Category Archives: Startups

Join us for Tomorrow’s SaaS Product Power Breakfast with Alation Cofounder Aaron Kalb on Design, Data, and Disagreement in PM

I’m delighted to say that tomorrow’s SaaS Product Power Breakfast will feature one of my favorite people to riff with, Alation cofounder Aaron Kalb.  Our topic will be on design, data, and disagreement in the context of product and product management.

In addition to cofounding Alation, the inventors of the data catalog, the category leader in data intelligence, and a high-growth company that recently raised a $110M Series D (placing the company squarely in unicorn territory), Aaron serves as Alation’s chief data & analytics officer (CDAO) and before that worked as a designer and researcher in Apple’s Siri advanced development group after graduating from Stanford with a master’s in symbolic systems.

We’ll speak to Aaron both as a product-oriented cofounder of a highly successful company and as a design-oriented product leader.  (We may get a little data-oriented decision-maker mixed in as well.)  Questions we’ll address include:

  • How do you synthesize data-led and design-led product management?
  • How did your psychology and software engineering background help you as a product leader?
  • How do you hire strong product leaders?
  • What was like for a product-oriented cofounder to hand-off the reins to an “outsider” (i.e., newly hired outside expert) product leader?

And, with a little luck, he’ll tell us what the heck symbolic systems is anyway.  See you there.  It should be a great episode.

Thomas will be joining us from a trip to Paris and says he won’t be asking too many questions, but I’m thinking this subject matter will inevitably draw him in.  On verra.

As always, the session will be recorded and made available on the SaaS Product Power Breakfast podcast.

# # #

(Disclaimer:  per my bio and FAQ, I’m both an angel investor in and director of Alation.)

 

 

A Quick Critique of Clubhouse

As you may know, I have been experimenting with Clubhouse over roughly the past six months in several capacities:  as a regular user, an occasional audience participant/questioner, and as the host of a regular room I’ve been running with Thomas Otter, the SaaS Product Power Breakfast.

I love to get involved with new social media platforms early because I’m interested in new forms of media (and the often subtle differences they bring), I enjoy watching early evolution of the products and their usage (e.g., the invention of hashtags or URL shortening on Twitter, the applause convention [1], speaking protocols [2], or the use of Instagram DMs on Clubhouse [3]), I like watching the minimum viable product (MVP) questions play out in real time, and I love to see strategy at work.

So, in that light, here is my quick critique of Clubhouse intended as both critical and constructive.

As a startup- and media-watcher, I’m of the opinion that, after raising money at a $4B valuation in April (and with maybe 50 total employees at the time), Clubhouse appears to have lost significant momentum in the past several months.  Why?

  • The pandemic is winding down.  I think Clubhouse got a significant pandemic tailwind when people were locked in, Zoomed out, and looking for new ways to connect with other humans.
  • Certain communities returned to IRL mode, notably comedians, one of several core Clubhouse communities.  Some of my favorite rooms were in Leah Lamarr’s Hot on the Mike club and it appears that many of those outstanding comedians are back working at physical clubs.  That’s great for them, but not for me — as a Clubhouse user I can’t just login when I’m free and easily find a great comedy room as I once could.
  • It’s hard to reliably find live content.  The key difference between podcasts and Clubhouse rooms is the serendipity of live content (e.g., when I stumbled into a room with John Mayer) and the potential for interactivity [4].  Without those two things, I can just listen to a recorded podcast.  If you can’t find content, what good is the app?  It becomes like cable TV — 500 channels, but nothing to watch.  Every day I am less enthusiastic about firing up the app because I think I’ll either spend half my time looking for something [5] or fail entirely.
  • The app doesn’t get the most basic thing right:  language.  While I do listen to content in two languages, the app is constantly showing rooms in my hallway with titles (and dialog) in languages that I don’t speak.
  • The app has no room-search functionality.  The single most basic, MVP-level feature is (still) missing:  search in-progress rooms by keyword (or topic) in the title or description.  Not there.  Stunning.
  • The follow paradigm is wrong.  Content discovery is based primarily on people, not topics.  Using myself as an example, I like:  enterprise software, the Grateful Dead, French language, comedy, startups, mathematics, and philosophy.  Just because you like enterprise software doesn’t mean you like the Grateful Dead or topology.  While the app notionally supports topics, they appear ignored in composing your hallway [6].
  • The app does not appear to learn.  While the app does not appear to learn what I like in formulating suggestions in the hallway, it does appear to learn some bad lessons:  e.g., if you actually stumble into a single Russian room it seems to suggest them endlessly.
  • The app breaks trust in machine learning.  In an era of sophisticated users, I’m OK to hide-room numerous times in order to teach the app my preferences.  While hide-room didn’t appear to actually do anything (yet), I was confident that at some point they’d leverage that data to improve my experience.  Then one day hide-room seems to have simply disappeared from the app, so all that teaching appears to have been wasted.  That breaks my trust.  Don’t ask me questions if you’re going to throw away the answers.
  • The app is gameable in odd ways.  It appears that long-running rooms get some advantage in hallway prioritization so there are people who run rooms for days on end (e.g., Scenes From an Airport Terminal) that pollute my hallway, and that now I can’t even hide.  If the app were focused on topics and not people and duration, they could eliminate this.
  • The community has too many hucksters and charlatans.  Everyone seems to be a millionaire, successfully running five companies, a great venture investor, and yet still somehow need $99 from you to take their masterclass.  Just reading the bios of the moderators in many rooms makes me feel vaguely ill.  Hearing the advice these people give to would-be entrepreneurs makes me feel worse.  Don’t get me wrong, some rooms are amazing and offer an experience you can find nowhere else.  But a lot of Clubhouse feels like the vapid self-help section of a bookstore.  Oh, and don’t forget your laser eyes before going into the crypto rooms.

