[HN Gopher] Tell HN: Amplitude (YC W12) just went public - AMA
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Tell HN: Amplitude (YC W12) just went public - AMA
HN- you are the community that convinced me to get into startups. I
wanted to come back and share what the experience of building a
company has been like from inception to public listing. I'll be
here for a couple hours to answer your questions. Ask me anything.
Author : sskates
Score : 351 points
Date : 2021-09-29 17:07 UTC (1 days ago)
| oakfr wrote:
| Follow-up question on your comment "my #1 recommendation is to
| get engineers regularly talking to people who could be your
| customers".
|
| Do you maintain this direct connection between customers and
| engineers today, and if so, how?
|
| How does the interplay with product/growth teams work?
| sskates wrote:
| Yes! It looks different when you're scaled as a company than in
| the early days.
|
| Product managers drive a lot of it, I expect that group to be
| spending at least 50% of their time talking with customers.
| They'll then bring in engineers when you have a higher priority
| or more technical issue as it's appropriate with customers. For
| particular features we have what we call "Customer Development
| Partners" who are the alpha/beta users for a feature as we
| develop the feature before we get to general availability and
| they'll interface with engineers. Shadi, our SVP of
| engineering, is also working on more ways to make this happen!
| rvz wrote:
| Well done and congratulations.
|
| Just like the Freshworks IPO which the CEO was inspired by a HN
| comment [0], it is good to see more founders getting their
| companies listed on the stock exchange and have gotten their
| inspiration from this site which is what I want to see here. Once
| again well done!
|
| And I also will be buying Amplitude stock at near market close.
|
| [0] https://news.ycombinator.com/item?id=28625322
| interblag wrote:
| Congrats on the IPO - Amplitude is a great product and the team
| behind it seems genuinely awesome.
|
| I had a question about your view on the enterprise software sales
| process? Currently I am avoiding upgrading from the free tier of
| Amplitude due to fatigue with negotiations - the whole "contact
| us for higher volumes model" is a bit exhausting.
|
| As someone who does this pricing model, I wanted to ask if you
| think it's optimal? Have you ever considered making your volume
| discounts transparent and allowing users to quickly understand
| how Amplitude pricing will work at scale? Are you just going
| along with the crowd on opaque pricing or do you genuinely think
| it's a better model?
|
| Appreciate your thoughts!
| zomglings wrote:
| Congratulations @sskates!
|
| My team has built a tool which can automatically add
| analytics/reporting to a code base (through code generation).
|
| I have heard that Amplitude tried this as well, but didn't
| succeed. I find that hard to believe. Is it true? If so, did it
| not succeed for business reasons or technical reasons?
| sskates wrote:
| It's possible to do and we've tried a few variations but it's
| so unwieldy that for 98% of cases we strongly recommend against
| it. Instrumentation isn't actually the hard part- it's managing
| your taxonomy. You're going to do that work at some point, and
| trying to sort through auto-generated events is much more
| difficult than manually instrumenting upfront. Maybe the
| technology has changed enough to make it possible though! I'll
| have my head of product reach out to compare notes as we'd love
| to talk more.
| zomglings wrote:
| Agreed re: taxonomy. Static analysis (at a massive scale) is
| the key to this - you can understand what code does by the
| code it calls, the code that calls it, and similar code
| available on public GitHub, Gitlab, etc. All these things
| induce a taxonomy on reported user actions.
|
| Sounds good re: talking. Would love to speak. Email is in my
| profile.
| rathboma wrote:
| Did you ever consider bootstrapping the business after growing so
| quickly to 1m ARR after your seed round?
| sskates wrote:
| No, I started a company to maximize my positive impact on the
| world. Maximizing my economics/ownership/control was secondary
| so there was no question we'd raise venture capital if it would
| help us scale (and it did to massive effect!)
| nthngtshr wrote:
| Tell us about your first enterprise sale. How far along were you?
| How did you find the customer? How long was the process?
|
| Also, congrats!
| sskates wrote:
| Our first sale was to an ex-Zynga founder of a casino gaming
| company (hey Bret!). We walked in, introduced ourselves, and
| went through the demo (note to past Spenser: spend a little
| time up front asking about their problems first!). We got to
| the end of it and he asked "how much does it cost?" I was
| shocked as I had never been asked that question before. I had
| in my head some number like $50/month, but I remembered
| patio11's advice to charge more and so I threw out the biggest
| number I could think of at the time: $1,000/month! He responded
| with "wow, that's really cheap" and we made our first sale.
| Thank you HN for the assist in that moment!
| raywu wrote:
| This is amazing. Thank you for sharing this story. As someone
| who failed a lot with B2B, I appreciate this. Also your
| bottom-up comment (startups rolls up into bigger customers
| over time through growth or acquisition).
| patio11 wrote:
| Thanks, that made my day!
| yehudalouis wrote:
| Hi Spenser! Congratulations by the way to you and your team.
|
| I've been working quietly on a project which I hope to turn into
| a product. When I speak with potential customers and users,
| they're very excited, but when I work with VCs, I receive the
| tired argument of "but XYZ incumbent pretty much dominates the
| market."
|
| That's fine, and I feel that I am differentiated enough, but I'd
| love to hear how in the early days of Amplitude you battled the
| "okay but what about Mixpanel" conversation?
|
| I'm fine with not raising cash for a while. I'd much rather put
| something out there and then have my user growth speak for
| itself.
| sskates wrote:
| Almost all of SV passed on Amplitude at one point or another. I
| remember one of them made a comment like "analytics companies
| pop up like mushrooms after a rainstorm".
|
| Raising our seed round was brutal. It took 6 months end to end
| and was one of the lowest points for me personally. I was
| trying to scrape together $1M in $50k chunks from any angel who
| would give us money. We ended up having to lean on our
| background as founders (MIT engineers, winners of the
| Battlecode programming competition) to convince the first set
| of VCs to come in.
|
| Once we started showing traction (0-$1M in ARR in 9 months) we
| went like hotcakes in our Series A and beyond.
