Grown-Up Startup

Fast Focus

Before joining Calico three years ago, Alan Naumann was a vice president at Cadence Design Systems, a much-admired software company with annual sales of more than $1 billion. At Cadence, Naumann learned what it takes to build a successful operation: The foundation of success is to act fast but to stay focused -- to make lots of tactical adjustments but to remain grounded both in a well-understood market opportunity and in a set of core values.

One way to maintain focus, he concluded, is to set unreasonable expectations -- and then meet them. For example, after a couple of years of making incremental improvements to existing products, Calico needed a radical makeover. Naumann took 30 top developers and formed a special project team (code name: "Lightning"). Team members were given four months to come up with a breakthrough. With so few people and so little time, they were forced to work in new ways. The result was a release that was 50 times faster than its predecessor. "If you look at the history of innovation, you'll see one proven recipe for breakthroughs," Naumann says. "Take a small, intensely focused team and impose an unreasonable time frame on it."

Although the pace at Calico is intense, the company strives hard not to overdo it, for fear of causing valuable employees to burn out. "It's a balancing act," says DiMaria, who came to Calico from Symantec Corp. "We're asking for a lot, maybe more than people can really do, but at the same time, we know that we can accomplish only so much. After all, we're not machines. And we're not making life-or-death decisions."

Still, the decisions that Calico does make need to be made fast. To ensure that Calico makes decisions faster than its competition, Naumann dramatically shortens deadlines whenever possible. "If we're taking more than a week to decide something, I'll tell people, 'Come into my office, and we'll decide this together.' " The results are impressive: One recent decision -- whether to acquire a startup called ConnectInc.com -- took just 18 days to unfold.

The key to making speedy decisions is accepting that they won't always be right -- and knowing how to respond when they prove to be wrong. A few years ago, Calico learned a million-dollar lesson after customers complained about bugs in its latest release. The problem was eventually traced back to Calico's development process. When the company started out, its lack of infrastructure enabled it to beat larger competitors to market. Instead of relying on heavy-duty software-development tools, its engineers worked closely with one another, engaging in an informal process of developing and testing code. "There was a lot of shorthand," says Dave Cardinal, 40, a Sun alumnus who serves as Calico's chief technology officer. Informality worked well -- up to a point. But as the company grew, and as teams of engineers found themselves working together for the first time, that cozy communication loop broke down.

Calico spent four months fixing bugs, and as a result, it fell behind during its next product cycle. Since then, the company has gone to great lengths to avoid a similar mishap. It has beefed up its quality-assurance team from 2 employees to 25, and it has spent millions of dollars on hardware for testing labs and on software that tracks every step of the development process. Now, thanks to Calico's intranet site, everyone involved in the development of a product knows what has been done and what remains to be done.

"That's a significant investment for a company of our size," says Naumann. "But I've seen so many companies hit a wall because their development process starts to hold them back." Because it provides mission-critical e-commerce applications, Calico has little room for error: Either it offers quality, or it doesn't. Regardless of a company's size and experience, says Dave Cardinal, "customers only want to buy from someone whose stuff works."

Long-Range Vision

The flip side to being fast is knowing when it's prudent to slow down. Naumann wants Calico to grow quickly -- but not at the expense of quality. That's especially true in the realm of talent. Unlike companies that do perfunctory reference and background checks, for example, Calico takes the time to be thorough with its prospective hires. Naumann tells his people to spend as much time as they need on researching a candidate's ability to produce results, or to work well on a team. In the case of Bayer, who is originally from South Africa, Calico waited three months for her to get permission to work in the United States. Naumann was willing to wait because he knew that Bayer, the top-ranked student in Stanford's industrial-engineering master's program, was a future star. "Being slow pays off in this area," he says. "You're bringing in people you expect to contribute for years to come."