Lean Startup Pitfalls Uncovered
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Transcript of Lean Startup Pitfalls Uncovered
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Lean Startup Pitfalls Uncovered
Brett G. Durrett (@bdurrett)
VP, Engineering & Operations, IMVU, Inc.
Lean Startup Meetup, San Francisco, July 21, 2010
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Presentation PIVOT!
a word so popular right now that I had to drop it on the second slide
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The Transition of a Lean StartupIMVU’s journey to becoming a Large Company
Brett G. Durrett (@bdurrett)
VP, Engineering & Operations
IMVU, Inc.
Lean Startup Meetup, San Francisco, July 21, 2010
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WTF?
Hey Brett… don’t Large Companies suck?
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I heard this talk…
From Steve Blank’s “Why Accountants Don’t Run Startups” presentation, used with permission.
Scalable
Startup
Large
CompanyTransition
- Business Model found
- Product/Market fit
- Repeatable sales model
- Managers hired
- Cash-flow breakeven
- Profitable
- Rapid scale
- New Senior Mgmt
~ 150 people
Startups Don’t Last Forever
You fail if you remain a startup!From Steve Blank’s “Why Accountants Don’t Run Startups” presentation, used with permission.
Scalable
Startup
Large
CompanyTransition
- Business Model found
- Product/Market fit
- Repeatable sales model
- Managers hired
- Cash-flow breakeven
- Profitable
- Rapid scale
- New Senior Mgmt
~ 150 people
Startups Don’t Last Forever
You fail if you remain a startup!From Steve Blank’s “Why Accountants Don’t Run Startups” presentation, used with permission.
Scalable
Startup
Large
CompanyTransition
- Business Model found
- Product/Market fit
- Repeatable sales model
- Managers hired
- Cash-flow breakeven
- Profitable
- Rapid scale
- New Senior Mgmt
~ 150 people
Startups Don’t Last Forever
You fail if you remain a startup!From Steve Blank’s “Why Accountants Don’t Run Startups” presentation, used with permission.
Large
Company
FTW!
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The Large Company is the result of a
successful Scalable Startup
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The Large Company is the result of a
successful Scalable Startup
If you can survive the transition
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The Large Company is the result of a
successful Scalable Startup
If you can survive the transition
(which has pitfalls)
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Not Really Startup Metrics
• ~100 full-time employees
– Technical staff ~50 people
• > $40 million run-rate
• > 10 million monthly unique visitors
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Introduction
• Assumption audience is quite familiar with
Eric Ries’ Lessons Learned blog
• IMVU sometimes referred to as the
original Lean Startup
• Talking about IMVU transitioning from
Scalable Startup to Large Company
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Quick Background
• Customer Development & Lean principles lead company to tremendous growth
• Fast development – everybody focused on getting new things into customers hands
• No “golden gut” - customer metrics beat grand product vision
• Inspirational environment – everybody empowered to make product decisions
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Hey – We’re a Scalable Startup!
$0.0
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$1.0
$1.5
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$3.0
Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07
IMVU Revenue by Quarter (in millions)
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Initial Transition
• Product Owners for R&D, productizing,
monetizing and keeping things running
– Smaller, independent versions of company
• Same successful philosophy and practices
– Ship fast (but 2 month cycles feel slow)
– Anybody can make product decisions
– Customer-facing over infrastructure
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Not So Much
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Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07
IMVU Revenue by Quarter (in millions)
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Not So Much
• Revenue dropped even though we were
the using exact same philosophy and
practices that delivered success
• Product becoming “bucket of bolts”
– Features abandoned because development
teams disbanded / moved to new projects
• Emphasis on customer-facing changes
leads to increased technical debt
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Transition: Plan B
• 7 “customer experience” product groups
– acquisition, discovery, connection, etc.
• Persistent feature ownership
• Each group has key business metric
– Conversion, retention, # chats, etc.
