Archive for the ‘a16z’ Category
AJ Shankar was busy working on his PhD thesis at the University of California, Berkeley in the prestigious Programming Systems Lab, where he published a number of important papers in OOPSLA and PLDI. As a big fan of side projects, he also caught the maker bug.
One of those projects was working as a technical expert for a leading Seattle-based law firm. It led AJ to ask what every entrepreneur asks, “How can this be improved with software?” That’s where Everlaw got started, in 2011.
The problem: A world of legacy software for lawyers
The legal profession — particularly the area of litigation and trials — is a costly, complex, labor-intensive, and, frankly, error-prone process. Beyond that, it is steeped in the complexities of individual courts and jurisdictions dictating, sometimes at the trial level, how technology can be used. Having personally worked through the transition from WordPerfect to Windows over the better part of a decade, I know the challenges of bringing technology to this highly knowledge- and people-intensive process are significant.
AJ and his co-founder, practicing lawyer Jeff Friedman, a former Assistant U.S. Attorney and corporate counsel, know these challenges well from their experiences. They set out to invent something that meets both the demanding technical needs of litigation along with the unique business requirements of law firms, which often do not have the resources or skills required to manage complex software deployments.
In fact, complex deployments of on-premises software defines the current state-of-the-art in litigation support software. Anyone familiar with modern software would look at this “state-of-the-art” and see architecture from another era. That’s not to say those solutions do not provide value and make money, but AJ and Jeff see a far better way.
There is also a need for modern solutions to deeply technical problems — such as searching terabyte corpora for relevant documents (the state-of-the-art is mostly keyword search) or identifying clusters of relevant documents based on machine learning techniques (versus relying on humans to manually sift through and connect millions of documents). Historically, an industry vertical with such a legacy business model and architecture (i.e., very slow to change) would have a very hard time attracting top computer science talent to improve the space.
Law firms also need software to solve the modern problem of “big data.” In this context, big data can mean millions of email messages, chat transcripts, voice mail recordings, scanned documents, entire data sets and social media feeds, and much more. Those are the artifacts of the legal discovery process that flow across both sides of the aisle in ever-increasing volumes. These volumes are beyond what many law firms can deal with, and as some might know, producing large amounts of data can often be part of a legal strategy used against smaller firms.
Finally, the pace of change for software in the litigation industry needs to increase. The model of one-time, slowly updated on-premises software simply isn’t compatible with the fast-paced changes in technologies that can help legal. Part of the legacy world the legal profession faces is the same that any enterprise faces: A desire to move away from high, up-front product costs and transition to a cloud and software-as-a-service (SaaS) model.
The solution: Bringing cloud innovation to lawyers
Everlaw architected a solution that starts from customers: attorneys at small firms, large firms, state offices, and on both the defense and plaintiff side of cases. AJ’s technical background and Jeff’s real-world experience as an attorney proved to be a great place to start. To begin the journey, Everlaw assembled an engineering team of hard-core computer scientists, many from UC Berkeley.
In the Andreessen Horowitz pitch meeting, it turns out a lot of the former CEOs, execs, and founders have been involved in litigation. Our collective experience, especially as defendants, led to an immediate bond with AJ as he detailed the Everlaw solution. Many of us have been through the boxes of documents and questions from counsel about “discovered” documents. We knew how difficult the process was and we loved when AJ detailed Everlaw’s approach:
- Bring together core computer science experts from natural language, machine learning, and full-stack development to architect the system.
- Build innovative experiences that start with the process of ediscovery and provide a platform for an end-to-end solution for attorneys to collaborate as a case is developed.
- Deliver Everlaw as an incredibly secure, highly reliable, totally scaleable cloud-based SaaS service.
So far, their experience with customers has been amazing. Since most attorneys are part of the world of mobile and cloud experiences, as soon as they see Everlaw, they see how much easier, faster, and higher quality their trial preparation and work can be. In fact, customers usually say “why did it take so long” or “this is how it should work”. AJ has written a postthat includes more details on the company’s vision and the success to date.
At Andreessen Horowitz, we are always incredibly excited to see technology founders taking on the hard work of reimagining an industry. It is clear that mobile, machine learning, and cloud delivered via SaaS will revolutionize every vertical, including legal. We love the work that AJ, Jeff and the Everlaw team have done to bring such high-powered efforts to an incredibly important part of the economy.
For those reasons, we could not be more excited to be partnering with Everlaw and leading their Series A funding round, joining the existing investors. I am super excited to be joining the Everlaw board to support their ongoing work. Software eats legal.
This post originally appeared on a16z.com
Many of the technical founders I have the opportunity to work with are well-versed in the architecture and features of their products (and products in general), but when it comes to possessing a similar view of the sales process there’s a good chance they are staring at a blank whiteboard. That’s to be expected because the skills and experience to do enterprise sales, and to do it well, are earned in the trenches over many years. Selling, specifically enterprise selling, is not something that comes naturally to most product-minded people.
Note: This post originally appeared on a16z.com on May 20, 2015.
Just as with code, one can devise an architectural view of how enterprise selling works. And like code, it is best to approach the process of selling using an architecture, rather than just diving in and writing code. Unlike code, if you act in haste or otherwise squander an enterprise opportunity there’s not really a chance for a rewrite or undo so it is best to approach with caution. Of course I’ve made many of my own mistakes and have also had ample time to learn what it was I have done wrong or what invalid assumptions I held. This post is a framework to help make sense of all the motions and actions that go on in the scope of enterprise sales.
Most technology leaders are consistently amazed at the depth and sophistication in enterprise selling. Since most engineers or technologists have little experience big-ticket selling, other than perhaps buying a car, this isn’t a surprise. While you might not be a designer or engineer, as a product person you have an empathy or sense of the skills, roles, and processes used. The same usually can’t be said for sales and selling.
There’s really only one key factor that distinguishes enterprise selling from everything a product person knows, and that is enterprise selling ends with the product and starts with the enterprise. Of course that is the complete opposite of what one might normally think where everything starts with a product. Even with the most amazing and inventive product ever conceived, selling at the enterprise level and enterprise scale requires inverting your perspective. There’s an analogy many often understand. Most product people know you don’t build a product by starting with a specific technology just because it is new, cool, or novel. Rather one starts by solving a problem of some sorts where applying a technology creates an amazing new experience that addresses a need or solves an articulated problem. Enterprise sales is similar in that you don’t start with a solution (your product) and then get to the problem (customer need, articulated or not).
Enterprise selling ends with the product and starts with the enterprise.
There are tons of amazing resources on enterprise selling. Resources go from the specifics of sales motions for a single sales person all the way to models for setting quotas, organizing resources, and training the sales organization. Most every seasoned enterprise sales person has their favorite toolset and part of hiring and managing a team is empowering them to make use of the tools they are comfortable with (just like you would for engineers). One resource I value is the book SPIN Selling, which is sort of a classic and spawned a whole ecosystem of supporting tools and guides.
A framework for product people
At an abstract level you can think of enterprise selling as following three steps:
First you set out to build a relationship with the enterprise customer that rests on a foundation of a deep understanding of their unique context. This relationship is formed by learning about the customer and organization, including how they do what they do, what they are struggling with and where they are heading. The biggest risk in most enterprise sales cycles is assuming you know these things—that one bank is like any other bank, that all Oracle shops are similar, or that everyone is trying to rip out SAP or move to the cloud. Almost all failures in enterprise selling, or at least all deal closing crisis moments, are caused by rushing this step or failing to learn all that needs to be learned about an enterprise.
Second, you articulate your vision or view of the “world” and how given your understanding of the enterprise you can begin to talk about a view for how to add value to an organization. The notion of “adding value” is key to this dialog as “solving problems” can set you up to fail too early in the process. The reason for this is that enterprise IT knows all to well that any new system begins with sunk costs, reduced productivity, and in general a period of investment. All this happens before the return or value is brought to the enterprise.
Finally, the last step is to establish a partnership, based on a mutual understanding. You understand the enterprise. The enterprise understands how you aim to aid value to their organization. The partnership process itself is how you go about going from pilot to implementation to expansion, sometimes called land and expand.
