Last week I was talking to an entrepreneur and he shared the latest progress for his startup. The story was a familiar one in the time of pandemic:
- Growth slows, sales cycles lengthen, uncertainty clouds decisions
- Layoffs to conserve cash and reflect new growth expectations
- Recognition that metrics needed to raise more money on ideal terms won’t be met
- Reset business expectations for measured growth with a focus on getting to profitability/breakeven
- Realize profitability/breakeven relieves an artificial pressure, providing a newfound freedom
This is the great reset for startupland.
Most startups were negatively impacted by the pandemic. A small percentage were positively impacted. All expectations were changed.
Look for this reset to play out in a number of ways:
- Revenue growth and profit margins, also known as the Rule of 40, will be one of the most important metrics
- Hiring, going forward, will be more measured. Entrepreneurs will start paying greater attention to revenue per employee.
- Work from anywhere, and the corresponding hire from anywhere, will change huge numbers of companies forever, in a way that has a positive benefit for the world.
- Costs, especially office space, will be more scrutinized, resulting in leaner, more efficient organizations.
- Investor expectations are lowered and more attention will be paid to existing portfolio companies.
We’re living through the great reset for startupland and the impact will be felt for years.
4 thoughts on “The Great Reset for Startupland”
Research has an increasing role here. Once the province of enormous consumer-focused companies, it’s transforming small-to-medium enterprises, including startups, by understanding what makes customers tick at the expert level. Good research saves time, prioritizes activities, and transforms strategy. A lot of the uncertainty I’m seeing boils down to companies not understanding human behavior. COVID has been fascinating in this regard.
It’s an interesting premise but without data, hard to know if true or not. Personally, my company has been hotter than ever, and several others I’m familiar with are in a similar situation. I’d love to see your data supporting this.
Thanks, love your commentary.
Congrats on growing even faster than expected. Here’s a survey that captures the same stories I’ve been hearing from entrepreneurs:
Thank you. It seems that most SaaS based companies would in large part be covid proof. My line of reasoning is that most of these companies are centered on efficiencies and automation. In a time when all companies are evaluating personnel and process very closely, many of these SaaS companies would benefit. Not sure the article had any hard days to suggest the overall SaaS market to be softening. Regardless, I’m only curious as a potential investor made a similar comment to me and I can see why potential investors would push that idea. You are more of a qualified source for me as I attempt to learn what the broader market is seeing and feeling. Thanks for the info.