After Nimi survived Sri Lanka's bankruptcy, we entered the SaaS crunch of 2022. It seemed like the suffering would never end, and I was left to balance an increasingly precarious P&L.
In boom times, we ignore the hairline cracks in a business foundation. When there's plenty, there's a sense of invincibility when considering business threats.
When the boom becomes bust, all those minor things get amplified. As I outlined in my previous post, the lack of processes and control around performance management, hiring, and delivery management put me out of control and, the business at significant risk.
In November 2022, one of our customers went through a second round of layoffs that impacted their QA team. Our customer champion had informed my head of QA that the company would fill those roles with Nimi engineers. They wanted us to supply six QA engineers. I committed all four engineers to the customer and asked Hishani, our HR manager, to open up two more roles.
There were requests like this from our other customers as well. Therefore, as the holiday party ended and many Nimians returned from their Christmas vacation, the middle managers at Nimi returned to work in the first week of January with much optimism.
But this optimism did not last. By the end of the first week of January, our customer had decided not to use our QA team and terminate the relationship entirely. Throughout Q1 2023, I fielded termination requests. This time there would be no price negotiations. These customers decided to lay off resources and not replace them for the foreseeable future.
I had yet to plan for how I would make up for this size of shortfall. I started 2023 with the future looking bleak.
As long as I'm taking something out of the company, I haven't hit rock bottom.
- Paul Downs, author of the book "Boss Life: Surviving my own small business."
Looking back, I regret that I never paid myself a salary for running Nimi. As I was always anxious about paying wages, I banked as much revenue as possible to build a runway for the company. Because I didn't have a salary to cut, I didn't see that I had already arrived at rock bottom.
At the beginning of 2023, I had burned through my savings to cover my expenses, as well as infusing capital in the business to cover reduction in revenue and unpaid invoices.
My father, one of the advisors at Nimi, has run a small business for over 50 years. It is a good business and offers a critical service to manufacturers in Sri Lanka, enabling them to put goods on the shelf for consumers. I asked my father for advice on what I should do, and he said:
If your business doesn't make a profit, that's okay. Give yourself some time to become profitable. But watch the clock. You need to know when to pull out.
My father is a person who is not emotionally connected to his work. He trusts the numbers and lives by them. If they don't work, he will move on. When I reflected on how I treat my business, I was the opposite. Emotion was everywhere in the company. The company was named after my late mother, Nirmala - her nickname was Nimi. We promoted a culture of belonging and growing together. I had gotten to know most of the early employees very personally. I learned about their families and their children.
My emotions kept me from making hard decisions. The consequence was burning cash with no clear plan in sight.
I asked my father what he would do in my position. I told him how much I cared about the company and reiterated all the pain and struggle we went through to get it to the stage it is in today.
At first he wasn't happy to hear this. He felt my emotions were clouding my judgement. But he also understood the importance of this business. It's valuable, a good service for young Sri Lankans and help us create a positive legacy in Nirmala's name.
He decided to help me. He asked me to make a small change - start cutting back on one particular software vendor. If we could pay as little as possible for the service without disrupting the business, we should do it.
It was a small change and a catalyst for what I needed to be doing. Little by little, I started finding more bills to cut or eliminate, and I felt good about the process.
He asked that I visit the team in Sri Lanka. At this point, it had been over six months since my last visit. I had to come and see things in person.
Even though cutting these costs had a negligible impact on the margin, it felt good to make progress. And by cutting costs, we started implementing other financial best practices. We created budgets for each division and started forecasting our cash flow for the next 12 months. We knew we would run out of money in less than 90 days if we didn't do anything about this.
On February 2, 2023, I jumped into a Lyft that would take me to the San Francisco International Airport to board a Singapore Airlines flight that would take me to Colombo. It was a longer route, but it was the cheapest fare available. Every little bit counts. I was internally preparing myself for a brutal trip. The energy would be the opposite of the previous trip from June 2022.
A week before the trip, I revealed to the company that the global economic situation was not good and that the recession would infect Europe and eventually land in Sri Lanka. I needed every Nimian to step up. The year's theme would be performance; every expense would have to go through me. As I was doing calculations on a piece of paper and writing out scenarios, it was clear that the only way out of this was to get new customers. But we would still pay attention to productivity and efficiency.
I would have to unturn every stone. I was deep in thought, playing through all the scenarios in my head, and how my team would react to it.
In a moment of complete awe, or perhaps some psychic abilities of my Lyft driver, he asked me this:
It looks like you're on a business trip. Do you work in tech? Are you ready to make some hard decisions?
Wow. How did the driver intuit that? Or was that a good guess based on the most recent passenger confessions? I opened up to him about what was going on. And he consistently and continuously repeated this advice.
