It was February of 2009, and the PayCycle exec team had just
settled in for their quarterly offsite. We were meeting in our CEO Jim Heeger’s
house in Palo Alto, getting ready to review our quarterly progress and look
ahead to the next quarter. Instead of the regular agenda, Jim kicked off the
meeting with some fairly shocking news. Intuit had approached us with an offer
to acquire our 180-person startup, and we were moving forward in the
negotiations. Wow, that was a surprising turn of events! With that news, our
regularly scheduled offsite turned into a planning session for the upcoming due
diligence and other logistics leading up to the acquisition. We eventually
announced the acquisition on June 2, and on July 29, 2009 we became Intuit
employees.
Fast-forward to today— more than five years later— and the
PayCycle acquisition has been a successful acquisition from a business,
technology, and people perspective for Intuit. Within the first year after the
acquisition, my team integrated the PayCycle online payroll product with
QuickBooks Online and released a mobile iPhone app. In the second year, we launched
a new full-service payroll offering. All of these were enabled by the services
and platform architecture that was developed in 2008. As a result, the payroll customer
base has quadrupled over the past five years, and annual revenue has grown by
600%. The PayCycle product line has grown and now generates more revenue each
year than the acquisition price.
And of the original 45-member Engineering team at PayCycle,
nearly 40 are still at Intuit and contributing to SaaS efforts across the
company. Dan Hing is a Product Development (PD) Director at Intuit Demand
Force, Yogesh Bhumralkar is the PD Director for Online Payroll, Jeff Brewer is
a Director and Distinguished Engineer, Daniel Gutierrez leads operations for
payroll, and Nagesh Tonne is the group development manager for QuickBooks
Online Accountant— a new product that he and his team launched this year. We
did experience some losses from our Engineering leadership team. Paul Gibson
was leading the DevOps architecture for Payroll and QuickBooks Online, but left
Intuit a few months ago for a small, public SaaS company.
Five years after the acquisition, more than 80% of the PayCycle
Engineering team is still at Intuit and thriving—
something which is very uncommon for an acquisition. I would like to share my
perspective on the rationale for this tenure and share some experiences from
the journey. In this day and age, M&A is a common exit strategy for many
startups, and retaining the engineering talent can be critical to the eventual
success of the acquisition. In particular, I will focus on the mindset and
approach from the acquired team’s perspective, since you are the master of your
outlook and approach.
TLDR: Here are the five key principles to thriving after an
acquisition:
- Leverage your unique talents and strengths.
- Be proactive and lead through the change.
- Learn from and appreciate the new culture.
- Understand why you want to be there.
- Be accretive and constructive.
Leverage Your Unique Talents and Strengths
Over the years, PayCycle had developed great Engineering
rigor and operational excellence that was highly tuned for an agile, highly
available SaaS operation. Back in 2008, we described our approach as the
“DevOps” model where engineers and operations worked hand-in-hand on production
architecture and troubleshooting production issues. As a result, we had a track
record of sustained 99.9% availability and disaster recovery across two data
centers. We also were on agile scrum, with monthly feature releases, weekly
bug-fix releases, and the ability to push same-day production changes for
urgent issues.
After the acquisition, we maintained our same operational
rigor and demonstrated the same success in the new environment. We put “points
on the board,” and our new leaders noticed. These early successes enabled us to
carry forward our best practices to the teams at Intuit that we have led and
are leading.
Be Proactive and Lead through the Change
After an acquisition, your culture does— and should— change
as you join a new parent company. Like other changes in life, there are some
really good aspects as well as some things that take more time to accommodate.
Your individual outlook and attitude during the transition can greatly affect
the outcome. Among the many things I had learned from Jim Heeger, our PayCycle
CEO, were how to embrace change and how to lead through change. In many ways,
Jim was the definitive standard for change leadership, and I still go back to
the “playbook” I put together from watching him in action.
