Allgemein - Philipps & Byrne

The funding market remains difficult, and VCs are still quite picky when it comes to new investments. As a result, startups face lower valuations, and those who did a bridge see it running out within the near future. If you can’t secure fresh cash, the only option on the table could be selling your company. When it comes to an exit, you want to make sure you are best prepared — also from a tech perspective.

After all, when moving towards an exit, founders and existing investors want to achieve the best possible valuation. If you have a good understanding of the tech assets within your company and their strengths, you will be in a better position when negotiating with potential buyers. You can ask yourself: Is your tech proven to be innovative, scalable and low-maintenance, and does it provide growth and efficiency gains through automation? Then it is a true value driver.

What to Expect from a Tech Due Diligence During an Exit

‍Before selling your company, you should think about how you are going to structure the whole process. Unless you have agreed on exclusivity, you will have several due diligence streams with two to three interested buyer parties at the same time. Founders often underestimate the effort this takes. It can literally keep a company on its toes for weeks or months.

Doing a Vendor DD in advance by the selling party to address some or all of the issues that will come up later on, can help. However, buyers usually have a healthy distrust of Vendor DDs. Therefore, make sure your Vendor DD is truly objective and find a partner who is really unbiased. If this is the case, it is less likely that the buyer will insist on a DD of their own. This in turn reduces the complexity of the sales process overall.

Since we do Tech DDs in both venture capital funding and M&A contexts, we know: These are two very different scenarios from a founder’s perspective. Buyers coming from the corporate environment are more risk-averse, so they want a much deeper assessment. They also oftentimes have higher expectations in terms of standards for documentation, compliance, data protection, security, and (open source) licenses. This is another issue founders tend to underestimate. Equally, they often oversee the way in which technical debt can pose a risk for the development, operation and maintenance of software.

Aligning Tech Assets With Buying Interests

When it comes to an exit, compatibility matters. As a founder, you need to know the strategy of the buying company: What do they see as the real assets? Should the company continue to exist stand-alone or be integrated? Do tech landscapes match, and are there synergies?

Investors with a build-and-buy strategy, such as private equity, have similar considerations: Can we turn several companies into one and create a value chain? Does the tech platform offer the necessary interfaces? Knowing the answers to these questions helps founders successfully navigate through a sales process and set their priorities right.

In addition, in our work, we regularly see a misalignment between the equity story and the story that tech tells. This needs to be anticipated and reviewed upfront. For example, is it wise to present Artificial Intelligence as the main value driver when it is only in a prototype phase and there is hardly any AI expertise in engineering? Your tech should be able to back up your equity story at all times.

Tech DD Dry Run: Well-Prepared For Your Exit

To identify your strengths and weaknesses and anticipate the assets potential buyers might value, you can do an early Tech DD Dry Run. It reduces the risk of unpleasant surprises, both in terms of delays in the sales process and in terms of valuation. If you do this early on, you have the time you need to elevate your tech stack to a higher level and close security gaps. Technical debt or issues that can’t be resolved in time can at least be addressed, and solutions can be outlined in a roadmap. This can make a significant difference, having a positive impact on the willingness of the investor to buy and the valuation they are willing to accept.

In addition, the data room can already be set up properly, and the engineering leadership team can be trained for the real case. If you clarify all these issues in advance, you are well-prepared, strengthening your own negotiating position during the exit.

Philipps & Byrne Supports €100 Mio Investment by STRABAG with Software Due Diligence

Construction Company STRABAG invested €100 Mio in CMBlu Energy. They produce high-performance batteries for energy utility companies, grid operators, as well as commercial and industrial demand. Batteries from CMBlu Energy are made from recyclable and organic materials, offering a sustainable solution in contrast to conventional lithium-ion batteries. Philipps & Byrne provided the Software Due Diligence ahead of the investment.

Location: Alzenau, Germany
Business Context: Energy Transition
Tech Landscape: Climate Tech
Round: 100 Million Euro

Software Due Diligence on CMBlue Energy Ahead of Investment by Globally Operating Technology and Construction Company STRABAG

CMBlu Energy develops and produces high-performance batteries. Their Organic SolidFlow batteries use carbon-based molecules and are free from critical, flammable, or explosive materials, including lithium, making them safe, scalable, affordable, recyclable, and long-lasting. With the Organic SolidFlow battery, they deliver an extremely safe and sustainable key technology for the energy transition and a broad number of applications.

By investing in CMBlu Energy, STRABAG is planning to speed up the development of specific large energy storage projects through their support with construction and infrastructure. Both companies complement each other and aim to give the energy transition a substantial boost. For STRABAG, this is the first investment into an energy storage producer, supporting CMBlue Energy to implement this crucial technology for the energy transition globally and at a large scale. Ahead of the deal, Philipps & Byrne was requested to conduct a thorough Due Diligence on the software at CMBlue Energy to provide a solid risk and opportunity assessment, supporting STRABAG’s investment decision. The €100 million funding CMBlue Energy received from STRABAG will flow into necessary investments which will help scale up the production as well as further developing the market.

