JOYUS - BUILDING AN ORGANIZATIONAL STRUCTURE FOR SCALE Professors Matthew Wong and Darren Meister wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G ON1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com. Copyright @2016, Richard Ivey School of Business Foundation Version: 2016-01-28 INTRODUCTION Sukhinder Singh Cassidy, co-founder and chief executive officer (CEO) of Joyus, a growing online video shopping network site, glanced at the latest copy of her company's organization chart. Founded in 2011, in San Francisco, California, Joyus had already established itself as the premier Internet video shopping network for women's health, beauty and fashion products. Joyus was a pioneer in bringing the multibillion- dollar "direct-response" shopping model online. Having raised US$44 million' in three rounds of funding, in 2015 Singh Cassidy and Joyus were poised for the rapid growth and scaling up of the business. Singh Cassidy, an experienced leader and executive, was now energized with a clear strategic direction for the firm over the next several years. She was very excited to begin work. However, her experience cautioned her that to achieve the company's ambitious growth strategy would first require that her current team both re-evaluate how to scale to achieve this vision and identify the new competencies and values that were required. OVERVIEW OF THE ONLINE VIDEO COMMERCE DOMAIN Ecommerce had become a fundamental aspect of the overall commercial landscape worldwide. Business- to-consumer ecommerce sales in North America were projected to continue growing, with $660 billion in sales projected by 2017." By any metric, online shopping on desktop and laptop computers, and increasingly through smartphones and tablets, was changing the means and medium by which people around the globe purchased consumer products. Joyus was part of a new category of online commerce, online video commerce, which it had helped to pioneer. Online video commerce had been greatly influenced by the direct-response shopping models of the television era, featuring such archetypal channels as the Home Shopping Network and QVC. Traditional static ecommerce sites, such as Amazon, typically featured several photos of a product and All currency amounts are shown in U.S. dollars unless otherwise indicated. 2 Statista, "B2C E-Commerce Sales in North America from 2010 to 2017 (in Billion U.S. Dollars)," 2015, www.statista.com/statistics/241394/forecast-of-b2c-e-commerce-sales-in-north-america/, accessed May 17, 2015.Page 2 9B16M003 some reviews. In contrast, online video commerce, like its television predecessors, typically featured the product "in action," demonstrated and described by product experts in streaming online video episodes of one to three minutes. With the rise of YouTube and user-created video content, the use of online video in the ecommerce domain created a significant new opportunity to use premium video content to drive direct product sales, which Singh and her team were determined to exploit. Additionally, the overall online video market had also been growing at an unprecedented pace. In 2015, the average U.S. adult spent 76 minutes a day watching digital video, up from 21 minutes in 2011.' Furthermore, U.S. adults were now spending an average of 5 hours and 38 minutes per day viewing digital media (e.g., on desktop/laptop computers, mobile devices and other connected devices) compared with an average of 4 hours and 15 minutes watching TV, which had been steadily declining in the past four years. Increasingly consumers were viewing videos on their mobile devices, which already accounted for more than 50 per cent of all mobile data traffic.' In terms of monetization, the primary model to date was online video advertising for large brands. In the United States alone, digital video ad spending was projected to grow from $2.89 billion in 2012 to $12.71 billion by 2018. BACKGROUND OF JOYUS Joyus was co-founded in 2011 by Singh Cassidy and Diana Williams. Williams, formerly senior product manager and then director at eBay Inc., became VP of product at Joyus. They were joined by Gina Pell, an online fashion entrepreneur at Splendora (acquired by Joyus), who became chief curator. The early management team was rounded out with chief technology officer and VP of engineering Sin Mei Tsai, formerly of Silicon Valley tech firms Sheyna and SendMe, Inc. When Singh Cassidy co-founded Joyus, she was already experienced leader and executive. In 1992, she had graduated with an undergraduate business degree from the Ivey Business School at Western University in Canada, and then moved to New York to be a financial analyst for Merrill Lynch. Her career path would take her to Amazon.com from 1998 to 1999, financial software company Yodlee, Inc. (which she co- founded) from 1999 to 2003 and then to Google from 2003 to 2009, where she had been president of Asia Pacific and Latin America Operations. After Google, Singh Cassidy spent a year as CEO-in-Residence with a venture capital firm, Accel Partners. She joined Silicon Valley fashion start-up Polyvore as CEO in February 2010, before leaving after having strategic differences with the founder in September of the same year. Joyus was a popular U.S.