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m&a is always about creating plan BS and the way I would think about it is for any one company there's only ever two to three buyers that find what you're building to be extremely strategic and the strategy that I would do and how do
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you get notice is I would figure out the area that you bring a competitive advantage and I would inflict pain on that potential buyer make it impossible for them to not notice you because that's when they're going to have their
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ears perk up and say what's going on with this company the really important piece here is you want to do that in a way that's still friendly and open I see a lot of Founders get this wrong and they prematurely will shut down a
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conversation or they won't talk to an incumbent or a potential future buyer because they take too competitive of a stance but that's a mistake because m&a is all about creating plan BS and you don't want to shut that door down prematurely because you don't know if
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you can really go the distance and be an independent company so you want to have optionality welcome to Lenny's podcast where I interview worldclass product leaders and growth experts to learn from their hardwind experiences building and
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growing today's most successful products today my guest is Julia shottenstein Julia is a product leader at DBT Labs where she leads the DBT Cloud product she's also the co-host of the DBT Labs podcast called analytics engineering
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podcast a show about data trends that impact analytics Engineers work as you'll hear in this episode Julie actually led the acquisition of a startup that I'm an investor in called transform from the side of DBT labs and
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in our conversation we dig into the m&a process and get into a bunch of advice for how to improve your odds of having a good outcome and just approaching m&a broadly we also dig into the story of DBT which is one of the most successful
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startups out there that you probably don't know about and we talk about what they did right to get to where they are now we also cover how to best think about competition bunch of Frameworks for think our product and advice on how
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to Bro pricing and also open source enjoy this episode with Julia shottenstein after a short word from our sponsors this episode is brought to you by vanta helping you streamline your security compliance to accelerate your
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editing summarizing and even translating join the ranks of the most productive teams and Unleash the Power of superhuman try one month free at superh human.com Lenny that's superhuman docomo welcome to the podcast super excited to be here so you have a really
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interesting career path in that you went from VC into product management usually it's the other way around usually PMS become PCS and it's rare to see this kind of version of it and so I wanted to start with just a question of just how
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did that how did that come to be I I do have an unusual background but you know it doesn't surprise me that people who are interested in product are also interested in investing and and vice versa you know for me I've always had
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three interests broadly and that's an interest in business an interest in technology and an interest in markets and I get to express those interests both in investing and in product but just with different weights so in
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product you go a lot deeper on the tech and and markets is is less of a focus but you still get to do all three so I I have an unusual background and I used to be a professional investor at nea I did all of um spent all my time investing in
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early stage startups that built for technical audiences so I think Dev tools infra data companies and in 2019 I first discovered DBT which was an open- Source data transformation framework and I got really very very excited about DBT
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because when I talked to people that were using it the way that they described their experience on DBT was like unlike anything I had heard before it was much more of an identity for them than just a tool that they were using to
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get their their job done and that really struck me and as I kind of thought about what was happening in the market there was a lot going on in in 2019 the markets were changing quite a bit cloud data warehouses were starting to explode
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like this was the year where snowflake went from A4 billion doll company to a 12 billion doll company and I thought to myself if DBT worked it could work in a really extraordinary way and I naturally Tred to spend all my time getting close
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to Tristan who's the CEO and founder and I I wanted to invest so at this point you're BC at NAA you're trying to invest in DBT and okay keep going yeah so I I I was very very excited I thought if this worked it could work in a really
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extraordinary way and I spent all my time trying to get Tristan to like me uh so that I could invest in the company and then in 2020 I you know finally got the call that I was you know waiting for Tristan said we're going to raise some
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money he had a term sheet from a firm that he liked it was a good Venture fund but he also liked me and he wanted to give me a shot and I was like super excited to get that message like this is this is my chance and unfortunately I
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ended up losing that deal to Sequoia it's a a formidable partner reasonable reasonable L I was I was just so convicted that it was going to be a special company that I asked to even put my my personal money in and I asked to
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put like a very irresponsible IR rational amount um nearly like 20% of my liquid net worth into DBT because I was so convinced that this was was special and you know sometimes when deals don't work out as an investor you can create
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this like narrative in your head like oh good you know I I dodged a bullet or you know that better off without them or you know screw them but but for me like that was quite the opposite with DBT I really felt like DBT was this Runway train and
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it was special and I wanted to jump on board so a few months later I ended up calling Tristan and and asked him if I could be part of the company company that built the product that I thought was so special so that was my kind of
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unque path into product and into DBT so you invested in DBT and then you ended up there an opportunity opened up where you can end up working there no I think if I was was able to invest I I wouldn't be here so I I got a no um the board
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ended up vetoing my personal investment but it's okay because I ended up dedicating all of my personal time to building the company awesome okay so something you touched on there I thought was really interesting of what you saw
