23min
A founder’s guide to crisis management | Uri Levine (Waze co-founder, serial entrepreneur)
Lenny's Podcast: Product | Growth | Career
Uri Levine is the co-founder of Waze (acquired by Google for $1.3B) and nine other companies. He's been on 20 startup boards and advised over 50 startups. This episode focuses on crisis management for startups, based on a new chapter in the updated version of his book "Fall in Love with the Problem, Not the Solution."
A founder’s guide to crisis management | Uri Levine (Waze co-founder, serial entrepreneur)
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Key Takeaways
- Two main types of startup crises:
- Cash crisis - When cash/funding plans are jeopardized (losing customers, investors backing out)
- Product-market fit crisis - When product-market fit disappears and you need to go back to square one
- Critical behaviors during crisis:
- Never give up - Most important behavior of successful startup CEOs
- Make decisions with conviction - Team won't follow without conviction
- Act fast - Delaying decisions reduces options
- Be transparent with the team
- Key steps when facing a crisis:
- Identify what's being impacted
- Determine how long the impact will last
- Calculate runway and options
- Make and communicate decisions quickly
Introduction
Uri Levine is the co-founder of Waze (acquired by Google for $1.3B) and nine other companies. He's been on 20 startup boards and advised over 50 startups. This episode focuses on crisis management for startups, based on a new chapter in the updated version of his book "Fall in Love with the Problem, Not the Solution."
Topics Discussed
Types of Startup Crises (00:07)
Uri identifies two main types of crises that startups face:
- Cash Crisis
- Occurs when cash/funding plans are jeopardized
- Can be triggered by losing customers or investors backing out
- Requires immediate action to extend runway
- Product-Market Fit Crisis
- Happens when product-market fit disappears
- Requires going back to square one
- Previous knowledge/assumptions become irrelevant
Crisis Response Framework (26:15)
When facing a crisis, Uri recommends following these steps:
- Identify Impact
- What exactly is being impacted? (revenue, runway, product relevance)
- How severe is the impact?
- Assess Duration
- Is this temporary or permanent?
- What's the new future look like?
- Calculate Runway
- How much runway do you have left?
- What options do you have to extend runway?
- Make Quick Decisions
- Act fast - waiting reduces options
- Communicate decisions clearly to team
Team Management During Crisis (46:26)
Uri emphasizes the importance of proper team management during crisis:
- Transparency is crucial
- Don't hide information from the team
- Share key metrics and challenges openly
- Be honest about the situation without sugar-coating
- Team engagement options
- Consider equity increases to retain key team members
- Management salary cuts before team-wide cuts
- Communicate clear path forward
Pivoting During Crisis (56:57)
When considering a pivot, Uri recommends this evaluation framework:
- Step 1: Problem Validation
- Identify and validate new problem to solve
- Ensure strong market need exists
- Step 2: Advantage Assessment
- Evaluate existing tech/team/knowledge advantages
- Determine if these provide meaningful edge in new direction
- Step 3: Passion Check
- Assess team's energy and passion for new direction
- Ensure willingness to restart journey
- Step 4: Team Validation
- Validate team's belief in new direction
- Get input on potential opportunities
- Step 5: Funding Assessment
- Approach existing investors with new plan
- Consider raising new funding for pivot
Crisis Prevention and Preparation (1:17:06)
On avoiding crises, Uri provides these insights:
- Crises are inevitable
- Don't worry about preventing them - they will happen
- Focus on being prepared instead
- Best preparation is cash
- Maintain 18-24 months of runway when possible
- More conservative CEOs prefer 2-3 years of runway
- Minimum 12 months for risk-takers
- Can't prepare for specific crises
- Unknown what form crisis will take
- Focus on quick analysis and action when crisis hits
Real-World Examples (1:13:34)
Uri shared several examples from his experience:
- Waze
- Faced crisis when Google launched free turn-by-turn navigation
- Survived through management salary cuts and new investment
- Eventually succeeded through focus on daily commuter use case
- Order Chat
- AI chatbot for restaurant reservations
- COVID-19 shut down restaurant industry
- Had to shut down due to insufficient funding to pivot
- WeSki
- Faced crisis during COVID-19 when ski travel stopped
- Survived through dramatic cost cutting and pay-to-play funding round
- Emerged successful post-COVID
Conclusion
The key message from Uri is that building a startup is "a journey from one crisis to the next." Success comes not from avoiding crises, but from handling them effectively through quick decision-making, transparent leadership, and never giving up. The most important behaviors during crisis are:
- Making decisions with conviction
- Acting quickly to preserve options
- Being transparent with the team
- Maintaining enough cash runway when possible
- Never giving up despite setbacks
Uri's framework for handling crises - identifying impact, assessing duration, calculating runway, and making quick decisions - provides a practical approach for founders facing inevitable challenges in their startup journey.
