Category: Product

bookmark_borderSpotify, One Product, Two Models

Posted on by mikejsiegel

Spotify is awesome.

As a consumer, having a giant library of music spanning hundreds of years available at your fingertips is a pleasure.

As an investor, Spotify is addressing a universal human problem. How can a person listen to any music any time they want? Music is ingrained into our DNA. Everyone loves music. Spotify’s total addressable market (TAM) is the entire world. Google, Facebook, and Amazon. Those are the businesses that scale the best.

Beyond the giant TAM, Spotify is attractive as an investor for its business modal. Spotify has a diversified revenue stream. The much-criticized targeted ad model and the much-beloved subscription model.

As a product person, on the other hand, having one product with two business models is a nightmare. Making product decisions that can satisfy both business models is a hell of a challenge.

Ads

Spotify uses ads to monetize their 109 million ad-supported users. In Q3 of 2018, Spotify pulled in 143 million euros from ads. This breaks down to 1.31 euro per ad-supported user. Ad-supported tech companies is nothing new. Facebook and Google make over 90% of their revenue from ads.

That being said, ads are a lightning rod for criticism. In order to serve the most effective ads, data of users must be harvested to allow targeting. This harvesting of data can be perceived as creepy or worse, can be exposed in a breach, damaging reputation. This has most recently played out with Facebook and its stock price is suffering.

Furthermore, many like to think that in an ad-supported business model, the user IS the product. The user’s attention is being sold to advertisers.

That sentiment is extreme but has a grain of truth. The company’s interests can become less aligned with the users’ interest in an ad-driven model. Users may tolerate an ad, perhaps even benefit from it, but it’s not something a user would opt in to. The key here as a product manager is to match the best ad to the user and to find the sweet spot of ad inventory that doesn’t alienate the user.

Spotify is using their self-serve Ad Studio to power their ad business. Like Facebook before it, Spotify is allowing customers to target specific users based on data. An advertiser can target a user based on their age, gender, location, activity, and music taste.

This set of targeting options pales in comparison to Facebook’s. The limited targeting options and the mostly audio-only ad inventory is reflected in Spotify’s Average Revenue Per User (ARPU). Facebook pulled in $6.09 per user in Q3 2018 compared to Spotify’s $1.48 ad-supported ARPU.

Subs

Ad-supported business models are more controversial than subscription business models, which tends to better align the company and user.

The good news for Spotify is their 87 million premium subscribers generated the vast majority of their revenue. Nearly 90% of revenue in Q3 came from subscriptions.

Strategy

With the risks of an ad-supported business model and 90% of revenue coming from subscriptions, the strategy to focus first and foremost on the subscription business appears clear.

Spotify can appeal to everyone and therefore it’s important for Spotify to always have a free tier. This free tier, supported by ads or not, should be treated like other freemium models – as a way to give people a taste of the product and to entice them to upgrade to the premium tier.

Unlike Facebook, who only has an ad-supported tier, Spotify should treat their ad-supported business model as a second-class citizen. Spotify should never sacrifice the product to make more ad money. Spotify should optimize the free tier to entice users to upgrade. Unlike most ad-supported models that are finding the sweet spot of ad inventory and user alienation, Spotify needs to purposefully alienate the free users enough that they will be enticed to upgrade, but not leave Spotify for a competitor.

 

bookmark_borderSnapchat UX

Posted on by mikejsiegel

I attended a Product School talk this week where Snapchat’s UX was hot topic of discussion. The consensus in the room was that Snapchat’s UX is abysmal. Snapchat is succeeding despite its UX. I couldn’t disagree more!

The Criticism

There’s a bunch of hate on the Snapchat UX. First, when you sign up, the app opens to the camera with no tutorial. Unlike Facebook or Twitter, who will onboard users by adding their friends and showing them content, Snap says “make something!”. As with everything, there is a trade off. Snapchat may be harder to figure out but it sets the tone with that first experience. Snapchat isn’t for the lurkers, it’s for the creators.

