From $5M to $100M: How to Scale a Multi-Product Startup with Lattice CEO Jack Altman

The talk I'm giving today is called, uh, From 5 to 100 Million: Founder Secrets of Scaling a Multi-Product Startup. Um, I'm really excited to talk about this because this is something I really deeply believe in and that I think has been kind of like a, an open secret behind a lot of great companies that I think is like somewhat underdiscussed. Uh, and my goal today on some level is to convince you that, uh, many more companies should be multi-product than are. And that for the types of companies that being multi-product makes sense, maybe going earlier than you thought could be a good idea. I'm the founder of Lattice, so obviously this is— we're a multi-product company. We've built 4 product suites over our 8 years of existence. So I do have some sort of survivorship bias in this belief, but I do really believe that the ideas that I'm going to share here today are applicable to the majority of companies. Today. So this is a visual that I think we're probably all somewhat familiar with. This is like a market landscape that, you know, somebody at an investment firm probably made. And this is what it looks like in some narrow segment of a relatively niche market. If you perhaps maybe zoom out to a slightly broader set of categories and you open up a couple more adjacencies of what the product does, you might get to a market map that looks like this. And they're probably missing a ton in here. You look at even like a YC batch. There are hundreds of great companies going through YC every 6 months, and that's like 1% of all the companies that applied, and there's huge ecosystems outside of it. You zoom back 5 years or 8 years or 12 years, and the breadth of companies is just narrower. Now any startup that gets started in any reasonable category has many or dozens of competitors, and that's sort of just the way it is. And so, uh, my belief is that multi-product in 2023 and going forward is one of the best strategies that you have, uh, to compete. It's a great dimension to compete against this backdrop. Um, before I get into a little bit of like the tactics of how to do it and what it looks like and some pitfalls, I want to just start with why this is happening. Uh, I think by understanding the mechanism of why we got to this place. That'll help you understand how to approach it and what it means for you. So Jason talks about this all the time, but it's worth repeating. We are so many years into cloud, and yet here we are at hundreds of billions in annual cloud spend, and we're still growing 6x over 8 years at this kind of scale. That's unbelievable. And so the demand from companies to use cloud software is just going to naturally lead to a ton of supply. But there's more than just the basic economics of it. There's a bunch of micro reasons at the company level why things have changed. The first is that it's become much cheaper to build software. In the past, in the far past, you had to set up servers. But even once we got past that, we didn't have nearly the ability for people to build really high-quality products extremely cheaply. You look at brand new startups with a couple smart founders. You can be in a dorm room and have a laptop and a couple subscriptions, and you can You can build something great and that didn't used to be the case. Uh, so that's one. Another is that it's the, the sort of shoulders that we are all standing on when we build software now is unbelievable compared to what it's been in the past. There are incredible libraries. There are great integrations out of the box with other companies that you can pull into. There are just so many reasons why now the tooling and systems let you build better products. So now everybody is armed in a way where they can build better products, cheaper, faster. Um, on top of that, the access to capital is much better. So, you know, there's obviously a real surge in 2021 of venture capital. It declined obviously recently, but generally speaking, the overall trend, if you look out over years or decades, has been many more dollars going into the space. And so what you see is rather than just a few companies with real traction getting funded, is anytime there's a good idea, a ton of companies can raise capital, build early teams, and build these great products. And so the capital going in behind the companies has obviously changed. And then this is a super important final point, that startups are no longer fringe. When I graduated from college, I guess like 12, 13 years ago, it was not really— even then, which was many years into tech, it was still not the case that everybody wanted to go into tech. Today, the big finance firms are competing with the big tech firms trying to lure talent, and it's super mainstream. And so it means now that— lots and lots of smart people who used to work in other industries now work in tech. And so the supply of talent for companies just looks completely different, obviously. And so given that backdrop where it is cheaper, easier, faster to build high-quality products, where markets are more crowded than ever, it's become my view, uh, that I hold pretty dearly that multi-product companies is one of the best ways that you can compete given this sort of reality that we live in now. A quick instance that I'm most familiar with, obviously, is Lattice, where we've built many products over the years. We started in OKRs and performance, but over time, we expanded out to a bunch of other products. And I think the thing that I learned doing this with Lattice is that you don't— the right way to do it isn't just building sort of random products that you think your buyer might want to build, but instead thinking about the user journey and what does this sort of human who's using your products, what else exists chronologically in their day? What else do they need and sort of take them through a journey? So as an example for Lattice, it might be you onboard at the company, you need to get set up with your goals, you need to have one-on-one with your manager, you're going to go through a quarter, you're going to get feedback, you're going to share back how you're feeling, and you sort of think in those terms. And this applies to— basically every software category, and that can kind of guide your roadmap and lead to a much more holistic solution for customers. I sort of share this timeline of when we built our products for a couple reasons. The first is you'll see that we've done it consistently, but there's years between each of these products. It doesn't come