YouSaid · the spoken record

Spenser Skates

lines on the record: 56
first: 2021-07-15
most recent: 2021-07-15
sittings or episodes: 1
sources: podcast

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“Right, that's right. Both of us were kind of, you know, I don't want to say nobody's, but basically when he first came here and he had this failed startup. And since then, he's been incredibly successful. Yeah, got on to start the leading crypto fund and he had one of the most successful Angel funds of all time. And so it's been cool to see both our careers rise in parallel.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“So many, I wouldn't even be close to here today if it weren't for a long line of very generous folks that for no other reason other than to be kind, willing to share their expertise and help. I'll give one example. When I first came out here, we hadn't even gotten to YC. I was just this kid with a dream and an idea. But one of my classmates from MIT, this guy named Matt Wang, he had just done a startup and he gave me tons and tons of advice for nothing in return to himself just to help me navigate and orient and understand who's who and what's what and what I should work on and how to navigate things and how to build a business. And as a result, I probably would have gone on for longer in the failure phase and may not have even gotten it by far if it weren't for his help. And so he would G-Chat me or call me a few times a week for about a year, even though we were a nobody and nothing at the time. And so that was incredibly kind of.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“As Spencer, and just my brain, and what I'm doing here, it's like, no, no, I think of Google as one of these tools I have an extension to. I think the same potential exists for all software out there where it's like they become further extensions of who we are as people and give us tools to become more leveraged. Now, I know I'm speaking in very, very abstract terms here, but I think that's the end state. I think you already see it a little bit. My wife put her on the spot here. Her name is Anne, and she really loves Korean dramas. And so she'll be on Netflix. She got suggested one the other day, ends up being one of her favorite shows that she ended up watching end to end. And so she got a bunch of value out of that. That wouldn't have happened otherwise if Netflix as a product had an adapted to her. That's kind of the future world that we're at the very, to be clear, we're at the very, very early days of, we hope that we can bring sooner.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Me, or can you proactively suggest things I'm interested in, whether it's things I'm likely to buy or content, movies that I like to watch, or information that I'm likely to need. Hey, if I'm about to do a podcast with you, Patrick, I'm likely going to want to look at the emails that we just wrote back and forth to each other and the context has been set up. And so all these opportunities for software to get smarter and a lot more personalized. And the way I think about that is it's all about us as human beings just getting more leverage out of the software we work with. Think of Google today. Google's done a phenomenal job of this where it's like there's a bunch of research that shows that information recall for things that you can Google is actually worse. But I actually view that as a great thing because we've outsourced a huge part of our brains to the web and we can look up all sorts of things really, really easily as a result of it. And so it's actually made us a lot smarter as human beings in a society. So now it's like instead of thinking of me.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Basically, it's this huge lever on our time and interface with technology. So today you have these things where it's the exact same experience for every single user, kind of no matter what you want. If you can get software that starts adapting proactively, I think you get a bunch of different things. First, I think you can eliminate a lot of the frustrations that people have. Like how many times have you been in software that's incredibly frustrating to use, whether that's, hey, I'm trying to reset my password. I spent an hour the other day just trying to reset my password and united because I had one account, but it wasn't linked with my flight. It was just like, man, that was an hour waste in my life that I would love to get back. Where, hey, smart software could have done a lot better job. That's one. Another thing is proactively understanding me as a consumer and what it is that I want and what I'm likely to need if I know, hey, I'm going to be traveling soon. I know that I'm likely to need a ride. Can you proactively set that up for me so that I don't have to worry about it or can you proactively order groceries?”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Things, if you look at where the largest SaaS companies are, Salesforce is in the 20 plus billion range, and there's a few others there. And so that's very much our aspiration over the long term. If we do this right where we become the infrastructure behind all these great products, then we absolutely have the potential to be. The other thing I will say about that is like one of the other ways that I kind of look at the SaaS market is like there's basically a big company that sells to every single buyer out there, right? So Salesforce does sales, Adobe does marketing, ServiceNow does IT, Workday does HR, et cetera. No one's built something for the chief product officer. And so our goal is to be that thing that builds for them, that builds the data-driven product and everything that they need around that.