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A founder’s guide to crisis management | Uri Levine (Waze co-founder, serial entrepreneur)
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Uri Levine is a co-founder of Waze (which was acquired by Google for $1.3 billion in 2013), along with nine other companies (including another company he sold for over $1 billion). He’s also been on 20 boards and has been an advisor to over 50 startups. He recently released a new chapter of his best-selling book Fall in Love with the Problem, Not the Solution, which provides a guide to surviving crises at your company. In this episode, we cover: • The two types of startup crisis and how to handle them • Why speed of action is the most important thing • How to keep your team motivated when things look dire • A framework for deciding whether or not to pivot • What to do when product-market fit disappears • How to approach raising money during a crisis • More — Brought to you by: • WorkOS—Modern identity platform for B2B SaaS, free up to 1 million MAUs: https://www.enterprise-ready.com/ • Rippling—Automate HR, IT, and finance so you can scale faster: http://www.rippling.com/lenny • OneSchema—Import CSV data 10x faster: https://oneschema.co/lenny Find the transcript at: https://www.lennysnewsletter.com/p/a-founders-guide-to-crisis-management-uri-levine Where to find Uri Levine: • X: https://twitter.com/urilevine1 • LinkedIn: https://www.linkedin.com/in/uri-levine • Website: https://urilevine.com • Book: https://www.amazon.com/Fall-Love-Problem-Solution-Entrepreneurs/dp/1637746601/ref=tmm_pap_swatch_0?_encoding=UTF8&qid=&sr= Where to find Lenny: • Newsletter: https://www.lennysnewsletter.com • X: https://twitter.com/lennysan • LinkedIn: https://www.linkedin.com/in/lennyrachitsky/ In this episode, we cover: (00:00) Welcome back, Uri! (05:10) The new chapter: navigating crises (08:15) Types of crises founders face (29:10) Navigating cash crises (38:31) The importance of never giving up (46:26) How to keep people engaged through a crises (47:59) Transparency in crisis management (56:58) Navigating product-market-fit challenges (59:27) Deciding when to pivot or shut down (01:13:34) Real-life startup survival stories (01:17:06) Avoiding and preparing for crises (01:21:21) Final thoughts and book promotion Referenced: • Waze: https://www.waze.com/ • Moovit: https://en.wikipedia.org/wiki/Moovit • Order Chat: https://www.crunchbase.com/organization/order-chat • Fibo: https://finder.startupnationcentral.org/company_page/fibo • Behind the founder: Drew Houston (Dropbox): https://www.lennysnewsletter.com/p/behind-the-founder-drew-houston-dropbox • TomTom: https://www.tomtom.com/ • Khosla Ventures: https://www.khoslaventures.com/ • WeSki: https://www.weski.com/ • Larry Silverstein: https://en.wikipedia.org/wiki/Larry_Silverstein • Oversee: https://oversee.biz/ • Lessons from 1,000+ YC startups: Resilience, tar pit ideas, pivoting, more | Dalton Caldwell (Y Combinator, Managing Director): https://www.lennysnewsletter.com/p/lessons-from-1000-yc-startups • Tobi Lütke’s leadership playbook: Playing infinite games, operating from first principles, and maximizing human potential (founder and CEO of Shopify): https://www.lennysnewsletter.com/p/tobi-lutkes-leadership-playbook • Harley Finkelstein on LinkedIn: https://www.linkedin.com/in/harleyf/ • Zip: https://zip.co/us • Qualcomm: https://www.qualcomm.com/ • Einstein quote: https://www.brainyquote.com/quotes/albert_einstein_148788 Recommended book: • Fall in Love with the Problem, Not the Solution: A Handbook for Entrepreneurs (updated 2025 version): https://urilevine.com/book/#Pre-orde Production and marketing by https://penname.co/. For inquiries about sponsoring the podcast, email podcast@lennyrachitsky.com. Lenny may be an investor in the companies discussed.
Segments Timeline
Understanding Startup Crises
Uri Levine introduces the concept of crises that founders face, categorizing them into two main types: cash crises and loss of product-market fit. He emphasizes the importance of recognizing these crises and the need for founders to take responsibility for their company's success.
"let's talk about crisis I think it might be helpful to do a quick taxonomy of the types of Crisis Founders face so two abstractedly two types of Crisis one is I would call that a cash crisis all of a ..."