|
| The real test is do customers buy. If you can show that
| everything will follow. VCs are weak predictors of market
| success. There's some signal, but they get it wrong almost as
| often as they get it right. If you close 3-4 paying customers I
| guarantee you they will change their tune. The incumbency
| argument is pretty weak IMO, particularly in B2B. Markets are
| so massive these days it's easy to carve out a large niche. For
| example, Freshworks went public last week even though
| Salesforce "dominates" cloud CRM.
| nedwin wrote:
| How much of that first $1m was mid-market/enterprise vs lots
| of smaller plans?
| sskates wrote:
| Deals ranged between $12-120k/year. We were very much the
| "deer" range vs rabbits or elephant hunting. The customers
| ranged from small to mid sized companies, we only had 2-3
| true enterprises at the time.
| hooda wrote:
| Getting first 1-10 paying clients is really tough. And
| with the $12k-$120k/year range, it might have been really
| tough. Would you be able to share how did you get those
| first few paid clients? Thanks.
| sskates wrote:
| Our first one was intro from a prospective investor.
| Second sent me an email after we launched on TechCrunch.
| The third one sent us the following email:
|
| "Hello -- we are a Mixpanel customer and evaluating
| alternatives right now and came across the TC article. We
| also use RJ metrics, so what you guys are offering is
| really compelling.
|
| I do have a question about what "custom integration"
| means on the feature breakdown by tier. Let me know if
| there is some more information about what that includes
| that I could review."
|
| After that I can't remember. Ex-Zynga product people were
| an early sweet spot for us and we're lucky we got on a
| few of their radars. It was then about finding our way
| into more similar situations.
| nojvek wrote:
| I'm an ex-Mixpanel employee. Congrats Spencer + Amplitude team.
| Competing with Amplitude raised the bar for the industry. Seeing
| that Amplitude was a SPA app that was very snappy, it was a core
| goal our team to make Mixpanel even faster and more flexible.
| Thank you for pushing us.
| tlb wrote:
| Do you have any screen shots from the first version you put in
| front of customers? It'd be fun to see how far it's come.
|
| I assume investment banks were trying to convince you to do a
| traditional IPO instead of a direct listing, so they could
| collect some fat fees. What were their best arguments?
| random123876 wrote:
| https://techcrunch.com/2014/02/20/real-time-mobile-analytics...
| sskates wrote:
| The other posts have some great screenshots of our product.
| Giraffe Graph! That brings me back.
|
| The fees are actually the same between a traditional IPO as
| well as a direct listing. We ended up paying $15M or so all in
| between everyone. The reason some banks push you to a
| traditional IPO is that their _real_ clients- public market
| investors like hedge funds who to repeat business with them,
| get a good deal on your stock.
|
| I heard all the expected ones: not having control over your
| price, wanting a monotonically increasing stock price, having
| the price trade up on the opening for good press. It's all
| bullshit, if you read any of the coverage on Amplitude we were
| able to achieve all the goals we wanted to:
| https://www.google.com/search?q=amplitude&tbm=nws
|
| My absolute favorite argument was that if you price too high,
| you price out people who will stick with you, and that will
| cause your price to be lower in the future than it would have
| been otherwise. Luckily, I did a year in the finance world in
| high frequency trading so they couldn't pull this one on me.
| That logic is the opposite of how pricing in a market works.
| High prices now are a signal that prices in the future are
| expected to be higher. If you want your price to be higher in
| the future, having it be higher in the present will increase
| the likelihood of that outcome. The thinking reminded me of
| Yogi Berra's famous quote: "Nobody goes there anymore. It's too
| crowded."
|
| I know a bunch of other companies planning to go public were
| watching our direct listing to see if it was a viable path and
| I hope our results convince them. Please reach out if you're a
| CEO and trying to figure this out!
| lifekaizen wrote:
| I'm glad you went direct. As a small retail investor it
| allows me to have access, and buying from employees and
| giving them some liquidity feels good like what a market
| should do.
|
| They also use restricted supply to keep the price high.
| Everyone's locked up, no supply, it's no wonder the price
| often jumps.
|
| Curious what you would say about pricing startup raises?
| There's a line of logic which says don't price too high, you
| never want a down round and that keeps the risk low.
| sskates wrote:
| Yes, you've hit on the other advantages of a direct
| listing! Retail investors get the same treatment as big
| funds instead of being shut out which I love. Everyone's
| also allowed to sell right away which so you know you have
| full market information AND it's much better for the
| employees.
|
| RE startup raises these are all what I call champagne
| problems (is it possible to win too much?). My philosophy
| is to aim for a little above (eg 20-30%) "market price" for
| what similar companies are raising at. If you go too much
| beyond that (eg 2-3x) then it can start to set the wrong
| expectations and it can get difficult to beat in the future
| even if you're doing well. It's not great to have
| misalignment with your shareholders (eg the investors who
| are now partial owners of your business). There is another
| train of thought that says to get the highest valuation you
| can, investors are professionals and will deal with it. So
| maybe I'm not bold enough. Either way, funding markets,
| particularly for startups now, are incredibly rich. They're
| probably 3x the valuation when we did venture/growth stage
| funding so you'll be in great shape no matter what.
| mtmail wrote:
| Oldest screen in web archive I can find is
| https://web.archive.org/web/20121204213532/http://www.amplit...
| "Welcome to our awesome mobile analytics platform!" with just a
| login form.
|
| Oldest landing page I can find is
| https://web.archive.org/web/20130529150217/https://amplitude...
| dang wrote:
| Hmm - I re-upped* this post after seeing it, but I wonder if
| Spenser is now busy with other things, since more than "a couple
| hours" have passed.
|
| In the meantime, Geoff's article from yesterday is here:
| https://blog.ycombinator.com/amplitude-w12-is-going-public/
|
| * a la https://news.ycombinator.com/item?id=26998308
| sskates wrote:
| Thanks Daniel! Sorry, I'm on it right now!
| dang wrote:
| Perfect!
