Moving Your Product Up-Market as You Scale

Episode Transcription

Justin Bauer:                I think we went through a learning process about three years ago, where a lot of our intuition was still based on assuming our customer was this 50 person startup, when in fact they were no longer that. And so then a lot of my job became educating the product development organization how that's different.

Anna:                           [crosstalk 00:00:23] Better Product, the only show that takes a behind the scenes look into how digital products are created.

Christian:                     The business is built around them and how you too can innovate better product. I'm Christian.

Anna:                           I'm Anna.

Christian:                     Welcome to today's show. There is nothing quite like those early days of product success. Seeing your vision come to life as customers begin to adopt your service is not only validating, it can lead to new opportunities to scale and grow.

Anna:                           Of course, scaling has its own challenges. For example, what happens when you wake up and realize your target customer's changed? How do you move your product upmarket, targeting a completely new audience while maintaining the customers you already have? Today's guest has a lot of insight into the subject. Well, because he's lived it.

Christian:                     We spoke with Justin Bauer, VP of Product at Amplitude, which helps people use customer data to build great product experiences that convert and retain users. When Justin joined Amplitude, he was a perfect fit for the company as it began to grow.

Justin Bauer:                I joined Amplitude a little over four years ago, so back when we were a pretty small company, only 20 people at the time. I joined because I was really passionate about the mission and vision of the company. The founders Spenser, Curtis and Jeffrey, really believed that there was going to be a new way for product teams to really be successful in the marketplace, and that many teams lacked access to the data they needed to be successful. I had experienced that myself having previously run a gaming company. Analytics was the lifeblood of basically many of the decisions that we made, and we struggled with many of the out of the box tools that existed at the time.

Anna:                           Justin lives and breathes analytics.

Christian:                     I mean, wouldn't you also call yourself an analytical person?

Anna:                           Oh God.

Christian:                     Wow, sorry, that was bad ... or great.

Anna:                           No, it was bad. You were right. Yep, trust your instincts. So anyway, with the nature of fast moving startups, data is extremely valuable, and Justin set out to help Amplitude be the go-to analytical resource for new products.

Justin Bauer:                For those of us that I think were fast moving startups, we got that the way you build product was that build, measure, learn cycle. It wasn't, go and just ask people what you should build and then go build it for them. And to do that you're going to need analytics. And so I think we felt a lot of conviction that that was going to be the future of how product would be built.

Christian:                     Before he knew it, Amplitude wasn't just serving startups, they were serving enterprise companies. And when that leap happened it changed how they thought about everything. From who their target customer was, to how they serve their customers, and the services they provided.

Anna:                           So what would Amplitude look like in the future? And what would they have to build to make that future a reality?

Justin Bauer:                Rallying around what's winning going to look like for us six to 12 months from now. We decided that we wanted to be known as the company that will help you understand and improve retention. That was our thematic goal, which then allowed us to then start to think about, what are some of the solutions that we could build to actually help make that happen?

Christian:                     So how did they do it? You'll learn today. Justin shares how that upmarket move actually happened and what he and his team learned in the process.

Christian:                     What was your role and your team's role as you figured out what market to go after, establish that this was the vision of the founders, and then what was the next step to go analyze these wins and losses, and whose responsibility was that?

Justin Bauer:                It ultimately is a shared responsibility, and when you're small you just need to make sure it happens. And a lot of times actually being the first product person in a company, that's kind of your job. Just to make sure all the things happen. And if no one's doing it then you do it, or you encourage somebody else to do it.

Justin Bauer:                One thing that is really important to me though is that in B2B, this concept of build what you sell, sell what you build. These things need to be highly aligned, and so working really closely with your sales counterpart to ensure that how we are talking about the products and our go to market motion is highly aligned with how we're building the products, and the direction that we're going there. That was also one of the first things I needed to do when I came in, was work really closely with the sales organization. Shouldn't even say organization, there were five people, but work with that team at the time to make sure that that was really tight.

