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CRAFTED. is a show about great products and the people who make them. Top technologists reveal how they build game-changing products — and how you can, too. Honored twice by The Webby Awards as a top tech podcast, CRAFTED. is hosted by Dan Blumberg, an entrepreneur, product leader, and former public radio host. Listen to CRAFTED. to find out what it really takes to build great products and companies.
Jack Altman (00:00):
To me the best way to get product market fit or the only way I've ever managed to do it was getting so steeped in the customer's mindset and so deeply rooted in their day and their problems and their needs that the solutions almost appear to you just because of how soaked you are and what their life is like.
Dan Blumberg (00:24):
That's Jack Altman, the Co-founder and CEO of Lattice, an employee performance and engagement software company that wants to put people first. Lattice is backed by top Silicon Valley VCs and has a unicorn valuation. The company was inspired by an experience Jack had at a previous company when he saw that staff feedback was collecting dust and employees were disengaged.
Jack Altman (04:14):
People feel unsatisfied, people don't have clarity on what they need to be doing to grow their careers, what goals are most important for them. They didn't necessarily feel like there were easy opportunities to be listened to by the company.
Dan Blumberg (04:27):
So Jack and his co-founder ran with this opportunity and founded Lattice.
Jack Altman (04:27):
We actually went all in on founding Lattice before we had good clarity, but there was an aha moment.
Dan Blumberg (04:27):
On this episode, Jack shares his aha moment, Lattice's most important inflection points and his lessons on finding product market fit.
Jack Altman (04:27):
I'm a huge believer that the only activities that create value are building software and talking to customers.
Dan Blumberg (04:27):
Oh, and you've probably heard of Jack's brother, Sam Altman, he's the CEO of ChatGPT maker, OpenAI. So you may be surprised to hear Jack's cautious approach to artificial intelligence.
Jack Altman (04:27):
Could the AI just write performance reviews for us? And the answer is it could, but just creating that document is not where most of the value is. And in fact, skipping the part where you do the critical thinking to get to that outcome circumvents some of the very important work.
Dan Blumberg (04:27):
Welcome to Crafted, a show about great products and the people who make them. I'm your host, Dan Blumberg. I'm a product and engagement leader at Artium where my colleagues and I help companies build incredible products, recruit high performing teams, and help you achieve the culture of craft you need to build great software long after we're gone.
(04:27):
Was there something in the water at the Altman household that led you and your brother to become such successful entrepreneurs?
Jack Altman (04:27):
That's funny. I don't think so. We grew up in St. Louis. I think it was a pretty regular but very happy, good childhood. I went to public school, I had a great group of friends. Parents were super supportive. It was not a high pressure environment. There's a lot of things looking back that I'm really appreciative for about the, I was going to say the word freedom, but I think just the lack of external intensity that's imposed was really nice. I don't know, I think we just had a good regular childhood.
Dan Blumberg (04:27):
All right. At the top of the Lattice homepage it says, "Our mission is to make work meaningful." Can you share what you mean by that and how you define meaningful work?
Jack Altman (04:27):
Yeah. One of the things I always thought about and still think about is I was very taken by the idea that once you're an adult, a humongous percentage of what your life is composed of is your work. And if you really just take an inventory of your hours, it just is a massive part of our waking moments. So to me, aspiring to having work that is meaningful to you, which we could talk about what that means, it might mean different things to different people, but where it has substance, where you derive joy from it, where you feel like there's long-term purpose, that to me just feels like such a worthy pursuit. For me now I've got two little kids, I see my friends and I work, and I'm really happy with that setup. So for me, having the pursuit of meaning at work is really important.
Dan Blumberg (04:27):
Can you take us back to where you were just before you founded Lattice? What was the opportunity that you spotted?
Jack Altman (04:28):
I had been working at a company called Teespring, which was an e-commerce company that grew really fast. My Lattice co-founder and I worked there together and we actually didn't see the whole surface area of the Lattice problem when we started. We just experienced these pains of people feel unsatisfied, people don't have clarity on what they need to be doing to grow their careers, what goals are most important for them. They didn't necessarily feel like there were easy opportunities to be listened to by the company. And so in some ways it was a little bit more like we were seeing the shadow in the cave than the object itself. And I think we only once we got into customer conversations after many months did we really start to grok the underlying problem set, but we could sort of smell smoke even if we hadn't seen the fire yet. But it was firsthand experiences of a lot of these things that just happen if a company's not really proactively investing in HR stuff like this. And I think that's common.
