Peer Effect
Best way to scale? Your peers have the answers.
This is the podcast for scaleup founders looking for insightful, actionable wisdom from some of the best operators around. Each week we’ll explore one secret that other founders and experts are using right now and how to implement it.
It’s practical wisdom to build the company AND life you want. Hosted by renowned founder coach and advisor James Johnson.
You’ve survived to £1m, now let’s scale to £10m+.
Peer Effect
Risking the good to achieve the great with Dan Lines of LinearB
Dan is the CO-Founder of LinearB, which has raised $71M ($50M Series B in 2022). Dan also hosts the Dev Interrupted Podcast, the most popular show designed explicitly for software engineering leaders.
Today he takes us to December 2021.
Dan and his Co-Founder met and decided to do a clean slate exercise.
They quickly came to a few conclusions...
More competition was coming…
There was a lot of potential for growth…
But Dan started wondering about what differentiates their business from others.
At this moment, Dan and his Co-Founder were facing an intriguing decision:
a) Risk all they'd built for a chance at something more
B) Maintain course in a market growing more crowded.
At this point, he was already excited about option A).
After taking a while to think about this decision, Sam went home and consulted with his wife.
He took into consideration the extra time he will need to work…
The talent he needed to find and hire...
And he took a while to assess both the personal and professional impact of this key decision. And after a month they went for it…
In this episode we discuss,
- The value of validation and due diligence
- The power of coaching in decision-making
- The increased competition and how to stay relevant in a crowded market.
As today’s episode wraps up, we are left with a powerful note on the importance of striking a balance between taking calculated risks and maintaining stability in a competitive market.
Tune in and listen to Dan Lines as he walks us through a difficult decision-making process that followed a make-or-break moment for his company, LinearB.
More from James:
Connect with James on LinkedIn or at peer-effect.com
So I'm super excited to welcome Dan to the show today. He's the co-founder of Linear B. They've raised over 71 million dollars so far, and he's not only keeping himself busy doing that, he's also the co-host of the Dev Interrupted podcast. So a busy man.
Speaker 2:Yes, I am. Thank you for having me on the show today.
Speaker 1:Well, life is looking good at the moment, but we're going to jump back to a tricky moment in time. When are we jumping back to?
Speaker 2:Life is looking good right now, but we're going to jump back to 2021. So it was the end of 2021. Super crucial moment in our company, and the way that I would like to describe this is really saying risking the good to be great. We were in a situation where things were going well for us. We were starting to get a lot of traction and a lot of customers using and we had a lot of VPs of engineering using our product. But we had an opportunity that came our way to provide our solution for developers and extend and, I would say, transcend our business. But there was a lot of risk and we were really debating are we willing to risk the good to be great?
Speaker 1:So this sounds fascinating, so take me into this moment. Is there a particular moment that you can really remember from this time?
Speaker 2:There is. So at the end of the year, at the end of every year, myself and my co-founder, we get together. So my co-founder, ori, is in Israel, I'm in the US, so we do a lot of remote meetings. We also do a lot of traveling, but at the end of every year, usually in December, we get together. Usually in the West Coast, like San Francisco area or LA. We get a room. We usually try to make it be one of those comfy rooms with beanbag chairs, on the floor, there's a whiteboard and we're really trying to do a clean slate of how did the year go and what would we want next year to be. But let's not just take in our biases from the previous year and let's do a clean slate exercise. So that was the setting and, in particular for this one, we were in Santa Monica in LA, and if anyone's ever been there, this is a beautiful, beautiful place. It's a beach town, it's sunny out, it's amazing for creativity and that's why we like to be there. So that's the setting, that's the atmosphere, and we were coming off a really good 2021 by most measurements. What does really good mean? Well, we thought we're achieving product market fit, at least for our VP of engineering persona. We were gaining traction, more and more customers, tens of customers coming every single week. It felt really good and, for those who don't know, Linear B is a tool for engineering leadership. That's what it started out as, and you could start measuring the performance of your delivery and are you going to be on time? And you see all this amazing data about your engineering organization, and that had called on really well. But the thing was we started hearing a little bit of feedback from customers, just a little bit, saying hey, this analytics is really cool, but what could you do to guarantee improvement for me? Because I can look at this data, but I'm not 100% sure I can guarantee that it will get better. I started to show this to my board of directors, I started to show it to my boss, the CEO, and it wasn't like an urgent thing, it wasn't like a red flag drop anything. It was just like we started to hear it a little bit.
