I had an interesting chat with a startup and I wanted to share their story because I think that it’s one that product marketers and product managers could learn a lot from.

The founders of this company were founders of a successful company called Workbrain.  Workbrain provided solutions for workforce management and grew to close to $100 million in annual revenues before being acquired in 2006 by Infor.

When thinking about their next venture they went back to the human capital management space looking for unmet needs.  They hit on the issue of performance reviews and how much people hate giving and receiving them.  One reason this is true is because the end users (employees and managers) have different goals than the folks that own the process and buy the tools (Human Resources). HR’s goals of determining pay increases, identifying top/bottom performers, promotion planning, etc, don’t line up with an employee’s wish to get some timely feedback or management’s desire to give it when it’s needed.

So the idea for their new company, Rypple was born.  Rypple allows users to is a tool get feedback from managers, peers or anyone else whose opinion they trust.  This feedback can be about anything from a person’s performance, to opinions on an meeting or input from a team on working together.  It’s easy to use – just put in your question, choose whom you want to ask it to and away you go.  Rypple is as remarkable for what it doesn’t do as it is for what it does do.  It doesn’t constrain people to a set of pre-defined questions, nor does it determine who should give you feedback or when you receive it.  Feedback is completely anonymous, so people can feel to call it like they see it. By leaving the tool so open, the Rypple folks left room for users to use the product in ways they couldn’t have imagined, such as using it to survey customers or to take an anonymous vote on something.

Sounds great right?  Wait a minute! Did you say free?  Where’s the money!?  HR owns the budget for tools related to performance reviews and frankly, they’re the ones that got us into this mess in the first place.  They aren’t going to want to rip out what they’ve spent years building up.  Plus some of these use cases aren’t looking so much like HR’s domain anymore, are they?

Rypple’s approach takes a page from the open source handbook.  The tool is web-based so there is nothing to install and it’s free.  Users can simply start using the tool today, regardless of any corporate policies or HR processes (MySQL pops up in companies in much the same way). Managers or HR folks that start seeing the benefits of using the solution, then want to formalize its use inside the company.  That means they need support and a security, which Rypple sells to them for a small per user, per month fee.  Notice that Rypple didn’t have to displace or disrupt anything to get to this money.  As Dan Debow, the co-CEO put it to me “Our competition isn’t performance review systems, it’s pizza.  If you have budget for a monthly team pizza lunch, you can buy our solution.”

Does this all translate into hundreds of millions of dollars in revenue?  Time will tell but so far it seems to be working. After launching just a few months ago, Rypple has thousands of users at hundreds of companies.  And so far they haven’t had to “sell” anyone.

So what can product marketers at startups learn from this example?  A LOT.  Here’s my take:

  1. Start with a business problem – Notice how I didn’t mention technology once.  The Rypple founders focused on identifying a business problem first, then started thinking about how best to solve it.
  2. Do what you know – It wouldn’t make sense to go from human capital management to building satellites.  Your knowledge of an existing market counts for a lot in discovering unmet needs.
  3. Personas matter a LOT and not always just the buyer’s persona – I’ve successfully sold B2B software where the end user’s opinion of the solutions didn’t matter to my sale whatsoever.  One of the key decisions Rypple made was to focus on the unmet needs of the USERS and then figure out a way to have either the users or the HR folks buy.  Focusing only on the HR buyer would have resulted in a “me too” product in a crowded space.
  4. Don’t be afraid of simplicity – The simplicity of the solution left the door wide open for users to be very creative.  Focusing too heavily on performance reviews in the initial version of the product would have discouraged users from trying to use it for other things
  5. An innovative business model can matter as much as an innovative product –  Targeting end-users instead of HR buyers was a stroke of genius.   This isn’t an HR solution – it’s a tool for making employees, managers and teams better at their jobs.  As a manager I would give up my team lunch money to buy that and after a few months, I’d be asking why it wasn’t coming out of HR’s budget (if HR didn’t ask the question first).
  6. “Viral” applies to products as much as it does to marketing tactics – One of the beautiful things about Rypple is that every user brings on more users with each request for feedback.  The product itself is inherently built to spread and in effect, sell itself by getting itself into users hands through other users.

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