3 Steps to Survive the Coronapocalypse

Photo Credit: @Krizde

Stay Calm; Don’t Panic 🙂

If you work at or run a retail brand right now, your work environment is probably like a scene from one of the apocalyptic movies.  Even it is orderly, there is probably a palpable sense of anxiety and dread.

Hopefully, your brand has already finalized a business continuity plan that addresses what and how to operate in a government-mandated work from home environment.  

I am writing this note from NYC which is one step away from lockdown, and the brands I work with have all instituted a remote work policy for headquarter employees.

Like the stock market, a month ago retailers were enjoying record levels, but in the past week, we’ve gone from peak to trough due to the global coronavirus (COVID-19).  The best brands have embraced these trying times and responded in turn.

I’ve had the benefit of living, working and managing through several economic shocks and after 20+ years, my consulting firm has adopted a crisis playbook for brands, manufacturers, consumer products companies and retailers. 

Consider this free consulting (feeding the karmic bank), so here are 3 broad and simple steps I would highly recommend you and your teams make in the next week (if you haven’t already):

1. ACT

Depending on your brand’s size, geographic reach, location, channel strategy and level of bravery, your initial response to this pandemic will likely fall along the following spectrum:

  1. Close Stores:  The brands we love, admire and stan were models for #flattenthecurve.  Global brands like Apple and Patagonia were among the first to announce they were closing the majority, if not all of their stores out of an abundance of caution.  And they are paying store employees throughout the temporary closure.  Yes, traffic was likely down dramatically in affected areas in the US, Europe, and ROW, but the financial impact of closing the entire chain of stores will hurt.  Of course, this was absolutely the right thing to do, and those brands seized the opportunity to make a statement that others will follow.  Not only for their customers, but also for the employees of those brands who are literally on the front line of the virus.  Bravo to the unflinching early movers!
  2. Limit Hours:  Another approach in this declining footfall environment, is to reduce hours so stores can record some revenue, while lowering employee exposure and store labor expense.  Canadian retailer Lululemon was one of the first to announce limited hours on Friday 3/13, but by Monday 3/15 they had reversed their position.  Many department, convenience and grocery stores continue to operate on regular or limited hours, undoubtedly to cover the overhead of their large footprint and massive employee bases.  However, Nordstrom announced just yesterday that they are changing their policy, and will join the heroic brands by closing for 2 weeks.  

Retailers Announcing Their Coronavirus Policies on 3/16

List of notable retail brands as of 3/16/20 that set the tone with their immediate announcements of COVID-19 policies for stores; These standards were quickly adopted by many other retailers.

Whether your brand decides to close stores or limit hours, if you are in hot spots such as NYC,  Seattle or San Francisco, the government may decide for you by ordering all non-essential retail to close.  Whatever your position, just be prepared for what inevitably will be coming your way.

2. Plan

Once you’ve addressed the 5 alarm ‘brick and mortar’ fire, and you grasp that the retail sky is falling, it’s time to focus on defense.  To ensure your company is an on-going concern, you must get a handle on your expenses, inventory, supply chain and cash on your balance sheet.  Cash flow is king in retail, and yesterday was the ideal time to prioritize revenue-generating expenditures while delaying or cutting non-essential spend.

Ideally, like the gallant, cash-rich brands who will pay employees while they are closed, you should want to do the same.  Building out weekly cash flow models and creating best and worst-case scenarios will help you assess your debt, lease and mortgage payments, cash flow, and funding availability.

Keep in mind, restaurants with their laser thin margins are typically NOT in a position to pay employees while closed.  So absent receiving government assistance, many of our beloved bars, clubs and restaurants will likely close their doors for good.  Tom Colicchio, celebrity chef and restauranteur, predicted 75% of those restaurants will never re-open!

In short, please make the hard decisions now, before you are faced to make the hardest decision – filing for bankruptcy.

Top of mind for me and my omnichannel clients is figuring out how the online channel can prosper in this new stay-at-home paradigm.  Diverting talent and resources away from closed brick and mortar stores and into the online, fulfillment and logistics areas seems a prudent and wise choice.