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about DBT that was so interesting and I think this is maybe a broader question of just in your time investing and finding a company like DBT early what if you learn about just picking well finding companies early especially what
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are signs in your experience of just that this is going to be something really interesting that you might want to join and this is more for people listening that are thinking about joining a company early on what you think they should look for so the way I
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would look at joining an early stage company would be the same way I would evaluate investing in one and so there are four things that I care about when I'm looking at really early stage companies and it's people Market product
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and distribution and I'll touch on each of those four to say a little bit more about what specifically I'm looking at so so people this is really the CEO the founder of the company put simply do you trust this person to lead and for me you
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know Tristan had this really rare ability to paint a very compelling future of the industry and how DBT was going to be a part of making that Vision a reality but he also was really really detailed in the day-to-day work of the
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anal analytics engineering work and it was that range and scale that made me feel like this is a Founder that's very rare and compelling the next is markets we we touched on it a little bit but you know what I'm looking for in markets is
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like is it growing is there space for a new entrance to make its Mark and when it came to DBT it was an explosive time in cloud data warehouses and is that chaos that was really the opportunity for DBT because they created some
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orderliness and structure to the way that people worked with their data in the cloud data warehouse so that was very compelling the the next is product everyone who's listening hopefully either is interested in products or has
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a product background so I won't say too much there but it but can you talk to users or customers potential customers are they building something that's really special unique can you hear that spark that enthusiasm and figure out if
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this is going to be special and then the last I think this is more important arguably than if they have a good product but is distribution do they have an advantage on how are they going to get to Market because that's really
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really hard and think about how they think about their competitive advantage on either the ecosystem or distribution and how they're going to ultimately sell the product you're not going to get a 10 out of 10 on on all four dimensions and
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so when you're joining a company you also have the benefit of dedicating your time and so try to think you know if they're weaker on one dimension what is it that you bring to the table or what are you special at that could
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potentially drisk the success of the company in terms of spark with a product I'm doing a post right now on product Market fit and how do you know if you product Market fit and a lot of it often comes down to like there's like a
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emotional reaction from someone you're talking to about the product You're Building they're just like holy I want I want this now is there anything even more specific you've seen of just like what is a sign that this there's a
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spark that people are just like really enthused you talked about people made DBT kind of part of their identity is there anything else there yeah it's can they not stop talking about it and that's this like the chatter about a
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product they want to share it with like their teammates or to other people at different companies that just top of Mind love and wanting to share what they've found with others is really a great sign that that you're on to
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something and then that spark will help do a lot of the work work on how do you get to Market because uh your evangelists are really your your users are people that love what you're building what about in terms of the distribution bucket what are some
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examples of just really important I don't know unique or effective distribution strategies or I don't know unfair advantages you've seen maybe with DBT maybe other companies like what are some examples of that so DBT had an
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ecosystem advantage and they were open source and this helped really dramatically for lots of people to have low barrier friction to just try it out and spread kind of organically they first got started with very horizontal people could just get started without
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ever even talking to sales and think that was a competitive Advantage but you know not all companies need to be product-led some companies are Enterprise topown sales and so in those situations think about like does the
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team really know how to land a complex Enterprise sale do they have a background in that particular space do they have a network of connections can be different depending on what the company is selling but you either want to see someone who's a company that's
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really strong at Enterprise or are really strong at the bottoms up Okay cool so I want to shift a bit to talking about an area that you have a lot of experience in which a lot of people are also really interested in right now
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which is m&a I've invested in a lot of companies and maybe I don't know once a month I'm getting an email from a startup I'm investor in they're just like we're looking at maybe selling the company things aren't working out the
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way we were hoping and you've been on I think maybe all sides of the table of m&a transactions including I think you led the acquisition of a company I was an investor in the DBT acquired that I think is public company called transform
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and so my question is just for Founders who are currently thinking about m&a m&a meaning acquisition essentially what's your best advice for them for how to be most successful in in the m&a kind of outcome for themselves when it comes to
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Acquisitions the time to start thinking about an m&a strategy is hopefully when you don't need one and the best strategy that I could give a Founder is to have a really strong offense in building their company and when founders start their businesses
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they don't usually set out to start a company to sell it to another business they start it to be an enduring independent Standalone company and if you have that path then you'll have the upper hand in absolutely every single
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m&a conversation because you have a viable alternative which is do nothing stay the course you don't have to sell but of course that's not the case for for most companies most companies don't have a viable path to being an
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independent company forever so they have to think about m&a and so m&a is always about creating plan BS and the the way I would think about it is for any one company there's only ever two to three buyers that find what you're building to
