The Teqlo Adventure

Few VCs admit to their misfires, though misses are more common in this business than hits.  One of the reasons I write this blog is to add some transparency to an all too opaque business of private equity.  It has been a while since I talked about Teqlo.com here.  Some of you may be aware there have been some changes recently. Others may have been to the web site recently and said “huh?” or, more precisely, ‘WTF?”

I figure the only authentic thing to do is to talk about this again, even when it is in an ambiguous period of re-birth.  This ugly period is a re-tooling of the premise of the business to give it more clarity of purpose.  It’s not fun being in the sausage phase.

First, let me admit we went down a mashup rat hole. We have a general technology for snapping together web services.  "Because they can" is an insufficient answer to "why do people want to create mashups?"  We failed to commit to solve a specific problem for a specific market, preferring instead the broad appeal of generality.  This has changed. 

No one led us down this rat hole.  We led ourselves.   When we realized we had to make a radical shift, we had to reignite the fire with limited fuel.  We made personnel changes because the fuel demanded it, not to penalize or blame anyone.  So we did the right thing.  We cut, refocused, questioned everything, and sharpened our edge. 

The first thing we did was toss out any pretense of solving everyone’s problem.  There is an old proverb that I just invented for this situation --  “The boiling of the ocean begins with a single puddle.”  We had to define our puddle.  So we did.

A friend of mine told me a few weeks ago that Snapfish is driven by a product team that thinks a hypothetical mom named Emily is their user.  Their design mantra is What Would Emily Want?  We went out and defined our Emily. 

The next thing we did was develop a hypothesis of the ways in which web application integration would please that Emily i.e., what is her pain?  What is she trying to do? What web services does she use to do it? And how does she cope with using 3-5 discrete web applications to get something done?    What  does she do now?  Then we went out and talked to a small army of Emilys. Arrgh!  This will strike everyone as obvious and necessary.  It is. And we hadn’t done it before because we were too busy building.

Along the way we re-learned something. Name your user.  Ask her what she wants; she will tell you, and often she will surprise you.  So we did and they did. One clear consequence is that you will see more emphasis on a configurable application, not a bucket o'widgets that snap together.  Leading with "it's so easy to build what you want" is like making a diet fun – it is still a diet, no matter how much more fun it is. You only do it when you must.

So now the Company is heads down executing what we think is a re-jiggering of the basic components.  We are packaging to solve a problem - not all problems.  Nor are we packaging to provide “examples” of how you can use Teqlo to solve a problem.  Nope.  We have picked a customer, listened to what they want, and are hacking away to get to market.

We now have an Emily in mind, a clear sense of who our natural distribution partners are, what’s in it for them, and how this little puddle becomes a pond and then a lake.  We dream of an ocean, but are navigating the puddle.

I'll tell you this much about the new direction - Web-based workflow.  Teqlo is ideal for making a pre-packaged process made from web applications and stitching them together to get something done.  There is no market for Cut-and-Paste, but Cut-and-Paste is the wow factor in Microsoft Office. There is no market for reconfiguring web applications, but reconfiguration is the wow factor in workflow for specific problems.  Without giving away the punch line, I'll point out that workflow is what's missing from the world of on-demand software.

The site itself has not changed.  It is still as confusing as it ever was.  That is not important, yet.  Over the next few [weeks] [months] the site will begin to molt.  We will shed the mashup cocoon and emerge as very different butterfly. (We may even re-brand the site to clarify what this new application is.) This butterfly will not offer you the universal promise of integration of all web applications. This butterfly will promise a specific user community a way to meaningfully improve the way they use the Web in their daily lives.  And if we do our jobs well, it will also be clear how we make money, not an insignificant question.

Of course, it might still be wrong, but that's the adventure in adventure capital.

Comments

[Jason Kolb]

Good decision. Have followed your blog for a while, and I'm very glad to see you're honing your market and message. Didn't see the market for what you were offering before, it's not a good idea to try to be everything to everyone. Jack of all trades master of none and all that. Web-based workflow is quite a bit more interesting and focused, I think if you're marketing it as a component for Web-based solutions to developers or tech-savvy analyst-types you're probably going to find a lot more success. Cheers!

