The Importance of Complementing PLG with SLG

Michael Grinich (00:02):

Welcome to Crossing the Enterprise Chasm, a podcast about software startups and their journey moving up market to serving enterprise customers. I'm your host, Michael Grinich. I'm the founder of WorkOS, which is a platform that helps developers quickly ship common enterprise features like single sign-on. On this podcast, you'll hear directly from founders, product leaders and early stage operators who have navigated building great products for enterprise customers. In every episode you'll find strategies, tactics and real-world advice for ways to make your app enterprise-ready and take your business to the next level.

Today, I'm joined by Ajay Kulkarni, co-founder and CEO of Timescale. Timescale was founded in 2017 and is an open source database company that focuses on time series and event data. They have a wide range of customers that include folks you probably know, like Uber, Coinbase and Warner Media Group. Timescale's growth started with a really strong community led, bottom-up PLG strategy. You probably know some of those words. I'm excited to talk to Ajay about this and more and talk about the valuable insights that they've had along the way as they've been growing the company. Ajay, welcome to the podcast.

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Ajay Kulkarni (01:10):

Michael, thank you for having me.

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Michael Grinich (01:11):

All right, so Timescale is open source. What does that mean? Bring us back to the beginning of Timescale as the company started forming. Where did it come from?

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Ajay Kulkarni (01:19):

The Timescale story is the classic solving your own problem story. We actually started off as an IoT company, building a slightly different product. Built the first version just because we needed it because the database we needed didn't exist in the world. And then when we found that other people were asking us more questions about this database, we became centered on the database. And we initially just open sourced it, Apache 2, because we said to ourselves, "Hey, we would not use a database that wasn't open source or freely available." And that's how the journey started and, I'll be honest, this is probably seven years ago. We were pretty new to this world of open source and Postgres and I think now we've gotten much, much better, much smarter about it. But in the beginning it was one of those, yeah, of course decisions because that's what we would've wanted as customers.

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Michael Grinich (02:04):

Scratch your own itch. Yeah. Can you talk about the community that formed around that? As you started building this, what was the role of others? And I know there's a lot of open source projects or maybe even just companies that start with people scratching their own itch. It's a very common entrepreneurial desire, but the idea of open sourcing it and building a wider community around what you're trying to achieve is a bit different, so walk me through that.

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Ajay Kulkarni (02:25):

Yeah, in general I feel like community has become a key part in many types of businesses, not just open source. When we built Timescale, we embraced this idea of a community and from the very beginning we didn't just make our software open source, but we also provided free support in Slack, very active Slack channel from day one. And we didn't gate anything and we did this because we're like, "Hey, number one, it's just more fun to serve a larger audience." As an engineer, and I'm a former engineer myself, you want to build stuff that people use. And the more people use it, the better. So we did everything we could to nurture the community and as we have over years. And that includes free Slack support, it includes free T-shirts and stickers. And it's kind of silly things that people seem to care about, but in the beginning what really struck me about the community is that we built on Postgres.

And so you talk about crossing the chasm. One month after we launched there was a utility in Italy that replaced Redis with Timescale to monitor 47 of their plants. And they did this on their own and then they told us about it and our reaction was, "Are you sure you want to do this? Because we're not sure you should do this." And they did it and they trusted us and it worked really because we're built on Postgres. Another of our early users that year, and our first year, was Bloomberg and we made it into the Bloomberg terminal. And so our community from the beginning was both these startup innovating folks who were building new companies in IoT or crypto, but also some traditional folks in energy and manufacturing and finance. And I think it's led to a really rich community and I think it's a testament to the work that the team has done, but also a testament to the popularity of Postgres.

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Michael Grinich (04:08):

I feel like that's a new definition of product market fit or it's one that I've heard from a lot of other founders and entrepreneurs. People start adopting your software and start using it, despite it maybe not being ready to go, not having all the capabilities or features. Can you talk more about that? As Timescale was evolving and you're building out new things into it, what was missing? What did you learn along the way? What did you hear back from people that were trying to use the product?