The biggest criticism is that Snapchat is confusing. Snap Map is hidden behind a not-so-obvious two finger swipe on the camera. Activating lenses requires a user to press and hold on a face. You can swipe in any direction, pinch on any screen and other “violations” of UX Best Practices.

Something as mundane as having chat on the same side has irritated UX purists.

VS


The Coolness

I remember the moment Snapchat’s je ne sais quoi clicked for me. I was at a work Happy Hour and taking a Snap when a co-worker asked to add me. As I told her my snapchat name she looked at me like I had two heads. Instead she took my phone, went to my profile and took a picture of my Snapcode. Like magic it knew who I was and added me as her friend. All I could say was “whoa”.

 

That was the first but not the last time I was wowed by a friend showing me a feature on Snapchat. Adding “Friends Near by”, accessing filters and accessing Snap Map were all in-person wow moments. Not only that, but I was able to wow friends by sharing the same UI tricks I learned. It’s fun when you learn it and fun when you teach it.

Josh from Greylock coined the term “Shareable UI”

Shareable design understands this deeply social nature of how humans learn, and capitalizes on people’s desires to learn and to teach.
Snapchat does this brilliantly, because each of those seemingly obscure features is an opportunity for its users to show their friends how to do something cool. Showing your friends something cool can increase your social standing, or maybe it just gives you a good feeling. Either way it’s something you want to do! And for Snapchat, that’s great, because it’s converting you into an evangelist for its product, and you don’t even feel like you’re evangelizing: You’re just showing your friends how to do something neat.

Fun over Function

A Usability Study at UserTesting.com concluded –

Of the users who did enjoy Snapchat and wanted to keep using it, the primary reason was because they found it fun. Users who said they would keep using the app were more likely to describe it as “popular,” “fun,” and “cool.” None of the users described the app using words like “useful” or “helpful.” They simply didn’t see the app as a solution for a need.

    Conventional wisdom says Interfaces “have” to be intuitive. Apps/products “have” to be a solution for a need. Snapchat shows this isn’t always the case. Perhaps like Seinfeld, Snapchat is an app about “nothing”.

    Bottom Line

    Snapchat’s interface is not conventional. The UX is not intuitive. These alone don’t make a UX good or bad. Although not intuitive, the Snapchat UX is highly shareable. It’s fun to teach others the secrets you know. The UI may not be conventional but it makes up for it with surprising delight.

    Critics are pressed for Snap to follow an established playbook. Follow standard UX guidelines, modify the product to appeal to everyone, do more growth hacking, make the stories feed algorithmic, etc. Snap’s ability to break convention and blaze their own path is what I love about em.

     

    bookmark_borderOh Snap!

    Posted on by mikejsiegel
    Snap’s first earnings as a public company are in and there is a consensus! Snap’s first earnings are terrible and the company is a disaster. Or is it? Do we care about the opinions on Wall Street trying to earn a quick buck? Or click-bait journalists looking for impressions? Those investing in $SNAP must have patience, and if you do, there is a lot to be happy about in this earnings report.

    Snap missed DAU and Growth Numbers!

    What did Snap miss? Expectations set by bozos on Wall Street? Evan and the leadership team didn’t set guidance on revenue or DAU growth. Analysts on Wall Street made numbers up based on little precedent. Snap didn’t miss a thing.
     
    Snap’s user base grew 36% yoy to 166 million. Quarter over quarter, Snap grew 5%. This is consistent with quarter-over-quarter growth from Q3 to Q4. Instagram Stories may have slowed down growth but Snap is growing at a healthy pace.

    Snap missed Earnings with a whopping $2.2 billion loss!

    Again, this is Wall Street expectations. $2 billion of the $2.2 billion loss was due to a one-time impact of stock compensation. I’m much more concerned with ongoing costs.
     