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“We're in 20 of the Fortune 100 today. And I would love for us to get from that to a majority of the Fortune 100. The way I think about it is there's going to be a data repository or kind of a brain that powers all the different products we have. So right now, when you're using a product on your phone, it's what I think of as static. So press something and then does the same line of code no matter who you are and what your previous history with the app is. Over the long term, you're going to see software that will adapt more proactively to you as a user. There's going to be a company that builds the infrastructure. And so our goal is to be that company is to basically help you personalize and create the ideal experience for all your end users. So we're in the really, really early days of that. I mean, we passed 100 million in ARR last year. We're now continuing to grow. But on the scale of these.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Incentivize long-term ownership of my shares. And so I would love there to be a way for companies to basically, the longer you've held the shares, the more votes that you get in electing the board. Fortunately, Delaware corporate law and the SEC hasn't innovated on that stuff yet. And so what most companies end up doing these days is just having a dual class with the argument that, hey, founders have a more long-term outlook in the business. And so they get more votes.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Those are the two I've spent the most time trying to understand. I could go on. I'll say the other one that I'm spending some work looking into is dual class structures. Most companies who go public these days have a dual class stock where basically if you own the stock before the IPO, you get 10 or 20 times the vote. And then if you buy an after, you only get one vote per share. I think it's actually really bad from a corporate governance perspective. Now, the argument that they'll make is that, okay, well, you want the founders or the founder CEO to who has the most long-term view of the business really have the most votes in driving where it goes. But for my standpoint, why are my share special versus someone else's? Why are benchmarks or sequoia's shares more special than a public market investor? No reason other than we're grandfathered in and we've been here for longer. The flip side of it as a CEO, I do want to introduce.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Though I've heard, I'll just close with this is that if you price too high, you'll price out people who will stick with you. It's so backwards in terms of how markets work. It reminds me of that famous Yogi Bera quote that says nobody goes there anymore. It's too crowded. And it's like, look, as a CEO, I want someone who do I want as owner of amplitude, whoever wants to pay the most. That's a representation of the belief that they have. And so this idea that one fund is better than another, the point of the public markets is that it's an open market and the best price ends up getting to be the owner. And then this idea that if you price low, your price is going to be higher in the future is also totally backwards. Like I was in high frequency trading. If the price is high now, that's an expectation that's going to be high in the future, not the other way around. So anyway, I just wanted to make sure to share that piece. There's some really bad thinking around the traditional public listing process that just needs to change.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“All the reasons that people have constructed around why it is you should go with the traditional listing process and underprice yourself, there's so many bad reasons. And so I just wanted to enumerate some of the ones I've heard as well as why they don't make sense. So one I've heard is like, oh, you want to be able to control your price. And it's like, okay, well, that's not how prices and markets work. You don't know your price either. That's why you have an auction process to discover your price. So try to control it. It's wild. The way it's done, and I just talked to a board member who just came from an IPO and they said they literally just sat in a room, decided the price out of a hat. And it's like, what are we doing here? The other one I've heard is like, oh, you want a price that always goes up so that the press and employees think it's a good thing. I think it's silly. Like employees are smarter these days. They're not expecting a monotonically increasing stock. No stock ever has that. That's a silly expectation to try to drive and one that's inefficient.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's just the way the process has been set out. One other fact Bill introduced me to Jay Ritter, the University of Florida professor, done tons of research on IPOs. And he looked at IPOs going all the way back to 1980s. One of the really interesting thing in his data, and so if you look at all the amount, total amount generated in those, about one trillion in total. So massive amount of money that have been transferred during the public listing process. If you go back on average, there's about a 25% underpricing. So what that means is of that $1 trillion, about $200 billion was inefficiently priced and given away from companies to these institutional public market investors. I heard it described, it's basically the largest arbitrage opportunity in all of finance. And so for me as a CEO, like do I want to be on the other side of that? Absolutely not. One of the most interesting things to me is”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“They need to change that for sure because that is definitely one of the biggest downsides of the direct listing process is you can't do a primary