| cwhatididtheir wrote:
| Just wanted to say thank you. We are still small and well within
| the free tier, your service is incredibly valuable to early
| startups and I look forward to returning the generosity as we
| grow.
| sskates wrote:
| I'm so glad to hear it!
| gregdoesit wrote:
| If I am not mistaken, Amplitude was the very first SV startup
| coming up with the idea of the 10-year post-termination exercise
| window, talked to lawyers who said it cannot be done, persisted
| and did it anyway late 2015, then open-sourced the approach for
| others to follow [1].
|
| Triplebyte made a splash by adopting a very similar policy months
| later in early 2016 (also discussed heavily on HN [2]) and all YC
| companies were recommended to adopt this approach off the back of
| Triplebyte starting from the W16 batch [3]. The rest, as they
| say, is history.
|
| Many companies on this extensive list of ones with 10-year post-
| terminiation exercie windows [4] might not have this policy if it
| was not for this know-how benefitting employees put out in the
| open - between Amplitude, Triplebyte and it spreading to YC,
| making this approach table stakes a few years later.
|
| Sir, I salute your for doing this not just for doing this for
| Amplitude employees (who no longer had a "golden handcuff
| pressure" after vesting their original grant - which is most
| companies actually see as a benefit, and a way to "leak" less
| equity thanks to leavers often not being able to exercise), but
| for a part in moving the tech industry forward.
|
| Legend!
|
| [1] https://amplitude.com/blog/employee-equity-is-broken-
| heres-o...
|
| [2] https://news.ycombinator.com/item?id=11198991
|
| [3] https://triplebyte.com/blog/fixing-the-inequity-of-
| startup-e...
|
| [4] https://github.com/holman/extended-exercise-windows
| sskates wrote:
| That is so cool! I had no idea it had gotten adopted so widely
| within YC. Wow!!! Be the change you want to see. I'm so glad
| the startup ecosystem is now adopting it as a standard.
|
| I'm so glad we did it- so many ex-employees are able to
| participate and celebrate with us this week because they didn't
| have to worry about giving up their options after leaving. The
| arguments for the old method of a 90 day window were so stupid.
| 1) I don't want to keep someone in indentured servitude if they
| don't want to be here 2) top talent is very savvy and more
| attracted to places that don't screw them over.
|
| I hope we can see the same for other innovations like more
| companies doing direct listings in the future. If you're a YC
| company figuring out how to go public, please choose a direct
| listing!
| hizxy wrote:
| Mixpanel is easier to use but I guess Amplitude has more
| functionality.
| costcofries wrote:
| Congrats on the IPO, I've been using your product for ~3 years
| and absolutely love it. It's hard to scale adoption in the
| enterprise but you've done impeccably well, happy to say I'm now
| a shareholder.
| stevenj wrote:
| Are you gonna buy a lambo?
| sskates wrote:
| The bankers advised me that getting a private jet would be too
| much but anything else was cool.
|
| Anne and I are not that flashy. Probably get a nicer house.
| Give some to family. Hermes handbags is as luxury as it gets
| for us.
| Jugurtha wrote:
| Congratulations,
|
| In addition to claudiulodro's question about whether the
| employees, especially the early ones, made a good chunk.
|
| - Could you explain the reasons you took it public? What were the
| parameters and different tradeoffs? Did you want to take it
| public? Was there a consensus? What were the conversations about
| that?
|
| - How long have you been preparing for and do you have a playbook
| for this?
|
| - Who did you hire to take it public, and how have you selected
| them?
|
| - What was your relation with the underwriters? How did you
| choose? What did you optimize for?
|
| - How has your cap table evolved from formation to now? How did
| you ensure fairness?
|
| - Hindsight is 20/20, but what would you differently?
| sskates wrote:
| Thank you!
|
| There are 3 main reasons we decided to go public:
|
| 1) The market opportunity is massive and we believe we are
| entering the "inside the tornado" phase where there are
| increasing returns to leadership. We're seeing more mainstream
| adoption of Amplitude as well as more companies giving a
| similar sounding pitch to us and we want every advantage we can
| have. Being public helps contribute towards that. As an
| example, we've gotten more press in the last 24 hours then we
| have in all of Amplitude's existence.
|
| 2) Having a liquid currency for our stock allows us to be much
| more aggressive about acquisitions and other similar moves.
|
| 3) You really should take your company public once you reach
| 100M in ARR. The expectation for performance across the board
| goes up and good companies rise to meet the moment. You're
| expected to do a better job of forecasting and planning your
| business, telling your story, sharing your long term vision,
| ensuring proper financial and legal oversight, and a lot else.
| Companies staying private so much longer has been bad for the
| them and for the ecosystem IMO.
|
| We hired Morgan Stanley as our lead investment banker. As we
| were meeting with different banks, they were the only ones who
| really understood my frustration with the traditional IPO
| process. They also have the most expertise by far with direct
| listings. I was expecting a lot of resistance to my views from
| everyone involved in the process but talking to them was like
| finding a partner who I wouldn't have to constantly fight to
| run the public listing process "my way". Colin Stewart at MS is
| also probably the single most knowledgable individual on IPO/DL
| capital markets in the entire world.
|
| I'll reply to some of the other questions in another comment.
| Jugurtha wrote:
| Thank you for your answers...
|
| > _As an example, we 've gotten more press in the last 24
| hours then we have in all of Amplitude's existence._
|
| The spike is certainly welcome. Would you attribute this to
| the product being invisible to consumers (not something to
| talk about), or that the company has focused more on the
| product and revenue until going public, and now it will "do
| press" (if this is too "forward-looking", a general view on a
| hypothetical company). How do you measure the impact of
| public relations in general on the company's objectives?
|
| Has the link between a flamboyant/controversial CEO and press
| been discussed?
|
| > _We hired Morgan Stanley as our lead investment banker. As
| we were meeting with different banks, they were the only ones
| who really understood my frustration with the traditional IPO
| process. They also have the most expertise by far with direct
| listings. I was expecting a lot of resistance to my views
| from everyone involved in the process but talking to them was
| like finding a partner who I wouldn 't have to constantly
| fight to run the public listing process "my way". Colin
| Stewart at MS is also probably the single most knowledgable
| individual on IPO/DL capital markets in the entire world._
|
| Was going with Morgan Stanley influenced by the fact Asana
| did the same. From what I've read, you were both with
| Benchmark and you're the second to do a direct listing there.
