500 million new apps: accelerating digital transformation and winning the talent wars with guest Joe Hurd, Managing Director, SOSV - The Accelerator VC
Meet our hosts
John Koetsier and Peggy Anne Salz
“Previously, he was the Mobile Economist for TUNE and the VP Insights for Singular.”
IN THIS EPISODE OF LOW-CODE NINJAS :
Accelerate Digital Transformation and Win the Talent Wars with Low-Code Development
Digital transformation has been a priority for most companies in recent years, but COVID-19 forced organizations to speed up the process and make real changes quickly. But challenges abound. It’s difficult to get the best developers when everyone else is also vying for them. It’s always hard to do things quickly and well, but that’s especially true when your whole team is suddenly working remotely. So the question is, “How do you build what you need right now?” In this episode of Low Code Ninjas, our hosts Peggy Anne Salzand John Koetsier talk to someone who has “been there and done that”: Joe Hurd, a former Facebook executive who is now the Managing Director of SOSV, a $750 million VC fund.
“There really is a limit on how fast organizations can build software,” says Joe. “If you need code to automate your processes, to get insights, to solve problems — in a lot of cases, you can’t find the developers and engineers fast enough in order to deliver the increasing levels of business automation that’s needed to run the business.” In fact, he cites Indeed, which points out that “86% of companies struggled to find technical talent. And we’re seeing all that play out real time today as well.” In this episode, you’ll learn how the pandemic has ramped up the talent wars and how low-code apps can help your company accelerate digital transformation and solve the business problems posed by COVID-19.
(This transcript has been lightly edited for clarity).
John Koetsier: How can low code accelerate digital transformation and maybe help you win the talent wars? Welcome to Low Code Ninjas. My name is John Koetsier.
Peggy Anne Salz: And I’m Peggy Anne Salz. And as you said, John, that’s the title here, right? Accelerate digital transformation. That isn’t the only transformation we’ve seen this year. I mean, most of it involuntary, due to COVID. But on the other hand, what it has done, it has accelerated existing change. So everything needs to happen super quickly and it has to happen super effectively, because there is no time for making mistakes.
John Koetsier: There’s definitely been a burning platform to transform quickly, right now, but it’s really hard. It’s hard getting the best developers. It’s hard doing things quickly that are also in good quality. And guess what? We’re not in the same location, so you’re working remotely as well. Question is, how do you build what you need right now?
Peggy Anne Salz: So we need someone who’s been there, done that. That’s what we have. We have the right person to talk to about this, John. He’s a former Facebook executive. He’s on more boards than I can remember, not even going to go to my notes here, manages a $750 million VC fund, busy startup advisor, and really watching what’s going on out there — Joe Hurd. Joe, it’s great to have you here on Low Code Ninjas.
Joe Hurd: Hey, Peggy, it’s great to be here. John, thanks for inviting me. I just have one small correction, I don’t manage a $750 million fund. I’m an operating partner at the fund, so I think the GPs would be a little upset with me if they thought that I was managing the fund.
John Koetsier:: We gave you a promotion, it’s all good.
Joe Hurd: We’ll take it. We’ll take it.
John Koetsier: It’s manifestation.
Joe Hurd: Will it into existence. Exactly.
John Koetsier: Absolutely. So, Joe, let’s start here. The pandemic has really accelerated digital transformation. We’ve seen 97% of executives have said that they’re having to move faster. What’s transformative about what we’re experiencing right now?
Joe Hurd: Yeah. So I think, you know, you hit the nail right on the head. The pandemic has been a huge forcing function, right? You have remote working. Because people are working remotely, they’re deprived of their traditional feedback loops, right, whether it’s an in-person meeting in the hallway … you have in some cases, longer sales and deals cycles. In some cases, it’s harder to get alignment with partners.
But what it’s forced every company to do is take a hard look at their product development, their product roadmap. You know, I would say in some cases two years of development has been compressed into two months.
And that’s a good thing, if you can find the right resources and tools to help you out, right? Back in 2011, Marc Andreessen wrote that “software is eating the world.” It’s a pretty seminal essay for folks in the Valley.
