Hello, everybody, this is Cortland from AndyHackers.com, where I talk to the founders of profitable
internet businesses.
In each episode, I try to get a sense of how the founder got started with their business
and with entrepreneurship in general, and the goal is to learn what goes on behind the
scenes so that the rest of us can learn to build our own successful companies.
Today, I'm talking to Spencer Skates.
Spencer is the CEO and co-founder of a San Francisco-based startup called Amplitude.
Thanks for coming on the show, Spencer.
Absolutely, Cortland.
Super excited to talk to you in the audience.
You know, it's funny, I wish AndyHackers had been around when we first started.
That was like seven years ago where I first got into startups, and I spent a huge amount
of time just reading the stories of early stage companies and how they got started and
all of that.
So, definitely super excited to kind of pass along what I've learned since then.
Yeah, I'm super excited to have you.
I think Amplitude is an awesome company.
The way that I would describe it is that it's an analytics tool that you plug into your website
or your app and it will tell you exactly how your users are behaving so that you can make
better decisions and build a better product.
Is that an accurate description?
That's right on point.
Yeah, we think of ourselves, I think just stepping back for a second, you know, I think
a lot of people hear the word analytics and there's like hundreds of analytics companies
that all do pretty similar sounding things like, hey, we're going to help you make better
decisions and, you know, we are the most scalable and the easiest to use UI and we let you ask
the most in-depth questions.
But our focus is a very unique one, which is we focus on the product.
We focused on helping you understand how your users are interacting with your product so
that you can build a better product.
So being able to say, okay, well, let me understand the level of engagement people have.
And then more importantly, let me understand what's behind that, so why people are engaging
or not engaging with the product, how the usage of different features impact things
like conversion or long-term retention.
So that ultimately you can take that and use that to understand how to improve your product
and to ultimately build a better one.
Yeah, I would love to deep dive into this a little bit later on, because I think there's
a lot of confusion around when exactly people should be adopting these analytics tools and
how they can get the most out of them and get the right data for their companies.
So just a subject that I'd really love to pick your brain on.
No, absolutely.
It's interesting.
I think it's definitely not something that makes sense in every use case, and there's
definitely a time and a place for it, so happy to talk about it.
Can you give us a sense of how big you guys are as a company or your revenue or how many
people are using Amplitude?
We have tens of thousands of products that send us data.
And we have hundreds of enterprise customers on the enterprise side.
We've grown the company.
We launched it four years ago, since then, and we've grown quite a bit.
We have 100 folks that work here today.
We just raised our Series C of $30 million about five or six months back.
And now we're on a trajectory to keep up and continue that growth.
So we've done pretty well over the last few years.
That's a tremendous amount of progress to make in just four years.
One thing I really want to get into is how you became who you are today, because today
you're running this business with 100 employees.
You're raising tens of millions of dollars from investors.
How did you decide to become this kind of person?
Was there a point in your life where you just said to yourself, hey, I can be a tech founder
if I want to?
Yeah.
Well, one, I really appreciate that question, because I definitely think it's not one that
enough people ask and talk about, and something that I spent a really long time thinking about
before jumping in.
So it actually started back when I was in school at MIT.
One of the things I realized coming out is that you could decide to do almost anything
in life, and not that that's going to be easy or you can do everything, but hey, you can
play whatever character you want to play.
And so I spent a really long time thinking and trying to understand, well, what do I
know about myself and what do I know about what's important for me to do?
And not to get too much into the philosophical, but I realized a few things about myself.
So one is just like, I've always been motivated and ambitious and driven, but at the same
time I've always wanted to do that on my own terms.
And then the other big one was that I saw the people who were most successful in their
life and I wanted to understand common themes.
What was it that really successful athletes or entertainers or business people or researchers
or anyone in life, what was it that they had in common?
And the one big thread that stood out to me was that they all were in it to do it for
something beyond themselves and they really wanted to help other people.
And so what my takeaway from that was I realized that, okay, well, hey, I want to set up my
life in a similar way.
And I saw a lot of people who were very unhappy with their careers and where they had gotten,
whether it's they had gotten into medicine or something else and they had chosen it because
they thought it was prestigious or they thought their parents wanted them to do it or they
felt that they could make a lot of money.
Because on the flip side, the people who were the happiest and most fulfilled and the most
successful were doing it because, hey, they wanted to help other people or they wanted
to make the world a better place or they wanted to serve others.
And so that was just a really, really strong thing that resonated with me when I was trying
to understand what my role in life was.
I spent some time looking around and one of my takeaways was that the best way for me
to create something that helps other people is through building a company.
And that was going to be the most impactful way that I could do that.
Because if you look at who I was, well, I was a new grad coming out of school.
I knew some coding.
I had seen other people take that path and that was going to be the most impactful way
I could help others.
I looked at a bunch of different industries at the time.
I was looked at consulting.
I looked at finance.
I actually spent a year in finance before coming out and starting a company.
I looked at going to a big tech company.
I looked at going into academic research.
And out of everything out there, I found that, hey, starting a company is by far the highest
leverage way to impact other people and being part of an early stage company.
And so I ended up looking at a bunch of other folks at the time who had done that.
So the founders of Dropbox were a few years ahead of me at MIT, Patrick and John at Stripe
were from MIT.
And so it was like there's a bunch of folks that with very, very little experience or
training kind of came out and made these massively impactful companies.
And so I said, hey, is this something I'm capable of doing?
So I spent a long time reading lots of stories about early stage startups.
I read Jessica Livingston's founders at work on a bunch of books like that.
And after about a year of research, I was like, you know what?
I think this is something I'm capable of doing and I could quite honestly dedicate my life
to for sure the next few years of my life and maybe if that works out the longer term.
So for me, it was really about, OK, hey, how do I make the biggest impact that I can?
And the cool thing about starting a company is that as we scale, it's like if we're successful,
that's a really good thing for so many folks.
It's a good thing for all the people that I get to work with.
It's a good thing for me, my co-founder.
It's a good thing for all the customers that we help.
It's a good thing for investors.
It's a good thing for the broader startup environment.
So it's just a win on so many counts.