Amazon recently announced plans to hire 100,000 people in warehousing and delivery to capitalize on this trend.  In these unprecedented times, what are you doing to turn lemons into lemonade?

3. LEAD

I find it interesting that disasters tend to be catalysts for unearthing heroes.  I encourage you to not shrink in fear, but to step forward with your ideas.

In business school, my favorite case was from a Moral Leader class (yes, ethics and business school do mix).  The protagonist was CEO James Burke and we examined his actions during the Tylenol product recall saga.  So few industry titans we studied exhibited the empathetic and compassionate leadership of Burke, and I am encouraged to see many executives adopt a similar approach by putting store and corporate employees first.

Finally, my suggestion is that YOU as an individual do whatever you can to ensure you take care of yourself.  Self-care during these stressful and unprecedented times will allow you to show up and present  your best self for your teams and family. 

If the images, stories, and experiences from China, Italy, France, and the U.K. have any bearing on our situation in the U.S., things will get worse before they get better

I have tremendous faith in this democracy we have created.  We have faced pandemics before, and we will emerge stronger and better. 

So please heed the warnings, wash your hands, and practice social distancing.  Personally, I’ve found a great group on Twitter who balance being informed with being entertained, and that’s the perfect prescription to sustain me through these trying times.

Be safe out there good people.

-Lockie

Bio

Follow me (BlogTwitterLinkedin) to join the conversation.

Lockie Andrews is the CEO of Catalyst Consulting (www.catalystconsult.com), a boutique advisory firm to retail and consumer brands, digital, media and technology companies, as well as venture capital and private equity funds. Since January 2019, Lockie has also served as the Chief Digital Officer (CDO) of UNTUCKit, a digitally native brand located in New York City.

With 20+ years of general management experience, Lockie has assisted high growth companies (e.g. Nike, Lane Bryant, Limited Stores, ANINE BING, and various high growth startups) in diverse areas such as digital transformation, technology, analytics, digital marketing, revenue enhancement, and operational/financial improvement.

Lockie is a speaker, angel investor and sector lead for the HBS Alumni Angels of NYC, and the Co-VP of Programming for the HBS Club of New York.

Innovation Universal
Image of Circle by Benny Andrews

The Changing Same

Art Break with Benny Andrews – the Perennial Prophet

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Last night I had the privilege of viewing The Bicentennial Series, Michael Rosenfeld Gallery’s second solo exhibition featuring artist and political activist Benny Andrews (American, 1930-2006).

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Sexism Study #22; 1973; oil on five stretched canvas panels

From the very first work, which greets you like a familiar stranger in your own home, to the final in the six individual sub-series, I thought… this work is so timely and prescient. 

Benny expertly captures the angst, anxiety, struggle and painful reality that exist in America today.  The irony, of course, is that Benny’s work was completed in the 1970s, and Michael Rosenfeld’s team conceived this exhibition 3 years ago.

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Benny Andrews – Liberty (Study #2 for Trash); 1971; oil on linen

After the exhibition walkthrough and powerful conversations with Nene Humphrey (Benny Andrews’ wife), Halley Harrisburg (curator) and Michael Rosenfeld (gallerist), I realized this work was a much needed reminder of the social injustices that have always plagued our great country.

Viewing this powerful and provocative body of work, and having the opportunity to unpack and digest it with my art group, The Friends of Education at the Museum of Modern Art, was just the therapy I needed.  Our key takeaway was – the more things change, the more they stay the same.

The racism, sexism, inequality and injustice my foremothers and forefathers fought, still persist.  Though the social ills and “-isms” have taken new (and often scarier) forms, the hate is clearly recognizable.

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Benny Andrews – Liberty #6  (Study for Trash); 1971; oil on canvas with painted fabric collage)

To those who struggle to comprehend our current reality, I humbly suggest looking to history and the arts.  While these times feel unprecedented, in actuality our current reality is more of the same.

The changing same.

ARTIST BACKGROUND

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The artist, Benny Andrews (1930-2006)

The Benny Andrews: The Bicentennial Series can be viewed from November 8, 2016 – January 7, 2017 at Michael Rosenfeld’s Gallery in New York City.

