Even the most well-funded software product and service companies are now faced with a new question; How I change my aggressive growth approach to a healthy profitable business?
During year 2022 global inflation kicked in heavily and that has pushed for increased interest rates for money. This forces investors to re-evaluate their investments and what they expect from their portfolio companies.
For entrepreneurs this means heavy decision-making times (yes, actual salty tears while going through the change) and it’s time to pivot business from aggressive growth plans to profitability.
Coredo’s partner, Petri Kämäräinen, and CEO of Coredo India, Nidhish Shetty, have lived through the 2000 tech bubble, and both are seeing similarities in current situation. Petri recall’s “Burning his option plans in a fireplace and seeing old colleagues as a taxi driver after wards.”
Petri, what did you learn about this?
“The 2000 tech bubble was a real thing for me. I worked in the Telco industry as part of highly funded part of the business where the future hopes and dreams was a big motivator in the job. Once reality kicked in, we had to go through serious technical challenges when we realized that the tech stack at hand wasn’t healthy from cost structure standpoint and an actual limitation of selling the business. Through the stormy times, we decided to re-architect the whole tech stack and get rid of Oracle’s heavy license costs. This meant we worked night and day with the tech team to turn around the tech to support the business to survive.
From a tech standpoint we got it done and eventually the company was sold, but not with the hopes and dreams prices and I ended up burning by stock options in a fireplace.
From all of this, I learned the importance of accepting difficult times ahead, going through the numbers and seeing what the actions are needed to be taken to pivot the business to be profitable. The key thing is to accept the fact that as an entrepreneur, all these changes are going to suck and it will be painful, but keep in mind, that when this is done right, company is healthy and the likelihood of becoming out as a winner is very likely.”
With these Petri’s lessons at close memory, we have ourselves gone through successfully the painful pivot at Coredo in the past 4 months time. It meant layoffs, it meant re-evaluating clients, lots of tears and frustration, but most importantly, it meant that we needed to keep in mind the company goal and what we want to achieve. As a result, we have successfully moved a lot of work done in Helsinki to our people in Bangalore. Through this change, we have streamlined our delivery model and empowered our Coredo India employees to take major responsibility for all the software delivery work we do. This has given us a much more scalable delivery model and through the change, has also increased our quality. And no, we didn’t stop growing, instead through this time, we have successfully launched our services in Sydney, Australia.
Petri Kämäräinen and Nidhish Shetty have spent a lot of time together in our Bangalore office while pushing through this change.
Nidhish says that “Moving software development projects form one team to another, it is crucial to keep the new team motivated and put a lot of effort to explaining what the product is used for and who is using it. Not only how it is technically built. This is how a new team can take over software products even in a few weeks times.”
Since the world goes in cycles and this all has happened before, there is no need to wait and wonder, this is time to decide and execute. At Coredo, we are a Software Development Agency and we have many people in our team that have gone through this similar turmoil in their careers multiple times. Going from current way of doing to re-structuring software development teams into a profitable model, its isn’t only about who writes the most beautiful code. To successfully push through the change, you will need people around you who have done it themselves and can help you with the difficult decisions as well.
Key things to do if you want to pivot to profitability:
- Stay optimistic. Remember that after the change, you are very likely to be a winner.
- Look at the numbers and accept what they show. What is your burn rate and what needs to happen for you to achieve profitability in next 6 months?
- Layoffs are coming. If you must do it, do it all at once, not in small pieces. Be realistic and invest heavily on the once who stay.
- Create a new strategy to maintain profitability.
- Prepare for positive outcomes once you’ve done the changes.
I know it’s easy to do plans from the negativity standpoint, but it is equally important to have plans for positive outcomes. When such pivot is done successfully, the company is operating healthy and the people who stayed are motivated and doing well, it is very likely that you’ll succeed. Keep that in mind.
How can Coredo help on all of this?
Yes, our core is software development, and we make sure our customers operate at optimal price-to-quality model. On top of software development, we are used to shovel the crappy projects and fix them for our customers. That means we evaluate the business case, help entrepreneurs understand their option, technically stabilize software, and build it forward from there.
We build dedicated and super-skilled Software Development Teams that work directly with our customers and the developers reside mainly in Bangalore while lead developer can sit at clients’ office. We have been doing this since 2014 and have figured out the way to operate our teams with high quality and run projects in agile methods. Yes, successfully running complex innovative digital product development when team is working outside the customers’ office (and yes, we have done this successfully since 2014, not by Covid forcing us).
All of our own lessons put together, all the passion we share to software development and entrepreneurship, we are ready to help other software product or service companies to pivot their business to profitability.
And as I like to put it: “Stop f***ing around and start executing!”
Let’s start executing together.