Let’s dive into each of these briefly with the goal of offering a flow or outline of the sorts of actions and motions that should take place. It is worth emphasizing that there’s a lot of unique value in how a given enterprise account manager approaches a specific customer with a specific type of product — so I’m not implying this is a one-size-fits-all model.
The goal of the first milestone is a strong understanding of what things are like within the enterprise you are selling. To a product person this is very similar to those first ideas in developing a product-market fit and needing to assess the potential for the market. Much of the early effort will be consumed by understanding if you’re even working with the right team or people within an organization, and often there are multiple parties. Too often a product person believes you start at the CEO and shortcut this step, but an experienced account manager knows great deals can die in the middle of an organization just as easily at the top.
Culture. First you want to understand a bit of the culture of the enterprise. How risk averse they might be (for example, where do regulations fit or how leading edge is the organization as a whole)? You want to understand a bit about how decisions are made and how technologies and products are evaluated. You want to make sure you are sensitive to the basics of how the company likes to do business (how formal, what times do meetings take place, where do coffee, meals, drinks fit or don’t fit, and so on). This is especially true as you venture to industry segments that are unfamiliar to you. If you’ve ever done business in a different country before a good mindset to get in is to treat the initial contacts with an enterprise with the same level of cultural sensitivity and learning—better to learn rather than assume when you’re in an unfamiliar environment.
Organization. Every enterprise sales person I have worked with begins to build out the physical and logical org chart from the first engagements. You want to learn the management reporting structure as well as the power You want to understand the budget and decision making processes. Great enterprise sales people also know that you invest in the full org chart and don’t just focus on the areas of most authority and power—you never know where an advocate or obstacle might appear from as a deal progresses.
Infrastructure. IT is all about infrastructure and understanding how the company really works will be key to speaking their language. Not only are all enterprises subtly different in infrastructure, they take great pride in the differences they maintain and the rationale behind those differences, no matter how odd or crazy they might seem. I remember once pitching Office to an enterprise customer that had customized the installation of Office uniquely for over 100 different job functions. Not only did I think this was nuts, it created a massive support burden for the company. But in their world this was key to their productivity and my job was not to “save” them but to show them how I made their job even easier with a new product (all that comes later, in this step you’re just learning). You need to understand all the basics of infrastructure from authentication, networking, BYO, approved apps, messaging, email, and more many of these environmental variables will almost certainly impact your solution’s applicability and deployment.
Needs. Once you understand the culture, organization, and the technical infrastructure you have the foundation to be able to understand the enterprise’s needs. This is often the trickiest part of the first phase because it turns out enterprise IT, even though they are experts in technology, most often express their needs in terms of their own understanding or expectations of what products can do. As you catalog and understand needs what you are really doing is learning how to bridge from the solution your advocates believe they want to a solution that might be a much bigger leap (and much better, but very different) than expected. The pressure to listen to customers and act directly on needs (often described as requirements) is intense and during the course of product development and sales will be a significant challenge to just about every company.
My earliest days working with enterprise customers taught me a lesson that I have to admit still makes the “here and now” product person in me a bit uncomfortable. It was told to me by a former IBM field sales engineer who said “I sold more product today based on selling the future product than I ever sold by just selling what was ‘in my bag’.” While that’s most decidedly a cynical view, the reality is that enterprise selling is never about what a product can do right this moment—that’s just practical given the purchase, deployment, and training cycles within a large organization. Therefore a huge part of enterprise selling is articulating your unique technology/world view in the context of the relationship you have developed.
To many this can sound like selling vaporware, an old term for software that never shipped. That isn’t true at all. This is about selling a broad concept that will both endure for years and take years to fully realize, but can start delivering ROI in the near term within a known time period and cost. Putting this in the context of startups, this is much like when you hear venture capitalists talking about the investment in the team relative to the idea or invention—everyone knows the maze from idea to product to business will change and scope the initial idea, but the bet on the team and people will endure.
Inspiration. What is your inspiration for the product? This is where you talk about the experience that led you rethink the landscape. In the enterprise space this is most often about revisiting assumptions that the industry has made about costs of technology, where there is hardware versus software, or some massive shift such as the move to mobile or the cloud. Relative to a startup, you can think of this as the founder’s story—what led the founder to start a company is very much in line with what inspired the creation of a new enterprise product or service.
Uniqueness. While your inspiration is important it is likely that may people will have the same inspiration. In fact, enterprise products often appear in waves when it appears as though many are doing the “same” thing all at once. If you are in enterprise IT, then for sure every single vendor meeting you have these days is about cloud, mobile, BYO, security, and more. In a sales motion, you don’t want to spend a lot of time being the umteenth person touting the “changing world” but want to quickly articulate the insight, secret ingredient, or radical implementation that you have that you believe is unique. Too often this can be viewed as marketing, but really this needs to come from your product core—what is it that you see that no one else sees (to paraphrase Peter Thiel). Building a better mousetrap is great, but ROI in the enterprise does not come from rip and replace getting you a 10% improvement, so your inspiration should be pretty significant.
Competitors. You are not alone. No one in enterprise IT believes you built the one and only product that does most of what you do. Coming to an enterprise sales engagement with a detailed understanding of competitors shows respect and acknowledgement of reality. There are two types of competitors you need to understand fully. First, you need to be versed in the current marketplace competitors and how you compare to them. Often the best tool to view this is a classic “magic quadrant”—just be forewarned you have to substantiate claims carefully and be prepared for the “fans” of competitors to confront you (and be prepared for your competitors to sell against your characterization). If you’re doing this right, you are not creating new comparison criteria but using incumbent/competitor criteria as a starting point. Second, you need to be versed in how the enterprise is already addressing (or trying to address) the problem space. This is just as much a competitor—in enterprise software the easiest product to buy is the one you’ve already got in place and no one gets fired for doing that. While you might be negative towards your market competitors, it is incredibly important to be respectful of implemented competitors or homegrown solutions even if some in IT might mock their own choices.
Roadmap. The key deliverable for a vision is your roadmap of where you are heading. A roadmap to a product person might look like a schedule and features and some in IT most certainly would love that sort of information. In practice, the sort of tool you want to employ is much less detailed and granular than a product roadmap. Instead, you want to use a roadmap to establish a credible view for how you intend to both refine your existing proposition and expand your solution space. Why is this so critical? Enterprise IT is all about planning and long term within the organization. Budgets, headcount, organization, and internal service relationships all depend on “knowledge of the future”. At the same time, IT also wants to build new capabilities within the company and your roadmap can become a part of the IT roadmap. Obviously everything here is a fine balance between “promise and deliver” and falling into the trap of “over-promise and under-deliver”. One personal example was the introductions of both Outlook and Sharepoint and how adding them to the roadmap caused significant consternation in how IT thought of Office, which then crossed from personal productivity to messaging and then server infrastructure. In hindsight, the introduction of a product literally brought together parts of IT that previously never worked together!
Transport yourself a couple of months (!) from that first opportunity to meet a potential customer and you’ve got a chance to really start to sell a product. For most product people, this is about deployment but to an enterprise account manager this last phase is about building a partnership. There is a distinction. The goal is to become long term partners and the tactic is to get the software into deployment and usage, not the other way around.
This phase always takes a bit longer than expected and for the first customers of a new product is a great deal of collaboration between engineering and sales. In later stages this repeatable process tends to become the role of Customer Success. For early stage products and companies, this phase is the equivalent of product-market fit as you work with the customer to refine the product (and pricing and more).
Proof. The first step is literally a proof of concept. The goal is to get the product up and running in their environment which could be as simple as single-sign on or a few dedicated clients or as complex as deployment or an isolated network with server hardware. It is likely during this stage that you will need to gain access to data, users, and systems that make the proof more relevant. It is important to be flexible and patient because for many pilots this is the most frustratingly slow part of the process. Do keep in mind, most every IT organization routinely does dozens of PoC, proof of concept, deals a year across many departments so be careful not to count this as “done” but do count it as “success”.
