Startups Post-COVID-19 Innovation, Finance and Talent with The Harris Poll

I talk with Yassir Hassan of The Harris Poll. Director of Brand Strategy and Insights, and an author of a white paper “Striving and Thriving: Startups in the Post-COVID-19 World, Yassir, brings insights into how COVID has impacted Startups in relation to Innovation, Finance, and Talent.

See this episode at - https://totallyhyped.com/insights/

Get the whitepaper here - https://totallyhyped.com/startups-post-covid-19-the-harris-poll/

Chapters

• 3:39 Marker 01
• 23:24 Marker 02
• 28:51 Marker 03

Transcript

Cale Guin: The goal of this program is to simplify marketing for small businesses. Small businesses don't have the time, money, or patience to mess around. My name is Cale Guin and I'm here to put things in perspective, to provide you with free marketing advice in small doses that are easy to absorb and apply. I'll tell fun stories, interview some amazing experts, provide easy to execute how-tos, and answer your questions all here on Totally Hyped, in Feedspot's top 25 must-follow small business marketing podcasts on the web.

COVID-19 has affected everyone in some way. We've all been a part of a world-shaking shift, widening divisions, changes in the way we look at things, and innovations in the way we live and the way we do business. We're witnessing a historic shift in the way employers employ and the way the workforce views work. Look at any category of worker life and there's a unique way in which it's been impacted. Startups, for example, are starting in an unprecedented time.

In this episode of Totally Hyped, I talked with Yassir Hassan of The Harris Poll company, director of brand strategy and insights, and an author of a white paper, Striving and Thriving: Startups in the Post-COVID-19 World. Yassir brings insights into how COVID-19 has impacted startups in relation to innovation, finance, and talent. Whether you are a startup or an SMB with a deep history, you'll enjoy the timeliness of the topics and the insights and how to tackle some of today's most dynamic business challenges. Listen as Yassir and I dig in. Tell me about yourself and start with your name and what you do for a living and how you got to be in the profession that you're in.

Yassir Hassan: All right, so my name is Yassir Hassan and I'm a director with The Harris Poll. My work primarily focuses on brand strategy and insights. I've been in the research and insights business for about 14 years now. How this all is started was with a United Nations Industrial Development Organization. That's where I started my career working in the entrepreneurship division branch. That's where my connection with startups actually began.

Cale: Wow.

Yassir: If you're looking for a street cred, I was also once a startup founder.

Cale: Oh, nice, and what was that all about?

Yassir: That was on a product that we imported from Africa, Baobab. This was meant to be an organic wellness and lifestyle brand.

Cale: Nice. When you become an entrepreneur, in my experience anyway and everybody I've ever talked to, it's hard to not be that. How did you make the transition from being an entrepreneur to a 9:00-to-5:00 job? Your job is pretty unique, so talk about that a little bit. What was that transition like? What do you like about what you're doing now compared to the entrepreneurial path?

Yassir: Well, first thing, just having the experience as a founder, as an entrepreneur, it just allows me to see things from the eyes of my clients now, right? That's extremely helpful. In my role, I am expected to bring entrepreneurial thinking, so that could come out in terms of new innovations, new products. It's been immensely helpful to have that experience.

Cale: Let's talk a little bit. I will intro this. I'm going to cut this little part out right here because I'm going to let you know that I'm going to write an introduction that sets this whole thing up that says that you guys did this study and I'm talking to this guy about this study. That will come before this and I don't have to talk about why we're having this conversation, but my next question is going to be specifically about the study, the one that I told you I was going to insert. Then from here, we're just going to keep rolling, okay?

Yassir: Sounds good.

Cale: All right, so then what sparks this study and how did you and the team decide which topics and questions you wanted to look into this study on startups after COVID?

Yassir: The first thing is curiosity and interest in startups. We're particularly interested in how they're faring right now in this particular juncture of the pandemic. We also believe that the startups are somewhat underserved, at least when it comes to primary market research literature. Our study focuses primarily on innovation, finance, and talent. These tend to be classic preoccupations in the startup ecosystem. It was only befitting that these become a center of focus for the study.