The Role of Conviction in Crisis Management
Levine discusses the critical role of conviction in decision-making during crises. He stresses that a founder's ability to make decisive choices is essential for team alignment and overall success, highlighting that ultimately, the responsibility lies with the founder.
"important behavior of successful seos of startup the second one by the way is making decisions with conviction if you don't make them with conviction then the team is not going to follow if the team i..."
Crisis is Inevitable for Founders
Uri Levine candidly states that every founder will inevitably face crises. He shares his extensive background as a successful entrepreneur and the lessons learned from navigating various challenges, setting the stage for a deeper discussion on crisis management.
"is the co-founder of ways along with nine other companies he sold two companies for over a billion dollars he's he's been on 20 different startup boards has been an adviser to over 50 different startu..."
The Importance of Crisis Management
Levine emphasizes the significance of crisis management in the entrepreneurial journey, noting that building a startup often involves transitioning from one crisis to another. He introduces the updated chapter of his book that focuses specifically on this topic.
"and the next Crisis and the next Crisis that you face as a Founder this topic is so important that Orie decided to update and re-release his book with a whole new chapter dedicated to managing crisis ..."
The Impact of COVID-19 on Startups
Levine reflects on how the COVID-19 pandemic created widespread crises for many startups. He shares a personal story about a startup he was involved with, illustrating the challenges faced when external factors disrupt business operations.
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Navigating Cash Crises
Levine outlines the first type of crisis: cash crises. He explains how sudden changes in funding or revenue can jeopardize a startup's financial health, emphasizing the need for founders to adapt quickly to these challenges.
"acquired warrant the fine grain authorization service warrant's product is based on a groundbreaking authorization system called Zanzibar which was originally designed for Google to power Google Docs ..."
The Challenge of Losing Product-Market Fit
Levine discusses the second type of crisis: losing product-market fit. He explains how this can occur due to various factors, including competition and regulatory changes, and stresses the importance of recognizing when a product no longer meets market needs.
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The Journey of Iteration and Failure
Levine emphasizes that the startup journey involves continuous iteration and learning from failures. He highlights the necessity for founders to remain flexible and open to change when faced with challenges to product-market fit.
"an offer letter ships a laptop with the necessary apps and permissions and even delivers a corporate card an employee needs to update their benefits contribution when they do it in Rippling the change..."
Recognizing and Responding to Market Changes
Levine explains the importance of recognizing significant market changes that can impact a startup's success. He shares insights on how founders must be prepared to pivot or adapt their strategies in response to evolving market conditions.
"ruri thank you so much for being here and welcome to the podcast thank you I'm really happy to be here I should have said welcome back to the podcast this your second time here which is a pretty rare ..."
The Consequences of Ignoring Market Signals
Levine warns about the dangers of ignoring market signals that indicate a loss of product-market fit. He provides examples of companies that failed to adapt and ultimately disappeared from the market, underscoring the need for vigilance and responsiveness.
"update your book you know end of the day um recent years have demonstrated major significant crisises throughout the world right from covid to um to interest rate to inflation to Wars to and then I re..."
The Importance of Retention as a Metric
Levine highlights retention as the key metric for assessing product-market fit. He explains that if customers are not returning, it indicates a lack of value in the product, emphasizing the need for startups to focus on delivering real value to their users.
"edition already it's will be published um in about a month um and um and it does include a new chapter and it's a paperback I love that you're solving the drops to be done make it easier to read we'll..."
The Disruption of Mobile Operating Systems
Uri Levine discusses the impact of disruptive technologies on established players in the mobile operating system market, highlighting how companies like Microsoft and Nokia failed to adapt to changes. He emphasizes the importance of recognizing when a product-market fit disappears and the necessity of going back to square one to innovate and survive.
"operating system that was running on pretty much all the phones in the world right so all the smartphones in the world from Nokia to Motorola to Samsung to pretty much everything and they look at it a..."
The Fibo Experience: Regulatory Challenges
Levine shares the story of his startup Fibo, which aimed to simplify tax returns but ultimately failed due to regulatory changes. He explains how the Israeli tax authority's decision to shut them down illustrates the fragility of product-market fit and the need for startups to be agile in the face of external pressures.
