Spenser Skates is the CEO of Amplitude, one of the leading customer analytics services for enterprises and product makers. But getting customers like Twitter, Instacart, Match, and IBM didn’t happen overnight. Spenser lays out the mistakes young companies will often make as they grow, and how he positioned Amplitude for growth and success. He found these lessons essential for founders to learn on their way to $100 million ARR and beyond. His SaaStr Build session was so packed with information that we had to split it into two episodes. Look for Part 2 on Friday! You can also watch the full video below.
“Success does not happen overnight. Twelve years in and I’ve learned that it’s the accumulation of small wins and little advantages that occur over many years that lead to growth.”
Growth potential begins with a strong business foundation
To build the right foundation, prepare your focus and determination. When Spenser first realized Amplitude’s potential for growth, he turned to companies coming out of Y Combinator for inspiration. As he was analyzing these companies coming out of seed funding competition, he observed what he refers to as The Rule of Thirds.
One-third of the companies that came out of Y Combinator were successful—in being acquired, going public, or hitting their growth benchmarks. Another one-third of the companies went under the radar. The final third of companies were still operating with satisfied customers, but they weren’t thriving and they weren’t growing.
Skates figured that if he, or any founder, could last longer than two years in business and find a solid customer base, then there was legitimate hope for hypergrowth. Of course, if Amplitude were among the first one-third, the successful businesses, then lasting two years wouldn’t be a problem and there would be time to find the right product-market-fit.
Find the right product-market fit
In case your product is not an immediate success, this two-year period will give you the space to develop the best product you can.
Getting the right product-market-fit is great for your customers, but it’s hugely beneficial for building your company. A successful company needs a market that it can serve. Then, once you have a product that solves an actual need for real people, you have the ammunition to recruit the workforce you need.
Build the best team for growth
In both creating the foundations of your business and developing the right product, hiring the right people for your business is one of the more important decisions in making your company sustainable.
“The first few members of your team are the most important people you must sell your product—or the vision of your product—to.”
Spenser was able to recruit two co-founders to join him at Amplitude, but it took some convincing. After all, they wanted to know that he had a solid product idea with potential. Before signing on with the company, one of the co-founders sent a thoughtful list of twenty questions that required Spenser to examine his product, the market, and his vision for the company closely. Among the list were questions such as:
- How do you know now is the right time for the market?
- Why do you think you have a winning product?
- Why do you have an advantage?
You must also go through a thorough examination of your product and company as you determine who the right leaders will be to join you in getting your idea off the ground.
Hire a team of people more talented than you
When choosing your executive team, don’t be afraid to choose people with more experience than you, who are older than you, or who are better at certain functions than you are. Hire talented executives, then learn to get out of the way so they can do what you hired them for. As a CEO, it’s essential to learn how and when to step aside and let the people you hire do what they are best at.
When your company grows, it will be impossible for you to execute, or even manage, every aspect of the company. Build a team that will make it easy for you to delegate as you grow.
Surround yourself with a well-rounded board of advisors
The next step in building a company for hypergrowth is choosing the board for the company. Unfortunately, many founders miss out on properly constructing this resource, and miss out on what a well-rounded board can offer the company.
The difference between appointing a board member and hiring an executive on your team is that you can’t fire a board member. In other words, you must be extra deliberate in choosing your board because they may be around your company for a long time.
There are three things Skates looks for while choosing a board member:
- Do they have empathy for the CEO?
- Are they going to work hard for me and put in the time to train and coach me?
- Are they conscious of what they know and what they don’t know?