| Is it a "why change something that works"? If so, was there a
| "here's what worked, here's what didn't with Asana or Here's
| how to do it better next time"?
|
| Thanks again,
| sskates wrote:
| Alright, I'm back 24 hours later to finish out my responses!
|
| RE going public- yes, there was a lot of alignment between
| everyone internally about the advantages of being a public
| company. The main downsides are 1) cost 2) distraction to the
| rest of the company. Huge credit to our CFO Hoang and the
| internal team for getting it done in record time which
| minimized the distraction. The main debate was whether to do a
| direct listing vs traditional IPO which I've covered elsewhere.
|
| We sold about 25% in the seed, another 25% in the Series A
| (cumulatively 45%), 18% in the Series B, and then 10% in the
| Series C, D, and E, and 5% in the Series F. We also did a lot
| of employee grants along the way and were more generous than
| the median company. It adds up! It's not so much about
| fairness, it's about what sets up Amplitude to win. You can see
| the full cap table in our S-1:
| https://www.sec.gov/Archives/edgar/data/0001866692/000119312...
|
| I wouldn't have done much differently- you can see my reply in
| some of the other threads for mistakes in not talking to
| customers enough or with people.
| light_triad wrote:
| Congrats Spenser & team!
|
| I hadn't realised that you pivoted a couple of times before
| starting Amplitude. Do you have any advice for powering through
| in the early days and evaluating startup ideas to get beyond the
| dreaded 0 to 1 stage?
| sskates wrote:
| What I say here around not quitting is the most important one:
| https://news.ycombinator.com/item?id=28701942
|
| You'll get better at evaluating what directions will result in
| traction as you go through more ideas and spend more time.
|
| We went through 6 or 7 different ideas, including: outsourcing
| website, website for finding photographers, alumni map for MIT
| students, Sonalight voice recognition, before landing on
| Amplitude.
|
| Here's our application to TechStars for one of them when we
| were very early on which is funny to watch now:
| https://www.youtube.com/watch?v=4PIM5wWut5Q
| light_triad wrote:
| Thank you for your reply and for the links. Much appreciated.
| suhail wrote:
| Congrats! It was a fun many years competing & excited to see the
| space validated in the public markets.
| sskates wrote:
| Suhail! It's good to hear from you, thanks for the note. Let's
| catchup sometime.
| rnavi wrote:
| Would love to learn what were like three pivotal moments in the
| company's journey from startup to IPO
| hellbannedguy wrote:
| This isn't a question for the CEO of Amplitude.
|
| My question is to HN partipicants.
|
| Does anyone feel like the stock market is about to tank?
|
| I have a feeling we are going to see a lot of private companies
| jumping in before they can't. (This last sentance is not a
| question.)
| sskates wrote:
| Holy cow, we're still going 16 hours later! I'm on a flight back
| to SF today but I'll keep answering questions as I have time. The
| questions here are so thoughtful (even more than some of the ones
| I get from public market investors) so I'll keep going!
| neom wrote:
| Hi thanks for doing this. I've been very curious how the roadshow
| process is in the "covid era"? Any Golfstreams? (I also saw you
| did a direct listing, I'm not sure how that process differs from
| an underwritten IPO either.)
| sskates wrote:
| The roadshow is all virtual now. We talked to 32 different
| investors in 4.5 days. I tried to push for in person but almost
| everyone preferred Zoom and it was probably for the best
| because we could meet more people. The downside is it feels
| more transactional vs building a relationship. We still had to
| pay the bankers the same amount even though there was no
| private jet provided. What a rip off!
|
| RE traditional IPO vs Direct Listing, you hit my rant!
|
| The traditional IPO process sets you up to massively underprice
| your stock. Instead of selling your stock directly on the open
| market, investment bankers sell it for you. They're
| incentivized to give public market investors a "good deal" by
| advising you to price your stock low (because they do repeat
| business with them even though we're the ones paying for their
| services!). As a result, on average in 2020, companies that
| went through the traditional IPO process underpriced their
| stock by 50%.
|
| As a CEO I could never sell a dollar for 50 cents. It's against
| my fiduciary responsibility to my shareholders. I once heard
| one public company CFO call it "the largest arbitrage
| opportunity in all of finance". Why would I want to be on the
| other side of that?
|
| I strongly encourage all other CEOs at taking their companies
| public to go through this path.
|
| IPO underpricing data:
| https://site.warrington.ufl.edu/ritter/files/IPOs-Underprici...
| neom wrote:
| What a rip off!!!! I'd demand a free jet ride regardless.
|
| re: TIPO vs DL, points taken - the advantage in theory is
| that they're also basically incentivised towards market
| stability for your stock, and a return over time for their
| retail investors? (Not saying I agree, just, in theory)
| dbt00 wrote:
| > the advantage in theory is that they're also basically
| incentivised towards market stability for your stock, and a
| return over time for their retail investors? (Not saying I
| agree, just, in theory)
|
| Post hoc justification garbage IMO. It's not like the
| market isn't littered with the remains of tech stocks that
| went through a traditional IPO and still crashed.
| sskates wrote:
| Yes, exactly. I always joke that once you're out they
| won't even pick up your call as they're onto the next
| IPO. (I know that Morgan Stanley still has our back
| though!)
| shry4ns wrote:
| Congrats Spenser! Just curious to hear -- what do you expect to
| be the biggest differences in your role as CEO pre and post IPO?
| nkotov wrote:
| Congrats on going public! Would love to know what kept you going
| in those periods of times when things just weren't working out?
| dmarble wrote:
| Huge congrats to you and the crew, Spencer! Well deserved. It was
| always a pleasure working with your product and the people behind
| it at prior companies, and lobbying for more adoption as a
| result.