"restart because if you cannot you will die you're following your own solution and you believe that this solution is going to be marketed better than what the market wants and what the market wants is ..."
Avoiding Regulatory Pitfalls
Uri Levine reflects on his decision to avoid reliance on regulators after the failure of Fibo. He contrasts this with his experience at Waze, where they initially considered selling data to municipalities but shifted their business model to advertising due to slow regulatory processes. This segment underscores the importance of adaptability in business strategy.
"lost product Market feed overnight they basically say oh we're going to shut you down and that's tomorrow and and that's it right now we we did not have enough um you know run rate to actually because..."
Crisis Moments: The Waze Journey
Levine recounts the challenges Waze faced when Google announced its own turn-by-turn navigation. He discusses how the industry reacted and the initial skepticism from investors, highlighting the importance of understanding market use cases and the need for resilience in the face of competition.
"business uh development process right they they didn't really care and that was frustrating right even if you offer that for free they still don't carear and the result is that we changed the business..."
Understanding Market Use Cases
In this segment, Levine explains how Waze differentiated itself by focusing on daily commuters, contrasting its use case with Google Maps. He emphasizes the significance of tailoring products to specific user needs and how this strategic focus contributed to Waze's eventual success.
"first one is actually TomTom TomTom was the provider of the maps for Google to do navigation and they basically say no we have our own Maps we are going to terminate the contract and to saying wait a ..."
Navigating Investor Relations During Crisis
Uri Levine shares insights on the difficulties Waze faced in raising capital after Google’s announcement. He discusses the importance of maintaining investor relationships and how unexpected opportunities can arise from industry shifts, illustrating the unpredictable nature of startup funding.
"the map looks U you know almost obstructive they are not but they looks like obstructive um and in way less details and the result is that the ability to create something that is simpler and people ar..."
Types of Crises Founders Face
Levine categorizes the two major types of crises that startups encounter: cash crises and product-market fit crises. He outlines the steps founders should take to assess their situation and make timely decisions to navigate these challenges effectively.
"you've shared all these types of Crisis I think it might be helpful to do a quick taxonomy of the types of Crisis Founders face you shared uh regulation changes competitors coming at you investors not..."
Responding to Cash Crises
In this segment, Levine discusses how to respond to cash crises by evaluating the impact on revenue and adjusting expenses accordingly. He emphasizes the urgency of making decisions quickly to preserve options and maintain team morale during challenging times.
"need to decide today right now and the reason is very simple right if you want reduce the burn the expenses in order to extend the Run rate if you wait two more month then it's going to become nearly ..."
Crisis Management in the Travel Industry
Levine shares a personal story about his startup in the travel industry, detailing how the COVID-19 pandemic led to a significant crisis with cancellations and financial uncertainty. He discusses the strategic decisions made to navigate this crisis, including resizing the company and planning for a longer recovery period.
"that is really interesting and we go back to co and I look at the you know two of my startups that uh that were in the travel space right one of them is whiskey and it's a essentially you know the boo..."
Raising Capital During a Crisis
In this segment, Levine explains the challenges of raising capital during a crisis, particularly when existing investors are preoccupied with their own issues. He discusses the concept of 'pay to play' and how it can be used to secure necessary funding while managing investor expectations.
"you're an airline guess what you have no Flyers so anyone in the travel industry has suffer from the same problem and the last thing on Earth that they care about is a startup that they invested at an..."
The Role of Luck in Success
Levine reflects on the role of luck in entrepreneurship, citing a famous real estate developer's perspective on the balance between luck and skill. He emphasizes that while luck plays a significant role, readiness and the ability to seize opportunities are crucial for success.
"actually very successful um after covid we U we used the time uh of Co to actually um improve the product and and as soon as Co was was over then we started to grow rapidly and Company is is profitabl..."
Taking Responsibility as a Founder
Levine discusses the importance of a founder's responsibility in the face of challenges, asserting that it is essential to take ownership of the company's fate. He emphasizes that blaming external factors does not contribute to success and that a proactive mindset is necessary for overcoming obstacles.
"good um for me lack you know I will Define lack as opportunity meets readiness Readiness is up to you opportunity not always beautifully said I I also agree with luck being so core to most people succ..."