Cale: When I read these studies, what happens to me all the time is I'm like, "Oh, that was a great question. Very interesting." Now, I want to know the context to that. How do you guys do that? Obviously, you're not down at the mall with a clipboard asking people questions and it's not a dynamic conversation. How do you get into some of the contexts? Some of the questions that we'll talk about today will be absolutely asking about context. How does that work?

Yassir: In terms of the actual research questions, we start out with just surveying the landscape, looking at what's being published if there are some gaps out there in the literature that we could fill in. This whole thing tends to be highly collaborative, right? I didn't do the study by myself. I had a team and we are brainstorming on questions, revising questions. This is the process and how it works.

Cale: Got it. [clears throat] I apologize. [coughs] A little coffee going down the wrong way there. In the survey, there's a lot of the startup leaders cite the pandemic as a primary driver for opportunity, new innovation. The biggest areas of growth and the featured areas of opportunity were telehealth and fintech and things of that nature. Yet at the same time, they were saying that 77% of them were saying, in fact, that it's almost more difficult now to drive innovation. That seems confusing. Do you have any idea what's behind all of that?

Yassir: Right, but let's start with one thing. It's not really unusual to see opportunities emerge out of crisis. This goes back to the notion of "creative destruction," the term coined by an Austrian economist. His name was Joseph Schumpeter. The idea behind this is that when you have a crisis, you have new needs and shifts in consumer behavior. That usually amount to new opportunities. Take, for instance, the SARS pandemic in Asia in the early 2000s. That led to huge adoption of e-commerce as people sheltered in.

While there might be opportunities to innovate, maybe plenty of opportunities to innovate, it doesn't automatically follow that these opportunities will actually translate into products and services. Having opportunities, that's a necessary condition, but it's not a sufficient condition. There is a host of other ingredients that have to come together to make the innovation recipe whole, if you will. It's these ingredients that startup leaders are telling us are lacking right now.

You have about 83% of startup leaders saying that top management buy-in is difficult to come by now in the aftermath of the pandemic. Also, to have successful innovation, you got to have budgets to finance innovations and you got to have budgets to finance the R&D that goes into it. A sizable amount of the entrepreneurs we talked to, about 77% say budgets for innovation have decreased.

Cale: The damn budgets, right? Isn't that the thing that stops some of the greatest innovations? [chuckles] Budget to me is always a perceived thing because there's never any budget for something somebody doesn't understand or something somebody doesn't want to do, but, man, they can find budget for anything they want to do or anything that is their pet project. I always find that interesting.

Related to that, though, there are some great innovations that have occurred. Even in small businesses, you have restaurants that now deliver and bring out to the curb and do things that they were never doing before. The concept of ghost kitchens where there's no actual front-end to a restaurant, but there is just a building full of kitchens that make food for carryout or delivery.

Maybe they're simple and, quite frankly, require less budget maybe than they did before. If there is a good thing about something like this, it is that innovation. I'm sad that they don't open the purse strings a little bit. By the same token, the thinking is there. I think that that's where we can set ourselves apart as a country is in the innovation, right?

We don't have the people's strength, right? We don't have 300 billion people. We don't have, I should say, 300 billion people. We have 300 million people. We don't have three billion people. We don't have that human resource factor where we can just keep plugging people into something. We need to do the innovation. That's the one thing I've liked about the pandemic. As you say, it doesn't necessarily equate to opening the purse strings and getting stuff done.

Yassir: Yes, you make some really good points there. There's a difference if we're talking about micro-innovation that happens on a daily basis every day. If we're talking about big-scale innovation, then you really need these budgets, right?

Cale: Right.

Yassir: To your point about dedicated teams for innovation, this is one of the things that came out of the study where 81% of the entrepreneurs we talked to are saying that it's really hard now to assign dedicated innovation teams. I imagine that's a huge bottleneck also.

Cale: Well, speaking of all the cash that's required for innovation, nearly 90% of the startups in your survey said that they believe now cash is king for investors to look at an investment as a favorable opportunity. Before, it used to be just a good idea. I don't want to discount that. Obviously, there's more than, "Hey, that sounds like a pretty good idea. Here's $1 million."

I know there's more to it than that, but is there any insight as to how that changes a startup's focus? I see a lot of startups out there where their goal seems to be to get funded as opposed to build a great product or build a great service. It's like, what can we do now to get to the next round of funding? Has this changed their focus at all, this idea of what it's like to get financed?