But there really is a limit on how fast organizations can build software. If you need code to automate your processes, to get insights, to solve problems — in a lot of cases, you can’t find the developers and engineers fast enough in order to deliver the increasing levels of business automation that’s needed to run the business.
So there’s a struggle for technical talent. And I think there was a stat that I came across from Indeed, the HR and jobs company, 86% of companies struggled to find technical talent. And we’re seeing all that play out real time today as well.
John Koetsier: Is this different than any time we’ve seen in the past? Is this significantly, totally transformationally different? Or have we seen this before?
Joe Hurd: You know, I think — we’ve certainly seen pandemics before, right? You know, a hundred years ago you had the 1918 influenza. I wasn’t around, but I hear it was a pretty bad thing. And we’ve definitely had temporary shocks, right? When you think about 9/11, which hit certain sectors more than others.
But what I think is different about this pandemic right now, is this is systemic across all aspects of our economy, and it’s proven to be sustained. We’re now coming up in the United States on the third peak in the last nine months. And no end in sight, at least until we have a vaccine, right?
So what happens then? Well, you have an erosion of trust, you have a feeling of vulnerability, you have the inevitable dread, you know, SARS is a coronavirus. We’ve had coronaviruses before in SARS and MERS, and we’re likely to have a coronavirus again. But the other thing that makes it different, you know, bringing it back to the center, is on the employment front, we’re caught in a crunch where the educational system in the United States has in large part failed to produce workers with the skill sets needed to satisfy the market demands, right? Most companies, their IT departments, they’re overwhelmed with security and maintenance challenges somewhat constrained on product and coding and development.
And this has happened at other points in our history, right? If you think about the push for people to study math and science during the space race. Or their transition from agricultural work so people could work in factories at the turn the 18th to the 19th — 18 hundreds to the 19 hundreds. We’ve got a similar constraint on our labor base right now, and I think that’s given rise to the types of companies that we’re going to talk about today.
John Koetsier: And you’ve said that this requires an iterative approach, correct? What does that mean?
Joe Hurd: Yeah. You know, it’s funny because after I wrote that, it’s — you know, I’d probably change that a little. I wouldn’t necessarily say ‘iterative approach,’ but it definitely demands a speed approach and an ease approach, right? And what I mean by that is the market is demanding increased levels of business automation and quickly.
Satya Nadella, the CEO of Microsoft, said that 500 million new applications will be built in the next five years. And that’s more than the last 40 years combined. And that demand for mobile apps is growing five times faster than IT departments can deliver, right? So what you need to do is, you need to do something, you need to do something quickly. And it’s got to be as easy as possible for these companies to deploy the apps and create these products and these systems, because you may not necessarily have the employees that you need to do all the development.
Peggy Anne Salz: It’s exciting to hear the big picture trends and the big picture view, but I’d also like to dive down a little bit deeper here, because you’ve seen a lot, you’re in the Valley, you understand this, you’re seeing it through that lens.
But we tend to get a little bit focused on the longer term changes underway, and there may be some things we’re missing in the short term shifts, as well as some opportunities there. So I’d like to switch the lens to short term shifts, you know, what are you seeing?
Joe Hurd: Yeah. So I think, one big thing we’re seeing is for large enterprise software companies, there’s pressure on them. Their business models are shifting. The way they are selling their products are shifting. And what their customers are looking for is shifting, right?
So, you know, the classic example is the restaurant or the retailer that needs to get a mobile app up very quickly to respond to the pandemic, and create an additional channel for their customers to consume, right? In the past, you’d be able to have the time to put an elaborate product spec together, go bid it out, get a team of developers, have them iterate, you know, one, two, three times, and then get that app launched. Oh, and by the way, then wait for the app store, Apple App Store or the Google Android Store to list your app and then get it deployed, right?
All that’s being sped up and increased right now.
So in the past, you could have customer support and you don’t necessarily need an end-to-end approach, because you have all of those services, outside services, built into your company. That’s changed now, right?
So one big trend that we’re seeing is for medium to large enterprises, over 50% of them, almost two thirds of them in the next three to four years, they’re going to be looking for the types of low code application platforms as an integral part of their strategy, in order to increase that time to deployment and reduce the friction in getting them the visibility that they need, in order to build services for their customers.