Speaker 2:And also in this timeframe now we see a lot of investment money going into our space. So we were really well funded, as you mentioned in the beginning. But we started seeing other competition pop up. We started seeing other VCs Other VCs are coming to us saying, hey, could we invest 100 million? These crazy, crazy amounts. And what it made us say is wait a second, more competition is coming. We're not going to be the only ones here anymore and what is it about us that can be different than every other competition out there? Because there's one aspect that you could say hey, everyone can make a metrics dashboard. It's really cool, it's innovative, but there's nothing there that's preventing another company from doing that.
Speaker 2:The other thing that was happening is I want to let you know we read an article, so sometimes two in two things come together. You start hearing customers say something a little bit. There was this movement around developer experience. I had just read an article called Ship Show Ask on the Martin Fowler blog, which is a blog that's really important for engineering leadership, and what this blog said was and I'll get technical for one second here not all pull requests are essentially create, equal.
Speaker 2:And what is a pull request? It's basically new code or a code offering the developer rights to the team that says hey, this is, this is my new code, will you all accept it in to get it merged? The request to merge and the concept behind it was some of these pull requests are really high risk, some of them are really low risk, some of them are in between, and as a, as a engineering community, we're treating all of these exactly the same, no matter if they're high risk, low risk, somewhere in between. So I had just read that article and that's, like, I think, also a key point, like it's really important to be involved with the community and be listening, and those two things kind of came together for that meeting in Santa Monica. In Santa Monica between me and Nori, where we were like whiteboarding and we rode up on the right board ship show ask question mark. Should we attack this problem or not?
Speaker 1:I think, before we dive into these, I'm just curious how did it feel in that moment to have this potential path risk? You built something quite exciting. You're getting your well funded, you're getting good feedback. You're personas getting modern at the same stage as the sense of wow, there's lots of money coming into space, there are getting more competitors. Are we, are we solving the key problem? How did that feel?
Speaker 2:Yeah, I think first of all it's that combination of going back and forth between excitement and fear, like honestly being scared. For me it was that thing. It's like when you're first starting the company, you almost have nothing to lose, or at least that was my mindset. Okay, we don't have anything. It's just us two. We're trying to build something out of nowhere. There's nothing to lose, let's just go for it.
Speaker 2:And in this moment there is something to lose because, we had, like, I think, by many accounts, a very stable and growing and successful startup. If I would have looked at it two years before that so we started in 2019, about and this is 2021, I would have been super proud of where we're at. And you kind of have this nervous feeling of like wait, am I going to throw something all the way that's going great by taking and we haven't gotten yet into what the risk is of actually bringing in a new persona and all the changes there and we can talk about that. But yeah, my feeling was this combination of excitement, entrepreneur excitement and then a little bit of fear of like, hey, Dan, are you proposing something that could take the company now off course, when it's going pretty well?
Speaker 1:So what was it then about this potential ship show, ship show ask that made this kind of this game changing slash, risky bet? What did it mean for you guys?
Speaker 2:So the thing about it was this what we were doing at the time was essentially showing a really nice metrics dashboard and it was cool and we still have it and it's like amazing all the metrics that you need, but the potential of actually analyzing each poll requests and deciding on the risk of the poll requests and deciding who should be the right reviewer or should you bring security in or should you auto approve this.
Speaker 2:We're actually getting now going from just displaying something on a screen, like displaying metrics on a screen, to changing the development workflow, which a lot of people in the world call DevOps, that whole space of DevOps. And when you're actually getting to the point where you're helping developers and you're changing the workflow for the better, for us that would be like a monumental achievement for the entire engineering world that we would be able to solve this problem, not to mention like user satisfaction. And now this stickiness of hey, you're not only showing me metrics, you're improving my metrics and all my developers are a lot happier. And it's not just me, the VP of engineering, that loves the product. All my developers love it too. That is really enticing to go after like more happy users. There's more developers out there than there are VP's, heads of engineering, right, and yeah, we just felt like we'd be ingrained in the workflow and really like helping the community more than we were at the moment. That was the pros. That's the exciting part.
Speaker 1:So then, what was the risk side to that then?
Speaker 2:So then there's a lot of risk. So think about this you have limited resources in your own company, right? We have a development team of our own. We have a product team of our own. We have a sales team of our own. All of these people are focused on one persona, which is the vice president of engineering. This is a persona that we know, that we love, that we've researched for two years. We've brought in salespeople that know how to sell to that persona We've hired. Myself and Ori were former VP's of engineering. It's a persona that we know really well.