quickly. It takes time to build these things, and it's really hard work. Building a multi-product startup is definitely extremely challenging. Just to give you a quick tangible story that applies to at least Lattice's early days, we launched with OKRs. That was not really where we got footing. We got a foothold with performance management in 2016. But then in 2018, we built our first second product. And the shape of the way that went is we were at $2 million of ARR. And we had 7 engineers. And we put 5 of them on this engagement product for 9 months. And so that was painful. That year felt like chewing glass. We were defunding the effort on the current product. We had all of these— the majority of our resources going to this thing that wasn't yet in market. And that was a difficult period to go through. And so it's not to say that this stuff is without cost. And product depth absolutely are in some amount of tension. But I'll talk about the ways that you can resolve them. Uh, but what we found time and time again is that when we got through the tunnel of building these second products and the challenge of that, on the other side, we were rewarded with these huge benefits. Um, a quick disclaimer before I talk about those benefits is that I'm definitely not advocating for infinite breadth. Uh, there's judgment call and every company is different. There are real trade-offs to these things. And when you go too wide too quickly, you do trade off the ability to serve customers in certain ways. But what I'm advocating for is that most companies should be pushing this thinking further than they are. So just to walk out the quick value of what was so helpful about being multi-product and what we've experienced at every juncture. First, just think about the demand side, like what's in it for the customer. That slide I showed you at the beginning of the market landscape, That's what the customer is facing too. It's like dizzying when you're looking at that and you're trying to figure out, geez, I need to do 19 things and they each have 14 vendors, like what's going on here? And so it's really helpful to the vendor if you're like, I can take care of multiple things for you in one solution. So you're not sitting on tons and tons of software and vendor relationships. I remember at Lattice, we looked at some point a couple of years ago and we had like 370 vendors or something like that. And it's just like, a lot for the company to manage. You're also going to get a deeper data connection between the products. So to the extent that the products tied together in a relevant way, it'll be easier inside one solution than if you're sort of stapling across companies. The cost of ownership tends to be cheaper. I'll talk about that more in a bit. But generally speaking, when you buy from a multi-product company, you'll get cheaper pricing overall, even though you're paying that company more than you would pay for like, you know, an individual SKU. And then it's just way less taxing to employees. The people have to roll it out, the people have to use it, another login in Okta. It just makes things easier. And then on the supply side, you actually get, it turns out you do get a lot of benefits too. It's not just trade-offs. Um, your go-to-market gets unbelievably more efficient. Uh, the cost of selling a net new customer is unbelievably higher than the cost of selling an existing customer or just renewing a company with sort of a new product. You do get some product advantages through data integrations getting much stronger. You get shared UX patterns, so usage gets easier. You might have elements that you can copy over, so it's faster to build the next product. And then you get much stronger customer relationships. You just get a deeper connection point. You're more embedded in their workflows. You have more reasons for them to stay with you, to buy more from you. And so the relationship does grow. So the, the way that we saw things happen in the funnel was surprising to us each time because the impact of the second product was not always what we expected. But let me walk out for you what the advantages are because a lot of people, I think, think, oh, it's just going to give me higher pricing and that's the value. But it turns out that that's often or maybe even mostly not it. So one is you can think about your growth curve inflecting at the top of the funnel with more leads. You're going to have more reasons to talk to customers. You're going to have more touchpoints with people. You're going to have an innovation story to tell. People who maybe weren't interested in your first product but are interested in your second product are going to come to you. So you're going to end up getting more leads. You're going to end up with better conversion rates once people are in your funnel. They're going to have more reasons to buy. It's going to seem cheaper to them. You might hit people who weren't as desperately in need of your first product but need your second one. So you're going to get a lift to conversion. You're going to get a higher price point per customer, which is the one that everybody expects, but is not always what ends up happening, but you do, generally speaking, get the ability to add pricing. And then you're going to get better retention. Some amount of customers both are going to want to stay with you longer because you've got more touchpoints in their system and in their workflows. Interestingly, for example, when we launched our engagement product in 2018, we had a humongous lift. We almost doubled our quarterly bookings rate overnight when we launched it. But then when you pulled it open, like 20% of the lift was explained by the higher pricing. Almost all of it was explained by the better conversion rate and more leads. And so in that case, you know, that's what happened. We've had other products where the balance is different, but just know that when you build these products, every part of your funnel stands a chance to improve and it all compounds. So the logistics, hopefully that was like a, you know, a good case for like what the value can be. And now talking about some of the logistics. So I'm not going to talk about the building of the products because it's almost too nuanced per company. It's out of scope for a talk like this. It's a whole thing. But I did just have to throw up for fun, this is month 1 of Lattice when we were building our first products. And there's so much of the craft there. And all of the go-to-market stuff that I'm about to talk about, that only exists on the back of a quality product that real