Anna:                           So why is that important? It sounds obvious, to build what you sell and sell what you build, but talk a little bit more about why that was such a focus.

Justin Bauer:                It can be really easy for those two orgs to start to drift, especially as you get larger. One example of that can be, you'll have sales selling way ahead of actually what your capabilities are. Luckily that has never been a problem here at Amplitude because I think we've been really tight on what it is that we build, and also because we've built a great product and so you don't have to have salespeople overstretch it.

Justin Bauer:                But another example of that is, over time we have expanded our capabilities and our focus, and making sure that sales actually knows how to talk to those people, that you're helping train them up on that. Or talk about some of the new capabilities that you have, because if they're not selling some of the capabilities that you're building in your enterprise, then you won't find success. And so, I think that's why those things just need to be really tight and those leaders need to be [inaudible 00:05:43].

Christian:                     When you started there and you did this research to figure out who the core customer was, were you facing problems when you started? Meaning, when you started, was your charter sort of like, "We're seeing these problems that we need to fix," or was it, things were working and you needed focus and scale?

Justin Bauer:                I think it was the latter. I think things were working but it was about how do we accelerate that growth. I think we built an early version of the product that was finding success with a core set of customers, but focus was starting to become a problem as I think at the time maybe the company had 30 customers. With 30 customers, I think, yeah, you can actually literally review every single customer request. You can go and meet with everyone on the sales team, but as we started to grow rapidly you start to get requests that maybe don't actually fit the strategy. And as we added more engineers, what's our process of actually building? We didn't have any concept of sprints or anything like that, and so big part of my job was also bringing in some of that rigor to ensure that we could scale.

Anna:                           As a product person, I'm curious how much you built the product that you wanted to have in your previous life, as opposed to how you balance that with customer request?

Justin Bauer:                In the beginning they were highly aligned because I did happen to be the target customer. I had previously run a gaming company, early stage startup, and that's who we were going after. That was, I think, fun. And I think also a reason why I was brought into the company, because I had a really strong conviction understanding the problem. And also, you find that commonly a reason why startups are successful. The concept of founder market fit, where most successful startups actually had founders who really felt the problem or were actually the customer in the beginning. And so I do think that was why we were able to find early success. However, as you scale, that can become a challenge and potentially even something that prohibits you from growing. Because today, I actually am not the target customer.

Justin Bauer:                In fact, most of the time we're now serving enterprise companies. They have much larger teams. I think we went through a learning process about three years ago where a lot of our intuition was still based on assuming our customer was this 50 person startup, when in fact they were no longer that. Then a lot of my job became educating their product development organization as to how that's different. What are these new problems that we had never really thought of before to kind of rebuild that intuition to make sure that we weren't just building for ourselves.

Christian:                     That seems like a hard sort of reality to grasp, I would imagine. You said it very professionally, but I'm imagining if I was sitting there thinking, "This is the way that I think we should do it. It's been working, we're not going to change for these new customers." How did you handle that transition or was it as seamless as you just made it sound?

Justin Bauer:                No, it definitely wasn't as seamless as I made it sound. It took time, and it was a lot of repeating myself and making sure that we brought customers in that looked very different. And so, yeah, there was a lot that I think we did through that. I would say one of the things that we did that was important was, as a leadership group we aligned around that being a key part of the strategy.

Justin Bauer:                By the time we decided to go after enterprise, the company was a little bit bigger, we could no longer have everyone in the same room. But we did meet as a leadership group and with key influential people in the company and talked about like, "Do we think we can go after the enterprise?" And when we decided yes, that was something that was like, "Okay, this is a big strategy for us as a company. We're going to need to rethink how we do things."

Justin Bauer:                That alone wouldn't have been enough because then we still would go back to intuition, but at least we had that like, "Oh remember, it's enterprise. Is Atlassian or Intuit going to be seeing that same problem that this tiny startup that has five people see? No. And I think, through over time, a lot of repetition and repeating, that we were eventually able to develop that intuition.

