THE CHALLENGE: Learning about your product while you're developing it
When Daniel Debow and David Stein co-founded Rypple, they knew they wanted to build a Web-based tool that would help people get valuable feedback at work.
They knew there was a need for such a tool, and they had ideas for the specific things it might do - but they were wary of settling on a set of design specifications without knowing more about how their customers wanted to use it.
How could they learn about and develop their product simultaneously?
Mr. Debow and Mr. Stein met on the original management team at Workbrain Corp., which went from a startup in 2000 to being acquired for $227-million in 2007. After the acquisition and a short break, the two knew they wanted to jump back into the fray and start something new.
They went through a systematic process of assessing business concepts, and ended up thinking a lot about the need to help improve employee performance.
They knew from their Workbrain days that annual performance reviews were dreaded by everyone - those who conducted them and those who received them. The information was just too late, too general and too formalized to help anyone become better at doing his or her job.
Instead, they started to think about how people could get relevant feedback when they needed it. The challenge, of course, was to figure out how such a system might work. Since nobody else was questioning the status quo, they had carte blanche to specify what an automated tool should look like. That, however, was a mixed blessing because they didn't know themselves.
"You need to fall in love with the problem, not the solution," Mr. Debow says. "We knew that the only way we could learn what the product should do was to engage in rapid and continuous development with people who wanted to help us."
They built a simple prototype, put it online and started talking with people about it. The goal was to find early customers with the biggest need. These were the people who had the most incentive to help them figure it out.
The prototype caught the attention of Dan Portillo, then vice-president of organizational development at Mozilla, who was frustrated with traditional performance-management tools and willing to take a chance on something completely different.
Mozilla was a perfect early customer for Rypple because it had an innovative culture and was willing to adopt something new immediately. Getting the tool into the hands of as many users as quickly as possible was important to get the feedback that Mr. Debow and Mr. Stein needed.
"We'd been approached by banks, manufacturers and large technology-based companies, and could probably have gotten a million-dollar contract early on," Mr. Debow says.
"The problem was that it would take six months to finalize the contract and another 12 months to get the system in pristine shape, and we wouldn't learn anything new about our customers and their needs during that time."
In contrast, Mozilla was excited to be in on the ground floor and able to explore early versions of the software, not just from the perspective of human resource managers but from people throughout the organization.
For months, Rypple went through an intensive customer discovery process, spending a great deal of time talking to Mozilla employees and managers as they used the system. The goal was to identify the one or two most important performance-related problems they faced, so they could focus on providing the most needed functionality. Over time, they learned that there was a huge opportunity in providing one-on-one coaching for continuous feedback.
Rypple's strategy of iterative development has been enormously successful. Its software is being adopted by innovative companies such as Rackspace and Digg. Mr. Portillo believed in the company so much that he left Mozilla and last fall joined Rypple to run its San Francisco office.
In the past year, at a time when investment capital for early-stage companies has been nearly impossible to find, Rypple has raised an impressive $7 million, bringing total outside investment to $13-million. Clearly practising what they preach has paid off. A company that's been built on valuing feedback is well-positioned to help other companies create a great feedback culture.
Special to The Globe and Mail
Becky Reuber is a professor of strategic management in the Rotman School of Management of the University of Toronto.
This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Your Business website.