    The flip side is Snap grew revenue yoy 286%. ARPU tripled yoy to 90 cents per user globally. North America monetization is at $1.81 a user and they’ve only scratched the surface. For comparison, Facebook is approaching $20 in ARPU. It’s encouraging to know there may be a long ways to go before we see a slowdown in ARPU growth with Snap.

    Evan is selfish!

    Another common theme is Evan is selfish. The $750mm bonus is evidence A. It’s quite the opposite in my book. Evan has turned down offers to sell Snap and could have been a billionaire years ago. Instead, Evan has shown an ability to delay gratification and plan for the long-term. This is why investors of Snap should be patient. Others in Evan’s shoes may resort to growth hacks to appease Wall Street. Evan keeps the big picture in mind. Evan dismisses short term thinking that doom companies in the long run.

    Bottom Line

    Expecting ~10% DAU growth and profitability from Snap this quarter was unreasonable. Evan is playing the long game with Snap and part of that approach is not optimizing for the short term. Snap is a product company investing money into R&D to grow and monetize. Instagram may have copied the story format but Snap is more than that. Snap is a different context to its users. Snap will morph in ways we can’t imagine. You’ll need patience if you want to buy and hold $SNAP but with that patience will come great reward.

    bookmark_borderSketchin’ a Howard Stern App

    Posted on by mikejsiegel

    Product Manager Venn Diagram

    As part of my never ending quest to be a better product person, I’ve been making mockups. After taking a Learn Sketch course I was itching to apply what I learned to a real-world problem. As a Howard Stern fan I’ve found the Sirius iOS User Experience frustrating. I crave a less cluttered, easier-to-use app designed for hardcore Howard Stern fans like myself.

    A Solo Howard Stern App

    Supporting the hundreds of Sirius channels brings a lot of UI baggage. Making a dedicated Howard App allowed me to get rid of numerous pages and the bottom bar.

    Sirius

    With one focus, the Home screen can be simple and clean. Search is at the top of the screen, below you may browse. The UI brings attention to a Live show since no content is better than Live content.

    My Mockup

     

    The Sirius UI for downloaded shows is good but has room for improvement. The thin fonts and pale colors are difficult to read and there are many colors in use.

    My mockup has two colors with only the most relevant information for easy reading.

    The Player

    The Sirius player takes up a lot of real estate for the background photo and title of the show.

    I shrunk the the amount of space for a photo and considered removing it completely. That space would not be a static photo of the logo but would allow for a multi-media experience. Photos relevant to the segment, like a photo of a guest, would work great.

    Navigating the Shows

    The Sirius app allows a week’s worth of shows available for “On Demand” download for a limited time.

    I envision access to the entire Howard Stern content library available for download. Another goal of this app is to expose new listeners to a taste of Howard Stern content. All content should have a degree of shareability. Allowing a user to share clips of a show via SoundCloud as they do now is a great start. Sharing Phony Phone Calls and Song Parodies are a perfect way to give people a taste of Howard.

       

     

    Search

    With access to 40 years of content the user must have a good Search to find what they are looking for. I’ve moved Search to be front and center in home. The results have labels with the most relevant information. It’ll be key to create a search based on machine learning that will improve overtime.

    New Features

    The Howard Stern Alarm Clock, Auto-downloading new shows and playing Sirius on an Amazon Echo are features I’d use everyday. 

    Inspiration for the Settings and Devices page came from Overcast and Spotify.

     

     

    Note – I used Sketch to create the mockups. I choose Open Sans as the font and downloaded it from Google Fonts. The Twitter and Facebook icons are from IconMoon. I wrapped the designs with iPhone chrome using MockUPhone. I learned about these resources through an excellent designer, Julian Haddad, who I worked with at Social Tables. 

     

    bookmark_borderJust Enough Design for B2B SaaS

    Posted on by mikejsiegel

    For decades, design in B2B software has been an afterthought. There are products making billions that were designed with no taste and no thought. Those who have been around the game for a while will tell you “Design in B2B software doesn’t matter!” and based on history, they have a leg to stand on. These design haters will go on to list successful companies that have what many would consider poorly designed software – Peoplesoft, Salesforce, Taleo, the list goes on.