Christian:                     What did it look like, that shift into a new potential market or moving upstream, were you ... how did that shift happen? Was it, deciding we're going to go upmarket, or were you starting to drive ... were you getting inbound people from larger companies inquiring? What was the sort of, I guess, inflection point that sort of drove that shift upmarket?

Justin Bauer:                It was a combination of all of that. So it was one, an understanding that we did believe eventually that we were going to serve enterprise, but we didn't know when. And then, it was that when not if question, a very common kind of question in product, was then getting a sense of market trends. So the fact that we started to get a little bit more inbound coming from enterprise. Because I think Intuit actually was one of our first enterprise companies, and then we actually didn't have one sign for maybe six months after that. And then we started to get two or three sign, and you started to observe that actually we're getting a lot more demand here, should we refocus as a company? And so I think it was a combination of all of that that led us to that intuition.

Anna:                           How did it feel to, at a company level, to move upmarket? Do you feel like you were kind of moving away from your initial group that kind of got you started? Or, what was that process like?

Justin Bauer:                It was a big shift for us. We had to rethink almost everything that we do as a company. I can't imagine trying to do that as a much larger company. Like I said, at the time we were 60 people, and even with that it was a lot of work because like I said, one, many of us didn't have intuition for that because we never worked at those larger companies. Obviously the go-to-market motion is very different, and so longer lead cycles. One of our operating principles is philosophy. That becomes a lot harder to do in enterprise sales. And then, like I said, on the product side it was like, "Well, we've found so much success with product, with these small fast moving startups, why are we doing this?" And something that I think we talked about, which was really important, was we still believe that we should be serving startups.

Justin Bauer:                And the reason for that was, they are the ones that are basically the cutting edge of product development, and these enterprise companies, they want to actually learn from startups. And so it wasn't a, "Startups no longer matter to us." It was, "No, what we're saying is enterprise now also matters. And the startups, we still want to make sure we're building a cutting edge product. They are going to be a key partner for us to do that. And then we need to think about, how do we bring that to the enterprise?" And that ends up being different solutions then if you're just going to the startups,

Christian:                     I think that'd be really interesting to dive into because yeah, usually you're worried about your favorite indie band and you hear them on the radio, you're like, "Aw, man, they sold out." It sounds like you've handled it pretty well, but I'm curious then how do you balance the Amplitude product that is for startups and then for enterprise. That is a marketing, messaging, positioning and packaging exercise. But from your perspective, it sounds like you're going deeper. You're taking what you're learning from startups and applying it to a broader product set. Is there any sort of specifics we can dive in to understand how you actually will take ... it's almost like a lab's approach it sounds like, or something, where you're almost taking what the startups are doing and rolling it into the product and communicating it outward. Can you talk a little bit about that?

Justin Bauer:                It can be a challenge sometimes, but I think it comes back to we know we're going to win on innovation and it's critical for us to have the leading product. And so, that means that we will always need to be investing energy and resources on building and experimenting around new ways to do analytics, specifically around product, and therefore not everything we build might be ready for the enterprise. That's just an assumption I think to everyone here, so people understand that, and a core part of our roadmap will always be focused on that. Some of those things actually we'll bring to the enterprise and some of them actually we won't, and that's okay. That's just part of how we make sure that we're always cutting edge.

Christian:                     How do you figure out whether something is ready for the enterprise?

Justin Bauer:                You start to test it with people within the enterprise and understand what adoption looks like. A big piece of that can be, it's one thing to build something for a power user, it's another thing to build something that's more applicably used across many people. Enterprise may not have as sophisticated of users and so we might start with building something specifically for a power user. We'll learn really quickly with them and then we might have to rethink even the whole experience to bring that to the enterprise. There's examples of that going on I think all the time.

Justin Bauer:                I do think sometimes people who are building for enterprise will fail and think that everything they have to start with, how might this get adopted into a 1,000 person company or a 10,000 person company? That may not be the case. Some things, yes, that makes sense because you're literally solving a problem that only matters for a 10,000 person company. But other times you can actually learn really quickly by working with a couple power users. And then make sure that that actually is a problem to be solving and an important solution to build, and then tackle, how do we actually take this and get this into the hands of many more people?

