20Product: Enterprises are not Adopting AI Yet, When Will AI Break Into Enterprise, What are the Blockers, What Do Enterprises Need from AI & Why Services Companies Will Win in the Next 10 Years of AI Implementation with Howie Liu, Founder & CEO @ Airtabl

Howie Liu is the Founder and CEO @ Airtable, the fastest way to build apps for your business. To date, Howie has raised over $1BN with Airtable with the last round valuing the company at $11BN and an investor base including Benchmark, Thrive, Caffeinated, Greenoaks and Coatue to name a few. In Todays Episode with Howie Liu We Discuss: 1. Scaling into Enterprise: What are the single biggest challenges when moving from PLG to enterprise? Why does Howie believe you have only truly hit enterprise when you sign $1M contracts? How long did it take for Airtable to sign their first $1M ARR contract? How can founders know when is the right time to scale into enterprise? How does the product need to change with the scaling? 2. Enterprises: Do They Really Love AI: Why does Howie believe that enterprises are not jumping on AI yet? When does enterprise interest turn into enterprise buying and purchasing? What are the single biggest barriers to enterprises buying AI solutions today? Post-purchase, what are the biggest implementation challenges for enterprises with AI? 3. The Changing Sales Process: Are we seeing the bundling of tools within large enterprises today? Which categories and vendors are most vulnerable? Which will survive the cuts? What do vendors need to do to prove to CFOs that they need to remain in their budget? How has the customer success process changed over the last year with tightening budgets? 4. Howie Liu: AMA: Airtable famously got Benchmark to lead their Series C, how did this come to be when they famously always only do Series A? Why does Howie believe that it is total BS to suggest post-PMF, everything is good? What does Howie know now that he wishes he had known when he started Airtable?

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  I think like product market fit is just the beginning and there are so many more hard parts of of building a business. I think a million dollar logo is the threshold of being kind of a real enterprise account. Now, we are nowhere near the tornado of every enterprise just knows they want AI in heaps and is very ready to go. Maybe that'll happen, maybe the train will arrive. But it's my sense from my conversations that we're not close to that yet.

• 0:28Harry Stebbings?

  This is 20 Product with me, Harry Stebbins, and 20 Product is the monthly show where we sit down with the best product leaders in the world to discuss product and go to market. And today, we're joined by one of the OGs of product-led growth in the form of Howie Lew at Airtable. Now, in this show with Howie, we discuss if enterprises are ready for AI, what they want in it, what their buying process is, what needs to change in products as you move from PLG to enterprise. This one is a goldmine of knowledge. And speaking of tools we cannot live without, I need your input on the 20VC Miro board about new guests we should feature for 20VC in 2023. Just head on over to miro.com/20vc. Miro is a tool I consider to be truly game-changing.

• 1:08Harry Stebbings?

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• 2:29Speaker 00

  You have now arrived at your destination.

• 2:32Harry Stebbings?

  Howie, I'm so excited for this, man. I always love our chats. So thank you so much for joining me today.

• 2:38Speaker 00

  Yeah, it's great to be with you.

• 2:39Harry Stebbings?

  Not at all, man, but I always love to start with like founding stories, but I want to do something a bit different today. I wanted to start with, if you could cool yourself up the night before you started Airtable and gave yourself a beast of advice, what would you tell yourself?

• 2:53Speaker 00

  I think the biggest one is, you know, it's really important to think not just about product market fit. You know, every first time founder is concerned about product market fit. And there's this adage that like, you know, a second time founder thinks about distribution. My take on it is a little bit more nuanced, which is it's still product market fit, but it's about figuring out the right product strategy that marries with an effective go to market model that lends well to that product, right? So certain products work well in a bottoms up, viral, organically adopted way. Certain products are single user versus team centric. You know, accordingly, I think you need to design a go to market model, whether it's outbound sales or performance marketing or organic and viral growth that really pairs well with that particular product dynamic.

• 3:37Speaker 00

  So in hindsight, we didn't think enough about go to market model. In the early days of the company, we just focused on building a good product. And happily and luckily, that was good enough to get us to the next phase where we did start thinking about go to market. But I think it's something that we could have thought about a lot more.

• 3:51Harry Stebbings?

  If you had have thought about it a lot more, what would you have done differently?