|
| 1. What are you most looking forward to (product/tech-wise,
| impact, financially for you, financially for the organization,
| etc.) that may not have been possible just a few years ago?
|
| 2. What do think are the greatest challenges you will have to
| face in your role as a founder-CEO and as a company in AMPL's
| next phase?
|
| 3. If you were starting over today, what ideas might get you
| excited enough to go at it again for the next decade?
| ablekh wrote:
| Congratulations! I'm curious about what equity management
| platforms have you used during your journey since 2012 and what
| platform you use now. I would venture to guess that the latter is
| Carta, since they have pre- and post-IPO support and relevant
| high(er)-end features, including private liquidity. Have you been
| offering liquidity in any form to your employees during the
| private phase of your company?
| SmellTheGlove wrote:
| I'm really surprised this thread isn't more active! CEO of a
| newly public startup opened a thread and is active in the
| comments. This is great stuff.
|
| - Just rewinding back to when you decided to get started - how
| did you convince yourself to leave a (presumably) comfortable,
| reasonably paying job to starting your own thing? It's that leap
| that scares me the most, so curious of your take.
|
| - If you have anything you'd care to speculate, what would be
| easier and what would be harder about doing a startup now versus
| when you all kicked off a decade ago?
| sskates wrote:
| I was doing high frequency trading before starting Amplitude.
| It was a great job: incredibly smart people, rewarding
| problems, great money and career progression. The only thing I
| didn't like was the ethos of secrecy in the industry.
|
| It was clear the long term potential of positive impact on the
| world was way greater through building a company than anything
| else. And if you didn't quit you were very likely to get there.
| One of the things that most resonated with me was one of the
| Airbnb founders talking about how they were having the same
| dilemma as you. But then they saw someone who had started a
| company and realized the only difference was that they had made
| the decision to start a company and that's what made them
| realize they could make the same choice. I wouldn't recommend
| it if you have other life circumstances like debt or
| significant family obligations that constrain you. But if you
| don't have that I think it's a great path.
|
| Better: Markets are way bigger and so the ecosystem has adapted
| around that. Funding is incredibly abundant (kids these
| days...). Information on how to start a company is more widely
| available. There's much more experienced help available.
| Tooling is much easier. What's crazy is people said the funding
| market was too hot in 2014:
| https://techcrunch.com/2014/09/05/its-time-for-vcs-to-run-to...
|
| Worse: Hiring is harder. There is a lot more competition but I
| think it's outweighed by markets being bigger. I think talent
| is still the rate limiting factor overall for the growth of the
| ecosystem.
| vladf wrote:
| Surely the hiring issue is a market inefficiency, then, no?
| There's got to be plenty of engineers out there, but maybe
| not for typical startup cash/equity structures.
| actually_a_dog wrote:
| When it comes to startups in particular, it might be a case
| of actual shortage. Not everyone wants to work at a
| startup, particularly in the earlier stages, even if comp
| is similar to what one could get in a public company.
| Couple that with the relative rarity of actually _good_
| engineers among the population of qualified software
| engineers, the fact that you don 't want to hire juniors or
| new grads at very early stages, and the general difficulty
| of hiring SWEs, and, although I'd like to see data before
| making a definitive statement, I can see how it could be
| many times more difficult to hire at a small startup than a
| larger and more established company.
|
| Does anybody happen to know whether data on this actually
| exists or not?
| sskates wrote:
| I believe a few things are happening:
|
| 1) The number of software engineers is growing quickly, but
| the market for software is growing even more quickly. So
| engineers are becoming more scarce relatively speaking and
| that pushes prices up. I don't know that I'd call that an
| inefficiency so much as markets working properly! OTOH,
| that's also why you see the explosion of coding bootcamps
| and alternative paths into the industry. Both my brother
| and sister in law did a coding bootcamp and 2x'd their
| salaries in 6 months! I don't think there's any sort of
| career investment you can make that comes close. So yeah-
| we haven't reached an equilibrium yet, there needs to be a
| lot more software engineers, and everyone is struggling to
| hire.
|
| 2) The market is not efficient at pricing top engineering
| talent in particular. It's hard for most companies to tell
| who the top engineers are (pg has written extensively about
| this). As a result, top engineers are underpaid by and
| large across the industry and companies that figure that
| out can get an edge. I've always said I'm for paying 10x
| engineering talent 2x above the average as you're getting
| 5x the value! You see a lot of FAANG taking this approach
| as well which is why salaries for the top end for engineers
| is growing at an outsized rate relative to engineers as a
| whole.
| mtc010170 wrote:
| Congratulations, I'm a user and big fan of your product! Three
| questions:
|
| 1) What was the hardest part of your journey to IPO?
|
| 2) If you could give just one piece of advice to early-stage
| founders, what would it be?
|
| 3) Of all the common startup mantras you hear repeated, what one
| would you would advise people to ignore?
| sskates wrote:
| Thanks!
|
| 1) It's not talked about much but this is an AMA so let's do
| it. Having to change our management team as we scaled. You have
| so much loyalty to people who made you successful it is brutal
| to have to hire a different set of people as you change as a
| company. This is true for almost every founder CEO scaling a
| fast growing business. Here's Larry Ellison talking about it:
| https://www.youtube.com/watch?v=HzZOfoHzju4
|
| 2) Set your life up so that you can stick with building a
| startup for a very long period of time. If you're not ready to
| make that level of life commitment then I recommend you don't
| do a startup! One of the things I found when I was researching
| what it took to be successful was almost every great startup
| would go through a period in the first few years where
| rationally they should give up (eg Airbnb founders selling
| cereal). For whatever reason they didn't and went on to find
| massive success as through sheer persistence. We spent a year
| on voice recognition app Sonalight and it didn't work out.
| There was no question though that we would keep going with
| Amplitude. It doesn't matter where you start out as a founder,
| by sticking around enough you end up learning so much and
| getting more formidable over time. Eventually you outlast most
| other founders who quit and go on to find success.
|
| 3) I need to think more about this one. Most of the stuff I
| agree with, the challenge comes in understanding what it means
| in practice. What mantras are you curious about?