It's like, yeah, I wouldn't rather be doing anything else.
That's such a great answer.
And it's funny because I bring a lot of people onto the show when I think one of the most
common pieces of advice that I hear people say is, hey, stop reading, stop thinking,
just jump in and do it.
And you, on the other hand, are a very analytical guy and your approach was to spend a lot of
time reading.
In fact, you have a very dedicated and thoughtful research path that you set out for yourself.
What would be your advice for aspiring founders who might be completely inexperienced but
trying to learn more?
I mean, you mentioned reading founders at work by Jessica Livingston, but is there anything
else you would read or things you would pay attention to?
Startups at work was great.
There's Startups Open Source, which is kind of the next gen version of it.
I know a lot of the stuff that you have on Indie Hackers is great.
Just being able to understand the really, really early stage stories of as many startups
as possible.
I definitely think if you want to start a company, go do it.
There are a lot of folks who spend tons of time just reading and talking about doing
it but don't actually make the leap.
And there's nothing that gets you more progress on starting.
If you know starting a company is what you want to do, then go do it.
The piece of advice that I will give is that the place that I don't see people spend enough
time is that just being really thoughtful around who they are and what they want to
get out of life, and that's more life advice than startup advice in particular.
That's something I wanted to make sure I've—I don't know.
That's just my personality and who I am, but that's always something I wanted to make
sure.
Actually, one of the very influential books that I read before was—I don't know if you've
ever read Meditations by Marcus Aurelius, but a lot of what his philosophy has been
resonated with me just about how to live a good life.
I'm all for spending a really, really long time being thoughtful about what it is you
want to do and why.
I think too many people will just jump to the next thing every year and only spend a
week or a few weeks thinking about it without deeply reflecting on who they are and what
their role is in life.
You think about how many years you spend over the course of your career, right?
You're likely to work for like 30, 40, in some cases 50 years, and so that's a long
time.
Not that the career is the only thing, but it is a big part of your—it will end up
being a big part of your identity as a person, and so spending the time to be really thoughtful
about that is—I see a lot of folks who really don't spend enough time on that and end up
kind of jumping from thing to thing and are continually unhappy because they don't introspect
at the level that I would for myself.
Exactly, and if you start from kind of what you want your life to be and what you want
to get out of life as a human being, then you're much less likely to later on find
yourself in a situation where you're working on something that ends up conflicting with
your goals and the kind of person that you want to be.
Exactly.
Yeah, you can be—one of the things that was cool that I realized is you can be—you
always watch movies—you see movies or TV shows of these people who live crazy lives,
whether as doctors or lawyers or in the military or business people or stars or whatever, and
what I realized is you could literally choose to be any of them.
You're not going to get there on day one.
It's going to take many, many years or decades in some cases to get to the place you want,
but you can choose to be any character you want, and so being thoughtful about that is
super important.
It's actually a really cool anecdote that if you don't mind, I'd love to share.
Go for it.
So one of the most inspiring stories to me when I was trying to figure out how to spend
my life was I was trying to read about people who had impacted the world in a really big
way, and there was this one name that really stuck with me.
It's this guy named Norman Borlaug.
Norman Borlaug, he was the Nobel Peace Prize winner in 1970, and what he did was he was
an agriculture expert, and he started his career in the 50s and 60s, and what he wanted
to do was he wanted to bring best practices around farming and how to grow crops to the
developing world.
At the time, the population growth was exploding, so we were at like three billion people or
something like that and adding a billion every decade or two.
The rate at which people would grow was really, really fast, but the problem was that if you
looked at how much food was available to feed those people, it was actually limited.
There was not enough farmland just in the entire world to feed everyone and to feed
the growing population, and so you had this exponential growth curve of people, but then
you had this limited food supply, and it's like, okay, well, what's going to happen?
There is a bunch of famous books written about this exact problem.
One famous one is called Limits to Growth, and it just talked about how the future would
be a really, really bleak one and how that we'd run out of resources and there'd be mass
starvation and disease and famine and war, and the few people left would be fighting
over what limited resources they have.
Anyway, so that was the prevailing thought at the time, and the only way to combat that
was to enact huge population controls, so basically limiting people, how many kids they
can have, just really horrible, awful things.
What ended up happening, as you know today, everyone alive today, it's like, hey, we have
seven, eight billion people around, and by and large, people are fed.
There are definitely folks who still go hungry, but those are problems more of distribution
than of just the total amount of food available.
The reason that we're able to sustain the population that we have is because of largely
the efforts of this one guy, Norman Borlaug.
What he did was he went down in the late 50s, he went down to Mexico to do a bunch of research
on how to bring modern farming techniques, and he created this special strain of wheat
that ended up being much higher yield.
It had a bunch of characteristics, it was disease resistant, it was high yield, it had
this other attribute called dwarfism, which is important for crops.
As a result, Mexico's wheat farming quadrupled over the course of a few years, and they went
from a food importer, they'd constantly have to import food from the United States to feed
the growing population to a food exporter.
That was huge, now it wasn't a worry.
Food stability and production and being able to feed the growing population wasn't a concern.
Then a few years after that, he went to India, he did the exact same thing there, and India
was even in worse shape than Mexico at the time.
India had just gotten independence, it had split with Pakistan, you had this massive
growing population with a super poor country, just the recipe for disaster in so many different
ways.
He did the same thing and as a result, India became self-sufficient in terms of food growth
and it was like two and a half X in terms of the overall ability to produce food.
Then after that, he went to Pakistan, he went to Africa, he went to a few other places to
create new strains of crops and bring modern farming techniques.
As a result, if you look at the net impact of what he's done, it's super clear that he
saved probably hundreds of millions of lives, if not a billion lives.
For me, that's real impact.
This guy saved, we talk about making a billion dollars here in Silicon Valley, real impact
is saving a billion lives.
That story really stuck with me and resonated with me.
He got the Nobel Peace Prize in 1970, but not many folks understand the impact he has
to both lots, hundreds of millions of people, but even more like our trajectory as a human
race.
If I can have a tiny fraction of the impact that someone like that has had on the world,
that would be incredible.
