M&A, competition, pricing, and investing

Julia Schottenstein is a product leader at dbt Labs who leads the dbt Cloud product and previously worked as a venture investor at NEA. In this conversation with Lenny Rachitsky she covers early-stage evaluation, dbt's distribution and open-core strategy, how to approach M&A as a founder, competitive philosophy, pricing, and how investing experience translates into product work.

01Key learnings

• Evaluate early-stage companies on four dimensions: people, market, product, and distribution, and recognize that no company will score perfectly on all four.
• Look for signs of product spark, such as users who can't stop talking about the product and want to share it with teammates and other companies.
• Build a strong standalone offense so you have a viable alternative in every M&A conversation rather than needing to sell.
• Think of M&A as creating plan Bs: identify the two or three buyers who would find you strategic and make your value to them impossible to ignore, while staying friendly.
• Don't shut down conversations with potential acquirers prematurely; keep optionality open until you know whether you can truly go the distance independently.
• Have the pricing and willingness-to-pay conversation before building the product, since you can't avoid it, only choose when to face it.
• Use corp dev teams and investors' networks to get introductions to potential acquirers well before an exit is needed, and be transparent if you are in a difficult spot.
• Ship good-enough versions and learn from real users; perfectionism delays the feedback that actually improves a product.

02Frameworks mentioned

Summary and takeaways written by PM Atlas; quotes are short excerpts. © the original author.