Anna:                           You've mentioned intuition a lot. You've said you had this customer intuition, it changed, it changed to the enterprise. It sounds like it's an important kind of aspect of how you think about product. Can you talk to me a little bit more about what you mean by intuition?

Justin Bauer:                Yeah. I kind of have a belief that every great products leader or product person has this mental model of how the world works in their head. And that is their belief around, what are the problems that are out there and why do people struggle to accomplish whatever the goal is that matters, ultimately that your company or product serves. So your intuition comes from that mental model. It is like a belief that if we were to tackle this problem, we will find success. This solution is the right type of solution for that problem. And I think that's just critical to be having just good vision and the ability to kind of the right discretion for what you should be doing within your products. You need to focus a lot of energy I think on building that up and continuing to make sure that that mental model is accurate, which is why we do things like we spend 20% of our time talking to customers or prospects. Constantly talking because I think that's making sure that our mental model is accurate.

Justin Bauer:                And then when I hear something that doesn't actually fit with that mental model, that's something I can go and dig into a bit more, and try to understand that better. And sometimes I understand it better. I'm like, "Oh, well that actually isn't a problem that we should be solving. That's great. Someone else's problem to solve. We don't have to solve every problem in the world." But sometimes you'll hear something and you'll actually realize that that is a problem. "I wonder if other people have that problem. Let me go and talk to other folks to try to validate that." And that's how you develop more of that intuition.

Christian:                     The challenge that I see a lot of times when we're working with clients is that in the early stages when you don't have enough, and I'm not a scientist and so I don't know when the critical threshold of sample size has been reached, but I imagine maybe thinking through shifting up to the enterprise, how do you weave in analytics and how do you know you've got good enough data to make decisions on? You have your intuition, you have your mental models, and you built that up with startups and people like you. And then you move into a new field and some of your models get tested. Plus, you may not always have the analytics to back it up because before you sign into it, you don't have the data coming from them. So how do you sort of deal with that stage in sort of developing intuition without deep insight from analytics?

Justin Bauer:                I think that is always the starting point. You should always start by talking to customers and talking to people, understanding what their problems are. It's all about the problem statement. And then you'll build your first version of that. You're going to get early feedback on that, you're still not going to have data around that. It's an alpha version of the product. But then, I think once you start to get into the world of having 30, 40, 50 people that you're actually using your early version of your product, I think you can start to weave in some early measures of metrics. You don't need a thing like Amplitude or something super complex, but you can start to look at things like, "Are people using this every single day or every single week?" Or like, "What was our intention of how often it should be used?"

Justin Bauer:                How many of our 50 people that we have this in the hands of are doing that? We do that when we build early products. We'll actually look at that and say, "Yeah, we expect this to be used every day. Are people using it every day?" "No, they're not." Okay, "Why not? Let's go talk to them and understand why that is." That's the kind of early part of beta. And then eventually you'll get to a part where you want to either get more users if you're an early stage startup, or you want to expose this to more users if you already have a user base. And that might be, okay, now you're at a thousand plus types of users, at that stage you obviously can't talk to everyone. Now you're going to start to layer in actual product metrics and measure that. At that stage I think is when you could start thinking about using a product like an Amplitude.

Christian:                     You kind of touched on this a little bit, too. And maybe this is less of a data answer to this and more of maybe your personal intuition. In thinking through the decisions that you've had to make along the way, how do you know when something is working and when something is not? You've been there for four years now, so I imagine you've been faced with situations where ... You said earlier that the sort of analytics or data can be the arbiter in terms of what's working. Well, how do you know when something's not working and what should even be done about it? Like correcting it, tweaking something, or just nixing something entirely.

