“A clever product on top of someone else's platform is frankly a feature ... I think the companies that are more durable are the ones that essentially are creating a data loop where the usage creates data that no one else has. The data makes the product better. The product attracts more usage.”
sputnikintelligence.com
The panel is discussing a large software company buying a young AI market-research startup for a reported $2 billion. Ittycheria expects more deals like it, because many AI application companies are really features that benefit from a bigger company's distribution. This is his test for which ones can stand alone.
I think it was a great outcome for a very clear category in a sense of it's pretty obvious that stepping back, listen up, market research is a very large, fragmented, almost pre-technical industry. There's a bunch of consulting type companies, and then there's three last-generation companies, Qualtrics, Medalia, and what was SurveyMonkey, all that got to kind of high single-digit, low, double-digit billions of dollars in terms of market cap outcome. So it's a really good category. It's an existing category with a big ass spend. And LLMs just do it so much better. Because what are you doing in market research? You're kind of asking questions of people and aggregating and assimilating the answers. And the two things LLMs do well, we just talked about voice. Voice as a modality is a solved LLM problem. And then asking questions and knowing how to, and not just kind of these canned, stupid last-generation surveys where no matter what you say, the survey just asks the next dumb question. You know, it's like, did you like your stay? No, I didn't even check in. And then the next question is, was the bed comfy? That's the last generation. Whereas now with LLMs, you can adjust the questions based on what the respondent is saying. All that means market research can be done so much better with LLMs. And I think Listen Labs was one of the early contenders that did it well and executed brilliantly and, you know, got the real revenue. Great outcome. I mean, it's kind of one of those, the list of use cases for AI and LLMs at the app layer, that comes out like a top five, top 10 use case. And there it is. But you
know what? I would love to get Dev's thoughts on this. I'm pretty much a fan of a lot of Salesforce's acquisitions and I've been champions of many one. This one I don't really get. It's not that I think it's a bad idea, but I mean, Salesforce is coming up on 60 billion. Their target's 60 billion. They're almost at 50. I just don't, I don't know how 20 million of revenue of next generation AI survey moves the needle. And I'm not saying it doesn't. I mean, Mongo scale, you got to move, you either has to tuck in or move the needle, right? Maybe you think about it differently, but to move the needle, it's got to be big. And Salesforce even, so this is the one where I'm, I get the theoretical appeal, but I wonder if this one will just be kind of forgotten in a couple of years.
What I will say is that I think we're going to probably see more of these deals, right? Because I think there's starting to be a difference between are you building a feature that's masking as a company or a franchise, right? And I think a lot of AI application companies will sell because a clever product on top of Someone else's platform is frankly a feature. And if they can use the distribution of that larger company, they have the cash and distribution, they're going to take advantage of it. I think the companies that are more durable are the ones that, you know, essentially are creating a data loop where the usage creates data that no one else has. The data makes the product better. The product attracts more usage. And you kind of create that virtuous cycle. And so if someone tries to copy you, they can copy the features, but they don't have all the interactions that you have. And so I think the difference here is when you look at these kind of standalone AI app companies, are they really feature masking as a company or are they really building a franchise? And I think the founders listed lab decided that this was an offer that made sense for them.
I mean, you'd be pretty pissed off if you're into com, wouldn't you? Sorry. You just like, you've gone through like 15 years of shit and struggle and building this business. And then, you know, ABBA's answer to Justin Bieber comes along and three years later sells for a comparable number. And you're like, fuck. Sorry. So I know, I know they all made money, but you'd be like, oh, bug it. That was an easier route, wasn't there?
Of course, you think that as a founder. I mean, I don't mean there's always someone that had the easier route. And you do think about it. Of course, you think, even at Mongo, I bet Dev thinks about once in a while. God, those, I mean, we've done great at Mongo, but those guys, they had an easier way with it. The
lesson I tell my boys is comparison is the thief of joy. You start comparing yourself to everyone else, and you're going to be very miserable for the rest of your life.