Peggy Anne Salz: And not just the customers, Joe, to your point, you know, you’re talking about building businesses, so you’re thinking about your ecosystem. You’re thinking about your partners as well.
Joe Hurd: That’s exactly right. And you’re thinking about your employees inside the company, right? And how do you build a service that takes the data in a very user-friendly way and surface it so the employees can make better decisions.
How do you quickly create a working prototype, right, to be able to get that into the market and determine how to allocate your resources as a company? How do you reduce your time to market?
So what we’re really seeing is, for a lot of these businesses, IT, which used to be this department, you know, way off in the [distance] and viewed by business unit leaders as a drag on productivity. All that’s now able to be brought into the business units, so these business units can speed up and move much faster in getting these prototypes to market, deploying an app in one step rather than a long integration, and increasing productivity. So you’re not waiting as long as you did for developers.
And the other impact that has is on the partnerships, right? As you look at how businesses partner with each other, what it allows businesses to do is to focus on what they’re good at, right? And conserve your resources and conserve your extraneous headcount. So rather than having developers and engineers in house, or overburdening your IT department where they’ve got to cover much wider remit, you’re able to then outsource that partner with companies like FollowAnalytics and other low code/no code companies … bring them in and move that much faster.
I tell my startups all the time, ‘If you do one thing, you live. If you do two things, you die,’ right? Focus on what you’re good at and execute on that.
John Koetsier: That’s amazing. And we’ve seen it actually in an earlier episode of Low Code Ninjas. We talked to the VP of FITNESS SF, and they operate five, six, ten different fitness centers in San Francisco and were completely shut down by the pandemic. Nobody in, nobody out. Revenue stops, activity stops.
And basically overnight, with low code, they were able to build an app that allows people to tune in to fitness programs, get nutritional advice, and expand what they were originally doing beyond what their in-person places, what their in-person facilities could do.
So … you see a lot of startups. You make a lot of investments. You’re connected to enterprise. What trends are you seeing? And what are you seeing with low code?
Joe Hurd: So, it’s definitely getting more and more popular for a lot of the reasons that I discussed earlier, right? The inability of companies to source the talent that they need. The need of companies, just like the fitness center that you mentioned, to move and move quickly, and iterate and iterate quickly, to come up with new ways of engaging their customers, right?
So we’re now starting to see low code companies, low code application platforms pop up in all kinds of niches. Whether it’s Tableau for data visualization. Zapier for data API and access. Firebase for data backend storage management. We all know about Shopify, you know, e-commerce. Or Wix or Squarespace for web development. FollowAnalytics for mobile app development. Airtable for relational databases. So, every conceivable niche that you could think about, you’ve got now a low code/no code company being built to fill that niche.
And you’re seeing no longer one-stop one-shop, one size fits all, but smaller companies coming with their own approaches to the market. All of them sharing sort of the same common traits, which is, being able to scale quickly, being able to do it — having employees that you don’t need to be a developer or to be an engineer in order to use these tools, having graphical drag-and-drop interfaces, having in some cases, tying into the back ends and bringing all the information to the front and surfacing, visualizing the data in a very powerful mix, right?
So … and marketplaces, right? Whether it’s Salesforce AppExchange or Microsoft app exchange, you know, these marketplaces now popping up much like on the mobile phone system where companies can take these modular approaches … drag/drop/combine, and make a new approach. Now, all this growth isn’t without criticism, right? You know, people are definitely saying, ‘Oh, this feels like a fad. It feels like a bubble. It’s not as powerful.’ Or ‘It’s only good for supporting applications that aren’t complex.’
But what’s really interesting is, fundamentally, right … fundamentally would you rather have 20 million people developing new products and services? Or would you rather have 200 million people developing new products and services? I’d opt for the latter.
So it’s just, it’s an ecosystem, right? It’s going to be a rising tide that lifts all boats and gives people the tools that they can, much like YouTube did and having cameras in the phones did, it gave everyone the opportunity now to be a creator. You weren’t relying on professionals to record and upload and host and shoot out your video. You’re going to see the same trends happening with people using all these low code/no code services to try their hand at developing software, and you can see all sorts of new innovations come out of it.
