Jun 10, 2021 · 37m · 20vc
20VC: Why and How The Best Companies Build Economies Around Themselves, When, Why and How To Build Effective Partner/Channel Networks & The Power of Compounding Growth in SaaS with Jay Simons, General Partner @ Bond
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In this episode of 20VC, host Harry Stebbings interviews Jay Simons, General Partner at Bond Capital and former President of Atlassian. Simons shares actionable insights on building software ecosystems, channel partner networks, multi-product expansion strategies, and the operational discipline required to achieve compounding growth in SaaS.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 28.6% of the talking time here. How this is scored →
Harry as informed peer 4.0 Guest teaching 2.9 Guest disagreement 0.9 Harry pushing back 2.0
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 30:37 Jay criticizing rigid VC growth benchmarks
Jay directly critiques the prevailing venture mentality of forcing companies into rigid 'triple, triple, double, double' growth trajectories, arguing that Atlassian succeeded by being a methodical grower instead.
Hardest push from Harry ▶ 13:13 Harry rejecting early-stage partner network claimsHarry firmly rejects the framing that early-stage startups can rely on partner channels, arguing that without established brand equity and founder-led sales, partner networks consistently fail.
Biggest teaching moment ▶ 11:20 Jay explicating channel partner misalignmentJay educates the host on the hidden structural trap in channel strategies, showing how internal direct sales incentives often destroy channel trust by taking lucrative mid-market or enterprise accounts back in-house.
Harry holds his own ▶ 27:13 Harry asserting early-stage investment simplicityHarry counters Jay's point about the difficulty of multi-year market forecasting by presenting his own expert stance that market timing predictions are unreliable, leaving founder quality as the primary evaluation criterion.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Jay Simons' Transition from Operator to Investor at Bond | 2 | 1 | 0 | 0 | Harry opens the interview with background questions regarding Jay's transition from operator to investor and his early days playing piano in Asia. Jay shares personal anecdotes setting a warm, collaborative tone without conflict. | |
| The Story of the Wise Brass Owl | 3 | 2 | 0 | 0 | Jay shares the heartwarming story behind the brass owl figurine gifted by Alex Welch. Harry transitions into framing how iconic SaaS businesses build multi-layered economies around themselves. | |
| Identifying Economy-Building Potential and Industry Benchmarks | 4 | 4 | 1 | 1 | Harry asks probing questions about when founders should begin building ecosystems and how to evaluate this as an investor. Jay uses Microsoft and Atlassian to detail how greedy direct sales teams often break channel partner trust by stealing enterprise accounts. | |
| Strategies for Scaling Effective Partner Ecosystems | 6 | 3 | 2 | 6 | Harry directly pushes back on founders attempting to launch partner networks before reaching scale, asserting that early startups lack brand power for indirect sales. Jay acknowledges the challenge while clarifying Atlassian's focus on boutique partner enablement over massive integrators. | |
| Adapting Ecosystem Strategies for Product-Led Growth (PLG) | 4 | 4 | 1 | 2 | Harry challenges how partner models fit into modern product-led growth (PLG) where software requires little configuration. Jay clarifies that PLG ecosystems thrive on developer APIs, extensions, and ISVs rather than traditional resellers. | |
| Retrospective on Atlassian's Strategic Choices and Growth Trajectory | 3 | 3 | 0 | 1 | Jay reflects on Atlassian's unconventional choices, such as launching Confluence in year two and deferring direct enterprise sales for ten years. The discussion remains reflective and highly harmonious. | |
| Timing and Execution for Launching Ancillary Products | 4 | 3 | 1 | 2 | Harry asks about the timing for second product launches and delves into Jay's adjustment during his first hundred days in VC. Jay explains that most companies wait too long to build a second act and describes the adjustment of saying no to 98% of deals. | |
| Evaluating Conviction and Leading Investments at Growth Stage | 7 | 4 | 2 | 6 | Jay highlights the difficulty of forecasting 5-10 years ahead when leading growth investments. Harry hits back with his own early-stage philosophy, arguing that long-term market prediction is impossible and founder evaluation is what matters most. | |
| Quick Fire Round: Lessons on Leadership, Mindset, and Music | 3 | 2 | 1 | 0 | In a rapid-fire round, Jay offers advice on long-term venture orientation, shares lessons from board director Lori Norrington, and demonstrates musical pitch concepts. The exchange is lighthearted and highly supportive. |
Statements from this episode (18)
Simons: Alex Risher built much of Atlassian's early operational maturity
“Alex and I were in the foxhole together in the earliest years of building Atlassian, and much of Atlassian's young operational maturity, he deserves a lot of credit for building.”