Justin Bauer:                I think it's hard and it's something that we need just make sure that we're doing all the time, which is actually going back and doing retrospectives on the things that we have previously built. So we'll do things like, let's review the last 10 product bets that we've made as a team. And so we'll go through that at least once a quarter and look at like, "Hey, when we created our initial one page measure of success, what does that actually look like for all these different bets?" I think it's important to be a harsh grader because in the long run we want to see things fail. It sounds counterintuitive but that means that we are taking risk. And so something we talk a lot about is what's our batting average on that risk? And are we getting better at that? But we should not be batting a thousand. If we are, then we're definitely not swinging for the fences.

Justin Bauer:                It takes time to be able to do that evaluation, and that is just the reality of it. If you're a company that is used every day and has millions of users, you might actually be able to learn that in a week. That's awesome. Unfortunately for us, we're not that, and so it might actually take a couple of months before we can fully evaluate the effectiveness of the first version of that bet. And then we have to make a call. Do we want to double down on it? Do we feel like it's sufficient for the ... it's meeting the needs that we have today? And we'll let it live. Or should we actually deprecate it? It didn't meet the needs of our customers.

Justin Bauer:                That can be a really hard choice to make in enterprise. I think because a lot of enterprise product are just ... it's like, "Throw more features at it. Throw more features at it." We really try to make sure that if something's not working we'll deprecate that, and be comfortable with that. And that might make a couple of customers angry because there might be a couple of them that use it, but in the long run carrying that product debt can definitely be a burden for us.

Anna:                           I do have one final question for you. What does better product mean to you?

Justin Bauer:                You're never done building products. So better product is the fact that you are constantly trying to understand how do you improve the product experience that you're delivering? And it's all in the context of the problems that you're solving for your customer. Every day we can make it easier, faster, cheaper for them to do, to solve the jobs that they care about. We even talked about jobs to be done, but that's a concept that I ... as well. And so, that's what we're striving to do every day is to actually better solve that job for that customer, and we do that through the product experience that we're building.

Christian:                     It's not often that we get to talk to somebody who's building a product that serves the audience of this podcast. We talked to Pieter Omvlee last season, back when we had seasons, season two.

Anna:                           I don't remember.

Christian:                     Don't remember.

Anna:                           I totally erased that.

Christian:                     I remember like it was months ago. So we talked to him and that's a big tool we use. We've talked to people from Envision. And this time we talked to Justin Bauer who's working on Amplitude which is also meant to serve product teams. So that was pretty cool.

Anna:                           He's not only building a tool for product managers, he's building ... He's a product manager, he's a product person, building a tool for product managers to be better product managers, to be more product informed. And I think that's so meta. It circles back on itself really.

Christian:                     Yeah, and we've talked about the theme of sort of building a product for yourself quite a bit on this podcast. One that comes to mind is we talked to Jon Gilman from Clear Software when he had that idea from being a consultant, and then built it around in those challenges. Justin went through those same challenges as well. But what I think was really unique was the way that he talked about intuition because I always find, especially with a design background, that your intuition is ultimately the thing that makes you good at what you do. But I also know that it's not ... necessarily born with it. So thinking about that is cool because I'm personally not big on analytics myself, but he talks about how he uses analytics to inform intuition quite a bit.

Anna:                           I liked what he had to say. In the beginning of Amplitude, he was the target user, so he was a good ... I know founder market fit, he's not the founder, but it's like he was the perfect person to lead product there because he was someone who would have utilized this tool and found a lot of value in it, and he talks a lot about his intuition. But I think what's important is that as Amplitude changed their target customer, he had to evolve his intuition because he had never worked in the enterprise. I think he talks about intuition, not that ... he had it, he learned it, but he had to evolve it. I think one way he talked about doing that was by spending 20% of his time with customers and prospects. It's one thing to have the intuition, but I think having the intuition intuition, that your intuition is not up to date and needs to be changed and needs to be pushed, is I think a huge product skill.

