Rising Up in a Downturn: Advice From SurveyMonkey’s Tom Hale
Those who went through the 2001 and 2008 economic downturns emerged with valuable lessons on navigating a crisis—not to mention a heck of a lot of resilience.
Currently President at SurveyMonkey, Tom Hale helped Macromedia survive and thrive after the dot-com bubble and had a ringside seat at Redpoint Ventures during the Great Recession of 2008.
Here, Tom shares practical advice on keeping your team calm, taking risks, and why it’s important right now for leaders to show vulnerability.
You were SVP of Business Strategy at Macromedia as the dot-com bubble burst and the economy halted after 9/11. Can you walk me through what that was like?
Tom: I was at Macromedia at the time, and we were right in the middle of the largest acquisition we’d ever done. We had a great business (400M/1500 employees) in web tools and multimedia, and we wanted to be in the app server business.
We’d won the tools category, and we wanted to buy the leader in servers and leverage our client runtime—which is why Adobe ended up buying Macromedia. Ancient history, but I can remember the day when all our daily bookings for all of our products fell off. It was as if every IT department, agency and web team decided to stop spending money all at once.
“Redefine the category if you can, especially in a downturn.”
That day, I knew we needed to make big changes—both on the expense side and on the strategy side. Changing expenses was straightforward, but the situation was so fluid that our ability to forecast revenues was… challenged. We went through with the acquisition, and that gave us the ability to pursue a radically different strategy, but we were set up for the go-go years of dot-com 1.0. So we had to prune back even as we were pivoting the teams and the leadership to chase a new opportunity.
But during that time, we adopted a kind of “let’s transform the business” rallying cry—it was a super creative time. We came out with new products, new branding, new packaging, new GTM, new business models.
Despite the downturn, we responded with a surge of energy and new ideas. We were lucky to have some strong franchises, but as a team we turned the company’s focus to new opportunities. It didn’t happen overnight, but our pivot and the pace of transformation was really exhilarating because once it started to work, we could put our foot on the pedal.
One of the things we did early on in this pivot was a pricing/bundling strategy that simplified our marketing and positioned value for our customers. And we introduced a subscription business model. Both of these ideas are visible at Adobe today. The suites and the subscription model have been a huge success.
Tom joined us at the PLG Summit in 2019.
Did that period influence how you manage a software company?
It was pretty formative for me. Particularly as I think about managing a company through a big transition and how to align people, many of those lessons—keep some dry powder, have a portfolio of bets, test and learn, the power of business model transformation and how to lead through change, and the importance of vision to motivate people during times of uncertainty and the like—are some of my most valuable lessons and tools.
And from a personal perspective, some of the best relationships came out of that era because we were all pretty energized.
What are the biggest lessons you learned from that time?
Never let a good crisis go to waste.
As leaders, you have to push teams twice as hard to go half the distance. To put it another way: If you think your vision is transformational and expansive, inertia and reality will slow you down. So go for it.
Redefine the category if you can—especially in a downturn. You get lots of license to do radical things and you’re less constrained by optimization of your business. Because everyone is in the trash can.
Get started. If the world really is changing—and I’m not yet sure the COVID-19 crisis will really change the world—then the best thing you can do is get started on the new thing. What got you here may not get you where you want to go.
Put your best talent and leadership on transformation.
Let’s fast-forward to 2007/2008 when you became an EIR for Redpoint Ventures. What advice did you give to companies back then about how to adapt to the Great Recession?
At that time, everyone was reeling from the Global Financial Crisis. However, many great companies came out the other side stronger, like Facebook, Google and Apple. They kept their eye on the prize and played big in the long game. It sounds trite, but it’s true.
The other advice we offered back then was to look for countercycle businesses. For example, the sharing economy wasn’t a thing, but lots of folks needed to make extra money. So HomeAway, VRBO and Airbnb all thrived in the downturn because they created new ways to enable network effects around making extra dollars.
What is one thing leaders should not be afraid to do right now?
Leaders should not be afraid to show vulnerability or a personal side.