Implementation. The implementation phase is the time when you go from PoC to a deployed solution, aka production, within a department or company. For those building their first enterprise product, they are often shocked at how long it takes to roll out a new service or system within an enterprise even after it is running and working. We often compare this to signing up for a new SaaS service when in reality most companies are filled with employees that are far more worried about failing to get their work done than they are excited to try new tools and change the way they work. While many think most of the learning happens during the PoC, the astute enterprise product person knows that the real learning and informing of future product features takes place during the phased-in implementation when the product is in use by a wider audience outside of IT (if applicable).
Expansion. From a business perspective, the implementation counts as “land” and the next step is to “expand”. Once you’ve landed and seen early success, your advocates within IT will want to explore different ways to expand—remember IT is like everyone else and when something goes well they want to get credit and get visibility for the solution. Expansion is really the accelerator for a business and as most experienced people will tell you, there’s almost always more revenue with customers already paying you than with starting all over again with new potential customers. Enterprise products should be equipped in both the business and the product to expand in depth and breadth of usage to maximize this phase of growth. There’s potential for a bit of friction here as sales wants to keep the price down and not partition product value in order to land the deal. Management incentives across sales, marketing, product, and engineering play a critical role in finding this balance.
Replacement. The very last step in the partnership with an enterprise customer is replacing an existing system. I purposely put this last because most every product person thinks that when you have a new product the first line of sales is to explain what the customer can replace or decommission if they buy the new product. Every IT person knows that this is exactly the very last thing you do and that the long tail on usage for any implemented system before actual replacement, no matter how inevitable. This is important to internalize in terms of building a partnership because every running system has a champion or advocate who bought and deployed the system so a poor selling technique is to challenge that person too early. If you play everything correctly, someday you will be the system that keeps running long after it should—that’s something to keep in mind!
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If all of this seems like a lot of work and a great deal of calendar time, well then you read it correctly. Average enterprise sales cycles for seven figure sales are easily 3 months and often up to 9 months depending on pre-existing systems. While every once in a while there are shortcuts or magical products, by and large this is how enterprise selling goes. It also makes a lot of sense because you’re going to collect a lot of money every year and your product will become an important part of a business.
For a just over a year, Tanium Corporation has been impressing enterprise customers with its special brand of Tanium magic — the ability to instantly learn anything you need to know about the PCs, servers, VMs, and embedded devices such as ATMs and Point of Sale devices on your network. About nine months ago Andreessen Horowitz was offered the opportunity to partner with Tanium and the founders David and Orion Hindawi, and we could not be more impressed with the progress and growth of the company. This week Tanium is adding some more magic to an amazing product.
Growing and Scaling
The Tanium team has been hard at work on the platform and in creating a great company. It is worth sharing a little bit about the progress they have made in less than a year:
- Tanium is deployed on over 10,000,000 endpoints, with individual customers managing hundreds of thousands of endpoints.
- Tanium is in broad deployment in over half the Fortune 100.
- Tanium is rapidly growing (and hiring) with a particular focus on expanding internationally.
- Even with growth on every metric, Tanium has stayed a cash-generating and profitable business.
Tanium’s product magic is matched by the team’s amazing leadership and execution.
Reimagining Systems Management and Endpoint Security
When customers first see Tanium, they are blown away by the speed at which IT can learn what is going on with the endpoints on the network. Tanium’s capability to navigate, interrogate, and act on even the largest enterprise network in seconds is the magic that fires up customers –networks comprised of millions of endpoints made up of PCs, Servers, VMs, and embedded devices. This 15-second capability is the foundation of Tanium magic and is unprecedented for large scale environments.
Traditionally, enterprises deploy Systems Management (SM) platforms to control their environments. Prior to Tanium, even the state-of-the-art tools require immense investment in agents, logon scripts, policies, signature files, databases, dedicated infrastructure (servers and networking), and more, just to provide base level information. These tools frustrate end-users and CIOs alike by choking endpoints, burdening networks, and offering up information that is approximate at best and at worse irrelevant, because it is outdated.
Tanium surpasses the state-of-the-art in systems management, which you’d expect from founders whose previous company built the leading tools of this generation before being acquired by IBM. Not content to stop there, Tanium’s ambition is much greater than improving on their previous solution, even if it is already “10,000 times better.”
That ambition is based on an important observation regarding today’s challenges in enterprise security, particularly the realities faced by the nature of attacks. Malicious attacks are no longer brute force attempts to penetrate the network firewall or simply blunt viruses or malware that indiscriminately seize endpoints. We’re all aware that today’s attacks are multi-step, socially enabled or engineered, and by definition circumvent network-based and traditional end-point protection. We’ve seen that in all the recent breaches across Target, Home Depot, JP Morgan, Sony and more, including Anthem most recently.
In every case, once a breach becomes known, the most critical job of the security team is to scope the breach, identify compromised endpoints, and shut them down. Traditionally security teams relied on network-based management solutions since those have the fastest and most familiar tools. In practice, quickly identifying all the endpoints with an unpatched OpenSSL version or all that match a known indication of compromise, for example, look much less like network security efforts and more like endpoint challenges, historically the domain of systems management. The problem is that systems management tools were designed for an era when most of their work took place logging on or during off-hours “sweeps” of assets, with results gathered over the course of weeks.
CIOs recognize that having a systems management team using one set of tools that can barely keep up with traditional demands and having a security team using tools that are only focused on the network edge isn’t ideal by any measure. Systems management is now an integral part of incident detection and response. Conversely, security and protection require full knowledge and control of end-points. Neither set of existing tools deployed in most environments is up to the task.
Tanium has been working with customers from the CIO and CISO and throughout the management and response teams in enterprises to deploy Tanium as a frontline and first response platform that reimagines the traditional categories of systems management and endpoint security. In a world of unprecedented security risks, BYO devices, and ever-changing software needs nothing short of a rethinking of the tools and approaches is required.
Tanium is a new generation of security and systems management capabilities that meets two modern criteria:
- Provide 15-second information on all endpoints. Open your browser, type in a natural language query, and know instantly every endpoint that meets a particular criteria or indication of compromise, IOC, (for example, running a certain process, recently modified system state matching a pattern, particular network traffic, or literally anything you can imagine asking the endpoint). Aside from instant information, the key new capability is being able to learn about any aspect of the running system even if it is something unforeseen or unplanned. Results are real-time, live, and refreshable instantly.
- Remedy problematic situations immediately. Given the set of endpoints matching the criteria, take action immediately by shutting down endpoints, modifying the system configurations, quarantining devices, alerting users, or patching the appropriate modules, all in seconds rather than days. Aside from being able to immediately deploy the remedy, the key new capability is being able to implement any possible remedy across all endpoints, even within the largest networks in the world using minimal infrastructure.
The most innovative products are those that provide new ways of thinking about problems or new approaches that break down the traditional category boundaries. Tanium is such a platform, and that is why enterprises are so enthusiastic about what Tanium provides.
Shipping New Capabilities
This week Tanium is releasing some significant new capabilities that further the vision of a new category of product that serves the needs of both systems management and security professionals.
Tanium IOC Detect. Open to a wide variety of highly-regarded third-party threat intelligence data and indicators of compromise templates, Tanium takes this data and continuously seeks to identify endpoints at risk in real-time. Tanium is able to match the widest possible range of system attributes and patterns without downloading client-side databases or signature files. Security operations no longer needs to sift through all of the intelligence feeds manually or script signatures to feed into legacy systems management tools. Instead, Tanium makes it possible to detect and remediate threats immediately at massive scale.
Tanium Patch. Tanium transforms a process that’s error-prone and time-consuming with the ability to deploy patches across hundreds of thousands of endpoints in seconds, with 99%+ reliability and no scripting required by the IT team. Using two of Tanium’s key architectural elements, the communications layer and the data transport layer, patches are deployed and installed with unprecedented speed and unrivaled minimal impact on network infrastructure. Since many security breaches require updates to endpoints to truly remedy them, Tanium brings together the needs of both security and management processes.
Tanium Connect. Tanium integrates its 15-second data into third-party security and management tools to make those tools more accurate and actionable. For example, Tanium’s ability to quickly see anomalies on endpoints can be used to create alerts in security information and event management (SIEM) systems. Traditionally this data would be impossible to collect or would be routed through existing systems management infrastructures, which are labor intensive and high-latency data sources. Tanium Connect provides the security operations data required to ascertain the threat and, because the data is only seconds old, the team knows it is worthy of investigation.