It was like, hey, sign me up, I'll dedicate the rest of my life, no question and I will
be totally confident in that.
That's really important because I think a lot of folks go through life and they end
up realizing what they want is very different from what they're doing.
Being able to find something where you can say, hey, let me dedicate my life to this
without having any doubts about that or having any regrets about what you do is super important
and a good way to find long-term success.
When I look at what we're doing here at Amplitude, definitely not on the nowhere near on the
scale of an impact of someone like Norman Borlaug, but I think about my talents and
what I'm good at and it's like, what do I know how to do?
Well, I know how to build and sell software, so let me do the most good as we can through
that.
That's such an inspiring example and also such a difficult person to compare yourself
to when you're planning out your life.
It's pretty rare, especially for people who haven't had any experience to have a successful
business.
It's pretty rare to have success right out of the gate, but the failures that you have
early on can often teach you lessons at a deeper level than you would learn just by
reading about what other people are doing.
In that spirit, I'd love to get a sense of what were some of the first companies that
you started before Amplitude and the project that you worked on that may have ultimately
failed to take off.
Yeah, absolutely.
I didn't know anything, I was just a kid starting out of college and so I didn't know anything
about anything about starting companies.
It was like, okay, how do we even pick something that's worthwhile to work on?
I convinced my co-founder, Curtis, who was a really close friend of mine from MIT to
leave his job at Google and we said, okay, well, what should we work on?
We worked on a bunch of different projects, but one of the first real ones to get traction
was this one called Sonolite, Sonolite Text by Voice.
It was a voice recognition application that helped you send and receive text messages
by talking to your phone.
The idea was that this was a safe way that you could interact with your phone while driving
because you didn't need to press any buttons or look at your screen.
You could just have a conversation with your phone and send and receive text messages.
We launched actually right around the same time as Siri, which was a really good thing
for us because a lot of people were looking for a similar type of experience on Android.
That was the very, very first idea that we worked on.
We didn't know anything about voice recognition.
We didn't know anything about mobile or mobile apps.
We didn't know anything if this would be a good bet, a bad bet, anything in between.
We were just like, hey, this doesn't exist.
We think we can build it and it'll improve.
It'll help some people, so let's do that and take it from there.
We started that in summer of 2011.
That was a little six and a half years ago from now.
We launched the product and it was awesome.
We got thousands of downloads.
We were really excited.
We ended up getting into Y Combinator as a result of that.
We were in the winter 2012 batch.
Coming out of Y Combinator, we had this really cool demo day presentation.
It was like a really slick demo day presentation where we'd show off the technology and I'd
take my phone.
I would be like a magician doing a trick to the audience.
I'd take my phone and I'd show it to the audience and then I'd put it in my jacket pocket and
then I'd be like, look, I'm talking to my phone and having a conversation with it without
touching it at all.
This is the coolest thing ever.
This was before Amazon Alexa and Google Home and all that stuff.
It was a pretty cool demo and the entire room was like, whoa, this is so cool.
Curtis and I felt top of the world and we were really, really jazzed about like, hey,
we did this really cool demo and we have this really cool piece of technology.
On top of that, we had the most mentions, the most press mentions coming out of demo
day out of any startup in that batch, out of 60 startups and there were some really
good companies in that batch.
We were like, whoa, this is awesome.
We're the best.
We fulfill their dream of starting a company.
Nothing can go wrong.
Yeah, exactly.
We did it.
What happened is I'm still not doing so well today, so it looks like things ended up going
out in a very different direction coming out of demo day.
We had a lot of press, which led to even more downloads and more users, but what happened
really quickly is users would not stick around in the product.
They would use it, it'd be a cool tech demo, it'd be a fun piece of technology, but they
would not integrate it into their day-to-day lives.
Very, very few people would actually continue to engage with the app for more than a month.
As a result, after all that press and all that users, our user base actually started
shrinking.
We looked at this and we were like, in panel, we're like, oh my God, what's happening?
I thought we're on this exponential curve and it's no longer happening.
What's going on here?
Because we were engineers, we spent a lot of time digging into the data and we really
wanted to understand what was going on.
We ended up spending about half our engineering effort because we were facing, after coming
off this big high from demo day, we were facing the death of the company in some sense because
users just wouldn't stick around.
I was like, oh man, it made me a failure.
I had spent a year before this building startups up as this big thing in my head and I thought
it was going to be this really, really successful thing.
My parents are worried that like, hey, I gave up a good job in finance and all my friends
are doing really cool jobs at their companies and getting paid a lot of money and I'm not
getting paid anything and I don't even have anything to show for it after a year working
on Sonolite.
I was just in this really, yeah, really hard place where it's like, yeah, I just don't
know if like, yeah, it's kind of questioning, okay, what my purpose is and if this thing
is for me.
Anyway, so that was kind of going on and we ended up doing this, trying to understand,
okay, well, why was it that users were not retaining?
We ended up, unfortunately, all the tools on the market at the time wouldn't do this
out of the box for you and so you had to spend, we had to kind of build their own systems
to do that and we ended up finding out that the best predictor of long-term, whether you'd
retain in the app or not long-term, was whether the voice recognition actually worked and
as it turns out, the voice recognition did not work that well.
So a good number of like most users actually would have a number of failed recognition
attempts within the application or they accumulate a good number of failures over time and so
after that happened, after you got enough failures, you wouldn't actually continue coming
back to the app because it's like, well, you know, I could try to have a conversation with
my phone and send a text message, but it gets it wrong so often, it's not even worth it
and so that was the core of our retention problem and then we looked into voice recognition
and we said, well, like it's going to be really hard for us to just two engineers be able
to improve the quality of the voice recognition and so we were like, okay, well, like this
doesn't make sense as an idea to work on, let's go work on something else and that was
a hard moment because all those emotions that I talked about earlier kind of built up in
that moment and we weren't sure if we would be able, it's like, okay, we have one thing
that didn't work out and a bunch of side projects even before that, that were pretty hit or
miss and so would we even be able to find something that we would be successful about?