Never Give Up: The Founder’s Mindset
In this motivational segment, Levine stresses the importance of perseverance during crises. He shares anecdotes about startup resilience and the necessity for founders to keep pushing forward, regardless of the difficulties faced. He highlights that giving up should only be considered under specific circumstances.
"care you also talk along these lines of you have this in your chapter this section of never give up in a crisis and throughout your journey this is by far the most important behavior of a startup CEO ..."
Strategies for Survival
Levine outlines practical strategies for startups to survive financial crises, including engaging employees through equity incentives when cash flow is tight. He emphasizes the importance of trust and belief in the company's recovery as key factors in maintaining team morale.
"up one is that your mission is wrong right so so the problem disappears and um if the problem disappears your mission is no longer relevant or not no longer valid and you might want to consider to giv..."
Leadership in Crisis Management
Levine concludes with insights on effective leadership during crises, stressing the need for decisive action and clear communication. He discusses the importance of maintaining a lean operation and preparing for unexpected challenges, reinforcing that strong leadership can help navigate through turbulent times.
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Building Leadership Through Transparency
Levine discusses the significance of transparency during a crisis, explaining that employees appreciate honesty about challenges. He advises founders to communicate openly about the company's situation and metrics, reinforcing trust and engagement among the team, which is essential for navigating tough times.
"be a way to to actually re-engage employees if you are unable to pay them the regular pay and and that was the case in in most of the startups that uh almost run out of cash um occasionally you can do..."
Engaging Your Team in Tough Times
In this segment, Uri Levine shares strategies for keeping employees motivated during crises. He stresses the importance of leadership and transparency, encouraging founders to involve their teams in the recovery process and to communicate openly about the company's challenges and potential paths forward.
"powerful advice and I want to spend a little more time here which is keeping people on board and engaged and motivated through a crisis so this uh kind of almost script you just shared is really great..."
Sharing Metrics and Challenges
Levine advises founders on how to effectively share company metrics and challenges with their teams during a crisis. He emphasizes the need for honesty without sugarcoating the situation, suggesting that key metrics should be displayed openly to foster a culture of transparency and trust.
"about everything like how what's an example of just like how far you recommend people go because you know you could just be like here's all of our data and metrics and numbers here's what our investor..."
The Urgency of Acting Fast
Uri Levine explains the necessity of quick decision-making in crisis situations. He illustrates how delaying actions can limit options and worsen financial conditions, emphasizing the importance of reducing burn rates and extending runways to secure the company's future.
"themselves it's less critical now if people ask then answer if someone ask okay so how many investors have you met that say no then um start counting 37 right be specific right that's a great answer I..."
Cost Reduction Strategies
In this segment, Levine discusses various strategies for reducing costs during a crisis, including the pros and cons of layoffs versus salary reductions. He highlights the importance of making thoughtful decisions that consider team morale and long-term commitment.
"within six months I don't know that but this is exactly the decision that you need to make that's a really great way of putting it just the math uh means The Leverage you have now to extend run rate R..."
Navigating Product-Market Fit Challenges
Levine shifts focus to product-market fit crises, outlining the critical questions founders should ask when facing such challenges. He discusses the importance of assessing relevance and the potential need to pivot or shut down, emphasizing the need for energy and resources to pursue new paths.
"is there a different way what about if management gives up on their salary that might make the same impact right and definitely the demonstrations of leadership right and by the way increasing the com..."
The Journey of Failure and Resilience
In this segment, Levine shares his personal experiences with his startup, Pona, detailing the challenges faced during its evolution. He highlights the importance of resilience in entrepreneurship, noting that many successful founders have faced near-death experiences with their companies. Levine encourages founders to embrace failure as part of the journey and to learn from it to ultimately succeed.
"successful pona is one of my uh startups that I started back in 2012 and U and back then we called that FX and we were dealing with financial fees in Israel and we were actually pretty successful and ..."
Validating Your New Path
Levine outlines a structured approach for founders considering a pivot. He emphasizes the need to validate the problem and the value proposition before pursuing a new direction. This segment covers the importance of team alignment and investor engagement in the pivoting process, ensuring that the new path is supported by both the team and potential funding sources.
"sudden um you know compan is 12 years old um and um and we pivoted twice and now we are um you know end of the day helping Americans to retire richer um helping finan advisors to um uh to support you ..."