These are just a few of the improvements to Tanium’s 6.5 platform available this week.
Tanium’s magic innovation uniquely positions the company at the modern crossroads of systems management and security tools. Tanium’s platform reimagines these categories, while seamlessly working with existing infrastructure, and adds a new level of value and capability to forward-leaning IT teams.
Given this superb team, amazing growth, and unparalleled innovation, we could not be more happy than to lead a new round of investment in this wonderful company. Andreessen Horowitz is incredibly excited to be partnering with David, Orion, and the Tanium team, and I could not be more thrilled with continued service on Tanium’s Board of Directors.
Note: This post also appeared on http://a16z.com/blog.
More products are being created and developed faster today than ever before. Every day new services, sites, and apps are introduced. But with this surge in products, it’s become more difficult to get noticed and connect with users. In late 2013, Ryan Hoover founded Product Hunt to provide a daily view of new products that brings together an engaged community of product users with product makers. Today marks the next step in the growth of the company.
Interconnecting a Community
When you first meet Ryan it becomes immediately clear he has a passion for entrepreneurship and its surrounding ecosystem. Well before starting Product Hunt, he hosted intimate brunches to bring founders together. This came out of another email-based experiment named Startup Edition, where he assembled a weekly newsletter of founder essays on topics of marketing, product development, fundraising, and other challenges company builders face. This enthusiasm is prevalent on Twitter where he shares new products and regularly interacts with fellow enthusiasts in the startup community.
Ryan’s background comes from games, an ecosystem that is regarded as one of the most connected. Gamers love to stay on top of the latest products. Game makers love to connect with gamers. There’s an even larger community of game enthusiasts who value being observers in this dialog. Ryan grew up in the midst of a family-owned video game store so it’s no surprise that he has an incredibly strong sense of community. That’s why after college, he got involved in the gaming industry, first at InstantAction and then at PlayHaven. Each of these roles allowed Ryan to build the skills to foster both the product and community engagement sides of gaming, while also creating successful business opportunities for the whole community.
Spending time in the heart of gaming, between gamers and game makers, Ryan saw how those makers that fostered a strong sense of community around their game had stronger engagement and improved chances of future growth. Along the way he saw a wide variety of ways to build communities — and most importantly to maintain an open and constructive environment where praise, criticism, and wishes could be discussed between makers and enthusiasts.
About a year ago, Ryan launched, in his words, “an experiment” — a daily email of the latest products. After a short time, interest and subscribers to the mail list grew. So with a lot of hustle, the email list turned into a site. Product Hunt was launched.
Product Hunt started with a passion for products and has grown into a community of people passionate to explore and discuss new products with likeminded enthusiasts and makers of those products.
Product Hunt: More Than a Site
Product Hunt has become something of a habit for many since its debut. Today hundreds of thousands of “product hunters” visit the site plus more through the mobile apps, the daily email, and the platform API. Every month, millions of visits to product trial, app stores, and download sites are generated. And nearly half of all product discussions include the product maker, from independent hackers to high-profile veteran founders.
Product Hunt is used by enthusiasts to learn about new products, colored with an unfiltered conversation with its makers. It servers the industry as a source for new and trending product areas. For many, Product Hunt is or will evolve to be the place you go to discover products in the context of similar products along with a useful dialog with a community.
Product Hunt is much more than a site. Product Hunt is a community. In fact, Ryan and the team spend most of their energy creating, curating, and crafting a unique approach to building a community. His own experience as a participant and a maker led him to believe deeply in the role of community and engagement not just in building products, but also in launching new products and connecting with customers.
This led the team to create a platform for products, starting with the products they know best — mobile and desktop apps and sites.
The challenge they see is that today’s internet and app stores are overwhelmed with new products, as we all know. The stores limit interaction to one-way communication and reviews. If you want to connect with the product makers, there’s no way to do so. Ironically, makers themselves are anxious to connect but do so in an ad hoc manner that often lacks the context of the product or community. Product Hunt allows this type of community to be a normal part of interaction and not just limited to tech products.
Product Hunt is just getting started, but the enthusiasm is incredible. A quick Twitter search for “addicted to product hunt” shows in just a short time how many folks are making the search for what’s new a part of a routine. The morning email with the latest news is now a must-read and Ryan is seeing the technology industry use this as a source for the most up to date launches.
Product Hunt’s uniqueness comes from the full breadth of activity around new products and those enthusiastic about them:
Launch. Product Hunt is a place where products are announced and discovered for the first time. Most new products today don’t start with marketing or advertising, but simply “show up”. Makers know how hard it is to get noticed. They upload an app to a store or set up a new site and just wait. Gaining awareness or traction is challenging. Since the first people to use most new products are themselves involved in making products, they love to know about and experience the latest creations. New product links come from a variety of sources and already Product Hunt is becoming the go-to place for early adopters.
Learn. Learning about what’s new is just as challenging for enthusiasts. Most new products launched do not yet have full-blown marketing, white papers, or other information. In fact, in today’s world of launching-to-learn more about how to refine products, there are often more questions than answers. Community members submit just a short tagline and link to the product. Then the dialog begins. There are robust discussions around choices in the product, comparisons to other products, and more. Nearly half of the products include the makers in the discussion, sharing their stories and directly interacting with people. And these discussions are also happening in the real world, as members of the community organize meetups across the globe from Tokyo to Canada.
Share. Early adopters love to share their opinions and engage with others. On Product Hunt, the people determine which products surface as enthusiasts upvote their favorite discoveries and share their perspective in the comments. Openness, authenticity, and constructive sharing are all part of the Product Hunt experience, and naturally this enthusiasm spills outside the community itself.
Curate. With the help of the community, the team is constantly curating collections of products into themes that are dynamic and changing. This helps raise awareness of emerging product categories and gives consumers a way to find great products for specific needs. Recent lists have included GIF apps, tools used by product managers, and productivity apps. One favorite that shows the timeliness of Product Hunt was a list of iOS 8 keyboards the day after iOS 8’s launch.
One attribute of all products that serve an enthusiastic community is the availability of a platform to extend and customize the product. Product Hunt recently announced the Product Hunt API and already has apps and services that present useful information gathered from Product Hunt, such as the leaderboard and analytics platform.
Product Hunt + a16z
When I first hung out with Ryan outside of a conference room, he brought me to The Grove coffee shop on Mission St. We sat outside and began to talk about products, enthusiasts, and community. It was immediately clear Ryan sees the world or products in a unique way — he sees a world of innovation, openness to new ideas, and unfiltered communication between makers and consumers. As founder, Ryan embodies the mission-oriented founders a16z loves to work with and he’s built a team that shares that passion and mission.
Andreessen Horowitz could not be more excited to lead this next round of investing, and I am thrilled to serve on the board. Please check out Product Hunt for yourself onthe web, download its iOS app, or sign up for the email digest.
Note: This post originally appeared on a16z.com.
Lightning doesn’t often strike twice, but in the case of the father and son team of David and Orion Hindawi, founders of Tanium, Inc., that’s exactly what has happened. Tanium is a prime example of a modern enterprise software company—solving the new generation of today’s problems using skills and experience gained from being successful founders in the previous generation.
Forming the company
David Hindawi, a PhD in Operations Research from UC Berkeley is an entrepreneur who led the creation of several successful companies through the earliest days of the PC era. His early efforts focused on getting PCs connected to the “net” and keeping them running smoothly.
In 1997, David teamed up with his son Orion, then an undergraduate at UC Berkeley, to form BigFix. BigFix solved the problem of communicating with all the end-points (PCs, servers, virtual machines, and more) on enterprise networks to gather configuration data and deploy product updates. BigFix was a remarkable product for the time routinely scaling to 100,000 end-points. In 2010, IBM acquired BigFix and integrated it into the Tivoli Software portfolio marking a successful exit.
Some might have been content to rest on their collective laurels having invented the technology, built a company, and scaled a business to the most elite of enterprise success stories. Instead, David, Orion and the key architects of BigFix had an even bigger idea.