About CMBlue Energy
Since its foundation in 2014 CMBlu Energy AG in Alzenau in the Rhine-Main Area, Germany, develops Organic SolidFlow batteries and is one of the largest developers of high-efficient energy storage systems on a non-lithium-ion basis in the multi-megawatt range.

SolidFlow batteries store energy in organic molecules – similar to nature. They are secure, sustainable, and affordable, the raw materials are environmentally friendly, abundantly available, and not based on insecure supply chains or conflict-ridden, environmentally harmful methods. This turns the SolidFlow energy storage systems into a crucial key component for building a global climate-neutral energy system.

CMBlu Energy employs over 190 employees in Germany and the USA – 100 of which work in research and development. With the upcoming serial production and market entry of their energy storage systems in Europe and the USA, the company is focusing on a clear course of growth.
Visit: www.cmblu.com

About STRAGAB
STRABAG SE is a European-based technology group for construction services, a leader in innovation and financial strength. Our activities span all areas of the construction industry and cover the entire construction value chain. We create added value for our clients by taking an end-to-end view of construction over the entire life cycle – from planning and design, to construction operation and facility management, to redevelopment or demolition. In all of our work, we accept responsibility for people and the environment: We are shaping the future of construction and are making significant investments in our portfolio of more than 250 innovation and 400 sustainability projects.

Through the hard work and dedication of our approximately 79,000 employees, we generate an annual output volume of around €17 billion. Our dense network of subsidiaries in various European countries and on other continents extends our area of operation far beyond the borders of Austria and Germany.

Working together with strong partners, we are pursuing a clear goal: to design, build and operate construction projects in a way that protects the climate and conserves resources.
Visit: www.strabag.com

Philipps & Byrne Provides Tech Due Diligence on Prop Tech AI Company

Vizcab has successfully secured €5 million in Series A funding. The funding round was led by KOMPAS VC, an early-stage VC firm with a focus on decarbonization in the manufacturing industry. Rise PropTech Fund, Cemex Ventures, and Altur Investissement participated as well. Additionally, existing investors A/O and Banque des Territoires (Groupe Caisse des Dépôts) stayed on board for this funding round. Philipps & Byrne provided the Product and Technology Due Diligence for this deal. Vizcab, headquartered in Lyon, France, is a SaaS platform that specializes in delivering data-driven solutions for Life Cycle Assessment (LCA) in construction projects.

Location: Lyon, France
Business Context: Prop Tech
Tech Landscape: SaaS
Round: 5 Million Euro

Product and Tech Due Diligence on SaaS Platform Startup for Sustainable Construction

Founded in 2015 by Dr. Thomas Jusselme and Guillaume Lafont, Vizcab connects the whole value chain, including real estate developers, architects, engineers, construction companies, and manufacturers. It allows construction and real estate players to reduce their carbon footprint, with the help of data calculating, reporting, and visualization tools. The platform enables various stakeholders to develop net-zero building strategies and meet environmental regulations and carbon budget requirements to be in full control of a project’s carbon trajectory.

Philipps & Byrne reviewed the tech and product organization at Vizcab. This involved an in-depth evaluation of the tech leadership, team, product management, tech stack, architecture, hosting, and infrastructure. Furthermore, we analyzed the processes in quality assurance, security, compliance, and privacy. The insights derived from our assessment have been consolidated into a comprehensive report, giving the investors a solid overview of the associated risks and opportunities. At the same time, the report provided actionable recommendations to assist Vizcab in their journey towards future growth.

About Vizcab
Vizcab’s innovative platform integrates seamlessly with industry-standard construction tools, driving the adoption of sustainable practices across the construction industry. It allows real estate developers to efficiently manage their carbon strategy within a unified interface — enabling them to plan, create, order, analyze and maintain control over the carbon footprint of their projects.
Visit: vizcab.io

About Kompas
Kompas is an early-stage investor in prop tech, construction tech, climate tech, industry 4.0 and enterprise software. Fund I ($160m) targets late Seed and Series A technology companies in Europe, Israel and the US. We back ambitious founders who develop technology to transform buildings into more sustainable and healthy spaces, reduce the environmental impact of the construction and manufacturing industries, and transform the way modern organizations work.
Visit: www.kompas.vc

Tech DD on Engineering Intelligence Startup for Complex Mechatronic Products

SPREAD has successfully wrapped up its Series A funding, securing €14.6 million. The round was led by HV Capital and also saw the participation of Cavalry Ventures. Angel investors Dylan Field, the Co-Founder & CEO of Figma, the visionaries behind the logistics unicorn, Sennder, and Walter Kortschak, the founder of Summit Partners, were also on board.