I read some of the things that you posted online about this period of learning where
you spent a year just trying to prepare yourself to become a founder and to decide if you really
could be a founder and one of your biggest takeaways you said was that almost all successful
startups have this point about a year to a year and a half into them where things look
hopeless and the founders should probably have just given up.
Was that this point for you guys?
Yeah, absolutely.
That was probably, that was definitely and we were lucky in that, you know, I had spent
a lot of time reading the stories of startups and so we recognized that, okay, we worked
on this thing for a year, it didn't work out, that's okay and we can still find success
and in fact, the path to success will almost certainly have an event like this along the
way and that's okay.
We ended up, yeah, taking what we had learned from building analytics and as we had showed
it to a few people and they had expressed interest, they weren't as interested in the
voice recognition technology but they were actually pretty interested in the analytics
because they had the same problems in their product where they were really trying to understand,
okay, well, what creates a successful product and how can I understand how my users are
interacting with it?
That was a moment for us where we were like, hey, you know, I saw a lot of other companies
that had gone through the same sort of failure so the fact that we didn't have something
that worked out even after a year was okay and so if we were willing to stick it out
for longer then, you know, it'd be pretty likely that we could eventually find some
sort of success and so that was a kind of big turning point for us saying that, okay,
it's okay that sunlight didn't work out, let's go work on the next thing.
Yeah, I think it's so helpful to have that realization before you get to that point as
well because I think if you end up, you know, running into this road bump and then you talk
to people and they're like, oh, don't worry, this happens to everybody, it's kind of small
comfort versus when you're like preparing for that to be, you know, something that you
run into and it happens and you think, okay, I was ready for this, you know, it's just
a matter of pushing through, you know, the admittedly very dark place that you're in
and finding the next thing to work on.
Kortland, I totally agree with you.
I think even outside of startups and a lot of businesses I see, you know, even if you're
starting kind of like a restaurant, you know, it'll take a year of no success to actually
find to get to the place where you have the potential shot at success later on and that
is just kind of the barrier to entry in my mind.
I think it's interesting to think about the sort of dichotomy between on one hand, starting
with the exact product that you want to build and having a very specific mission and on
the other hand, kind of stumbling into a really successful and promising business idea and
then sort of having to grow to actually care about it over time.
Do you think you fit more into the latter category since amplitude was something that
you guys really didn't start off building and you kind of just stumbled upon it?
Yeah, absolutely.
You know, definitely it was not like super intentional that, you know, it's not like
we had this grand vision for what products analytics would become from day one.
We definitely have come to realize what the real opportunity is and that like, you know,
hey, the way people build products today is pretty messed up and that there can be a much
better way for them to understand how to build a great product.
And so that has come to us, but it took us, you know, it's taken us like five years to
get there and to figure that out in the really early on.
We actually really focus on mobile analytics.
That was the big focus of the company because we had saw, hey, mobile is growing a lot.
The needs of people on mobile are pretty different from the needs of the analytics tools that
came beforehand.
So let's create something custom for that.
And that did not morph into, you know, it definitely it took a while for that to morph
and shape into what amplitude is now.
And now we have a vision of where we're going and like why we had the potential to have
this massive impact.
But especially at the time, we were just like, hey, this is an immediate problem that we
see needs solving.
Let's take a stab at it and see where it goes from there.
So one of the interesting challenges with that is at the same time that you're trying
to figure out what you want your company to be and what kind of impact that you want to
have, you're also trying to solve like the very practical problems of growing and, you
know, hiring.
So over the early days of amplitude, like when it was just you and your co-founder,
and what kind of concerns were at the top of your mind back then?
Yeah, so the biggest one that I think that we took away from Sonalite is we didn't spend
enough time talking with customers.
Like we did some user research studies where we just like had people use the application
and see, you know, what worked and what didn't.
But like we didn't really spend time getting to know our customers.
We spent probably 95% of our time building and engineering things, and we spent very
little time interacting with customers.
And so when we started amplitude, it was like, all right, let's change that and let's flip
that.
And so let's actually see if we can spend too much time talking to customers because
everyone says you should talk to customers more.
Let's take that to the extreme.
You know, let's see if we can talk to if it's possible for us to talk to customers too much.
So before we built anything, we said, okay, for the first month, let's set ourselves a
goal of talking to 30 people who could potentially be customers of the software.
Not build anything, not have anything to demo, not have any product, let's just get out there
and talk to people who have this problem.
And that was huge.
That like did a bunch of different things.
One, it gave us much more conviction that, you know, if we built something, it'd be useful.
Two, it really helped us understand what was it that frustrated people about existing solutions.
I remember back then, the big name in mobile analytics was Flurry.
And there are all sorts of issues with Flurry about the data being inaccurate and not being
in real time.
The sorts of reports that you were able to get out of it being very limited.
That it convinced us and it gave us a path to say, hey, we know if we solve these problems
that there will be people that will find this useful and be willing to pay us money.
That was a big change.
And so we started off, yeah, just talking to people for building anything.
Once we did that, it was an iterative loop for about a year after that, where we alternated
between talking to prospective customers and then we built what they asked and then we
gave it to them for free.
And then we asked them, okay, well, what would make this really useful to you?
So then we went back and we built that and we just kept doing that over and over again
for about a year.
We started to get a real understanding of analytics as a problem and how do you scale
a system to massive data volumes and how do you really build something that's useful for
people?
The one mistake I would say we've made is we didn't ask for money early enough.
And so we'd end up spending a lot of time building something for someone when they didn't
really value it.
So that would be the... I think it was definitely great that we got out there and talked to
a lot of prospective customers, but the one really big mistake is we didn't ask for some
amount of money.
You don't have to ask for much, but just some amount of commitment from their end that they
value it.
Even like $50 or $100 a month would have been a really big deal.
And that would have allowed us to focus in because we spent... The one big mistake is
I would say we spent a lot of time building for people who didn't really have as much
pain as we thought they did.
They'd say they had the pain, but when it came time to like, okay, well, let's actually
see how much you're willing to pay to fix this pain while nothing at all, okay, well,
we probably shouldn't build for you.
Let's go spend time talking to other people.
And I think we were kind of so afraid that nobody would want our product that we weren't
willing to say no to people who we should have said no to.