• 3:55Speaker 00

  Yeah, I think one of the differences was, you know, we built the product with the ability to become team centric. So we built, you know, we spent a lot of time engineering the backend to be real time collaborative in nature, which was not a small technical feat. We thought about the team centric use cases. And when we started putting out templates, this was a little after we launched initially. You know, we built some templates that were more solo user centric, some that were more team centric. In hindsight, you know, I wish we had put even more emphasis on the team scale use cases, and especially those use cases that involve larger teams, right? I think we got to those sort of organically, but it was a little bit more diffuse. So early on, we got a very large range of different adoption.

• 4:37Speaker 00

  And I wish we had guided our adoption more and earlier towards the the team centric use cases with the anticipation that those would be the ones that A monetize better, B, you know, lent to more go to market models, right? You know, if you're taking a single user product out to market, it's just harder to make performance marketing work. You know, you can't really make outbound sales work, right? The economics of pitching a single user who pays a single and relatively small dollar cost to you is just hard. So being more committed to from the earliest days, the team centric use cases and even larger teams would have lent better to early on a pairing of more aggressive go to market models.

• 5:18Harry Stebbings?

  My question is, I have so many PLG founders who say, we have a horizontal product, similar in the way that Airtable, so many different use cases. Should we go for two or three verticals and product market aggressively towards them? Or should we let a thousand flowers bloom and just let the world try our products and be much more horizontal? What advice would you have for those founders? Because I never know the answer.

• 5:42Speaker 00

  I think it's a genuinely tricky question. There's nuances, right? I think for products where the use cases are not as self evident, the importance of verticalization, especially early on, is more important. That's kind of the crossing the chasm versus inside the tornado metaphor, where early on, I think, especially when the market is still trying to figure out, what is this thing? It's helpful to really go deeper into a few different use cases and make sure you fully solve those, while at the same time preserving the optionality in the long term, you know, not over committing the platform or the product roadmap in such a way where, you know, you're so brittle, you're so hardcoded for those narrow use cases that you can't expand outward. So I think these are pithy statements that are easy to speculate on in the abstract. But when you get really specific in terms of what is the use case?

• 6:27Speaker 00

  What are the the functions? What is the? Product roadmap, one way or the other, and the go to market model. I think that's where it gets really interesting.

• 6:34Harry Stebbings?

  We first kind of reconnected and decided to do this next discussion because of a tweet that I did on AI and essentially how it's integrated into enterprise. I want to start with kind of a thread, so to speak, and it's why are advancements in AI as significant as the introduction of cloud computing?

• 6:51Speaker 00

  They're different, but potentially going to be more profound. The reason for that is the benefits of cloud compute are pretty easily groccable, right? You don't have to manage your own servers. There's infinite scalability. You know, as hardware costs go down, you kind of instantly realize the the benefits of that, right? Like, we just pay our AWS bill every month. And over time, over the long term, you get more compute, more scalability. By all means, there there's a lot of power and value to the cloud compute model. I think AI, while still in its infancy, and especially L L Ms, are going to be profound in a very different way, which is, you know, when you think about the broad range of knowledge work, every function, right? Whether it's legal or finance, or even the more creative functions, marketing, et cetera.

• 7:36Speaker 00

  You know, you can just see the glimmers starting to emerge of how a really, really broad set of work can be automated or accelerated with especially Gen AI. I think objectively, it is able to produce useful output, right? And it's easy to squint and imagine as the capabilities of these models only get better and better. You know, it's really about the the breadth and the depth of value that can be created with Gen AI. If you believe that we're just at the beginning of this curve of not only adoption, but technological improvement, right? I think with Gen AI, we're going to see more and more use cases get powered by AI, right? And it's going to attack all these different functions, industries, et cetera, piece by piece.

• 8:19Speaker 00

  And so the total amount of disruption, I think, just a lot bigger.

• 8:23Harry Stebbings?

  So if we're thinking about piece by piece in enterprise, you know, you speak to some of the biggest enterprise leaders in the world. What are the commonalities, I guess, in what enterprises want to achieve through the implementation of AI and Gen AI, do you think? What are those commonalities?

• 8:37Speaker 00

  One thing I've learned is is just that it's super early. I think a lot of customers are still trying to to figure out what you can do with AI. So to some extent, I think we're still limited by the broader understanding of what Gen AI is capable of, what its affordances are. So, you know, what are its limitations? Obviously, there's, you know, hallucinations and accuracy issues that are a major challenge, right? So there's all these limitations for sure. We're still in the education phase where I think every enterprise is getting savvy as we speak, or trying to get savvy as we speak in terms of what is an LLM, you know, what are these basic primitives, right? You know, I'm hearing the words even vector database and and other technical concepts be talked about in the enterprise.