In the lead-up to this funding round, Philipps & Byrne provided the Product and Tech Due Diligence, ensuring a comprehensive assessment of SPREAD’s tech stack.

SPREAD operates an Engineering Intelligence Network, a transformative platform that bridges various forms of product data to provide engineering teams with a clear, unbiased understanding of intricate systems such as automobiles, aircraft, and machinery.

Location: Berlin, Germany
Business Context: Engineering Intelligence
Tech Landscape: SaaS
Round: 14.6 Million Dollar

Tech Due Diligence: Assessing SPREAD’s Engineering Intelligence Platform

SPREAD wants to provide easy access to product information, making it effortlessly accessible and actionable for all. Their intelligent algorithms understand the interplay of the mechanics, electronics, and software domains. Combining this with information about a product’s requirements, functions, logic, and physics gives engineers unprecedented insights about a product that can scale along with its complexity. SPREAD combines existing data across engineering domains to create unprecedented insights that drive magnitudes of improvement across the whole product lifecycle.

In a comprehensive Tech Due Diligence, Philipps & Byrne evaluated the technological landscape at SPREAD. We looked at the dynamics within the leadership, tech team and product management. Furthermore, we assessed the organizational framework, the fundamental architecture supporting the tech stack, the hosting and the infrastructure. The software delivery and quality assurance processes, as well as security and privacy, were also analyzed.

The insights were delivered in a report intended to give the investors a solid risk and opportunity assessment and also help SPREAD on their ongoing journey of growth and scaling their tech and product organization.

About SPREAD
SPREAD’s mission is to make product information easily accessible and actionable for everybody. Their Engineering Intelligence Network is a knowledge graph for systems engineering. It connects all kinds of product information to help engineering teams gain an objective understanding of ultra-complex systems like cars, aircraft, and machinery. With use cases from R&D to Aftersales, SPREAD’s Engineering Intelligence Network is helping customers like Mercedes, Porsche, and VW accelerate development cycles, increase quality, eliminate millions in inefficiencies, and reduce their environmental footprint.
Visit: www.spread.ai

About HV Capital
Since 2000, HV Capital, formerly HV Holtzbrinck Ventures, has backed Internet and technology companies through various generations of funds and is one of the most successful and financially strongest early-stage and growth venture capitalists in Europe. HV’s funds have already invested in around 200 companies, including Zalando, Delivery Hero, FlixBus and SumUp. The total of all HV‘s funds amounts to €1.7 billion. The company supports startups with capital between €500,000 and €50 million. This makes HV Capital one of the few venture capitalists in Europe that can back startups through all growth phases.
Visit: hvcapital.com

Tech DD on Startup Providing Decentralized Multi-Service Cloud Solutions

Philipps & Byrne undertook the Product and Tech Due Diligence on Impossible Coud ahead of a funding round of €7m seed led by HV Capital, alongside 1kx, Protocol Labs, TS Ventures and very early Ventures. Hamburg-based Impossible Cloud is the first enterprise-grade cloud storage solution based on web3 technology.

Location: Hamburg, Germany
Business Context: Enterprise Cloud Solutions
Tech Landscape: Web3
Round: 7 Million Euro

Product and Technology Due Diligence on Impossible Cloud’s Tech Platform

Impossible Cloud stands as the pioneering decentralized, enterprise-grade cloud platform, presenting a holistic solution tailored for B2B customers. They encompass the core advantages of Web3 technology, such as heightened speed, cost-effectiveness, and security, all achieved without the necessity to engage in transactions involving tokens or cryptocurrency.

The tech platform of Impossible Cloud provides an almost boundless storage capacity, designed for 100% durability, aspiring to ensure an industry-leading availability of 99.95%. It offers access to a global network of enterprise-grade storage hubs, ensuring dependable performance and efficiency for their customers. The company has the capability to provide geofencing technology, ensuring that data for customers in the U.S., for instance, remains within the U.S. Another benefit of Web3 is conferring partial ownership to those contributing computing power, motivating them to contribute to the computing foundation. Additionally, they can employ multiple layers of encryption and distribute the security responsibility across multiple node operators. In the long run, Impossible Cloud aims to broaden its enterprise services and contend with a more streamlined infrastructure.

Philipps & Byrne scrutinized the technological terrain at Impossible Cloud, looking at the tech leadership and team, product management, tech stack, fundamental architecture as well as of course hosting, and infrastructure. Furthermore, we assessed the processes regarding quality assurance, security, compliance and privacy.

The findings have been encapsulated in a report, aiming to provide investors with a robust risk and opportunity assessment while aiding Impossible Cloud in their ongoing journey of growth.