So that was the one mistake, but we probably could have gotten through that phase faster
if we had gotten in front of that, but it was fine.
We ended up doing this really good loop of building, giving that to more people, taking
their feedback and building more and so on until we had something valuable as an analytics
product.
All of the insights that you just said are so valuable and so important to have.
And it goes back to what I was saying earlier, which is that you can spend a lot of time
reading stuff.
And I totally advocate.
I'm analytical as well.
I think you should read things and you should be prepared for what's to come.
But there's something about actually doing it.
It's so easy to hear people say, talk to your customers, and you think, yeah, yeah, yeah,
that's great advice.
And then you don't do it.
It's so easy to have retention issues and to hear about retention issues and not really
worry about them.
But once you've actually experienced those issues, once you've actually experienced the
benefits of talking to customers, then it's so ingrained into your soul at that point
that you just don't make that mistake again.
You become a lot more resistant to it.
So I think learning from experience, this is the part of your story that really shows
how valuable that is.
Yeah, absolutely.
I mean, there's definitely a lot that we got wrong.
Obviously, choosing Sonolite as an idea and going through the ups and downs of that, then
we definitely could have been a lot faster in starting up Amplitude.
But there was no real way for us to understand that and internalize that and appreciate that
without having to go through that as a failure.
If you just told me at the time, hey, you should spend 50% of your time selling the
product and asking money from customers, I wouldn't even have known how to do that.
And it was going through the pain of not being able to do that that eventually led me to
like, okay, let me really step back and see what it would take to fix this as an issue.
I think what's also cool is that you guys are so conscious about understanding where
your weaknesses were and sort of almost overcorrecting for them.
When I started ND Hackers, for example, I had a very similar situation where I looked
at everything I'd done in the past and thought, geez, Cortland, you spend way too much time
coding and you can get so sucked into the coding that you don't do anything else.
So I'm only allowing myself to work on an idea that involves very little code so that
I won't even be able to fall prey to that problem.
Yeah, that's absolutely right.
Yeah, I think just having the ability to look at what you've done wrong in the past, and
of course that requires having past failures and experiences, and then having a discipline
to correct for them is extremely underrated.
One thing you mentioned was that you were going through this loop for about a year where
you would talk to customers and sort of build these things for free and see how they reacted.
Were you consciously going through this loop or was it just something you sort of ended
up doing?
Oh, absolutely.
It was definitely a conscious decision.
So the thing about great engineers is that if you're an engineer, your natural instinct
is to solve a problem.
And so if someone says, hey, I have a problem doing this, you're just always like, hey,
I can fix that for you, let me build something that can help solve that.
And so that part is easy.
And all you have to do as an engineer to add on to that is like, okay, we'll go talk to
customers.
The only asterisk I would have added in this case is ask them for money as well.
You don't have to ask them for a lot, but just ask them for something.
Then just alternate between those two things.
And if you keep doing those two core things really well, if you understand what people's
problems are and then build something to solve them and you do both of those things really
well, then yeah, that is the core motion of success for any software business.
Anything else that people think is starting a company doesn't really matter.
You don't really need to market yourself.
You don't need to have a great product strategy or the perfect messaging or, hey, I need to
sort out all of these things on my finances.
It's like, no, no, no.
All you got to do is build the product, sell it, build it, sell it, build it, sell it.
That's it.
That's the core.
When you're very, very early on, that's the core motion that will lead to building a successful
company.
It's such a simple model for an engine that will run your company.
And I think it will appeal to a lot of developers out there who don't necessarily want to spend
a lot of time doing other things that might end up being unnecessary for them to learn.
Yeah.
If you're an engineer, the only thing is get in front of customers.
And then if you can't ask them for money, I definitely wish I had.
But at least getting in front of customers is a million times better than not.
So how were you guys funding yourselves during this entire period of exploration and building?
Were you still living off of the money that you got from YC the year before?
Or did you guys raise additional funding?
We raised a tiny amount of additional.
It was not much.
It was like $70K of additional funding.
Curtis and I were lucky in that we had saved up a bunch of money from the year.
He was at Google for a year, and I was in finance for a year, and I had managed to save
up some.
We both managed to save up some money from those experiences.
And so we were able to live on that plus the money that YC had given us.
In fact, we didn't even pay ourselves salaries for about the first two or three years.
I can't even remember.
It was like two or three years before we even started paying ourselves anything, and it
wasn't even that much when we got to that point.
So we had just saved up the money from the jobs that we have.
Both Curtis and I were relatively frugal people.
We were just very cheap on the apartment and on our lifestyles and on everything.
And we were both also lucky not to have any debt from student loans or anything else.
As long as we didn't spend a lot of money, we could sustain ourselves just based on what
we had saved up.
Yeah, that's such an important thing to do because you just give yourself a bunch of
extra chances to succeed that you wouldn't otherwise have if you were eating through
money so fast that you had to quit in six months or three months.
That would be one piece of advice.
If anyone feels really passionate about starting a company and wants to do it, I would say
do it.
The one exception I would say that you should probably strongly consider not doing it is
if you have a lot of debt for whatever reason or you don't have, you're not able to live.
You have debt or bills or whatever else you have to pay off.
So that's kind of the one exception I'd say of the role of start a company if you want
to start a company.
It's one of the cool things about being a programmer too and why a lot of programmers
end up becoming tech founders.
In addition to the obvious reasons because if things don't work out, you've got a solid
skill set that you would always kind of fall back to.
Absolutely.
Yeah, especially as an engineer, you have no reason to worry about not being able to
find a job or find opportunity.
So one of the cool things I think about your story and the success that you've had with
Amplitude is that analytics is an extremely crowded space.
You mentioned this earlier that it seems like there's new analytics tools popping up all
the time.
And even on this podcast, I've talked to Josh Pickford at Baremetrics, I've talked to the
guys behind Segment, Dr. David Darmon at Hotjar, and you at Amplitude, and you guys are all
doing extremely well despite kind of the fierce competition.
Why do you think that is and how worried were you about your competitors early on when you
were first starting?
So we're not.
