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Best practices in crisis management for startups

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Mercury

Image of Immad Akhund (CEO and co-founder of Mercury), Amanda Duckworth (SVP of corporate reputation at Outcast), Cassie Young (general partner at Primary Venture Partners), and Paul Levine (partner at Sapphire Ventures) | Mercury
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As an entrepreneur, you’re bound to face public crises — both big and small. Assuming a crisis isn’t a matter of “if,” but of “when,” it helps to have a sense of best practices around preparing for one, let alone for addressing a crisis as it's happening.

Mercury’s CEO and co-founder, Immad Akhund, recently moderated a discussion centered on crisis management with Amanda Duckworth (SVP of corporate reputation at Outcast), Cassie Young (general partner at Primary Venture Partners), and Paul Levine (partner at Sapphire Ventures). The guests spoke on their previous experience in managing crises or in advising companies facing crises of their own. Whether you’re dealing with a security breach, a total shutdown, a customer service catastrophe, or layoffs, these experts agreed there are a few foundational rules of thumb worth considering, no matter the situation at hand.

Communication is key, but be strategic

In the face of a crisis, silence is not golden. Founders should never fall into the trap of believing that simply not talking about the situation publicly will make it go away. Instead, communicate what you know about the crisis at that given moment. Make yourself readily available, even if you don’t have any news to share, and be crystal clear with your employees about what can be said publicly. Even if the update is that you don’t have an update, “simple acknowledgment goes a very, very long way,” says Cassie.

Here are a few things to keep in mind when communicating around a crisis:

Transparency is preferable — to a point

In a desire to be transparent, companies will often speculate and communicate the wrong things, Amanda points out. “Everything you communicate has to be rooted in facts,” she says. “In some cases, litigation may limit you in terms of what you can say. That's why sometimes you’ll find some unsatisfying company responses that don’t say much of anything.” In this type of situation, work closely with your lawyers. Eventually, there will come a time that you can say more — and at this point, you’ll be able to say it in a way that feels meaningful both for your company and for your stakeholders.

Be careful about withholding information

If you’re wondering whether to withhold certain information from the public (or from your employees) or, as Amanda puts it, “play around with versions of the truth,” there is always a risk that those facts are going to come out in the future. In nearly all cases, it is advantageous to be transparent from the beginning.

Take advantage of social media

“Founders and company social handles should be active during times of crisis,” Paul says. It’s important to see social media as a tool that can help you own the narrative during times of crisis, but only on the condition that leadership is working with their communications team to make sure that the narrative they’re putting out there is the narrative their company wants to own. To that end, Paul adds that overcrowding social media with a slew of opinions is an example of what not to do. “I don’t think having a whole bunch of employees each offering their point of view is productive at all.”

Handle layoffs with humility and grace

Many companies make the mistake of trying to counterbalance the news of layoffs with a bunch of good news around how the company is performing — but this isn’t the right tone for the moment. Paul argues that as a leader, you should own the situation and take accountability for false assumptions you may have made along the way that led to the reality of layoffs. Make sure to keep your announcement short and direct — and in all cases, acknowledge the contributions of the people who are leaving and speak to the support you are offering them.

When it comes to announcing layoffs to the employees affected, timing is key. “I prefer it when the affected employees have been communicated with before the rest of the company gets to know,” Amanda said. Ideally, there should be communication with these employees  — whether over Zoom or in an office — immediately before everyone else in the company is notified.

Get to work — and turn crisis into opportunity

Amanda explains that in the face of a crisis, it’s time to rally your entire team behind the same cause. There needs to be extreme attention paid to addressing the issues at hand. Ideally, this sense of urgency leads to a burst of energy and innovation. She shares that in the case of Airbnb’s crisis in 2011, recovery required more than good PR. This particular crisis, which involved a guest essentially destroying a host’s property, highlighted myriad problems with the company’s business model. “There needed to be some kind of insurance policy,” she continues. Ultimately, “[Airbnb did take] action; they didn’t just give an apology.” And that following summer, Airbnb experienced their best booking month ever.

Prepare to the best of your ability

You’d prepare for a natural disaster, but what about a comms disaster? “I’m not a big fan of these crisis manuals that companies commission firms to do; they cost a small fortune, and all they do is sit on a proverbial shelf gathering dust,” Amanda says. Instead, one of the best ways you can prepare for inevitable emergencies is to sit down and assess your weaknesses. It’s impossible to predict exactly what will happen in the future, but if you’re aware of what could potentially happen — and you have a tentative playbook in mind for those specific scenarios — your company is already in a better position.

Cassie explains that it’s important to remember that trust is never built in a crisis. You have to cultivate relationships and trust all the time with the press, your investors, board members, employees, and customers. And when a crisis inevitably hits, these relationships can pay dividends. In fact, it’s during times like these that your investors can really go to bat for you — and make the difference.

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