What to do about it?

  • Strategically, Clubhouse seems to have missed the systematic expansion memo (e.g., Amazon from books to DVDs to cameras and onward, or Facebook from Harvard students to Ivy League students to College students to broader groups).  I think their decision to port the app to Android before coming even close to completing it (e.g., content discovery, search) was a big mistake.  They need to focus on completing the app first.  Get to MVP before porting the app.
  • Systematic expansion includes not only product but community.  Just as they need to prioritize their product features to complete the product in a logical order, they need to decide which communities they want to serve (and, no, “creators” is not a sufficiently focused community definition).  I think comedians may be gone for good because the time that people want to hear them is precisely the time they are out at work.  But there are lots and lots of communities on Clubhouse they can try to develop (e.g., Silicon Valley VC/startups which had an early focus but seems to have faded away, crypto, activism, real estate, investing).  Just pick some and complete the app for them.
  • Appoint community mangers.  In addition to product managers to drive functionality, appoint and empower community managers and not just to makes rules about content [7] but to help build the community in a given topic area.  Just as retailers have category managers (someone responsible for, e.g., swimwear at a business level) so should Clubhouse have community managers.
  • Play for your users, not your VCs.  Existing users definitionally were not pushing for Android.  I’m guessing the VCs were — so they could continue to show great adoption.  But what good is great adoption if, after using the app a few times, everyone drops off because they can’t find anything they want to listen to?  Without great content on the app, there is no need for the app.
  • Stay in touch and on the ground.  One of my favorite rooms was cofounder Paul Davison’s weekly introduction [8] for new members (on Thursday evenings) that I assume he’s still running.  I know he runs a weekly Town Hall as well.  Paul is a great spokesperson, communicator, and listener and I love that he stays in such direct touch with his user base.  They just need to add some more systematic strategic focus atop that and some Geoffrey Moore 101 to go with it — complete the app, use-case by use-case and don’t get stretched too far, too fast in the process.

# # #

Notes

[1] Muting and unmuting your microphone in rapid succession

[2] Examples:  Pull-to-refresh (PTR) order.  Or the “this is Dave and I am done speaking” protocol, which is seemingly for several reasons including:  to identify speakers in rooms with large numbers of moderators where you may not be able to find the speaker (e.g., if they are buried three screens down), as a basic courtesy protocol, and for accessibility reasons for people who are unable see the grey ring indicating speaker identity.

[3] A great example of not needlessly building DMs a feature, but instead supporting profiles that link to Instagram and the community quickly embracing Instagram as the default DM method on Clubhouse.

[4] If you want to raise your hand and ask a question and are so selected — itself another issue as I’d been in numerous rooms where people said they waited literally for hours

[5] And because Clubhouse can be and is often best done while multi-tasking, it needs to be fast and easy to find something, e.g., when you’re hopping on the treadmill.

[6] The app suggests if you’re not finding content you want to “follow more people” — not to like more topics.

[7] The narrow definition of community manager is about making and enforcing rules for rooms, dealing with reported speakers, etc.  While such activity is important, it’s table stakes — a community manager should be far more than a security guard, but instead a leader trying to build the community, drive membership, foster and promote rooms, etc.

