Several factors are driving explosive growth at a handful of cloud-native, B2B technology companies these days—and Databricks*, a high-profile decacorn which makes next-generation data-analytics technology, is a prime example.
In this first episode of our “Billion-Dollar B2B” podcast, Databricks CEO Ali Ghodsi chats with Battery’s Dharmesh Thakker about how technical founders can effectively scale their cloud-native B2B companies today. Ghodsi, a former academic who grew up in Sweden, says leadership qualities like empathy and respect, in addition to technical chops, are crucial to fueling hypergrowth—and that building well-rounded teams with expertise in non-technical areas like human resources/talent, sales, finance and communications is essential. Here are some key takeaways from the interview:
People are everything
Ghodsi advises founders to think hard about their first 20 hires. Those early employees set the cultural tone for a company and will influence how culture evolves from there—much more than any mission statement or set of company values posted on the website. Then, once companies grow to 150 employees, they likely need to implement new policies to manage growth and make sure a positive culture can grow and evolve.
A company’s early hires likely exhibit “a maniacal focus on making sure that this product brings value to some group of people, to some markets that want to use it,” Ghodsi says. But once a company has established product-market fit and is starting to really scale, it doesn’t need to spend so much time on what he calls “the smart stuff”: selling, pricing, figuring out an optimal sales motion. Instead, spend time on “the people stuff”, Ghodsi advises, including finding trusted lieutenants with different backgrounds than you—e.g., non-engineers—who can run key corporate functions. Putting yourself in their shoes will help you develop a deeper understanding of, and respect for, what they do, and drive growth at your company more broadly.
Leveraging the cloud AND open source together can pay dividends
The traditional way of monetizing open-source technology—like the Apache Spark technology on which Databricks is based—is selling services on top of the free code. But Ghodsi says that’s not a great long-term model, as selling support and services can be quickly commoditized. Instead, he advises having customers rent your open-source product as a service in the cloud. Then, you’re selling a high-performing, reliable and secure service, not just services on top of free code. And that creates a much more defensible moat around your business.
You can’t live on product-led growth alone
PLG is the latest B2B tech watchword; who needs a sales department when your product is so great it basically sells itself? While this may be true in the early stages of a company, Ghodsi says, successful enterprises eventually do need an enterprise sales force to scale. Many CEOS view these two sales strategies as mutually exclusive when they’re really complementary. “We have awesome product teams, awesome innovation, and then we have the fantastic, kick-ass sales team that (is) putting pressure on delivering customer features” and pressuring the engineering and product teams to better, according to Ghodsi. “And the combination of these two really made Databricks what it is today.” Other B2B leaders wait to long to establish an enterprise sales motion, which can hold back growth.
The views expressed here are solely those of podcast guests, not Battery.
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*Databricks is a Battery portfolio company. Investments identified above are for illustrative purposes only. No assumptions should be made that any investments identified above were or will be profitable. It should not be assumed that recommendations in the future will be profitable or equal the performance of the companies identified above. For more information about Battery Ventures’ potential financing capabilities for prospective portfolio companies, please refer to our website. For a complete list of portfolio companies, please click here.
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