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Ajay Kulkarni (04:30):

So product market fit is such an interesting feeling. My previous company was a BlackBerry address book, so you can imagine how long ago this was. And we were the leading address book on BlackBerry devices and that's like being the tallest person in the sinking ship. You're still going down with the ship. I think we had some product market fit, but then it always felt like we were kind of pushing a boulder uphill. And that company got essentially acquired by GroupMe, a group messaging company, that then got acquired by Skype that then got acquired by Microsoft. And when I joined GroupMe, GroupMe had real product market fit. And when I realized is that, our company felt like we were pushing a boulder uphill, but with GroupMe it was the boulder was already rolling downhill and you were just running as fast as you could to keep up with it.

And that's how things felt with Timescale. Timescale in the first three weeks, we had more buzz and press and visibility on it than we did in two years of our IoT company. So we were like, "Okay, we don't know if this is a billion dollar company, but it's better than our last company, that's for sure." And so I think what product market fit feels like is you're like, "Hey, there's more interest here than I can deal with." And this feedback comes in many different ways and the thing we always focused on was, okay, how do we make our community, back then we had no customers, how do we just make them happier? And so I remember there was a feature that I think Bloomberg wanted for a geotemporal use case, so tracking something over space and time. And one of our engineers was like, "Hey, I know you want me to work on this one thing that's in our backlog, but Bloomberg needs this thing and we need to make folks like Bloomberg successful, so I built this thing instead."

And I'm like, "That's great. That's actually great." And so I think we heard a lot of things from the beginning and some of them were like, "Hey, this isn't quite working right. Can you just optimize it for me?" And other things were like, "Hey, I actually need something totally different." And so I think product market fit is a constant evolution and I think part of it is people want a faster horse and part of it is people are expressing the pain points that illustrate that they need a car, but they may not be articulated that way. And so I think there's this constant process of learning and maybe interpolating and extrapolating to build the thing that really solves their problems.

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Michael Grinich (06:52):

Yeah. They want a faster horse, they want a car. They want a faster car, I guess, after that. So that example with Bloomberg, when they came and said, "Hey, we actually need you to do this other thing. It would be really great if you went this other direction," this is a common thing that happens as companies get pulled up market. You have some big customer that comes to you and wants to use your stuff and they sort of dangle the allure of a huge contract in front of you, a big, juicy maybe multi year, hundreds of thousands of dollars, biggest deal you've ever signed, feels like it could change your entire trajectory of your company, but in exchange for that they want you to build something. They want you to change your roadmap, change your product in a way for their specific need.

When else has this come up for Timescale? You guys have grown a lot and expanded a lot up market. We'll talk about that in a bit, but I'm curious if you can talk about the balancing of those needs from the big customers, when to focus and spend time on it versus when to say no. Where you're like, "Actually, we're not going to do that thing that you're saying you're going to pay us for because it's not maybe aligned with our longer term vision or roadmap." That tension, how have you dealt with that?

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Ajay Kulkarni (07:54):

We generally say no and this is partially because we're actually backed by great investors like NEA and Benchmark and Redpoint who have seen this movie so many times with Mongo and Snowflake and Databricks that they're like, "Hey, this is a common way people fail, that one customer hijacks your roadmap and all of a sudden they're 30% of your revenue and you're kind of beholden to their whims." And from the very beginning we would say no to those things if we felt like there were kind of bespoke things that only this customer needed. But if it was something that we thought in general people would need or if we thought it was something on our roadmap, we might just bring it a quarter earlier, we've done that. There's some cases where it's like, "Hey, they need this thing and it's going to take a few days of engineering work."

Okay, cool, and then just do it. But big things, we've really shied away from that. We've also shied away from having one big customer driving a significant part of our revenue. I think one of the advantages of PLG is you build this really wide diverse base which has a lot of benefits to it, but one of it is that we never felt that we were even beholden to one customer to do this. I think there's some industries where maybe the universe of customers you would serve is really small, like 10, and in that case you can't avoid it. But I think as a database company building the next great database company, our customers today are in the thousands, but our potential market is in the hundreds of thousands. The key is to build something that works for the market.

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Michael Grinich (09:20):

As you started getting pulled up market, Bloomberg's a great example and you had more and more and more customers since then, what else changed? How else did you need to adapt the product, adapt the company to those needs. If you think back in time to that transition as you started evolving, what changed?

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Ajay Kulkarni (09:36):

Yeah, it's interesting. I would say that we are just now evolving past PLG.

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Michael Grinich (09:43):

And where are you at right now to give people a sense of where the business is maturity wise?

