Founder Story: Spenser Skates of Amplitude

From a failed voice recognition app to revolutionizing how companies understand user behavior, Spenser Skates' journey to founding Amplitude is a testament to the power of pivoting and perseverance. His vision for data-driven product development has transformed how businesses approach digital analytics, turning what was once a cost center into a critical revenue driver. This is the story of how a young MIT graduate's relentless pursuit of solving real problems led to the creation of a $1.4 billion software giant that's changing the face of product analytics.

A Vision Born from Frustration

In 2012, fresh out of MIT with a degree in computer science, Spenser Skates found himself grappling with a problem that would unknowingly set the stage for his future success. Along with his college friend Curtis Liu, Skates had developed Sonalight, a voice recognition app that allowed users to send text messages hands-free. It was an exciting venture, born in the era when mobile was the "next big thing," much like AI is today.

However, Skates and Liu quickly ran into a significant hurdle: they had no way to effectively analyze how users were interacting with their app. The existing analytics tools were inadequate, providing only surface-level insights that did little to help them improve user engagement and retention.

"We were flying blind," Skates recalled in a later interview. "We knew people were downloading our app, but we had no idea what they were doing once they opened it. It was incredibly frustrating."

This frustration led Skates and Liu to build their own internal analytics tool. Little did they know that this side project, born out of necessity, would soon become the foundation for a much larger vision.

The Pivot That Changed Everything

By 2013, it had become clear that Sonalight, while innovative, wasn't gaining the traction Skates and Liu had hoped for. However, something unexpected was happening. Whenever they showed their homegrown analytics tool to fellow Y Combinator batchmates, eyes would light up.

"People kept saying, 'I want that, how can I get it?'" Skates remembered. "That's when we realized we might be onto something much bigger than Sonalight."

The decision to pivot wasn't easy. Skates and Liu had raised seed funding for Sonalight, and there was a stigma attached to changing direction. However, their investors saw the potential in the analytics tool and agreed to back their new venture.

On June 26, 2014, Amplitude was officially launched, with Skates as CEO, Liu as CTO, and a new addition to the founding team, Jeffrey Wang, as Head of Engineering.

Building in the Face of Opposition

Entering the analytics market in 2014 was no small feat. Giants like Google Analytics dominated web analytics, while Mixpanel had already captured a significant share of the mobile analytics market with nearly 20,000 customers.

Skates, however, saw their underdog status as an advantage. "We were able to start fresh, without the legacy code and outdated assumptions that were holding back our competitors," he explained.

Amplitude's early strategy was simple but effective:

Talk to potential customers
Give the product away for free
Gather feedback
Build what users asked for
Repeat

This customer-centric approach allowed Amplitude to rapidly iterate and improve their product. By focusing on solving real problems for product managers and developers, they quickly began to differentiate themselves from the competition.

The $1,000 Moment

About a year into Amplitude's journey, Skates had a pivotal meeting with the CEO of Super Lucky Casino, a mobile gaming company. After demoing the product, the CEO asked a question Skates had never heard before: "How much does it cost?"

Remembering advice from Patrick McKenzie to charge more than you're comfortable with, Skates took a deep breath and said, "$1,000 a month."

To his surprise, the CEO's response was, "Wow, that's so cheap!"

This moment was transformative for Skates and Amplitude. Not only did it secure their first paying customer, but it also set a precedent for how they would approach pricing and sales in the future.

"Every dream I have ever had about building software was validated at that moment," Skates later reflected.

Rewriting Industry Rules

As Amplitude grew, Skates and his team began to realize they were onto something much bigger than just another analytics tool. They were changing how companies thought about product development itself.

Traditional analytics tools focused on marketing metrics like page views and click-through rates. Amplitude, on the other hand, provided deep insights into user behavior within products. This shift in focus allowed companies to make data-driven decisions about feature development, user experience, and product strategy.

In 2016, Amplitude made a crucial pivot in their messaging and branding. They moved away from "mobile analytics" and positioned themselves as a "product analytics" platform. This shift, inspired by insights from their sales team's conversations with customers, proved to be a game-changer.

"We recognized that what we were doing was much more than just mobile," Skates explained. "We were helping companies build better products, period."

