MGMT Boston - The Endeca Effect - Special Report (2/5)
The Endeca Effect - Markets
Large markets matter. Being bold matters even more. Timing, of course, matters too. The biggest lesson, according to Steve Papa, was a “failure of imagination”. With the right imagination, timing & strategy Endeca could have potentially built an e-commerce business that rivaled the scale of Shopify. But they didn’t see it. And different things are possible at different points in time (and cycles). Maintaining focus through market cycles is also such an important way to learn and build. They built the Endeca platform with eBay as their scale target in terms of product variety, scale of users, throughput, SKUs, etc. A “pile of all the stuff in the world” and a completely unreasonable ask.
Here are their learnings on markets:
Markets Matter. Be Bold
Markets matter. A lot. Timing of course matters too. The generational switchover of search & commerce helped fuel the growth of the company. When we looked at starting Jellyfish, we looked at the markets first. (A.L.)
Fast moving water, big markets. Fast growing markets almost matter more than how good your product is. It’s hard to accept but we see it in the world regularly that sometimes it’s better to find the right river to be in. Endeca was my second job out of school. I thought “this is fun, work is fun” but, in retrospect, it was one of the few times I could pattern match to visceral product market fit. I’ve almost never experienced it again at that velocity. To know what that feels like is a helpful reference point as you advance in your career. (V.M.)
Horizontal or Vertical Market Approaches Both Work - Just Be Deliberate
Interestingly, Endeca did both. We had a core asset with strong product market fit in the commerce vertical. Then we learned how to use that core asset and apply it to various use cases across financial services, media, manufacturing, etc. It was an interesting view to explore how to expand across many different horizontal areas with a core pre-existing vertical (e-commerce) asset. There is also a really good case to be made for Endeca if we had just focused on commerce and gone deep in that one vertical “customer experience” could we have grown to be something larger in the e-commerce space a la Shopify? That’s not the approach we took but something, looking back on, worth considering. (J.A.)
I thought it was critical to see the benefits of being vertically focused and selling more products to the same customer (with the benefits of a brand) vs. what it looked like to try and be a horizontal player with various different iterations to fit different market solutions. When you don’t have a customized product behind it to support the vertical solution marketing, it’s harder to make that work. Where the product and marketing lined up most closely is where we saw the most success. It influenced how we thought about building a vertical company at Toast (S.F.)
Surfing Cycles & Handling Competition
I joined Endeca straight out of college. Years later, I heard Steve Papa speak on a panel and describe how the company had almost run out of money in the fallout after 9/11. I was just starting at the company and had no idea we were on the brink! During my 5 years at the company we went through at least 1.5 cycles and I learned a ton about how to persist through those cycles. (J.Y.)
We learned a lot about product lifecycles and the evolution of a market. We saw competitors get acquired and then later the pressures of open source software on price showed the market and competitive evolution. Early on at Toast, we had a lot of competitors, but the Endeca experience taught me that some of this just plays itself out. You have to stick with it and not let competition scare you. Just focus on what you do and do it well. Focus on your customers. (S.F.)
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)
Series Outline:
People - coming Friday
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