Christian:                     Yeah. Anna, you mentioned something that's really important, the shift from moving upmarket to serving users that are not himself. One of the cool things that he mentioned doing quite a bit to do that is not just by talking to users, the other aspect was he was running experiments a lot. I think he said something like he tries to look at 10 product bets per quarter. I really like the idea of that because he also mentioned how you sort of make a certain number of bets every quarter, and then you look back on how they turned out. He explicitly mentioned that you don't want to be batting a thousand, that would be 10 for 10 for non baseball people, or 100%. Let's just do that. You don't want to be 100% right because he says you wouldn't be taking enough chance. But I think that taking chances is another way that you kind of evolve out of yourself. I think maybe there's no better path to serving customers that are different from you than just throwing some things out there and seeing what sticks.

Anna:                           I agree with that. That ties really well into ... he mentioned it, I'm sure we'll be ... we've talked about it, we'll talk about it more, the idea of the product led growth. I think those big experiments ... One thing we learned at OpenView's Product Led Growth conference is, one important aspect of having a really good growth team is that safety to fail. You have to create an environment where people can do things and they may not always work, and that's going to be okay. And I think that's a lot of what he talks about with this retrospective, is that ideally not all of these things did actually work because that means they're taking bigger and bigger bets. I think that's a super important aspect of, like you said, building your intuition and even pushing beyond it.

Christian:                     Do you think that that risk taking is something that is universal for all growing SaaS product teams? Or do you think that there's situations where it's appropriate and times where it's not?

Anna:                           I think it's part of your balanced portfolio, right? I mean, you shouldn't be working on all innovation. At the same time you've got bugs to fix, you've got sustaining to do. I think it's kind of like how you have a mixed portfolio, you probably have a mixed set of experiments. You're probably testing big features. You're probably testing small enhancements. I don't know. What do you think?

Christian:                     Well, I think there's some industries where maybe it isn't so useful. I think if you're in some of these sort of specialized industries like say healthcare or biomedical devices, or something like that-

Anna:                           That's a good point.

Christian:                     ... maybe running experiments with your product doesn't quite work since there's such regimented processes. But I don't know, maybe there's something to be said about, even in those challenging the status quo through your product by running experiments with how you serve your users.

Anna:                           Well, he talked too about how the startup users were always on the cutting edge of things. The fast growing startups, they want new things. They want to do something different. They're always willing to change. And so I think maybe pushing it with those users, maybe your early adopter users are the better ones to kind of push with. And like he said, that what Amplitude does is they take those learnings from the startups and they'll feed them to the enterprise, and be a more thought leader in that way.

Christian:                     Yeah, that was a good point. I could imagine a lot of people as you move up scale, you ultimately, in B2B SaaS, almost start small, or SMB, or however you define those smaller companies at the move up to increase your revenue. But he does kind of give a different playbook than I've heard a lot, which is, yeah, to still serve the startups in a different way but he's even, yeah, leveraging them in interesting ways. And I think that itself could be a principle that I think product managers could build off of. Which is, as you diversify the types of customers, maybe figure out ... maybe they were early adopters, maybe it's the ones that have more of a stomach for trying new things. Maybe utilize those always to kind of keep pushing things forward.

Christian:                     So to recap, the things that Justin said, that we sort of found interesting, were one, tying product intuition to analytics is important. Even though they're building a product that's for product managers, he himself uses analytics to test out new things and tie it to that. Secondly, at least where it makes sense, running experiments, taking risks with certain types of users or with your product is important because it's how you help push your product forward.

Anna:                           Thanks so much for listening to the show this week. If you haven't yet, be sure to subscribe, rate and review this podcast. Until then, visit innovatemap.staging.wpengine.com/podcast and subscribe to learn how you can take your product to the next level. As always, we're curious, what does better product mean to you? Look us up on Twitter @innovatemap, or shoot us an email at podcastatinnovatemap.staging.wpengine.com.

Christian:                     I'm Christian.

Anna:                           And I'm Anna, and you've been listening to Better Product.

Christian:                     Better Product.

Anna:   Drop mic.