Time to Upgrade the Startup’s Functional Areas

Recently I was talking to an entrepreneur about the changing startup landscape and the big slowdown in growth rates and funding. After initial frustration that the boom times were over, he’s now excited for this new era with a focus on excellence across the board. Many elements of the business were given less attention or hastily constructed due to the frenetic pace of growth.

Now’s the time to upgrade the startup’s functional areas.

While growth rate is still one of the biggest drivers of valuation, there’s a mind shift, albeit for a limited period of time, to focus on refurbishing core elements of the business in anticipation of the next level of scale. Internally, the trick is to frame it as a rebuilding or upleveling mission, one that’s aligned with the larger vision.

Many years ago at Pardot, we debated this intensely for product development. Our heavily funded competitors were constantly rolling out new features and modules while we were more resource constrained. We made the decision to alternate quarters between extensive new feature development and general product health (code cleanup, refactoring, technical debt, DevOps, etc.). Internally, we knew that if it was a “features” quarter, we’d be cranking out new product releases, and new features to help customers be more successful. If it was a “bugs” quarter, we’d put much more focus on fixing issues, cleaning up technical debt, refactoring clunky components, and many other important areas of the product. One quarter for aggressive new innovation, one quarter to upgrade the quality of the existing functionality.

When we sold the business, the acquirers commented that in most cases a startup’s sales and marketing is far ahead of the product’s robustness and reliability. In our case, the product’s technical underpinnings were ahead of our sales and marketing. We focused on technical excellence and delivered.

Now’s a great time to assess every functional area of the business and spend internal cycles leveling up people, processes, and technology. Cruft builds over time and needs to be revisited on a regular basis. Now is an exceptionally good time to upgrade functional areas.