-based online shopping site built around the consumer mission "to delight and empower women every day with compelling products, great advice, and easy entertainment." Since 2011, Joyus had grown rapidly, targeting the valuable demographic of urban, educated women, aged 30 to 60 (median age of 37) with annual household incomes greater than $50,000. With approximately 1.5 million page views per month and more than 400,000 registered members, Joyus was captivating this valuable consumer demographic. "U.S. Adults Spend 5.5 Hours with Video Content Each Day," eMarketer, April 16, 2015, www.emarketer.com/Article/US- Adults-Spend-55-Hours-with-Video-Content-Each-Day/1012362, accessed September 15, 2015. * Ibid. G. Sloane, "These Are the Digital Trends Everyone in Tech and Advertising Needs to Know," Adweek, May 27, 2015, www.adweek.comews/technology/these-are-digital-trends-everyone-tech-and-advertising-needs-know-165017, accessed September 15, 2015. "U.S. TV Ad Market Still Growing More Than Digital Video," eMarketer, June 12, 2014, www.emarketer.com/Article/US-TV- Ad-Market-Still-Growing-More-than-Digital-Video/1010923, accessed May 18, 2015.Page 3 9B16M003 Joyus's business model was based on using professional, high-quality production tools and techniques to create informative short videos on selected women's health, fashion and beauty products. Subject matter experts helped to demonstrate the products and provide information in an accessible and entertaining way. All of the products featured in the videos were available for purchase through Joyus's site. This catalogue of videos (600 to 800 new videos were produced in 2014 alone) was also syndicated to such popular online media publishers as People.com (the online version of People Magazine and AOL.com). Through these syndication partners, Joyus had the potential to reach 100 million unique visitors per month in addition to visitors who accessed the site directly. Joyus's main value propositions were offering a superior customer experience, namely unique, exclusive or desirable products; expert and entertaining content; a shoppable video platform and customer-centred service that included real-time inventory. By late 2014, Joyus was a busy company with approximately 35 full-time staff. Joyus's efforts in its early years focused on more fully developing the nascent direct-response online shopping model as it was the first player to launch the service. Through several rounds of funding, venture capital investors had invested more than $40 million, on the basis of Joyus's past and projected performance. Given the company's bold strategic vision, expectations were riding high on Singh Cassidy and Joyus. Joyus's Strategic Vision After extensive management discussions in late 2014, Singh Cassidy and the team had decided to develop Joyus's vision for 2015 and beyond. At this management strategy session, the team discussed several fundamental questions for Joyus moving forward: in ontix forl What kind of company do we want to create together? What kind of a network will we most look like in three to five years? . Who are our key competitors, and how would/should Joyus's strategy differentiate in an effort to win? What key values do we want in our team? What values and skills are essential for moving the organization forward, compared with what we have today? What categories make sense for us to pursue? While Joyus had already been operating successfully for several years, Singh Cassidy recognized that if Joyus was to grow and scale-up to the extent envisioned by the team and their investors, senior management would need to answer these tough questions regarding the company's strategic vision. When considering the answers to these questions, the team needed to remain true to Joyus's broader vision: "to delight and empower women every day with compelling products, great advice, and easy entertainment." This broad vision would help to frame and provide context around these tough organizational questions. The senior management team had debated at length the options between a more "platform-oriented" strategy versus a more "retailer-oriented" strategy. The platform-oriented strategy would focus on developing Joyus as a larger and more powerful shopping platform. For example, Joyus would concentrate on producing more video content showcasing more products with a growing number of subject experts. Joyus would then push that content out to a growing publisher network. Essentially, this strategy would prioritize scaling up and increasing the quantity of videos (while retaining quality). This outcome would have the company look increasingly like a "media" publisher. In contrast, a more retailer-oriented strategy would adopt a more traditional upstream retail approach, where Joyus would focus on carrying comparatively fewer but more exclusive products with greater margin and a narrower and tighter focus onPage 4 9B16M003 customers. Under this strategy, Joyus would be focused primarily on its own site, building higher merchandising capabilities in an effort to more deeply differentiate itself from other retailers. Ultimately, Singh Cassidy and the Joyus team decided that a platform-oriented strategy was the right choice and tailored their investor pitches accordingly. The platform-oriented strategy held far more potential for growing the Joyus brand and building on consumer awareness of Joyus's reputation as the premier women's online shopping site. Thinking toward the future, Singh Cassidy and the management team wanted Joyus to ultimately become a sustainable online video commerce network of premium content with robust monetization capabilities. Joyus wanted to own its distribution network and to be able to access its users directly. Joyus would continue to focus on women's beauty, fashion and health categories, while developing and expand the "home" category, which was consistent with its vision. JOYUS'S ORGANIZATIONAL INFRASTRUCTURE The strategic choice to become a more platform-oriented video commerce network was a bold and ambitious plan; however, it also meant that substantial changes would be required throughout the organization. Leadership at Joyus Singh Cassidy was an experienced leader, manager and executive, and had a tremendous amount of perspective, particularly from her time at Google, where she had learned how to scale. She was Google employee number 1,200 (approximately), and in six years the company grew to 26,000 employees. As president of Asia Pacific and Latin America Operations, Singh Cassidy had overseen tremendous international expansion and growth at Google. For example, during her time with the company, Google's revenue grew from $1 billion to $26 billion. Of course, working at Google meant having