By Desmond Mularkey, Stripe’s Head of Revenue and Growth for Latino America,
Inflation, disrupted supply chains and economic slowdown. It is more important than ever for companies to be prudent and maximize their efficiency, but focusing only on short-term savings can lead to long-term losses. Being strategic and finding new sources of income is also extremely important; You cannot overcome a crisis just by saving.
learning from the past
In the dot-com crisis of the early 2000s, the Nasdaq fell 78% as thousands of Internet companies went bankrupt. Those that survived did so with very low ratings.
Some of the most successful tech companies of our time have not only survived but thrived during the crisis. Amazon started as a book retailer in the 1990s, but launched the Amazon Marketplace in the late 2000s. Bazaars weren’t that popular back then, so it wasn’t an obvious decision. At the time, market-making was complex and costly, but Amazon decided to invest despite the crisis, hurting its share price but rewarding with great success.
In contrast, Nokia, once the world leader in mobile telephony, faced a new threat in 2007 when Apple launched the iPhone. In 2008, there was a financial crisis followed by an economic downturn. Rather than allocating resources to long-term innovation goals such as working on a new operating system, Nokia opted for a simpler alternative: developing phone devices for short-term market demand. This lack of vision led the company into a steep decline, only to be acquired by Microsoft in 2013.
do more with less
The proliferation of SaaS APIs and tools has significantly reduced the operational burden on businesses, meaning large strategic projects can be implemented with lower long-term fixed costs. Building an Amazon-like marketplace no longer requires months or years of software development because it can be built directly from tools like Stripe Connect.
During a recession, reviewing your technology solutions and SaaS providers to identify where you can cut costs can be a useful exercise.
strategic decision making
Estimating the total cost of ownership (TCO)—an estimate of all the costs an organization will incur to acquire, install, operate, and maintain its IT infrastructure—can provide a clear picture of the true cost and long-term longevity of an investment. Consequences of choosing one provider over another.
You have to weigh the value of developer time against the benefit of using scarce engineering resources for more strategic parts of the business. In addition, the overall product offering of the software vendor and future innovations must be taken into account in order to maintain future flexibility. Recession brings change, and the world will look very different when the economy picks up again.
It may also be useful to do a Total Economic Impact (TEI) analysis. View the costs as investments and their potential profitability. Forrester recently conducted such an analysis for Stripe users and found that users saw an average ROI of 326% when choosing Stripe as their payment provider, both by optimizing payments and conserving developers’ resources and income. By using new sources of By starting new lines of business and spending more development time on developing their core products, these companies become more dynamic when the economy grows and more resilient when it declines.
never stop innovating
Centenary companies like Ford or Maersk have experienced many downturns, even ones as devastating as the Great Depression. Ford invented the assembly line in 1914 and today is the first automaker to think holistically about the digital payment experience for its customers. Maersk has experienced many crises over the past century and is now successfully embracing technology to provide its customers with a fully digital logistics platform.
Traditional companies have tried to learn from the success of technology companies adapting to the digital world. In the current economic climate, reversing that knowledge transfer might be a good idea: young tech companies can learn a lot about adaptability, innovation, and resilience from them.