Dan Blumberg (04:58):
Congrats on making the earliest reference to Plato in a podcast interview that we've done yet.
Jack Altman (05:01):
I've never made it before. It just kind of spoke to me.
Dan Blumberg (05:03):
I like it. So as you were emerging from Plato's cave and what was an aha moment that made you see things a little more clearly and then decide to go all in on founding Lattice?
Jack Altman (05:13):
Well, we actually went all in on founding Lattice before we had good clarity, but there was an aha moment, probably like eight months in something like that where we had been kind of banging our heads against the wall with our first product, which was a goal setting tool that was going to help companies set and align and manage goals. And it just wasn't quite working. People thought they wanted it, they would start using it and then it just didn't fit the mold easily enough. Keeping users retained was just too much effort from our side. It didn't have a natural pull. And so at some point we talked to our customers who we had become friends with, had built real relationships with in the process of developing this first product. And we asked them, what else do you use? What else is important to you but you're not getting what you need? And we just heard about performance reviews over and over.
(06:07):
What was interesting was once we decided to do it, instead of with the first product where we built the whole tool and production code and let customers start using it and tried to grow adoption, this time, we would show design mockups and people would agree to annual deals with that. And that had never happened to us before. And then once we got going, the go-to-market side was easy. And so we had this moment of we were like, okay, that's what it feels like when people want the thing.
Dan Blumberg (06:35):
That's amazing that you were able to sell with mockups. Can you give a little more detail on what you did the first time that was over productionized and then how you were able to sell with not yet built software?
Jack Altman (06:47):
Yeah, the first time we didn't go to people until we had working stuff for the most part. I mean, we would email people and say, "Are you interested?" But they would say, "Yeah, once it's ready," versus the second time around, here's a whole storyboarded set of mockups and you're going to do the performance review in this way and here's how peer reviews are going to work and everything else. There were definitely things that changed between the first go and the second go that put us in a position where we were able to do that. We understood the customer much better. We understood their needs and their problems in a much deeper way than the first time when we were actually really just meeting HR people for the first time. But then also it was just I think learning how to do this, learning how to take a product to market for the first time. And I think aside from having better context, we just had a better approach.
Dan Blumberg (07:34):
You just have more reps it sounds like is also part of it.
Jack Altman (07:37):
And I think the first time you think that it's going to be the feel and the tactile use of the product that's going to sell people. And there are certain product categories where that's right, extremely high polished productivity tools come to mind, but in most cases I think what you're really selling is a solution to a problem. And if you can show people what that solution's going to be, they'll hopefully tell you yes or no and trust you to be able to build the thing.
Dan Blumberg (08:05):
Can you talk a little bit more about who the buyer is, the buyer, and potentially not always the same person as who the user is and what problems they're trying to solve that you were able to address so effectively?
Jack Altman (08:16):
It was the head of HR. In some cases it would be the top, top HR lead. In some cases it would be someone who reported to that HR leader who was managing these kind of processes. And then to your point, yeah, the users were everybody. So everybody in the company is a user of a performance review. Sometimes it'd be a founder, sometimes it would be a COO, but certainly the majority were HR leaders. And that actually led to one of the interesting product challenges for us that actually we've had the whole life of the company, which is we have at least two personas that matter, really, three, the HR admin who completes a performance review, an engagement survey, a compensation management cycle, in our most recent product cases, the one who administers a core HR system and does all the employee workflows and onboarding and everything else.
(09:06):
And then you've got the employees who are in some ways like the end user consumers of whatever that process is. And then there's this third persona, which is the manager, which in Lattice's construct has got a lot of distinct uses. So that's a big balance is figuring out, okay, your economic buyer, your daily user, your key stakeholders, those are all different people and there's different builds for them, so that leads to a lot of interesting decisions along the way.
Dan Blumberg (09:34):
How do you prioritize when you have those three different types of users? There's also all sorts of different companies you could be building for large, small, I know you've chosen mid-size as your sweet spot. How do you prioritize among those many things you could be doing?
Jack Altman (09:48):
Well, the unfortunate reality is you have to create a good experience for everybody or it won't work. And so you can't neglect any of those groups. I think what we've found over time that's worked well for us is in given moments in a particular quarter or month or sometimes half, we'll say right now it's really important that we prioritize this persona or right now it's really important that we prioritize existing users. And so to me, there is a little bit of a cyclicality to it and a little bit of a judgment, and who the product team is prioritizing isn't the same at all moments in time.
