A crisis survival guide for startups | 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

Some takeaways:

1. When a crisis strikes, first categorize it into one of two buckets:

   1. Cash crisis: When your cash runway is suddenly jeopardized due to lost customers, disappearing investors, or missing expectations

   2. Product-market-fit crisis: When your core value proposition becomes irrelevant due to market changes, regulation, or competition

2. Once identified, act quickly and with confidence. If you hesitate or lack conviction, the team will lose faith in your leadership:

   1. If you’re facing a cash crisis, assess how much runway you have left. If your revenue takes a hit, adjust your expenses immediately to extend your runway. Don’t wait too long to make this decision—waiting can reduce your options. Act within the first month to make critical decisions before your options narrow.

   2. If you’ve lost product-market fit, it’s time to go back to square one. Ask yourself: what’s changed in the market, and how can we adapt to stay relevant? Look for new opportunities and be willing to reframe your product or pivot your business model to meet the new needs of your customers.

3. When considering cost reductions during a cash crisis, remember that 70% to 75% of your budget is people. To reduce costs you can:

   1. Lay off a percentage of the team

   2. Reduce everyone’s salary by a percentage

   3. Reduce management salaries

4. For evaluating whether to pivot when losing product-market fit:

   1. Validate that there’s a real problem worth solving

   2. Assess if you have tech, team, or knowledge advantages

   3. Check if you have the passion and energy for a new journey

   4. Validate that your team wants to pursue this direction

   5. Approach investors with the new vision

5. In any crisis, take full responsibility. It’s easy to blame external factors, but the reality is, as a founder, you’re responsible for navigating through the storm. Owning the challenge increases your chances of success.

6. Always be ready for a crisis—because one will come. The best preparation is having enough runway to ride out the storm. While 12 to 18 months of runway is a general guideline, the key is flexibility. If you’re low on cash, you’ll spend all your time fundraising instead of building the business. Keep your focus on creating value.

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=

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-order

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.