About Impossible Cloud
Impossible Cloud is Europe’s premiere cloud storage solution. Their decentralized cloud architecture outperforms current cloud solutions with faster, cheaper, more secure cloud storage. Made in Germany, Impossible Cloud stores all data in top tier, GDPR-compliant data centers and integrates seamlessly with any data management or backup solution. Impossible Cloud provides a high-performance, lower cost alternative to public cloud and a secure, scalable alternative to private cloud, Impossible Cloud offers industry-leading availability, durability, and security for a fraction of the cost.
Visit: impossiblecloud.com

Philipps & Byrne Provides Tech Due Diligence on Health Tech Startup

We worked with Munich-based Health Tech Startup Floy on the Product and Technology Due Diligence during their seed round. They raised €5.4 Million in a funding round led by HV Capital with participation from All Iron Ventures, 10x Founders, xdeck, SB21, as well as angel investors. Floy is a Health Tech startup from Munich developing AI to support radiologists in seeing diseases difficult to detect.

Location: Munich, Germany
Business Context: Health Tech
Tech Landscape: Artificial Intelligence
Round: 5.4 Million Euro

Technology Due Diligence on Floy’s Approach to Use AI To Detect Health Anomalies

Floy, a Health Tech Startup headquartered in Munich, is pioneering the use of AI to enhance the diagnostic capabilities of radiologists. In Germany alone, 25 million CT and MR scans are conducted annually, each containing valuable yet often unused data and information. Leveraging AI technology, Floy helps doctors to extract additional insights for early disease detection from these scans. Floy asserts that it has secured a 14 percent share of the German radiology market within just two years since its inception, seeing this as a testament that they identified a crucial need to address. The business model revolves around Floy collaborating with radiologists to provide their AI as a self-pay service directly to patients.

Philipps & Byrne conducted a thorough examination of the technology and product aspects at Floy. This encompassed a detailed scrutiny of the tech leadership and team, product management, tech stack, and architecture, as well as hosting and infrastructure. Additionally, we assessed processes related to quality assurance, security, compliance, and privacy. The findings from our assessment were put together in a detailed report, giving the investors a solid understanding of the risks and opportunities, while also helping Floy as they continue to grow by providing a set of actionable recommendations.

About Floy
Floy supports radiologists in seeing diseases that are difficult to detect. Radiologists receive a financial profit for every patient for whom they employ Floy-AI. Founded in 2021, Floy already raised €3.4m in funding and closed over 100 radiology locations.
Visit: www.floy.com

By Bastian Buch

Shall we speak about engineering metrics? Again? Yes, we should. I have been working in Tech Companies for 20 years and one thing has never really changed: the heated debates about what to measure, how to measure, and what to do with the data we capture.

Just recently, McKinsey published an article about measuring developer productivity, and thought leaders like Kent Beck and Gergely Orosz, among many others responded, sometimes almost in rage, sometimes with a more practical perspective.

After these enriching years in leadership, here are my nuggets of wisdom that I deem universal. Whether you’re an aspiring engineering manager, a seasoned middle manager, or the technical co-founder of a startup, these insights will resonate with you.

This is not a new discussion. I remember myself debating passionately with one of my first managers, also a former McKinsey consultant, about how to performance manage Software Engineers. Can you do it on an individual level? What are metrics in an engineering context good for? How can we know if an individual or a team is good? How do we know if someone deserves a bonus? So many questions.

A lot has happened since then: Agile practices have been adopted by almost all engineering teams around the world: Velocity, WIP, Cycle Time, Cumulative Flow, and many other process-related metrics have become our everyday companions. Additionally, the DevOPS movement started to shed a light on operational and infrastructure metrics (e.g. DORA). Also, with cloud engineering, the commoditization of measurement tools such as Grafana or Kibana, and the adoption of data analysis and visualization tools like Jupyter or libraries like D3.js really created a foundation for engineering teams to truly become ‘data-driven’ in the best sense.

Yes, a lot has changed and improved, and we still have the same or at least similar discussions I had 20 years ago. The same questions about the why, when, how, and who keep executive teams of startups and also established companies busy. Why is that? What’s missing?

I think the missing piece in a lot of companies is the actual operating model or framework in which metrics are used. Different people, teams, functions, and management layers have different and sometimes even competing views on what metrics are actually good for. Metrics and tools are still used in isolation. In the heroic efforts of functional leaders introducing tools and metrics they have used before (or just read about). A CEO with a sales background might not (yet) understand that measuring throughput or commits on an individual level can’t be a good measure of the performance of single team members. A CMO might not understand why it might be better to spend more budget on an internal engineering team building the company’s digital product instead of hiring an external agency to do the same job.

With this article, I’d like to share some of my thoughts and experiences with you. I don’t have the ambition to offer a complete overview of the topic or even to be right about this. But as much as these ideas have helped me and the teams I’ve led before, they might also help some of you.

What Metrcis Are (For Product & Engineering Organizations)

Yes, metrics are a good compass for management steering. In the oftentimes vast portfolio of operations, metrics act as a guiding element, providing direction and allowing leaders to steer their teams effectively towards desired outcomes. The question is: which metrics are useful and which are not? More about this later in this article.