[8] Even though it was notionally an “introduction” I attended for several weeks just to hear Paul talk about the app and his vision.

 

SaaS Product Power Breakfast with Evan Kaplan of Influx Data

Please join us for tomorrow’s SaaS Product Power Breakfast, Thursday 6/24 at 8am Pacific.  Our guest is veteran technology executive Evan Kaplan, CEO of Influx Data, makers of the open-source, time-series database InfluxDB.

Our theme for tomorrow’s episode is how to manage the transition from traditional open source to true cloud native, something relatively few companies have done, and a transition that Evan has overseen at Influx Data.

We’ll cover questions including:

  • A primer on the traditional open source model
  • What it means to be true cloud native
  • How to approach the transition to true cloud native
  • Perils and pitfalls in the transition
  • Organizational (and people) change in the transition
  • Licensing implications, including protecting the open source from cloud hyperscalers and while trying not to alienate the traditional open source community

Influx Data is a category leader that has raised about $120M from top-tier investors.  Evan has a spectacular background, having been founder/CEO of Aventail for about a decade, CEO of iPass for half a decade, the member of numerous boards, and having serving 5+ years at Influx Data.  I’m super excited to have him on the show.  See you there!

Pulse 2021 Slides: Net Dollar Retention (NDR) Benchmarks and Thoughts

This is a quick post to share the slides I presented today at the GainSight Pulse Everywhere 2021 conference in a session entitled Net Dollar Retention, Key Benchmarks at $50M, $200M, and $1B in annual recurring revenue (ARR).

In the session we discuss:

  • The answer, which is 104%.  (Median NDR which is surprisingly invariant across size.  Exception:  public company NDR median is 111%.)
  • Problems with historical installed-base valuation metrics such as churn, customer lifetime (CLT), and lifetime value (LTV), building on my SaaStr 2020 presentation, Churn is Dead, Long Live NDR.
  • The rise of NDR as the SaaS metric of choice.
  • How NDR is currently the most powerful predictor (among common alternatives) of a company’s revenue multiple (EV/R).
  • The “dollar” in net dollar retention and why global companies should look at NDR using constant currencies, not dollars converted at a spot rate.
  • How NDR should vary as a function of stage, expansion model, business model, target market, sales motion, and pricing model.
  • How usage-based (aka, consumption-based) pricing models will be as transformation to subscription SaaS as subscription SaaS was to perpetual license software.

The deck has an rich appendix with interesting information clipped from a variety of my favorite sources, including RevOps^2, Meritech Enterprise Public Comps, OpenView Expansion SaaS Benchmarks, OpenView Usage-Based Playbook, Bessemer State of the Cloud, KeyBanc SaaS Survey (PDF), SEC filings, and others.

Here are the slides, which I’ve also embedded below:

 

I’d like to thank Ray Rike at RevOps^2 for giving me early access to his upcoming FY20 B2B SaaS Benchmarks report.

If GainSight makes a video available online, I’ll add a link to it, here.  Meantime, thanks to GainSight for having me and hope you enjoy the presentation.

Product Power Breakfast with Chris McLaughlin on Big/Small, US/Euro, and Marketing/Product

This week’s episode of the SaaS Product Power Breakfast is Thursday, June 10th, at 8am Pacific and we welcome a special friend and unique guest, Chris McLaughlin, currently CMO at France-based powerhouse LumApps, a collaboration and communications platform backed by top European investors including Idinvest and Goldman Sachs.

I got to know Chris by working together in his prior gig as joint CMO and CPO at Nuxeo, a France-based content services platform that had a great exit earlier this year to Thoma Bravo / Hyland Software, and where I sat on the board of directors for the past 4 years.

Chris has a unique background because of its dualities, working:

  • As a senior executive for both US-based and European-based companies.
  • At both growth startups and large megavendors (e.g., EMC/Documentum, IBM/FileNet)
  • In leadership roles on both the Product and the Marketing side.

In this week’s episode we — and the audience — will ask Chris many questions, including:

  • How to get product and marketing working together, especially when they aren’t under a common boss.
  • How European startups should organize their go-to-market functions to enter and grow in the US market
  • The role of both the product and marketing leaders in startups with either a technical founder or business founder
  • When is the right time to hire your first CPO and/or CMO
  • How to align product, marketing, and sales around a strategy — and dealing with the normal challenges in focusing that strategy

See you there, Thursday 6/10 at 8 am Pacific — and bring a friend.

As always, the room will be recorded and posted.  We think of the show as a podcast recorded in front of a live, studio audience.