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Ajay Kulkarni (09:47):

Yeah, we're raised $180 million in funding, multiple years of runway, 125 people, thousands of customers. And we've gotten here just through PLG, which I always tell the team that it's a testament to the quality of the product, but also to the size and the intensity of the problem we're solving, that it's pulling this out. I would say we're just now kind of expanding past PLG, but we've had enterprises using our software from essentially day one. And we've had enterprise customers, I think our first one we've had five years ago. So we've had enterprise customers for a long time as well. First, I think it's really hard to go the other way and this is what I've heard from other folks who have been trying to do this. It's really hard to go enterprise led to PLG, but going the way we're going I think this is the future of how I think databases are being sold. It's PLG plus sales on top.

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Michael Grinich (10:41):

What does that look like to you? Let's go into that maybe a little bit deeper. What does that mean? PLG means so many different things, so many different companies, different things, different teams. You guys are different than Dropbox or Airtable, for sure. Very different product, different customer.

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Ajay Kulkarni (10:53):

I 100% agree and maybe the way to think about it is where does demand come from? Is it inbound and does growth come from increased product usage or does demand come from sales driving outbound and driving really large deals and expansion comes from them working those expansions? And your classic database companies, most of them are top down trying to sell really large installations. For us, it's been, I think we're maybe now starting to do some outbound. We've never done any outbound and we didn't really ever have a sales team. And so the way people discovered Timescale was through our community and our content and word of mouth and the quality of our product. They could get up and running and be successful, swipe a credit card, get into production and we have customers spending hundreds of thousands of dollars a year with us who've never talked to us.

And from one perspective, you're like, "That's great. It's so efficient." I think what's an important lesson for me to learn as a kind of product-based founder, and maybe for a product-based founder, engineering-based founders in general, is that there's some limitations to that. And at some point you really want a human in the loop because, number one, some customers want to be sold to. They want to have a human. They're not comfortable swiping a credit card and just getting up and going. But also number two, as you start becoming a larger and larger item on their P&L, as you become a more critical part of their infrastructure, they want to know that they can count on you and they want to know who they can go to if they have problems. And I think there's a key human relationship there.

So what PLG looked like for us is we were able to grow essentially through inbound and just through product-led revenue expansion. But I think the business of the future, at least in the database industry, is this layer cake of PLG and on top, for lack of a better phrase, call it SLG. Essentially, sales coming in and expanding deals or landing bigger deals that don't need to swipe a credit card.

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Michael Grinich (12:44):

Let's talk more about that. I think that's a perfect topic to dig into. So I bet a lot of developers listening to this, people in the engineering world, they're like, "Yeah, I totally know developer led bottom up. I've used Heroku, I signed up for Twilio. I know Stripe, I use Vercel. I know all of these products that are in the zeitgeist of the tools that people use and a lot of developers think exclusively about building their business in that way. There's no contact sales. I don't want to have to talk to these people. The optimal product is a credit card form and an API. And a lot of folks that I talk to, really hold onto that for a long period of time, don't want to necessarily have sales engage. Or when they do, it's like a technical support type of a thing for people. You guys have been transitioning away. Not away from this. I mean, it's still going, it's still driving it, but you do have a sales team.

You do have sales leadership. You have experiments with this and evolved it. Go into that. How did you think about the first steps of evolving this? What did it look like? What are the things you tried and put in place? What are the mistakes maybe you made along the way? Where are you today?

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Ajay Kulkarni (13:45):

Yeah, so number one, I just hired our CRO I think two months ago. So I think on the sales side, it's all very new, which is exciting. Number two, we are generally not very black and white about these types of things. We're not very religious about these. I'm not someone who's like, "Hey, sales is terrible or PLG is terrible." I think it depends. It always depends. I think even the database business depends. I think in any industry it depends. What we have found is that if you listen to the customer, then the answer kind of presents itself. So for us it was with PLG we saw it work really well and we found the developers really liked it because most developers want to start off just tinkering. They want to play with it, get a sense of what the product is and then reach out for help.

And we'll get that a lot of that, like, "Hey, we ran a POC. It went really successful, but I need some help setting up this one advanced feature." Like, "Okay, cool. Great." But if you listen to customers, you realize that not every customer is like that. And there's some people who want to be sold to and especially if you want to become a critical line item, which I think databases eventually become, you need that human relationship. And so my feedback to entrepreneurs, especially ones who come from a product engineering background, is, number one, try not to be super religious about this topic. I think be open-minded and really just listen to the customer, listen to the market. Every business is different, even the database industry. I know other database companies that are very successful taking a very different model, so I wouldn't even say that our model is the only model that works in the database industry, but I think listen to your customer.