Based on the TimeOut Review 

In 1969, Benny Andrews (American, 1930-2006) began conceptualizing the Bicentennial Series, in a time when the artist himself was deeply committed to political activism. After reading New York Times articles covering then President Nixon’s Bicentennial Commission and the American plan for coast to coast celebrations, Andrews became afraid that the American milestone would omit the voices of contemporary African Americans. To ensure inclusion, Andrews set out to document the America he knew and respected. Executed over six years, the Bicentennial Series consists of paintings and drawings from all six individual sub-series – Symbols, Trash, Circle, Sexism, War and Utopia – which in their totality comprise The Bicentennial Series.  The Series remains a timeless body of paintings and drawings that address nationalism, war, feminism, sexism and hope. This is the first time that the Bicentennial Series will be presented in its totality. 100 Eleventh Ave (212-247-0082, michaelrosenfeldart.com). Tue–Sat 10am-6pm or by appointment.

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Benny Andrews – Circle (Bicentennial Series); 1973; oil on twelve linen canvases with painted fabric and mixed media collage

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Benny Andrews – Sexism Study #15; 1973; oil on linen

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Photo of Michael Rosenfeld Gallery – Benny Andrews The Bicentennial Series

BLOG TITLE INSPIRATION

The Changing Same: Black Music in the Poetry of Amiri Baraka (1978)
https://en.wikipedia.org/wiki/Amiri_Baraka https://www.jstor.org/stable/302328?seq=1#page_scan_tab_contents

“The Changing Same: Studies in Fiction by African-American Women” (1995)
https://www.amazon.com/Changing-Same-Womens-Literature-Criticism/dp/0253209269

Photo credits: Michael Rosenfeld Gallery and the author.

AUTHOR BACKGROUND

Lockie Andrews is an innovation and digital strategist at Catalyst Consulting (www.catalystconsult.com).  Lockie feeds her creative side through support of the art, music and fashion communities.  A speaker, writer and member of the Friends of Education at the Museum of Modern Art of New York, Lockie resides in Brooklyn, NY.  Follow Lockie on Twitter and Instagram.

Inspiration

Time to Stop Judging & Start Mentoring Millennials

Sustaining Innovation in the Millennial Age: Why Everyone is a Millennial

Originally posted on RiseSmart’s blog.  

In a four part series, innovation and “growth hacking” consultant, Lockie Andrews outlines the primary forces that drive millennial engagement – and the surprising connection between millennial-friendly cultures and innovation.

Last month I hosted a RiseSmart webinar (recording available here) in which I presented 5 Ways Innovative Companies Attract and Retain Millennials.

MILLENNIAL RESEARCH

A quick search on Amazon reveals over 5,000 books on Millennials. The research studies and academic papers on this generation are equally voluminous.

It seems everyone has chosen a side in this debate. Are Millennials different from prior generations? Why do they still live at home with their parents? Do they deserve the title of entitled and lazy?

What’s lacking in this debate, and what I plan to contribute, is a forward-looking and constructive analysis on the impact Millennials will have on future organizations.

After all, whether they are different or the same, and whether you like or dislike their behaviors, Millennials are who they are. They will change, like all generations, but change will come slowly- and the business world needs them now.

To build my prescription for Millennial engagement, I based my research on a recent study by Gallup. I prefer Gallup’s How Millennials Want to Work and Live, 2016 because it presents survey results with low bias and judgment.

What’s also compelling about the decades of research from Gallup, is the easy comparison between empirical data sets for Millennials, Gen Xers, Baby Boomers and Traditionalists. There is clear evidence that Millennials are the least engaged generation at work (at this age), and that there are other substantive differences from prior generations.

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I’ve been mentoring and working with this cohort for some time, so these differences have been clear to me.