• 9:19Speaker 00

  And to me, that's really exciting because I think once there is this baseline level of understanding of what exactly this technology is and what it's capable of, that's when the real fun will begin, where we'll see enterprises actually get really smart about applying this powerful technology to specific problems that they have.

• 9:37Harry Stebbings?

  So I'm in Europe, Howie, and we're chatting about kind of how shows have changed over time and how I've changed over time. I'm much more honest, but like, we don't have Slack in a lot of large enterprises. I have friends who are CEOs of fifty to five hundred person companies. They don't know what Slack is. And then if Gen AI and AI is the next one, my question to you is like, how far away do you actually think we are? And is this tech bros getting a little bit excited too soon?

• 10:02Speaker 00

  One difference between Gen AI and, you know, a traditional enterprise tech. Gen AI is not going to be confined to just enterprise. The way that we've all become aware of and and, you know, it's become top of mind is through the consumer applications, whether it's ChatGPT, Mid Journey, you know, these products have have gotten real scale, right? So it's not just the, you know, Silicon Valley elite who are adopting this product.

• 10:27Harry Stebbings?

  I'm just rolling with this one. It's the end of the day and it's Mondays.

• 10:30Speaker 00

  Yes.

• 10:31Harry Stebbings?

  Employees don't want it. You know, I'm invested in several companies. When I speak to the CEOs and I'm like, are we using X, are we using Y? The teams are pushing back.

• 10:40Speaker 00

  On what basis? Because I've heard all kinds of different, you know, perspectives on this from employees, including our own.

• 10:46Harry Stebbings?

  Media companies to gaming houses.

• 10:49Harry Stebbings?

  Where asset creation, where content creation, where graphic creation, they're getting rid of it ninety percent of the team over time and replacing them with these tools. And the teams know this is a gradual transition.

• 11:02Speaker 00

  Yeah.

• 11:03Harry Stebbings?

  What happens when the employees don't adopt because they know this is a transition? It's almost like the screenwriters right now.

• 11:10Speaker 00

  I think we have to, you know, get very, you know, solemn and serious about the very real economic implications of AI, right? I tend to be a believer that AI has the potential to, you know, actually lower the cost of goods and services production and therefore increase also the demand. I think we're in this weird transition phase where the risk is that everything happens very quickly before we as a society know how to kind of adapt. But I do think there is potential for every person to figure out how to augment their capabilities and ultimately become more productive and and yet more valuable because of this human and AI symbiosis.

• 11:47Harry Stebbings?

  For those that are educated in enterprise and those that are aware, what are the biggest reasons for them not to adopt? What are the biggest implementation challenges that they face? Why are they not adopting it if they're post-education phase?

• 12:02Speaker 00

  The technology has actually reached this breakthrough point. Even now, public market investors are pricing into our stock, you know, based on whether we're going to be an AI winner or loser. And that's not just for tech companies, you know, it's of course even for traditional companies, right? If you're a retailer, the ability to gain OpEx margin is driven by your ability or perceived ability to implement AI and improve the leverage of your business. Though, that being said, I I think some of the other bottlenecks are going to be around data privacy and whether enterprises are comfortable trusting, you know, these cloud-hosted providers. OpenAI, for instance, has an amazing model offering, but right now they don't have a way for you to deploy in a, you know, self-hosted way inside your own infrastructure, if that's something that that you care about, right?

• 12:46Speaker 00

  And of course, there are going to be open source models that help bridge that gap. You're going to be able to adopt your own models that are pre-trained. But even then, there's going to be challenges around, you know, what is the nature of the training data? Is there copyrighted? Content on which this model is trained, does it have the risk of plagiarizing content? You know, especially if you're producing content that's going to be public facing. And ultimately, you know, how do you get the accuracy and the safety of these models high enough to be useful for the intended application?

• 13:16Harry Stebbings?

  A lot of it also comes down to kind of handholding for the enterprise. Despite what you said there about those challenges, they might try it. And we kind of chatted because I put a tweet out saying the biggest companies built in AI will actually be services companies helping integrate AI into large enterprises. Do you agree with that statement that services companies helping integrate AI into large enterprises will be some of the biggest winners of the next few years?