    Design in B2B SaaS matters less than Consumer

    “Consumer Products” are bought and used by the same person. In the B2B world, this isn’t always the case. Since the Buyer may never use the product they are less likely to feel the pain of poor design than the end user. B2B software is more likely to have upfront costs – setup costs, integration costs, training costs, etc. These upfront costs immediately make the software more sticky, sunk costs be damned, the buyer will have a tough sell to their manager if they bail on a product after incurring the upfront costs.

    Design matters more in B2B SaaS than it use to

    The world is shifting, as people grow up using consumer-grade (better designed) software, expectations for design become higher. Even the buyers, who may never use the software, are becoming more critical of the appearance and this impacts their buying decision.

    Furthermore, the SaaS model typically has lower upfront costs than on-premise B2B software. This lower cost decreases the buyer’s reluctance to switch if the end users complain. The low cost SaaS model makes it easier for a small team to adopt a product in an organization and let it spread from there.

    Slack is the best example of this phenomenon. From a feature list standpoint, Slack is not much different than its IRC predecessors. Where Slack differentiates itself is through superior design – both aesthetic and usability. Slack’s free tier allows small teams to try it risk-free, and once they fall in love, it becomes viral within the organization.

    Design & SaaS metrics

    • Close Rate & ASP. Looks matter. If your product looks “professional”, buyers are more likely to believe it’s a more expensive product and pay more.
    • Churn & NPS. Usability matters. It may look pretty but if it is difficult to use, the end users will complain and this increases the chance of churn
    • CRC (Customer Retention Cost). Intuitive software cuts down on training and long term support. Ideally, a user should learn the product without personal hand holding

    When making a case for a design overhaul or adding more effort to your design process, these are the metrics that can be valuable when establishing your goals and measurable results.

    Design & Market Factors

    • Buyer = End user. Design, particularly usability, will be more important to reduce churn.
    • Self-Serve SaaS products. Making your product intuitive becomes more important if you will not have a salesperson explaining its value or a Customer Success Manager training the end users.
    • Competition. The more competitors in your space the more likely design will become the differentiating factor. When I worked at Jibe, design became our core competency. Jibe provides a consumer-grade experience for applying to a job on a company’s career website. The incumbents – Taleo, Kenexa and SuccessFactors, are weak at this and Jibe is taking that opportunity and running with it.
    • Age of end-users – Older users, although generally less savvy, are more tolerant of poor design. They’re use to it. A younger user base is more likely to demand a well designed product.

    For the past six years I’ve worked at venture-backed SaaS companies. In my experience, we don’t have time or money to design products in the thorough, methodic fashion many product people would like to. It’s tempting to read the latest design book and want to implement all of the suggestions but it’s not practical at an early-stage SaaS company. Does design matter in SaaS? Absolutely. Know your market, track you design efforts with measurable results and invest your time and money wisely.

    bookmark_borderMeasurable Results for SaaS Products

    Posted on by mikejsiegel

    what-is-a-product-manager

    Whether you’re doing OKRs, GSCs, KPIs or some other 3 letter process, a generally accepted good practice when building a product and company is to tie measurable results to goals. Try to keep these goals “SMART” – Specific, Measurable, Achievable, Relevant and Time-specific.

    My manager, Derek Haller, spoke about the importance of using measurable results when Driving Business Outcomes during our last ProductTank Meetup. Derek and I work at a SaaS company, Social Tables, and we identified the main types of Measurable Results that are relevant to those managing a SaaS product.