I’ve spent the last few years figuring out ways to engage and motivate Millennials. Because, honestly, it doesn’t matter what others think about their generation. Our opinions and assessments of Millennials will not change these hard truths:

  • Today, Millennials = 30% of workforce
  • In four years, Millennials will = 50% of workforce

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Given their sheer size and their obvious digital advantages, the business world needs to do a better job recruiting and retaining young people. The fact that Millennials feel disengaged is a problem that belongs to all of us, plain and simple.

HOW TO APPEAL TO MILLENNIALS?

So how have some companies figured out how to build Millennial-friendly work places?

Based on research and experience, I’ve identified five core characteristics that give companies an edge with Millennials.

Principles Driving Millennial Engagement

The first two principles relate to the core DNA of a company. A firm’s values and purpose are factors that are traditionally set by the founders, Board of Directors and owners.

The next two principles are processes the management team creates to execute on its purpose and values. How a company communicates and collaborates is the spinal chord of every organization. Without a healthy and flexible system, the culture, speed and business performance will be hampered.

Interestingly, it turns out that communication and collaboration are also critical enabling factors in highly innovative cultures (more to come on this finding).

The final principle is a modern mindset that appreciates both the professional and personal needs of employees. Companies with enlightened management appreciate work/life balance and show a significant level of empathy towards their employees.

All five of these principles are controllable, and with commitment and focus, can be achieved by any corporation.

SOCIAL PROOF

During the webinar, I took the audience through illustrative case studies on the top five Millennial-friendly companies that ranked highly on Glassdoor’s Best Places to Work list (Airbnb, Bain & Company, Guidewire, Hubspot and Facebook). I will explore these examples in more detail in future articles.

In the interim, do you know any companies (startup or mature enterprises) that have done a great job of appealing to Millennials? We’d love to hear your thoughts. And follow me (Blog, Twitter, Linkedin) to subscribe to this series and be a part of this important conversation!

 

Lockie Andrews is the CEO of Catalyst Consulting (www.catalystconsult.com), a boutique advisory firm to retail and consumer brands, digital, media and technology companies, as well as venture capital and private equity funds. With 20+ years of general management experience, Lockie has assisted high growth companies (e.g. Nike, Lane Bryant, Limited Stores, and various high growth startups) in diverse areas such as strategy, innovation, digital marketing, revenue enhancement, operational/financial improvement and fundraising. Lockie is a speaker, author of an upcoming book on Innovation, and a sector lead for the HBS Alumni Angels of NYC.

Innovation
5 Ways Innovative Companies Attract and Retain Millennials

5 Ways Innovative Companies Attract and Retain Millennials

Despite a volatile employment landscape, smart companies are always looking for ways to attract the next generation of talent. Engaging with Millennials, however, requires a strategic approach. Are you prepared?

In this #SmartTalkHR webinar with Lockie Andrews- consultant, Angel/VC/PE Investor, and keynote speaker from Catalyst Consulting, you’ll learn why Millennials are a tremendous talent opportunity—and why they flock to certain companies while avoiding others.  Lockie will lead us through an intriguing discussion on the following topics:

  • The current trends in hiring and employment for startups, and how to leverage these trends to help your organization succeed
  • The five corporate principles that drive high Millennial engagement
  • Examples from leading large enterprises that have created Millennial-friendly cultures (and how they apply to you)

Discover the startup trends that will help your organization succeed, and learn about the principles that drive high Millennial engagement.

Watch a recording of the webinar here:

– See more at: http://www.risesmart.com/resources#sthash.ThlRZaDQ.dpuf

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Lockie Andrews is the CEO and Managing Director of Catalyst Consulting, a boutique advisory firm to retail and consumer brands, digital, media and technology companies, as well as venture capital and private equity funds. With 20+ years of general management experience, Lockie has assisted high growth companies (e.g. Nike, Lane Bryant, Limited Stores, and various high growth startups) in diverse areas such as strategy, innovation, digital marketing, growth hacking, revenue enhancement, operational/financial improvement and M&A/capital raising. Lockie is also a sector lead for the HBS Alumni Angels of NYC.  Follow Lockie on Twitter and Linkedin

 

Innovation

Inspiration| On Winning

Congrats to Team USA on a phenomenal 2016 Rio Olympics.  So many “firsts” and personal and world records.  Amazing!

