Stealing Signs - Issue 50
PMF for a B2B Company, Zwift: Exercise x Gaming, Why Self-Driving Money is So Hard, How to Build a Super App, How MLB Pitchers are Cheating, & Explo Raises $
Worth Reading
Product-Market Fit for a B2B Company
Krishna Mehra, Director of Engineering @ Cohesity
Unlike in consumer companies, for a B2B company, product-market fit is often loosey-goosey and not a binary state. Several of the above may exist but still not indicate a good PMF. For instance: A lot of times, startups get early logo wins due to their prior relationships, but that may not indicate PMF and a "pull" from the market. At other times, some products will start at the lower end of the market (small ACV) but quickly graduate into the enterprise after the first few logos, indicating very strong PMF (think of UiPath and RPA).
Krishna provides a very helpful framework for understanding they key variables in achieving product-market fit as a b2b company. Two variables worth digging into are 1. “Logos” and 2. Lock-In. Pilots are typically the starting point for both variables — does a company have enterprise customers and how much weight do said logos carry? And do customers expend effort to fit this product into their workflow?
These questions hit at the underlying questions of how valuable are a company’s enterprise pilots and what do they imply for the future of the business? Since sales cycles can be quite long and conversions from pilot to contract typically require sign off from many, many stakeholders, it’s critical to understand what a pilot actually means.
Borrowing a few factors from Krishna’s outline, below are a few diligence questions that can get our answer:
Is it a paid pilot?
How many business units or employees are they piloting the product with?
What are they measures of success?
What is the process for conversion from pilot to contract?
Are the pilot customers early adopters in their industry?
Pilots are a step towards achieving PMF, but there are many variations that signal many different stages in an enterprise sale. In my experience, paid pilots are a strong indicator of potential or even true PM, and defined measures of success are typically better than vague measures because it often forces a cut and dry decision for the client. To Krishna’s point, many times startups get early logo wins due to their prior relationships, but it may not indicate PMF and a "pull" from the market.
Zwift - Breaking the Dichotomy Between Exercise & Gaming
Max Riegel, Techstadium
At its core, the metaverse idea is based on interoperability, the existence of a real-world connection, and virtual immersion. Zwift is located on the right side of the spectrum along all three dimensions.
Zwift takes an open approach towards data portability and interoperability, allowing its users to share their performance data across services.
Zwift blends the difference between the real-world and virtual world, demonstrated by the partnership with real-world race organizers.
Zwift offers its users a virtual immersion combining virtual and real-world elements by mirroring real-world cities in a virtual and gamified setting.
Zwift is an excellent example of starting with a niche customer segment then expanding more broadly, an approach which helped them achieve product-market fit quite quickly.
The social features of Zwift appear to be it’s biggest advantage against competitors like Peloton. Features include audio chat with other riders, group rides, real-time biometric and performance data, and custom avatars and equipment. These features keep Zwift riders coming back and help drive powerful network effects. It’s hard to imagine Peloton remains on the sidelines of the social and gamification battle, but it introducing gamification and social features is no small technical feat. The founder and CEO of Supercell, a mobile game developer, Ilkka Paananen recently joined Zwift’s board, which indicates both the expertise required to gamify an exercise experience and the importance of these features to Zwift’s long-term strategy.
A more realistic feature Peloton might develop to introduce multi-player dynamics is peer-to-peer workout sessions, allowing groups to ride without an instructor. Though this is antithetical to Peloton’s instructor-driven model, the COVID-era is as good a time as any to diversify their product with digital, peer-to-peer experiences.
Now let’s really push the boundaries… Instead of Swift and Peloton competing head to head, what if they teamed up? A key feature of Zwift’s product is that its hardware agnostic — the direct opposite of Peloton’s closed loop system. Thus, a clear gap exists where each company is complementary to one another — Zwift could power Peloton’s multi-player experience. While compelling in theory, it’s likely these two will remain competitors and converge to compete for the same customers over time.
Why Self-Driving Money is So Hard
Alex Johnson, Director of Portfolio Marketing @ FICO
Larger, better-known financial services brands — traditional banks, established challenger banks, robo-advisors — have a compelling reason to stop before Level 4.
Take Goldman Sachs Marcus as an example. It may legitimately believe, as quoted above, that the end state of the bank of the future is a personal, digital CFO for every customer. But given the fact that every $10 billion in Marcus deposits reduces Goldman Sachs’ cost of capital by $80 million, will it really empower that CFO to move money out of Goldman Sachs’ walls, even if it’s best for the customer?
In short, self-driving money is hard because incentives are misaligned, at least at the top. The big banks risk cannibalizing their core business and the small, emerging fintechs have an impossibly steep hill to climb to acquire customers and build a brand capable of competing with the big guys.
I’m curious to know to what extent the large banks’ consumer apps inform their core banking products. To use Alex’s example, to what extent does Marcus inform Goldman’s core technology products? One of they most difficult tight ropes to walk in corporate innovation is how closely to tie innovation products to the core business. In the Marcus <> Goldman example, if Goldman believes the long-term value of an agnostic platform outweighs the short-term costs of losing deposits in Goldman accounts, a more distant relationship between the two might be more beneficial than the seemingly tight relationship they currently have. More distance between the two might re-align incentives such that promoting Marcus is more advantageous more keeping money flowing between Goldman accounts exclusively.