It’s almost like you take the Bisquick baking mix and then you kind of add a few things to it and make a whole brand new product. And so you’re not just making flapjacks, you’re making something different. It’s going to be exactly the same, the same trends.
John Koetsier: Yummy.
Joe Hurd: I said that ’cause I’m hungry. It’s 9:30 in the morning, I haven’t had breakfast yet.
Peggy Anne Salz: I can totally identify with that. And, you know, it’s exciting ’cause that’s just it — it’s a mix and you get something out of it. You talked about trends, but there’s also like, you know, there’s a wave here because we’re saying there are a lot of companies doing this. They are gaining traction, which means they are getting funding as well, right?
Joe Hurd: Oh, yeah, they’re getting funded. They’re going public. There is a lot of activity that we’re seeing at both ends of the market, right? Whether it’s on the public side, we have Shopify, $120 billion market cap. Or a Wix, you know, $15 billion market cap. Companies that have just raised big series, big rounds at large valuations. Airtable just raised $185 million Series D at a $2.5 billion valuation. Notion workplace productivity, $50 million at a $2 billion valuation. Coda, which has tried to take on G-Suite for collaborative services, $80 million at a $636 million valuation.
Then you have a lot of activity at the sort of seed and early stage rounds, right? Companies like Hevo, which just raised $8 million for a data pipeline aggregation play. Or Paragon company came out of Y Combinator, helping product and engineering teams streamline their product development, $2.5 million seed round.
So you’re seeing activity at both ends of the market, whether it’s the established public markets where investors by buying the stock are signaling and showing their confidence in companies like Shopify and Wix, to bring — and Tableau — to bring their solutions and products and services to an ever larger part of the marketplace, as well as startup companies that are looking at the niche plays that I mentioned earlier and trying to fill the gaps in there. A lot of activity on both sides of the market.
Peggy Anne Salz: So I’d like to unpack this a little bit, because at one level we’re talking really about something very exciting. We’re talking about the democratization of innovation, of iteration. This is exciting. This is not a trend, this is a tide. This is going to be around for a long time, probably even past, well past COVID. I won’t go there, because you’re the expert, Joe.
So I’m going to ask you, right? You know, this investor interest, this interest, this excitement that even I feel from the outside looking in … is it aligned with the macro changes and trends that we’re talking about here? Or maybe even accelerated?
Joe Hurd: Yeah. No, I think this is more sustainable than a fad, right? It is not a fad. I think it is part of a larger trend. And if we take a step back, where back in the eighties and nineties, you had super complicated software integrations with armies of developers being thrown at the problem, you know, the rise of the Oracles and the SAPs, right, of the world. Remember, then the rage was all about learning to code, right?
And then you had the whole BPO fad, where it’s, okay, well, we’re gonna have the developers in the U.S., we’ll leverage developers offshore outside the U.S. and get armies of developers in other countries, and yet a number of companies that were created for BPO, right? So now you have sort of low code/no code where you’re bringing a lot of that back in-house, and then giving people the tools that they need in order to create these services. I think that’s all part of a trend.
You’re now going to see, not only the niche plays I saw before, but then a demand for customization and tweaks where people are going to want to be able to add their bits and pieces on top of that. And success, I think, is really going to be driven by … look for industries and applications where growth is going to be constrained by the lack of technical talent, right? And where you find industries where you have that disconnect between the size that the market could grow to, but the absence of the technical talent onshore that is easy to get at reasonable prices, in order to achieve that growth … you’re going to have a low code/no code company or option jumping into the breach. And I think that is very much a macro trend that’s here to stay.
And it goes back to the systemic bit that I raised earlier. You want 20 million people working on something? Or 200 million people — give the 200 million people the tools and you’re going to see great things start to happen.
John Koetsier: That almost sounds like an investment tip right there, Peggy. And the other thing, Peggy, that I wanted to mention here—
Peggy Anne Salz: Yeah.