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be extremely strategic and and the strategy that I would do uh in in how do you get noticed is I would figure out the area that you bring a competitive advantage and I would inflict pain on that potential buyer make it impossible
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for them to not notice you because that's when they're going to have their ears perk up and say what's going on with this company you know we just bought this company transform they were doing a they're playing a really good playbook here and uh the really
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important piece here is you want to do that in a way that's still friendly and open I see a lot of Founders get this wrong and they prematurely will shut down a conversation or they won't talk to an incumbent or a potential future
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buyer because they take too competitive of a stance but that's a mistake because m&a is all about creating plan BS and you don't want to shut that door down prematurely because you don't know if you can really go the distance and be an
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independent company so you want to have optionality I love this term of inflict pain on your potential acquires what are some what are some examples of that like how who's done that well or what does what's an example of that yeah I mean I
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can share the the transform story company we we just acquired uh we announced it in in February so so DBT Labs we build Transformations that's our kind of main product and we we're venturing into a new product area that
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we call the semantic layer and to describe what that is like quickly it's allowing companies to Define their business metrics and so that whenever anyone queries it we always serve back consistent data on those business
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metrics and transform they were a pure play company only in this metric layer semantic layer and they they they had a really strong product they had figured out uh some of the technical challenges and they had solved it early on they had
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the benefit of having worked at Airbnb which which you know uh and Airbnb in the data world is is famous for having a really successful like semantic layer metric layer called manura and what we had at DBT Labs is really good
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distribution and ecosystem but we were kind of a little behind in bringing a product to Market and we felt that pressure from transform because they were doing such a great job at being vocal and loud about how their semantic
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layer solves these really hard technical problems but but they didn't have any distribution and so that was really tough for them and they were putting pressure but they were still positioning their company as a partner to us because
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they wanted our community to be excited about what they were building and hopefully get lure them over to use their product and so because they had positioned themselves as a friendly partner when when really we we weren't we were trying to compete for this
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similar use case when it came time to do an acquisition uh we were really excited because we knew their product was good and they had already done a lot of the work to make integrating with DBT possible and uh that helps us Post acquisition do the integration much more easily how do you just think about as a either as as a startup or even an incumbent about how to think about competition how much emphasis how much energy to put into thinking what
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competitors are doing and just how to that informs your strategy so we we recently codified our philosophy when it comes to competition and I'll give Nick handle the the founder of transform who kind of LED this exercise at DBT Labs
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but we really have like three pillars when it comes to comp comption so the the the first is hold true to our vision we're really excited about the path and the journey that we're going on at DBT labs and we don't want the distraction
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so occasionally you'll have competitors maybe throw shade or throw stones but most of that is just noise if you have a lot of conviction that you're going in the right Journey you want to just keep your eyes straight ahead and run your
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best race and not be too distracted by what maybe some critics are saying the second philosophy we have is really a grow the pie philosophy so we want to work with our partners in our ecosystem to make the opportunity set
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even larger and we see that today like we mostly serve reporting and um bi use cases we're we're seeing lots of companies start to operationalize their data now with this big wave of of ml clean transform data assets are being
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used to train machine learning models so the the pi continues to grow grow let's let's focus on that as our Target and work with people to make the opportunity set really attractive and not try to slice it up too thinly and then the last
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one is you know we want to lean into our strengths so so we have an ambition to be a platform company and we know what we're good at but we also want to leave space for our ecosystem to offer solutions to our users that that help
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them out and um we really want to Foster an ecosystem where we can partner with lots of companies in the modern data stack and generally speaking when it comes to competition we take a really long-term View and there are a few areas
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that we do want to hold our ground and that's in our transformation standard as well as our semantic standard because we believe those two are better served together for the user sake but for everything else we really feel like we can work with our ecosystem and
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accomplish what we want to accomplish and also help them accomplish their goals too so might be a good time to just chat about DBT and the success the company's had like so many startups have tried to become a standard default layer
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of what's now called the mo modern data stack and I don't know any startup doesn't use DBT or doesn't think about planning to use DBT it's just like a incredibly rare success story similar to snowflake where it's just like it's just
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the default for building large data startups and and most startups these days work with a lot of data so my question is just like what do you think DBT did most right to win in this and continue to win so I think DBT did a lot
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of things right but I'll point out two that that really stick out to me and the first is just power and simplicity and the second is a commitment to being open and I'll touch on what I mean by by those two things so when DBT was first
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getting started you would hear a lot from companies like I don't understand like what what's so special about DBT we we have a SQL templating tool at our company we built one in house like this is really straightforward and simple and
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it's true like DBT is really simple but that is the power of it and so our Founders Tristan Drew and Connor they had a belief that the people who do data analysis work that really work closely with their business stakeholders should