You should have made these decisions six months ago. Do you see that? If you do, you need to decide now before I tell you that you should have made the decision twelve months ago because clearly, there would be no company to save.
That was it. Now I dared to be the ruthless CEO the company needed me to be.
Over the next few months, which in retrospect feels like two years, I completely changed how I operated. Here are the significant changes I made to regain control of my company.
As the company scaled in 2022, I intentionally stepped away from the daily activities of the business. That's the purpose of delegation anyway - I trusted my middle managers.
Typically on these trips, which tend to be 8 or 9 days long, I spend most of my time meeting with my middle managers. I rely on them for information on the company's health and how the Nimians feel, and they rely on me for strategic direction.
Given the nature of the situation, I wanted to probe my team to identify any blind spots.
So when I arrived at the Sri Lankan office, I asked simple questions. "What is your goal for this month?" "What is X working on these days?" "Who designed this API?" "Can I see the technical design doc?" To my surprise, some middle managers didn't have answers. They had to "get back to me on that." Curious.
I decided to spend most of my time in the open office and observe Nimians at work. By the end of the week, I concluded that Nimians got disconnected from the company's mission.
I also found that some of our new hires lacked a sense of urgency and subscribed to a culture of perception rather than one of the driving outcomes for the business.
But it wasn't a lost cause, as I identified specific teams and leaders working very hard. They had hired well and had instilled the right culture in their teams. So I could see the latent talent hidden in the company, shrouded by this bureaucracy created by some middle managers to create this perception that "everything was okay."
Everything wasn't okay, and now having seen it myself, I didn't feel fine burning my savings (and what would be my daughter's future) for an unmotivated and disengaged team.
The first change I made was to raise the bar on performance, and I would work directly with each Nimian to learn who was performing and who was not.
To do this, I flattened the org and had most of the Nimians report to me.
Next, we would go through all the company initiatives and kill the ones that didn't have much of a future. By doing this, I was able to pool engineers on fewer projects. The fewer our projects, the easier it would be to measure success.
Through this process, I realized we had redundancy in our QA division, and given there was no pipeline here, I had to lay off several members. It was a sorrowful moment for me, having groomed all these engineers, but it was a decision I had to make to create laser focus for the business.
Finally, we froze hiring. In addition to having all expenses requiring my final approval, so did any hiring decisions.
By doing this, I could separate the ones in the organization who were creating chaos from the ones who were performing.
By flattening the org, I was also able to create room for juniors to grow and show their true capabilities.
Now that I fully understood what everyone was doing, I needed to work on the unit economics.
I started with one of our customers who had gone through a difficult price renegotiation, in addition to crushing us on cost and reducing the team size. I sat down and ran the P&L for this customer as if it were its own business. To my surprise, we ranged between -8% to +3% margin on this customer over the past six months.
Worse, the delivery manager could not explain what the team was working on this week and why it mattered to the customer. While we started as a product development partner, over time, we had become slaves of JIRA tickets. It was hard to articulate if we even mattered.
I like being essential and expect my companies to be the same. I will collect a penny from a customer only if we create multiples of value for them.
It was clear to me that based on the salaries we were paying senior engineers and the change in market demand, there was no way we could justify dedicating engineers full-time to a customer. We had to spread the senior engineers across multiple projects. We would also bring in junior engineers, and deploy them hourly. By doing this we would increase utilization and increase profitability at a lower price point.
We also had to evaluate if we needed so many senior engineers. Where there was redundancy, we evaluated who was essential to the company. Where they were malleable, we moved them into gaps in the company. Where there wasn't a fit, I had to let them go.
I worked on an entirely new price book with simplified pricing. In this model I would be the delivery manager in the customer's timezone while I brought on a shadow who would handle all operations in Sri Lanka.
For projects like Nimi Kash, which didn't have revenue yet, it was harder to measure success. We created other goals, revenue proxies, such as features delivered, customer demos, inquiries and so on.
While digging into the Nimi Kash JIRA board, I identified that one of the QA engineers had generated over 100+ bug tickets through a script. Another junior engineer had somehow broken down a task that should be a single JIRA ticket completed in a day to a ticket with over 14 subtasks. It took them over a week to complete it, including opening and closing related bug tickets.
The reason for this behavior was a goal around the number of tickets closed. So obviously, it was abused to create a perception of success.
For me to get Nimi Kash out the door, I had to make drastic changes. I had to get back in the driver's seat.
What came next was not the happiest moment in my Nimi career. Several months ago, I onboarded my brother Mavisha onto the company to lead product management for Nimi. Mavisha runs several businesses, and it was gracious of him to accept my request to come and run the function.
Neither did I spend the time to train him, nor did he allow me to weigh in and guide the Nimi Kash team.
It was a tough decision but the right one for the company - in addition to being the delivery manager on all company projects, I also assumed the responsibility of owning and delivering the Nimi Kash product.
