The Amplitude Journey: How Engineering, Sales, and Persistence Built a Product Analytics Powerhouse
Today, we’re excited to kick off a new interview series on the Productboard blog, delving into the lesser-known aspects of product strategies from top software companies. Our CEO, Hubert Palan, shares a few thoughts on the inspiration behind the series below. But if you’re eager to dive into our first interview featuring Amplitude CEO Spenser Skates, scroll down below.
As CEO of Productboard, I’ve seen firsthand how crucial product strategy is to get the right products to market quickly. But even for experienced founders and product leaders, strategy remains enigmatic. It’s the glue that binds your business, from R&D to pricing, positioning, and go-to-market.
The challenge? There’s no blueprint to determine when to persevere as competitors and customer demands evolve or when to pivot to a new idea. Both paths have unique challenges and opportunities.
These strategic decisions come from experience, but founders and product leaders often hesitate to share their lessons learned. As a result, there’s a scarcity of information on the frameworks and techniques modern product leaders use to build successful strategies. For every success story, there’s a graveyard of failed products, victims of strategies based more on intuition than intention.
That’s why we’re launching “Perseverance and Pivots,” a series aimed at bridging the gap and sharing invaluable insights from those who’ve walked the path. We’re convinced that by unveiling the thought processes and decision-making strategies behind exceptional products, we can inspire our audience of product makers and leaders to hone their approach and propel their organizations forward.
In this series, we’ll dive deep into the minds of some of the most accomplished product leaders. We’ll learn how they’ve navigated the complex and often uncertain world of product strategy, and uncover the lessons they’ve learned along the way – both from their successes and failures.
It’s my hope that these stories not only inspire but also equip you with practical insights and tactics to help you make better strategic decisions for your products. So join us as we delve into the captivating world of product strategy, and together, let’s create a future of intentional, successful products that delight customers and drive growth.
Hubert Palan, CEO, Productboard
In the ever-changing world of tech, product strategy is often a fascinating dance between careful planning and embracing serendipity. While success may seem like a product of a meticulously crafted roadmap, it’s often the unexpected opportunities that catapult companies to greatness, taking them on an extraordinary journey they never expected.
Few founders embody the spirit of perseverance and adaptability more than Spenser Skates. Since co-founding Amplitude in 2012, the company has become a leading player in product analytics, helping companies make better decisions by providing insights into user behavior.
We sat down with Skates to discover how he and his team expertly blended foresight and happenstance to build a thriving product analytics platform that continues to make waves in the industry.
Sonalight and the pivot to Amplitude
Before starting Amplitude, Skates co-founded Sonalight, makers of a mobile app called Text by Voice. Predating Siri and other voice assistants by several years, the app allowed you to talk to your phone while it was asleep, using voice commands to send text messages and perform other tasks. “We thought voice recognition technology was just getting good enough so that it would start to be a new interface and there were gonna be a bunch of applications around it,” Skates explains.
The technology worked – Sonalight was the first company to launch an Android app that was always listening in the background – but it still faced issues. Skates explains that the app’s voice recognition accuracy – particularly on the first use – was still not high enough for people to return to the app and keep using it. “We had something like 200,000 downloads using the product. But [retention] was gonna be a real grind. It was like, we’ll bang it out for over a many year timeframe and we may get to some minimal traction, but this thing is never really going to take off and be a super impactful company.”
“We may get to some minimal traction, but this thing is never really going to take off and be a super impactful company.” – Spenser Skates, CEO of Amplitude
The push to determine how accuracy impacted long-term user retention yielded an unexpected benefit. On the side, Skates’ team had been developing their internal analytics product for Sonalight. The tool tracked how users interacted with Sonalight – what features they used, what they liked and didn’t like, where they were getting stuck, and where they were having problems. “I remember looking at so many competitors – Google Analytics, Kissmetrics, Flurry, Localytics – none of them could answer these sorts of questions.”
Skates realized the company might be onto something big once they started showing their analytics technology to other software and app companies. Mid-2012 saw mobile usage snowballing – Skates remembers how the total smartphone usage was predicted to double yearly. “So many companies that we showed that data to were like, ‘Holy shit, you guys know this stuff? This is incredible. Can I get this?’ So we said, let’s build a company that serves the infrastructure behind that, which is what Amplitude ended up being.”
TAKEAWAY: Avoid becoming too attached to your ideas, especially in the early days. Sonalight may have been a product ahead of its time, but that still didn’t guarantee business success. If it wasn’t for the fortuitous discovery of mobile analytics, Skates and his team may have shut the company down early – and Amplitude would not exist, at least not as we know it today.
Serendipity in early customer acquisition
The early days of Amplitude were a “classic startup grind,” with a small team working long hours and making sacrifices to bring their vision to life. Determined to avoid the same mistakes the team made with Sonalight, the founders talked to 30 different companies to gauge interest in the product – but crucially failed to ask whether these companies would be willing to pay for it. “Out of that initial 30, none ended up paying for the product, at least in the early days.”
It wasn’t until mid-2013, when Skates had a chance encounter with Bret Terrill, the co-founder of mobile gaming company Super Lucky Casino, that he realized the value of the platform. “We show up, we give the pitch, we walk through the demo, we get to the end of the whole thing, and he asks a question that I had never been asked before up to that point: ‘How much does it cost?’” Skates, recalling pricing lessons from other online entrepreneurs, blurted out the largest number he could think of – “$1,000 a month” – and was blown away by Terrill’s response: “Wow, that’s so cheap!”