capital raise. So you're either forced to do it after going to public markets or before. Either one can work. You can at least run it. If you're going to do after or before, that's better in my mind than doing it as part of a traditional IPO because at least just run an auction process yourself instead of hiring consultants to give you advice to keep your price low. I've heard the argument, oh, well, a CEO you can just tell them what to do because you're hiring the consultants. And I'm like, do I really want to set up a process where I'm going to have to fight the existing thing I set up? That makes zero sense. In a lot of cases, a lot of these bankers will threaten to hold up the IPO and say, hey, if you're too high on the price, we're not comfortable going out. And so we can't actually do it. And it's like you're holding my company hostage. It's absolutely wild. And to be clear, it's not explicit collusion between the banks and the public market funds.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“The investment banks and public market investors. And Driesen Horowitz, one of the great VC firms out there, wrote a whole long series talking in the defense of the traditional IPO. I'm like, what are you guys doing? Traditional IPOs are bad for existing shareholders. So that means me as a founder, that means my employees, that means my existing investors, they're also bad for retail investors because in a traditional IPO process, you don't give allocation to retail investors. And you basically do this transfer. do this massive giveaway of tens of millions of dollars or some cases hundreds of millions of dollars to public market investors. And for what? Charity, like we're a business, you know, at the end of the day, this is like the croniest of crony capitalism. Anyway, I'm going to stop my rant for just a second.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“We're going to forecast $100 million in revenue, even though we don't have any today. We're going to forecast $100 million next year. And then, oops, just after a public, we're going to bring that $100 million down to $10 million forecast. It's wild what you're allowed to do as part of the SPAC process. And so to me, my recommendation both on the CEO side and the public market investor side, you know, at least for now until a lot of this stuff gets sorted out is to stay away from SPACs. There's a good reason for a lot of the information disclosures and protections that exist that already in place. That said, within the public listing process, IPOs are just so backwards. So the real clients of the investment banks are the large long-term public market investors. Now, the craziest part of it to me, there's like a Stockholm syndrome in Silicon Valley where the people that have convinced themselves the most are the venture capitalists and the existing players in Silicon Valley.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't love SPAC because in a lot of ways it's an end run around SEC. The point of the SEC in general is an institution to protect shareholders from unscrupulous actors, whether it's companies or banks or whoever else. And one of the big constraints in the public listing process, whether that's an IPO or whether that's a direct listing, is that you have to disclose all the facts about your company and you're not allowed to tell about the future of your business with too much certainty because the reality is you don't know with Spax it's a total end run around it where you can say whatever the hell you want to whoever the hell you want because the company is already public and you're doing a reverse merger where you acquire the company that's private and then the shares from the private company become the ones from the public it's basically an end run around all the structures that the SEC has put in place and there's a good reason for like 90% of those structures there's 10% we might want to change and so you get companies that say hey”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Equity on behalf of my existing shareholders. If I were a shareholder in one of these other companies that has like 100% day one pop on the stock, I would sue for breach of fiduciary duty because it's like whenever you have big price movements, that's a sign of a massive inefficiency in the market where one player does not have the correct information and what the true price of whatever their thing is, whether it's their equity or something else. And so the whole thing, you know, I don't want to say criminal, but it needs to be just totally broken down. Thank goodness for the rise of the direct listing because that's a much, much superior way to take your company to the public markets. And so for any CEO that is going through this now who is interested in learning, okay, what should I do? Should I do traditional IBO? You absolutely have to do the direct listing because anything else from my standpoint is a breach of your fiduciary duty to your existing shareholders.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Patrick, I'm going to give you and your viewers the most extreme view on this. As I've been doing my homework, the entire process, like I'm not a conspiracy person, a conspiracy, but I just wild how bad and awful the traditional IPO process is for companies. The whole process is set up to give you a bad outcome. You hire consultants, your investment bankers, to advise you and bring you through the process, but their incentives are not aligned with yours at all. It's the principal agent problem to the most extreme. And then not just the bankers, but the entire ecosystem, public market funds, and then press, your lawyers, and the folks on your side, they give you this advice to basically lower the price of your stock for a bunch of reasons, but that's against your own interest. As a fiduciary to amplitude, my job is to get the best price forever.