We were having a company all hands in Zoom, and the CEO’s two-year-old climbed up into his lap and stole the show. It was utterly authentic and captured the challenges that folks with young kids are facing as they work from home in limited spaces.
“Leaders should not be afraid to show vulnerability or a personal side.”
The moment engendered genuine followership and empathy and affection. All of that adds up to productivity, engagement and loyalty.
Are there specific resources that you recommend for operating a seed-stage company through a downturn?
If you are a seed-stage company, test and learn your way into new opportunities with speed. I’ve been really impressed by how some of the mobile data collection companies have steered into the COVID opportunity and created new offerings by positioning themselves into the crisis.
I’m thinking of the data visualizations, some of the big data companies, and others who are now on the world’s radar. Obviously not everyone can be these companies, just like it’s hard to pivot to become Zoom, Teams or Slack, but the opportunities could be as simple as pivoting towards government or healthcare, or looking for new patterns of search to position your SEO against.
Disruption means opportunity, so be agile, fail fast and run hard. And as a seed company, I don’t know that you have much of a choice but to hunker down, preserve capital and look for the new angle.
What is one unconventional piece of advice that you’d give, that you think others might not share?
Cash is king. When the macro environment gets harder, it’s all you need to outlast the other folks. Then you can buy them.
Many people were taken aback when Brian Sharples raised $275 million to do a roll-up of alternative accommodations sites during the global financial crisis. But he did it, and he built a ton of value.
“Disruption means opportunity, so be agile, fail fast and run hard.”
How are you keeping your team calm?
We’re working hard to focus our intentional efforts, minimize distractions and avoid overreacting. The good news is that we’ve been able to feather the crisis into our planning for Q2, since we generally do a 90-day planning outlook in the last month of the quarter.
In addition, we’ve increased the frequency of check-ins and shortened our meetings to allow for more frequent interactions, as the pace of new information has been pretty high. Something like 2–3X the frequency.
One of the main messages I send during a crisis, especially to leadership, is to “dampen oscillations.” This is important because teams need their leaders to be calm—especially in the face of disruption. But we want to remain agile and be able to find opportunities as they arise.
We’ve also increased the frequency of “checking in” with employees via surveys. You’d expect this from a company like ours, which is based on the value of feedback, but it’s been super helpful.
How are you taking care of yourself?
Typical stuff. Exercise. Eating right. Making time to hang out. Allocating more time to connect with important people.
How has leadership changed in the last few weeks?
At SurveyMonkey, we’ve done some fun stuff as a team in Zoom, with games, cocktail hours, backgrounds, and dressing up in ugly sweaters or silly hats. We spend more time on personal connections and the messages of “take care of yourself” and “this too shall pass.”
We’re fortunate to not be in a business that has to make radical changes to survive this crisis, like in the travel or restaurant verticals where the disruption has been dramatic and instant.
“Teams need their leaders to be calm—especially in the face of disruption.”
Is there a different decision-making process leaders should follow right now to make sure they’re not making fear-based decisions?
Leaders should start to actively engage with their stakeholders—customers and employees and communities—to get a pulse on the ground truth. It’s more important in times of crisis to do this, and so it’s not surprising I’d advocate that leaders use pulse surveys to understand how people are feeling.
With a quick pulse of data, leaders can make better decisions. But the decision really depends on the situation.
Marc Benioff is weathering the storm and saying “Sign the no layoff pledge” because many employees are worried about their jobs. That’s easier to do if you’re a recurring revenue, high-margin business.
Airbnb halted marketing spend and froze hiring, but they need to realize that their community of hosts can’t just refund all of their future reservations.
As leaders, it’s really important to set a simple and clear framework for your teams to operate within, and then let them make the best decisions with the best information. So my advice is to make sure you’re identifying opportunities in an agile way, but working hard to keep people focused.
You always benefit from making decisions with data—and even more so in times of uncertainty. When it comes to looking ahead, surveys are great to capture the view of a population, and they can be deployed very quickly.
Note: If you’d like to send out surveys to your employees right now but you don’t know where to start, SurveyMonkey published an 8-step guide to launching a coronavirus employee survey program.