[anthropocentric]

Good post and thanks for the disclosure. I must admit, my reaction was WTF. Perhaps by being so vocal, having a public beta, etc, you've accelerated the necessary learning process.

So, to continue your analogy, Teqlo is a newborn named Emily. Still in her diapers and onesies, not yet smiling voluntarily.

[Amitabh]

This is the #1 lesson we learned in my previous startup. As engineers, we always like to build platforms and tools that will solve the broadest possible problem. Customers don't want tools - they want solutions. More preferably, solutions that match their industry requirements. The challenge is to build a specific solution, while retaining the ability to migrate to other adjacent vertical markets.

[fewquid]

Appreciate the update -- I had been following Teqlo off and on since it was Abgenial Systems. Kudos for the candor too. Best laid plans of mice and men...

[Karsten Bjørk Rasmussen]

Thank you for sharing these insights. No doubt we all know the theory about customer orientation, but how to execute it is extremely difficult.

Prior to my current position, I worked with a BPM company, who also had an application 'that could fit all purposes'. But it was only when they defined a narrow focus on a selected few processes and hence some selected customer segments, that their business was really able to take off. Today its one of the fastest growing IT companies in the Danish market.

Working with a couple of ventures myself, I keep hammering myself about involving an advisory board of potiential users/customers. But it seems like such a tedious task, "because what could they possible come up with? I'm the expert on the idea and they might just not understand the ingenious product at this early stage?"

But I guess there's really no other way around this as you story shows.

[Daniel Markham]

As a technologist and an entrepreneur, great article. I can see where the technology itself can become extremely seductive, especially in the area you're in. Been down that road a few times myself. But as the mantra goes, "know your customer." The focus has to be on the customer: how to find 'em, how to reach 'em, how to help 'em along, and how to monetize that exchange.

It's a shame you can't just execute a new and exciting technology flawlessly and get rewarded from the marketplace. Sadder still is that so many people have been conditioned by the media to believe that the idea (or technology) IS the business. The business is a lot more than that! The best way to show people is from actual experience, as you've done here.

[Eric]

Thank you for sharing this. It is too often that no one wants to discuss the challenges that occur, even though they lead to the biggest successes down the road. I appreciate hearing these types of stories as it reminds me that things like this happen even with careful plans in place. Gives motivation to us smaller entrepreneurs.

[Michael J.]

Went to check out the Teqlo site and found it doesn't support Safari.... Oh well, maybe in the future.

Thanks for the transparency; it's good for everyone.

[anon]

Peter, I think you're great and I'm a long time follower of your work.

That said, your post omits in defining the quantitative problem that you are hoping to solve for emily; neither do you identify the features that will solve this problem; and never do you mention any quantifiable benefits that emily can expect from using teqlo

If I came into your office and pitched you; "This butterfly will promise a specific user community a way to meaningfully improve the way they use the Web in their daily lives" or "The butterfly is ideal for making a pre-packaged process made from web applications and stitching them together to get something done", you'd very politely throw me out.

And also...I can't understand why the CEO allowed the team to throw up even one line of code before the primary research was finalised and orders for delivery had been signed. If I was the CEO and had to account for the quarter by saying something like; "Then we went out and talked to a small army of Emilys. Arrgh! This will strike everyone as obvious and necessary. It is. And we hadn’t done it before because we were too busy building", I would have been fired.

This kind of "build first, sell second" thinking is unacceptable. There is no excuse for it. You are not funding a workshop for "revolutionary inventors".

[Peter Rip]

You're right about a number of points here. Things did change, a lot. I guess I am more 'translucent' than 'transparent' in one respect. To your point about metrics, I did not disclose exactly *what* we are doing going forward. The butterfly metaphor is a bit of literary license. We *do* have a clear user definition, benefit statement, and definition of who is our competition. It just isn't appropriate to completely disclose the entire business plan.