“Every dream I have ever had about building software was validated at that moment.” – Spenser Skates, CEO of Amplitude
Skates admits they weren’t initially strategic in targeting product managers as their early customers, instead building whatever was needed to close a deal. Still, Terrill’s mobile gaming connections proved a boon. “We started meeting more people in that community – ex-Zynga product managers who had gone on to build their startups. That was the source of so many of our early customers” – already used to using analytics in the same way Amplitude envisioned and willing to put up with a less-than-perfect product that provided the data they craved. “That was our bootstrap out of nothing. A lot of ‘em were pretty hardcore,” Skates laughs. “They gave the best feedback.”
TAKEAWAY: Be open to serendipity. While strategic planning is essential, be open to unexpected opportunities that may arise, such as chance encounters or connections that could lead to valuable partnerships or customer acquisitions.
On the transition upmarket and shifting positioning
Like many tech startups, Amplitude started by targeting small and medium-sized businesses (SMBs), as it was easier to sell to them initially. The company didn’t have a clear marketing strategy at the beginning and relied heavily on engineering and sales to grow the business. “We’re an engineering and sales company,” Skates noted. “So it’s like, all right, what does the next deal need? Okay, build that.”
Despite needing more direction, Skates still reached the first million in revenue in only nine months, but the team struggled with high customer churn. Around 2014, Skates noted that to scale the company, they needed to move upmarket and focus on enterprise clients. “We realized the money’s in the enterprise,” Skates says. The team landed Intuit in early 2015, followed by Atlassian in 2016.
2016 also marked a fundamental shift in Amplitude’s messaging and branding from mobile analytics to product analytics – an insight gathered by sales representatives during customer conversations. “One of our early sales reps named Bryan Parman came up with the insight… and that ended up weaving our way into the whole company messaging and branding. That was a huge revelation.”
“We recognized we need to go upmarket to the enterprise to really be able to scale this.” – Spenser Skates, CEO of Amplitude
But the transition wasn’t always easy. Skates recalls how the company built features like crash reporting and white-labeled analytics, only to realize later that these were distractions. “We actually built a lot of things outside of analytics in the early days that were really stupid.” But Skates recognized in hindsight that it was only after eliminating these distractions that the company could find clarity in its offerings. “Anything that ended up growing product analytics, we would build. Anything that was outside of that, we’d just say no, and that was okay.”
TAKEAWAY: The most effective strategies come from within the organization instead of being dictated by the C-suite and other stakeholders. Skates believes these field insights were more valuable than anything market analysis consultants or PR firms could provide. Conversations with customers from those on the front lines – salespeople, support staff, or other roles – are gold for early companies like Amplitude.
Learning from Mixpanel’s mistakes:
Product analytics was already a competitive market in 2016, with Amplitude’s stiffest competition coming from industry giant Mixpanel. With a healthy bank balance and boasting nearly 20,000 customers and almost 50 percent of their revenue coming from enterprise, the company made for a formidable foe.
For Skates, being the underdog wasn’t a drawback; it was a strategic advantage. Playing catch-up allowed Amplitude to learn from Mixpanel’s mistakes and take a more measured approach to growth. “They [Mixpanel] ended up being an incredible source of leads for us,” Skates explains. He notes that Mixpanel made the mistake of expanding too quickly, hiring a massive sales team and trying to roll out multiple products before reaching $100 million in revenue – a gamble that ultimately failed.
In contrast, Amplitude scaled sales much more gradually, focusing on the needs of a single buyer. “You need to prove our product market fit within one product first before you try to go to multiple products,” Skates noted. “The consolidation play doesn’t work below a hundred million [in revenue].” Keeping sales overheads low meant Amplitude could offer their product at a much lower cost than Mixpanel – an intentional strategy to attract users. Amplitude provided 10 million events for free, breaking the industry standard and giving users a reason to switch from competitors. This decision led to a surge in free users, many of whom converted to paid customers.
Skates also explained how Amplitude looked to previous generations of analytics companies like Omniture to learn from their successes and failures. “Omniture was the OG data analytics company,” Skates recalls. “It was uncanny – they were like the exact same business, only 20 years earlier.” These insights from past companies helped Amplitude win larger enterprise customers, focusing on collaboration, data management, and, crucially, the segmentation of Amplitude’s offering into preset packages, what Skates calls product line extensions. By offering B2B account management and data taxonomy, among other features, as distinct packages, Amplitude’s sales team could start to talk about the differentiated pieces of value within the wider product portfolio.
TAKEAWAY: Learn from industry examples. Analyze the successes and failures of other companies in your space, and apply those lessons to your product strategy. In the case of Amplitude, focusing on customer-centric metrics rather than vanity metrics has been a key driver of their success.
The future of product analytics
Skates doesn’t see the trend of customer centricity slowing down anytime soon. As the digital landscape continues to evolve, he believes that companies will increasingly rely on data to make informed decisions. “I think the future of product analytics is going to be driven by machine learning and AI, helping companies predict user behavior and make better decisions even faster,” he says. Far from the company’s early days with ex-Zynga product managers, Amplitude now helps households names grow their usage – Chick-fil-A boosted their average order value with upsells based on Amplitude’s data, and NBC began tailoring its homepage based on user history, doubling its 7-day retention rate. “There’s so many examples of us doing this with companies out there where we are providing the data that drives their product strategy.”
In the meantime, Skates remains focused on growing Amplitude and staying true to the company’s mission of helping businesses make better decisions through data. “We’re making a lot of big bets this year to drive distribution,” he hints. “Our ultimate goal is to help companies build better products, and we believe that by focusing on customer-centric metrics and fostering a data-driven culture, we can make a real difference in the world,” he says.