Alexa von Tobel: Eliminating risk is the key to building a startup during an economic downturn
Launching a company, even in the best of times, is one of the most challenging exercises a person can go through. In an economic recession, it can seem downright impossible. But founders across the country, and indeed across the globe, are in the midst of that process as I write.
They aren't the first. Alexa von Tobel, founder of LearnVest and founding partner at Inspired Capital, publicly launched her fintech startup in 2009, and founded it in May of 2007. In that span of time, Lehman Brothers went under - in December of 2008.
The company was launched in the midst of the worst economic downturn in at least three generations (current circumstances notwithstanding). We briefly chatted with von Tobel about this in a recent episode of Extra Crunch Live, but the topic deserved much more exploration. Von Tobel was gracious enough to talk to us again, and gave us her advice and insights on what it means, and what it takes, to launch a business in the midst of economic uncertainty.
Write it downVon Tobel says that one of the most important exercises in forming LearnVest - a company that was acquired for $375 million by Northwestern Mutual - was writing out a business plan. It was 75 pages, and by no means a formal document. Rather, the LearnVest business plan was a brain dump of everything von Tobel could possibly think of as it relates to her idea.
It was nothing beautiful and by no means a work of art," said von Tobel. But it was valuable to put it together and walk through this blueprint of all the big questions, all the concerns. How would the customer feel? How big was the market? What was the competition? I even drew up a product plan of how I would roll it out. It was a budget, looking at how much money we think we need to get up and running."
This business plan also included the areas in which von Tobel felt she was not an expert. She wanted a clear expression of her own strengths and weaknesses built into the business from its very inception.
von Tobel had never written a formal business plan before. She had taken a few business classes at Harvard Business School, but didn't see the exercise as preparation for publication, but rather her own personal space to develop a product and business.
It was a macro, more thoughtful plan that allowed me to understand where things were positioned," said von Tobel. Perfect is the enemy of good enough. You don't have to be perfect, but you have to do enough that you have a really clear sense of the picture and a really clear sense of the cracks."