Looking for product-market fit in a declining market? Hire freelancers to manage your burn rate – TechCrunch


Winter is coming for the global economy: 8% inflation, China in lockdown, a war in Europe, plummeting capital markets, a pandemic that won’t stop, and an impending recession.

But for the tech and startup world, winter is already here. Shares of public software companies have fallen 80% to 90% from their highs, startups large and small are laying off workers en masse, and VCs are posting a slew of blog posts and PowerPoint presentations informing their portfolio companies on how they will have to survive for years without new funding.

The tone of the moment is one of uncertainty – something most of us have never experienced. No one knows how bad things are going or for how long. The rational response for many leaders is to batten down the hatches and prepare for the worst. This means canceling investments, freezing new hires and conserving cash.

However, previous recessions have taught us that the companies that cut fastest and deepest – cutting costs, laying off workers – are not the ones that thrive on the other end of recessions. By starving, they weaken and have less ability to seize opportunities as the economy rebounds.

Layoffs are particularly destructive to company culture, lowering the morale, commitment and productivity of remaining workers. They diminish the company’s internal know-how and damage the company’s image with customers. The net result is that companies that resort to layoffs to survive adversity often find themselves less profitable and may struggle for years to regain their footing.

Limiting the number of full-time employees and bringing in freelancers is a way for startups to play both defensively and offensively to increase their options while controlling costs.

Take-out? Playing defensively in a downturn is not a recipe for success.

Often the companies that come out on top are the ones that find ways to play both defense and attack. They end up taking market share from competitors and putting themselves in a position to dominate in the boom that inevitably follows.

It’s not an easy balancing act. In the 2010 Harvard Business Review study Roaring out of Recession, the authors found that a key element of success was the ability to re-examine and reconfigure the entire operation to reduce costs and increase flexibility. .

For startups in Series A or earlier stages that have a war chest, there is a way to easily expand the runway while maintaining flexibility and option: freelancers.

Freelancers can help keep your business burn rate low if you employ them for tightly defined and budgeted projects. Reach and spend can be limited until there is clear ROI on a small scale. Once positive unit margins can be validated and revenue models become clear, freelance talent platforms can allow flexible adaptation of a work strategy.


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