| mtc010170 wrote:
| Wow, I really appreciate you taking the time to thoughtfully
| answer these. Thank you!
|
| There's no particular mantra I had in mind. Some examples
| would be to "do things that don't scale" or "fail fast" or to
| not focus on what your competitors are doing.
|
| I understand there's no one-size-fits-all of course.. and I
| suppose that's the reason I'm asking. I'm curious what in
| your experience has turned out maybe counterintuitive or
| where you went against the grain. And what standard wisdom
| you may look back on and say: "Wow if we had done what
| everyone had advised us to do.. I don't think we would've
| ever gotten here."
|
| Thank you and congrats again! Best wishes to you and
| Amplitude moving forward.
| sskates wrote:
| I think part of it is the foundational wisdom is by and
| large correct. The hard part is knowing which applies to
| your situation. One place I got tripped up on was thinking
| the answer to every problem was working harder, preparing
| more, and being more disciplined. It took me many years to
| figure out some problems needed a different set of skills
| (eg listening, setting expectations, running a meeting).
|
| One other place where it was correct to not listen to-
| everyone hated our market, particularly investors. We
| didn't listen to them. It was very clear to me that there
| was a big opportunity: usage of mobile phones was
| exploding, apps and web 2.0 was so different it would
| require a totally new form of infrastructure and tooling.
| Zynga, Facebook, Netflix were already embracing this
| approach and it was only a matter a time before everyone
| else did as well. I remember one very prominent venture
| capitalist told us they'd fund us but IFF we stopped
| working on Amplitude. We didn't listen to them, thank
| goodness!
| matsemann wrote:
| If I had a product page featuring either a horse-sized duck or
| 100 duck-sized horses, which would get the most clicks?
| koolba wrote:
| Definitely the horse-sized duck.
|
| Do one thing, and do it well.
| sskates wrote:
| This is beauty of data driven product- your users will tell
| you!
|
| I'm 60/40 on the duck, it's less confusing and more clear click
| target.
| jedberg wrote:
| Obviously you have to A/B test it and try both.
| [deleted]
| boringg wrote:
| Now that you have gone to the public markets for more capital
| (congrats on what look to be a good liquidity event), where do
| you see the company going from here, how do you get there without
| private equity incentives for employees (ie continuing to get
| good talent) and what are the greatest challenges going forward?
|
| Best of luck on the next stage of the journey in the public
| markets!
| sskates wrote:
| We're going big after the Chief Product Officer in the
| enterprise. We're in 26 of the Fortune 100 today and are going
| to figure out how to get to a majority.
|
| The levers you have available as a public company are different
| and I'm still learning them. Employee stock purchase plans are
| one thing we've already implemented that helps align incentives
| with company success. You can also be more aggressive about
| rewarding top performers with cash which is great. Sidebar:
| I've never met a great account executive who couldn't use more
| cash. If you want to make a lot of money in the next few years,
| come work with us as we take the market!
|
| I feel good about the massive market as well as our
| differentiation. The #1 challenge is getting the right team in
| place to execute successfully against the opportunity. When
| you're growing 50-60% YoY, you have an entirely new company
| every 2 years. There is such a high degree of variation between
| people that just because you're a high functioning organization
| today does not guarantee you will be tomorrow. My biggest lever
| on it as CEO is the leaders we bring into the business and so I
| spend a lot of time thinking about how to get that right.
| johnxie wrote:
| Congratulations, amazing product and kudos for continuing to
| offer the scholarship plan to startups!
| sails wrote:
| I can never read any of your blogs without disabling my hosts[]
| filter, as it includes amplitude.com
|
| Pity as they are great, so I often pass on them!
|
| [] https://github.com/StevenBlack/hosts
| carterschonwald wrote:
| Hey! i still remember when i was your TA a long time ago, mad
| props on IPOing :)
| pramodbiligiri wrote:
| What are your thoughts on the new idea of Product Led Growth [1]?
| Have you seen the role of Sales and Marketing in customer
| adoption change in recent years?
|
| [1] - https://www.productled.org/foundations/what-is-product-
| led-g...
| hashamali wrote:
| Hey Spencer, congrats on going public! I've been a happy
| Amplitude customer at several companies now. If you were starting
| a company today, what would you do differently from how you
| approached starting Amplitude?
| sskates wrote:
| That's so great to hear. Please keep us honest as we continue
| to grow!
|
| Ask for money for your product, even if it's incomplete. We
| didn't start asking for money until a year in because our egos
| felt we needed to have a fully functional product before
| charging customers. You'll get a lot of no's initially which is
| great because it allows you to focus on the very few yes'. If
| you're an engineer, make sure you're spending 50% of your time
| talking to customers because you'll always lean towards
| building product.
| pwillia7 wrote:
| Congrats! Been keeping an eye on you guys for a while.
|
| What kind of trade offs were involved in the direct listing? How
| confident were you that was the best way to list?
| brd529 wrote:
| What did you do to beat Mixpanel to IPO - when they had a couple
| year head-start?
| mathattack wrote:
| Congrats! Any string views on how pricing changes over time? (Do
| what it takes to get early reference customers versus maximizing
| long term revenue later on)
| plinkplonk wrote:
| Congratulations Spenser!
|
| From the YC article
|
| "But, in fact, they rather quickly settled on a different problem
| space that they understood deeply and which immediately resonated
| with their batchmates. It was also a problem for which the market
| had not yet, in Spenser and Curtis's opinion, come up with a
| great solution. Their chosen target was, of course, mobile
| analytics. This, it turned out, was precisely the right idea for
| the team. "
|
| How did you come up with/converge to this idea? what was the
| thinking process? TIA
| christophergs wrote:
| Thanks for doing the AMA!
|
| How did you discover your repeatable distribution channel, and
| what did it end up being?
| sskates wrote:
| The key thing to understand is it is a sales-led motion. As
| much as a lot of HN is not a fan of sales people, it is
| necessary for any buying process where there are multiple
| stakeholders involved. As much as I'd like for individual
| product managers to decide to adopt Amplitude, the reality is
| it needs the signoff of a full team to implement and adopt.