Forming Tanium came about as the team reflected on these product shortcomings. “We recognized that enterprises needed endpoint control that was much faster than they could get with existing tools, and challenged ourselves to leapfrog the state of the art, including BigFix, where basic management queries could take days.” Orion recounted, “We knew that nothing short of a 10,000 times speed improvement over the state of the art at the time would solve the problem, and we needed to fundamentally change the paradigm of systems management and end-point security to accomplish that. We are lucky to have one of the few engineering teams in enterprise management who are smart and ambitious enough to do that”.
The team, mostly members of the original BigFix engineering group and all experts with years of experience in large enterprise management, worked in their Berkeley, CA offices for almost two years before the first customers saw the early results of their new product. When seeing the product in action, it was clear to early customers that the team had in fact built a better mousetrap. Tanium was born.
Meeting Tanium @ a16z
When Orion first came to Andreessen Horowitz to meet us and introduce Tanium we had no idea what a surprise we were going to see. Collectively we are many old hands at systems management and security. Many folks at a16z share the experience of having built Opsware and my own experience at Microsoft make for an informed, and perhaps tough, audience.
Orion popped open his laptop, clicked a bookmark and navigated to Tanium’s web-based “console”. At the top of the screen, we saw a single edit control like you’d see for a search engine. He started typing in natural language questions such as “show computers where CPU > 75%” and “show computers with a process named WINWORD.EXE”. Within seconds, just like using search, a list of computers scrolled by as though it was just an existing spreadsheet or report. At this point we reached the only reasonable conclusion—Orion was showing us a simulation of the product they hoped to build.
After all, we were all quite familiar with the state of the art for this type of telemetry (BigFix in particular represented the state of the art) and we knew that what we were seeing was just not possible.
But, the demonstration was not a simulation or edited screen capture. In fact, Tanium was running on a full scale deployment of thousands of end-points. This wasn’t even a demo scenario, but a live, production deployment—the magic of Tanium. As we learned more about Tanium and how it easily scales to 500,000 end-points (not theoretically, but in practice) and the breadth of capabilities, we were more than intrigued. We were determined to do what we could to invest in David, Orion, and team.
Redefining State of the Art
In enterprises, one team is generally responsible for securing end-points, while another is responsible for managing them (systems management). Typically, each team uses its own tools, and each is independently struggling to keep pace with modern network security threats and the scale of modern networks.
Today’s IT Pros on both security and management teams know the types of information they need from their network. With current tools these questions require careful planning, significant infrastructure, and a fine balance between what IT needs to know and the cost to the end user who is working on the computers that are being queried – if you get it wrong, you can cause slow logons and sluggish performance at inconvenient times. However, to effectively manage and secure networks and provide assurance of compliance with government and industry regulations IT Pros absolutely require information such as hardware configuration, software inventory, network usage, patch and update status, and more. In addition, today’s socially engineered security risks are often combinations of seemingly simple combinations of running programs, files or attachments on the system, and a few other clues. An IT Pro walking up to a PC or Mac could easily obtain all of this information, but for all practical purposes it is impossible for them to gather that data from the thousands of end-points they are responsible for with any level of ease or timeliness.
Getting that data at scale is typically hard and slow because almost every Systems Management tool uses a classic hub (servers) and spoke (end-points) architecture. IT Pros deploy multiple servers running on network segments with high-end databases and significant networking hardware combined with fairly elaborate end-point runtimes. Even when this state of the art deployment is carefully tuned, the best case at very large scales can be 3 days to “compute” the answer to critical operational questions, assuming you knew ahead of time you were going to ask those questions. By this time the information would be out of date and by then the whole problem you were thinking about has probably changed. As a result most IT Pros know that best case the data is approximate, and worst case just worthless. For mission critical problems, such as compliance with HIPAA (healthcare) or PCI (electronic payment) regulations, this is more than just inconvenient for IT, it can cause a painful failure with board-level visibility.
The state of the art for Security is all about building stronger and taller walls between the enterprise network and the internet. We’re familiar with these approaches across the basics of firewalls, more sophisticated security appliances and adaptive architectures, and of course the typical security suites that run on end-points. Unfortunately, the bad guys are wise to that game, and modern threats are created anticipating that these protections are in place—in many cases, the bad guys actually “QA” their attacks against the systems enterprises use before they release them. In addition, today’s malware is targeted to particular organizations, and is often put in place by a series of seemingly benign or undetectable actions. Malware, a bot, or a backdoor make their way onto the network leaving behind a series of benign clues—a running process, a changed file, a memory signature, or a specific network packet. It is only taken together that a pattern emerges. It is only after the fact or with an IOC (indicator of compromise) in hand that IT Pros can potentially track down end-points that have been compromised. Unfortunately, IT is literally swamped by IOCs to investigate and there are no effective tools that support this wide range of questions and even if you could, the state of the art would give answers in days, long after the damage was done.
Even with these challenges, both of these state of the art approaches have their place in a modern network. It would be irresponsible to run a network without basic asset management or network firewalls and end-point protection such as anti-virus. Unfortunately, for the vast majority of both threats and systems management, the needs of IT Pros are far more dynamic and complex than existing systems can provide. This is the opportunity where Tanium adds unique value to the tools of the modern IT and Security professional.
At 16z, we love the opportunity to partner with enterprise companies that are either working to radically improve the way a given IT need is met with software or transforming the IT landscape by re-creating or re-defining the traditional categories with unique software. Tanium is magical because it is transformative across both of those measures.
In practice, the Tanium team accomplished nothing short of a complete rethinking of how IT Pros manage, secure, and maintain the end-points in their network—every node on the network can now be interrogated, managed, updated, and secured, instantly from a browser. Literally, you can ask almost anything of an end-point from basics such as configuration, patch status, software inventory compliance, performance, reliability measures, telemetry, network activity, files, and more (basically anything you can ask of a running system) and get answers back in seconds. Not only can you ask questions, but you can take actions as well—distribute and install updates, shut down processes or executables, remove or quarantine files, and so on. All of this happens in seconds, across your entire network of end-points, across LAN segments and the WAN, from branch offices to headquarters to the data center.
Orion walked us through the magic of Tanium. It became clear very quickly that David, Orion and team have invented a completely new way to think about managing and securing a network of computers. The magic of Tanium is built out of four innovative technology pillars:
- Runtime. The Tanium runtime builds on the end-point management lessons of BigFix. The runtime serves as the platform for asking the end-point questions in the scripting language of your choice (VBscript, Powershell, WMI, Python, Unix Shell, and most any other language), packaging up the answers and getting them to single server/VM that coordinates the activities. The runtime also provides actions allowing you to make changes across your entire network, instantly. The end-point runtime is a couple megabytes, takes almost no CPU or RAM, and incurs nearly imperceptible network usage.
- LP2P Networking: End-points secured by Tanium do not drive up costly WAN traffic but instead communicate between end-points on the local area network. Expensive WAN load is vastly reduced because rather than all end-points trying to reach a single data center across the WAN, answers and actions are coordinated across an incredibly efficient linear peer-to-peer (LP2P) architecture—an innovative hybrid of mesh and peer-to-peer concepts designed and validated for the enterprise. LP2P is self-healing and architected for fault tolerance, transient end-points, and global WAN segments connected in a typical manner.
- Natural Language. The interface to Tanium is through a simple text box where you can use natural language to ask questions of the entire set of end-points. Just like using web search, each question gives you suggestions for follow up questions, refinements, and ways to improve your queries. You use natural language questions to generate tables, charts, time series, and other representations of your near real-time network status—instantly.
- Security. The entire Tanium platform was of course architected from the ground up to be secure enough for the largest enterprise and federal networks – Tanium affords IT Pros incredible power and flexibility in managing and securing end-points, and they recognize the need to ensure that power stays in the right hands. As a result, all traffic is FIPS level secured, actions are controlled and validated by signed certificates, and administrators have fine-grained control over the types of queries and actions permitted by different users within IT.