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Eric is way too humble. It drives me bananas. He makes a face whenever I've told him this, but he has the highest ratio of quality to whatever brand presence. There. So ask the CEOs of these companies and ask them what they've actually done. That's where you'll hear it”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Portfolio do I want to be in? And so for me, at the time, that was a really easy question. Like, I wanted to be, I think their fund is like a few of their funds have been like 50x, which is wild. I mean, normally it's like you're good if you do three to five X. And so it's like, yeah, I want my company's equity to be in that portfolio.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Doing similar things, and I had no question we would not have been the one to break out if it weren't for the amount of work, Erith. Now, you'd never know it because Eric's not going around promoting himself on Twitter like some of these other VCs, but in terms of raw impact. In a lot of ways, it's like having the right co-founder because it'll change, it'll absolutely change your trajectory. So the lesson is most VCs are undifferentiated. There are a few exceptions, and you can tell by looking at their portfolio. So look at the companies they've been with. And then these days where rounds are getting closed in like negative two days, I understand it's hard to do references, but you should do references. Understand, think about this is a long-term commitment. What's the business you want to build 10 years from now, and then look at the companies they built. Look at them, not just the really successful ones, any VC worth their salt these days. I mean, you better have a successful company, otherwise you should be out of business, but look at their unsuccessful ones too. Look at the whole portfolio and ask yourself, okay, well, which”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Correlation or causation, it was like, okay, is benchmark causing? Are these really good selecting? You know, it's always some of both. But I was like, okay, this is what I'm here to do Norman Borlog. These guys are down to do that, even though this is worse terms in every respect. And, you know, I ended up signing with them and it was even better than could have expected. I probably talk to Eric once a week. A lot of VCs brag about. I want to be the entrepreneur's first call, but it's like I'll call him about anything, whether it's a management issue or there's a company crisis for help on personal stuff. And so he's interviewed hundreds of people for us. He referred at one point one quarter of the early team years was at amplitude. He's interviewed every single exec bin on every single recruiting process. I've been in the most helpful with every single fundraise we've had. Without that, we wouldn't have broken out. Analytics is a crowded competitive market, or at least was very crowded and competitive when we were starting. There were probably a dozen different players.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay. I asked a bunch of advice. A bunch of folks say, hey, take your other offer. That's the best offer, you know, on all the terms. But there was a group of entrepreneurs who had worked with benchmark who absolutely pounded the table for them. I did a little bit of homework. I didn't actually know a ton about them then, but I looked at the set of companies they had invested in them and I was blown away. Twitter, it was Yelp, it was Zendesk, it was New Relic, it was Snapchat. This was like the who's who of like Silicon Valley. And I'm like, holy smokes. I did like quick back of the envelope portfolio analysis. And I was like, man, if you work with these guys probably about half their businesses go on to be massively successful, like incredibly, massively successful. And that's a way better hit rate than any other VC fund. You know, most VCs will get like one out of a portfolio of 30. And if you're good, maybe you'll get one in 10. This is like one in two companies are successful. Now, I didn't know if it was.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“They were offering to invest at like a $40 million valuation or something like that, which was incredibly high at the time these days, not so high. Yeah, these days very, very high 2014. And here you come benchmarking Eric. He's the lowest of the five offers. He asked for a board seat. He's asking for a quarter of the company. He wants to pay 24 million pre. I've tried beating on him a bunch. I was like, hey, I'm going to take this other offer. They're offering everything better. Can you at least move a little? And it's like, all right, all right. I'll go down from 25% ask to 24.5%. And I'm like.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Now, what I've learned is, I think, with most series in A investors, that's the case, there are an exceptional few that can change the trajectory of their business. So when we did our series A, so for those of you who don't know, we did our Series A, we ended up doing it with Eric Vishria from Benchmark. In a lot of ways, he's the best. We just had Confluent IPO. He has been trajectory changing. We'd be a tenth of the size if it weren't for him. It's been like having another co-founder in the business like a lot of ways. But I didn't know that at the time. During our series A fundraise, we had gotten five different offers. We had built the business to about a million in ARR at the time. We're hot. There was a bunch of interest. And it came down to benchmark and one other offer. And the other offer, who I won't say who it was, but they were incredibly generous. Really like the partner there. They were going to take 10% of the company, a really small chunk. They weren't going to ask for a board seat. They were going to do a really high valuation. They were like 50% higher than anyone else.