| What I have found is that product-led sales people are much
| more successful than other types of sellers at Amplitude.
|
| There's a lot of ways people find us: events, online search for
| our content, our free plan, partners, customer referrals. We're
| still figuring this out as we scale!
| HatchedLake721 wrote:
| What do you mean by product-led sales people?
| andrewljohnson wrote:
| It seemed critical early on that Amplitude basically made what
| MixPanel charged a lot for free, by providing a huge free tier.
| This is how my company ended up on Amplitude... and then we
| didn't pay for years, until we eventually ended up paying
| $40K/year then more.
|
| That pricing structure seems like a very long-viewed approach
| that could have easily been ruined by short-term product
| thinking.
|
| Was there ever internal or investor pressure along the way to cut
| or pare down the free tier?
| sskates wrote:
| It's great to have you as a customer. Make sure you give
| product feedback to our team!
|
| Most of the money in SaaS is in large clients in the
| enterprise. Almost all large SaaS businesses have been built
| that way (Salesforce, Adobe, ServiceNow, Workday). Once you
| figure that out monetizing smaller companies goes way down in
| priority and it's a better strategy to give your product away
| for free.
|
| For us in particular: 1) It was a great way to grab attention
| from Mixpanel and others in a crowded market. 2) A lot of those
| companies become large customers over time when their needs
| become bigger and more complex. Doordash, Instacart, and Rappi
| all started out that way and are now huge customers. 3) A lot
| of those companies and people at those companies get acquired
| by larger companies over time. Under Armour, Capital One, and
| Twitter were all companies where Amplitude was brought in
| through acquisition of a smaller company. 4) It's not that
| expensive relative to your overall cost base. I believe 8% or
| so of our server costs go to our free plan, which is
| significant, but worth it.
|
| We've never received pressure to do that, our venture capital
| shareholders are very aligned towards winning the market over
| the period of decades. We did get some stupid (IMO) questions
| about gross margin as we went public but no one ever gets down
| to the level of messing around with your pricing plan and free
| tier. If we were owned by private equity though it'd be a very
| different story. Those guys are experts at wringing blood from
| a stone.
| callmeed wrote:
| To be fair Adobe IPO'd in 1986, long before SaaS was a thing.
| I wouldn't say they quite fit the bill of "built by selling
| large enterprise software contracts".
| sskates wrote:
| Yes, but they later pivoted into SaaS and have gone on to
| dominate enterprise CMO budgets. It's one of the most
| impressive business model changes by a large company.
| jedberg wrote:
| I would. Back in 1986, enterprises paid for Adobe software
| (paid _a lot_ ) and everyone else pirated it. Piracy was
| the free tier -- you'd pirate it as a student or small
| business, then pay as you either got a job at a big company
| or turned into a big company.
| system2 wrote:
| I agree. Even at the small agency I worked as an intern,
| all Photoshop's were pirated. Not cracked but same serial
| with no online checking. Licensing for small companies
| wasn't a thing until online verifications became a thing.
| teej wrote:
| One of the mistakes Mixpanel made was to position themselves as
| a "better" Google Analytics. That meant a generous free tier
| without the benefit to search that Google gets.
|
| Amplitude, from the moment I was aware of it, was more about
| productizing the Facebook/Zynga style product analytics
| approach.
|
| I left Zynga for an early startup in 2011. At that time, I
| tried to use Mixpanel for acquisition and retention analysis -
| it fell woefully short. I wasn't able to use any of the built-
| in reporting.
|
| Meanwhile, I have been a mega fan of Amplitude from the first
| time I ever used it. It was built for the "product data" use
| case first, not as a Google analytics replacement. That
| positioning made it easier for them to demand premium pricing.
| sskates wrote:
| Thank goodness for the Zynga diaspora! Zynga was ahead of its
| time when it came to building data driven products. They were
| the first company to get it down to a science. We're lucky to
| have so many ex-Zynga product people come across Amplitude.
| You, Siqi, Bret, and tons of others were hardcore early
| supporters of us and we would not have been successful
| without you. Thank you, Teej, and keep the feedback coming!
| andy_ppp wrote:
| There are loads of products this applies to, I think trying to
| charge small clients too soon is often a false long term
| strategy especially if you have growth and a plan!
| HPMOR wrote:
| What advice would you recommend to a current undergrad?
| Jnfojfkmfim wrote:
| Congrats! How did you convince a VC like Sequoia to invest in
| you? What was the experience like working with them?
| robinjhuang wrote:
| Congratulations Spencer! Had a question about the early days. How
| did you keep everyone motivated during the early days of heads
| down building before you had real customers? Did you talk to
| customers during that time, and what best practices can you
| share? How did you communicate your vision to your team /
| investors?
| sskates wrote:
| We're more about execution than vision at Amplitude because
| that is my personal bias. The vision part has gotten clearer as
| we've grown.
|
| Even before you have any customers or a product, my #1
| recommendation is to get engineers regularly talking to people
| who could be your customers. They will get so motivated to
| build something that will solve their problems (at least if you
| have the right engineers). Potential customers love talking to
| engineers as well as they're the ones who can actually solve
| their problem. Once you get a win with an engineer solving a
| potential customer problem, that starts a virtuous cycle where
| the team wants to get even more wins. I always tell people our
| best salesperson at Amplitude is actually our best engineer- my
| cofounder Jeffrey.
| pototo666 wrote:
| Congrats.
|
| I just learned from this thread that Amplitude has more generous
| free tier than Mixpanel. I shall try it in my product.
| ignoramous wrote:
| Congratulations! So happy for you. I'm sure others in this
| community are too.
|
| Some Qs:
|
| In as competitive a space that Amplitude operates in, what were
| some decisions the company took during tough periods or in
| anticipation of dooms-day scenarios that you think proved
| invaluable?
|
| Consequently, what moments do you think would have killed
| Amplitude if not for luck or execution or vision or hardwork?