customers need. It is in many ways back to day zero, back to the product market fit moment of starting a company. And so I'm glossing over that part, but in many senses, that's the most important bit. So on the taking it to market, obviously, every company is going to be unique. Every product is going to be unique. Every competitive landscape is going to be unique. But let me just share a few of the things that are going to be worth thinking about. when you, when you build multiple products. So the first is on go-to-market teams, on your new business teams. Uh, some of the things you're gonna wanna think about are what are the ways that you're gonna set ARR goals and other targets? Um, there are many cases in which setting ambitious goals will help you. There are gonna be times when actually attaching ARR goals is not gonna be helpful to you and you really just wanna be getting distribution. But this is something that you really wanna think about and like, what are those incentives? Second is gonna be who's gonna do the selling? Do you wanna have an overlay team that only sells this new product, or are you gonna try to enable your entire, entire sales force? And this question exists whether you have 2 sales reps or 12 or 50. Um, they're just fundamentally different things and it has to do with the complexity. How able are you to train? Is it the exact same buyer? But that's a really important thing to think about. Are you gonna have net new sellers? Are you gonna have your current sort of account management team do the selling? Those questions really matter. One thing to note, and I've seen this at Lattice, I've seen this at a lot of other companies, is surprisingly, you would think, generally speaking, you would expect to see more velocity on cross-sell because you already have the customer relationship. What tons of companies find is it actually comes more easily on the net new side than on the cross-sell side for various reasons. And this won't be true for every product, but just knowing that you're going to get surprised and your intuitions won't always be exactly right, so not always overplanning, but getting in market quickly and then going back to that zero-to-one mindset is really important. The second logistical set of questions is around making your customers successful. Um, the— if there's one point that I think, uh, is important to remember here, it's the difference in maturity curves of your different products. So you've got your first product, which is going to be up some maturity curve. It's going to be battle-tested. It'll be hardened in the wild. You're going to have customers who've used the thing. You're going to have like integrated real product feedback, and you're going to know how to talk about it, how to sell it, how to talk about competitors, and it's going to have some amount of maturity. And you got this new thing that has zero maturity, and it's a day one product. So like, how do you do that? Generally, what we found is you have to go back to the reasons why a startup can compete with a big company. And a startup can compete with a big company usually on the basis of individuals who are making up for the lack of all of that institutional experience with great care, attention to detail, white glove service. And when you do that and you can segment that out on the post-sale side, you can get incredible results. But you have to remember that these maturity curves are just fundamentally different for your current products and your new ones. On the marketing side, the biggest learning we've had is that it's hard to evolve your brand and your, your story to customers. It took us a long time after launching new products to get customers to know that we had those new products. We thought we were beating the drum on it, but We learned that even years after 2018, when we had launched our second product, people still just thought we had a performance management product. So you really have to find ways to transform your story, to do product marketing, to make sure your customers know that, to enable your sales force. Because if you've gotten to like a mini brand or a full brand, your customers are gonna think of you as that first thing. Um, the fourth point is existing customers and distribution. It is just, it's, it is. This is like the, this is the centrality of the advantage. Uh, it's that cross-selling and bundling is much more effective to the company. It is so much cheaper to do. It drives so much better retention. And so you want that to be happening, but back to the maturity curve point, it is easier for everybody in your org to not do the new thing. They know how to do the old, the old product. Your customers know it. They know how to talk about it. It's easier to sell. They're gonna get more commissions. So you have to find ways. To design incentives so that individuals want to make that happen. And you can do that not just through financial incentives. You can talk about it. You can make it a company mission. But certainly designing it that way helps too. So those are the 4 logistic things. I realize those are more prompts than they are answers. But every situation is unique. And it just takes a lot of thought, experimentation, and effort. OK, the last thing I want to talk about is— some of the pitfalls that I think you can get into as you go into multi-product companies. Obviously, a startup at all is full of pitfalls. There's a million things that can go wrong. Finding the happy path is very challenging. But when you're in multi-product, you definitely do compound the surface area on which things can get weird. So I want to talk about a few of those. The first is clarity of ownership, which probably we all are focused on. That concept no matter what. What I've found is that when it comes to building and then taking to market new products, having unbelievably clear ownership is really essential or everything gets tripped up over everything. So when you build, one of the things that I think you end up needing to do is really cordon off, for example, the resources on the engineering product side and make clear who owns it. Because there's going to be an existing draw engineering and product resources on your current products. You're going to have hopefully lots of customers by the time you're on your second product who are banging down the door saying, I need this thing tomorrow. I want this for my renewal. A salesperson is going to be like, hey, we can beat our competitor if we build this thing. But you're trying to build this new product. And so having this clear ownership structure