If you’re running existing state of the art tools for managing and securing your end-points, you have a fixed set of diagnostic questions that you routinely ask and then store the answers in a database for later analysis. Even if it’s a simple question like what version of OS software your computers are running, it will take a few days or more to get answers. If you have a crisis requiring new information, you likely push out an emergency logon script or dreaded background process to add a new question to the list of slowly collected answers, and days later you know the approximate answer.
As a result of the innovations above, Tanium completely upends the thinking about how this should work. By analogy, if you think about the current state of the art as a printed set of classic encyclopedias then Tanium is like having the entire internet at your disposal through a search engine. Rather than a set of fixed questions and answers, you use Tanium to explore your end-points. When new security threats arise you can immediately explore your risk by using any telemetry to diagnose your risk and then using any mechanism to take corrective actions—instantly.
A top of mind example for all of us is the outbreak of Heartbleed. As soon as your operations center received notice of this vulnerability, there was one simple question “what variants and versions of OpenSSL are we running across all servers and VMs”. Almost no management and inventory system would have this readily available. Many would have first relied on what was believed to the “standard” images, but later would find out that isn’t enough. With Tanium, you just ask a question in natural language and within seconds you can have any level of details required on the servers and VMs running OpenSSL. You can then shut those servers down, deploy updates, or monitor actions—instantly.
Identifying and securing end-points for compliance with regulations, software licensing, or corporate policy is equally simple. When talking to Orion about Tanium, I searched my own experience for what I thought was a trick question. I wanted to know “how many end-points had attached USB memory stick and written to it recently” (a potential information leak, compliance issue, or malware vector all in one simple and common operation). Once again Tanium’s magic delivered an answer from a natural language query in just a few seconds for thousands of computers.
In addition to all of this, Tanium is also a true platform. IT Pros can utilize mature REST, SOAP, and syslog APIs to connect the results of Tanium queries to their favorite big data destination and develop time series models of their end-points, and mine the data for patterns. Because the Tanium runtime has such a minimal impact it is possible to collect thousands of independent data points continuously from hundreds of thousands of end-points, feeding the predictive analytics and big data systems that enterprises are building today with extremely valuable data. This type of analysis allows for finding points in time when the network changed, identifying malware, bots, and other exploits that we all know escape traditional firewalls and anti-virus. Using the platform, IT can also create tailored dashboards and custom actions that enable monitoring and guarantee compliance of end-points with standards.
Tanium and a16z
I could go on and on about the magic of Tanium that David, Orion, and the amazing team created. In fact when we talk about Tanium we describe it as an entrepreneur trifecta. First, David and Orion are experienced and successful entrepreneurs. Second, Tanium is a product that builds on innovative and inventive technology that could only come about from a team with years of experience and a depth of understanding of the enterprise. And third, Tanium is already a successful and profitable company with dozens of customers in massive, mission-critical and global deployments.
With this incredible story, Andreessen Horowitz could not be more excited to be leading an investment in Tanium. I’m personally super excited to be joining the Tanium Board where I will work closely with David, Orion, and the team.
–Steven Sinofsky (@stevesi, email@example.com)
This post is also on a16z.
Innovation and disruption are the hallmarks of the technology world, and hardly a moment passes when we are not thinking, doing, or talking about these topics. While I was speaking with some entrepreneurs recently on the topic, the question kept coming up: “If we’re so aware of disruption, then why do successful products (or companies) keep getting disrupted?”
Good question, and here’s how I think about answering it.
As far back as 1962, Everett Rogers began his groundbreaking work defining the process and diffusion of innovation. Rogers defined the spread of innovation in the stages of knowledge, persuasion, decision, implementation and confirmation.
Those powerful concepts, however, do not fully describe disruptive technologies and products, and the impact on the existing technology base or companies that built it. Disruption is a critical element of the evolution of technology — from the positive and negative aspects of disruption a typical pattern emerges, as new technologies come to market and subsequently take hold.
A central question to disruption is whether it is inevitable or preventable. History would tend toward inevitable, but an engineer’s optimism might describe the disruption that a new technology can bring more as a problem to be solved.
Four Stages of Disruption
For incumbents, the stages of innovation for a technology product that ultimately disrupt follow a pattern that is fairly well known. While that doesn’t grant us the predictive powers to know whether an innovation will ultimately disrupt, we can use a model to understand what design choices to prioritize, and when. In other words, the pattern is likely necessary, but not sufficient to fend off disruption. Value exists in identifying the response and emotions surrounding each stage of the innovation pattern, because, as with disruption itself, the actions/reactions of incumbents and innovators play important roles in how parties progress through innovation. In some ways, the response and emotions to undergoing disruption are analogous to the classic stages of grieving.
Rather than the five stages of grief, we can describe four stages that comprise theinnovation pattern for technology products: Disruption of incumbent; rapid and linear evolution; appealing convergence; and complete reimagination. Any product line or technology can be placed in this sequence at a given time.
The pattern of disruption can be thought of as follows, keeping in mind that at any given time for any given category, different products and companies are likely at different stages relative to some local “end point” of innovation.
Stage One: Disruption of Incumbent
A moment of disruption is where the conversation about disruption often begins, even though determining that moment is entirely hindsight. (For example, when did BlackBerry get disrupted by the iPhone, film by digital imaging or bookstores by Amazon?) A new technology, product or service is available, and it seems to some to be a limited, but different, replacement for some existing, widely used and satisfactory solution. Most everyone is familiar with this stage of innovation. In fact, it could be argued that most are so familiar with this aspect that collectively our industry cries “disruption” far more often than is actually the case.
From a product development perspective, choosing whether a technology is disruptive at a potential moment is key. If you are making a new product, then you’re “betting the business” on a new technology — and doing so will be counterintuitive to many around you. If you have already built a business around a successful existing product, then your “bet the business” choice is whether or not to redirect efforts to a new technology. While difficult to prove, most would generally assert that new technologies that are subsequently disruptive are bet on by new companies first. The very nature of disruption is such that existing enterprises see more downside risk in betting the company than they see upside return in a new technology. This is the innovator’s dilemma.
The incumbent’s reactions to potential technology disruptions are practically cliche. New technologies are inferior. New products do not do all the things existing products do, or are inefficient. New services fail to address existing needs as well as what is already in place. Disruption can seem more expensive because the technologies have not yet scaled, or can seem cheaper because they simply do less. Of course, the new products are usually viewed as minimalist or as toys, and often unrelated to the core business. Additionally, business-model disruption has similar analogues relative to margins, channels, partners, revenue approaches and more.
The primary incumbent reaction during this stage is to essentially ignore the product or technology — not every individual in an organization, but the organization as a whole often enters this state of denial. One of the historical realities of disruption is uncovering the “told you so” evidence, which is always there, because no matter what happens, someone always said it would. The larger the organization, the more individuals probably sent mail or had potential early-stage work that could have avoided disruption, at least in their views (see “Disruption and Woulda, Coulda, Shoulda” and the case of BlackBerry). One of the key roles of a company is to make choices, and choosing change to a more risky course versus defense of the current approaches are the very choices that hamstring an organization.
There are dozens of examples of disruptive technologies and products. And the reactions (or inactions) of incumbents are legendary. One example that illustrates this point would be the introduction of the “PC as a server.” This has all of the hallmarks of disruption. The first customers to begin to use PCs as servers — for application workloads such as file sharing, or early client/server development — ran into incredible challenges relative to the mini/mainframe computing model. While new PCs were far more flexible and less expensive, they lacked the reliability, horsepower and tooling to supplant existing models. Those in the mini/mainframe world could remain comfortable observing the lack of those traits, almost dismissing PC servers as not “real servers,” while they continued on their path further distancing themselves from the capabilities of PC servers, refining their products and businesses for a growing base of customers. PCs as servers were simply toys.
At the same time, PC servers began to evolve and demonstrate richer models for application development (rich client front-ends), lower cost and scalable databases, and better economics for new application development. With the rapidly increasing demand for computing solutions to business problems, this wave of PC servers fit the bill. Soon the number of new applications written in this new way began to dwarf development on “real servers,” and the once-important servers became legacy relative to PC-based servers for those making the bet or shift. PC servers would soon begin to transition from disruption to broad adoption, but first the value proposition needed to be completed.