Yassir: Well, you're right. Let's talk about this shift that we're seeing first. It's true that prior to the pandemic, investors just looked for organic growth potential. If you were in the consumer side of things, if you mustered a good consumer audience, then that worked well for investors. If you were in the B2B space and you were able to enlist a couple of big logos, investors were thrilled, right? Now, and according to the study, the majority of startup entrepreneurs are telling us positive cash flow.

When you are in a situation like this, you find that startups having the need to reevaluate and ultimately re-engineer their business models to drive more revenue or enhance their profitability. Either find new revenues streams or find new efficiencies to reduce costs and boost up the bottom line. What does that look like in actuality for a startup, let's say, in the digital streaming space when that probably relied heavily on subscriptions? That could mean enhancing those subscription plans, making them more flexible, and perhaps introducing or promoting paid preview options so that you are able to get additional revenue streams.

Cale: One of the things that I thought was interesting was according to the study and the way it's presented, it seems like there's this customer-centric shift and this idea of workforce diversity, which seems like, well, that should just be anyway. It seems to be more focused on that or that the pandemic has either lifted that or made someone aware or maybe it's just that you asked the question and maybe nobody's been asking that question, which is also interesting. Do we know why the pandemic causes those factors to be focused on?

Yassir: Well, certainly, these are not new concepts in the realm of customer-centric innovation and workforce diversity. What we're seeing is that the pandemic has just heightened recognition of these two ideas as being instrumental for innovation in this so-called post-pandemic era. The way we went about this in the study is that participants had a list of options and these came on top.

Cale: Nice. It seems interesting to me. Now, granted, I think that the reality of what I'm trying to get at is there's no benchmark prior to this for us to say that this is an increased focus versus it's just been a focus. While it does seem to be a primary to their thoughts right now, we don't know what it was three years ago, but those are interesting things. You wonder if some of these are new because some of them like diversity in the workforce seems counter to a lot of the clashing of ideals today, but it is obviously necessary for growth.

When you consider now, we have the Great Resignation and all of these people, I'm even hearing now that record numbers of people are leaving their positions. I always thought an interesting concept of the world would be if everyone quit their job that they're doing right now and just did exactly what they wanted to do that almost all jobs would get taken anyway. The reason I think that is because there are people who want to go to a factory and just do this thing for eight hours and be done.

There are absolutely people who like that because it's regimented. I don't have to think about it when I go home, none of those things, and then there are people who are going to want to pick up the garbage because of the eco-friendliness of that and what have you. I just feel like somehow, everything and maybe even more would get done. I'm probably horribly wrong. [chuckles]

There are probably all kinds of things that wouldn't get done, but I always thought that that would be interesting. We have this thing right now where people are leaving their jobs and my guess is to go do something that's more fulfilling. Maybe it pays more, but they have this confidence right now and the workforce seems to have the upper hand. With the Great Resignation and record numbers of people leaving their jobs, there's obviously more startups right now.

There's a record number of small businesses being started, given that there's this reluctance to invest in just great market potential. What should a startup be doing right now to attract those investors, given that there might not be any track record for what they're doing, or do they have to go the extra step to actually prove their product prior to getting any investment?

Yassir: Well, Cale, you don't say this directly, but there is a bit of an assumption and a myth in your question, right? The assumption being that every startup needs an outside investor. The myth is that most startups rely on outside investor funding if we're talking about debt and equity financing right here. Historically, we know that startups relied on personal funding, money from personal savings, cash from family, friends, and fools as the joke goes, right?

Also, bank loans were a major source of startup funding, right? Our data now shows that that trend is still going on even in the so-called post-pandemic time, right? I imagine these are going to continue to be the primary sources of funding. In terms of what startups can do right now, I think there is not a way around it. If you are already in the business and you're looking to get more funding, then you've got to demonstrate that you can bring back cash flow. You can bring it back to positive cash flow.

If you're just starting out and looking for funding, also, I think it goes back to cash flow. You got to demonstrate that the business model you are bringing is innovative and that it's going to bring in cash flow as quickly as possible. This is just the economic environment that we live in right now where investors are interested in immediate returns and seeing the business actually driving the kind of returns that they're expecting.