• 13:43Speaker 00

  I think services companies will definitely play a very important role. For how long and how much of the cake they take versus application companies? The services companies are going to be the handholders, right? They're going to help these enterprises both with the technical know-how of, you know, for instance, how do you implement a vector database? What's the right embeddings model to use? These are all technical implementation details that actually matter a lot, right? To getting a useful solution. I think enterprises are going to need some help, you know, figuring this out. Otherwise, you know, I've seen some, you know, go off and do this themselves and it's possible, but it's also a lot of heavy lift, right? It's a very uphill journey to go and gain the internal technical expertise to do this.

• 14:26Harry Stebbings?

  When we think about enterprise and startup or smaller company, I think it comes in like two different lenses. One is in the providers of AI themselves and income versus startups. And then the other is in terms of the actually normal company world. Big toy company, startup toy.

• 14:44Speaker 00

  That's right.

• 14:45Harry Stebbings?

  If we start in the traditional tech world, who does AI favor more? Does it favor Adobe or does it favor the next generation creative cloud company? Does it favor Airtable or the AI first Airtable from two months ago in Y C?

• 15:02Speaker 00

  One thought I have is it grows the entire pie. When you think about like Microsoft's Copilot offering, it's going to add significant ARPU to every single seat of Office, which is a massive install base, right? So it's actually growing the pie of dollars because it's creating new economic value in the world, right? So I don't think it has to be purely a winner takes all, Adobe wins and Canva loses type of equation, right? I think AI could actually enable both Adobe and Canva to grow and to actually create disruptive experiences that both deepen the value prop. I mean, generative fill, for instance, in Adobe is amazing, right? It's amazing for existing Photoshop users in a way that I think I personally would be willing to pay a lot more money for.

• 15:46Speaker 00

  But some of the AI capabilities are also going to be amazing from the standpoint of creating disruptive capabilities that open these products up to new user bases, right? And even new use cases. And I think that's where potentially the startups or the newer companies that have more ability to lean into the tech and kind of build products without the need to support existing customer expectations, distribution models, et cetera. You know, when you think about products like Gamma or Tome, for instance, disrupting how you create slides. You know, I think there is a possibility that while Google Slides and Microsoft PowerPoint are for sure going to implement Gen AI capabilities into their own products, these new upstarts implement them in a way that actually goes after novel use cases.

• 16:31Speaker 00

  They're not competing for existing PowerPoint use cases, but they're actually going after completely new ways of sharing, expressing information that arguably are not even really about slides, right? So much as a better way to communicate visually. I kind of think of it like Prezi, which I never personally liked that much as a product because it always made me dizzy, the flying around the screen. But what they were doing was not going after traditional PowerPoints, but rather creating a new improved way of communicating content in an engaging way.

• 17:02Harry Stebbings?

  Can I ask, in this situation, you'd be considered the incumbent if we're being blunt. Are you able to move as fast as startups are?

• 17:09Speaker 00

  Yeah, so the short answer is yes, and it's a spectrum of how much of an incumbent versus an upstart you are. And within our table, there is this cautious choice that we always have to make of, we still have a finite number of resources, right? We may have raised over a billion in capital, but there's always resource scarcity. I think it's, you know, it's ultimately a choice of, you know, if we wanted to cut corners, launch something completely separate and new, we could move really, really fast. I mean, maybe some startups are able to take even more aggressive shortcuts, like, you know, not having to worry about security as much, right? I think for us, though it does slow us down versus, you know, a truly cavalier new startup. But I think when we're building stuff into the existing product and to, you know, for the existing customer base, I think it necessarily is

• 17:54Speaker 00

  a little bit slower than building it as a clean slate, cut all corners, new product entirely. But you gain the advantages, of course, of, you know, compounding the value that you already have. So I think it's always a choice.

• 18:04Harry Stebbings?

  What are the hardest things about the transition to enterprise, Howie? You're the PLG kind of glory child. Making the transition to enterprise is no mean feat. What are the hardest parts?

• 18:14Speaker 00

  Yeah. Going back to the, one of the early questions you asked, you know, I think it comes down to product go-to-market model alignment. Meaning, you know, you can have a product that's amazing, you know, for, let's say, individual users or small teams. But, you know, let's just say like hypothetical product X. You know, product X is purely for individual usage. There's no team collaboration built in, at least from, from day one. And you get all this viral adoption. But, you know, at some point, when you try to go into enterprise, you know, it becomes really tough to sell the value of X to a senior buyer within the enterprise if its value is only experienced by individuals, right? And then you have to do a productivity sale, which is to say, like, you go and you say, well,

• 18:56Speaker 00

  like, every person that uses X gets 10% more productivity, right? Or saves two hours a week, or whatever it may be, or they like it. And you should pay more money for this, right? Or buy it for more people. And maybe that works, although I think in increasingly in this environment where every enterprise is trying to rationalize their toolset, right? They don't want to have, you know, a million different products. And in some enterprises I've talked to, they Literally have thousands of SaaS products and they're trying to consolidate down fifty different collaboration tools into three, right? For good reason, right? It's easier than to develop internal know-how around that one product, right? Instead of having to support twenty different ones and you know, you have one vendor relationship to manage, et cetera.

