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.