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Embracing the Valley's New Mantra: Sustainable Growth

Embracing the Valley's New Mantra: Sustainable Growth Credit: Testlio

When my husband Marko and I founded Testlio five years ago, we didn't realize how our own frugality would influence the growth of our company. I've constantly stressed the need to keep our burn rate – the amount of capital we spend monthly – as low as possible and to understand the value of everything we purchase. As tech investors have begun valuing sustainable growth over growth at all costs, this strategy has started paying off.

Sustainable growth hasn't always been in vogue, though. Watching the rise of companies like Uber and Facebook in the late 2000s made you feel like the best way to reach success was to identify a common problem and pour money on it. Sometimes that gives companies enough time to get their business fundamentals in order, but these days it's increasingly common to see companies raising tens or hundreds of millions go up in smoke.

Startups haven't always had to think critically about why they're spending because they've never been in a market where they couldn't continue raising money at higher and higher valuations. That used to be a way to extend your runway and develop a go-to-market strategy, but investors don't want to see vanity metrics and ballooning overhead that startups used to be able to get away with. Building a stellar product is hard, but mastering the new rules to startup success don't have to be. Here's how you can grow your business the right way.

Keeping your burn rate as low as possible seems pretty obvious, but you would be surprised how many startups lose sight of this in favor of other goals. As a rule of thumb, most A-series startups aim to keep their burn rate below $10k per employee per month. At our size, we're well below this benchmark. Keeping our burn low lets us expand our team while giving us as many options down the road as possible. No amount of confidence in your own plan can insure you against the unpredictability that comes with launching and growing a startup. Our runway – the amount of time we have before becoming profitable or seeking new funding – is long enough to weather a change in the funding climate, should there be one.

Distributing our employees across the U.S. and Europe is another key to our success. Estonia is part of our corporate culture and setting up two offices allows us to take advantage of the competitive skillsets both cities have to offer.

Estonia a growing startup hub in Europe (Skype was born there) so we recruit in Tallinn for our engineering and product teams. It's quickly becoming one of the most competitive talent markets in Europe. Estonians respect software engineers without treating them like rockstars, making it the ideal spot to assemble a strong technical team. Likewise, having our business development in the U.S. helps us grow and manage our trajectory as efficiently as possible.

2017 is an exciting time with Testlio, but we still have to be deliberate about our path to success and the steps we need to take going forward. When we look for new ways to connect with our customer, we test each new method individually instead of flooding the zone with different approaches. That way we can isolate what's working, understand what's not, and know how to maximize our spend during this crucial phase.

We've also experimented with different approaches to customer success. We initially envisioned a dedicated CS team, but quickly realized that our sales executives were closest to our customers and best suited to support them. Since then, we've made customer success part of our sales team's DNA and have seen an uptick in positive feedback from customers.

There's nothing easy about launching a company, building a product users love, and doing everything I've described above. But as I've told my team, success requires hard work -- there's no getting around it. Startups have a new mantra – sustainable growth – and we're doing our best to walk the walk.

About the author: Kristel Kruustük is the co-founder and CEO of Testlio, an end-to-end QA management platform and community of highly vetted testers that help businesses deliver amazing customer experiences. Clients include Salesforce, Lyft, Microsoft, CBS Interactive, Flipboard and Strava.

Edited for brevity and clarity by Nicole Fallon.