• 19:38Speaker 00

  But you know, for for product X, you know, if you're coming in and if the value that you're selling is purely a function of we have X number of people who use us individually and there's no team or org-wide value that becomes more than the sum of its parts or that matters specifically to the executive buyer. I think that's going to be a really tough position to be in if you're trying to transition into the enterprise and especially you know, sold enterprise, right? Which you know, save for it lasting, I think every great enterprise product eventually has to be sold to a strategic buyer, right? In the enterprise, whether it's the head of IT for ServiceNow selling ITSM or you know, initially for for Salesforce head of sales.

• 20:19Speaker 00

  I think you have to define that senior buyer who really has a business case for for adopting your technology.

• 20:25Harry Stebbings?

  Can I be a dick?

• 20:27Speaker 00

  It's your show.

• 20:28Harry Stebbings?

  Well, true, but I'm a Brit, so I feel very uncomfortable asking quite direct questions. Everyone talks about like the bundling of a CFO purchasing decisions. How do you think about that? Would a table be a bundling or an unbundling? Like, would you be vulnerable to a Google suite? And is it true that there is the bundling happening?

• 20:47Speaker 00

  So I think bundling, it already is very important for products that fit into that core productivity suite. If you're a product that generally provides very horizontal, but in my mind, shallow value, right? Or commoditized value, meaning like there's a lot of different products that do the same thing, right? So certainly if you're doing video conferencing, Zoom is great, but there's also other products that offer the same thing, whether it's Teams or Meet. There were many other products like BlueJeans, et cetera, that that predated the current era of products. For those products, or if you're doing whiteboarding, or if you're doing any kind of like free-form or a very generalizable document editing. I think those products are screaming.

• 21:29Speaker 00

  Re-bundled, right? Because they're very broadly applicable. Every company wants some form of it. Maybe not for every employee, like, does everybody need video conferencing? Yes. Does everybody need whiteboarding? Maybe not. Unclear to me at least. And but either way, you think of it as an aggregate decision that you make across the entire company, right? So the CIO can say, look, I'm gonna go with Teams and not use Slack. I'm gonna go with Office and I'm gonna buy it all together as a bundle and not necessarily need every single specific product that otherwise would be unbundled. Because the benefits of each of those products just are not that differentiated. Like, I need one big bundle. It's really about finding simplicity and cost effectiveness.

• 22:11Speaker 00

  And if someone like users would have preferred XYZ, let's just say, like, document editing product instead of Word, too bad, because it's close enough and I don't hear of a strong enough argument for the business impact of of using one or the other, right? I think that's different from making an ROI sale, which is by definition about differentiation of saying this is not a commoditized product. So I think as we move up market, it allows us to fight the bundling effect by creating differentiated value that can be sold in in a business ROI to a senior buyer.

• 22:47Harry Stebbings?

  When you're selling to enterprise today, to what extent do you lead with, hey, we have all these cool sexy AI features that make our table great? Versus we are a foundational tool that you will use and we have AI integrated. To what extent?

• 23:01Speaker 00

  Candidly, I've I've tried the former and it doesn't work. While there's a lot of excitement around AI in general, and you know, maybe you'll get conversations that are just more exploratory in nature, right? But interest and excitement alone don't close deals, right? A real business case, real justification of budget, of value closes deals, right? And What I found is I think it can be a conversation opener in the sense that, you know, if we come in and say, look, like AI has the ability to disrupt a lot of key pieces of this specific use case, let's say that marketing supply chain end-to-end process, right? So I think when we come in, we tease a point of view of how AI can specifically help in a certain use case.

• 23:46Speaker 00

  I think that's a lot more interesting and actionable than just talking about AI as this very abstract thing, because then we're back to square zero of enterprises are still trying to figure out what is this AI thing and what can we use it for. So we are nowhere near the tornado of every enterprise just knows they want AI in heaps and is very ready to go and throw their own resources at deploying AI into every corner of the company, right? Maybe that'll happen, maybe the train will arrive, but it's my sense from my conversations that we're not close to that yet.