    Types of Measurable Results for SaaS products

    • Behavior (click paths, engagement)
    • Business (active users, conversion rate)
    • Financial (ASP, billings, time to close)
    • Performance (load time, uptime, crashes)
    • Operational Costs (storage, hosting)
    • Go To Market Costs (acquisition, programs)
    • Sentiment (NPS, surveys)
    • Environment (PR mentions, comments)

    Goals may have a variety of types of measurable results. Depending on the stage of your company, some of these types, such as Operational Costs and Sentiment, may take a back seat to Business and Financial results.

    SsaaS

    SsaaS, Stock Software as a Service, is a company I just made it up :). We make software for Stock Advisors to analyze a stock. Below are the Objectives and Key Results for SsaaS –

    Objective

    Successfully Launch MVP Stock Analysis Tool with a Free Two-week Trial Period

    Key Results

    • Establish ASP of $5,000 / year (Financial)
    • Receive press coverage in 5 publications, including TechCrunch (Environment)
    • Net Promoter Score > 50. (Sentiment)
    • Engagement: 75% of users analyze > 5 stocks. (Behavior)

    Time Frame – Q1

    Objective

    Sunset Two-week Trial Period and Launch Freemium Product

    Key Results

    • Deliver 1000 new Product Qualified Leads (Go To Market Costs) 
    • Reach 500,000 Daily Active Users (Business) 
    • Improve user sign up by 10% (Behavior)

    Time Frame – April

    Objective

    Launch Product Rewrite and Sunset old Product

    Key Results

    • Cut down hosting costs by 30% (Operational Costs)
    • Achieve 99.7% uptime (Performance)
    • Decrease support inquiries by 10% (Operational Costs)

    Time Frame – Q2

    Timeboxed Results

    It’s nice to set key results and work backwards to figure out when you can achieve those results but some organizations prefer to set OKRs on a timed basis (usually quarterly). Some goals take longer to hit the more traditional key results (i.e. engagement and revenue). For example, if you are embarking on a six month product rewrite that will not have active users in the first quarter you must come up with other ways to validate your product/decisions along the way. You may accomplish this through internal validation and surveys.

    Objective

    Validate New Stock Comparison Product

    Key Results

    • 75% of current customers confirm the features on the road map would meet their needs (Sentiment)
    • 5 prospects have signed letters of intent to purchase (Financial)
    • 90% of the Sales team believes the product is sellable (Sentiment)

    Time Frame – Q3

    Always Be Learning

    Finally, when setting measurable results, it’s effective to have goals and results that are focused on learning. Create a hypotheses to help validate your vision and develop experiments around that hypothesis.

    Objective

    Determine if Stock Advisors want to display a portfolio publicly

    Key Results

    • 75% of Stock Advisors surveyed confirm they would like to have their portfolios displayed (Sentiment)
    • 50% of Stock Advisors provided with embeddable portfolios use them on their corporate website (Behavior)

    Time Frame – December

    bookmark_borderYoung Users

    Posted on by mikejsiegel

    giphy (2)

    Old habits die hard. As you get older your mental models of the world become more rigid. You know what you know but ya start becoming closed off to trying new things.

    People making products, especially products with a shitload of users, run into this all the time. As processors and cellular networks improve, new features are possible but people are stubborn, they like the way they do X and they’re not trying to change it.

    Facebook, with over a billion users, has a tough task on hand. They don’t cater to the lowest common denominator but they don’t cater to their advanced, or power users either. This means Facebook doesn’t release the most advanced product they can, Facebook makes concessions so they can release a product that will be widely used.

    Snapchat, on the other hand, is doing an excellent job of capitalizing on bandwidth and smartphone improvements. “Stories” – a mixture of photos and videos that users create using the editing tools Snapchat provide are a perfect example of this. When Facebook came out, sharing videos was a pain in the ass, it was slow and cameras weren’t readily available. People form a mental model around what Facebook is as they use it and when things change it becomes difficult for companies to break out of the box their user base sees them in.

    Facebook has done a great job pushing against that tide and have made huge inroads with videos, some say they’re even surpassing youtube, but taking a video of yourself and uploading it to Facebook is not the ubiquitous behavior you see in Snapchat.