Speaker 2:Now to take a small company because I think we were still like series A at the time take a small company and say not only do you need to be unbelievable at serving that first persona, but you're going to also now say that you're going to understand developers, you're going to solve their problems. You're going to have to change the DNA of the people you are hiring. And even for me personally because it's human nature to think about yourself first my role was going to change if we were going to go and do this. I was actually leading sales and marketing at the time. Ori was leading the CEO of the company and leading product and engineering, ori, had said to me hey, if we're going to do this, dan, I want you to go hire someone, build the feature set in an incubator mode, then bring it to market, then merge it in. It's a huge change for myself and everyone in the business. For a very small company, I think that's what the big risk was.
Speaker 1:It sounds like you take the engine of sales and marketing which was you away from product one which is all going very well, lock you in a room incubator style to build something new. So potentially you could come out in six months time, 12 months time, with a stalling product A which was going really well and no product B.
Speaker 2:Yeah, and risk that. Hey, we're in the wrong direction, it's not going to work. So now you don't have product B and you've heard the good business that you have, and now you're like behind on making your customers happy and getting ready for the next round and all of that. So, yeah, I think the stakes were really high and I think it's something that a lot of entrepreneurs have to go through. Just because you're doing something fairly well, do you go after the next thing that will elevate your business to the next level, or do you not Do?
Speaker 1:you play it safe. So how did you go about making that decision then?
Speaker 2:So the first thing that we said is what would it mean from like a people perspective? I remember having a conversation with my wife, lauren, after this, because you know, we didn't make like the decision on the spot that day in Santa Monica, but we were like 50% there and the other 50% is okay. We both go home, we sit on it, we meet again and we make the other 50% of the decision right. So I remember going home talking to my wife. We had an amazing meeting in LA. It was awesome. What do you think about me?
Speaker 2:You know leading this area of the product and, by the way, I'm in the US and probably the people aspect of it is we will hire more people in Israel because that's where our product engineering team that would be reporting into me and I'm going to be now doing different types of hours. I'm working with people, you know, overseas. It's going to change. It's actually probably the load is going to increase. So there's all of that. Side of it is like okay, how is it going to affect the family? How is it going to affect me?
Speaker 2:And then the other side of it is like can we find the right person who has the experience, coming from a developer background, delivering developer tools. How are we going to find them? Do is there a recruiter that specializes in it? We need an innovative person. Do we open the search? What does it look like from a sales perspective? Do we need to bring in more technical people? Because we're not talking the leadership anymore. So we first started with all the people sought side of things and said, like it could we do that? And then we moved back into Validation. Is it a true? Is it a true problem? How can we validate that, the problem, that type of thing? So two-step process.
Speaker 1:But I like this idea, the sound of sort of made 50-second decision, slept on it for a month, two weeks, but also really involved your families in the decision to because of the of the personal impact.
Speaker 2:Yeah, for sure, for sure, at least for me. Yeah, I think it's kind of like you come out of that, those end-of-year creative sessions, you come out super excited. But yeah, we do do usually say like this is the direction we think we want to go. But let's not make sure we just got in a room and got super, you know, excited together. Let's have like, take a moment, let's let reality set in, let's, you know, think about it for ourselves. Let's come back. Let's say that we were meeting, I don't know like we did, like Wednesday, thursday, friday, then I, you know, we flew back from LA. We we usually then meet again, like Monday, okay, on the same page, having cold feet, where, where are we in this situation? It was like, no, we both want to go for it. Like I talked to my family, or he talks with, like his People, all of that. Hey, we both still feel like we want to go for it. Okay, now let's go into a validation phase over the next few weeks.
Speaker 2:Let's say so yeah, I would say it's over that one one month time frame. Three to four weeks. Start validating the problem. Start thinking about how we would find this type of person. Start under mapping out Okay, dan, if you change your role, what does that mean? The impact for the other Organizations, I think in this situation. By the way, we started moving Sales from under me to Ori. We had like an omit. We still do have an amazing DP of sales, so we felt very confident that that organization was up and running and we could transition it to Ori and it would still be Okay, didn't need me there anymore. And yeah, we just iterate over that three, the four week time period to try to boost our confidence. Talk to our board members about it. Pitch the idea. Hey, what do you think about this? Got great backing. Oh, it sounds awesome. We should do this, you know. You just make sure there's no like red flags that people aren't all in to do it, you know.
Speaker 1:Let's say there had been red flags in terms of, let's say, is that anyone in that process, once you and Ori were, and your families were like on board, who do you think could have red flagged you effectively?