Stage Two: Rapid Linear Evolution
Once an innovative product or technology begins rapid adoption, the focus becomes “filling out” the product. In this stage, the product creators are still disruptors, innovating along the trajectory they set for themselves, with a strong focus on early-adopter customers, themselves disruptors. The disruptors are following their vision. The incumbents continue along their existing and successful trajectory, unknowingly sealing their fate.
This stage is critically important to understand from a product-development perspective. As a disruptive force, new products bring to the table a new way of looking at things — a counterculture, a revolution, an insurgency. The heroic efforts to bring a product or service to market (and the associated business models) leave a lot of room left to improve, often referred to as “low-hanging fruit.” The path from where one is today to the next six, 12, 18 months is well understood. You draw from the cutting-room floor of ideas that got you to where you are. Moving forward might even mean fixing or redoing some of the earlier decisions made with less information, or out of urgency.
Generally, your business approach follows the initial plan, as well, and has analogous elements of insurgency. Innovation proceeds rapidly in this point. Your focus is on the adopters of your product — your fellow disruptors (disrupting within their context). You are adding features critical to completing the scenario you set out to develop.
To the incumbent leaders, you look like you are digging in your heels for a losing battle. In their view, your vector points in the wrong direction, and you’re throwing good money after bad. This only further reinforces the view of disruptors that they are heading in the right direction. The previous generals are fighting the last war, and the disruptors have opened up a new front. And yet, the traction in the disruptor camp becomes undeniable. The incumbent begins to mount a response. That response is somewhere between dismissive and negative, and focuses on comparing the products by using the existing criteria established by the incumbent. The net effect of this effort is to validate the insurgency.
Stage Three: Appealing Convergence
As the market redefinition proceeds, the category of a new product starts to undergo a subtle redefinition. No longer is it enough to do new things well; the market begins to call for the replacement of the incumbent technology with the new technology. In this stage, the entire market begins to “wake up” to the capabilities of the new product.
As the disruptive product rapidly evolves, the initial vision becomes relatively complete (realizing that nothing is ever finished, but the scenarios overall start to fill in). The treadmill of rapidly evolving features begins to feel somewhat incremental, and relatively known to the team. The business starts to feel saturated. Overall, the early adopters are now a maturing group, and a sense of stability develops.
Looking broadly at the landscape, it is clear that the next battleground is to go after the incumbent customers who have not made the move. In other words, once you’ve conquered the greenfield you created, you check your rearview mirror and look to pick up the broad base of customers who did not see your product as market-ready or scenario-complete. To accomplish this, you look differently at your own product and see what is missing relative to the competition you just left in the dust. You begin to realize that all those things your competitor had that you don’t may not be such bad ideas after all. Maybe those folks you disrupted knew something, and had some insights that your market category could benefit from putting to work.
In looking at many disruptive technologies and disruptors, the pattern of looking back to move forward is typical. One can almost think of this as a natural maturing; you promise never to do some of the things your parents did, until one day you find yourself thinking, “Oh my, I’ve become my parents.” The reason that products are destined to converge along these lines is simply practical engineering. Even when technologies are disrupted, the older technologies evolved for a reason, and those reasons are often still valid. The disruptors have the advantage of looking at those problems and solving them in their newly defined context, which can often lead to improved solutions (easier to deploy, cheaper, etc.) At the same time, there is also a risk of second-system syndrome that must be carefully monitored. It is not uncommon for the renegade disruptors, fresh off the success they have been seeing, to come to believe in broader theories of unification or architecture and simply try to get too much done, or to lose the elegance of the newly defined solution.
Stage Four: Complete Reimagination
The last stage of technology disruption is when a category or technology is reimagined from the ground up. While one can consider this just another disruption, it is a unique stage in this taxonomy because of the responses from both the legacy incumbent and the disruptor.
Reimagining a technology or product is a return to first principles. It is about looking at the underlying assumptions and essentially rethinking all of them at once. What does it mean to capture an image,provide transportation, share computation, search the Web, and more? The reimagined technology often has little resemblance to the legacy, and often has the appearance of even making the previous disruptive technology appear to be legacy. The melding of old and new into a completely different solution often creates whole new categories of products and services, built upon a base of technology that appears completely different.
To those who have been through the first disruption, their knowledge or reference frame seems dated. There is also a feeling of being unable to keep up. The words are known, but the specifics seem like rocket science. Where there was comfort in the convergence of ideas, the newly reimagined world seems like a whole new generation, and so much more than a competitor.
In software, one way to think of this is generational. The disruptors studied the incumbents in university, and then went on to use that knowledge to build a better mousetrap. Those in university while the new mousetrap was being built benefited from learning from both a legacy and new perspective, thus seeing again how to disrupt. It is often this fortuitous timing that defines generations in technologies.
Reimagining is important because the breakthroughs so clearly subsume all that came before. What characterizes a reimagination most is that it renders the criteria used to evaluate the previous products irrelevant. Often there are orders of magnitude difference in cost, performance, reliability, service and features. Things are just wildly better. That’s why some have referred to this as the innovator’s curse. There’s no time to bask in the glory of the previous success, as there’s a disruptor following right up on your heels.
A recent example is cloud computing. Cloud computing is a reimagination ofboth the mini/mainframe and PC-server models. By some accounts, it is a hybrid of those two, taking the commodity hardware of the PC world and the thin client/data center view of the mainframe world. One would really have to squint in order to claim it is just that, however, as the fundamental innovation in cloud computing delivers entirely new scale, reliability and flexibility, at a cost that upends both of those models. Literally every assumption of the mainframe and client/server computing was revisited, intentionally or not, in building modern cloud systems.
For the previous incumbent, it is too late. There’s no way to sprinkle some reimagination on your product. The logical path, and the one most frequently taken, is to “mine the installed base,” and work hard to keep those customers happy and minimize the mass defections from your product. The question then becomes one of building an entirely new product that meets these new criteria, but from within the existing enterprise. The number of times this has been successfully accomplished is diminishingly small, but there will always be exceptions to the rule.
For the previous disruptor and new leader, there is a decision point that is almost unexpected. One might consider the drastic — simply learn from what you previously did, and essentially abandon your work and start over using what you learned. Or you could be more incremental, and get straight to the convergence stage with the latest technologies. It feels like the ground is moving beneath you. Can you converge rapidly, perhaps revisiting more assumptions, and show more flexibility to abandon some things while doing new things? Will your product architecture and technologies sustain this type of rethinking? Your customer base is relatively new, and was just feeling pretty good about winning, so the pressure to keep winning will be high. Will you do more than try to recast your work in this new light?
The relentless march of technology change comes faster than you think.
So What Can You Do?
Some sincerely believe that products, and thus companies, disrupt and then are doomed to be disrupted. Like a Starship captain when the shields are down, you simply tell all hands to brace themselves, and then see what’s left after the attack. Business and product development, however, are social sciences. There are no laws of nature, and nothing is certain to happen. There are patterns, which can be helpful signposts, or can blind you to potential actions. This is what makes the technology industry, and the changes technology bring to other industries, so exciting and interesting.
The following table summarizes the stages of disruption and the typical actions and reactions at each stage:
|Disruption of Incumbent||Introduces new product with a distinct point of view, knowing it does not solve all the needs of the entire existing market, but advances the state of the art in technology and/or business.||New product or service is not relevant to existing customers or market, a.k.a. “deny.”|
|Rapid linear evolution||Proceeds to rapidly add features/capabilities, filling out the value proposition after initial traction with select early adopters.||Begins to compare full-featured product to new product and show deficiencies, a.k.a. “validate.”|
|Appealing Convergence||Sees opportunity to acquire broader customer base by appealing to slow movers. Sees limitations of own new product and learns from what was done in the past, reflected in a new way. Potential risk is being leapfrogged by even newer technologies and business models as focus turns to “installed base” of incumbent.||Considers cramming some element of disruptive features to existing product line to sufficiently demonstrate attention to future trends while minimizing interruption of existing customers, a.k.a. “compete.” Potential risk is failing to see the true value or capabilities of disruptive products relative to the limitations of existing products.|
|Complete Reimagining||Approaches a decision point because new entrants to the market can benefit from all your product has demonstrated, without embracing the legacy customers as done previously. Embrace legacy market more, or keep pushing forward?||Arguably too late to respond, and begins to define the new product as part of a new market, and existing product part of a larger, existing market, a.k.a. “retreat.”|
Considering these stages and reactions, there are really two key decision points to be tuned-in to:
When you’re the incumbent, your key decision is to choose carefully what you view as disruptive or not. It is to the benefit of every competitor to claim they are disrupting your products and business. Creating this sort of chaos is something that causes untold consternation in a large organization. Unfortunately, there are no magic answers for the incumbent.
