Performance Engineering Series: Mastering the Talent Equation
The final post in the Performance Engineering series covers how to attract, retain, and develop the right people for your startup's success.
In the economic uncertainty that has characterized early 2023, many founders and executive teams are considering how to position their companies to maneuver whatever the year may bring.
Survival and endurance are the baselines. The ideal state is resilience, which is not just the ability to endure market shocks. It's also the agility to navigate, recover, and adapt so that the company emerges stronger than it would have otherwise.
Research from the 2007-2008 crisis revealed that truly resilient companies honed in on the differentiation and capacity that made them uniquely suited to perform. Similar assessments from 2020 show that even companies that were 'middling' going into the unexpected hit from the pandemic came through stronger if they quickly addressed their business model, engaged the resources to pivot, and moved with boldness and tenacity. In fact, many of these companies did more than endure. They outperformed the competition. As the market constricted, they found ways to thrive and emerged stronger.
As we get into Q1 2023, it's worth reflecting on these recent history lessons. Nearly two-thirds of companies (globally) say that building resilience is at the core of their organizations' strategy for the year. And hindsight is always valuable. Even though the crises from 2007-2008 and 2020 looked very different, the characteristics of the companies that came through them stronger are fairly recognizable.
By similarities, we don't mean the size or composition of the business. Resilience fundamentals look generally similar whether you're studying well-established companies focused on surviving or startups leaning into growth during periods of economic uncertainty. In fact, over the past 60 years, numerous successful technology companies launched during times of economic turmoil. Many of the most successful startups (Apple, Microsoft, Amazon, Alphabet, etc.) emerged during periods of above-average interest rates and economic uncertainty.
There are a few reasons why a challenging economic environment can be an asset for launching and scaling resilient startups. From the vantage point of venture capital, the funding environment becomes more focused, concentrated, and selective when there is less money to invest. The risk/reward equation also changes, making the selection process and valuations more challenging.
In a down market, tenacious founders are less distracted by an apparent need to 'grow at any cost' and strive to raise funds continually. Instead, they lean into financial controls, marketing, sales, and the customer experience, and their people. These companies focus on zeroing in on the platform, products, and services that differentiate and grow the company.
In other words, they build resilience by paying attention to what is most likely to take them through a challenging market. And what they find is that those focus areas constitute a sustainable competitive advantage. Provided you have ample insight into the market and your company, a strong team and strategy, and sufficient resources to make decisions, 2023 is not a time to panic or feel overwhelmed. It may be a time of unexpected opportunity.
For our portfolio companies considering how to build or strengthen resilience measures, we advise two things: hold on to your focus and make small, incremental adjustments.
Rather than thinking broadly - more funding, more markets, more products - put attention and resources into one solution, one market, one problem. Instead of trying to do more, do the one or two things that generate or free up the most money and value. Knowing which solution, market, or problem to focus on requires diligence. You need to understand who your best customers are and what you offer that is what they truly want or need and, therefore, are willing to pay for.
Work daily, weekly, and monthly on that focus. Allocate your efforts, resources, data, and ideas judiciously. Keep your eye on the ball and avoid taking big, unnecessary swings. Instead, embrace agile decision-making processes and the power of incremental changes. The discipline and measured approach will help you to maintain the capacity to make moves when and as needed.
To know where you're going and how to get there, you have to start by honestly acknowledging where you are. Especially when the sand is moving beneath your feet, it's important to remember that the only thing you can control is you. You can lean into growth by running a highlighter over the problem you're solving and over where you have real leverage. That self-awareness is the first step toward building resilience.
Ask a few starter questions:
Sometimes we are mired in the business and can miss some obvious marketing or product opportunities. Bouncing things off an unbiased (sometimes ironically uninformed) third party can result in some great observations and suggestions. Once you have answered the questions, use the insights to build and deploy a measured, actionable resilience plan. To improve your odds of success, establish (or strengthen) your alliance with a dedicated, experienced, capable partner willing to operate as an extension of your team.
Particularly for companies in the growth phase, it can be challenging to find a partner that can help to identify value creation gaps and opportunities. That's unfortunate. This phase is where many founders and teams have built some momentum and are striving to do the best work of their lives.Facing an environment that could threaten it, they need a genuine, well-resourced, and knowledgeable resource to help them become (and stay great).
The answer is not a 100-day plan. It's not more funding. And it's not a prescriptive, transactional VC playbook. It is a yes-and offering that combines a data-driven capital investment strategy and a meticulous value-creation platform. We call this Performance Engineering. A differentiated offering among VC firms, BIP Ventures built a Performance Engineering practice to deepen what it means to be invested in our founders. The practice works alongside our capital contribution to bolster a company's capacity to accelerate revenue, attract superlative talent, improve operations, and increase the odds of achieving its vision of success.
Even in fair weather, Performance Engineering is a proven means of solving problems and supporting entrepreneurs toward optimal results.In a time of uncertainty, its impact is even more measurable.
Whether you're one of our portfolio company founders or someone seeking actionable, expert counsel independently, we want to offer fundamental considerations and resources to help you start the year strong and build resilience – even in the face of market headwinds. Over the coming weeks, we'll share ideas, practices, and tools in four core areas:
Building a company is hard. Doing so in an uncertain economic environment can be even harder. But successful outcomes are absolutely possible. Identify what has brought you success. Acknowledge your gaps and priorities. Keep an eye on your email as we deliver data-driven, rigorous, thoughtful information and tools. Just by reading this far, you're already taking the first steps toward competitive distinction and more efficient, sustainable growth potential.