Hunter Walk of Homebrew discusses how the 2020 economic crisis presented a "second punch" to DTC businesses, emphasizing that while past downturn advice might not directly apply, the fundamental questions founders ask themselves remain crucial. He highlights the importance of founder resilience and intrinsic motivation, arguing that founders deeply connected to solving a problem are better equipped to navigate severe challenges than opportunistic entrepreneurs. The episode provides valuable insights for ecommerce operators on evaluating their business foundations and leadership during uncertain times.
Key takeaways
Founders should focus on 'evergreen questions' about their business model's core viability and their personal commitment to the problem they're solving, rather than solely relying on specific answers from past economic crises.
Prioritize investing in founders who demonstrate deep, personal conviction and insight into the problems they are solving, as this intrinsic motivation is critical for navigating severe economic downturns.
Recognize that not all founders are created equal; mission-driven founders with a genuine passion for their problem are more likely to persevere through significant challenges than those driven by opportunism.
Understand that the current economic climate tests the true resilience of DTC brands, exposing those built on fleeting trends versus those with strong foundational purpose and adaptability.
Re-evaluate business strategies by asking "how do I have to rethink my business?" during downturns, fostering adaptability rather than outright stopping operations.
Looking to the past doesn't always work. For one, many current founders or CEOs were "still in high school" during the last economic crisis, according to Homebrew partner and co-founder Hunter Walk.
For another, even for those entrepreneurs who survived the last global downturn, the big takeaways might not apply to current circumstances. "The answers from those entrepreneurs in 2008 may or not be the right answers for companies in 2020. But the questions they asked themselves might be the things that are evergreen. And so asking some of those questions of yourself as a founder who might be going through this the first time -- I think that's where it gets valuable," Walk said on the Modern Retail Podcast.
Homebrew, the investment company Walk co-founded in 2013, has invested in companies ranging from the worlds of kids' clothing to aerospace technology and farming robots.
Another evergreen spot for him is in the qualities of the founders he invests in, "which have remained consistent and help us do our job during a time like this," Walk said.
"You ask yourself 'why is this founder working to solve this problem?' And if the answer is something that usually comes from a personal interest in the problem, a deep insight or connection, then when they hit a speed bump (or in this case a very large speed bump, from a global standpoint) they don't stop. They pause, maybe, and say 'OK, how do I have to rethink my business?' But they're not just doing this opportunistically. They're doing it because they couldn't imaging doing anything else."
Founders should focus on 'evergreen questions' about their business model's core viability and their personal commitment to the problem they're solving, rather than solely relying on specific answers from past economic crises.
What does this episode say about founder & leadership?
Prioritize investing in founders who demonstrate deep, personal conviction and insight into the problems they are solving, as this intrinsic motivation is critical for navigating severe economic downturns.
What does this episode say about finance & fundraising?
Recognize that not all founders are created equal; mission-driven founders with a genuine passion for their problem are more likely to persevere through significant challenges than those driven by opportunism.
What does this episode say about dtc strategy?
Understand that the current economic climate tests the true resilience of DTC brands, exposing those built on fleeting trends versus those with strong foundational purpose and adaptability.
What does this episode say about dtc strategy?
Re-evaluate business strategies by asking "how do I have to rethink my business?" during downturns, fostering adaptability rather than outright stopping operations.