I mean, we're always paying attention and all of that, but for us, it's like as long
as we're solving problems for our customers, then you don't really have anything to worry
about for competition.
Stepping back, I think one of the mistakes people make is they use pre-existing terms
to kind of bucket everything into a market.
So people think of it as a market for analytics, but that's actually a really deceiving way
to looking at what's going on because analytics is just a tool to help you accomplish something
else.
And I'm super excited to work on analytics for the sake of analytics.
Once you start thinking about, okay, well, how is the analytics used and why is it used?
There's actually very few people that we compete directly with.
So within the realm of product analytics, when you think about helping product teams
build a better product, we think of it, while there are hundreds of companies in analytics,
we think of ourselves as the only one or one of the only ones out there that does product
analytics.
And so while yeah, analytics is like there's hundreds of companies for solving the problem
of the product team, there's very, very few.
And so if you can understand that like, hey, I'm solving this person's problem in this
very specific way that other folks are not and they're coming to me because I'm the best
thing for them, then it's not really like, yeah, you just don't worry about the competition.
It's kind of like I think of Slack and Slack is a great example of this.
If you think about messaging tools, there are hundreds or thousands or probably even
more than that of messaging tools and applications out there, whether it's email, text message
or things like WhatsApp or chat applications or hip chat from Atlassian, there are hundreds
or thousands of messaging tools out there, but that's not the problem that Slack solves.
Slack is really focused on helping teams collaborate better and they think that that problem hasn't
been solved.
And as a result, they've found a niche within that for themselves that they've been the
best at and the most successful at.
And so in the same way, we found product analytics for ourselves and we feel we've been the most
successful at that.
And so as long as looking at it in terms of, oh, what's the market, like that doesn't make
any sense at all, think about, okay, well, what problem am I solving for who and like
am I, yeah, am I, is there a group of people out there who I can solve a problem for and
as long as there is like, yeah, you don't have to worry about competition or anything
else just whether you can solve that problem for that group of users.
I think that's such a good way to look at it.
And you know, there's so many early stage founders who are motivated and excited to
start something new, but they're not sure what to work on.
And I think the default thing is for people to say, okay, well, let me look at something
that doesn't exist at all.
I need to do something that's completely unique and unheard of, whereas when you look at companies
that are more successful, a lot of them do fall into these buckets where it seems like
they have a ton of competitors and it seems like they're not all that unique, but they're
actually providing a lot of value to specific people.
Yeah, the mistake is that you're looking at it and we had this with Sonalite as like,
hey, I have to do something totally new and novel.
And the way to look at it is instead is like, hey, I have to solve a problem for someone
that is not solved for them right now.
If you look at it from that perspective, then yeah, man, people's wants, Cortland, people's
wants are unlimited, like humans will always want more stuff.
And so as long as you, you know, have something that they, as long as you can solve a problem
that they have that hasn't been solved for them yet, then you're in great shape.
Yeah.
And it kind of goes back to the story you told about the guy who kind of revolutionized farming
and helped so many people.
I mean, farming wasn't exactly new.
It wasn't like he was inventing something that no one had ever even conceived of before.
He was taking things that worked in one place and bringing them to other people who want
something similar.
Exactly.
He solved the problem of, hey, we don't have enough food and food production within the
developing world.
That's the problem he solved.
And, you know, a lot of the farming techniques he used in terms of creating crops that were
high yield and robust and, you know, disease resistant had already existed with the United
States and Western Europe and a few other places.
But he was taking those solutions to places that hadn't solved that problem yet.
So as long as you're solving a problem for somebody somewhere, that's all that matters.
So let's talk about analytics for a little bit.
And I know you're biased because obviously you run an amplitude, but what's your philosophy
on how people should use analytics tools and get the most out of them, especially early
stage companies who might not, you know, be in a place where they have a product that's
even worth making incremental improvements to?
So I'd say the first thing is before we even talk about analytics or anything else, the
first thing is make sure you're talking to your customers.
And that's even something that we still do today here at Amplitude.
If you look at how our own product team spends its time, they actually spend way more time
talking and interfacing with our customers and prospective customers than they do in
analytics.
We still, we definitely use analytics quite a bit internally, but we spend even more time
talking with customers.
So if you're going to choose only one thing to do when you're early on, talk with an interface
with your customers.
And I just want to interrupt here for a second to let people know, because I know we keep
saying talk to customers, but for some people it's not obvious why you need to do that.
And my take has always been that, well, as a founder or a creator or product person,
you don't know exactly what people find valuable.
And it's very difficult for you on your own to just sort of magically come up with all
of the answers, right?
And so when you talk to people, you're actually learning what they value.
And so you prevent yourself from spending months or years headed in the wrong direction
because you're focused on building your hypothesis for what it is that your customers want, as
opposed to the reality of what they want.
Yeah, the key, this, I'm currently glad you said that, because this is actually really
important for those listening and who are wondering why people keep saying talk to your
customers.
The really important thing to understand, the difference between when you're at another
job or when you're at school, working on things, is that in the world of startups and, you know,
business, the problems are not well-defined.
And so defining the right problem is a job and super important in itself.
And we have the saying here at Amplitude, which is that product's job is not actually
to come up with a solution.
Product's job is to define the right problem.
And so recognizing that that's a hard thing in itself, defining the right problem, I think
the false expectation that a lot of people have is that, hey, they're going to hand it
the ideal problem down from the heavens and the perfect definition and know exactly what
it is to build perfectly for all things.
But the reality is you don't know at all.
You don't know what problem you should solve.
And viewing that as like a, hey, it's actually, you're never going to know perfectly what
problem to solve.
And so viewing that as a thing you always have to invest in, just like, hey, you always
have to continue to improve your product and ship more code and make improvements.
It's like you always have to update your understanding of the problem and really invest behind that
as a thing in itself.
Just knowing the right problem to solve is like massively valuable and like basically
avoids all the situations you were talking about.
You know, if you don't know what the right problem to solve is, it's like you solved
an incredibly hard math problem, but for a test that just didn't matter or like, you
know, there wasn't even a test around it or like you don't get credit for it.
So you only get credit for solving problems that people actually have.
