The rollercoaster ride of Atlassian’s Silicon Valley soulmate
He was the $640m CEO of a US tech unicorn who’s launching new products for Atlassian and Canva – but losing millions has taught him new lessons.
It was the moment Perth officially became “the city of lights”.
On February 20, 1962, thousands of the city’s residents rushed out to their backyards to wave torches into the night sky, putting on a bright display for astronaut John Glenn as he became the first American to orbit the earth.
That connection between Perth and America now lives on in new guise, this time in technology.
Silicon Valley-based American entrepreneur Spenser Skates is the co-founder of tech unicorn Amplitude, now one of the leading niche data analytics companies in America.
His grandfather, who passed away several years ago, was originally born in London a stones-throw from the Arsenal football stadium.
The family took a boat to Australia when he was 10 and settled in Perth. He eventually became a surveyor in the resource sector and even had a hill in the WA outback named after him.
Skates’ now 88-year-old grandmother June Stokes is still living in the Western Australian capital.
“My dad grew up in Perth, so is half West Australian. I moved to Boston because of my mum,” says Skates junior, who resides in San Francisco.
“My uncle, Jeffrey, is still in Perth. He was an early investor in Amplitude so we made him a lot of money. When we were raising money in the early days, about $1m, I called up my uncle and he put in a bit. But I told my parents ‘I don’t want to lose any of your money, as your son that would be unforgivable’ … It ended up being a phenomenal investment for my uncle. My dad is still a little jealous of that.”
In recent years Skates has built upon his Australian connections, as Amplitude has forged strong relationships with local tech trailblazers Atlassian and Canva, and now it wants to help both firms reach more customers and build more products to roll out in the America market.
Amplitude was created a decade ago to help companies build better products through sophisticated product analytics, helping them discover the features that users like and dislike based on data.
Skates, who is chief executive of the firm, says Amplitude now wants to take its relationships with Atlassian and Canva to the next level. He recently visited Australia to meet with senior executives of both firms, and even dropped by Perth on his way home to visit family.
“Helping Atlassian and Canva launch some more of their new products and take on more US companies is something we are excited in doing,” he says.
“We are seeing the real rise of the Australian digital ecosystem that we haven’t seen in the past. Australia is home to some of the most successful product-led growth companies. They don’t spend dollars on sales teams and marketing, they are focused on building great digital products and we help them drive revenue through those products.”
Atlassian was one of the early customers of Amplitude in 2017. About 1000 users from the Australian tech giant now work with the American group every month.
“They now do a tremendous amount of business with us,” Skates says.
“They want to understand how people are using their products.”
Early years
Skates was only 12 years old when his mother took him on a trip to Malaysia to visit her family there.
Everyone around him seemed to be building their own computers and small start-ups.
The trip inspired the budding entrepreneur to want to build a computer of his own and became his first real introduction to technology and programming.
After finishing school, Skates studied bio-engineering at the Massachusetts Institute of Technology where he twice won Battlecode, the university’s largest programming competition.
After graduating in 2010, he worked full time as a trader in finance before finding his passion in working on Text by Voice technology.
In 2011 he and fellow MIT graduate Curtis Liu built a company they called Sonalight, a voice recognition app similar to Siri. But they soon found they had no idea how customers were using their apps.
After experiencing the need for a better product analytics solution first-hand, in 2012 they created Amplitude to give companies more visibility on how customers were using their digital products. Liu is now chief technology officer at the firm.
Almost a decade later, after becoming a tech unicorn in its private funding rounds, Amplitude was valued at more than US$5bn when its shares began trading on the NASDAQ in 2021. The firm has 700 staff.
26 of the biggest – or so-called Fortune 100 – companies in America now use Amplitude to answer strategic questions about how customers use their products to maximise business outcomes.
Its almost 2,200 customers include tech giants like Square and PayPal, as well as Jersey Mike’s, NBCUniversal, Shopify and Under Armour.
Skates is conscious of being a first-time founder CEO.
“Before starting this business I never managed anyone or ran a company. So you need to surround yourself with people who have that public market company experience,” he says.
While he laments the short-term, quarterly focus of public market investors – which he believes can be overdone at the cost of long term investment – he welcomes the scrutiny.