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“I'll talk about private market and then we can talk about public market after. For private market investors, what's funny before I get into it, I'll first say my mentality coming into fundraising was that investors didn't know anything and that advice was all undifferentiated because that's what Y Combinator teaches you, which is directionally to a first order approximation correct. You got to build the business. No one else is going to have some secret to build it for you. It's on you what fundraising can help you do is help give you cash, but that's the main purpose. It doesn't give you some magic powers that you didn't have otherwise by and large. There's exceptions for by and large. I remember the very first VC I invested, and I'll give him a lot of credit, Maris Capital. This was the seed round. I told him to their face. I fucking hate venture capitalists. I told them that. And they're like, I hope you don't mean us. I'm like, no, I don't know. I love you guys. You guys are the best. I had gotten this kind of YCA investors or don't matter if you.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Right, that's exactly right. When you get to the one year point, it's like they're exchanging equity as basically cash, a little bit mercenary. And so if you're looking to be a long-term owner in a business and share in the massive potential upside, you want to get as much equity as you can as early as you can, which is why I love, I think there's an argument to do them even longer than to give more. But I'll leave that battle for now and join a company that sees you as a four-year owner in the business as opposed to.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Awful, awful change. I want to write an open letter to the employees of Coinbase and Stripe and Lyft and all the others who are doing that and just saying, hey, this company does not see you as an owner. Come to Amplitude or come to a company that actually sees you as an owner and will give you four-year vesting schedules for your equity because they'll write long posts and they'll have their HR people say, hey, like this is actually better for you because we can price your equity in the market. But one, at a fast-growing startup like any of them, equity only goes one direction up. You're giving them one year, but leaving out the other three years, there's no way you're going to have that huge ownership upside and potentially get very wealthy by working at the startup with one-year grant window. So it's just not going to happen.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Equity employees, and this can be a huge differentiator for amplitude. And so that's ended up working out great, particularly a lot of the early team felt so much ownership in the company and was a large part of why we're able to kind of break out of a crowded market and be in the dominant position we are today. So anyway, that's my rant on 10-year exercise windows”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Windows to all employees, regardless of situation or tenure or whatever else. Other companies have started following suit, which is just phenomenal to see, that we can now grant equity in a way that's more beneficial to them without having all these crazy asterisks and gotchas in it. Equity compensation is so important at early stage startups. It makes up a huge percentage of the expected value. Now people debate, it's like, okay, should you believe in it? Should you not like only take cash? I'm not here to debate that. But for a lot of people, they really are meaningful. And one of my lessons was that like in explaining this to employees of amplitude, after I spend all this time learning about them from lawyers, when I was actually explaining them to candidates and employees, nobody had any idea how equity really worked. And a lot were expecting me taken away to some gotcha. And so for us, it was like, okay, hey, let's actually try to be really transparent and fair and like aggressive with how we grant.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Idea by Spidey Sense tells me there is some serious pitfalls, and it's just like anyway, I finally found a lawyer who was willing to hear me out on this thing. Craig Schmitz at Goodwin Proctor. And he basically explained to me the reason this exists is because of a quirk in the tax law where options granted to employees are considered ISOs. So I think incentive stock options or ISOs. And you're not actually allowed to hold them if you're not working at a company. You have that 90 days to decide whether to convert them to equity or you lose them. But there's actually a really simple workaround, which is you can just convert those ISOs to ENSOs for non-qualified stock options. And you can just hold them indefinitely, no problem. And so we ended up making this change. And it took some work to get our board on board with this change in equity, but it ended up being a huge differentiator for us. We were the first company in the valley to give 10-year unconditional exercise.