Metrics are also a tool for self-improvement. The “self” can be an individual, a team, an organization, or even an entire company.

Organizations are groups of people working with each other to accomplish a common goal. How is this possible with people from different backgrounds, different languages, different personalities, and different ambitions? Metrics are (imho) the best way to align goals and priorities, to have a common language for strategic decision-making, and to discover opportunities and risks.

Metrics are not a tool to micromanage teams or individuals. It is (still) a common misconception that metrics are there to scrutinize every action of teams and individuals. While they provide data and insights, they shouldn’t be used to micromanage from the outside.

While data and facts are important, they are not the cure for all evil, they are not even the cure for a bit of evil. They are not solutions, they are simply tools, and for some problems, they are not even the right tools. They need to be complemented by intuition, instinct, experience, creativity, and a deeper understanding of context.

Metrics are also not the ultimate goal. They are a means to an end, not the end itself. They are only signals for you to understand if and how well a certain goal was achieved, but a number on a slide, even if it is dark green, does not count as success.

Building a Data-Driven Organization Requires a Company-Wide and Clear Understanding

When building a data-driven organization, it’s not simply about collecting vast amounts of data or having an array of dashboards visualizing it. Nor is it solely about hiring a data or product analytics team. Being a data-driven company requires a culture and operational model that position data, scientific rationale, and evidence-based reasoning at the forefront of nearly everything. Discussing data carelessly, intertwining contexts, and lacking foundational knowledge about the data and its structure can instigate widespread randomness and misalignment.

To cultivate a genuinely data-driven organization, one must grasp the hierarchy of decision-making and performance evaluation. This structure guarantees that every action taken resonates with the organization’s overarching objectives. Concurrently, all decisions and actions within an organization intrinsically follow a sequence, which leaders must understand and vigilantly oversee:

If this appears rudimentary: Kudos to you, well done! It’s staggering how many companies blur these lines. Your weekly meetings, status updates, dashboards, and so on should mirror a collective understanding of this structure and how it represents your business. Recognizing your business objectives helps in setting goals. These objectives, in turn, guide you to appropriate KPIs that determine if you’re on the desired trajectory. It’s paramount to have clarity and alignment about which KPIs are pivotal for accurate metric-level measurement.

Simultaneously, discerning whether a specific KPI or target measures input, process, output, or the outcome of your enterprise is crucial. Outcome measurement is challenging. Hence, selecting good lead indicators becomes an important exercise.

Consider the following example: if you offer a ticketing app for buses or trains, your paramount business objective might be to become the first choice when individuals want to buy a train ticket. Assessing this is daunting, since we can’t measure thoughts (as of now). While surveys about brand recognition can be conducted, they may not be wholly reliable due to potential contextual voids. A plausible hypothesis might be that users will only return if they consistently have a seamless experience with your app, especially given the myriad of alternatives available. Therefore, a goal could be that customers return multiple times within a year, or the ratio of one-time to recurrent buyers remains below 0.5. This serves as a robust KPI at the outcome level for team focus.

Supporting this from an engineering standpoint, leading indicators for these KPIs can be explored. The challenge arises because most metrics at this level refer to input, process, or maybe output. An effective output metric might be the count of uninterrupted sessions, the ratio of completed to lost transactions, or even the number of resolved incident root causes. Emphasis can be placed on the process level, ensuring rapid issue resolution or bug fixes within a strict timeline. For input, a metric might consider the time allocation for code quality enhancement. The true art isn’t in exhaustive measurement but in understanding the ‘why’ and clearly delineating between business metrics, goals, targets, KPIs, and other metrics.

Metrics Follow Two Directions: Outside-in (Metrics About) And Inside-Out Metrics (Metrics For)

Another important aspect of creating a data-driven culture is understanding the audience for your metrics, KPIs, targets, and goals and determining their purposes. Within each layer of an organization — be it strategic, operational, tactical, or individual— there are two vital perspectives:

The external value perspective
The internal growth perspective

At the strategic company level, the external perspective might encompass metrics such as market share, market capitalization, recurring revenue, or even customer satisfaction. While these metrics provide external stakeholders with insights into your value proposition, they aren’t necessarily instrumental in fostering internal growth or improvement. Thus, in addition to these outcome-focused, external metrics, it’s essential to adopt an internal growth perspective that promotes continuous improvement and evolution.

This dual perspective is especially important for product engineering teams. Internally-focused metrics like velocity, work in progress (WIP), development cycle time, and test coverage are crucial for maintaining team health, enhancing delivery capabilities, and scaling in tandem with the company. As a leader, your role is to inspire teams to leverage such metrics effectively, ensuring they aren’t merely numbers but tools for improvement. It’s not about the specific figures, but the broader implications. Conversely, from an external perspective, the focus shifts to metrics like feature adoption rate, bug rate, and direct user feedback. Don’t mix these up! Test coverage does not say anything about how good the company is, and your share price does not indicate if the engineering team is in a good position.

