We recently spoke with the CEOs of companies that participated in the recent AWS Startup Showcase: Innovations With CloudData and CloudOps to find out what drives them and learn about their visions for the future. This is the second in our CEO Startup Spotlight series.

MIT graduates Spenser Skates (pictured) and Curtis Liu were trying to get their startup Sonalight off the ground in 2011, when they realized there were a number of questions they wanted answered in the product development process. Building hands-free text based on speech recognition in a pre-Siri world, they specifically wanted to know such things as how to build a product that would be successful, if customers were using it the way they wanted it to be used, and which features in particular would drive adoption. 

“We just couldn’t answer these questions with any existing products out there,” Skates said. “There were a lot of analytics tools and data tools focused on the marketing channel as opposed to the actual online product. We saw an opportunity to build a fundamental piece of infrastructure for the internet that would allow companies to know how their digital product was driving their business.”

That led to the formation of Amplitude in 2012, where Skates is now chief executive officer and Liu is chief technology officer.

“Companies have spent $6.8 trillion on digital transformation, which has resulted in new business models, new products and new services, and everyone is reinventing their companies around digital,” Skates said. “But the crazy thing is that nobody can answer the fundamental question of how does that digital transformation effort result in business outcomes? How does that new website, new app, new feature or new campaign actually drive the business? It’s a huge black hole, and as a result, companies are just guessing at building features.”

Enter Amplitude Inc., which connects digital products to business performance. The Amplitude Digital Optimization System is designed to help digital teams, including product, marketing, engineering and beyond, understand customer behavior in the digital product, predict which features and actions lead to business outcomes, and adapt each experience in real time to maximize its business impact. The system unifies the data, analytics and infrastructure required to deeply understand which customer product behaviors lead to business outcomes.

Amplitude, an AWS partner, has achieved significant milestones with $186 million in funding by some of the top VCs in the industry and 480 employees in place. In 2020 alone, the company grew its revenues by 50%, signed on 400 new customers, doubled new enterprise customers, and increased its penetration of the Fortune 100 to more than 20%. Skates says he sees an IPO on the horizon, and it’s not hard to see why.

From Battlecode to the formation of Amplitude

Having graduated from MIT in 2010 with a degree in bioengineering, when it came to making a career choice, Skates looked at his options through a philosophical lens. He saw technology as a huge driver of change, recognizing how it has had a vast impact on our lives over the last 20 years. 

A turning point had come earlier when he participated in MIT’s Battlecode, a “Super Bowl for nerds” programming competition. It was there that Skates was first introduced to the idea of technology startups, having learned that a few other Battlecode competitors had gone on to become founders of well-known technology companies, like Dropbox. He came to the realization that starting a company and successfully building a product could be the closest he might come to replicating the programming competition as a career.

Pairing up with Liu (both were on the same Battlecode team and took first place in the competition two years in a row), they made several attempts at building a new product when they found themselves asking the questions at Sonalight that led to the idea of product analytics and the founding of Amplitude. In 2012, they were accepted into the Y Combinator startup accelerator program and formed the company based on the principle that to build the best product requires a deep, cross-functional understanding of customer behavior. 

Amplitude launched its first product in 2014.

“The really interesting thing is that many of our early customers were product people who had previously worked at data savvy businesses, like Facebook and Zynga,” Skates explained. “Having moved on to work at new companies, they were looking for the same set of tools we had been at Sonalight but couldn’t find them and didn’t want to build them from scratch. We found early success through that and have been growing and scaling Amplitude since.”

Changing digital products from cost centers to revenue drivers

 As Amplitude’s leader, Skates finds himself focused on trying to scale the business in the most effective way — no small challenge for a company that’s doubling in size each year. 

“Going from being an engineer to thinking and learning about how to create a great culture and environment for people has been a big learning for me,” he reflected. “The question is, how do you be really intentional about the culture of the organization and how it is that people work together? So we’ve set three values of humility, ownership and growth mindset and made these part of our hiring and recruiting process. This is how we evaluate people internally.”

Skates added that before becoming a CEO, it’s easy to have an abstract idea of what it means to have the right people in place. But now that he’s on the job, he more fully understands the importance and difficulties of succeeding at it. While an engineering mindset can sometimes lend itself to arrogance, Skates said he tries to take the opposite approach and be very humble when it comes to learning about building the company. He takes advantage of the great body of knowledge available and also said he’s fortunate to have a very good board of directors that provides guidance and supports his journey. Sharing with other CEOs in the industry has been beneficial as well.

Going forward, Skates is excited by the potential for the company and the industry at large. 

“We’re in the very early stages of everything happening around data,” he said. “There is a massive opportunity for organizations to understand how they’re going to use data to build products and drive their business.”

He explained that today, organizations view digital products as cost centers because they have “no idea” what sort of impact they have on their business. Skates believes Amplitude is changing that with its Digital Optimization System, which is designed to help companies build better digital products through an understanding of how people interact with them and directly drive greater revenue as a result. 

The system intelligently adapts and personalizes each customer’s experience across any digital product or touchpoint in real time based on their behavior or the behavior of customers who act in similar ways. Machine learning algorithms and predictive models enable teams to understand the drivers of specific outcomes. For example, a company can create Amazon-style recommendations across channels tailored to users’ unique behaviors to increase checkout conversions.

“It’s more important than ever for companies to have an understanding of how people interact with their digital products,” according to Skates. “Organizations that succeed in this new era of business will be those who understand their customers and use these insights to transform experiences from the place value is created, and that is the digital product.”