👯♀️ Takeoff #51: Product Manager's BFF
Welcome to Takeoff, your weekly dose of product deep dives and new learning opportunities. Today, we're diving into the Amplitude story. Lessgo!
Before we start, make sure to check out some free resources on interview prep at the end. But first,
📊 Product Lessons from Amplitude
If you're a product manager or an enthusiast tracking the product ecosystem, you've likely come across Amplitude, the trusted product analytics software used by over 20,000 companies. Today, we will be distilling some interesting product and business insights from Amplitude’s journey. Let’s get started!
Fun Fact: Just like Slack emerged from Glitch, a gaming startup, pivoting to focus on its internally developed communication tool, Amplitude also pivoted from its original product. Initially, they launched as ‘Sonalight’, an app enabling users to send text messages via voice. However, to monitor user behavior and retention, they developed an internal tool, dissatisfied with existing solutions. This software unexpectedly garnered significant demand, leading to a strategic shift in focus, and thus, Amplitude was born.
Retention is King
Retention rates vary significantly across industries. For instance, mobile apps typically have a 30-day retention rate of 42% and a 90-day retention rate of 25%. Retention is a tough problem to solve. For example, Threads, a recent hit in the social media sphere, attracted over 100 million users within its first week of launch. However, recent reports indicate that Meta is exploring strategies to retain users, as more than half of these users have not revisited the app.
At Amplitude, the product team places a high emphasis on retention. This focus is crucial, considering that acquiring a new user can be nearly five times as costly as retaining an existing one.
^ A sample dashboard that tracks user retention.
Pay attention to how users behave
Spenser Skates, the co-founder of Amplitude, underscores the significance of scrutinising user behaviour and discerning patterns. He cites Facebook's strategic move as an example. Facebook discovered that if a user added seven friends within the first ten days of joining, it was a strong indicator of their long-term engagement. This insight was instrumental in shaping Facebook's feature development, giving them a competitive edge.
He also shared an anecdote about one of their customers, similar to Etsy, who aimed to boost retention. The customer developers segmented active users by demographics such as location and device type but found no difference in retention rates. However, they discovered a specific behaviour - messaging the seller - that significantly increased retention. Thus, while demographic data didn't provide actionable insights, behavioral data did.
Learn from Competitors.
Amplitude's growth strategy was significantly shaped by observing its competitors, particularly Mixpanel. They gleaned valuable lessons from Mixpanel's missteps, such as premature expansion and launching multiple products before achieving substantial revenue. In contrast, Amplitude adopted a more calculated approach, concentrating on the requirements of a single buyer and scaling sales incrementally. They also drew insights from past analytics companies like Omniture, leveraging those learnings to secure larger enterprise customers.
Interestingly, while the concept of 'first mover advantage' is often glorified, the potential downsides are rarely discussed. It seems that in the race to innovation, sometimes the tortoise does indeed beat the hare.
Leverage Customer Conversations for Strategic Insights
Amplitude's early customer acquisition was a blend of strategic planning and serendipity. They initially targeted small and medium-sized businesses, but a chance encounter with a mobile gaming company co-founder led to their first significant enterprise client. This encounter also helped them realise the value of their platform and set a pricing strategy. Furthermore, the feedback from these early customers helped shape the product. The key insight here is the importance of customer conversations in shaping product strategy and development.
Closing Thoughts
Wrapping up, Amplitude's journey underscores the importance of user behavior, retention, learning from competitors, and leveraging customer conversations in product development. Their story is a testament to the power of agility, customer-centricity, and strategic thinking. As the product landscape continues to evolve, these lessons serve as a valuable guide for those seeking to build successful, user-focused products. It's a reminder that in the innovation race, it's not always about being the first but about being the best at understanding and serving your users.
🎙️Do you need to bond with your colleagues?
Episode 6 of 🎙️The Airtribe Podcast features Abhash Kumar, VP of Marketing at Springworks. Abhash and Navneet sit down together and discuss remote vs. non-remote work in detail. They cover aspects like the pros, cons, how to approach it at an early-stage startup, why India has failed at it, and a lot more. It’s a super interesting episode, one that you’ll definitely resonate with! Watch the full here
💁♂️ Product Jargon of the Week
Feature Creep
Feature creep, or scope creep, is like adding too many toppings to your pizza. You start with a basic cheese and tomato pizza, but then you keep adding - mushrooms, olives, peppers, extra cheese, pineapple, and so on. Suddenly, your simple pizza is overloaded and the original flavors are lost. In product management, feature creep happens when you keep adding new features to a product without considering if they're necessary, useful, or in line with the product's core purpose. It can lead to a complicated product, delays, and going over budget. To avoid it, product managers need to prioritize features and sometimes say "no" to unnecessary additions.
🎉Free Resource on PM Interview Prep
This free resource on PM interview prep is packed with 100+ PM interview questions from renowned product companies such as Amazon, Uber, Google, Microsoft, and more! You can access it here
That’s all for today, folks! We hope you enjoyed this week’s newsletter. 🤗
Until next week, keep learning and growing! 👋