Home Guiding a Tech Startup Through COVID: Q&A with Hawke Media’s Erik Huberman

Guiding a Tech Startup Through COVID: Q&A with Hawke Media’s Erik Huberman

The coronavirus pandemic has been hard on every company. But as in every crisis, the small players have been bruised worse than the big ones.

Tech startups, in particular, have faced hardships. ClassPass, a fitness membership startup, saw more than 95 percent of its revenues dry up in less than two weeks. Hiring platform ZipRecruiter has cut nearly half of its staff.

There’s no one-size-fits-all solution to startups’ financial struggles. What they can do, however, is look at how agencies designed to help tech startups grow are handling the situation.

For that, I caught up with Hawke Media founder Erik Huberman. Hawke Media is the fastest-growing agency in the United States and serves as an outsourced CMO for a range of tech startups.

Erik’s take? Every startup is going to struggle, at least in the short term — but the greatest opportunities are rooted in adversity.

Talking Shop for Tech Startups

Erik and I covered a lot of ground. Here’s a lightly edited transcript of our conversation:

Brad Anderson: How has Hawke Media been affected by the COVID crisis? Has it seen any silver linings?

Erik Huberman: For the first time in six and a half years, we’ve gone fully remote. That’s tough in the best of times; try doing it overnight.

We’ve also had client challenges. Although we’re fortunate to have a massive client base, some of their struggles have cascaded to us. We’ve had some pullback on marketing, while others have shut down completely. There’s been a lot of triage work to do.

The silver lining we’ve seen is that, because we’re focused on internet business and driving digital commerce, our work has become increasingly important to our clients. In the past six weeks, e-commerce has gone from 18 percent to 30 percent of consumer spending. As a result, we’ve been able to almost double the average online company we work with.

Many of our clients have wound up thriving in this crisis. The challenges come from the minority of them that haven’t grown — and in some cases, simply can’t grow — during this.

BA: It sounds like Hawke Media has weathered the crisis well so far. What key risks are other startups struggling with?

EH: It’s critical to understand that every startup is going to lose some customers because of the pandemic. It’s just a fact. If you have a diversified client business, there’s a very strong chance some of your clients will pull back on what they’re spending with you.

There are two ways to counteract your clients cutting back: You’ll either need to grow your existing customer relationships, or you’ll need to develop new ones.

Like us — and many of your own clients — you’re also likely learning to operate remotely. That’s going to look a little different for every company. How you meet, operate, or manufacture might have to change. This crisis could last a while, so focus on building out new processes and procedures.

Likewise, assume fundraising is going to be wonky for a while. Some firms, like Zoom, are going to close much higher rates because they’re built for this sort of thing. With that said, investors are unsure about what the future will look like, so it’s going to be harder for most companies to raise money.

BA: Those are big challenges for small companies. How should startup leaders handle them?

EH: The good news is that marketing costs have plummeted because so many companies have pulled out. In that sense, replacing lost business is actually easier and less expensive than you might think.

That’s exactly why we’ve been playing offense at Hawke Media. Double down on marketing and sales now, and you should see a surge in retention and acquisition as the situation improves.

Remember, though, that sales and marketing can’t be a contact sport right now. You’ll need to operate with the least amount of human contact possible. Use digital tools, but make sure you don’t lose the humanity of the workplace.

Throw happy hours. Have Zoom parties. Get your team involved beyond just Slacking and working from home. People are going to get lonely, so it’s on your company to keep the culture strong.

Focus on building to last. You don’t know what’s coming. If you’re burning cash, slow the burn; if you’re mid-negotiation with an investor, close it. Slow down a bit, and find ways to button up your business so it’s not just a startup.

Are you ready to actually make money? If you can drive revenue and build a solid business, as opposed to just fundraising, you’ll be fine. “Primetime revenue solves everything,” as the saying goes.

BA: How can tech startups go beyond just meeting challenges? What COVID-related opportunities do you see?

EH: As I mentioned earlier, marketing is dirt cheap right now, and ROIs are massive. If you can afford to market digitally and aren’t in an industry directly affected by the pandemic, you’re probably doing very well right now.

Even if you are in an affected industry, you can still thrive. Many restaurants have successfully switched to contactless delivery and takeout. Gyms that have gone virtual are getting a lot of engagement. You shouldn’t be scared to spend money on marketing if you can help people enjoy their homes in some way.

Realize, too, that your competitors are having these same conversations. Some of them are going to be aggressive about winning business right now, and some are going to be playing scared. Which do you want to be?

The bottom line is that a pandemic is a great opportunity to bring people together. If you can hold your team together and look out for your customers, you’re going to come out of this much stronger. It’s human nature: Nothing creates community like crises.

BA: Help us understand how the rubber meets the road: How has Hawke Media tapped those opportunities?

EH: We’ve encouraged our clients to keep going. The majority of our clients have had record months across the board.

Because of what’s going on right now, there are tons of consumers moving online. The best move is to model that. It’s a chance to grab market share, hit the ground running, and emerge from this crisis as a leader.

At Hawke Media, we’re choosing to go after that opportunity. We’re watching our competitors — or at least a portion of them — fall apart because they’ve made the opposite choice. The difference is that we’re running at the problem while they’re running away from it.

When I question whether we’ve made the right call, I think back to a quote from my business partner and COO, Tony Delmercado: “Even if it lasts another year, it’s still going to be just a blip on the radar of our lives. Our actions during this time, though, will stick with us for the rest of our lives.”

Decide who you want to be when the pandemic is over, and set yourself up for that. If it’s a successful business, keep that mindset. If you want to run off into the woods, why not just shut down your business?

Imagine what you could do if you were to treat this as an opportunity. Think about how not just to mitigate risks, but also what you can actually do to grow.

In my experience, most startups are operating that way; it’s the bigger companies that are freaking out.

BA: You’ve given a lot of good advice, but what’s the most important lesson you think startup leaders should take from this crisis?

EH: Don’t let external factors become excuses for not building your business. There’s always going to be some crisis — whether it’s a pandemic, tariff, natural disaster, lawsuit, or internal issue — to deal with.

That’s exactly the advice my dad gave me during one of the first crises my company faced. Stressed out, I called him and told him the whole story. His response? “Yeah, it happens all the time. I have to go. Talk to you later!”

That’s the mindset you need to thrive. Welcome to the world of business ownership: There’s always going to be some type of adversity to overcome. Get used to it.

About ReadWrite’s Editorial Process

The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

Brad Anderson
Former editor

Brad is the former editor who oversaw contributed content at ReadWrite.com. He previously worked as an editor at PayPal and Crunchbase.

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