• 24:20Harry Stebbings?

  I think the hard thing for me is, I mean, a lot of AI companies, obviously as my role as an investor, and they have these massive logos, your Walmarts, your Nestles, and you're like, wow. But truth be told, they're two seats in one department in one office. And actually, it's 10K spend for these enterprises for them to test, see, it means nothing. To what extent do I start taking those logos seriously?

• 24:43Speaker 00

  In my crash course on enterprise that I've gained over the past 10 years of, you know, doing the PLG thing and then shifting into an enterprise-centric model, I think a million-dollar logo is really the threshold of being kind of a real enterprise account. Now, you know, you could argue like there's a earlier-stage milestone before that that's still meaningful. Like, I would think of even like 250K, 500K as a meaningful milestone. But the truth is, what I've come to appreciate is that anything less than a million is really a speck of spend for a really large enterprise, right? And frankly, if a million is just a starting point, I mean, you've got really large enterprise vendors, ServiceNow or Salesforce, that literally are doing multi-deca-million or even hundred-million-dollar

• 25:27Speaker 00

  deals with some of their largest enterprises. And that's where you're really powering a really critical part of how the enterprise runs, right? So I think a million is kind of the real threshold at which you're a truly battle-tested or like significant value-delivering enterprise vendor.

• 25:44Harry Stebbings?

  How long did it take you to get in a million ARR contract?

• 25:47Speaker 00

  I think it happened fairly early for us. I think probably 2019, maybe a year after we got our unicorn valuation. You know, that was four years after launch, admittedly, and we had gotten a lot of PLD adoption. We were well at the mid to high tens of millions in revenue, I believe. So certainly it wasn't like we got a million dollar contract right away. And especially given the nature of how our product was adopted, like we got there because we had this groundswell of organic momentum within these larger enterprises. And by then, you know, there were many Fortune 500s that already were using Airtable to the tune of thousands of active users who are easy to monetize.

• 26:26Harry Stebbings?

  Final one before we do a quick fire. I had Henry do an info on the show and he said, in the good times, everyone just renewed and put more seats on happy days. And now

• 26:36Speaker 00

  That sounds lovely.

• 26:37Harry Stebbings?

  Yeah. And now not only are they not adding more seats because the teams aren't growing, but they're also wanting data to prove ROI, to prove usage, to prove value. And it's actually changing how he structures his teams. They have to be much more CS heavy in particular. Do you agree with that? And are you seeing the same?

• 26:57Speaker 00

  It's interesting now, when you operate a company at scale, you start to realize how much macro plays into enterprise behavior and therefore your own execution behavior, right? When interest rates were low and every company was going on a little bit of a binge of spending across the board, but including software where maybe there was a rational argument for it during COVID. Every company had to digitize their workforce really quickly, shift into remote work, figure out how to enable their workforce to be effective, even when they weren't in office and they had to disrupt how they worked. So there was kind of this massive groundswell of adoption and just dollars being thrown at a lot of different products, right? I think now there is a very understandable rationalization of, wait a second,

• 27:41Speaker 00

  we had to go during the mad rush over the past few years of adopting tech, spending on tech, and also less budget sensitivity. We adopted all these products and now we're feeling a little fool. We've gorged ourselves and We have to go in and understand what product is adding what value, which ones are duplicative or duplicative and which ones are actually meaningful, I need to say. I think the thinnest or the shallowest analysis that enterprises are doing is the active to paid ratio calculation. So how many of our paid seats, if you have a hundred paid seats, are we using fifty of these actively and which departments do those occur in? Does this department really need XYZ product? So I think that is one of the analyses, but I think the harder work is actually saying,

• 28:26Speaker 00

  well, even if they're active or not, are we getting business ROI from this product, right? You could have a collaboration product or a chat product that has very high activity and yet, you know, maybe arguably is actually costing you in terms of productivity because everybody's just kind of going and using the product, but is it actually enabling real and better work results to get done, right? There's this funny quote I heard from one enterprise CIO, which was, look, if I added up all the supposed time savings that every collaboration product, you know, claims, my employees would have negative hours of work to do every week, you know, like say five hours with this tool, say ten, would say five, you know, it adds up to more than a full

• 29:07Speaker 00

  work week. So the math can't possibly be true. And so I think instead, the more that you can ground into business outcome and what are the best measures for us to show that to the customer rather than just tell, right? So I do think it requires a different mode of thinking, especially from the early PLG collaboration and active usage only centric world to how you do post-sales engagement.