|
| What is that unique insight the competition still doesn't _get_?
|
| Thanks.
| sskates wrote:
| Overall success or failure rarely comes down to a single
| decision or single event. It's more about having enough
| compounding success and avoiding compounding failure.
|
| Probably our worst failure was our 2016 outage where we were
| down for an entire week. I remember thinking we would lose a
| big portion of our customer base. What we did really well was
| our outage response and customer communication. We proactively
| reached out to customers, fully owned the mistake, and were
| very transparent about what was going on. As a result we didn't
| churn a single customer! I later heard that some investors
| passed on our Series B as a result of our outage. Which is so
| funny to hear that now because it's such a stupid criteria to
| evaluate a company. It just goes to show how much sheep
| mentality there is in the investing world. Here's the retro:
| https://amplitude.com/blog/amplitude-post-mortem
|
| Product/product management is a new buying center in the
| enterprise. There will be a giant company built around selling
| to that function.
| raywu wrote:
| patio11's story on his idempotency issue which led to
| repeatedly calling customers' customers comes to mind [0]. He
| personally called all affected customers!
|
| [0] https://twitter.com/patio11/status/1405704339969220615?la
| ng=...
| claudiulodro wrote:
| Congrats!
|
| HN is always saying that working for a FAANG is better money than
| working for a startup even if it IPOs, so my question to you is:
| How did your employees make out during the IPO? Is the prevailing
| HN wisdom correct? Did your average developer employee that stuck
| it through with you on your journey end up with more or less than
| what they would have made working at FAANG?
| flashgordon wrote:
| So a slightly different take on this question is what is the
| highest "employee #" you would want to be under to make more
| money (in total including comp and level growth) than as a
| FAANG engineer over the last 9 years?
|
| PS: Definitely a huge congrats on this journey and outcome.
| sskates wrote:
| I'm going to try to answer the question without divulging how
| anyone individually did.
|
| I took a look at the initial 4 year option grants for the first
| 10 engineers (this doesn't count refreshers or other follow on
| grants). The average value at $50/share (yesterday's opening
| price) is just over $10M. The group varied in experience from
| just out of school to a few years working when they joined. I
| feel we were a good deal more generous than the median company:
| https://amplitude.com/blog/employee-equity-is-broken-heres-o...
|
| Someone on the FAANG side can figure out what the apples to
| apples comparison is. There's no question that in 90% of cases
| FAANG compensation is way better. If you are optimizing for how
| to make the most money over a few years you should absolutely
| choose FAANG. The real benefit of startups comes from other
| forms. If you asked that group of 10 I think they'd respond
| that being an early engineer at a start that IPOs gives you way
| more career capital and long term earning potential than FAANG.
| oakfr wrote:
| While I am happy for your company and for your first 10
| employees (congrats, really), I am not sure that looking at
| their return teaches us much.
|
| Joining a fresh startup as employee #10 (or less) is somewhat
| of a gamble (even at YC). The following data would put things
| in perspective:
|
| 1. How do the _average_ first 10 employees of a YC startup
| do?
|
| 2. How did the following cohorts in your company do?
|
| I am not trying to be negative here, but trying to put things
| in perspective. Congrats again!
| farmerstan wrote:
| To put things in perspective, in 1999 I joined a company
| that ipo'ed in 1997. The company's first admin assistant
| made enough from the ipo to buy a vineyard in Napa valley.
| I was employee 40 at a YC company and after exit I made 5
| figures whereas the founders made high 8 figures. YC
| definitely teaches the founders to keep a higher percentage
| of equity for themselves and distribute less to employees.
| sskates wrote:
| To be clear, it's the first 10 engineers, a very different
| group from the first 10 employees.
|
| No question that the economics of FAANG is way better than
| an average YC company. That's an easy one. I don't have the
| data, but the economic outcome is easily 2-5x, maybe more.
|
| Following cohorts of engineers are a fraction of what I
| outlined so the economics are different. It's too hard for
| me to do the work to get an exact calculation, but probably
| the next cohort of 10 engineers is something like 1/2 that,
| and then subsequent ones are down to 1/3 or 1/4. They're
| joining years later and so taking on much less risk at that
| point.
| oakfr wrote:
| Thank you for your reply. Makes sense.
|
| By the way, thank you for running this AMA and answering
| all the questions with so much clarity and transparency.
| What an example!
| caseyf7 wrote:
| While joining a FAANG in the past was most likely the richest
| path, that may not be true today.
| pm90 wrote:
| Doesn't this depend on yoe? Startups could certainly match
| faangs for early career engineers but the more experienced
| folks are likely going to get unmatchable offers.
|
| Not everyone cares about the money though. After a certain
| point you get tired of politics and process and just want
| to build things. A successful startup culture seems like a
| win win.
| swyx wrote:
| Here's the classic post on the FAANG vs startups debate,
| for the uninitiated
| https://startupljackson.com/post/135800367395/how-to-get-
| ric...
|
| >If you want to get rich, your best bet on a risk-adjusted
| basis is to join a profitable and growing public company.
| Google for short. Make $200-500k all-in a year, work hard
| and move up a level every 3-5 years, sell options as they
| vest (in case you joined Enron), and retire at 60, rich.
| This plan works every time.
| sskates wrote:
| I completely agree with the linked post!
| hnmullany wrote:
| Yes, now would be a great time to join Amplitude.
| tehlike wrote:
| An engineer 6-7years into their career can pull more than
| 1M$/yr in FAANG.
| farmerstan wrote:
| I have a close friend at Uber pulling in over $1M/yr. He
| joined just before IPO so he didn't benefit from share
| appreciation.
| Hermitian909 wrote:
| For the actual top tier of compensation in tech (out of
| FAANG only Netflix is a part of that band) I think it still
| is. This year I've seen multiple engineers get ~500k offers
| for 4-6 yoe with no particular specialty, just general
| competence.
|
| High end of Staff appears bumping into the million dollar
| range once bonuses come around at some of these places.
| gkop wrote:
| Extended exercise options tilt my scales back to start ups.
| [deleted]
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