M&A, competition, pricing, and investing | Julia Schottenstein (dbt Labs)

Brought to you by Vanta—Automate compliance. Simplify security | Superhuman—The fastest email experience ever made | AssemblyAI—Production-ready AI models to transcribe and understand speech—Julia Schottenstein is a product lead at dbt Labs, a data transformation company, and an active angel investor in data and infrastructure startups. She first got excited about dbt in 2019 when she was a VC at NEA and decided to make the leap from investor to operator by joining dbt Labs. She also co-hosts the dbt Labs Analytics Engineering Podcast, a show about data trends that impact analytics engineers’ work. In today’s episode, we discuss:• Advice for founders hoping to improve their M&A outcome• How to strategically think about competition• How to determine your paid features and have willingness-to-pay conversations• Why Julia lives by “worse is better” and “tech debt is a champagne problem”• Lessons from dbt Labs• What PMs can learn from investors—Find the full transcript at: https://www.lennysnewsletter.com/p/m-and-a-competition-pricing-and-investing—Where to find Julia Schottenstein:• Twitter: https://twitter.com/j_schottenstein• LinkedIn: https://www.linkedin.com/in/julia-schottenstein-25424318/• Podcast: https://open.spotify.com/show/4BKMMeVXk4jJnAQSqGSJvE—Where to find Lenny:• Newsletter: https://www.lennysnewsletter.com• Twitter: https://twitter.com/lennysan• LinkedIn: https://www.linkedin.com/in/lennyrachitsky/—In this episode, we cover:(00:00) Julia’s background(04:15) How Julia went from VC to working in product at dbt Labs(08:24) Four things Julia uses to evaluate a company’s potential (11:10) How to identify whether or not you have product-market fit(12:05) Distribution strategies(13:11) M&A strategies(15:54) Lessons from the Transform acquisition(18:01) Competitive values at dbt(20:25) Keys to dbt’s success(26:35) An offsite exercise Julia used to help her team internalize upcoming changes(29:32) Determining what features are included in open source(31:56) Pricing and willingness to pay(33:34) Lessons from dbt Labs’s first pricing change(36:33) Whether or not to be public about selling your startup(40:08) How to utilize connections during acquisitions(44:57) How to communicate selling your company(46:33) M&A market forecast(47:28) Values at dbt Labs (50:14) Lessons from working with strongly opinionated users(52:02) The importance of shipping, learning, and iterating (54:08) How VC skills translate into product(57:03) Lightning round—Referenced:• dbt Labs: https://www.getdbt.com/• Tristan Handy on LinkedIn: https://www.linkedin.com/in/tristanhandy/• dbt Labs acquires Transform to enhance Semantic Layer tool: https://www.techtarget.com/searchbusinessanalytics/news/365530993/DBT-Labs-acquires-Transform-to-enhance-Semantic-Layer-tool• Snowflake: https://www.snowflake.com/en/• Gödel, Escher, Bach: An Eternal Golden Braid: https://www.amazon.com/G%C3%B6del-Escher-Bach-Eternal-Golden/dp/0465026567• Red strings training clip from Ted Lasso: https://www.youtube.com/watch?v=aVe3Iwy10MA• Monetizing Innovation: https://www.amazon.com/Monetizing-Innovation-Companies-Design-Product/dp/1119240867• Madhavan Ramanujam on Lenny’s Podcast: https://www.lennysnewsletter.com/p/the-art-and-science-of-pricing-madhavan#details• Pricing survey: https://www.qualtrics.com/marketplace/vanwesterndorp-pricing-sensitivity-study/• Hunter Walk’s blog post about publicly selling your startup: https://hunterwalk.com/2023/05/13/the-acquihire-market-for-early-stage-startups-is-ice-cold-one-better-strategy-announce-youre-for-sale/• Range: Why Generalists Triumph in a Specialized World: https://www.amazon.com/Range-Generalists-Triumph-Specialized-World/dp/0735214506/• The Snowball: Warren Buffett and the Business of Life: https://www.amazon.com/Snowball-Warren-Buffett-Business-Life/dp/0553384619/r• Sam Walton: Made in America: https://www.amazon.com/Sam-Walton-Made-America/dp/0553562835• Succession on HBO: https://www.hbo.com/succession• In Depth podcast: https://review.firstround.com/podcast• dbt community Slack: https://www.getdbt.com/community/join-the-community/—Production and marketing by https://penname.co/. For inquiries about sponsoring the podcast, email [email protected].—Lenny may be an investor in the companies discussed. Get full access to Lenny's Newsletter at www.lennysnewsletter.com/subscribe