Cale: It's interesting. You're right. There is a myth in that, right. I've never borrowed money from an investor in all the years I've been in business, but I really do. I work with a lot of companies that don't seem to be making a lot of headway in completing a product or a service as much as they seem to be completing whatever is necessary to get the next round of funding. Those are usually a little bit of red flags for me. I don't really like working within those situations. I'd like to see a finished product and see what the fruits of my labor are. To your point, that probably is very accurate. Maybe I'm more than norm where if you listen to the news, you think I'm the minority or the guy that never borrowed money.

Yassir: On another level, I do sympathize with those startups that you are referencing because also, a lot of the times, you need the investor funding to actually complete the product or the service that you want to put out in the market. You know you have a prototype and you want to scale it, right? What are you going to do? You have to pursue that money.

Cale: There's no question that it's necessary. I think people sometimes get comfortable with it too while we got this round of funding. "If we just get here, we can get another round of funding," rather than, "Let's see what we can do on our own." In my opinion, it would almost always be better to borrow less. That seems obvious, but it doesn't seem like all companies adhere to that simple logic.

Now, let's talk about, in my opinion, probably the most important topic of the day, right? Let's talk about acquiring talent, retaining talent. It is one of the things that you can't turn on the TV, you can't have a conversation at the water cooler. I might be a little bit biased here because my significant other has been in HR for 20-some years. Certainly, the talent acquisition and retention challenges is very real right now.

You guys have done some studies with CareerArc and showed that nearly a quarter of employed Americans are considering leaving their jobs in the next 12 months. Does anybody have any idea what's going on here? Why? How did the employee get into the driver's seat of everything right now and what's driving this confidence to say, "You know what? I'm going to do this a different way"?

Yassir: Well, that's a great question, Cale. Unfortunately, the juries are still out in terms of what's driving the Great Resignation as a macro trend or a phenomenon that we're seeing now in the labor market. I think your question is linked to that at some level. This study we did with CareerArc, I think it was late last year, may give us some insights into why so many of employed Americans are planning to quit and I should say planning to quit in the next 24 months.

We know from our study that employees want better working conditions. Almost a third of the people we talked to are saying that better working conditions are a driver. Also, we know that people are just burnt out. We got about 30% of the people we talked to citing burnout as a reason for why they want to quit. I think this one is not going to come as a surprise, warning a higher pay, right?

Cale: Back up one time. What was the number of the burnout? What was that?

Yassir: 30%.

Cale: 30% burnout. That seems actually somewhat low to me, but you listen to everybody. I can't remember a conversation, "I've been working a lot lately. I'm so busy." I don't remember a conversation not starting out that way. 30% seems low, but I'm sorry to interrupt you there. You were saying 30% were based on burnout and, of course, then there's some chunk that are looking for more money.

[crosstalk]

Cale: I'll let you finish that thought, but it's been my experience that money seems like the easy thing to look at for a driver to either leave a job or take a job or what have you. 29% isn't really that much when you consider that you think everybody wants more money. At the end of the day, sometimes it's just I want-- When you talk about working conditions, can we get into that a little bit? Better pay, maybe more hours or less hours. What were some of those things that led to a better working condition?

Yassir: Well, working conditions, and this is not from the study in particular, but that could mean a host of things, right? It could mean if the culture that you're working in is actually an engaging culture, a culture that values and promotes employee engagement and employee satisfaction. Because if we're talking about a toxic culture, nobody really wants to work there, right? Better working conditions could also relate to safety. Especially right now in the COVID era, that's a huge deal for a lot of employees. I want to point out one thing. This intention to quit is mostly coming from younger workers. In particular, ages 18 to 34.

Cale: Interesting.

Yassir: We find that they're twice as likely to have that intention to quit compared with their older counterparts.

Cale: Interesting. I love that you bring that to the table because, a lot of times, a report like yours talks about the higher-level things that you find. When you get into those types of things, gender, age, nationality, all kinds of different factors that might drive people's decisions, I love when we can put that into the equation because, a lot of times, it matters a lot. A lot of what we're seeing right now is a demand for recruitment marketing to make sure that they're getting in front of top talent or that top talent is considering a brand that maybe they wouldn't have otherwise known about.

