The startup scene in 2022 and 2023 has been tough. This “Startup Winter” has seen less funding, many layoffs, and startups closing down. The hopeful times of 2020 and 2021, driven by big investments, feel far away now. Add to this the global events and banking decisions, and we’re in a tricky spot.
I’ve helped startups for 10 years, and one thing is clear: now isn’t the time to just keep making new features. Look at fintech and other SaaS areas. A startup that keeps adding features for every small need is very different from one that focuses on the big needs and does them really well. In these tough times, guess which one stands strong (spoiler: neither, but second is more sustainable)?
The Problem with Just Making More Features
Recently, many SaaS businesses, including fintech, became feature factories. They kept making new features, but many of these weren’t even used or took too long to check. The idea was: “more features = more value.” But smart tech leaders know this isn’t always true.
Tech Leaders often fall into the trap to make your engineering work better, deliver faster. But, it’s a problem if you only improve one department and miss the big picture (which is called Local Optimisation in Systems Thinking). It’s like giving a car a new paint job while not changing the oil inside the engine. It might look good for a bit, but it won’t last.
Using Product Leadership to Guide Engineering
Being smart with money doesn’t mean cutting corners or outsourcing all the time. It means using your resources, like engineering, in the best way. This means focusing on big product goals, not just single features. And aligning of distributed teams with unified goals is super important, because as you roam over the globe when collaborating – context and end value is easily lost in communication (cultural, async, indirect).
I’ve worked with tech leadership within the last couple years to move in this direction. We’ve come up with simple tools to check how features are doing and if they’re worth the money spent. Here are two main tools:
1. Feature ROI Check: This tool helps you see how your features are doing out in the real world. For each feature, you can see:
- How much you spent to make it.
- When it was released.
- How customers interact with it.
- How many new customers it brings in.
- If it helps sell more.
- If it impacts your yearly income.
- How many users are using it and how they use it.
Imagine you’re deliberating on introducing a new feature to provide Automatic Fraud Evaluation for new Contracts. Sure, it sounds fantastic on paper. However, what if, after the feature’s deployment, the adoption rate is significantly lower than the projected number? Wouldn’t it be prudent to have these insights sooner, to pivot or optimize accordingly?
With this tool and information, you can see which features are really helping your business. The simplicity of this approach removes complexities, such as ARR Projections usually gaining traction within a year+ (especially for enterprise clients). However, nothing prevents you from keeping track of ROI so far, Quarter-on-Quarter.
2. Engineering Cost Check: This calculator provides a detailed breakdown of the investments behind each feature. It evaluates: (1) The upfront technical investment, which encompasses development hours, resources used, and any third-party tools or services acquired specifically for the feature. (2) Time, measured by the date of the feature’s release and the total duration from inception to launch. (3) Resource allocation, including both human and technological resources. (4) Effort, which includes dev-days, and any additional support and enablement to bring the feature to fruition. I’m using industry-standard ratio of QAs, DevOps, Managers per Developers. But your company may have it different, so feel free to change that!
The logic of this calculator is to combine these factors, offering an overview of the total cost to develop a feature. This calculated total then is used to evaluate the ROI by comparing it against the feature’s revenue generation or other success metrics.
Click here to navigate to Simple ROI Calculator, and Engineering Cost Calculator. Each field comes with the note and explanation, to help you. This would give you solid data to talk to your team and make smart choices. For example, if a feature to make online payments easier has low interest after some time, you need to think about why.
Moving Forward
Becoming product-led is tough. Your product and sales teams might not like the changes, and may not be aligned with Product Vision. Top-level leaders might have different ideas and steer the wheel (or OKRs) into different directions. But it’s important to think beyond just making more features. For startups, especially in changing areas like fintech, every decision must make sense. Every feature should have a clear purpose, and all decisions should be part of a big plan.
As we hope for better days after the Startup Winter, let’s be smart. Not just by saving pennies but by making smart choices with what we have and lead with solid products, backed by real data and a clear goal.
All company names are coincidal.
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