And those are unknown by default, you just don't know what they are.
And so viewing things as, hey, I always need to spend time updating my understanding and
definition of the problem I'm solving as like a task in itself is super important.
And I would say spend half your time doing, that's what talking to customers is.
That's what sales is.
Sales is uncovering the problem of the person you're talking to.
You don't know that by default.
And so spending, you know, I would view it split your time between the two.
It sounds crazy to spend half your time defining the problem, but that's actually how you should
think about it.
Spend 50% of your time talking to customers and to update your understanding of the problem
and define the right problem and spend 50% of your time solving it.
Because the worst is you define a crappy problem that nobody needs to solve.
And you spend 95% of your time spending the wrong problem.
So that would be the challenge I have to anyone who's starting a company from an engineering
background is to spend half their time defining and understanding the problem they're solving.
I think that's such a great way to look at it.
And I liked that you mentioned sort of the misleading experience that you get by being
an employee at a bigger company or being a student where...
Yeah, you're handed problems.
You're handed well-defined problems.
Exactly.
You have these well-defined problems and there's this entire layer that exists between you,
the programmer who's implementing the solution, and the people who are actually talking to
customers and understanding what problems customers have.
And it's easy to fool yourself into thinking that you understand that.
Exactly.
That's exactly right.
So, first of all, companies need to understand their customers and talk to their customers.
But what else can they get out of analytics tools?
Because I think the most common thing that I hear from founders, especially the founders
of early stage companies, is that they set up their Google Analytics, they set up Segment,
they set up Amplitude, they set up whatever tool they're using, Mixpanel, and then they
don't know what questions to ask.
Or they kind of just look at the metrics and they don't really change how they're building
their companies.
Is there such a thing as being too early stage for analytics or are they just using the tools
wrong?
I'd say if you're already talking to customers and you have a few thousand users or more,
like on a daily or weekly or monthly basis, then that's the right time for you to start
using analytics.
If you're earlier than that, if you only have a few hundred users, or if you're not talking
to your customers yet, don't use analytics.
This is coming from an analytics CEO, so you know that even with my biases, that's what
I'd say.
So that's the first thing.
Now, once you get beyond a few thousand users, it becomes very impractical to interface and
interact and talk with them all directly.
And so that's where analytics comes in and it's very, very powerful.
The way I'd look at it is if you don't know what to track or how to track or how to think
about it, the first thing you want to do is focus on your attention.
A lot of people focus instead on their daily active users, but the problem is that's the
output.
The input to that is your product and how good your product is.
And the best measure of that is the retention of your customer base.
And so the way to view your users is someone has taken a lot of time and gone out of their
way and out of all the things in the universe, they landed on your thing and they found your
thing to solve their problem or what they think solves their problem and they started
trying it out.
And your ability to retain people, to convince those people that you can solve their problems
and they keep coming back is the best indicator of whether you have, you're actually building
a good product and solving people's problems.
And so the first thing I would focus on once you get to the stage where you can actually
start thinking about analytics is understanding whether your users are coming back and retaining.
And if they're not, if very few of your users are, then that's a problem.
The standard, the benchmarks vary by industry and are all over the place on this one.
But if you want a very simple baseline, the standard baseline is that I use with folks
is that after the first day, so after using it for a day and then 40% of users should
come back the next day of your new users.
And then 10% of those should still be around by day seven.
So if you're hitting those benchmarks, then you probably have a good, then you have a
good product.
But if you're below those, then you should be much more introspective and ask yourself,
why is it that people are not coming back enough?
What is it and spend time understanding that?
Now from an analytics, there's a bunch of ways to understand that from an analytics perspective.
With amplitude, what you'd want to look at is what is it that people who retain have
in common and what is it people that people who don't retain have in common?
So typically what you'll find is you want to look at what features people use and you
want to look at what features that people who retain use versus those who don't retain.
And that will tell you the difference.
It will tell you, hey, these features are really valuable and I should emphasize them
in my product and these features are really not.
So a quick example of that is there was this mobile app named Calm, one of our customers
who was an early stage startup.
They've since grown quite a bit and they wanted to understand this exact same thing.
They wanted to understand how can I improve my retention?
They looked at a bunch of different features that people used and they found a really interesting
feature.
This is one feature that if you used it, you were three times as likely to retain long
term as if you didn't use it for the baseline.
But the interesting thing is only 1% of their user base actually used the feature.
And what the feature was, it was a reminder.
So Calm is a meditation app that helps you achieve mindfulness and it walks you through
a bunch of meditation sessions.
And the feature that these highly retained users used was a reminder to meditate at the
right time.
And the really interesting thing is that they had buried this behind three or four different
screens within the application.
And when they saw that data, they realized that like, hey, this reminding people to meditate
at the right time is actually as important, if not more important than the entire rest
of the application that actually guides you through meditations.
So they took that feature, they brought it to the front of their application.
And as a result, they massively increased their attention.
And that was huge because they created a better product from understanding what features were
really valuable to people.
So that's a really small example of the process of how to go about using analytics and product
analytics to create a better product.
I'm really curious about those numbers that you got 40% retention by day two and 10% by
day seven.
Did those numbers come out of your personal history building products, or is it something
that you've noticed and analyzed and working with Amplitude customers and trying to help
them?
It's actually been around since before Amplitude has existed.
This came from the gaming industry, which is a pioneer, has been a pioneer with analytics.
If you look at some of the stuff that, say, Zynga did in 2011 or 2012, they were very
much thinking about all these different things.
It's been since reinforced by a lot of what we've seen with the products that we work
with.
And if you have less retention than that, you really want to focus on increasing that
and nothing else.
But if you have more than that, that's when other things can become higher priority.
So yeah, that's one of these analytics industry standard benchmarks that we've seen and we've
found to be true.
So we're running kind of toward the end, I've got a couple more questions for you if you've
got time.
One of the first is that I saw an interesting talk last year by Gail Goodman, who runs this
company called Constant Contact.
And her talk was the long slow SaaS ramp of death.
And she was basically talking about how at her company, they constantly had to find new
growth channels.
Because whenever one started working too well, they would eventually sort of exhausted and
hit the point of diminishing returns.