In early 2023 we migrated from Microsft Teams to Slack for all workplace communication. While the Teams web conference software was satisfactory, their chat product could have been better. There was no way to keep track of threads and reminders, and information was constantly lost.
Slack was a better choice, but most channels were radio silent. I was assured by the middle managers that they communicate through Teams calls and phones throughout the day.
As part of flattening the organization, I heard from the individual engineers that the middle managers stifled communication across teams. That was the opposite of what I heard from the middle manager. Was there some fiefdom between teams? Were they throwing their managers under the bus?
I would later learn that a specific middle manager was threatened by some of the junior engineers their peers had hired, and so behaved in a way to limit and restrict the ability of some engineers to collaborate and grow.
I didn't have any patience for this stuff. We're trying to build a productive company together, and stuff like this detracts from the experience no matter how you see it. We had written principles when the company was first founded. But a lot had changed and it was time to revist them.
I wrote these three principles down and shared them at a company all-hands meeting.
1. Ensure everyone is learning
2. Respect and trust each other
3. Transparency for everything
We overlayed this with goals for each team within the company. Either we hit the goals or don't—no gray area. If we keep missing the goals, we stop doing that.
It was clear to me that communication was a weakness in the organization. I determined that I would show the best practice by doing. I communicated through the written format through confluence documents, spreadsheets, and Word documents and used Slack extensively to spread the word.
The team needed me to invest in hands-on training on agile practices. On my May trip to Sri Lanka, I completed a session with the entire company on scrum methodology. We did a story points workshop, one for Kanban, feature writing, ticket descriptions, etc.
Now that these processes were formalized through daily and weekly meetings, I started building a shared passion with every Nimian for our company's operations.
And it wasn't just me lecturing the team and walking away. I became very hands-on with the team. From being involved with Figma designs, flow diagrams, API testing, and troubleshooting, I showed the company what to expect from a leader.
By doing that, I also showed the next generation of leaders at Nimi how to show up for their team.
By taking control of my business through the tactics defined in my book Gangsta Vision, I could shape the business's destiny.
The core mechanics of the business and the team were working to my satisfaction and gave me the confidence to go out and fight for new business.
In preparation (or in the hope) that I would solve this by the end of Q1, I had pre-planned and booked an entire roster of business development activities from March to May that would put me in front of as many founders and tech leaders as possible. Like a robot, I shared the story of Nimi's product development agency and the Nimi Kash product.
These sales trips opened up the funnel, and I used pitching to VCs and applying to accelerators to sharpen my communication about the business and finetune the value proposition for the Nimi Kash product.
When I was at FinTech Meetup in Vegas in March 2023, I got to spend some time with Jason Gardner, the former CEO of Marqeta. After meeting with him, we started an email thread that revealed all my fears and worries about running Nimi, and I looked to him again for advice (previously, he had guided me to figure out when to start a business).
This time, he taught me when to end a business.
Set goals and trust the metrics. Metrics don't lie; if they don't pan out how you want them to, it's time to wind down.
There were many changes that I had already started making in this vein, and our email conversation gave me the boost I needed to keep pushing forward.
After several months of hard work, we've found new customers. We work very hard, and I'm involved and hands-on in every new project.
Most importantly, I am intimate with the customer vision. I want to know what levers need to be moved to help their product be successful. We are not in the business of executing instructions. We are a product development partner, and every day, I exercise my 15 years of product development experience to enable our customers to be mega successful.
In Q2 2023, the company finally stopped incurring losses. And we are building back our runway.
Throughout this time, the company has grown intellectually. The makeup of our team has changed. We had to say goodbye to a many Nimians. It's sad, but it was a sacrifice we had to make to ensure the philosophy and purpose of this company would survive.
We've grown our list of customers and partners, added more technologies and skills to our assets, and are ready to scale safely.
Don't hesitate to contact me if you or someone you know is looking for a trustworthy, reliable, and hard-working team of product engineers.
Learn more about our work at Nimi Product Portfolio (nimidev.com)
Dilip Ramachandran has over 15+ years of building teams, shipping delightful and highly successful enterprise software products in MarTech and FinTech at companies like Walmart, Experian, Marqeta and Bond.
Dilip wrote Gangsta Vision to help folks in product management to figure out their path and a plan to break into senior leadership.
At Nimi, Dilip is CEO and Chief Product Therapist helping high-growth FinTech startups with product and payments advisory and matching them with highly reliable and skilled experts in Sri Lanka. Learn more about Nimi at www.nimidev.com
Dilip has a Bachelor’s in Electrical Engineering from the University of Pennsylvania and resides in Oakland, California with his partner Alla, daughter Ariadna and son Wiley (a papillon-sheltie rescue). The family occasionally travels to Colombo, Sri Lanka for his work with Nimi.