I hope you are as inspired as I am.

My top highlight from watching these games was how much class Michael Phelps showed throughout his dominating performance.

We all face the distraction and negative energy of critics and haters.  Thankfully, we have seen the gold standard on how to handle those imitators.

Just win!

– Lockie

 

Inspiration

Why Wal-Mart’s Acquisition of Jet.com Makes Perfect Sense

…and why other traditional enterprises must acquire innovation to stay relevant and competitive.

The retail sector is abuzz about the latest rumor Wal-Mart is acquiring or investing in Jet at a reported $3 billion valuation.

There are increasingly more examples of these “innovation acquisitions”. Incumbents view these money-losing innovators like they are fountains of youth.

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For years, I have been advising traditional retailers/brands to “pair up” with startups. Conditions are ideal for these marriages given the slowdown in venture capital funding and the state of cash-strapped startups.

No company wants to be Blockbuster in a Netflix world.  And well-funded traditional enterprises are feeding internal innovation by pouncing on wounded unicorns.

The strategic benefits to large companies from innovation acquisitions are obvious:

  • Fend off disruption by digital upstarts
  • Address changes in consumer preferences and shopping behaviors
  • Find new growth channels, products and customers
  • Acquire proven technologies and platforms

Of course, long term the preferred route is to transform traditional enterprises into lean innovation machines. However, from time to time, it makes sense to look outside for innovation.

There are three compelling reasons why incumbents like Wal-Mart should buy innovators like Jet:

REASON #1: Innovation is HARD

Building an innovative and entrepreneurial culture in large traditional enterprises is incredibly difficult.  Most innovation initiatives die under the rigid controls that fuel hierarchical organizations.

Even companies that succeed in creating innovative environments run the risk of having their efforts erased during the first downturn or management change.

REASON #2: Innovation is EXPENSIVE

Wal-Mart is undisputedly the heavyweight brick and mortar champ.  Unfortunately despite years of investing billions of dollars online, they have not kept pace with Amazon:

  • 2015 Online Sales were only $14 billion (3% of Total Revenue of $482 billion) as compared to Amazon.com’s $80 billion in Product Sales.
  • Last year, Amazon overtook Wal-Mart in market capitalization, and this year Amazon is 40% larger.
  • Growth on Walmart.com has slowed for six straight quarters.

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An acquisition of Jet is a risky and expensive bet, but it’s a small price to pay for long term growth.

REASON #3: Innovation fuels GROWTH

A recent Street.com article hypothesized potential deal synergies between Wal-Mart and Jet.  Assuming Street.com’s analysis is correct, the complementary nature of their customers and products could be a catalyst for Wal-Mart’s stock price.

Of course, integrating an acquisition target while realizing merger synergies is just as hard as transforming traditional enterprises.  The path of “acquiring versus building” innovation is fraught with risk, and will be an uphill battle for Wal-Mart.

That said, Wal-Mart is one of the few companies with the size and scale to compete with Amazon.

A potential acquisition of Jet.com COULD turn out to be a brilliant win-win for both companies.

And that win-win could be Amazon’s Achilles heel.

Pass the popcorn.

 

Lockie Andrews is the CEO and Managing Director of Catalyst Consulting, a boutique advisory firm to retail and consumer brands, digital, media and technology companies, as well as venture capital and private equity funds. With 20+ years of general management experience, Lockie has assisted high growth companies (e.g. Nike, Lane Bryant, Limited Stores, and various high growth startups) in diverse areas such as strategy, innovation, digital marketing, revenue enhancement, operational/financial improvement and M&A/capital raising. Lockie is also a sector lead for the HBS Alumni Angels of NYC.

 

Disruption Universal

How to attract VC funding like the best unicorns?

Q2 2016 VC funding results are in, and the unicorns took the lion share of funding.  Early stage startup funding experienced precipitous declines as the cash crunch continues. 

This post is the second in a series on the state of VC funding and startup performance in the United States. The inaugural post How we know the tech funding bubble has burst? was published in May 2016.

While most people are preparing for summer vacation, young entrepreneurs are preparing for a long winter.

