How the Factory, a Janus Friis-backed product incubator, wants to reinvent startup building

Do you know that feeling when your job turns into just another job? Todd Berman was at that point a few months ago. Berman had been CTO at Rdio, the music subscription service backed by Skype co-founder Janus Friis. And as employee number one, he had essentially built the service from the ground up.

But at some point, Berman ran out of hard problems to solve. The service was up and running, and engineering challenges had become business tasks. “I’m not even solving software problems anymore,” he recalled when I met him in San Francisco this week. “I’m solving people problems.”

That’s not exactly what Berman had signed up for, and so he decided to take the plunge. But instead of just jumping ship and founding yet another startup, Berman launched a new kind of product incubator called the Factory that aims to reinvent the way startups are being built. The Factory is based in San Francisco, like Friis-backed Rdio, and Berman is joined by Rdio’s outgoing VP of Product Malthe Sigurdsson, who is in the process of transitioning from the music service to the Factory.

Here’s how things are going to work at the Factory: A team of around 20 people will work on three or four products at a time, launch them, tweak them, find a market — and then recruit a separate group of people to run those companies and take them to the next level. “The goal here is to iterate quickly,” Berman said, which is why he began to work on the first project two weeks ago, before the team is even complete. And in a novel twist to incubation, everyone at the Factory will have equity in any of the companies being spun out.

The Factory’s serialized product creation is also an answer to something Berman and Sigurdsson have seen happen to many startups in their early stages. Instead of focusing on innovation, engineers are forced to reinvent the wheel over and over again to create yet another sign-up mechanism, contact list or sharing feature. “The way software companies are being built is incredibly wasteful right now,” Berman told me. The Factory wants to solve this problem by repurposing a lot of components, and writing code from day one with reusability in mind.

That approach was also informed by the development of Vdio, the video service operated by Rdio that came out of beta this week. Vdio was originally developed by a separate startup that initially operated as Project WBS until GigaOM revealed the company’s existence in late 2011. However, most of that team was let go when Friis made the decision to align Vdio more closely with Rdio in the spring of 2012.

That’s when Rdio’s engineers took over the development of Vdio — and Berman said this week that it was essentially a reboot. “Vdio was completely rebuilt,” he told me. But instead of starting from scratch, his team reused a lot of Rdio’s architecture, which made it possible to launch the service into private beta within six months.

As for Friis, the Skype co-founder remains closely involved with the Factory. Sigurdsson said that he’s not only the sole backer of the company but also its biggest champion. “That’s exactly what he wants to do,” Sirgudsson told me. “He wants to build stuff.”

Image courtesy of Flickr user Man Alive!