Curate YOUR Set of Operational Metrics

The silver lining is that the area of engineering metrics offers an abundance of established metrics, frameworks, and tools. This means that constructing metrics isn’t the real challenge. Instead, the art lies in selecting the right ones and weaving them into your daily operations, so they resonate with your team and stakeholders.

A great place to begin is with the DORA and SPACE metrics, which both center on work, processes, and the team dynamic. Avoid getting too involved in debates over the utility of these metrics. Instead, immerse yourself in understanding your unique context and business objectives. From there, curate a set of metrics that genuinely matter to you and your team.

Also, don’t overlook cost, application, and system-based metrics. Pinpointing the ideal metrics for your particular scenario demands rigorous effort and deep collaboration within the team. Your dashboards and reports should act as your secret arsenal, enabling swift reactions and keeping you informed about ongoing developments.

It’s crucial to stress once again the importance of interconnecting metrics. Aim to use ratios wherever feasible, and design your dashboards and charts in a manner that fosters insight rather than just presenting you with a stream of raw numbers. Each and every look at your dashboard should create value instead of more confusion. If something is broken or not working as intended, ideally one glance at your dashboards and data should provide insight about what happened, where, and possibly why.

How to Introduce Metrics and KPIs to Your Organisation

Start with Your Culture

Before measuring anything and before scheduling your first metrics meetings, it’s essential to enable a culture that values data-driven insights. Prioritize a mindset that favors facts over opinions. Foster an environment that embraces scientific approaches to problem-solving, highlighting the importance of insight, thorough reasoning, and evidence-based conclusions. Metrics and KPIs will be most effective in an environment where they can be interpreted and applied thoughtfully, rather than merely viewed as numbers. This starts with you as a leader, you need to be a role model in this. If you are not obsessed by insight and facts but rather act based on your instincts and gut feeling, don’t be surprised that your team won’t use data as effectively as it could.

Agree on what to Measure

Deciding what to measure is as important as how you measure it. Focus on metrics that align with your business objectives and values. These metrics should provide actionable insights that can drive the business forward. Equally important is identifying and eliminating metrics that aren’t relevant. Streamlining your metrics ensures clarity and purpose in measurement, avoiding data clutter that can muddy decision-making.

Democratize Your Data

Transparency is the foundation of trust and innovation. By making most of your data accessible to all team members, you empower them to interact with the data, derive new insights, and draw correlations that might not be immediately evident. When employees have the autonomy to ‘play’ with data, it encourages a culture of curiosity and innovation, often leading to unexpected and valuable findings.

Think Holistically

A siloed approach to metrics can create a fragmented view of organizational performance. The leadership team should ensure that metrics from various departments, be it business, sales, marketing, product, or tech, are harmonized. Establish a cohesive system that offers context and facilitates informed decision-making across all functions. This integrated approach ensures that everyone is aligned with the company’s overarching goals and objectives.

People Development

Embracing a data-driven approach requires more than just access to data; it demands the skills to interpret and utilize that data effectively. Investing in your team’s development in areas like data analytics, understanding standard KPIs, visualization techniques, and even mastering spreadsheets is crucial for being successful as a data-driven company. Make these competencies a part of everyone’s learning journey to equip the entire organization well for leveraging the power of data and insight.

Phased Rollout

Rome wasn’t built in a day, and neither should your approach to metrics. Begin with basic tools and essential metrics. This allows for testing and alignment and ensures everyone is on the same page. Find quick wins — these can boost morale and demonstrate the value of a data-driven approach. Activities like sharing weekly data stories can engage your team and stakeholders, highlighting the tangible benefits of integrating metrics and KPIs into your organization’s operations and how these can enable everyone’s creativity and innovation.

Best Practices and Anti-Patterns

Last but not least, let’s look into some best practices and anti-patterns. As you journey through the landscape of metrics and KPIs, it’s crucial to understand not only the tools and techniques but also the pitfalls and shortcuts. The following guidelines will provide some dos and don’ts, ensuring that your metrics-driven approach is both effective and sustainable.

Best Practices:

Push Over Pull: Instead of making data accessible only on demand, actively push it to where people already are. On-site, display dashboards in communal areas, like by the coffee machine. Remotely, use tools like Slack to share insights and ensure that standard dashboards are easily accessible.
Favor Ratios: Ratios often provide a more comprehensive picture than absolute numbers, offering context and deeper insights.
Embrace Visualizations: Visual representations make data more digestible and insights easier to grasp. Raw data, without interpretation, can be misleading.
Comprehensive Dashboards: Instead of isolated metrics, combine them to provide a holistic view of the situation or performance.
Standardize Tooling: Using standard tools ensures consistency, easier training, and more reliable data handling.
Right Visualization for Right Metric: The choice between, for instance, a bar chart and a line chart can greatly influence interpretations. Think critically about which visualization conveys your data best.
Consistent Presentation: Whether it’s the color scheme, chart types, or terminologies, maintaining consistency makes data interpretation more intuitive and reduces the risk of misunderstandings.