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also be the ones to contribute to creating clean data Assets in production because that data prep work is a necessary prerequisite for any an Anis that you do and so DBT was really this belief that if you know SQL we want to
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invite you to do these workflows that were traditionally held by data Engineers but you know you had to earn that right and so DBT has this nice framework where it's harder to mess up keeps data quality really high but it is pretty simple to get started and learn
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and and and that was really the unlock in the industry they were were definitely solving a pain point at the right time and then the second thing is this commitment to being open so DBT is open source and that's the the main kind of
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guts of of DBT where you write your business logic and it helps in a number of ways specifically it helps with flywheel keep the flywheel running and also with network effects and I'll explain what that looks like so DBT is
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really easy to get started with at your company with reduced friction you know we're building a product that people like so they talk about it they want to share it both of their organization and with other companies other companies get
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started with DBT again with reduced friction we now get to see this really diverse set of use cases for DBT across company sizes across Industries and it allows us to build a truly horizontal uh company as our company grows we get to
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invest back into our community and our product and the flywheel begins to spin faster and then you know meanwhile we have uh really large user base so we have 20,000 companies using DBT every single week and that attracts Partners
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to want to build for DBT so they share best practices build workflows and now if you're a company and you've standardized on DBT you really unlocked and integrated modern data ecosystem that wasn't available for you before so that has a flywheel and also kind of
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benefits everyone that decides to be on the standard and so it's those two really important trends that made DBT so powerful today so what I'm hearing there is essentially there the product was right for what people needed to solve
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there's also like a product Le component open- Source free self- serve kind of piece that people adopted used oh and start working and then kind of scaled and started paying for it and then there's kind of like an alignment of the
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vision of where this was going and how and it fit with how people wanted this to work for them is there anything else because a lot of startups do that and that all sounds really smart and good but a lot of startups try to do those
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things and no one cares maybe their product isn't necessarily what people are looking for maybe they're they don't get the right distribution I don't know is there anything else that you think they did really well that helped them
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Kickstart this to even be a thing like is it timing that was really great is it like specific influencers early on I think timing was really important with the success of DBT that they were there when the cloud data warehouses were
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really exploding and growing in a in an enormous way and you know DBT lab started as Fishtown analytics a consulting firm so they worked really really closely and Hands-On with all of their Consulting Partners to get the paino and really solve firsthand
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challenges that they saw I think that combination of being at the right place at the right time and also getting to work really closely with people's day-to-day problems created a really special experience I didn't know that
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that's a really important element of the story is basically they were focused like how long did they do that analy fish analytics Consulting Consulting part of the business was almost two years okay so they basically spent two
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years solving this problem like basically manually for people and that's such a that's such a great way to understand real pain and figure out how to solve it totally awesome okay so that's a really interesting Insight just like
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spend a few years just like man like it sounds like it was almost manual right like manually helping people transform their data using whatever tools already existed yeah well they were building DBT and using DBT to help them do their jobs
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better in supporting their clients and whenever they encountered paper cuts or friction or the workflow was taking longer than they expected they would build that into DBT and that really matured the experience of the product
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because the people who were buing it the founders were also day-to-day working with these customers clients that had pain points that reminds me of a story you told me about how you made your Eng team do some manual work of an algorithm
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involved in transformation can can you share that okay so I'm going to preface this story by sharing that I'm a huge math nerd and one of my favorite books on logic is called girdle eer Bach and in this book there's a fun scene where
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there's an ant farm that bands together to do the work of a computer flipping bits from zero to one to solve logic gates and so this chapter of that book was really the inspiration for an exercise that I ran my team through so
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about a year ago we were doing a big zero to one new project at DBT labs and we were going to change the algorithm for how we built customers data transformation graphs and I needed a way for the team to really internalize all of the changes
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that we were going to be make and I needed them to own it because otherwise they wouldn't be able to anticipate all of the edge cases it wouldn't be quite as durable you couldn't copy paste the algorithm so I showed up to a team
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offsite with uh spool of rope and uh sticky notes and I think my team looked at me crazy went with two heads when I started to tie people up to create a graph so each Noe of the graph was an engineer here and I uh the Rope was kind
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of the edges of the graph to connect them and then we worked through the new algorithm extremely slowly step by step and it was a way that you couldn't leave that exercise without knowing exactly what was going on because everyone had a
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role to play so I think a lot of times when you're starting something new you get into a situation where a few people really understand it and they're running way ahead of the rest of the pack but I needed a way for the whole team to go
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along for the journey so I'm constantly trying to create these important moments or memorable moments for the team so that it's centered around our mission and they can have the ownership of taking the project and making it