Has that been true of you guys and Amplitude?
Because you guys have grown so much.
I mean, the number of products you have sending you data and employees you have at your company,
you have to imagine that you've been through several stages.
Or has it been just kind of one smooth, uninterrupted path of growth for you guys?
It definitely has been where we've had to find new growth channels.
I think one of the things is that we're less sophisticated than you might think at finding
channels for us to grow.
And that's still something we're trying to understand.
So we've had really good success with two things in particular over the last year or
two.
One of them is just reaching out directly to folks.
So reaching out to folks who have product analytics as a problem and just sending them
an email and just saying, hey, are you having any of these issues?
If so, we'd love to talk more.
And then the other one that we found to be helpful is what we call product analytics
summits, where we spend a bunch of time hosting an event that teaches people the basics about
product analytics and what product analytics is and some examples of how to do it.
So those have been the two that have been most successful for us in recent history.
I definitely think it's something that I'm not an expert at.
I think I came from the build and sell that those are the two things that I know how to
do really well.
So that's something that we're still developing our good ability to do.
But it's absolutely true that the thing, the way that you get your first ten customers
can be pretty different from the way that you get next hundred from the next thousand
and so on.
I think it's, especially as you get bigger, there's no playbook for exactly how you're
going to grill your particular company and acquire the users that you want and you always
have to sort of be experimenting and trying new things.
Actually one of the comments I do want to say on this is, I think one of the funny things
is I don't know if you know Dropbox has this referral program where if you refer someone
you get more space.
I don't know if you're familiar with that.
Yeah, super famous.
Everyone tried to emulate it for years.
Yeah, exactly.
So everyone's tried to emulate that and I don't think I've heard of a single other instance
where that has worked.
And my big takeaway, I remember it like, yes, I was at a panel of Y Combinator founders
a few months back and everyone had said how, you know, people asked the question that you
did and were about, you know, what channels are successful and everyone said, hey, they've
tried out the Dropbox referral program and it didn't work for their product.
And my takeaway for that was that the way that you reach your audience is just so different
by industry.
It's almost, it's good to know what other people do, but it's impossible to just take
what has worked for another company and customer and user base and apply it to your company.
And so you just need to figure out, okay, what are effective ways to get in front of
people who have the problem that I solve.
And that's very, very different.
The channels that you're going to use on that are very, very different.
So don't try to be Dropbox, you know, don't try to be amplitude, just try to be you.
Sage advice, be you.
I usually end these episodes by asking you to give advice to early stage founders, but
I think you've given a ton of advice.
So let's do something different here and I'll ask you to tell me a story, but not a real
story.
What I want you to do is pretend that you are Spencer skates, but the ideal version
of yourself 10 years from now in 2027.
What is your life like?
Ooh, that's a really hard one.
You've got two minutes, well, that's, that's an interesting question to think about what
things are like 10 years ago.
And that's something I care a lot about getting right.
It's so hard to look out.
You know, I can barely tell you what's going to happen next year.
Uh, nevermind, you know, a few years out, nevermind 10 years.
What I mean is who do you want to be in 10 years?
I would say in terms of who I want to be, you know, I love this amplitude to go on,
uh, to continue to be successful.
We continue to grow.
We continue to solve this problem, uh, of helping people build better products.
And you know, I think there are a lot of really interesting things way beyond analytics that
can help people build better products that we have the potential to do.
And we have an opportunity to do it for successful.
So I would love for us to get the opportunity to tackle some of those.
Oh, I think we got to get the product analytics problem solve first.
So I think, yeah, if amplitude continues to grow, uh, you know, Hey, I, I, I want to,
yeah, no matter, well, no matter what happens to amplitude, it would be awesome if 10 years
from now I could, you know, we could amplitude and, and me as a part of it could still be
around and we're still successfully helping other companies build, but you know, if I
do nothing else in my life, but help companies build better products, I think that's awesome.
I would say I definitely don't know a lot, you know, there's a lot of, there are a few
things I know for sure that about myself in 10 years and what I'm going to be like, like,
you know, I know, um, I'm going to really care about, you know, making the world a better
place and helping other people.
I know that that will probably still be true.
I know I'll, I'll still be, uh, motivated.
Um, other than that, you know, it's really hard to say, uh, you know, it's really hard
to understand what I'm going to be like in 10 years and what the Spencer of then 2027
is going to want.
Um, but you know, at least I'm hopeful that if I can continue, uh, making amplitude a
success and making everyone here at amplitude a success and making all our customers successful,
um, that would be awesome.
Well, I wish you the best of luck and I hope you continue to make your customers successful.
Can you tell listeners where they can go to learn more about you personally and about
the things that you're working on at amplitude?
Yeah.
So, um, me personally, that's a good question.
I've done some AMAs in the past, so if you just Google me, uh, you know, there's, I think
I did one, uh, with a product community a few months back, um, uh, if you just want
to learn more about product analytics, that we have a ton on our website at amplitude.com.
I'm always super happy to help out folks in the early stage.
So feel free to reach out to me direct, um, and happy to provide more perspective and
advice.
And that's one of the things I definitely owe to the community because there are a lot
of folks that helped me, uh, when I was early stage.
So I'm always more than happy to help out folks.
Feel free to send me a note directly at Spencer at amplitude.com as well.
All right.
Thanks so much for coming on the show, Spencer.
Absolutely.
Cortland.
It was really, I really appreciate, um, you know, talking to you.
I love what you're doing with indie hackers.
I'm glad that, you know, there are just more resources today for folks at the really early
stage and, you know, feel super happy to be a part of that.
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other people to discover the show.
So thanks a ton for your support.
In addition, if you are running an internet business or if it's something that you'd
like to do in the future, you should join me and a whole bunch of other founders on
the ndhackers.com forum.
It's a great place to get help with pretty much any problem that you might encounter
while growing your business, like how to come up with an idea or feedback on a product that
you're working on.
I try to spend a couple hours a day just answering questions and giving people feedback and getting
to know everyone.
So I really hope to see you there.
That's ndhackers.com slash forum.
Thanks for listening and I'll see you next time.