And I think for us, it's been a very natural evolution of layering sales on top of PLG, but what we're doing is different than what Slack did or Airtable did or I forget who else who mentioned it. I think it's very organic to our business and I think there's some cautionary tales out there, too. I think if you look at some of the early PLG darlings, like Dropbox, and I haven't talked to Drew about this, but I think that you could argue that Dropbox kind of capped out at a $10 billion market cap partially because they didn't build this sales muscle early enough. And I'm sure there are other reasons as well. And so I think with any business, the more diverse your sources of revenue are, the better because at some point you might be in a VC pullback where PLG drops because there are fewer startups getting funded, but large companies are still spending money.

Or you might be in a market collapse where large companies are pulling back, but there are all these new startups who are innovating. And so I think the more diverse your customer base is, the better. The more diverse your business model is, the better. There's no one size fits all, but the one thing I've learned is listen to the customer, listen to the market and have an open mind.

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Michael Grinich (16:25):

What was changing about Timescale? Hiring CRO, big move. Was it opportunities that you weren't able to close? Was it conversations, different types of conversations or strategy? I mean, as you were thinking about that step beyond PLG because you guys have, like you said, customers spending six figures on a credit card, PLG happy customers. When you started saying, "Hey, there's another level here. Maybe we should reach for a leader to bring in to kind of change our organization and evolve it," what did you see as that gap?

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Ajay Kulkarni (16:54):

I could see all the money we were leaving on the table.

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Michael Grinich (16:57):

That's pretty clear. Yeah.

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Ajay Kulkarni (16:58):

I could see that there are companies coming in with kind of a sales motion would contact us and we didn't have the expertise and hows to guide them through a sales process. I could see companies who were spending six figures with us that we actually didn't have a champion there. I mean, there's someone who picked this, but we didn't have anyone who was building a close relationship to make sure that, A, the customer was happy, but, B, if there were an expansion opportunity, that we could drive it. And then number three, we started seeing enterprises like multiple teams at multiple enterprises using Timescale through PLG. And I looked at these accounts and I'm like, "These accounts should be at least 10X bigger." All these accounts should be seven figure accounts if you just tried. And it's kind of funny because when I talk to people who come from sales, it's like, yeah, duh. Duh.

There's a reason why sales exists as a profession. And sales is evolving, but I think the fundamentals are still true. But I think for a product-based founder, it was eye-opening to say, "Hey, if you really want to capture on the opportunity that you're building and if you really want to serve the people who could be served who could benefit from your product, I think you have to layer sales on top." Depending on your business, I know other folks who brought in very early and some folks who brought in later than we did, but for us the breaking points were, hey, we have a funnel that's not a PLG funnel that we don't have the muscle to close. And then we have customers who we should be spending more time with from a sales perspective, but we're not because we just answer the support tickets. And if they don't send any support tickets, we don't talk to them.

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Michael Grinich (18:39):

Yeah.

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Ajay Kulkarni (18:39):

It's kind of like when I talk to salespeople, it's a little embarrassing because people are like, "You didn't know this?" I'm like, "I didn't know this," but it's also one of those things you're like, "Okay, that means that there's a lot of just raw potential here in this business." And that we've gotten this far despite not having a fully built out of go-to-market model. Okay, let's add that on top. And I think that's the way to go. I mean, I think be product led and then capture more of the market you're creating through sales, but I think the other way of being sales led, it's a lot harder unless you're in I think certain industries.

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Michael Grinich (19:09):

In terms of hiring a CRO, what did you look for there when you were going out to market, looking for folks to come in and really be a partner with you to lead this part of the business? What was important to you when you were looking at candidates? How did you interview them? I know you just hired this person, so it's probably fresh in your mind. Walk us through that. I think there's probably a lot of people listening to this who maybe are not doing a CRO, but it's their first VP of sales or maybe it's their first sales rep, literally the first person coming in to actually be a seller.

