As a VC, I’ve learned the hard way: the best ideas don’t always win. What really separates the big winners from the rest? Technical excellence hidden in the code. And sometimes, it shows up in the most unexpected places—like asking, “Is this a blister or a DDO?” That’s not a question about rare coins (though I’ve met founders who collect those too). It’s about spotting the difference between a flashy feature and a real technological advantage—the kind that moves the needle on valuation.

The Importance of Technical Due Diligence

You wouldn’t buy a car without popping the hood. So why invest in a startup without checking its engine? Technical due diligence isn’t just a box to tick. It’s your best lens into whether a team can actually build—and sustain—what they’re promising.

Here’s the thing: founders can pitch beautifully. But when I dig under the hood, I want to see more than a sleek UI or a viral demo. I want to know: Is this tech built to last, or is it just pretty? That’s the “blister or DDO” moment—tech edition.

What Is Technical Due Diligence?

It’s not about rewriting their code. It’s about asking the right questions:
What’s the architecture like? How do they deploy? How do they handle bugs when they scale?
Who’s on the team? And are they solving hard problems the right way?

It’s about judging not just the what, but the how—because how a team builds often predicts how they’ll grow.

Why It Matters

Technical due diligence isn’t just for engineers. It’s for anyone writing a check. Here’s why:

• Risk Mitigation: Spot red flags early—like a monolith that can’t scale or a stack no one maintains. These aren’t just tech issues. They’re valuation issues.
• Resource Allocation: Is the team spending time building value—or firefighting tech debt? That tells you if your capital will compound or evaporate.
• Investor Confidence: A solid tech foundation makes term sheets easier. When engineers say, “This works,” VCs sleep better—and pay more.

Signals of Technical Excellence

Great tech isn’t loud. It’s quiet, consistent, and often invisible to users. But as an investor, you need to see it. These are the signals I watch for—they’ve paid off in countless exits.

1. Code Quality and Maintainability

You can tell a lot from a codebase. A well-organized, well-tested one? That’s a team that respects craft. Look for:

• Clean Architecture: Components are modular, dependencies are clear. You don’t need a PhD to understand how it hangs together.
• Code Reviews: Regular, thoughtful reviews. Not just “looks good to me.” Real feedback that improves the code and spreads knowledge.
• Test Coverage: Tests that catch bugs—not just “happy paths.” Unit, integration, and end-to-end tests are non-negotiable at scale.

Example:


// Example of clean, modular code in a React component
const UserProfile = ({ user }) => {
return (

);
};


Simple? Yes. But clean, reusable, and ready to evolve. That’s the kind of code that doesn’t break when you add 100 new features.

2. Technology Stack Alignment

Ask: Did they pick the right tools? Not the trendy ones. The ones that fit the problem.

• Right Tools for the Job: Building a real-time chat? WebSockets. A data pipeline? Kafka. Not every app needs Kubernetes.
• Future-Proofing: Will this stack handle 10x, 100x growth? Or will they need a full rewrite in 18 months?
• Community and Support: Popular tools mean more talent, more tutorials, faster fixes. That matters when you’re scaling.

3. Development and Deployment Practices

How they ship code is as important as what they ship.

• CI/CD Pipelines: One-click deployments. Automated testing. No “it works on my machine” excuses.
• DevOps Culture: Devs and ops talking. Shared ownership. That’s how you avoid midnight outages.
• Monitoring and Observability: Logging, metrics, tracing. If something breaks, they know—fast.

Valuation Implications of Technical Excellence

Great tech doesn’t just work. It translates to valuation. Here’s how:

1. Faster Time to Market

A clean codebase and solid CI/CD mean faster releases. That means faster feedback, faster iteration, faster revenue. And faster growth always commands a higher multiple.

2. Lower Technical Debt

Every shortcut adds debt. And debt compounds. Teams with high tech debt spend 30–40% of their time fixing bugs instead of building. That’s a valuation killer.

Low debt = more innovation = more value.

3. Scalability and Adaptability

Investors don’t care about today’s MVP. They care about tomorrow’s unicorn. Can this system handle 10 million users? Or will it collapse at 100,000?

A scalable stack isn’t just technical—it’s financial sense.

4. Competitive Advantage

Look at companies like Stripe and Segment. Their edge wasn’t the UI. It was the infrastructure—robust, reliable, developer-friendly. That’s hard to copy. And that’s what drives premium valuations.

Case Studies: Lessons from the Field

Here’s what I’ve seen after 15 years in VC: the tech choices founders make early—on architecture, testing, and culture—end up defining their ceiling.

Case Study 1: The “Blister” Startup

They had a beautiful product. Fast, flashy, and viral. But the backend? A house of cards. No tests. No CI/CD. Every new feature broke something else.

When they hit 50,000 users, the site crashed weekly. Churn spiked. Investors pulled term sheets. The valuation dropped 60% in six months. All because they chased bling, not muscle.

Case Study 2: The “DDO” Startup

Same market. Same problem. But different priorities.

This team spent 60% of their seed round on code quality, CI/CD, and observability. Their product wasn’t flashy—but it was rock-solid.

When demand surged, they scaled seamlessly. No outages. No panic hires. When they hit their Series A, investors competed to get in. Valuation? 3x what the “blister” team got.

Same idea. Different outcome. All about the tech.

Actionable Takeaways for Startups and Investors

Here’s what to do with all this—right now.

For Startups:

• Invest in Code Quality: Treat clean code like a KPI. It’s not overhead. It’s leverage.
• Choose the Right Stack: Pick tools that match your stage and problem—not your Twitter feed.
• Adopt Modern Practices: CI/CD, monitoring, observability. These aren’t “nice to haves.” They’re table stakes.

For Investors:

• Conduct Thorough Due Diligence: Don’t fall for the demo. Ask for a code deep dive. Or bring in someone who can.
• Look for Technical Signals: High test coverage, clean PRs, automated deploys. These are leading indicators of success.
• Engage Technical Experts: Your generalist can’t catch everything. An engineer can spot cracks before they become avalanches.

Conclusion: The “Blister or DDO” Dilemma in Tech Valuation

Just like rare coin collectors look past surface imperfections to find true value, VCs need to look past glossy demos to find real tech.

The difference between a “blister” and a “DDO” isn’t just in the code. It’s in the team’s mindset. Are they building for the demo—or for the decade?

For startups: technical excellence isn’t a cost center. It’s your valuation engine.

For investors: the next big thing won’t always be the loudest. But it will be the one that just works—at scale, under pressure, and for years.

So next time you’re evaluating a deal, ask yourself: Is this a blister? Or a DDO? The answer could change how—and how much—you invest.

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