An entrepreneur and graduate of Y Combinator, Fred is leading an award-winning company culture as co-founder and CEO of Rainforest QA.
Davis Baer: What’s your background, and what are you working on?
Fred Stevens-Smith: I started out in business as a web designer, running a one-man show. Found many ways to make money since, and ended up focused on the venture-backed startup path.
What motivated you to get started with Rainforest QA?
The intensity of the need in the market. We were working on a different idea, had trouble monetizing it, and went looking for problems that people wanted to pay real money to solve. QA was the clear and obvious winner. Everyone we spoke to had a problem with quality, everyone we spoke to had no idea how to address it, and everyone was happy to trade dollars for a fix. Digging deeper we also found that the existing solutions were really weak, designed for another time and another context before the norm of shipping many times per day, and before the era of developer primacy.
What went into building the initial product?
A lot! Unlike a lot of startups, our key risk was product execution, since the underlying tech required a lot of invention. Most startups have to focus more on validating the problem they’re solving and its importance to the market. We started by running the QA process for our customers by hand, and then automated each step of the process. The hardest part was the crowd — our model is a little like Uber for QA, and we have tens of thousands of ‘drivers’ all over the world that execute tests for our customers. Coordinating, training and measuring the crowd was the most complex and risky aspect of the product, and took a huge amount of energy and time to get right. From initial customer development to the rollout of the v1 product took around 2 years, although we were charging and growing revenue that entire time. My main lesson from this period is, if you’re in b2b, start where the money is. If the problem is severe enough customers will want to pay you for even a very half-baked solution.
What’s your business model, and how have you grown your revenue?
We charge customers whenever they run tests on our platform. We work with customers to understand how much they are going to test in the next 12 months, which tends to derive from how frequently they’re releasing and where they have the most risk in their applications. We then build an annual contract that works for both sides. We’ve grown mostly on word of mouth and outbound email campaigns. We identify prospects that have similar characteristics to our existing customers, and reach out to their engineering leaders directly.
How did you get your first 10 customers?
The first ~10 came from our initial customer development, where we uncovered the problem and started working on it.
What are the biggest challenges you’ve faced and obstacles you’ve overcome?
It’s hard to answer this question because, to be honest, every single day a startup is facing at least 1 existential challenge (i.e. if it’s not solved, the company could die) and 10 major challenges (if they’re not solved, the company will be materially impacted). So it’s a little disingenuous to focus on any particular challenge.
That said, ultimately the only way for a business to actually fail is to run out of money. When the zero cash date looms and you’re out there fundraising, you’re literally meeting with people who have the power to keep your company alive or kill it. That’s pretty hard to beat in terms of stress.
I think scaling culture is one of the hardest things to do, and at ~135 people we’ve managed to do it better than most companies. Each time you add a management layer or a significantly different culture or personality type to the company, things change and break. We’ve been able to overcome these challenges consistently because of the core values that tie every Rainforester together.
I’m also really proud of the work we’ve done to API-ify QA. It’s still mind blowing to me that when we run our test suite, hundreds of people from all over the world are testing our application within 5 minutes.
What does the future of Rainforest QA look like?
We’re building the AWS for QA. It’s about taking a complex, messy and challenging process and selling it back to customers as a service. Software companies will consume QA implicitly, as part of building software, and will stitch together our APIs to get the right balance of testing for them. In addition to the functional testing and usability testing we do for customers today, we’ll also do security and performance testing. And all of this will be easy to use and affordable.
In terms of our organization, we’ll keep doubling revenue while being one of the best companies to work at in the world. That’s the bar we’re setting for ourselves.
What’s one thing that most people don’t know about you?
Most people don’t know that my core skill and passion is design… in all senses. Graphic design, UI design, organizational design, architectural and interior design. When I’m having a really bad day I’ll just fantasize about being a designer at an agency or company where I’m given a brief and a fixed time period to solve the design problem, and just think about how amazingly simple and great life would be. Obviously the grass is greener. Over my lifetime I’d like to work on ways to use design to improve peoples’ lives. It’s incredible the difference good design makes, and it’s still far too much of a luxury. For example a well-designed house doesn’t have to be more expensive than a terribly designed house, it just tends to be. And that’s a huge opportunity.