Ant-Patterns:

Micro-Management: Instead of nitpicking minor fluctuations, like “why did team A have 5 story points less?”, focus on bigger trends and broader insights.
Metrics Paralysis: Too many metrics lead to decision paralysis and confusion. Prioritize and streamline metrics to capture what’s truly important.
Ignoring Timeframes: Always contextualize metrics with timeframes. A temporary dip might be insignificant in the grand scheme of things.
Isolated Metrics: Never view metrics in a vacuum. Context matters immensely, and a singular metric without related data can lead to skewed interpretations.
Metrics-Based Compensation: Tying compensation directly to certain metrics can result in unintended consequences and behaviors.
Not Questioning Metrics: Metrics are tools, not truths. Regularly reassess and question the relevance and accuracy of your metrics.
Over-Reliance on Numbers Alone: While data is invaluable, it’s essential to balance it with intuition, experience, and collective intelligence. Don’t steer your business solely by numbers; human judgment is irreplaceable.

If you’re keen on introducing the right engineering metrics to your organization or wish to assess your current setup, our team at Philipps & Byrne is eager and equipped to support you on this journey. Reach out, and let’s build the future together.

Resources

Occam’ Razor – Blog by Avinash Kaushik
Measure Everything (Etsy)
Metric Driven Engineering (Etsy)
How to improve efficiency in your team (Lena Reinhard, Expert at Philipps & Byrne)
From ‘The Pragmatic Engineer’:
- Engineering Productivity
- A new Framework for Measuring Engineering Productivity
- Answer to McKinsey: Part 1, Part 2
Bastian Buch on Linkedin about Metrics
DORA Metrics
4 Golden Signals
SPACE Metrics
Not directly about metrics, but team maturity: Agile Fluency (ThoughtWorks)
Modern Agile Product Teams by Marty Cagan
Accelerate, Book & Video about Building High Performance Tech Organizations

About the Author

Bastian Buch is Executive Tech and Product Advisor at Philipps & Byrne. He possesses profound tech expertise and experiences from working with some of the most successful tech companies in Europe. Over the last 16 years, Bastian has worked as Engineering Manager and Head of Technology at Scout24, and an Engineering Director at companies like travel tech unicorn Omio, food and grocery delivery giant DeliveryHero, and Europe’s fashion ecommerce champion, Zalando. He is also co-founder and Managing Director of one of the biggest global non-profit mentoring platforms The Mentoring Club.

Tech DD on Audit Data and Application Platform Company

Qualifyze just raised $12 million in a round led by HV Capital and new investor HarbourVest Partners with participation from H14. Philipps & Byrne was on board by providing the Product and Technology Due Diligence. The Startup offers compliance solutions for the pharmaceutical industry. Their mission is to transform supply chain compliance in the healthcare industry in a sustainable, data-driven manner.

Location: Frankfurt, Germany
Business Context: Pharmaceutical Industry
Tech Landscape: SaaS
Round: 12 Million Dollar

Tech Due Diligence on Qualifyze’s Product and Tech Organization

Since its inception in 2019, Qualifyze has conducted audits on a multitude of suppliers.’ By effectively capturing audit data at scale and providing a comprehensive digital platform for end-to-end audit management, Qualifyze has already assisted over 1,000 pharmaceutical manufacturers in enhancing supply chain compliance and reducing supplier qualification expenses.

In the Tech Due Diligence, Philipps & Byrne scrutinized Qualifyze’s technological framework from every conceivable angle. This encompassed a holistic examination, spanning from the leadership landscape and the intricacies of product management to the dynamics within the team. Beyond that, we looked into the organizational structure, the architectural foundation underpinning the tech stack, the robustness of hosting and infrastructure, the software delivery and quality assurance processes, and of course, security and privacy.

The resulting report provided actionable recommendations to help Qualifyze on their ongoing journey of growth while also enhancing their tech and product organization for the future.