We've worked with companies that have so many brands that you might recognize that the top-level brand that owns all of the brands that you might recognize has a difficult time retaining talent or acquiring talent because nobody's ever heard of the top-level company. They have these great jobs and the kind of what's lost on that is how impressive that company is compared to the brands that they own.

There's always a challenge there like, "How can I look better than the other jobs that they're considering?" That is a huge component to what drives business today. A lot of people won't speak it, but it turns out to be what they end up wanting is we need to be more attractive to talent. There's an interesting thing that your study points to that I really want to dig into here.

There's all these studies that point to this huge gap between startups. In fact, I'll broad that out and say that every business I believe feels this way and their thoughts about where employees and how employees will be working for them and the gap that exists between that and what employees expect today. They want at least a hybrid working situation where they can work from home or maybe flexible hours or what have you.

Do you guys have any idea what fuels that gap, why businesses feel like-- I think one of the things is that businesses feel that, "Soon, all our employees will be working back at the office." If you ask an employee, they're like, "No way in hell am I going to go back to the office." I want to know what drives that. Is this a weird standoff that's happening or are they unaware? Are the businesses unaware of how employees feel? Do you have any idea what's going on there?

Yassir: Yes, so we're definitely seeing the contrast in the data in terms of what employees want and what employers are actually willing to offer. We did a study with CNBC where we are seeing that 76% of employed Americans would like their company to make work flexible in terms of both location and schedule. When we did this startup study, we're seeing that startups tend to be more flexible when it comes to schedule, but not work location.

In fact, 67% of the startups we talked to began offering flexible hours already and 25% intend to do the same. When it comes to workplace location, almost half of the startups plan to bring most of their employees back to the office. Cale, obviously, one's ability to work from home or have a flexible work location depends highly on the type of work they do, but we are increasingly seeing flexibility becoming more of an expectation on the part of employees as opposed to it being a perk, right?

Those employers that tend to push back on flexibility, for me, it seems that they still got a little bit of work to do when it comes to performance management, especially in the context of remote or hybrid work. Because if you really nailed performance management, you really shouldn't be focused on what your employees are doing and where they are. The focus should be on job outcomes. Let's not forget the role of culture here, Cale, right? If, historically, remote work has been perceived negatively in your organizational culture, then that's definitely going to be a barrier. We know cultural shifts take a long time to come about.

Cale: Isn't it funny? I'm an old man. I'm 53 years old. Granted in the whole scheme of things, there's obviously people older than me. As far as what I've seen, this feels like the first time in my lifetime where the employee has had such an upper hand, where the employee can really say, "You know what? If you are not going to give me what I want, that's okay. I'll go somewhere else and have all the confidence in the world in doing that."

I've not seen that in my lifetime. In fact, I've seen the 1980s where the economy was bad. I lived and got partially destroyed during the recession of 2008, 2009. People would think they're lucky stars to have a job and would pretty much do anything to keep any job during those times. I just find that this is a very interesting moment. I don't know historically if there was another moment like this where jobs were so easy to come by that people are just willy-nilly just switching things up whenever they wanted.

I find it fascinating. I also find it provoking in the sense that not only do business owners need to think about this, but this is an easy win for you to offer the flexibility in schedule and workplace. Because most studies will show, and I don't know if you know of any specific, but that productivity's actually been up during the pandemic. Therefore, how do you align those things?

It's confounding that business owners and startups are feeling that way that we want everybody back in the office when, clearly, it's been working for them when they're not. I don't know if you guys have any insights into that or not. The productivity aspect, I don't know if you know that-- do you have any empirical data that says that, in fact, productivity was up for the most part and, like you said before, certain types of jobs that don't require one to be in a specific place?

Yassir: Well, not data by The Harris Poll per se. We do find this trend to be very fascinating for sure. At some level, I could maybe provide some anecdotal evidence just citing my own experience and how being able to work from home and have a really flexible workplace has helped me personally, right? I think as more evidence come out in terms of the link between productivity and flexibility, I think those employers that currently push back on it are going to start paying attention.

Cale: You talked about a safe work environment just a little bit ago. I love history around the turn of the 20th century. Back then, a safe work environment meant the difference between living and dying, right? People working 16-hour days and working around heavy equipment and bad things happened. We're not talking about that as much today. I think most of those things, there are still some dangerous jobs out there.