– Combined metrics ultimately drive revenue
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Again, Not So Much
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Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08
IMVU Revenue by Quarter (in millions)
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Again, Not So Much
• Revenue flat
• Product still a “bucket of bolts”
• Technical debt continues to pile up
– Build infrastructure hindering development
– Can’t iterate on IM client
• Lack of progress leading to morale issues
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Key Failures
• Didn’t align everybody for success
– Competing metrics = adversarial owners
– Authority disconnected from responsibility
• 7 product teams = too small to be effective
– No desire to apply limited team to tech debt
• Focus on immediate customer feedback
prevented “big bet” improvements
– Bias favors features over infrastructure
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Transition: Plan C
• Align organization for success
• Strengthen product ownership
– Support it with effective project management
• Allow “big bets”, not just optimizations
• Don’t lose the things that make us great!
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Getting Aligned
• Officers determine business strategy
– Shared (repeatedly) with all employees
• All employees have same incentive plan
– 2009 targets for profitability and revenue
• Authority consistent with responsibility
– Drive accountability
– Required difficult changes to culture
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Stronger Product Ownership
• VP Product clear mandate
– Determines long-term product strategy
– Aligns product owners to company strategy
• Product teams: product, monetization,
keeping things running, but this changes
• Product Owners determine all product
changes
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Project Management
• Needed visibility into:
– Where we spend development resources
– Better ROI assessment when planning (the “I”)
– What others are doing (transparency)
• Resource Allocation
– Product decides % of resources to each area
– Engineering determines actual people
• Variation of scrum, 2-3 week sprints
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Seeing the Big Picture
• Passion for customer validation great
• Obsession for immediate validation can
distract you
• Easy to lose sight of:
– Product opportunities requiring a big bet
– Increasing technical debt
– Infrastructure needs
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Customer vs. Infrastructure
• Customer facing features prioritized over
infrastructure critical to early success
• When it compromises ability to rapidly
iterate a key strength is lost
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How Do You Know?
“We are hiring smart people that can’t make
changes to our code”
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Payback of Technical Debt
• Dedicated technical investment projects
• Some systems get a technical debt “tax”
applied only when product changes
• Tech Leads can add project requirement
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Continuous Deployment Overhead
• Effective development systems require
ongoing investment to scale
– Impacts speed and morale
• IMVU spends >20% of engineering on
maintenance of the tests and process
– Even with premium we find it has high ROI
• Pain follows a square wave pattern as we
scale the organization
CD: Expect Some Hurdles
• Production outages
• New overhead
– Tests
– Build systems
• Production outages
• Frustration
• Production outages
(but well worth it)
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Cultural
• No longer possible for everybody to
participate in every aspect of the company
• Leadership changes at all levels
• Process: too much, too little.
• Not everyone makes the transition… some
people just love startups
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Key Cultural Values We Kept
• Entrepreneurial spirit
• Customer metrics validate our decisions
• Value everybody’s ability to contribute to
product direction
• Accepting failures in order to learn and
improve
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Example: New IM Client
• Not previously possible
– 1-year design and development
– Substantial non-customer-facing infrastructure
• Big win for customers and technical debt
– Solved key issue confusing customers
– Rate of development greatly accelerated
• Iterated with customer validation!
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Example: Hack Week
• Originally few requirements– Anybody can develop anything
– Have to demo it at end of week (live)
• New requirements – anything, but ship it or kill it– Each person allowed 1 project at a time
– Product adopts it, keep building it or kill it
– Limit customer exposure until adoption
– Engineers need business data to make decisions!
• Results– Much higher rate of projects getting to customers
– Many engineers choose to work on existing product plan!
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How’s the Transition Going?
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Qtr Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09
IMVU Revenue by Quarter (in millions)
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Thank You
Brett G. Durrett
Twitter: @bdurrett
and… many thanks to Steve Blank for use of his slides
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Oh Yeah…
Interested in getting more experience?
We’re hiring!
http://www.imvu.com/jobs/