• 29:33Harry Stebbings?

  Howie, I could talk to you all day, but I do want to move into a quick fire. So I'm going to say a statement and you give me your immediate thoughts. Does that sound okay?

• 29:40Speaker 00

  Yeah, let's do it.

• 29:41Harry Stebbings?

  So you're also an angel. What's been your biggest lesson from angel investing?

• 29:45Speaker 00

  It's that everything looks easier from the outside. You know, when you're a startup founder, it can feel very lonely because you feel like, oh, man, everything's so hard and there's so many things we have to figure out. I mean, you look at other companies and if you're only reading what they put out on press releases and the big announcements and so on, everything looks like it's just so easy. And I think when you come to appreciate when you invest in companies, you're kind of plugged into the community, it's like if everybody's got challenges, right? It's never this perfectly smooth sailing the whole way at least, right? Maybe there are easier and harder phases, but I think I've just come to both empathize with every other founder going and figuring things out, especially from the early phases, but also normalize that that experience for myself.

• 30:26Harry Stebbings?

  How did you get Fanton to write a Series C check? He's incredible, but he writes Series A checks.

• 30:31Speaker 00

  We were at a very unique inflection point as Airtable and believed and still believe that there is a massive market ahead of us, right? And so, you know, I think what really matters in venture is, you know, what is the upside? What's the IRR potential for for this investment? And if you're in a market where the biggest you can ever be is, you know, a hundred million dollar revenue business, right? And then you're going to plateau, then, you know, it's hard to come in and get excited from an early stage returns profile standpoint. If you're already investing at, you know, basically a valuation where that's priced in, you know, maybe you get a two X, three X on it. I think when we raised that round, we were very much and still are at this early phase, this point of inflection where things were starting to work.

• 31:16Speaker 00

  We were starting to monetize. We were seeing a very quick ramp on the revenue growth curve. I think we went from, you know, one to 10 million in revenue in a little over a year. We were well on track to multiple tens of millions. The nature of the adoption, we had everyone from cattle farmers to law firms, to nonprofits, to agencies, but also really large enterprises starting to adopt Airtable and paying for us. So it just felt like a very large TAM that, you know, could easily or could potentially have a hundred X even from from that point.

• 31:47Harry Stebbings?

  What's the biggest piece of startup advice that you hear that you think is bullshit?

• 31:51Speaker 00

  It's this idea that if you just find product market fit, all else is gravy, right? I think like product market fit is just the beginning and there are so many more hard parts of of building a business. But I feel like there's this, you know, mentality or myth that the hardest part is that first phase where you're chasing product market fit. And once you see the takeoff trajectory, everything's a downhill battle from there. And in truth, you know, at least in my experience, like that's when the real fun and learnings, but also the challenges really start to emerge, like to build a real business and to scale it.

• 32:25Harry Stebbings?

  What do you know now that you wish you'd known when you started?

• 32:28Speaker 00

  It's really about thinking on on longer time scales. You know, we were always a very patient company. Airtable took two and a half years to build the product before we even launched. But what I wish I had done more of was not only have that patience, be willing to think on 10 year long time horizons, but actually be more measured about holding ourselves to certain goals at milestones along that way. So I remember LinkedIn supposedly had put out a business plan before they started. I think Reid Hoffman had written this plan and had like MAU counts and revenue goals and and just in in full detail and in exactly the right chronological order, they spelled out, here's what we're going to be five years in, here's what we're going to be seven years in.

• 33:11Speaker 00

  It's like the NBA's dream of a business plan where it sets like the next, you know, 10 years of of growth expectation and product execution expectation in. And usually that never works, right? Like when you try to predict the path of a company, it's like everything's volatile and there's so many things out of your control. But apparently in their case, it actually worked surprisingly well, right? Like they were able to hold themselves to it. So some of that is in a good way, a self fulfilling prophecy where if you hold yourself to an expectation of we have to be able to figure or get to this milestone by X date, right? If you're SpaceX or if you're Tesla getting off the ground, you can't just say, we'll figure it out when we figure it out, right? You're burning cash, you have limited time to to get a product out the door, you have to make that product good enough to get sales.