“A lot of CEOs complain about public company markets but I like it. Public company investors give you a lot of latitude. They are happy to back you if you are deliberate about your path and communicating it,” he says.
Generative artificial intelligence (AI) services, like ChatGPT, look set to transform industries like IT, engineering, marketing, and analytics.
Amplitude is now working to embed more in its operations but Skates believes AI algorithms quickly become a commodity, so the most important competitive differentiator is the quality of the data set.
He says the biggest opportunity in the future for firms such as Amplitude is to automate the work of data scientists.
Last year, Amplitude was named by Amazon Web Services (AWS) as an Artificial Intelligence for Data Analytics (AIDA) solution, meaning it can augment analytics with machine learning to bring personalisation at scale to the enterprise.
“We have this massive set of data on what people’s customers are doing. How can we unlock and automate that in a much more scalable way? Instead of having to have a human analyst – a data scientist, do that, – how can you automate that. If an analyst can generate 100 reports a day instead of 10 using ChatGPT, that is so much more exciting and valuable,” he says.
“I am really looking forward to a day when AI can generate the insights for your product for you. A great limitation today is you have to spend time learning and understanding the data.
If you don’t need to be an expert to do that, you are giving access to a much bigger group of people. We will be able to do that in a few years time.”
Future plans
Amplitude now generates US$250m in annual revenues and Skates thinks the firm’s Asian business – including Australia – can grow in the longer term to account for at least one-third of its yearly turnover.
Late last year Amplitude appointed former Dell executive Mark Velthuis as vice president of sales for Asia Pacific and Japan (APJ) with the expectation that Asia’s forward-looking culture will accelerate growth of digital products.
But like Atlassian and Canva, which have seen their public and private valuations hit during the tech market shake-out of the past 18 months, Amplitude has not been immune.
From their peak in November 2021, Amplitude shares have lost more than 80 per cent in value.
In April the firm cut 13 per cent of its workforce or 99 jobs and in May revealed it now expects 12 per cent to 13 per cent revenue growth for full-year 2023, down from the previously forecast 19 per cent to 22 per cent.
Skates says the company hired too many staff in the third quarter of 2022 when there was debate about how bad the tech market shake-out would get.
“So we looked at how we should set the business up properly for the new environment. We had to think about restructuring the sales and the account teams,” he says.
He expects the headwinds to continue for the tech sector for the rest of 2023.
“You have to be able to be break even as a business now. My number one thing is don’t expect to be able to raise any money in the next few years. You have to be able to make it on your own, that is the only way you can control your own destiny,” he says.
“In this environment you need to reset expectations around fundraising and need to show you have a plan to get to profitability with the cash you have. We are going to see a lot of companies in tech go out of business in the next year.”
Technology companies across the globe have been heavily criticised over the past year for announcing waves of sackings via email.
Skates stresses that while the impacted employees on his staff received personal emails from him before a company-wide announcement, they were invited to 1-on-1 meetings to talk about their transition. The firm also offered generous severance packages, including extended healthcare benefits.
“You need to be very thoughtful on how you treat people on the way out. That is very important to me personally. We had a list that any impacted folks could sign up to for new roles elsewhere outside the company and half of our people signed up to that,” he says.
“You need to take ownership as a CEO. You own the decision and you own the path you took the business to. It was on me ultimately. In retrospect there are things we should have done to better avoid this and that responsibility rests with me. This is a time when people respond to authentic leadership. I see too many leaders and CEOs that don’t take responsibility for things in the bad times.”
He says the challenges have also provided a timely reminder of the importance of remaining humble in business. His personal wealth soared to over US$450m after the stunning NASDAQ listing when he was just 33 years old.
While some of his tech colleagues bought fancy cars and started flying around the world in private jets, he and wife Anne-Lee have remained grounded. They were married in August 2019, just before the onset of the Covid-19 pandemic.
“You have to remember that even if you do well and end up wealthy, it can be very dangerous if you let that get to your head. People have lost a lot of money on paper in the past few years. That can be tough to swallow. A lot of people have wanted to quit and sell their companies,” he says.
“But I was worth five times more two years ago than I am today. That is life. I am at peace with it, totally at peace with it. The reasons I am doing this remain the same. I love building new technology and as long as I can do that, I am happy.”
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