You're gracious to suggest that I'd politely throw out someone this abstract. I can be as impolite as the next guy. Otherwise they'd revoke my membership in the NVCA. ;-)

[John Furrier]

In the startup area the entry strategy into the market is the key. It's all about entering the market with a value proposition that works and can evolve. Once established broad acceptance is key then it's about scale. I've always like the Teqlo vision but timing is everything in technology startups. I've started a few companies that were way to early and they normally fail if the value prop in entering the market isn't there. I hope that Teqlo can pull a solution that solves a problem then map it to the broader market because the vision is strong.

Best of success

[Jason Wood]

Peter,

Glad to hear things are heading in the right direction.

Jason

[Jeffrey McManus]

Great post, Peter -- looking forward to seeing the next iteration of Teqlo.

[Terry Jones]

Who is the "we" in the "we cut" and "We made personnel changes"? Shooting for additional transparency is a great aim, but given the use of the 3rd person (plural at least :-)), and that it's written by Peter at Crosslink, not the Teqlo CEO or someone else, this article does raise questions. Like: whether "we" are the investors, the fate of the founders, whether this is a preemptive post ahead of anticipated public recriminations from recent ex-management, whether there was a happy ending (so far), whether this is selective/convenient/partial/self-serving transparency, etc. I've no idea at all about the answers to these questions and I am not making assumptions - just wondering. If you write aiming to be transparent, especially given what I've just mentioned, you could or should anticipate that people are going to ask the above pretty obvious questions. If things are happy and healthy and so on, it's to your great advantage to say so. If not, then leaving that out while claiming transparency does feel like a stretch.

Regards & good luck!

[Leigh]

i don't mean to be a poo-pooer since everyone is being so supportive and all - but could you choose a different name other than Emily? Emily is the name of the voice of Bell Canada customer service... (press one if you want to wait on the phone forever and then get treated terribly by the service centre in India, press two for)....

I hate Emily.

:(

[rj]

Being in the enterprise software space for a long time Peter, you must remember all the dead bodies in the application integration markets. These companies never died because of a lack of technology. Just that the grand vision always proved to bigger than sum of the actual applications.

So my reaction when you first announced teqlo was worry. The problem wasn't ease-of-mashup, it was: how many mashups does the world really need? How many of them do I _really_ have to build myself? And I'm an early adopter.

Then I fall into a bit of self-doubt: Am I doing the world-market-for-computers-is-6 thing?

I always figured that teqlo was one I would have had to wait to see the adoption curve before investing. I don't personally get the myspace/facebook market either, but at least I can see they have millions of people who are.

so chalk me up for "i still don't get it." I'd say that if teqlo has the word "mashup" anywhere in its executive summary, they're doomed. In fact, it's possible if they have "web based workflow" in their exec summary, they're still doomed.
JMHO

[Peter Rip]

rj -

you're 200% right. Workflow is a graveyard. It is a non-app. This isn't generic workflow. Workflow without purpose is a mashup is a composite app is a rat hole. No one says "my job needs workflow." This point is not lost on us. I wish I could be more explicit, but it's not time for that, yet.

PR

[Jason Vu]

Enjoy your post, thanks

[verap]

Hello Peter,

I am struggling with the "Emily" profile that fits the web2.0/mashup environment. Especially within enterprise walls. Can you give a little more detail about who "Emily" is - is she a telco provider giving users the ability to customize widgets on their mobile phone, or is she a sales guy assembling sales spreadsheets and contacts? I am reasonably sure that Emily is not my mom, assembling weather and gardening tips (although that might be theoretically possible). Who is teqlo's Emily?

[Peter Rip]

I can't get too specific, simply because it's not appropriate to do so. However, this 'design center' is a professional user doing a specific job who uses a certain number of applications in discrete sequences to accomplish his/her job. There are clear 'pain points' associated with doing the job with these various applications. If we can reduce this fritcion, we have created value for the person.

PR

[ckeene]

I had a good conversation with Jeff about his Teqlo experiences and my current ActiveGrid experiences and wrote up the results as 5 Show Stoppers that Cause Enterprise 2.0 Apps to Fail and posted it here

[Jeff Minich]

What about the potential of selling Teqlo to other ISV's? Many application vendors are struggling to keep up with Enterprise 2.0 trends. I could see a market for a bolt on solution that could be used to speed up the process of making legacy apps enterprise 2.0 ready.