For the most part, we have a lot of safety precautions in place. What makes a safe work environment in general today? Is it things like cleanliness and making sure that we're protecting against disease and the promotion of some of the COVID variants that we're seeing going around right now? What makes a safe environment today given our circumstance?

Yassir: Well, I want to start by saying that startup employees who are being asked to go back to the office should actually feel reassured that their employers are committed to safety, at least in the context of COVID-19. We have strong data to show that over 80% of startup founders believe that their employees should maintain social distancing during working hours, right?

We have about almost the same number of these leaders saying that employees need to get the COVID-19 vaccine. Also, we got about 82% of startup leaders saying that employees need to continue to wear masks during working hours. These are all very important elements of COVID-19 safety. I think this is the big deal right now, especially in the context of returning back to work. We are happy to see that there's this level of commitment actually on part of startup leaders.

Cale: I was surprised that startups in your survey said, in fact, that they were not having a problem attracting talent, where it seems like everyone else in the world is having a problem attracting talent. Is there information in the studies that helps us understand what is driving that? I see a lot of compassion regarding mental health and wellness. Are these things playing a role and does it matter who in the survey-- I just want to say age might play a role in that. Gender might play a role in those kinds of answers. Are you seeing anything that gives you clues as to why startups are not having a problem attracting talent where the rest of the world seems to?

Yassir: Well, that was a surprising finding for me as well, but it started to make more sense as we dug more into the data, right? It's actually a constellation of factors that are making a startup successful in this "war" for talent, right? During the onset of the pandemic, there were huge layoffs, right? That opened up a pool that was not reachable for startups before. They were able to recruit top talent that would have been otherwise so difficult to recruit, so that's one factor.

We're also seeing that the startups' willingness to pay sign-on bonuses play a role here. Going back to your point about compassion, willingness to be compassionate, and in tune with what employees actually want, and paying attention to their psychological and emotional needs, that's a huge one, right? We know from a study that we did with CNBC that 41% of American workers were considering leaving their jobs or actually doing so because they feel that their company didn't care about their concerns or provided empathy during the pandemic.

There you have, 73% of startups we talked to have already launched wellness programs. Generally speaking, a huge number of startups, about 85% say that their businesses need to offer free access to mental health and wellness programs. By paying attention to these things and actually implementing those programs, startups are sending strong signals to the labor market around the degree to which they care about their employees. That's usually received very well by employees.

Cale: Yassir Hassan, it has been an absolute pleasure talking to you. I'm very excited that we got this off the ground today. Is there anything else about the study that surprised you? Are there other things that you'd like to leave us with as far as what you learned from doing this study?

Yassir: Yes, so maybe related to the last question, one of the things that I found really interesting is the degree to which startups are willing to go in terms of supporting their employees who are working from home, right? We see them making investments in the home broadband connections, furniture for home office, senior care, childcare. These are great things that just send the right signals to employees and to candidates as well, right?

At a fundamental level, Cale, that's a show of compassion as far as I'm concerned. One thing I would like to leave you with is we've been really interested in startups and we are actively working on products and services that they may find very helpful. I make a reference here to one of the frameworks we put together. It's called the Harris brand growth framework.

That's a great tool for startups, where we help them basically along every step of the brand growth cycles. We work with startups on defining and understanding their market. We work with them on articulating their value to the market. We work with them on accelerating their strategy and, hopefully, after much success, sustaining that momentum. Ask me about it.

Cale: We'll do it. By the way, you, sir, are welcome back anytime. I had an absolute pleasure. This is a great conversation, one that I would like to dig into even deeper as you guys, I'm sure, will be looking into a lot of these topics. Now that you have some benchmark information, you'll probably want to look into some of these things a little bit more deeply. I'd love to have you back. You're welcome back anytime. Your role seems to fit well with what we're looking to do as far as brand growth and marketing and what have you are concerned. Again, thank you so much for your time, Yassir Hassan. I hope you'll come back.

Yassir: It's my pleasure. I appreciate you having me, Cale.

Cale: We'll have more conversations with The Harris Poll company in the near future. For more information on this episode, go to totallyhyped.com/insights where you can download the white paper and for quick and easy direct access to The Harris Poll company.