where you figure out upfront who's doing what, and then you really empower those groups and you protect them, is like the only way that you can make it happen because the natural pull will go against that. The second is preparing for post-sales on the new product. And if you're not intentional here, things can get really challenging. And it's all to do with that maturity curve. And so what you need to remember is you're going to launch this thing, and all of a sudden, your customer base is going to pull you really hard to want to swoosh all those resources back to the first product because people have been waiting, the roadmap got backed up. But you launched a product that is just nascent. So you have to figure out a way to keep investing in that product. You have to keep those lines clear somehow, uh, while getting back to your current product. Um, so there's a couple things here, but, uh, the, the key is that you're gonna be tempted to defund the product after you've gone to market and it's actually The better that new product's doing, the more important it is to not defund that product and keep leaning into that investment. Keep having the go-to-market teams wanting to incentivize it and don't let off the gas. Because we all know from even launching one product that nothing gets off the ground that quickly. And so you got to keep the separation here once you've launched. A third pitfall I think a lot of companies can get into is around the question of build versus buy. Let's say you know this next product category you want to get into. You fundamentally have two choices. You can build it yourself in-house, or you can buy another company. I'll reveal my bias, which is I think that the vast majority of the time, building is better than buying. I think buying companies, particularly when you're small, comes with a huge amount of overhead that is hard to foresee. You have to integrate the team, the culture, the product. You're not going to have the integrations. It's generally speaking going to be more expensive than if you just build it in-house. It's going to be a huge distraction to your leadership team relative to building it in-house. You might have different tech stacks. And so it just— it's not the optimal path most of the time. So I'm a huge believer that when you can, until companies are big and there's real leaders that you're considering, and I think the early stage purchases of products are often challenging. There are a couple caveats, obviously. Acquisitions do make sense, and there are situations where they can transform companies. One is when you're buying a true winner or a true number 2 in a category that you know will be just too hard to compete into, that's strategically critical, and you've got enough scale to pull that off. I think that's one. A second, which happens at a smaller scale, is there are instances where a different company or team has done a long, complicated build that will actually take you a very long time, and you won't have the product expertise to do. And so you're acquiring years' worth of R&D and a team that really knows how to build it. There are instances where that has worked really well. And then the last is if you have to. And when you have to is when the market is moving so quickly that you just need to get on the map and it's worth it to go faster even if it's a little bit messier because otherwise things are going to get away from you. And so buying today and then spending the next 12 months integrating can, in some of those instances, be preferable to building for 12 months and not coming out for 12 months. But generally speaking, I think buying is a last resort situation rather than building yourself. But that's a bias. The fourth pitfall that I've experienced is you really need to simplify everything. Everything wants to get complicated once you're multi-product. The way that you're building product gets more complicated, the way you're talking about go-to-market, the way you're thinking about commissions, all of it just gets complicated. And the world is a complicated place. You have to have some of that, but wherever you can, look for ways to make it simpler, make the goals clearer, make the plans simpler, streamline the people on the project. It always makes things easier because there's so much natural trend towards complexity. And then the last I talked about a little bit, it's the company resourcing thing. More than any other sort of project I've ever worked on at least, and that, by projects I mean a new product, but also things like going international, changing segments, trying to expand into a new industry, standing up a new function. More than any of those, a new product, both the build and the launch, can suck company resources at a rate that you didn't expect. And so the only antidote that I know for this is to go in with some clarity of, this is not that important. I'm only willing to invest 10% of company resources on it. Maybe the number's 40%. Maybe it's a bet the company thing, and you're like, I'm willing to invest 70% for a year. But if you don't have that clarity as you go into it, you can get trapped extremely quickly. And so having that up front, I think, is really important. OK, so just to summarize the key takeaways I shared, the first is that we are in an extremely and increasingly noisy SaaS market, which is natural. And the market is getting bigger and bigger each year. And so it is just sort of the way of the world. Um, but multi-product, given that context where building products is cheaper than ever, taking products to market is sort of more expensive than ever. Multi-product, I believe, is one of the most powerful forms of differentiation that's available to many companies. Number 2 is that when this is done well, it actually is better for everyone. It is like a truly better experience for customers in many cases. It's a truly better, uh, go-to-market machine for companies in better cases, and the results should be better software. And so this is the path, I believe, that leads to better solutions for customers over time. And then the last point, which I alluded to many times throughout the talk, is it's really hard. That's the catch of this whole thing, is it is super hard. And so getting advice from people who have done it before, who can help you see around some of the corners, hiring people onto your team who have worked in a multi-product context, the more advice you can— and then just sort of mentally preparing for a more challenging build, but the rewards on the other side are very high. So that's my talk. Thank you.