Anti-Lean Startup: Yottaa Yearns for Big, Fast Growth by Hiring Global Workforce
Lean startup, schmean startup. There’s more than one way to build a Web company.
Just ask Coach Wei, the founder and CEO of Yottaa, a two-year-old tech startup in Cambridge, MA. Yottaa (pronounced sort of like the green Jedi master) makes software tools to help business websites run faster, monitor their performance, and generate sales more efficiently—a field known as Web performance optimization. In a previous life, Wei worked at data storage giant EMC (NYSE: EMC) and founded business software firm Nexaweb Technologies. He is a graduate of MIT and Tsinghua University in Beijing, China, which foreshadows the approach he is taking with his current startup.
Over lunch recently, Wei talked in depth about what he’s doing with Yottaa. You might call it the “anti-lean startup” (my description, not his). In some ways, it is the opposite of the lean startup model, coined by Silicon Valley entrepreneur Eric Ries, which involves having a small team, creating software prototypes quickly, and using customer feedback to rapidly iterate code. The process is much faster than traditional software engineering and uses methods such as “agile” software development and “customer development.”
As Wei explains, that approach works well for some social media and Web startups, but not all. In particular, he says, if you’re trying to build a company that will be able to grow from, say, $1-5 million in revenue to $50 million, you could run into difficulties with the lean startup model. If you start small and local, ramping up to hire a team of 100 people in Boston or San Francisco will be almost impossible because of the current talent crunch and skyrocketing cost of good developers. “There’s a huge scalability gap,” Wei says.
So he’s trying something different at Yottaa—and he’d probably be the first to acknowledge that it might not necessarily work. The idea, he says, is to be “global from day one and have scalability built in.”
Translation: hire most of the team in Beijing and the rest in the Boston area, from the start. “We try to integrate the best of here, and the best of China, to build a company,” he says.
This is different from offshoring, he says, because it’s not about cost, and the Beijing employees are not seen as second-class citizens. “You don’t do it for the sake of cost saving,” Wei says. “You have to think of building a scalable growth engine into your company. You have to build it into your DNA.” More specifically, he says, it’s about “how to leverage the global workforce.”
Here’s how I see it. Plenty of U.S. tech startups—and big companies—make use of developer talent in other parts of the world like Brazil, China, and Eastern Europe. But few are building their teams to be truly global. Yottaa is positioning itself to grow quickly by tapping into Beijing’s developer talent pool (which Wei says is very deep and fast-moving) and making that a fundamental part of the company’s culture.
But having the team split across such a huge distance is very challenging, especially for a startup. In fact, geography is a big reason why techniques like agile software development don’t work for Yottaa—fast iterations and code releases (on a daily basis, say) usually require developers to be in the same room. Still, some aspects of the lean startup process persist in the company. For instance, as Wei has figured out “how to run a team in a global scale,” he says code development has “converged to a semi-agile, semi-waterfall [traditional]” model.
Regular visits to Beijing and daily meetings and e-mails are the norm at Yottaa. Until recently, co-founder Bob Buffone (formerly chief architect at Nexaweb) was head of Yottaa’s Beijing group, even though he’s American and doesn’t speak Chinese. That must have been interesting. Buffone is now back in Boston, and Shawn Hsiao, a recent hire from TripAdvisor and IBM, has moved to Beijing to head up the office there (he does speak Chinese, I presume). Meanwhile, Wei has been keeping his finger on the pulse of Beijing developers. He compares it to 1998-99 in the U.S., in that three out of every 10 people you meet on the street are working on startups, he says.
Yottaa currently has 36 employees—about 10 in Cambridge and the rest in Beijing. It is actively looking to hire senior sales and engineering staff, as well as a Web designer and system engineers, in Cambridge. The company, which raised $4 million from General Catalyst, Stata Venture Partners, and Cambridge West Ventures, went from zero to 50,000 users in the 10 months after it rolled out its beta product last summer. Interestingly, Yottaa is not going after customers in China, Wei says; it is focusing on the U.S. and Europe for now.
The company’s global-workforce approach clearly isn’t for everyone. And it’s too early to say whether the growth model will even come to fruition—that will depend on whether its product for website optimization really takes off. But it sounds like Wei has reached the point in his career where building a $5 million company isn’t going to satisfy him.
“We’re getting to the level where we can start to look at scalability right now,” he says. “We could have achieved what we have so far with a Boston [only] team faster, but now we’re built for the future.”