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Almost a form of like wage slavery or equity slavery. People talk about the golden handcuffs. This is it. It's crazy. I don't want people who are going to be at my company just because they're sitting around investing their equity and they don't have enough money to exercise. That does nobody any favors. And then the other part of it, imagine this for cash compensation. Imagine you gave cash to employees and then 90 days after leaving they had to give it back to you. The NLRB would be up in arms. There'd be no way this thing would ever fly Libby wage theft people would riot in the streets. It's like there's no way that you'd be allowed to take back cash compensation after someone left. So why let people do that with equity? Now, as it turns out, after pressing a bunch of lawyers, and I had to ask a few different lawyers, the first one we met actually was just like, I've never heard of this thing before. This is crazy. What are you talking about, Spencer? They wrote me this long essay being like, I've worked with hundreds of companies and none of them have ever, or I've worked with thousands of startups for nearly a decade, have never heard of this.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't want to get into why we do options as opposed to outright grand of shares, but there's a bunch of tax reasons that that thing exists. And so when I started asking about, okay, why is it that you have 90 days to actually decide whether to become an owner of this equity? Because the problem, if you're an employee leaving, is that companies these days aren't going to see liquidity for seven years at least, maybe 10, maybe even more. If you look at how long some of these have been private and you have no idea you lock up your cash in a company with an uncertain future for a lot of these folks can amount to tens or even hundreds of thousands of dollars, which a lot of people don't have just sitting around. And, you know, even if they do, do you really want to take that risk? The reason I was given the 90 day exercise window exists is because you want to incent the people that decide to stay. But it's like, okay, well, even if you leave, if you decide to actually get it. So you're only really incentivizing the people that don't have money. And it's like.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Compared to how much wealth you can accumulate through equity, that's nothing. That's absolutely nothing. With equity, you can get people worth tens of millions or hundreds of millions or billions in some cases. It's this really great tool in order to do that. Now, one of the interesting things is just when we first encountered this early on at Amplitude, I asked a ton of questions about why it was set up the way it does. whether that's from lawyers or from others or just this is the way it's always been done One of the ones that made absolutely no sense to me was this thing called the 90 day exercise window. And so for those of you who don't know, 90 day exercise window is if you're an employee of a company and have been granted equity or options specifically, if you end up leaving that company whether you're fired or you just voluntarily leave or whatever the case is, you have 90 days to decide whether to spend a whole chunk of cash to exercise those options and convert them to equity. Otherwise, you lose them forever.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, absolutely. You first have to go back and look at why equity was created as a compensation mechanism so that the very first company to make it a standard thing to give you equity grants was, at least in the valley, was Hewlett-Packard back in 1950s. And they did it for a few different reasons, partly to incentivize building the company, but partly out of, hey, we want the workers to own part of the company too, you know, kind of a blend between the capitalism and socialism where we're saying, okay, we're actually going to”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“The biggest one is when we were doing Sonalite, we developed our own analytics system in house, which was just a colossal. So many teams do this, but it's a colossal waste of time. We're two of us at the time. We probably spent one-third of our development time just trying to build analytics. And it's like, we weren't even experts in that thing. We wanted to make Sonalite successful. We should have outsourced that to someone else and just focused on voice recognition and what we were good at and finding the product market fit in there. But it turned out because we have amplitude today and it's massively successful and would have been there without that mistake.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“When it comes to scaling a company and building what a function looks like, so building your finance function or building your sales function or building your engineering function, this has been done tens of thousands of times before, and there's industry expertise out there on how to do it. Now you can try to go relearn that yourself, or you could just take their knowledge and stand on their shoulders to get further ahead more quickly. And so you're always much, much better off learning calculus from Isaac Newton than trying to invent it yourself. He only did it after thousands of years of work from other folks in math. And so it's kind of the same thing here. You could try to reinvent an organization. Most founder CEOs, that's their instinct too, but it's a big mistake. Learn from them and figure out, okay, what's the right thing for you?”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Productive, so many. That's so funny because it's like you think of things that are productive and you're just like, oh, that must not have been a mistake retroactively. I mean, I could definitely list tons of things that it's like, we were slow to hire outside executives and every company and every founder, CEO is slow, but we were like extra slow. And that definitely was a mistake. some ways held us back. The flip side of it, I'll say, is that it gave the early team a lot of ownership and a lot of agency, made them very invested.