Building Passion Through Validation
Uri Levine explains how validating a problem can ignite passion in entrepreneurs. He discusses the significance of engaging with potential customers to understand their needs and how this interaction can fuel excitement for a new venture. Levine stresses that passion should be built through real-world feedback and validation rather than starting with passion alone.
"fall in love with the problem not the solution and and for for a few reasons right and maybe number one reason is uh look entrepreneurship journey is about creating value simplest way to create value ..."
The Framework for Decision-Making
In this segment, Levine introduces a framework for founders to assess their business direction. He encourages entrepreneurs to ask themselves what they would do if starting their company today, emphasizing the importance of adaptability and continuous evaluation. Levine's insights provide a powerful reminder that staying relevant requires constant reassessment of strategies and goals.
"of those so you have the very significant value proposition and you think that you have something that is going to accelerate you dramatically because of the knowhow the technology the team then the n..."
Empowering Yourself by Quitting
Levine shares empowering advice on leaving unfulfilling jobs. He encourages individuals to take control of their destiny by quitting jobs that make them unhappy. This segment highlights the importance of self-empowerment and the idea that quitting can be a powerful decision, allowing individuals to pursue more fulfilling opportunities.
"this problem yep awesome and and I like this order right now some people will tell you oh my order is different and then I'm not saying if this is the right thing or the wrong thing but I think that u..."
Adapting to Competition
Uri Levine reflects on the competitive landscape faced by his startup when Google launched a competing product. He discusses the importance of continuous improvement and iteration in product development. Levine's experience serves as a lesson in resilience and adaptability, emphasizing that staying ahead in the market requires constant innovation and responsiveness to competition.
"that you do that first but this is pro for everything in your life right look if you if you are working in a place and you are not happy and you suffer there then then I would say um you know the guid..."
The Importance of Product-Market Fit
Levine discusses the relationship between product-market fit and cash flow, explaining how a lack of fit can lead to investor hesitance. He emphasizes that when product-market fit is lost, it may be necessary to pivot or even restart the company. This segment provides insights into the challenges of maintaining alignment with market needs.
"going to say good fomo but the result was that um um we had enough cash to keep on trying um and keep on iterating and iterating and iterating and eventually we ended up to be U very successful so tha..."
Crisis Management Insights
Levine shares his thoughts on crisis management, asserting that crises are inevitable for founders. He advises that while you can't predict the next crisis, having sufficient cash reserves can ease the burden. This segment highlights the importance of financial preparedness and quick decision-making in navigating crises.
"that the story is actually really illustrative of a point I was thinking as you were talking which is that product Market fit crisis often also leads to a cash crisis from investors not wanting to inv..."
Preparing for the Inevitable Crisis
In this segment, Levine discusses the reality that every founder will face crises. He stresses the importance of having cash on hand to manage these situations effectively. Levine also notes that while you can't prepare for every type of crisis, being financially secure can provide a buffer against unexpected challenges.
"avoid falling into a crisis as a Founder number one answer is no don't worry you will face crisis um and if you worry you're still going to face crisis um number two is that look it's way easier to to..."
Runway Recommendations for Startups
Levine offers advice on maintaining a financial runway, suggesting that founders should aim for 18 months of cash reserves. He discusses the trade-offs between raising capital and maintaining equity, emphasizing the need for a balance that allows for growth while minimizing risk. This segment provides practical financial guidance for startup founders.
"things when you say plenty of cash do you have any advice there's kind of common advice of have 18 months a Runway is there anything there you'd recommend uh for rounders and then and this is really d..."
The Journey of a Founder
Levine reflects on the entrepreneurial journey, describing it as a series of crises and challenges. He shares insights from his experience founding multiple companies, emphasizing the importance of resilience and value creation. This segment encapsulates the emotional and practical realities of being a founder.
"tough gig and I'm going to come back to this quote you had that I shared at the beginning of the podcast which is building a startup is a journey from one crisis to the next yeah you know it goes back..."
Value Creation and Book Promotion
In the closing segment, Levine discusses his motivations for writing his book and the importance of value creation. He invites listeners to pre-order his book and emphasizes the dual goals of doing good and doing well. This segment highlights Levine's commitment to helping others succeed through his insights and experiences.
"I'm hearing here you know I I I'm not there for the crisis I'm there for the value creation yeah or is there anything else that you wanted to share they you think might be helpful to get into before w..."