access to nearly limitless resources. "I was from Google . . . . I was hiring international CEOs away!" Singh Cassidy wryly noted. In contrast, her management team, and indeed the rest of the relatively small staff at Joyus, did not generally have that kind of growth and scale experience. At the time of the management strategy session in late 2014, Joyus's executive team consisted of six members (their approximate date of hire shown in parentheses): Sukhinder Singh Cassidy, co-founder and CEO (January 2011) Diana Williams, co-founder and VP of Product (January 2011) Sin-Mei Tsai, chief technology officer and VP of Engineering (January 2011) David Lazar, president and chief customer officer (May 2014) Jennifer Sharp, VP of Partnerships (September 2014) Gavin McLaughlin, VP of Finance (August 2013) inshow Singh Cassidy strongly believed that with the right management team and, more importantly, with the right leaders, Joyus would be able to achieve its goals of scaling up. Joyus's Culture Singh Cassidy and the management team knew exciting opportunities were ahead for Joyus, but they wanted to be sure that they grew in the "right" way. Although growth and scale were important to them and their investors, the team did not want to lose its sense of purpose or its sense of who they were as aPage 5 9B16M003 company. As with any company, the underlying identity of Joyus referred directly to its corporate culture. An important part of any corporate culture was a values system that clearly articulated the company's philosophy - in other words, what the company fundamentally cared about. By understanding the company's values, employees could figure out what was and was not important in the company - and why - which represented the critical features of both understanding the culture and being a part of it. In 2014, the management team introduced Joyus's corporate values system, which used the acronym POWERRS, standing for the following seven values: Possibility (be optimistic and open to possibilities) Ownership/Accountability (take ownership/accountability for your work and actions) Will (exercise willpower and perseverance) Excellence (strive for the best) Results (deliver results) Realness (be authentic and genuine) Service (serve the customers and each other) While this system served the organization well enough, Singh Cassidy grew concerned in the wake of the management team meeting at the end of 2014. The benefit of POWERRS was that people remembered it, but the challenge was whether or not it would serve Joyus adequately in the company's next phase. In their offsite session together, Singh Cassidy had asked her management team to re-evaluate this values system for where they wanted the company to go from 2015 to 2018. The core question was "What skills and values are missing in the company?" As can be imagined, Joyus was a fast-paced, competitive and, in some ways, an aggressive environment with oversight from self-described "hyper-critical" Singh Cassidy herself. As both the company's leader and also as a co-founder, she had high expectations from all her employees but especially from her senior management team. As she described it, "I can you give you the guardrails but you have to do it." As a result of her past experiences, Singh Cassidy knew herself and her own management style well. She described herself as a business development person, used to moving really fast and managing a lot of people, but also being very hands-on. For example, she once said, "If you walk into a meeting with me that you called and you don't have an agenda, then you're going to walk out with my agenda." She also said, more bluntly, "You either manage me, or I manage you, what do you prefer?" However, what was also clear was that Joyus was a company that thrived not only on creating exciting content and interesting solutions to complex problems but also on accountability, authenticity and delivering. Singh Cassidy was well aware that Joyus's culture was not for everyone, but it was an important part of its success. The challenge for Singh Cassidy and the management team in the coming quarters would be the numerous new hires, many of them engineers. Joyus was aiming to hire 17 new people in 2015, meaning that one- third of all of Joyus's employees would be new. While the San Francisco Bay area was rife with talent, it would still be challenging to find the right people who would fit well with Joyus's culture. Singh Cassidy and the whole team knew that defining what they were looking for in the next phase of the company, and the skills and values they wanted to attract would be critical to being successful in both hiring the new recruits and transitioning the current team toward their new strategy.Page 6 9B16M003 CONCLUSION Despite the numerous challenges facing Joyus, Singh Cassidy was energized. She and the team had crafted a vision of a bright future for Joyus. The recent round of funding meant that they had a great deal of investor confidence and financial support behind them. However, Singh Cassidy still needed to continuously communicate Joyus's vision, especially as the company continued to bring in new people. Important leadership, management and culture issues still needed to be addressed. Joyus was transitioning from a start-up to a powerful, substantial player in the online video commerce space. Singh Cassidy was not and had never been a "sit-and-eat-pizza kind of founder." Indeed, with Joyus's rapid growth, she was quickly resuming the strong executive leadership role over an all-star management team she had lived and breathed at Google for six years. She knew that the challenges ahead were shifting from lighting a fire under her employees to lighting a fire within them. However, consistent with the culture at Joyus, she was optimistic about the future. The Ivey Business School gratefully acknowledges the general support of the John M. Thompson Case Studies and Curriculum Development Fund in the development of this case