Before the acquisition even completed, my leadership team
and I discussed the change and what it meant to us and to our teams. We
developed a list of the things that we wanted to preserve— the “secret sauce”
that made us successful, which we would protect at all costs. But we also made two
other lists:
- What we did not do well and wanted to change— some of these very soon.
- Other areas where we were open to change— things that were not critical to our success, and where we were not married to the particular choice. These were the battles not worth fighting.
Learn from and Appreciate the New Culture
After the acquisition, we realized areas where Intuit
excelled. Intuit had a rich history of customer focus and iterating designs
with customer feedback— Design for Delight and Customer-Driven Innovation. We
found these practices to be great additions to our Engineering practices, and
we rapidly adopted these practices. We modified our Agile practices to
incorporate Intuit’s experience design practices—which were superior to those
we had at PayCycle.
We also realized that we were now part of a company with
more resources (and deeper pockets) than a startup. As a result, we could shore
up the areas that were not well resourced or ignored entirely. Also, we had
access to a much larger customer base that we could reach through integrations
with other Intuit products. Our early integration with QuickBooks Online proved
to be a great accelerator for the growth of the online payroll customer base.
Understand Why You Want to Be There
Joining a much larger company was a big change from the
start-up life. With additional resources and larger teams come more meetings
with decision-makers and stakeholders—and a slight loss in autonomy. As part of
a larger company, influencing these additional stakeholders and the ability to
work across teams become essential skillsets.
I decided that I wanted to grow my leadership skills and lead
at scale— larger teams with broader and more complex product lines. Also, I
wanted help accelerate Intuit’s transformation to a SaaS company. Fast forward
five years to 2014, and I feel that I have grown significantly as a technology
executive and have also played a role in shaping Intuit’s SaaS portfolio. Over
the past five years, I have steadily increased my scope and responsibility each
year, culminating in a role where I have led a 700-person Engineering team
spanning multiple locations and generating over $700M in annual revenue. I have
also led the development of one of Intuit’s flagship SaaS offerings—QuickBooks
Online. Not bad a journey for a startup guy.
Be Accretive and Constructive
Now, the ride has not always been easy, and I’ve made my
share of mistakes along the way. However, I’ve learned from each of those
situations— setbacks, things that didn’t go my way, or my own missteps— and
grown as a result. There’s a sailing expression that one of my colleagues uses
which is quite appropriate: “Smooth seas never made a great sailor.” In fact, becoming
a better sailor requires being tested on choppy seas and bad weather. Dealing
with adversity— and surviving— makes you a better leader.
In the early days, I didn’t understand some of the cultural
norms at Intuit. I found that I was bringing up great points and ideas, but no one
was listening— or worse yet I was shutting down discussions. I got some great
coaching from my General Manager, Nora Denzel, and she also hooked me up with
an executive coach. I also reached out to Brooks Fisher, an experienced Intuit
exec whom I had met during the due diligence. After great coaching and my own
self-reflection, I made a few subtle adjustments to my style and used more
inquiry instead of advocacy. By rephrasing the same points as questions and by asking
more questions to understand, I was able to engage in discussions and get
others to appreciate my points of view— and eventually reach constructive
outcomes in a collaborative fashion. By being more patient in discussions and by
taking time to understand the history and context, I was seen as someone who
there to help— and not someone who was there to critique and criticize.
Wow, did the floodgates open. I was invited to more
discussions, and I was able to contribute to more strategic decisions. As a
result, I was able to have greater impact across the company with our
technology strategy and along the way share the recipes for our “secret sauce”—
the best practices that had made our startup successful. Eighteen months after
the acquisition, I was asked to lead the QuickBooks Online Engineering team,
and as they say… the rest is history.
One of the things I learned from Nora and other execs at
Intuit is to have a “teachable point of view” and share it more broadly. Over
the coming posts, I plan to share some of the lessons I’ve learned along the
past 5 years as I scaled my leadership. I also plan to share my leadership
style. Stay thirsty my friend…