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Key part from us is like, okay, well, let's make it really easy for you to ask a question about a single or a given user's history really quickly. The example I just shared is one of the more advanced use cases. Most customers on amplitude are just doing the basics. It's like, okay, show me how my users retain. Show me where people are getting stuck in a conversion funnel. Show me what the key difference is and feature usage between those two groups. There are parts of the product that have sophisticated AI, but most of the vast majority you can do just simple correlations, simple questions. That's the key that most companies struggle with, that we're there to help them.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Reason that this is not possible to get out of a database or other analytics platforms is that because the way data is structured, we ended up deciding to write, which I don't recommend anyone do, but we did it, a custom database where all the data for a single user is located in the same partition on the database. And so what that allows you to do is it allows you to scan their entire journey really quickly to ask any question. So you can say, okay, do users who use feature A engage more than users who use feature B? Or how many times does someone have to come back to be a long-term sticky user? Or what's the most common path that someone takes through the app? The trouble is if you think about product data, every single user's journey is unique. Products are not go click next, next, next, done. They're not linear things. It's more like a random walk. And so the question is, how can you analyze that in any sort of meaningful and consistent way?”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“That a huge part of their product's value to their customers was not just around walking and guiding you through a meditation. A huge part of the value was helping you develop a healthy habit around meditation. I hadn't even realized that without it. And so to the point of the money ball approach, that was the most undervalued feature in the application. Now, not every app makes sense to set a daily reminder for specifically if you're in fitness or lifestyle. That's when creates tremendous value. But it didn't even occur to the 50 people at the company. One engineer just put in the feature on a whim. They wanted it personally. And it turns out it was the most important one for the rest of their user base.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“That's what they thought. They had all these hypotheses that you're this type of user versus this. But the number one predictor was whether someone decided to set a daily reminder to meditate. Now, it sounds so obvious, but what was crazy was only about 3% of their user base was using feature. And the reason only 3% of the user base was using the feature was because it was buried in like a settings menu. You had to go to settings and the reminders and the set daily reminder and like four or five clicks, which most users never went to. But what they realized through looking at, so what did they do? Okay, well, they said, okay, let me bring that feature to the front. So when you first sign in, bam, it hits you. Do you want to send daily reminder to meditate? They went from 3% to more than 50% of their user base, setting a reminder overnight. The retention of their user base tripled. And they went on to be top meditation, top of the app store. Apple, they were Apple's app of the year in 2018. Just all this amazing success. But the core of the insight was”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“They are the top meditation app on the App Store these days. But when they're first starting out, they were trying to figure out their product market fit as a company and they were asking, okay, what is it that gives our users tremendous value? And they looked at all the different features someone could use as part of, they looked at, okay, well, what if you use this meditation versus this one? What if you use it for sleep versus use it for exercise? Is there any differences there? Guess what? The number one predictor of a long-term engagement was Number one characteristic or feature of a user make them a highly engaged user.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“So, typical customer will come in, they'll say, Hey, we have this goal this year to increase the number of people using our app by 50%. And then the first question we'll ask is like, okay, well, how are you measuring it? In a lot of cases, they aren't, or they don't have a great way to measure it. And that's where we come in. And then once they got on board, they'll spend some time to instrument and get set up. And once they get on board, they'll want to understand, okay, what is it that drives engagement in our product? What are the features people use? What leads people to come back? What's the difference between people who come back and people who churn? Where do people get stuck? And they start answering all these questions to start making systematic improvements in their product.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“To work to a money ball approach where you could actually quantify the impact of specific features and say, okay, if I'm Facebook, hey, what do people really like? They really like having a social network and friends. So let me design my product around that. And we looked at that and we said, hey, every single company out there is going to need this. And so that was 2012. We launched the company in 2014 and we've been lucky since that has just been up and to the right. And the most recent piece of news that we put out is we just raised a $4 billion valuation round last month with Sequoia and a few others. So that's a very short version of the journey of how I got into Amplitude Tech and then to Amplitude.