    Snapchat has a much younger and more open minded user base and this allows them to be more aggressive with their product. When Snapchat Chat 2.0 was released on 3/29 I was curious if they were going to push the envelope in the chat game. Sure enough, they delivered.

    The chat game is crowded, as I pontified on before. It’s hard to make inroads but one of the ways to get started is to piggyback on your social network’s user base. Unlike Facebook and Instagram that have public ways of giving props, Snapchat lacks this which encourages users to send a chat if they like a Story or have something to say. It’s funny because, like the name implies, Snapchat started off as an ephemeral chatting app, evolved into a Social Network and is now getting back to its roots and beefing up its chatting abilities.

    It’s one thing to release cool features it’s another to have them be used. At 33, most of my friends will be reluctant to embracing the new features. The majority in my age group insist on using feature-poor iMessage or SMS. Luckily I’m on the older side of Snapchat’s user base. Snapchat Chat 2.0 will be immediately embraced by their users. For whatever reason I find the stickers lame (too old?) but I look forward to seeing my (younger) friends live stream, create small gif-like videos, annotate em with Snapchat’s editing tools, audio notes and more.

     

    bookmark_borderYentas, the Messaging Gold Rush

    Posted on by mikejsiegel

    yenta2

    We’re all a bunch of yentas and inventors from Samuel Morse to Alexander Graham Bell to Brian Acton (WhatsApp) have made a ton of money making it easier for us to chit chat. Communication is a time-tested gold mine that’s changing with the rise of new paradigms (like smartphones). With so much at stake, we’re experiencing an intense battle between all sorts of players vying to solve our messaging needs.

    To name a small sampling ya got iMessage, WhatsApp, Facebook Messenger, GroupMe, Line, Viber, Kik, Tango, Skype, Slack, Google Hangouts (Gchat), Tencent QQ, Snapchat etc etc etc. They all have different twists to them but the general use case is the same: help people directly communicate.

    These players differentiate in a few key ways:

    Communication styles is the first way these messenger services start to differentiate. People like to communicate differently depending on where they’re at and what they want to say. You have short text (SMS-style), longer texts, pictures, videos, gifs, voice, ephemeral messaging, and who knows what will be next…VR videos?

    Cross-platform is a big differentiator in the messaging wars. Many of the newcomers are smartphone only (iOS and Android generally). Skype crosses a number of platforms (Windows, OS X, Windows Phone, iOS, Android, Blackberry OS). This cross-platform support ensures the vast majority of computer and smartphone customers can use a messaging service conveniently on the device they have on them.

    Interoperability is the next decision all of these messaging services wrestle with. The majority of the popular ones are single-protocol –i.e. ya gotta be on Google Hangouts to talk to others on Google Hangouts. When you go multiprotocol, you allow your users to talk to people outside of your messaging service.

    Deciding how to approach each of these areas of differentiation can be a challenge, and implementing too much can slow down your ability to do anything cool. Supporting multiple communication styles adds complexity to both the code base and the UI. More communication styles limits what platforms you’ll be able to support with parity. A cross-platform strategy adds complexity to the development process — instead of building a feature once you build it per platform. Supporting multiple platforms can affect your ability to support these features and can result in a “lowest common denominator” type effect if you want a consistent user experience. Same thing with interoperability, you ultimately hinder your ability to support numerous protocols well (e.g. if you want to use SMS, you’re limited to 160 characters).

    In the messaging game, getting better distribution (cross-platform, interoperability) makes it harder to do cool stuff. If you want that premium, cutting edge experience, you go for the 80/20 rule when it comes to cross-platform and not worry about interoperability.