John Koetsier: We’ve seen this for people, right? Steve Jobs called computers ‘bicycles for the brain.’ And computers, and what we’ve been able to do with software, have increasingly made us able to do more and more and more technical things for a wider and wider audience. I mean, we produce this podcast, we do audio engineering, we do video engineering, all this stuff. And you know, look at us. We’re not super technical, right?
Joe Hurd: You’re selling yourself short.
John Koetsier: Hah, maybe, maybe. But that’s really interesting because that trend is now strong in enterprise.
Joe Hurd: I would completely agree, right? And when you look at the drivers, you know, what’s feeding this trend. You’re looking at constant demand for simplicity. Constant demand for speed. The need for these companies to show traction or be able to pivot quickly. Constant demand to increase productivity, right? Moving functions away from IT, you know, that I mentioned earlier. Constant demand to reduce cost. So you then have a sort of shift for — whether it’s internal enterprise use or good-looking consumer facing applications — all part of the broader trend. And I think that’s, again, not going anywhere. That’s here to stay, those are the constants.
John Koetsier: So, Joe, I wanted to ask you about FollowAnalytics. We do this podcast with FollowAnalytics. You’ve known the founder, Samir, for quite some time. He’s seen amazing growth over the past two quarters. Why do you think the core low code product of FollowAnalytics is growing so quickly?
Joe Hurd: Yeah. So first, you know, Samir is one of the most talented founders I have ever had the pleasure of dealing with. I’ve known him since 2006. And so, now we’re now going on 14 years. I’ve known him longer than most marriages last in the United States, you know, and he’s on a rocket ship with FollowAnalytics.
I think there are a couple of things that FollowAnalytics does that are pretty unique in the market, and I think has contributed to the company’s rapid growth. The first is, at its essence, they take a lot of structured data, right, a lot of complicated stuff, and they make it super simple.
Going back to your gym owner, right? If you’re owning a small business, you don’t want to either get bogged down in a long integration path, or have to work with three, four, or five different companies in order to get your app up or your website developed, you know, get a new product in the hands of your consumers. So being able to work with FollowAnalytics, which is really that sort of one-stop shop where they can help you build the mobile app, helps you move fast — I call it the Three Fs, right, it’s fast, it’s friction-free, and it’s feature rich.
So whether you’re a restaurant, or retailer, or a small business, you’re looking for sort of that omnichannel play where you want to get a mobile app out there so you can further engage your customers and get those data points, and generate revenues … FollowAnalytics is a great company to work with.
The other thing they do, and I think they do it pretty well, is they’ve worked pretty hard on their backend integration, right? With the Salesforces, the Shopifys, the Magnetos, all the CRM providers, right? Whatever system you’re using in your business that you want to then bring to the FollowAnalytics platform, they’ve got pretty seamless integration with all of those backend providers.
And then most importantly, in terms of getting your app on the Apple App Store or Google Play, that’s again seamless. They take care of all of that. All of the backend reporting and analytics as to how the app is performing, and giving you those actual insights so you can adjust your strategy or your feature mix, or your product mix on the fly. They’re an incredibly good partner for these businesses to have.
John Koetsier: Cool.
Peggy Anne Salz: And I love the three Fs again, Joe — John, because, you know, if you — Joe, John, oh whatever.
Joe Hurd: It’s all good.
Peggy Anne Salz: It’s all good, it’s all good.
John Koetsier: It’s all Js.
Peggy Anne Salz: It’s all Js here, but it was interesting—
Joe Hurd: He’s smarter. I’m prettier.
John Koetsier: Mmm, haha, other way around.
Peggy Anne Salz: I love it. Now I can’t choose — brains or beauty. But anyway, we have had guests who talk about the feature rich, so we came from feature rich to three Fs. And we’ve had that in some of our shows now, just out there in a SlideShare as well. So really focused on the idea of the friction, of the feature rich, you know. But, you have also an aspect here that we haven’t been talking about, Joe, right? You also do consulting, you talk to other companies. I’d like you to tell me a little bit more about that. Give us a perspective about how you work and what your work is.