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“We call ourselves the digital optimization system. So, what does that mean? Where the analytics brain behind understanding what's going on in your product. So our main product is product analytics, and it basically what it does is it helps you take a data-driven approach to developing product. And so when we're starting the business, what we saw was that some of the most sophisticated companies, you look at Facebook or you look at Zynga, or you look at Netflix, they had taken a very quantitative approach to developing their products, which was quite different. A lot of people think product developments like Steve Jobs at Apple, you sit in a room, you think really hard, you're like, oh, I know the brilliant feature. But it turns out some of the best companies were actually totally changing it. The metaphor I like to use, it's the world of product was going through this transition from like a madman phase where you literally had people in suits with cool ideas that had an MBA degree from, you know, wherever being like, oh, here's the cool pitch.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“Silicon Valley, if you look at how our lives are different today than 20 years ago, it's through all the advances in tech. If you look at how the lives of the poorest of the poor are different today from 20 years ago, exact same set of things. It's all the advances in mobile and tech. I said, okay, well, let me go ahead and start a company here because I believe this is the greatest way to do good. That was kind of the very start of me deciding to get into startups. The funny part was after getting into it as like the first few years or nothing like that. You're just like trying to get anyone anywhere to be interested in what you're doing. We worked on five or six different ideas that didn't turn out. We did one app called Sonalite, which was a voice recognition app. It was like a version of Siri right around the time Siri was coming out, did Y Combinator with it. That failed. But through it, we actually found this really interesting thing, which is what led to amplitude. So for those of you who don't know amplitude, amplitude, what we do.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“There and after a few years, they become self sustaining. He went to Pakistan and did it there, then went to Africa and did it there. You look at the sum total of his impact over his career. And it was clear he was able to make impact on billions of lives. He saved hundreds of millions of lives. He got the Nobel Peace Prize in 1970. And to this day, a huge part of the fact that we don't have to worry about food as a human society is due to his efforts in the Green Revolution around it. Now these days our problems are different. We think about energy, climate crisis. Food is largely off the table, which is an incredible place to be as a society. So I read that story as a young, impressional 21-year-old, and I was just so inspired. And I was like, man, if I can have a fraction of the impact that this guy has on the world, I'm going to be really happy with wherever I end up in my life. I said, okay, well, what do I know how to do? Well, I know how to build software. So what's the biggest and highest leverage place I can do that? No question.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“In crisis, we're going to have way more people than food in the year 2000. There was this famous book Limits to Growth, which talked about how the year 2000 there'd be starvation and riots and famine and war and just all these awful things if we didn't do some form of population control. Now, they turned out all to be wrong, and a huge reason is in part through the efforts of this one guy. And what he did was he went to Mexico, which at the time was a food importer, so a need to import food from the United States. And he developed a new strain of wheat that was high yield, was resistant to disease, and that had this other trait called dwarfism, which is important when you're making high yield crops. And through doing that, the wheat production of Mexico quadrupled in a few years. And then they became self-sufficient in terms of food. And then he went to a few years later in India. And India was even in worse shape. It just gotten independence and fast-growing, incredibly poor country. They were desperate to try anything. And so he helped them do the same thing.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source
“I knew I really wanted to start a company. It was clear. I was lucky enough to be in the position where I had the option to do so many different things. And I could take my career and I could go into finance or I could go into consulting or big tech or start a company or go into nonprofits. One of the questions I ask myself is like, okay, well, what is it that I want to do with my life? I'm really fortunate to be in a position where I have lots of different options. And I actually came across this story which really inspired me. It was about this guy named Norman Borlaug and he was an agriculture expert in the 1950s and 1960s. And what he did was basically brought modern farming techniques to the developing world. If you kind of go back all the way to the 50s and 60s, one of the biggest problems is if you look at the population graph, it was exponential like this. But if you looked at our ability to produce food, it was kind of leveling off. And so there was this huge concern around we're going to run out of food and we're going to have this Malthusian.”
2021-07-15 · Invest Like the Best · Spenser Skates - Challenging Big Ideas - [Founder’s Field Guide, EP. 42] · IDENTIFIED FROM THE TRANSCRIPT · source