    Facebook-logo-png-2

    Of all these players, I’m digging Facebook’s approach. They have two massive horses in the race with WhatsApp and Facebook Messenger, which allows them to try out different strategies that will capture different segments of the market. WhatsApp is all-in on the cross-platform strategy and removing the $1/year fee removes the remaining friction there to get on WhatsApp. Sure, the experience won’t be great and definitely won’t be consistent for all users, but WhatsApp will continue to capture the low-end market where people want a cheap way to chat.

    Facebook Messenger is going for the premium experience and taking the platform route. It’s single-protocol, it’s got a web presence and is on the major mobile platforms, but it’s focusing on the cool things. More importantly, Facebook is empowering other devs to do cool things within Messenger.

    In the messaging space, being the best of breed might not mean squat. The network effect is too important, you go where your friends are. I love Facebook Messenger but I gotta admit, I’m a iMessage, Google Hangouts, email, SMS (non-iOS users) Facebook Messenger, Skype, WhatsApp kind of guy, in that order. I may like Facebook’s strategy the best but I go where my friends are.

    bookmark_borderThe B2B Gold Standard

    Posted on by mikejsiegel

    Atlassian Logo

    I can’t believe it, I’m excited for an IPO for a B2B company. Maybe the past 10 years working at B2B companies has poisoned my brain but I’m hoping it’s because Atlassian is something special. Companies like SalesForce and Workday have killed it on Wall Street but I never had any interest in throwing money at them. I like to invest in companies in which I’m intimately familiar with their product, companies that are profitable and are led by founders who care. I haven’t found a B2B business that fit those requirements but Atlassian is a different beast.

    The money most SaaS companies put towards marketing & sales boggle my mind. The majority of SaaS companies spend 2x on marketing & sales compared to product & engineering. For every buck put into making the product better, these companies are spending two bucks to get the word out and convince customers to fork over the dough.

    Bucking the norm for SaaS, Atlassian has been profitable since year one (Note: Atlassian isn’t a true SaaS company since they allow customers to host their software). Thirteen years in, Atlassian continues to make more than they spend. The margins aren’t anything to brag about but at least they exist and Atlassian still has the killer revenue growth people expect from SaaS companies.

    I’d imagine part of the reason Atlassian has been able to turn a profit is its small marketing & sales spend. Atlassian spent 21% of its revenue on marketing & sales in the first half of 2015, 16% in 2014 and a mere 12.5% in 2013. In comparison, Box spent 200% of their revenue on marketing & sales in 2013, Salesforce spent 56% and the industry standard is around 50%.

    Atlassian’s marketing & sales budget has been growing but I’m hoping they keep the course of letting the product speak for itself. My ideal B2B company does the following — build a badass product that customers enjoy, those customers spend more money with you and they tell others about how great your product is, which does the sales for itself. When you get into that cycle the money goes into making your product better which accelerates it and scales better than a heavy marketing & sales approach. After a decade of using Atlassian products like JIRA, I’m of the opinion they make best of breed products and can pull this strategy off.

    I dig not only Atlassian’s product-focused philosophy but all of the other things I look for when I buy a stock. I like that their founders have shown an ability to delay gratification. Scott Farquhar and Mike Cannon-Brookes could have sold out long ago but held out, these guys are in it for the long haul. They’ve been patient in building Atlassian slowly and thoughtfully. They only took funding after they had impressive traction, which gave them the leverage they needed to get a favorable deal. The values the founders run the company on jibe with me —

    1. Open company, no bullshit.
    2. Build everything with heart and balance.
    3. Don’t f*** the customer.
    4. Play as a team.
    5. Be the change you seek.

    I’m going into this stock knowing the Price to Earnings ratio is ridiculous, and that is fine. The bottom line is I think this company will be around in 10 years and will be making a lot more money than they are now. I have faith that Atlassian will continue to seek profit and their low marketing & sales spend will allow them to do so with ease. The founders will keep the culture strong and ensure a long-term outlook is maintained. The product line will continue to get better, the current Atlassian customers will continue to spend more money, the Atlassian products will continue to make their way into the browsers of employees at companies all over the world and the money will add up nicely.