In the fast-paced world of tech startups, success stories often read like fairy tales. But behind every overnight success is years of hard work, dedication, and strategic decision-making. Today, we dive into the journey of Spencer Skates, CEO and co-founder of Amplitude, a digital analytics platform that has grown from a bedroom floor startup to a billion-dollar public company in less than a decade.
The Genesis of Amplitude
Spencer’s journey began like many others in Silicon Valley – with a mattress on a friend’s bedroom floor. After graduating from MIT, while most of his peers headed to tech giants or consulting firms, Spencer chose a different path. He moved to California and teamed up with his current co-founder, Curtis, to chase the startup dream.
Their first venture, Sonaly, was a voice recognition application that allowed users to send and receive text messages by talking to their phones. This was before Siri hit the market, and the concept seemed promising. They even had a successful demo day presentation and managed to get a few hundred thousand downloads.
However, as Spencer recalls, “A few months after demo day, we couldn’t get any of our users to stick around. They would try out the app, think it was kind of cool, but then churn out.” This challenge led them to build their own analytics platform to understand user behavior better.
Little did they know that this internal tool would become the foundation of their next venture – Amplitude.
Pivoting to Amplitude
The decision to pivot from Sonaly to Amplitude wasn’t easy, but it was necessary. Spencer remembers a crucial conversation with Sam Altman, who had just wound down Loopt and was getting involved with Y Combinator. Sam challenged them about their passion for voice recognition technology.
“I remember saying to him, ‘Yeah, you know, we’re not particularly passionate users of voice recognition as a technology. We just think it’s a cool technology,'” Spencer recalls. “He’s like, ‘Yeah, you guys should work on something else.'”
This conversation was the catalyst for winding down Sonaly and focusing on what would become Amplitude. It’s a stark reminder that passion for the problem you’re solving is crucial for long-term success in the startup world.
The Importance of Customer Interaction
One of the biggest lessons Spencer learned from his Sonaly experience was the importance of customer interaction. “One of the biggest mistakes we made with Sonaly was not spending enough time talking with our customers,” he admits. “We would build product because, as engineers, that’s what you know how to do. You know how to build product. How do you talk to customers? I don’t know. It’s weird, it’s awkward, it’s uncomfortable.”
With Amplitude, Spencer made a conscious decision to spend at least half his time talking to customers. Before even building the product, they reached out to 30 companies to do research and understand their pain points. This customer-centric approach proved invaluable in shaping Amplitude’s direction and value proposition.
The Journey from $0 to $100 Million
Amplitude’s growth trajectory is nothing short of impressive. Spencer breaks it down year by year:
- Year 1: $0 to $1 million
- Year 2: $1 million to $4.5 million
- Year 3: $4.5 million to $14 million
- Year 4: $14 million to $31 million
- Year 5: $31 million to $53 million
- Year 6: $53 million to $80 million
- Year 7: $80 million to over $100 million
This rapid growth didn’t come easy. Spencer emphasizes the different challenges at each stage of growth:
- From $0 to $1 million: “You’re just begging anyone to use the product,” Spencer says. At this stage, it’s all about committing to building whatever customers want, just to get them on board.
- From $1 million to $10 million: You have a working kernel, and it’s about replicating your initial success. There’s some momentum, but it still requires significant effort.
- From $10 million onwards: This is where things start to break down. “What worked in just doing heroic efforts and single deals does not work,” Spencer explains. “You need to build an organization. You need to build repeatable processes and scale.”
The Importance of Asking for Money
One crucial lesson Spencer learned was the importance of asking for money early. He regrets not doing this sooner with Amplitude. “I should have asked for money much earlier because then I would have realized we weren’t talking to the right companies,” he reflects.
It wasn’t until July 2013, over a year into development, that Spencer got his first paying customer. The conversation with Brett Taylor from Super Lucky Casino was a turning point. When Brett asked about the price – a question Spencer had never been asked before – Spencer, remembering advice to always charge more, quoted $1,000 a month. To his surprise, Brett agreed.
This experience taught Spencer a valuable lesson: “I should have been asking for money way earlier for all those customers. I would have gotten a lot of nos, but that would have been okay. I would have gotten much faster to someone like Brett and realized I should have been out there trying to keep finding someone until I found someone with enough pain on this that I could get them to pay us money.”
Standing Out in a Crowded Market
When Amplitude launched, the analytics market was already crowded. There were 20 to 30 companies offering similar-sounding services, with Google Analytics being the default choice for many. However, Spencer and his team saw an opportunity to differentiate themselves by going deeper than their competitors.
“The thing we saw when we looked at it is none of them went deep in the problem,” Spencer explains. “They all did surface-level metrics and then stopped there. We said, ‘Hey, if we go much deeper, we think there’s a ton of value.'”
This focus on depth and providing more profound insights has been a key factor in Amplitude’s success and rapid growth.
The Realities of Startup Life
Spencer is candid about the realities of startup life and the sacrifices it requires. “You can start a company at any age,” he says, “but the key thing to understand is how hard it is and how much of a life commitment it is.”
He emphasizes the all-consuming nature of building a successful startup: “I’ve been very deliberate about sculpting my entire life to allow me to build this company. That extends to my personal life, that extends to where I live, that extends to what I think about. I just obsess about what I’m doing here day in, day out.”
This dedication comes at a cost. Spencer admits to falling out of touch with many friends due to his focus on building Amplitude. While part of him misses these connections, he’s made peace with the trade-offs. “That’s the choice I made in life, and I’m okay with that,” he reflects. “I’m okay with that trade-off because I knew that’s what it takes to build.”
Keys to World-Class Performance
Spencer references a famous Harvard Business School study on world-class performance across various fields. The study identified three key elements:
- 10,000 hours of practice
- Expert coaching
- Enthusiastic family support
He advises aspiring entrepreneurs to consider how they can set up these elements in their lives. “You need to spend a lot of time on it, you need to go get help from other people who are really good at this so you can learn much faster, and then you have to set up your personal and family life in a way that supports this,” he explains.
The Ongoing Challenge of Growth
Even with Amplitude’s success – going public in 2021 and reaching a billion-dollar-plus valuation – Spencer still feels the pressure to grow. “No matter what size you’re at, you’re always expected to grow more,” he says. “Everyone wants to know how you’re going to be 10 times bigger than you are today.”
This constant expectation of growth is both a blessing and a curse. It provides continuous opportunities but also creates a persistent feeling of being unsuccessful. “Even if you’re as successful as Google or Amazon or Microsoft, they want to know how you’re going to be 10 times bigger,” Spencer notes.
Conclusion: The Startup Journey Never Ends
Spencer’s journey with Amplitude is a testament to the power of perseverance, adaptability, and customer-focused innovation. From a voice recognition app that didn’t quite take off to a digital analytics platform used by Fortune 100 companies, his story embodies the ups and downs of startup life.
For those considering embarking on their own startup journey, Spencer’s experiences offer valuable insights. It’s not just about having a great idea; it’s about being willing to pivot when necessary, deeply understanding your customers’ needs, and being prepared to dedicate your life to your vision.
As Amplitude continues to grow and face new challenges, Spencer’s entrepreneurial spirit remains strong. His story reminds us that in the world of startups, the journey never truly ends – there’s always a new summit to climb, a new problem to solve, and a new opportunity to seize.