This repositioning allowed Amplitude to capture a broader market, including web-based products and enterprise clients. By 2017, they had landed major clients like Microsoft, Adidas, and Under Armour.

The Product-Led Growth Revolution

As Amplitude's client base grew, Skates noticed a significant trend: companies were increasingly shifting their focus from acquisition-driven growth to product-led growth. This meant that instead of relying primarily on marketing and sales to drive revenue, companies were looking to their products themselves to attract, retain, and expand their user base.

Amplitude was perfectly positioned to capitalize on this trend. Their platform provided the deep insights companies needed to implement effective product-led growth strategies.

"We turned what was traditionally viewed as a cost center for companies into a revenue center," Skates proudly stated in a 2021 interview.

This shift had a profound impact on Amplitude's growth. Between 2019 and 2021, the company's annual recurring revenue more than doubled, reaching $129 million.

The Journey to $1.4 Billion

Amplitude's growth trajectory was impressive, but Skates had his sights set on even bigger goals. In 2021, he made the bold decision to take the company public through a direct listing on the Nasdaq.

The decision to go public via direct listing rather than a traditional IPO was characteristic of Skates' unconventional approach. He believed that direct listings were more equitable and transparent, aligning with Amplitude's values.

On September 28, 2021, Amplitude made its public debut. The stock opened at $50 per share, giving the company a valuation of approximately $7.1 billion on its first day of trading.

"This is a watershed moment for direct listings," Skates declared on the day of the listing. "The entire market is looking at Amplitude."

While the company's valuation has fluctuated since its public debut, Amplitude continues to grow and innovate under Skates' leadership. As of 2024, the company serves over 1,800 paying customers, including 26 of the Fortune 100.

Innovation Philosophy

Skates' approach to innovation and product development is deeply rooted in his belief in the power of data-driven decision-making. He often emphasizes the importance of what he calls the "magic threshold" metric – the key driver that ultimately determines a product's success.

"Every company needs three things: data they can trust, an understanding of what customers are doing in the product, and ways to take action. This is exactly what Amplitude delivers in one integrated platform," Skates explained in a 2024 earnings call.

His philosophy extends beyond just product development to how he builds and leads his team. Skates is known for fostering a culture of humility and continuous learning at Amplitude.

"We're an engineering and sales company," he once said. "So it's like, alright, what does the next deal need? Okay, build that."

This pragmatic, customer-focused approach has been a key driver of Amplitude's success.

Industry Impact

Amplitude's impact on the software industry has been profound. By providing deep, actionable insights into user behavior, they've changed how companies approach product development and growth.

Before Amplitude, many companies relied on gut instinct or surface-level metrics to make product decisions. Now, data-driven product development is the norm, with companies using behavioral data to inform everything from feature prioritization to user interface design.

The rise of product-led growth strategies, which Amplitude's platform enables, has also had a significant impact on the broader SaaS industry. Companies are now focusing more on creating self-serve, frictionless user experiences that drive organic growth.

Legacy and Future Vision

As Amplitude continues to grow and evolve, Skates remains focused on the future. He sees enormous potential in the application of artificial intelligence and machine learning to product analytics, areas where Amplitude is actively investing.

"We're just scratching the surface of what's possible with product intelligence," Skates said in a recent interview. "Our goal is to make every product decision a data-driven one."

Beyond Amplitude, Skates is passionate about fostering the next generation of entrepreneurs. He's known for his candid advice to startup founders, often emphasizing the importance of perseverance and the willingness to pivot when necessary.

Closing Thoughts

Spenser Skates' journey from a failed voice recognition app to leading a billion-dollar public company is a testament to the power of identifying and solving real problems. His ability to pivot from Sonalight to Amplitude demonstrates the importance of staying attuned to market needs and being willing to change direction when a bigger opportunity presents itself.

Perhaps most importantly, Skates' story highlights the transformative power of data in modern business. By providing companies with deep insights into user behavior, Amplitude has not only built a successful business but has fundamentally changed how products are developed and grown in the digital age.

As Skates often says, "Data isn't just about measuring what's happening – it's about understanding why it's happening and predicting what will happen next." This philosophy, embodied in Amplitude's platform, continues to shape the future of product development and business growth in the digital era.