Joe Hurd: Sure. Sure. So, I’ve been based in the Valley since 2004. And I’ve built a consulting practice where I tend to work with founders coming from outside the U.S. that are looking to build their businesses inside the U.S., and they need a trusted partner in the Valley to help advise them on investors, potential partners, right? Or, help them with their go-to-market strategies and figure out what their business plans ought to be.
That’s actually how I first got to meet Samir. Samir was based in France, and he had an incredibly innovative business back in 2006 that was leveraging mobile devices and location-based services to create a social network. And I had just come out of a company called Friendster and we worked together. Lo and behold, a few years later, he came up with the idea for FollowAnalytics, and he wanted to come to the United States. And I worked with him to identify target investors, some target venues, so he could raise his profile and raise FollowAnalytics’ profile. And then those first, you know, two or three partnerships figure out what the bid-ask was and how he should partner with companies to enable himself and the company, and hit the ground running … and hire a team, the whole nine yards.
So I really enjoy working with founders that — you know, I always say, ‘I’m not smart enough to have the idea, but I can definitely help you figure out how to make it go and how to generate revenue.’ That, I know really well, right? And being based in the Valley, where the relationships that I have with investors and other major companies, I enjoy opening that up and helping my clients build the best businesses they possibly can.
John Koetsier: Well, given your track record, you’re very humble. We appreciate all that you’ve brought here — and Friendster, I mean, that is back in the day!
Joe Hurd: Right?
John Koetsier: I remember Friendster.
Joe Hurd: Exactly.
John Koetsier: I thought Friendster was better than Facebook at one point. And I was like, you know, what is this Facebook idiocy? I’m going on Friendster. And of course, that went the way of MySpace, but—
Joe Hurd: I just wish a couple of hundred million people felt exactly the way you did.
John Koetsier: I know.
Joe Hurd: I thought it was a great service too. A lot of lessons learned. A lot of lessons learned there.
John Koetsier: Joe, thank you so much for this. It’s been such a pleasure. You know, there’s some podcast guests where Peggy and I have to work really hard, and so we have to bring out all the insights. There’s other guests where you kind of push ‘play’ and you sit back, and you were on that side. And yet not the kind that also just goes on for half an hour on a one topic. So, very insightful. Thank you so much for your time.
Joe Hurd: I really appreciate that. I trained as a lawyer, so I get paid by the word. You don’t have to worry about me filling up air time. Thank you, John. Peggy, it was a pleasure.
Peggy Anne Salz: Absolutely. No, I had to second it, because it was insightful, it was interesting, and it was inspiring. You are certainly giving back, and that is something that is — I find always a shining example. Something we need to follow. You obviously are successful, but you’re also thinking about sustainability in the future as well. So I can’t thank you enough for joining us.
Joe Hurd: Well, listen, I appreciate it. And one of the great things about a company like FollowAnalytics — you know, building a business is hard, right? And when you’re a CEO, you’re looking for anyone you can to help you take the friction out of building your business and make things simpler. And one of the things that I really appreciate about Samir and the team that he’s built, and his approach at FollowAnalytics, is they’re helping CEOs de-risk building mobile apps and make scaling their business and getting to additional channels simpler. And I respect that.
John Koetsier: Wow. Well, we thank you for being on the show, and we thank everybody else as well. The show is available on all the usual channels and a full transcript will be available at the FollowAnalytics website, as well as multiple social shares and a SlideShare of the key points. And I don’t know how we’re going to separate out the key points here, Peggy, ’cause there’s a lot of them.
Peggy Anne Salz: I was thinking a book, but I won’t go there.
Joe Hurd: Peggy, happy to work with you on that.
Peggy Anne Salz: You’re on, Joe. And Joe, you are blogging, you said you are, so, you know, shameless plug here—
Joe Hurd: Now you’re going to hold me to it? Yeah.
Peggy Anne Salz: I’m going to hold you to it, absolutely. And I’m going to follow you, absolutely. I want to find out about this, ’cause this is transformational. This matters, right? So, again, great to have you here. And until next time, of course, this is Peggy Anne Salz signing off for Low Code Ninjas.
John Koetsier: Thank you so much, Peggy. My name is John Koetsier, have a great day everybody.