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successful and so it was perhaps a overly creative or cooky way to uh spend the day but it was was really successful what was the actual algorithm you were trying to implement um we we were trying to figure out how to make uh kind of a flipping
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the way that we run people's dags from an imperative way to a declarative way so instead of like running things left to right when data arrived in your Warehouse you think about it is rubers it's like what would need to happen to
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make uh your data slas be materialized in time awesome and uh sounds like the team found that valuable yeah okay uh reminds me of a clip from this last season of Ted lasso where they have used red strings and they I won't get into it
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but it's uh if you've seen it you will know what I'm talking about I want to come back to you're chatting about open source versus not open source so some part of DBT was is open source and some isn't I'm curious how the team decides
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what is open source and what should be open source what isn't open source and and what to charge for we think about DBT open source it's really the guts of the data transformation it's where you describe your business logic and then on
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the cloud side we build proprietary software that supercharges the development life cycle and the productionize so what we think about as leaving for our Cloud offering is we deal with state so stateful interactions and also any kind of cross team or
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structural collaboration we want to reserve that for our proprietary offering and I think it's really important to have that distinction of you know what what you believe should be open source or what is the open standard
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that really matters and ecosystem to us is really important so it's important that that remains open source but then we want to supercharge that experience with kind of an open core model and build proprietary software that that
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makes people much more successful using DBT today's episode is brought to you by assembly AI if you're looking to build AI powered features in your audio and video products then you need to know about assembly AI which makes it easy to
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31:56
Lenny and also spent a lot of time thinking about pricing and willingness to pay and things along those lines is there anything you could share about what is what you've learned about how to think about pricing for a tool like this
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or even in general pricing and willingness to pay is such a hard conversation and lots of startups don't do this early enough in their their company Journey likely a uh side effect of zero zero interest rates where investors were
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happy funding um GitHub stars and and usage and companies never thought about how how am I going to make revenue or make money which is it's important so you know for for us at at dbts I don't claim to be perfect at it but we're
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trying to get a better muscle around it and I always think about mavon who wrote This Book pricing Innovation I know you've had him on the show before but but he shares that you don't get to decide if you're going to have a pricing
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or willingness to pay a conversation you only get to decide when so it's much better to have that conversation before you build the product than have it when your sales team's trying to sell something and and people aren't excited
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about what you've built aren't willing to pay for it and at DBT L we have this value it's one of our core values that says we're more concerned with value creation than value capture and we really mean this when we talk about what is the value of DBT labs to our
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customers they often talk about how it's either 20 to 35% as valuable as what they spend on their cloud data warehouse but we charge our customers is a very small fraction of that 20 to 35% and that's that's by Design and last year we did our first
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ever pricing change in the company history and you learn a tremendous amount when you have that event because you get to test the price elasticity by of your customers and it's so important to learn that lesson while the company's
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still smaller the stakes are lower because pricing just is always evolving it's not a fixed thing it gets more complex over time and so we have to think about it quite a bit because uh you know my team builds proprietary
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software for DBT cloud and when we lose a deal we most often lose it to DBT open source and we like it that way we're we're happy to lose to ourselves uh but we have to really think very deeply about what are people willing to pay for
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and what moves the needle for them and and focus on that I'm so curious with that pricing process was like to figure out what to change is there anything you could share about just like what that was for you or what are some just surprises that came
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out of that process we just like oh wow we didn't expect that in these conversations there really like an all handson deck conversation it's pricing is so crosscutting because it's a finance discussion as well you're kind
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of modeling out things in spreadsheets and and figuring out how that might impact the business but you can't just solve these problems in spreadsheets you have to go talk to customers test the waters uh understand where people's
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appetites are and sussing that out is really hard and then of course there's a product piece to it too where you have to affect it and communicate it as well so it was very crosscutting we learned a lot we we track our conversion rates
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really carefully we track our turn rates very carefully and I think largely we were we were happy with the the change that we made and we we felt like uh one of the big things that we were trying to solve for was have our pricing catch up
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to how people valued the tool how many people did you end up talking to who was doing these conversations and is there anything really important you learned about the how to ask these questions in these sorts of leness to pay
35:49
conversations so we we talked to dozens it was combination of product and product marketing having the conversations uh and you know people aren't very willing to share explicitly like what they will pay but there's some tools that we used on relative value people most think about what is the relative value of DBT in their Cloud warehouse and we also tried to employ some of the tactics that we tried to sus out what what do people view as very
36:16
inexpensive what's a price point that's very cheap or a no-brainer what price point is uh maybe fair or comfortable for them what would be kind of too expensive and then we had all the data back to figure out where we landed I
36:34
want to come back to m&a for a bit I had a few more questions there and I kind of moved on from that and so again you've done a lot of work within the m&a realm something that I saw recently and this connects to the fact that a lot of
36:47