UNICORN FAIRY TALES?

Last Thursday Pitchbook released the 1H 2016 U.S. Venture Industry Report. Second quarter VC investment reached a staggering $22.8B. Not surprisingly, the majority of investment went to mature, late stage startups (many of whom are unicorns valued over $1B).

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The stark reality is that startups falling in the Series D and Late Stage categories represent less than 1% of all U.S. startups (author’s estimate).

Even within this infinitesimal tranche of later stage startups, it is a ‘tale of two cities’ as mega-rounds from super unicorns like SnapChat, Slack and Uber significantly skewed totals. The less obvious point is that ‘almost’ or ‘fallen’ unicorns have had a tough time raising funds. Expect to see more layoffs and pivots among late stage non-unicorns given the frozen IPO market.

THE CREME OF THE CREME

The creme of the top 1% are mature companies that have reached hyper-growth mode. These darlings of the media and VC communities have produced solid results, gained traction and identified a path to profitability. VCs have separated the wheat from the chaff, and lack of funding will force the bottom 1% to pivot, sell or close.

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Mattermark took a closer look at May VC funding results in their report: Venture Capital Cooling Trend: “Wait And See” Mode Continues. When the dust settles and we get under the May/June numbers, we are likely to see continued precipitous declines in non-unicorn investments. Keep in mind, before May, the Series D and Late Stage funding totals were down 20-37% YTD.

And that’s the good news.

THE 99% PERCENT

Back in the real world of startups (2-3 million companies in the US), raising capital is just plain ugly.

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So early stage entrepreneurs, that headwind you feel against your raise is real!

My advisory firm spotted these trends real time while advising startups. The slowdown was particularly pronounced during investor meetings with the HBS Alumni Angels.

A NEW DAWN: REASON HAS RETURNED!

As outlined in our original piece, during the first half of 2016, investors pulled back investment in the overheated market. I mean, perhaps we don’t need the fifth on-demand dog grooming service? Just saying!

So what can entrepreneurs do to successfully raise funding?

Given increased volatility, low interest rates and inevitable surprises (like Brexit), we tell our startup clients the following:

  1. Adapt: The funding environment and investor sentiment have changed. Investors are more cautious and want assurance. This usually means tougher due diligence questions and bigger data rooms. Be prepared for a raise to take 8-9+ months and don’t take it personally.
  1. Spend Wisely: In this market, cash is king. Given the longer raise cycle, startups need 18-24 months of runway. The biggest wildcard is usually marketing spend. Unless a startup is a market leader, throwing cash at consumers with little return on investment will haunt the next raise.
  1. Build, Measure and Learn: Small bets are the best way to stretch capital. Fully embrace lean startup principles and double down where there is traction. Entrepreneurs should prioritize achieving proof points and milestones. The best startups will keep close to customers and actively monitor feedback.

The road ahead for startups won’t be easy. The true irony is VCs have raised humongous war chests; but investments will be made cautiously.

Personally, I’m happy to wave goodbye to growth for growth’s sake. I’ve long felt it odd that there was so little focus on profitability and sustainability. Granted, the “get big quick” model generally works for specific verticals: namely SaaS startups with favorable economics, or platforms that enjoy network effects. However in the consumer and media sectors where I focus, that approach rarely succeeds.

Whether good, or bad, or just long overdue- it’s back to the basics. Entrepreneurs are putting in the hard work to turn innovative ideas into products/services that change the world.

Venture forth and carry on!

 

Follow me on Twitter:  https://twitter.com/lockieandrews

Lockie Andrews is the CEO and Managing Director of Catalyst Consulting, a boutique advisory firm to retail and consumer brands, digital, media and technology companies, as well as venture capital and private equity funds. With 20+ years of general management experience, Lockie has assisted high growth companies (e.g. Nike, Lane Bryant, Limited Stores, and various startups) in diverse areas such as strategy, innovation, digital marketing, revenue enhancement, operational/financial improvement and M&A/capital raising. Lockie is also a sector lead for the HBS Alumni Angels of NYC.

Startups