IVP’s Hypergrowth Stories: How Amplitude Became the #1 Product Analytics Company and Will Optimize Digital Business
In IVP’s Hypergrowth Stories series, CEOs of the fastest-growing companies share the ins and outs of company building in a hypergrowth environment.
In 2012, M.I.T. graduates Spenser Skates and Curtis Liu noticed an undeniable market opportunity. Companies like Facebook housed internal teams that offered valuable product analytics tools, but no such off-the-shelf counterparts existed at the time. What if Skates and Liu developed an advanced analytics system that helped businesses build better products?
The pair launched San Francisco-based Amplitude in 2012, and in the time since, the company has become a quintessential hypergrowth story that other aspiring entrepreneurs can learn from. Thousands of digital products from a wide array of businesses now depend on Amplitude to grow their digital businesses, including Walmart, Atlassian, NBC Universal, Instacart, and Under Armour. Amplitude has consistently been ranked #1 in Product Analytics by G2 and other firms, and ranks as a top 50 software product in 2021 across all categories.
Amid the throes of the pandemic, as many other businesses struggled to adapt to a new unexpected reality, Amplitude reported a banner year in 2020 and now has more than 1,200 paying customers, including 26 of the Fortune 100. Today, Amplitude (Nasdaq: AMPL) is a public company, after a successful debut through a direct listing in late September.
For Skates and Liu, and their other co-founder Jeffrey Wang, this validation of a successful graduation to public company status is the culmination of years of hard work, sacrifice, and smart decision-making.
Skates, who serves as the company’s CEO, reflects on the hard-fought journey to transform a compelling idea into a rocketship.
This Q&A was edited for length and clarity.
How difficult was it to raise funding in those early days, and what did you learn from those experiences?
Kids these days have it so much easier than we did. In 2013 or 2014, it was much, much harder. Our seed round took us six months to raise, and it was brutal. I remember trying to put together $1 million dollars for a seed round $50k at a time.
For those of you who have never raised money, trying to put together $1,000,000 in $50K increments is really hard, because you have to find 20 people that will sign up. But I kept at the process, and we eventually found a set of folks who believed in what we did, and it’s a huge credit to them. Folks like Adam Draper, SV Angel, Data Collective, and Merus Capital managed to put together a seed round, and that was enough to help us hire some early folks, really launch the company, and take off from there.
What was the experience like of getting your first check for that seed round?
Actually, the first check that I really remember is the first customer that decided to pay us. We had gone a year of building the product and just giving it away for free, not charging anyone. But the first time we convinced someone to pay us, we showed up to this little mobile gaming company and gave them a demo. We went through the entire thing, they had a bunch of questions, and then we got to the end of the conversation. They asked how much it cost, and I’m like, ‘Whoa. I’ve never been asked that question.’ Then I remembered the advice: charge way more than you think is reasonable. You can always negotiate it down.
So I said it costs $1,000 a month, and they were like, ‘Wow, that’s so cheap. Sign us up.’ I remember thinking, ‘Oh, my god. Someone is paying us money for software. This is the best thing ever.’ That was the real start.
Between you and your cofounder, how did you decide who would become CEO?
We talked about it. There are a few things the CEO has to do. They have to be the one out there pitching and raising money, and I was a more natural fit for that part, especially in the early days. CEOs should also be out there selling the product, and so I was doing that too.
Curtis had always wanted to focus on the technology and the product side and get really good at that. Although, he’s worn the most hats of all throughout Amplitude’s history: he was our interim CFO, our interim head of recruiting, our interim chief people officer at one point, and he ran engineering for a good chunk of time. I think that is something that’s quite important: when it comes to co-founders, they must be willing to play whatever role or do whatever it takes to make the company successful. They need a willingness to embrace a role they might not think they could learn, but they do it because it’s needed to build the business and is really important.
None of these skills came naturally. I was so bad at fundraising, I was so bad at sales, and I was not a good manager. I was really really bad at all of these things at first, but I was willing to do it.
How did you refine or hone those skills?
You just have to do it and fail enough times. People try to read books on how to fundraise or books on how to become a salesperson and books on how to manage, but you’ve learned a fraction of what you need to from those. So you’ve just got to go do it.
You can also find people who are good at those things, who are willing to take a little bit of time to provide you with advice and coaching on how to do them because that will accelerate your learning so much faster than if you’re just trying to figure them out on your own. That’ll take you really far.
One of the things we did really early on was to hire someone to coach me on sales. This guy named Mitch Morando came in one day a week and taught me so much of the basics, reviewed my pipeline, gave me coaching, and pushed me to focus in all the right places.
You’ve said that to be an effective CEO you need to ‘orient your life around it.’ What exactly does that mean to you?
Being CEO of a high-growth venture-backed company takes a lot out of you, and if you ask any CEO or co-founder who’s been doing it for more than 10 years how they’re doing, they’ll say they’re doing great. But if you really get to know how they’re doing, you’ll learn they’re exhausted, because all problems are CEO problems at the end of the day. Whatever is broken in the business is the CEO’s problem.
So you really need to set up your life in a way that helps you. You need the support of your family, and unfortunately, you can’t have other big issues in your life like a lot of debt (or what have you) that can make a hard job even harder.
Just think about how you set up your life so that you can really pour a lot of yourself into the building of the company. I’ve been lucky to have an incredibly supportive wife who works in venture, has empathy, knows what I’m going through, and supports the work I’m doing so that’s incredibly important.
The hard part is sustaining that pace for a very long period of time because that’s what it takes to make these things compound successfully. Every engineering company out there is an ‘overnight success,’ but in reality, it’s been 10 years in the making at least, if not longer. And the only way to get there is to have the work you do compound over a very, very long period of time, and you’re not going to be able to do that without setting up your life in a way that allows that. You can’t take a real break. It’s not like it just takes three months or six months or a year — it’s a real commitment.
You guys had a banner year in 2020. That came during a tumultuous year for the rest of the world. How and why do you think Amplitude accomplished this record year of growth during what was otherwise a tough year for nearly everyone else?
We didn’t know if it was going to be a good or bad year for us, so we were going through all sorts of scenarios and planning for the worst, as I think everyone else was at the time. What happened pretty quickly is that all the companies we worked with realized that they needed to double-down on digital or switch to it right away.
Our customers across the board said, “digital and online business is the only way we can keep things running,” and we felt a real sense of obligation to quickly and rapidly. It’s been awesome to help companies that were going through such challenging times find success with their transitions to digital.
Originally published at https://www.ivp.com on November 16, 2021.