startups now are looking to get sold this uh VC Hunter walk he's a founder of Home proof Ventures had this interesting blog post where he basically suggested you should actually think about being public about the fact that you're selling your company which is
37:04
kind of crazy because in the past you never want to come across as to S like I no I don't want people to think I'm I'm desperate and his point is like many startups are desperate right now and that's it's okay to be public about that
37:16
and then in theory creates more of a bidding situation many people know versus keeping it secret and kind of in in Clos rooms so my question is just what do you think of that do you think that's effective strategy is it not I
37:28
think it's good advice if you're in a Hail Mary situation where you're you're looking for a home or you need an exit for your business it's better to be transparent and cast a wider net and you're right in like previous times
37:40
Founders tried to be a little bit cute or off the skate that they were evasive of the situation that they were in because they wanted to drum up some competitive interest when they there really wasn't any but you know
37:51
unfortunately in in today's uh climate too many companies are in that spot so it's impossible to hide it and so the better approach is just to be transparent and I see it pretty regularly and it there's absolutely no shame in sending a note that says
38:08
something like hey we're looking for an exit for our company X Y and Z didn't pan out as we expected we built a really interesting product and we want to keep the team together we're running a process are you interested really just
38:22
as simple as that I've seen a lot of companies put together these really detailed decks or even websites of just like here's the team here's what we've built to be very kind of promotional about it is that something you've seen
38:33
is that something you'd recommend yeah usually in this these situations people are acquiring the teams and so having your data room together really the most important thing is this is these are the team members that are going to come
38:46
along with the acquisition is the biggest motivator for why a buyer would get excited you made this point earlier that a lot of the seeds need to be planted early for you to have the best outcome and this reminded me so I had a
38:59
startup local mine that we sold to airb B and I met airb B initially at uh a year before we actually started exploring the process at a random party at South by Southwest where I was I actually have no memory of this party
39:13
but the had of product at Airbnb Joe bot remembered it and came back to us a year later and just like hey what are you guys up to maybe we could collaborate on some stuff and that let to an acquisition so I think that's just just
39:23
wanted to touch ug ban on that point of just the power of the way I thought about is let a thousand flowers bloom just like meet everyone get the word out that you're around and what you're doing so that in the future when someone has
39:32
that problem like oh that company maybe we should talk to them yeah you want to make sure that the buyer knows who you are before the acquisition moment and you know hopefully that's because you've made an impact and they like what you're
39:47
building maybe you've inflicted some pain on them but yeah certainly creating those connections while ahead of an an exit event is important and specifically there it's like meet people at your competitors potentially for us like
40:03
Airbnb was never even a potential company we would sell to because had nothing to do with it but ended up making sense down the road what's like the realm of the companies and people that you think people should think about
40:12
meeting if the company is buying a lot or they're active they often have Corp Dev teams and so use that Corp Dev team to your advantage like it's their job to meet absolutely every company that could be potentially interested so take that
40:26
meeting say you're not interested in in an acquisition just yet but push them to make an introduction to someone that could sponsor the deal so usually that's someone in product or maybe a GM and use that as a starting point for maybe a
40:43
just a conversation maybe something more like a partnership but get the Corp Dev team to to work for you what if you're at the other end of the spectrum and you're in kind of Dire Straits right now and you're just like oh man what do we
40:55
do to potentially sell a company I know odds are not going to be great but just what do you suggest folks do in terms of I guess finding connections to potential companies that might be acquires yeah I mean use your use your network usually
41:09
your venture capitalist has a really big Network and one of the things that I hear Founders feeling the most nervous about is like a duty to return the money to the investors and and maybe this is a unpopular thing to say on a podcast but
41:26
like your investors understand that they're not making their money back and what they want to do instead is have you end up at a really great company like an Airbnb because that will help them down the road so it's all about the long game
41:39
but use your investors to help you find connections at different uh companies that could be buying and and don't worry so much about disappointing them or being really realistic about where you are in your company Journey yeah to
41:54
build on that like I'm just an angel investor I'm not like the lead fund and I they feel differently I imagine but the last thing I want for a Founders is to get stuck at a company they hate and just so that they could return some
42:05
money or have some kind of outcome like I'd rather they just just give up move on like life is short yeah I think Founders for I get that it is so risky investing in early stage companies that portfolios 50% of portfolios don't
42:23
return Investments don't return anything and that's just part the game and it's it's a very acceptable path where you know hey we gave it our best shot it didn't work out and moving on which is tough a lot of times for Founders that
42:37
are told like it's all about grit and not giving up and don't quit sometimes sometimes you should quit oh gosh yeah I I don't want to be I don't want to say that I I love that you know PE I think being Founders it's it's extremely
42:50
lonely role sometimes and it is very hard to to know what your next chapter will look like or what the journey will look like and you know sometimes you really are out of cash and you do have to find a home but you know I hope I
43:04
hope that you can continue to fight and and Find A Way Forward agreed specifically for people thinking about selling their company are there any companies you think are good companies for people to look at right now that are
43:17
actively acquiring or open to m&a this is a tough one I think a lot of companies are on the sidelines for a number of reasons and they could be on the side Sidelines because they just did an acquisition and they're trying to digest or integrate that company they
43:32
could be on the sidelines because they're not growing headcount as much uh and m&a is often work chart uh gymnastics of folding the target companies headcount into your budget and plan and maybe just don't have a lot of space or probably more common right now
43:50
is there's just a general uncertainty about the future and in highly volatile markets people want to take care of their own and even the best m&a deals at a level of complexity that a lot of buyers are just not looking to uh take
44:06
on right now and so there are a number of reasons why people might sit out but what I would do if I were in a position of wanting to sell my company is I would come up with a buyer set of maybe a dozen and really there aren't more than
44:19
a dozen companies that will find what you're doing to be a very good fit start with your buyer set and then start calling the list by looking at some of the criteria that might count people out and then go have those conversations and