• 33:56Speaker 00

  And then you have to follow that, you know, in the case of Tesla, first product out with a second product that's not a loss I think that kind of discipline could be applied more to even software companies. So just holding yourself accountable to this longer term plan of, you know, what is the sequencing? And at what point do you need to make that transition? For instance, from PLG to enterprise sold, what does that entail? What are the revenue milestones, et cetera, that you can hold yourself to?

• 34:20Harry Stebbings?

  Do you feel pressure about scaling into valuation? Your last valuation was 12 billion. It is high. Do you feel pressure to scale into that?

• 34:29Speaker 00

  I feel pressure to drive durable growth in this business. I think valuations are always, you know, an outcome metric, right? It's the output metric that is a function of all of your execution efforts. And to some extent, like if you focus too much on valuation, you're trying to chase the tail and not the dog. Right? It's hard to directly impact valuation. I mean, maybe you could do a better job of pitching the company out there and that helps. But I think the hard work that goes into building a great business takes a long time. Right? Airtable at least was a company that, you know, we spent a lot of time building our initial product before we even raised our first round. We then spent a lot of time getting product market fit before we went and raised that unicorn round. Right?

• 35:14Speaker 00

  You know, this was not a let's go and get the valuation first and then justify the business after. You know, we very much focused on trying to build a really great product and a business. And that's what we're doing now. Right? I think to some extent, everybody has had a reset in terms of valuation expectations, revenue multiples, like what's normal in this new era. And certainly like if we do well at executing on the durable growth playbook, there will for sure be a break even point where we are worth our, our previous valuation and more. Right? You know, the great companies are the ones that durably compound. And no matter what the revenue multiple is, revenue multiples can compress from, you know, 20x to 10x to 5x.

• 35:57Speaker 00

  But I think the one thing to focus on, which is in your control, whereas those multiples are not always, it's really focusing on that durable growth. So if you can consistently grow and efficiently grow, inevitably you will justify any valuation that you pick. Right? It's just easier said than done.

• 36:14Harry Stebbings?

  Listen dude, I want to do one final one. It's a very simple one. What would you like to be remembered for as a leader?

• 36:20Speaker 00

  It's a good question. You know, I think I care less about being remembered and instead about doing a good job. Meaning, I think ultimately, you know, what I've learned is there's much more to this than just building a a product, right? You know, it's it's fun and easy in some ways to to build a good product. I think to build a great company and one that, you know, is not only a great business, but also is, you know, a place where great things are built, are are done. That's a very different challenge. And so I am learning to become a company builder. And while it's it's less about having a legacy attached to my name around that, I think it's something that that I hold a lot of both pride and accountability to learn.

• 37:00Harry Stebbings?

  Howie, listen, I've absolutely loved this. I always so enjoy our conversations. Thank you so much for putting up with my more direct style this time around, but I've loved it and you were fantastic.

• 37:11Harry Stebbings?

  Now, if you want to see the full interview in video, you can check it out on YouTube by searching for 20VC. I always love to see you there. But before we leave you today, I need your input on the 20VC Miro board about new guests we should feature for 20VC in 2023. Just head on over to miro.com/20vc. Miro is a tool I consider to be truly game changing. It's a visual collaboration tool packed with the right tools, tech and templates to help you think of and create that dream product. That means you can brainstorm the perfect product with your team, vote on the best ones and explore with your customer journey roadmap all on a Miro board. Whatever you need, Miro's infinite whiteboarding capabilities help you get there. It acts as your team's single source of truth.

• 37:55Harry Stebbings?

  And now I'm using it to hear from you. Go ahead and add your suggestions for 20VC guests on our Miro board at miro.com/20vc. And finally, you have to try EPO, the next generation A B testing and feature management platform designed to help you run reliable, impactful experiments. EPO saves you time across the entire experimentation workflow. Planning tools help run experiment scenarios beforehand. Best-in-class diagnostics mean you spend less time debugging. Issues. Their cutting-edge stats engine helps you reduce experiment runtimes. Plus, EPO sits directly on top of your data warehouse and your North Star metrics. So it gives you this real confidence in experiment performance and ease in conducting follow-up deep dives.

• 38:38Harry Stebbings?

  No more extended analysis cycles to understand results. And that's why companies like DraftKings, ClickUp, Momentive and Cameo all rely on EPO to power their experiments. Get access today at getepo.com. That's getepo.com. As always, I so appreciate all your support and stay tuned for an incredible episode this coming Friday with Noam Shazer, founder and CEO at Character.ai.