Speaker 2:I wouldn't call it red flag, but there's definitely people that aren't always on board and it's usually. I mean, there's kind of like two types of people, at least in our company, and they're both super important. By the way, it doesn't mean that one is like better than the other, because both of them keep us in line. I think you got some, some people and it's probably a little more like me and Ori, like that entrepreneur mindset of like we can do anything. We can, you know, create something new. We can go out of our comfort zone and be like really bold and like take a risk. And then there's other other people again. These other people it's not like a bad thing, but more like Steady-minded or like level-headed hey, we have a great thing going, sales is increasing. This could really mess us up, and some of those people in the company, I think, gave us a really good feedback of like, hey, this is a really cool idea, we're supportive of it. But can we also talk about how we like de-risk and make sure like the main?
Speaker 2:business is still focusing like good, oh, and we're like, yeah, great point, let's work with you. So let's make sure that. So what we did was like, Okay, we're only going to grow this team to like four people at first, so it's like limitations, so that we're not you know total in and you know Ori, and I would say, okay, we only want 20% of our company investment going there. Still 80%, I'm like making you know VP of engineering and their you know leadership super happy and we're not going to increase the percentage you know investment unless we hit X, Y and Z milestones. So, like I really appreciate kind of that other style person. It's not that they're like completely uncomfortable, it's just more like, okay, let's work together to set some goals of focus so that we're all on the same page, because this is something different.
Speaker 1:That's really nice. So, once you made decision, is that, how can you mitigate the downside of that decision?
Speaker 2:Yeah, exactly. Okay, so like we know, we're going for it. And now, how do we put boundaries I would call it, or like rails around it, so that you know it can succeed, but it does not, you know, derail.
Speaker 1:And what was it, do you think, during that discovery? Okay, so it sounds quite logical. It's kind of like sit in the room, brainstorm, take the data, go hey, that's what we think Take a short period of time to come back to it over the weekend and go are we still in yes or no? Then do some something more intense validation over the first month and then shift into kind of like a very like experimental phase with like clear success success criteria, but also like resource constraints, so that you're not betting the farm. Yeah, what sort of things were you looking for in that initial validation stage?
Speaker 2:I think there's two things that I'm looking for. One is we went back to the problem set. So we said to ourselves our problem criteria is we believe that code is getting stuck in the pull request process because all PRs are being treated like treated equally and really they're not equal. That was like our problem statement and we, you know, we saw this article that was written. We were like highly involved in community, thought it was super smart and we also had the advantage that that linear B proper, like linear B for VP ease, was measuring the pull request process, how long it was taking. We have all these great metrics, we have cycle time, we have mean time to restore, we have deployment frequency and part of cycle time is how long is that PR process taking? So we have the advantage and that's the cool thing about you know what we ended up deciding to do. It's not like we did something completely different. That was like a separate business. It tied in. And what we saw from our data, because we were able to measure millions of PRs is yes, it's true, the data shows that one of the biggest problems in cycle time is from when a pull request is created until when a pull request gets merged. That's a problem space for all of our customers. So then we saw that from a data perspective.
Speaker 2:Then we were able to go to talk to customers hey, is this data says this is a problem? Do you think that this is a problem for you? And they started to say, yeah, my developers complain about this all the time. Yeah, my developers complain about it. Yeah, we have. This is like we're not standardized of how we're supposed to. You know review code. The bigger customers started saying to us yeah, we actually we're under compliance and we're a financial institution. That's why we have to have like two reviewers for every PR. But if you had like rules where sometimes it could be one reviewer, that would be like awesome. So we started getting that validation from our, our current customer base, which I think, by the way, was like a huge advantage from the first idea when you have no customers or anything like that. So we were like able, over like a short amount of time, like a short timeframe, go to our customer base, draw up mockups, validate the idea, which just gave us like more and more confidence.
Speaker 1:So you're just validating the problem. At that stage there's no real sort of can we actually solve this. It's more like is this a problem?
Speaker 2:Yeah. So that was around validating the problem, which we got, like I would say, really fast feedback yes, this is a problem and it's worth solving. Then we went back to the people side and we said, okay, so Dan, you're going to go and do this. Like, what type of person do we need to bring in in order to make this happen with you? Because, like Dan, I cannot do this alone. So we said to ourselves, it's almost like we need another entrepreneur type person and maybe someone that's like an inventor or came from the space or like a founder.
Speaker 2:And so we set a criteria when we started looking for someone let's find someone that's more like an entrepreneur type has to be a former developer. So we started creating our criteria and maybe this is lucky or maybe not, but somehow we found that person. His name is Ofer, who's like amazing. He was a former founder, technical founder, inventor, the one that was writing the code, former developer. And we brought him in and now, like, honestly, the rest is history. He has a team of you know, he has probably people reporting to him, he has engineers that are working with him that are doing an amazing job, but he was that right type of DNA to work with me. So we set the criteria of the type of person that we want and I guess we like manifested this to happen.