44:32
if you're in a Hail Mary situation be very transparent about it maybe open up the the buyer list but if you still have some room I would maybe focus on two to three partner or buyers and and really play the a different Playbook which is inflict pain make it really hard for them to not notice you but but do it with the smile and be friendly while while you do that sometimes with m&a discussions there's a lot of like uh subtlety to the way you
45:01
communicate where you don't come out and be like please we'd love to sell our company to you any advice on just the phrasing and how to approach it or do you think it's just it's fine just tell us we're looking to sell our company are
45:13
you interested in being a buyer yeah I just wouldn't be too clever here like everyone understands like oh I'm EV valuating strategic Alternatives it means you're you're looking to sell your company and it depends like are you looking do you have
45:29
time if you if you have time yeah don't don't come out and say hey I'm for sale like that's not going to end up in a a good outcome but depends where you are in your your company Journey if you have time then don't talk about m&a at all
45:46
like that's the last thing that you want to speak about instead you're talking about maybe collaborating or Partnerships how do we work together knowledge sharing and m&a is a dirty word if you have like a lot of Runway and you're and you're going to try to
46:02
continue to pursue an independent path but if you're if you're out of time you're you're out of time that's such good advice I remember the term we use was uh we want to explore a strategic partnership and everyone's just like and
46:15
knows what you mean by that but you just kind of don't want to say it yeah it's like everyone everyone in the room is kind of looking like oh yeah yeah okay strategic partnership or strategic alternative it's like we all know these
46:28
code words and we understand the situation you're in yeah when do you think the mmaa market might pick up again I know it's impossible to predict do you have any sense yeah I wish I had a magic ball that'd be pretty sweet uh I
46:41
think what is happening though is we're like far enough out from the peak of the markets so the the peak was really like November of 2021 and why does that matter uh two things one Founders are coming to terms with valuations that they maybe received
46:57
at the highs of the market are no longer going to hold in this market and companies are out of cash or maybe out of option so we'll be better assets entering the market soon and at a certain point the opportunities will just be too great that that will incentivize a lot of the buyers that have been uh on the bench to start participating again in the m&a market and I don't know exactly when that will be but I think we're we're pretty close
47:27
I think we're pretty close you mentioned a value that you have at at DBT I forget exactly what it was but I'm curious what are the other values that you have at DBT whatever you can share I'm always curious what principles and values
47:39
companies come down to to help Drive the way they think the value that I shared is we are more concerned with value creation than value capture and that really like drives everything that we do we try to put a lot of good out into the
47:51
world and it it pays back um kind of slowly the whole mission of DBT Labs is to help analytics Engineers disseminate organizational knowledge through data so we really believe in also being participants of sharing that information and getting more people knowledgeable about about about all sorts of things transparency wins we're really transparent company like we uh share our board decks we have lots of communication and participation in all
48:23
of our slacks we writing culture we have hard convers ations in the open so that's another a big one transparency always wins we are humble like we we don't ever feel like we're successful like we we kind of come at this from a
48:39
very humble space where we we feel like we have to serve our community and our users uh and that really motivates us and then uh another one is just work done well is its own end and it's really focusing on the journey and and not the
48:54
end destination I want to do a post someday of just like here's the values all these different successful companies have come to and see if there's any patterns I'm actually doing a post right now on Snowflake and on figma and what you touched on there's
49:09
such a connection and a threat of obsessing with your users and making sure they're happy at figma I forget exactly what it is but it's just like they're just like in this article it's going to come out tomorrow actually so
49:22
people get a sense of when we recorded this where they think of their company as software as a service where service is their number one goal like actually provide service and software is just a way to do that and then it's snowflake
49:33
their number one core value is put customers first and they talk a lot about how that just actually informs of their pration all that thing and all their thinking and so it's interesting that also comes up a lot in what you're
49:44
talking about which I think it's easy to say but I think what actually separates companies that succeed is they actually put this into practice it's really interesting too because a lot of the people who work at DDT Labs came from
49:55
the community so they feel this real ownership in making the experience an excellent one because they were so compelled to come join DBT Labs because the product changed the way that they work or changed their lives and so that
50:09
commitment to the community and product experience is really really strong this is another thread maybe we'll go down real quick I'm working on a different post around Reddit and how to work with really opinionated users that strong
50:22
opinions about changes to the product and the way they described it these guys were there for 5 years working with the community on the product is that like to your users the product is their baby basically it's like they think it's
50:34
theirs versus the companies and I'm curious having a really strong opinionated Community is what it sounds like you also have what have you learned about just working with them to build product that makes them happy and avoid you know revolts and and really
50:50
upsetness it's hard as as you grow I think it's just a challenge because our community gets bigger you can't service like everybody's needs but I think what we've done is like everyone is very deep in our own product I think one of the
51:05
cool stats is at DBT Labs we have over 30% of our employee headcount has contributed to our data transformation workflow and so that's across like every discipline it's in obviously product obviously in our data team like our
51:22
marketing team also contributes to data transformation and our ering team will also contribute to our internal DBT analytics project and that sense of like really understanding what the experience is like and then soliciting as much
51:38
feedback as we possibly can we have a DBT slack community of 50,000 and all of our employees are like in that slack uh Channel regularly and can feel when we like mess up or we don't quite deliver an experience that we're we're
51:56
proud of like you will just see like dozens of people trying to jump on board and and try to make it better is there any other Frameworks or just general processes that you found to be really useful in building awesome product running teams I'm not a big framework
52:11
person but there's kind of two sayings that I find myself repeating or either to myself or to others and it's uh um worse is better and Tech debt is a champagne problem and what do I mean by that it's really to help combat this
52:27
perfectionism because perfect doesn't exist and you should instead go with good enough because when you ship that's the moment when you get to learn a lot from your users and you just can't anticipate it you try very hard to
52:41
