The Wisdom Wall

“We're not going to in, we're not going to expand the sales organization till we see the whites of their eyes... when the customer starts demanding this, then we're going to go build a sales organization, right? Or add the reproducibility.”

“What I like to look at is that a sales person is generating greater than three times their loaded cost, meaning Base plus commission. Let's say a salesperson cost 500,000 dollars a year or 200,000 dollars a year. They need to generate a three X multiple on that cost. And it needs to be across the organization. You…”

“One of the metrics to be used in the industry is at the beginning of the quarter, you want to have between three and five times the pipeline to close the quarter. Ok? If you don't have four times the pipeline At the beginning of the quarter, you're not gonna make your number.”

“IP ownership is, to me, less important than who actually wrote the code”

“The, the, the fork company is never going to be as strong as the one, ah, who has invented it.”

“when more people disagree, that's the project we want to go invest in. Because, like, you know, it's, it's too crazy for, you know, hell, that'll never work.”

“open source was and is the best way to create software because it speeds product feedback, it drives adoption, it improves reliability.”

“Licensing is a heavily debated topic, and while it's important, I see a lot of companies spending too much energy in the early days on licensing. I think it's way more important to understand your competitive advantage and use licensing as part of a go-to-market strategy and not put licensing up front and then figure…”

“Often what gets missed in the whole product adoption cycle is the idea of selling value into the customer where value is not necessarily felt through a self-service product or whatever. You just can't see the value or appreciate the value until an organization comes in to actually promote those pieces that may not be…”

“Well, the element, I believe, that has brought open source from fringe hobby project out of academia to mainstream is the fact that you can actually build commercial businesses On top of open source. Right. And a lot of that, which you, you guys at Databricks are doing, and many other companies, GitHub is another…”

“Unless we get to in memory processing and in-memory data structures, machine learning doesn't really work.”

“And with that, I believe that you need to have a sales organization actually come in to sell the premium products such that the users can be educated. The organization can be educated on the additional features that are available outside the base freemium products.”

“It's sort of a head fake when, you know, the best products, the products with this unbelievably great product market fit from day zero with freemium start to take off. And the assumption is like, oh, well, look at here. We don't need a sales organization. Let's just go hire more engineers and the market will just…”

“Most of these mergers fail because the go-to-market is muddled and the sales organization is, is muddled after the merger, you know, after the merger happens.”

“my whole philosophy around this is I take something that's very popular right now, cloud computing, and I say, what happens when cloud computing doesn't exist anymore? What fills that place?”

“when it comes time for budgeting, uh, All the existing operating groups say we need X dollars, you expect us to grow a hundred percent a year, therefore we need a hundred percent of the dollars, and after everyone jumps in, there are no cookies left in the jar to go do innovation.”

“Open source is built on three pillars. They are one, project community fit, two, product market fit, and three, value market fit. Each of these have measurable objectives, and these pillars sort of unfold over time.”

“what's most important is that open source has a project leader to drive the effort, and typically that project leader becomes the CEO of companies.”

“The next is product market fit, and this is all about organic adoption as measured by the number of downloads.”

“While product market fit often accrues to individual users, value market fit typically centers on departmental and enterprise buyers and is measured by revenue.”

“And I would say that the downside or potential area to be aware of is this model is very hard to scale and hard to scale operationally.”

“measuring downloads turned out to be interesting, but not sufficient in terms of a metric that could credibly be used to indicate the user traction and what was happening.”

“Typically, in an open source company, there's going to be two roadmaps. One for open source for core functionality, and one closed source for paid features.”

“One is your open source user doesn't lead to a buyer, and this is an example of where product market fit might be really great, but there's not value market fit to tie into it. So you have a lot of open source users, but there's no buyers.”

“your commercial offering kills your developer's street cred. This, again, is an example of where you may just be putting too many features into your proprietary product and almost abandoning your open source roots.”

“the product, the features of the product need to inherit part of the sales motion itself, right? And that if you're going after a certain Motion or certain customer, the product needs to be reflective of that, and I think we often miss there.”

“while services from a unit economic standpoint may be, you know, a little more expensive from a margin standpoint, if it drives very large deals with software margins, you come out way ahead.”

“you have to come up with pricing that the customers used to actually paying for. If you start to create something that's totally new, it creates friction in the system.”

“Every company goes through some cathartic event, right, where it's the pit of despair, right, like nothing can go well, and the companies that pull out of that actually come out much stronger as a result. It is not A straight line up and to the right by any stretch.”