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Ajay Kulkarni (19:36):

I have made some good hires in my career and some bad hires, as you can imagine, and one of the places where I've made some bad hires is you say open source database company, there are people who have done X, Y and Z in open source for a decade. There's people who have sold open source databases for a decade. Let's bring them in and they'll help us figure out what to do. They'll tell us what to do. And what I realized is that in a fast moving industry, having experience can actually be a liability because instead of looking at things with open mind and fresh perspective, you're coming in with this old model of like there's only one way to sell a database. But yeah, the market has changed. With cloud, it's more like SaaS. It's more like PLG.

So the number one thing I looked for when I hired Todd, our CRO, so far he's just been great, I wanted someone who had done it before and had a track record of excellence, but who was intelligent and had the mental agility to say, "Hey, I've done it before. I know what great looks like." And he took his last company to north of $100 million in revenue and he came to Timescale. He's like, "I want to do it again, but faster." What I liked with him is he's like, "Here's what worked before." I'm not saying that's what we should do here, but here's the questions I would ask to figure out if we should do A or B here. And so that's what I look for, is this track record of success. Look, there's some things in sales where I don't want to reinvent the wheel.

There's certain proven methods to do discovery or there's MEDDIC and all these other things. There's a reason why they work, but there's also places where the PLG business we've built in databases, there aren't many other companies. I can maybe think of a couple that have done what we've done and most have done the opposite. And so there's a lot of like, okay, you have to unlearn what you've learned. So again, what I look for is someone who had a proven track record of excellence, could hire a great team, but also had the intelligence and mental agility to look at a fast moving market and say, "Okay, cool. Here's what we're going to do the same, but here's what we're going to do differently because the market's different."

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Michael Grinich (21:40):

We're just about out of time. Thanks for spending so much of your busy day with us. Last question I wanted to ask you to leave our audience with, if you could go back again and give yourself advice in the earlier days or maybe give advice to the next generation of builders and entrepreneurs that have started building, they have this maybe community piece, they have some traction, some momentum and now they're thinking about really growing their business, what would you say? What do you think would be some salient advice to give that group?

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Ajay Kulkarni (22:06):

I would give two pieces of advice. Number one is you're always going to make a lot of mistakes and the key is to get the right things right. And so don't beat yourself up if you make a mistake. You're going to make mistakes. It's fine. That's natural. I think the number one thing I'd tell myself is hire great people. And it seems like a obvious statement, but I think when you're a new founder, CEO, what's hard is, A, you don't know what great looks like. And every step along the way, I'm like, "I thought that person is great, but this person's way better." So it'd be part is try to understand what great looks like, but part two is when you're small you have to be creative to hire great people. As Timescale's gotten better, I think we've gotten better at hiring and I think our caliber and our bar has gone up, and I think what it's really done is it's freed me and my co-founder to focus on what we're best at and what our superpowers are. That'd be the number one lesson and there's a great book called The Who Book on Hiring that I'd recommend everyone hire.

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Michael Grinich (23:03):

You know, it's funny, I have it on my desk literally right here right now.

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Ajay Kulkarni (23:06):

Do you?

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Michael Grinich (23:06):

Yeah.

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Ajay Kulkarni (23:07):

Hey, there you go.

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Michael Grinich (23:08):

Yeah, yeah. No, it's a fantastic book. Yeah.

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Ajay Kulkarni (23:10):

We did not plan that. That's amazing.

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Michael Grinich (23:11):

Yeah. Thinking about the same things, obviously. Yeah.

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Ajay Kulkarni (23:16):

They're one of those things that they sound cliche, but they're so true, that it's all about people. You hire great people, take your time and hire great people, and it'll unlock so much opportunity for you.

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Michael Grinich (23:30):

Ajay, thanks again so much for spending time with us today. We'll let you get back to it. Take care.

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Ajay Kulkarni (23:33):

Hey, thank you for having me.

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Michael Grinich (23:39):

You just listened to Crossing the Enterprise Chasm, a podcast about software startups and their journey moving up market to serving enterprise customers. Want to learn more about becoming enterprise ready? The WorkOS blog is full of tons of articles and guides outlining best practices for adding features like single sign-on, SCIM provisioning and more to your app. Also, make sure to subscribe to this podcast so you're first to hear about new episodes with more founders and product leads of fast-growing startups. I'm Michael Grinich, founder of WorkOS. Thanks so much for listening and see you next time.