understand exactly how people will use the product and get all the edge edges uh ironed out but you you can't until you ship and I'll I'll share an example so my team help support the DBT Cloud scheduler and the initial version of the
52:58
DBT Cloud scheduler was pretty naive like we were a little embarrassed by it it was a big old for Loop over a big old jobs table and so we would look like is this job is it time for this job to run okay yes run this job okay it's not time
53:13
for this job to run next continue on like is it time yes run this job and it would just Loop over and it's extremely naive and very simple but it got the job done and I try to remind the engineers like we would be so lucky to have tech
53:27
tech debt because that means people are using the product and you know now we've had to rebuild our our schuer several times over because we do have meaningful scale we have 8,000 companies using our scheduler we have to manage 10 million
53:42
runs per month but what we didn't need at launch was a distributed scheduler with gow workers and rabid mq we just didn't need it because we had no users and so these two sayings that worse is better and and Tech debt is a champagne
53:59
problem just really reminds people like let's ship let's get it out into the users's hands and then we'll learn and iterate and it'll be a better experience for them that's a good Segway to my last question so you weren't a PM before this
54:12
role you have strong experience in investing Investment Banking business in general I'm curious what you think product managers should maybe focus on more or learn more or lean into to become stronger product leaders based on
54:28
the experience you've had moving into product so I pull a lot on my experience or some of the things I did was as an investor in my current role in product and maybe I'll touch on like what is the skill of a venture capitalist might be a
54:42
little bit foreign for people but Venture capitalists they spend all their day meeting lots of different companies context switching they have to know like a little bit about quite a lot of different things and they do this to
54:55
like refine their investment taste or find their investor judgment they're also investing a lot in their Network and Connecting People supporting people and Mining people for ideas that are way smarter than they are and so you do that
55:09
all the time in Venture and I've brought a lot of those know skills with me into product and it translates really well the first is I still spend a lot of time investing in my network and I think it's an underrated way for a PM to spend
55:23
their time and I try to build a network of of operators at other companies that are like DBT Labs that are growing nicely maybe a little bit ahead of where we are and I ask them questions like how did you navigate open source how did you
55:36
navigate pricing how did you navigate Acquisitions and then I take kind of the best ideas figure out which ones I can apply and bring it back to DBT Labs the second thing is I really think my specialy or my superpower is that I'm a
55:51
t-shaped generalist and so I know a lot about I know a little about a lot of things from from Finance to business to product I have to go a lot deeper in product in the areas that I specialize in that's where the kind of tail of the
56:05
tea comes in but it's precisely because I've had a diverse background that makes me more effective when I'm trying to get things done within the organization because I have just more credible experiences that I can pull from and
56:18
then the last thing that I think maybe doesn't show up day-to-day in my product work uh but in investing you're constantly thinking about risk and the power laws and we touched on this before but like most Investments don't work out
56:32
you lose the dollars that you put in but all the Returns come from these rare events that make up for all the losses it's you have to think about what are the uncapped upside opportunities in investing I think in product you still
56:46
have to do the same thing like you can't uh if 50% of the things I worked on went to zero like we'd have a problem but it encourages me to continue to make bets for the company that has the chance of bending the trajectory of
57:02
our business we've reached our very exciting lightning round I've got six questions for you are you ready yeah let's do it what are two or three books that you recommended most to other people okay so two books that helped me
57:13
learn a lot about myself range it's a book about generalist and also quiet it's a book about introverts uh and then I like a lot of biographies so a few of my favorites are snowball that Buffett made in America about Sam Walton and
57:29
Leonardo da Vinci what is the favorite recent movie or TV show okay so I almost watched a movie in preparation for this podcast but I really don't watch things except in the holiday during the holidays I like succession but I have
57:44
not seen the latest season wow youve you're in store for a treat favorite interview question you like to ask when's the last time you had to teach yourself something new and how you do it and so I like to test for a growth mindset and a thirst for Learning
58:01
and then also why DBT Labs I think a lot of people who come to DBT Labs have very authentic reasons why they're drawn to the company and in moments when things are tough It's the answer to that question of why why are you here that's
58:15
going to make all the difference and sounds like what you look for is just like in like genuine enthusiasm yeah awesome what are some favorite products you recently discovered that you really like I like belly it's a consumer social app
58:29
that lets you find and discover restaurants and rate them and with your friends it's been a lot of fun looking at the New York City restaurant scene I've not heard of that awesome what is something relatively minor you've changed in the way you all do product that has had a lot of impact do fewer things and try to single thread the team as much as possible and single thread meaning like one main Priority One mission yeah we're all working growing
58:55
in the Direction Final question you have a podcast first of all tell us what it's called but second of all what's a favorite podcast of yours other than this podcast and your podcast yeah it's called the analytics engineering podcast
59:07
so if you want to learn more about the data industry I host it every other week with our CEO Tristan handy it's a lot of fun check it out other podcasts that I really like are in-depth it's first rounds podcast by Brett Baron he
59:22
interviews a lot of operators about how they do their very best work and another podcast that I really like is the Logan Bartlett show which touches on timely uh Trends in in Tech and in-depth I think Todd Jackson actually host a lot of the
59:37
episodes too also a huge fan of the podcast definitely check it out and then name say your podcast again and how can folks find it it's called The analytics engineering podcast and it's just in podcasting apps yes amazing check it out
59:50
Julia we've talked about inflicting pain and strategic Partnerships and why worse is better thank you so much for being here two final questions where can folks find you online if they want to reach out and how can listeners be useful to
1:00:03
you you can find me on Twitter Jore shottenstein and you can also find me in the DBT Community slack also Julia shottenstein uh send me a note reach me there and uh I'd love to hear from you if you're have data problems or we can
1:00:18
help serve your needs better uh would love to chat thank you so much for being here Julia awesome thanks Lenny bye everyone thank you so much for listening if you found this valuable you can subscribe to the show on Apple podcast
1:00:33
Spotify or your favorite podcast app also please consider giving us a rating or leaving a review as that really helps other listeners find the podcast you can find all past episodes or learn more about the show at Lenny podcast.com see you in the next episode