“That's sort of a new phenomena are enterprise companies that do have a bottoms up model whereby they do start with the consumer, which is typically a employee in a company where the product, you know, in some ways sells itself. And so that's another way of thinking about product market fit in terms of, can I get a…”

“In my experience, the growth kind of stops when they try to run sales too much and kind of get involved in an area where They have not a lot of experience, right?”

“Now, let me point out that if I enter into a new geography or I build another product as part of the company, you start over again. Let's say a U S geography and I want to expand internationally. Maybe my go to market model is actually different. It very well could be, I may be direct in the U S but I might go through…”

“Enterprise companies actually are looking a little bit more like consumer companies when it comes to product design, fit and finish and all of that”

“if your company is reasonable size, there's almost nothing you can do this quarter to change the outcome of this quarter.”

“You take the experts who are the programmers in their field, and they then push that knowledge off to everyone else. So maybe your dad's an expert in certain parts of this, and he can participate in it. It's the open source of data, right? Everyone's manipulating this to get better solutions.”

“The way I think about freemium is that it's a proxy for marketing spend. You tend to have to spend quite a bit on marketing in order to get the user to, to see the The value of a given product. What freemium does is it offsets the marketing costs.”

“If you don't manage the community in a proper way, the community will say, well, they're not doing what we want. We're going to fork the code and go run off and do, we're going to just do the whole thing.”

“There are discrete sort of components of open source that one could argue, here's all the functionality needed for a given user, a given server, a given environment. And then the added value components may be along areas such as scalability, security, Enterprise kind of completeness. And that tends to work very well…”

“When open source is offered as a service, the pricing. Is based on the service that you actually provide, and it, it makes for a very nice way to work around some of the nuances of open source and the whole, what's your support model and all these other bits and pieces.”

“We've seen many companies, you start with a cloud, I'll say a cloud SaaS offering based on open source. Viral adoption, great uptake. And then enterprises say, well, like we need to have that inside our firewall. We want a copy of that. So then the expansion, the sales model actually, in that case is taking from SAS to…”

“And once the developers in an organization have coalesced around a set of great tools, It becomes a foregone conclusion that the company ought to step up and go purchase those particular, uh, tools and services.”

“Really the whole indoctrination of open source and SaaS as a starting point is a marketing vehicle to build a pipeline for an organization.”

“Organic virality works to a certain point, but in order to be a successful organization in this new ecosystem, the notion of viral spread plus an enterprise sales organization, I think is the winning formula.”

“a lot of the new data center architectures Are more going to look like Facebook, Google, and Amazon, and less like older, you know, sort of Wall, I call them Wall Street data centers.”

“I think one of the most difficult transitions, uh, a person makes in their career, whether it's from academia or from just an individual, is from individual contributor to being a manager and leader.”

“If you don't have that early, what starts, and you don't know what that is, then potential customers and partners don't know what you're going to charge for in the future and all that, and it makes it, the longer you go on without having a model, the harder it is to roll back some of those things, like in a year from…”

“I would argue that the more successful a product is, the better the product market fit is early on, and the more success a company has with no sales organization in the beginning, the more reluctant that company is to bring on sales along the way”

“We, we like to say the mobile supply chain is eating the data center, right?”

“Containers use far less, uh, compute resources there. You know, it used to be where I had to support Windows and Linux on a machine, therefore virtual machines are important. Now it's only Linux on both sides. Linux as the, as the base operating system and running within these containers. So we can simplify the…”

“Subtract something that's important today And fill it with something else. Take an important thing, take it away, and go fill it with something, and you'll start to think out of the box as opposed to sequential.”

“You think about a self-driving car, it's effectively a data center on wheels. And a drone is a data center with wings, and a robot is a data center with arms and legs, and a boat is a floating data center”

“product management is a critical role in any software organization, particularly open source, because here's where you balance not only the bridge between engineering and your go-to-market organization, but you also Manage the bridge between your community and the roadmaps that you produce.”

“In this particular area of analytics and telemetry, I would encourage you to experiment with SKUs, with product bundling, unbundling, bundling, you know, kind of go back and forth to find the correct line between free and paid functionality. This is really a never-ending journey for an open source company, and the…”

“Next, sales development really takes a customer success approach to be curious about developer needs and understanding what your users are doing. Here, be inclusive, ask questions, and don't be overly salesy.”

“This not only democratizes the use of big data, it democratizes the organizations that use big data, such that it's not limited to the, only the Fortune 2000 who have the capabilities to set up these large data centers.”