About Qualifyze
Since its inception in 2019, Qualifyze has been committed to supporting pharma companies with fast, flexible, and reliable supply chain compliance assessments. Qualifyze connects customers, suppliers, and auditors via their data and application platform. They capture and convert proprietary raw audit data to generate unique insights into supplier compliance levels across the supply chain and help their partners in healthcare track, monitor, and forecast quality and sustainability compliance efforts. Through this cloud-based platform, their customers can access and drill down into supplier compliance information at any time across multiple sites, shaping a new way to optimize supplier risk mitigation processes in a streamlined, cost-effective manner. With a global network of over 200 local expert auditors, 1,000+ pharma clients, and the world’s largest database of supplier compliance data from 2,000+ suppliers, Qualifyze is a leading provider of structured and analyzable GxP audit data resulting from onsite inspections in the pharmaceutical supply chain.
Visit: qualifyze.com

Product and Technology Due Diligence on Pricing Operations Platform Company

m3ter raised $14 million in a Series A round led by Notion Capital and joined by Insight Partners, Union Square Ventures, and Kindred Capital. Philipps & Byrne supported the deal by conducting the Product and Tech Due Diligence ahead of the investment.

m3ter helps software companies successfully operationalize modern usage-based pricing strategies. The company’s platform plugs directly into software businesses’ existing systems to capture granular usage, pricing, and account data at scale. It enables complex pricing configurations and error-free billing in near real-time, feeding systems throughout the stack, including billing and finance systems, the SaaS product itself, and Sales CRM and Customer Success platforms.

Location: London, United Kingdom
Business Context: Pricing Operations Platform
Tech Landscape: SaaS
Round: 14 Million Dollar

Tech Due Diligence on m3ter’s Pricing Operations Platform

m3ter supports software companies moving beyond simple recurring subscription models to implement hybrid and usage-based pricing. Demand for these models have grown due to the widespread adoption of Product Led Growth, as well as the rise of APIs and automation. Despite their advantages, usage-based pricing models are challenging to deploy and manage because existing pricing and billing tools are not well adapted to them.

m3ter’s platform is designed to support software companies of all stages and variations of pricing complexity, so they can scale with confidence. It plugs directly into existing systems to capture granular usage, pricing, and account data at scale and then applies complex pricing configurations to calculate error-free bill items in near real-time.

Philipps & Byrne conducted a thorough examination of m3ter’s technological landscape, analyzing various facets, ranging from leadership and product management to the tech team’s structures and processes. Additionally, we assessed the organizational setup, the fundamental architecture underpinning the tech stack, and the robustness of the hosting and infrastructure. We also looked into the efficiency of software delivery and quality assurance processes, as well as aspects related to security and privacy.

The outcomes of this evaluation were provided in a report that not only offered valuable insights but also actionable recommendations. These recommendations can assist m3ter on their ongoing path of growth and strengthen their tech and product organization for the future as they continue to scale.

About m3ter
m3ter is a pricing operations platform that powers and automates every variation of usage-based pricing for software companies at all stages, so they can deliver great customer experiences and accelerate revenue growth. By plugging into existing systems, m3ter flexibly ingests and enriches data, applies pricing of any complexity, and generates error-free bills, unlocking new capabilities for the entire business.

The company was founded in 2020 by Griffin Parry and John Griffin, repeat founders who previously built and sold a backend-as-a-service business, GameSparks, to AWS.
Visit: m3ter.com

Notion Capital
Notion Capital is a Venture Capital investing firm focused on European SaaS and Cloud, with more than 100 investments to date. They support exceptional founders on their extraordinary journeys, with lifetime capital and a value-add platform.
Visit: notion.vc

Product and Tech Due Diligence on Fintech Startup

London-based fintech kennek raised $12.5m in a Seed round, led by HV Capital and supported by AlbionVC, DFF (Dutch Founders Fund), FFVC, Plug and Play Europe and Syndicate One. Philipps & Byrne was called in to do the Product and Technology Due Diligence in the context of the deal. Kennek is the vertical software, an end-to-end solution for lenders that allows them to manage the full value chain of lending in one platform instead of using different systems and tools.

Location: London, United Kingdom
Business Context: Fintech
Tech Landscape: Vertical SaaS
Round: 11.8 Million Dollar

Product and Tech Due Diligence: Assessing kennek’s Platform Solution for Non-Bank Lending

Kennek is on a mission to simplify and streamline the non-bank lending sector, which has long grappled with complexity and inefficiency. With their vertical SaaS solution, they want to empower innovations like Open Banking, Open Finance, and Payments. Their platform addresses every aspect of a lender’s operations, spanning from loan underwriting to monitoring, servicing, and even investor reporting. It achieves with APIs to establish a single source of information for lenders, borrowers, and investors.

Philipps & Byrne assessed kennek’s tech stack from a 360 degree view. This means evaluating everything from leadership, product management, and team dynamics to organizational structure, architecture, hosting and infrastructure, software delivery, quality assurance, and considerations related to security and privacy.

Our report provides a set of actionable recommendations that can help kennek in their future growth and in building up their tech and product organization.

About kennek
Kennek helps lenders operate efficiently and scale easily, providing the best-in-class technology to manage everything from Loan Origination, to Servicing & Monitoring, as well as Portfolio management and Investor Reporting. All without the need to develop anything in-house so lenders can simply focus on their origination channels.
Visit: kennek.io/