Speaker 1:So really that's titled as podcast could be find your Ofer.
Speaker 2:Yeah, find your Ofer.
Speaker 1:I'm curious about the set. So he took about the setting boundaries, work wise. You also said that this is going to change your time zone working to their family. How did you go about setting, or did you set any different boundaries with around your personal life as well?
Speaker 2:Oh man, I wish I could say I did, but the truth is, when some of these like new things come up, you just you do have to put in more hours. So you know, I was making sure that I was starting work, like every day, like 6am, so I could get with Ofer and I could talk with Ori more about this and make sure that there's kind of that initial phase of like I would call it activation energy, and my best advice there is really the boundary at least that you know that I usually set at home is like this activation energy is like a time box thing and I think what will happen? Hey, I found this great person. You know Ofer and you know we're going to start hiring more and yeah, you know, for, let's say, this three month time period, I'm going to be working a little bit more, but then I have the expectation that it's going to get up and running and it's going to go itself and I have more people that can lead it and that's actually what happens.
Speaker 2:And I think if you do a good job and you kind of like set that mindset, okay, this is not a forever thing, it's like a sprint, I'm like running, and then it's going to calm. That's the way that I was able to do it, but I think there's no way of getting around like the truth, like sometimes, as a founder, you're putting in like insane amount of hours, but I think to keep like the longevity of it, it has to be time box. And the only other thing that I would say, like from like the health standpoint for me, like I had to hire like a personal trainer and like a yoga like I like invested a little bit into like my own health and instead of like just doing that kind of stuff on my own or at night, I said listen, I'm like, I'm working, you know, almost every day of the week. I will take out, you know on Fridays between like eight to 930am, like during work time, like I'm going to do this like health stuff just to maintain.
Speaker 1:Did you find that impactful?
Speaker 2:Oh, it's like unbelievable. So I'm still doing it today, Like every week. I'm doing like an hour and a half private yoga, like strength and meditation.
Speaker 2:So, that's something that stayed with me. Now I'll probably never give it up, because I think it's one of those things yeah, you can work as many hours as you want, but how effective are you really? How are you showing up? Are you really showing up as your best self during those hours? Are you just working? And for me it gets to like a certain you know timeframe where it's just like, yeah, more hours doesn't really help.
Speaker 2:I need to like run or like exercise or like be healthy. Then the next time I work I'm like twice as effective. So that's something that stayed with me the whole time.
Speaker 1:now, I already believe in that too. It's not that time. I'm out of that time. Intensity, how, like, what's the quality of the stuff you're getting done, rather than how much. Looking back on this again today, this moment, is there anything that strikes you?
Speaker 2:I think the biggest thing that strikes me is, I do think that there's these opportunities that come up because, you know, what we didn't get to is now we have, you know, hundreds of thousands of developers using Linear B. We have a more happy customer base where differentiated from our competition, you know. So in the end, it was the right decision. But I would just say, in the moment I didn't really know if it was the right decision or not, and the only thing that I can say is I think this type of thing of like extending beyond, like your current product, or like going out of your comfort zone, I think it makes sense. Ask yourself the question will this allow you to transcend the current space you're in? If it's a yes, then I think it's a risk worth taking.
Speaker 2:If it's high risk, if it's a high risk but you can't like transcend what you're doing, then maybe no on that. And that's the thing. Looking back, that's like, hey, this really did. Let us transcend it, let us open. Now we're a software delivery management platform. We're not just analytics, we're actually in the workflow and helping. You know, our VP of engineering loves actually that we have this for the developers. It all molds together. So, yeah, that's the kind of thing I think about looking back.
Speaker 1:That's really interesting. So on that journey then there was kind of that moment of, yes, let's do this. You went to the validation, yeah, let's definitely do this. But then it sounds like between then and success, or however we define it, there could well have been moments of doubt. And was this the right thing?
Speaker 2:Yeah, of course, I mean that's ongoing. Then, for the net, you're making a decision that's going to impact you for years. That is it the right thing? And all of that. You know that goes on, I think, forever or a very long time let's say a year because you're committing to years of work and for us, yeah, in between there's ups and downs and all of that kind of stuff, but yeah, at the end of the day, it was the right decision for us, it really helped us out and I can just give it advice. I think of how I thought about it as like, yeah, is it going to be impactful enough compared to the risk that you're taking? For us, it was a yes.
Speaker 1:Amazing. Dan Well. Thank you so much for today. That's been really, really interesting. As you heard today, coaching opens up a whole range of insights and areas to explore. If you have a potential moment to revisit on the podcast or just want to learn more about coaching, book in for a 30 minute chat with me at peer-effectcom.