Simons: Founders should plan ecosystem economies from company formation
“I think in the earliest days of the company, in the formation of the company, you know, as you're building the product, I think you should be thinking, What are the economies, the extensions of our business that we can invest in that will have transitive prope…”
Simons: Atlassian has over 500 partner resellers and solution providers
“And, you know, when we thought about it, even sort of one of the examples that I mentioned, a partner economy of resellers and solution providers, we, I think Atlassian now probably has over 500 of those.”
Simons: Atlassian drew inspiration from Microsoft's platform ecosystem strategy
“We drew a lot of inspiration from Microsoft, which I think is a textbook case here.”
Simons: Partner ecosystems and certifications made Microsoft a generational business
“I think if you look back on time before they had the brand and direct reach that they have today, they had reached through this incredibly durable partner ecosystem and the customer economy built around getting Microsoft certified and having that sort of crede…”
Simons: Atlassian built a partner network instead of direct enterprise sales
“We invested at Atlassian, we invested early on, we had built this self-service online e-commerce flywheel for customers to buy the product. And as we moved into the enterprise, we had an opportunity to either invest directly in building an enterprise sales org…”
Simons: Software firms need established market demand before building partner networks
“You need market there. I mean, you need market for the partners to be able to grow their businesses, and then I think you need alignment around what they do, and what you do, and where you work together, and where some of the rubs will be.”
Simons: Atlassian enabled third-party add-on ecosystems from an early stage
“And by the way, the other dimension that I mentioned was, it was important to us is we had Extensibility in Atlassian products from a really early age. And so one thing that partners could do is they could extend them and kind of build add-ons and customizatio…”
Simons: Ecosystem extensions drive higher core SaaS product retention
“If they do get access to that and it does solve a problem, it means that both the core product is more valuable to them. And the core product from a retention perspective is even stickier because you've got JIRA and then you have three or four things that are …”
Simons: Atlassian wouldn't be the same company without an early second product
“We added a second products really early in the company's life cycle. That was a very unconventional and risky choice. But I think if I look back, had we not done that, we probably would be a very different company. Who knows? Like if we were just the Jira comp…”
Simons: Atlassian grew 40% to 50% annually for 15 straight years
“Atlassian grew between 40 and 50% for more than 15 straight years.”
Simons: Startups more commonly fail by waiting too long for second products
“I think it's more common, a more common mistake is companies probably wait too long. Versus doing it too early. I think history is littered with examples of great companies that didn't invest in, you know, a durable second act, and they're putting all their en…”
Simons: Atlassian launched its second product Confluence in year two
“In Atlassian's case, our second product, Confluence, was created in year two of the company, which was incredibly risky, I think, to diversify focus so early. But, you know, as I mentioned earlier, I think it was foundational to the company Atlassian became.”
Simons: Generational companies require multi-product portfolios built organically and via M&A
“If you're going to be a big generational company, you actually have to have more than one thing, and you probably have to have the ability to build them organically and acquire them.”
Stebbings: Early-stage VC relies entirely on founders because product is transient
“Market timing, I'm not smart enough to predict it. The product is transient. So all I've got in front of me is Scott and Mike and Jay, and do I fundamentally believe that whatever may happen, they might be the ones to guide it to where it could be.”
Simons: Atlassian wouldn't be as successful had it targeted enterprise early
“We made choices where we could have really early on invested in the enterprise segment, and instead of selling a 10,000 dollar product, chose to sell a 200,000 dollar product. And again, the counterfactual is tough to paint what Atlassian would have looked lik…”
Simons: Capital scarcity forces early-stage companies to build ROI discipline
“Capital scarcity can also benefit you. You know, we were forced to kind of fund the business from the cash register, and I think that created, you know, a discipline. It created a compelling need to really, really materially understand ROI, and so anywhere we …”