How to Build a Super App
Ryan Rodenbaugh, Chief of Staff @ TrustToken
Mike was describing apps that could talk to each other. For example, he walks through a user looking at an eBay auction and then automatically syncing with the calendar so they could get a reminder when the auction is about to end.
Mike viewed this as a way to create lock-in for the Blackberry device. He was trying to demonstrate that only on Blackberry could you connect apps to each other, turning your calendar app or eBay app into a SuperApp with a seamless, integrated experience.
The core difference between Mike’s definition and the modern definitions is that Mike’s was hardware dependent. By using the Calendar app or eBay on a Blackberry, those apps would be ‘supercharged’.
The difference with modern Super Apps is that e.g., WeChat is hardware agnostic. In general, there aren’t notable differences between WeChat on Android and WeChat and iOS.
This is the best breakdown I’ve found of what super apps are and how they can be built. We’ve yet to see them emerge in the U.S. like they have in Asia for various reasons like the U.S. is not a mobile-first society and it’s had an established internet economy for some time, but an interesting variable is the impact of “Not Invented Here Syndrome.” Ryan identifies a key feature of super apps is openness — the most successful super apps in Asia partner with many different providers across service lines to provide a comprehensive experience in which both the super app and partner brand are promoted. In the U.S., most partnerships are white-labeled or structured as underlying service provider agreements where the partner service brand is not promoted, which is likely in part a result of an attempt to control the user experience or prevent any loss in value capture, or “Not Invented Here Syndrome.”
A few thoughts on who could emerge with successful super apps in the U.S.:
Facebook’s super app for SMBs. This would end up being a B2B product so not sure it qualifies for super app status, but Facebook is building many of the tools small businesses need to operate and build direct relationships with customers: FB messenger, FB marketplace, FB website builder… and finance products probably aren’t too far out.
Inspired by Nik’s tweet below, Walmart may be able to build a supper app more similar to those in Asia. They have a massive customer base, access to 1.5M employees across 21 states, a world-class eCommerce platform, and an increasing capabilities in healthcare due to experiments offering healthcare services to their employees, all of which is to say they are deeply penetrated into numerous vertical which matter to U.S. consumers. And, they’re lees likely to suffer from “Not Invented Here Syndrome” than some of the large tech companies like Uber and Facebook, so they may be willing to strike the partnership deals we see in Asia where both the super app and service provider share the customer experience and value capture.
<stuff> Weekly
LOL Weekly: To the mooooon
lollllll
Funding Weekly: Explo
Stop wasting engineering resources by embedding in minutes. Simply copy a few lines of code and utilize to our API to embed our interactive dashboards and reports. Explo handles the dashboard functionality, permissions, and end user customization.
Explo raised a $2.3 million Seed from Amplo VC, Soma Capital, and Y Combinator.
A potentially valuable component of Explo over time is the visibility into what data their customers feed into various dashboards. This would be one level deeper than most SaaS tools which offer dashboards as a feature have access too because many are unable to pipe in data streams from various tools. The most common approach to solve this problem is internal custom built dashboards.
The data Exlpo could aggregate over time presumably spans any data source, which can help them refine dashboard templates, implement smart recommendations for combining data sources, and even help clean data for easy flow into dashboards, which the founders appear to have been working on prior to the pivot to current state. The third opportunity, cleaning and potentially structuring unstructured data, is quite large.
Baseball Weekly: Getting a Grip on How MLB Pitchers are Cheating
Eno Sarris, The Athletic
These resulting changes in movement would improve this pitcher’s stuff in an apparent way. A pitcher who added this much spin to a league average fastball would expect his swinging strike rate to go up from the 10.4 percent (league average) to 11.1 percent, research on “stuff” metrics has found.
Nearly every MLB pitcher is using a banned substance to increase their grip on the ball whether it be pine tar or sunscreen. Detection and prevention is so difficult and rules surrounding the matter are so vague that I’d be in favor of the league legalizing them. It just isn’t worth fighting. But, changing the baseball is also an option. In recent years the MLB baseball has undergone numerous changes resulting in a significant increase in distance traveled (thus more home runs) — a clear advantage for hitters. Sticky substances to improve grip and pitch break seems like a reasonable response to this change.
That said, the MLB could also slightly raise the seams on balls which would cause balls to travel shorter distances but result in better grip for pitcher, producing similar results to the pine tar or sunscreen most pitchers use today. There must be a middle ground seam height that would create a more balanced playing field and ideally eliminate the pitcher’s need for sticky substances.
Art Weekly: NEPTUNE, 2020
FUTURA2000
As one of the most celebrated artists emerging from the world of graffiti and street art, FUTURA2000 was first recognized for bringing abstract painting to the genre. The artist’s work bears his interest in a futuristic aesthetic. Long fascinated by science fiction and the space age, he was an early adopter to sophisticated computer technology and video gaming. His painting motifs relate to these interests and often are cosmic panoramas, abstract compositions that master color, movement and line. FUTURA2000 employs spray paint with virtuoso precision, creating a thin, refined line, contrasted by larger mists of color areas, and gestural brush marks. By leaving large areas of his canvases open, and allowing the forms to float across the surface FUTURA2000 suggests access to a cosmic space. His recurring motifs include an atom shape, denoting perpetual motion; a crane or a linear mark signifying a break or rupture; and the Pointman: an alien, robotic figure.
