1. The Covid-19 pandemic may last longer than initially expected, with a vaccine still 12-18 months away and production/distribution taking additional months. There is no guarantee things will return to normal even after cases slow down. 2. Startups can be built during difficult times, as was the case with Bukalapak which started with no capital, investors, industry hype or talent. 3. Spending efficiency is critical during the Covid-19 era. Improving efficiency means focusing on variable costs like marketing and sales to acquire the most profitable customers, and reducing fixed costs such as staff, buildings and technology infrastructure.

1. Dealing with Covid19
Managing Spending Efficiency

2. Covid19 may be longer than u think...be prepared
1. Vaccine is 12-18 months away
2. Production and shipment will take
another few months
3. No guarantee will back to normal
after the case slowing down
(happen in Wuhan)
4. The test is still small portion of
world population

3. Many great startups come from bad time

4. Bukalapak was in the bad time
Bukalapak was started
with :
1. No capital/investor
2. No industry hype
3. No talent

5. Spending efficiency is critical in covid era
1. Spending inefficiency is top startup killer
2. In a bad time, Spending Efficiency saves the company
3. In a good time, Spending Efficiency creates a winning company
4. Investors love ROI : better Efficiency, better ROI
5. Spending Efficiency creates discipline and strong talent → sustaining culture

6. How to measure spending efficiency
Net Additional Revenue
Net Burn
=
NOT GOOD GOOD BEST
<0.1x 0.5x-1.5x >1.5x
$12M ($24M-$12M)
$2M
= 6x
Source : bvp.com/cloud

7. Improve efficiency : Fixed cost vs variable cost
- Fixed cost
- People : do you really need a lot of people?
- Building : move to cheaper one?
- Tech/infra : move to cheaper/simple one?
- Variable cost (S&M) :
- Marketing : explore unpaid/organic channel
- Sales : focus on profitable customer
- Tips : Lower the fixed cost, more
experiments on variable cost, focus
for growth!

8. Measure your S&M efficiency with CAC ratio
Example :
- CAC Ratio < ¼ means more than 4
years payback. Bad! Refine your
operation.
- CAC Ratio > 1 means less than 1 year
payback. Raise money, spend more!
Additional Revenue
S&M cost
CAC Ratio =
Impact of CAC to future cash flow
Source : bvp.com/cloud

9. How to improve your CAC ratio : organic growth
1. Social media
2. PR (Story building)
3. SEO
4. Virality/referral
5. Product quality : retention rate
6. Direct sales to most profitable customer

10. Choose most profitable customer/segment
1. Your customers are not all the same
2. There is no single startup that success by attacking all space at once
3. Focus will impact on :
- Lower CAC
- Higher user retention (LTV)
- Stronger virality → more organic growth → cheaper CAC
Not focus
CAC = 5
LTV = 5
LTV/CAC = 1
Focus
CAC = 1
LTV = 10
LTV/CAC = 10
VS
10x Better!

11. Summary : Some Tips to Deal with Covid19
1. Preserve cash. If possible, raise as much as money. If not, plan for profitable.
2. Relook your metrics : CAC ratio, Spending Efficiency. Control your own
destiny.
3. Act. Although it hurts. Hard nego leasing/credit, etc.
4. Watch the competition/market. Explore possibility to buy cheap assets.
5. Build online/virtual channel. Zoom sales acquisition. Ecommerce store.

12. Bonus : Some Tactics
1. Use more commission, but less fixed salary
2. No office, no travel policy
3. Long term payment commitment, upfront, discounted
4. Pursue partnership marketing, instead of paid
5. Stop new project/feature
6. Move service to cheaper alternatives