MGMT Boston - The Endeca Effect - Special Report (4/5)
The Endeca Effect - Products
The context of Endeca at the time, as we’ve highlighted, was the tug of war between being a platform company vs. a vertical application company. In order to raise capital in 2001 to get the company off the ground, they had to pitch a platform and didn’t necessarily have the persuasive arguments for why they should be a vertical application company instead.
Here are their learnings about products:
Differentiated IP & Positioning
I learned how important it was to build differentiated IP. We had built a technical moat at Endeca, the MDEX engine, and I learned from that experience how critical it is to solve a hard problem that not just anybody can go out and solve without spending a long time on it. (J.A.)
Endeca was “Engineering first” culturally. The technology was super innovative and it was a novel way to do something that hadn’t been done. The technology helped carry the day and create a category. It was almost successful despite ourselves. Platform success is rare and hard to achieve. But our success allowed me to see “what great looks like”. Last, the work we did with Gartner & Forrester allowed Endeca to be positioned in that “top right quadrant” that helped us become and establish ourselves as the market leader was really impactful. (J.Y.)
Process > Product
Good product is a process, not a static thing. It’s the people you sell to, who you listen to, who you build for. It’s also who you don’t sell to, the customers you churn, and which of those problems you choose to take on. Rinse & repeat, that’s the iteration. Understanding the problem you’re trying to solve and sitting down with your customer. Going through that at Endeca on a daily basis was so informative and also hard to just “write down”. My friend Rob Go, Co-Founder & Partner at NextView, refers to it as “Product Grit”. A little hardship is how you build a good product person. Non-usage, bricked sales, churn, etc. Those hardships teach you how to solve the problem. If you create something magic and it just works you might not be able to do it again because you never learned the muscle. Rob recalled to me that when he was with e-Bay, the marketplace had so much momentum that he never really learned how to build a product from scratch and deal with the ancillary process of finding product market fit like we did at Endeca. (A.L.)
Services before Software
There was a playbook in the 90’s that we used at Endeca where we would do deep services engagements on behalf of customers - like Barnes & Nobles & Tower Records - to help inform our learnings for the product we were going to then go out and build. And that’s basically how we built our commerce product, from those consulting projects. Later, for the first couple years of Jellyfish, we were completely quiet. We did professional services too, we just didn’t charge for it. We would go to customers and say “we’ll build anything you want as long as you let us do it with you”. We didn’t take any revenue. We would visit customers and assume that we don’t know anything, our customers' pain knows best. It’s not about building a “faster horse” and taking what they say they need literally. You need to hear their pain and try to iterate with them to solve that pain in a new & unique way. (A.L.)
Innovating at Scale
Endeca was an Enterprise software company and we learned how difficult it is to take a complicated Enterprise solution down market. Also, we witnessed the move to the cloud firsthand and how it then becomes difficult to deploy software “on-prem” to SMBs as our tools were optimized around Enterprise IT developers. Additionally, the MDEX engine took a lot of engineering work where architectural overhauls took time. Being cognizant of the cost and time to invest for the long term was a great experience to witness. Serving on the Special Operations team, we built a lot of prototypes that then got deployed with customers - contracts in the thousands of dollars. From there, I learned what is a service you have to provide vs. building a product around it. It’s much harder to make something really scalable vs. building a prototype. At a certain scale you can’t afford to break things. Quality becomes the overarching top priority where you measure three times and cut one time, which also makes it very difficult to innovate if the culture shifts. The Special Operations team was a part of helping preserve that innovative culture and we’ve replicated our own Spec Ops group, a program called New Ventures, that does similar work within R&D at Toast. Innovation as a programmatic motion has been influenced in a deep way from my time at Endeca (S.F.)
We learned how to build a big enterprise product platform that people relied on. They were running their businesses on it and, to an extent, their careers were riding on it. I learned the human side of buying and building products. To have the experience of building a technically complex product early on in my career has really helped. I’ve spent my entire career in Enterprise Software and have learned a lot from thinking about functionality & tradeoffs. I’ve also emulated the process we had at Endeca of getting prototypes out in the field quickly to see what does & doesn’t resonate. It was my first customer development experience and I’ve used that pattern repeatedly over my career to get products to customers rapidly for feedback (V.M.)
Because we raised our 2001 funding with our platform story we were obligated to pursue the platform strategy for a period of time. Only during the Financial Crisis 6 years later were we able to throw that out the window and build 2 different products. Then everything started moving faster. Ideally we would have done it in 2004 but we did it in 2008. It was a product of our context. Everyone got involved to be a part of this platform when, in reality, we were building a vertical e-commerce application and a business intelligence application. It wasn’t until Qlik Technologies came on the scene that it validated next gen BI for venture capitalists and we could go out and say we’re building applications. (S.P.)
KEY:
J.A. = John Andrews, Director Strategic Marketing > VP, Marketing & Product (2004-2012)
S.F. = Steve Fredette, Software Engineer > Sales Engineer > Manager, Special Operations > Manager, Development (2005-2012)
A.L. = Andrew Lau, Engineer > Professional Services > VP Engineering (1999-2008)
V.M. = Vinay Mohta, Software Architect & Developer > New Market Development (2000-2006)
J.Y. = Julie Yoo, Software Engineer > Professional Services > Sales Engineer (2001-2006)
S.P. = Steve Papa. Co-Founder & CEO (1999-2011)
Series Outline:
Career Learnings + Conclusion - coming Wednesday
Other Resources:
Boston Tech Big Board - building out data on every Boston area venture backed software company I can find
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