The business team needs to develop a keen understanding of the dynamics of competitive offerings, and know when a new model can offer more to customers and partners in a different way. More importantly, it must avoid an excess attachment to today’s measures of success.
The technology and product team needs to maintain a clinical detachment from the existing body of work to evaluate if something new is better, while also avoiding the more common technology trap of being attracted to the next shiny object.
When you’re the disruptor, your key decision point is really when and if to embrace convergence. Once you make the choices — in terms of business model or product offering — to embrace the point of view of the incumbent, you stand to gain from the bridge to the existing base of customers.
Alternatively, you create the potential to lose big to the next disruptor who takes the best of what you offer and leapfrogs the convergence stage with a truly reimagined product. By bridging to the legacy, you also run the risk of focusing your business and product plans on the customers least likely to keep pushing you forward, or those least likely to be aggressive and growing organizations. You run the risk of looking backward more than forward.
For everyone, timing is everything. We often look at disruption in hindsight, and choose disruptive moments based on product availability (or lack thereof). In practice, products require time to conceive, iterate and execute, and different companies will work on these at different paces. Apple famously talked about the 10-year project that was the iPhone, with many gaps, and while the iPad appears a quick successor, it, too, was part of that odyssey. Sometimes a new product appears to be a response to a new entry, but in reality it was under development for perhaps the same amount of time as another entry.
There are many examples of this path to disruption in technology businesses. While many seem “classic” today, the players at the time more often than not exhibited the actions and reactions described here.
As a social science, business does not lend itself to provable operational rules. As appealing as disruption theory might be, the context and actions of many parties create unique circumstances each and every time. There is no guarantee that new technologies and products will disrupt incumbents, just as there is no certainty that existing companies must be disrupted. Instead, product leaders look to patterns, and model their choices in an effort to create a new path.
Stages of Disruption In Practice
Digital imaging. Mobile imaging reimagined a category that disrupted film (always available, low-quality versus film), while converging on the historic form factors and usage of film cameras. In parallel, there is a wave of reimagination of digital imaging taking place that fundamentally changes imaging using light field technology, setting the stage for a potential leapfrog scenario.
- Retail purchasing. Web retailers disrupted physical retailers with selection, convenience, community, etc., ultimatelyconverging on many elements of traditional retailers (physical retail presence, logistics, house brands).
- Travel booking. Online travel booking is disrupting travel agents, then converging on historic models of aggregation and package deals.
- Portable music. From the Sony Walkman as a disruptor to the iPod and MP3 players, to mobile phones subsuming this functionality, and now to streaming playback, portable music has seen the disruptors get disrupted and incumbents seemingly stopped in their tracks over several generations. The change in scenarios enabled by changing technology infrastructure (increased storage, increased bandwidth, mobile bandwidth and more) have made this a very dynamic space.
- Urban transport. Ride sharing, car sharing, and more disruptive traditional ownership of vehicles or taxi services are in the process of converging models (such as Uber adding UberX.
- Productivity. Tools such as Quip, Box, Haiku Deck, Lucidchart, and more are being pulled by customers beyond early adopters to be compatible with existing tools and usage patterns. In practice, these tools are currently iterating very rapidly along their self-defined disruptive path. Some might suggest that previous disruptors in the space (OpenOffice, Zoho, perhaps even Google Docs) chose to converge with the existing market too soon, as a strategic misstep.
- Movie viewing. Netflix and others, as part of cord-cutting, with disruptive, low-priced, all-you-can-consume on-demand plans and producing their own content. Previous disruptors such as HBO are working to provide streaming and similar services, while constrained by existing business models and relationships.
- Messaging/communications apps. SMS, which many consider disruptive to 2000-era IM, is being challenged by much richer interactions that disrupt the business models of carrier SMS and feature sets afforded by SMS.
- Network infrastructure. Software-defined networking and cloud computing are reimagining the category of networking infrastructure, with incumbent players attempting to benefit from these shifts in the needs of customers. Incumbents at different levels are looking to adopt the model, while some providers see it as fundamentally questioning their assumptions.
In much of the world’s urban areas, it can seem like there are more cars than people. In the U.S., there are nearly 800 cars per 1,000 people. With that comes increasing congestion, pollution, and resource consumption. Yet, surprisingly, the utilization of vehicles is at an all-time low—to put it simply, the more vehicles there are, the harder it is to keep them all in use. That’s a lot of waste.
Throughout government and private business, tens of millions of passenger cars are part of vehicle fleets used on-demand by employees. Making vehicles available when and where needed and keeping track of them is a surprisingly manual process today. Not surprisingly as a result, it’s fraught with high costs and low efficiency. In an effort to meet demand, managers of these fleets simply add vehicles to meet the highest peak demand. This results in more cars to own, manage, insure, store, and so on. But maddeningly, most of these cars end up either sitting idle, parked in the wrong place, or awaiting replacement of lost keys.
John Stanfield and Clement Gires had an idea for a better way to tackle the fleet problem. They shared a vision for reducing the number of cars on the road and increasing the amount any given car is used, while also making it easier than any other program existing to use a shared car.
John has a physics degree from Central Washington University and a Master’s degree in Mechanical Engineering from Stanford. He’s a conservationist at heart, having spent his years just after college as a forest firefighter. Along the way he invented an engine that processed vegetable oil into biodiesel. At Stanford, he began implementing an idea for a new type of vehicle—an electric car for urban areas that would be a resource shared among people, not owned by a single person. It would be a car that you jump in and use when needed, on demand.
About the same time, Clement Gires was studying behavioral economics at École Polytechnique when he wasn’t also working as part of a high-altitude Alpine rescue unit. Clement worked on the famed Vélib’ bicycle sharing program in Paris which encompasses over 18,000 bicycles in 1,200 locations providing well over 100,000 daily rides. Clement brought novel approaches to improve the distribution and utilization of bikes to the program before coming to the U.S. to study Management Science and Engineering at Stanford.
While climbing in Yosemite, John and Clement got to know each other. Initially, they spent time pursuing the electric vehicle John began, but soon realized that the real value of their work was in the underlying technology for sharing, which could be applied to any car.
Local Motion is bringing to market a unique combination of hardware, software, and services that redefine the way fleets of vehicles can be deployed, used, and managed. There are three unique aspects of the business, which come together in an incredible offering:
- Simple design. Open the app on your mobile device, locate a car or just go out to the designated spots and locate a car with a green light visible in the windshield—no reservations required. Walk up to the car, swipe your card key (same one you use for the office) or use your Bluetooth connected phone and the car unlocks and you’re in control. Forget to plug in your electric car and you’ll even get a text message. When you’re done, swipe your key to lock the car and let the system know the car is free.
- Powerful hardware. Underneath the dash is a small box that takes about 20 minutes to install. In the corner of the windshield is an indicator light that lets you know from a distance if the car is free or in use. The hardware works in all cars and offers a range of telemetry for the fleet manager beyond just location. In modern electric cars, the integration is just as easy but even deeper and more full-featured.
- Elegant software. Local Motion brings “consumerization of IT” to fleet management. For the fleet manager, the telematics are presented in a friendly user experience that integrates with your required backend infrastructure.
The folks at Local Motion share a vision for creating the largest network of shared vehicles. Today, customers are already using the product in business and government, but it’s easy to imagine a future where their technology could be used with any car.
Today, we are excited to announce that Andreessen Horowitz is leading a $6M Series A investment in Local Motion. I’m thrilled to join the board of Local Motion with John and Clement as part of my first board partner role with Andreessen Horowitz (see Joining a16z on this blog).
This was also posted on http://blog.pmarca.com/