Dan Blumberg (10:33):
In the early days of Lattice, you posted a Twitter thread and some lessons you'd learned, and two of them were job number one is get to product market fit. A heuristic for everything you do can be, does this activity help me get to product market fit? You went on and said, you'll know you have a product market fit when strangers buy your product, when 20% of demos convert. I mean, you sort of talked a little bit about how you found product market fit through those demos. What are some other ways that you were focused on that in the early days and some lessons you may have learned?
Jack Altman (11:03):
One of the reasons I think that that's worth saying because it kind of sounds obvious, is when you're an early stage product builder, there are so many temptations that sound really reasonable to do. And it's that second part, the fact that they sound like good ideas to do, that's what is tricky. That's where it's easy to get caught. So things that sound smart might include talking to press or talking to investors in fundraising or working on partnerships in biz dev deals. And in the early days, I'm a huge believer that the only activities that create value are building software and talking to customers. It's just so important to not get distracted by the next best ideas. To me, the best way to get product market fit or the only way I've ever managed to do it was getting so steeped in the customer's mindset and so deeply rooted in their day and their problems and their needs that the solutions almost appear to you just because of how soaked you are and what their life is like.
(12:11):
And I think when you get to that point, you then get to a place where you get this conviction that of course, I need to build this in this way. And of course customization is the thing that's going to be the most value to them. Or of course the 360 with peer feedback in these ways is differentiated because I know there are other systems and their other systems don't do that. And so that's going to be our differentiating angle. And so I think getting to the place where you have this very high confidence of what will solve problems for the customers because you're so rooted in their real experience, I think that's where good stuff happens.
Dan Blumberg (12:46):
So you have a big release this month, Lattice HRIS. First, what is an HRIS for those who don't know what it is, what pain point did you identify and how did you go about building out this new big release?
Jack Altman (12:58):
Yeah, it's basically HRIS, HR Information System. It's basically a database of employee information. That's really the centerpiece of what it is. So the way that Salesforce is a database for customer information or NetSuite is for financial information, that's really what the HRIS is for employee information. There's a set of apps that sort of naturally live around it to help you manipulate that data to do a couple of other very central employee related things. But so it's a lot of stuff like employee onboarding and offboarding, reporting the analytics on employee data, vacation and time tracking, integrations with a lot of other systems like these really core workflows that are all hinged around a robust employee record that is the source of truth for all the employee data at your company. And we had heard this for many, many years from our customers that it would be really helpful if we could build it.
(13:49):
I think what we've realized over time in the industry is that the small end of the market has a really great set of tools where there's this real all-in-one platforms that are fantastic that can do a whole lot of stuff for you, but then in the mid-market where Lattice's customers live, the set of options is a little less complete, less obvious. And so we found that through just a lot of customer conversations that if we could add to that set of options with a really robust uniquely positioned HRIS, you're going to have hopefully a product offering that's really compelling for a lot of people. So we've wanted to do this for a long time. We had an intuition that it would be something people wanted and we sort of only in recent years got to a scale where we could pull it off in a reasonable way.
Dan Blumberg (14:35):
What is it about the HR tech stack about particularly the mid-market companies you mentioned that's so messy? Why is it so messy?
Jack Altman (14:41):
Basically by messy what I'm talking about is that you end up with a ton of vendors and so you end up with a lot of solutions like some HR teams that you talk to with a few hundred employees will have 10 or 12 or 15 products, I think Lattice at one point had like 19, and they're stitched together. You're doing integrations as best as possible, but it's a lot to manage. Something breaks, you're dealing with 19 or 10 or whatever renewals, which is a pain. You've got all these rollouts. Once you have single sign on, now you've got all these Okta logins. It's just complicated. And I don't believe that you can necessarily do a one size fits all company that builds everything super well. But I think you can simplify and clarify that stack by companies continuing to consolidate more and more offerings. So a company can use three or four tools rather than 10 or 12.
Dan Blumberg (15:37):
How'd you decide what to include and what not to include in the first iteration of the HRIS you just launched?
Jack Altman (15:43):
It was super customer driven. So definitely it was our North star, a combination of customers asking for it, but us saying, yeah, this is the strategic direction we want to go. But our philosophy is always have your own North star when you decide a new area to go into and then become incredibly customer driven. So we've been building with small advisory groups among customers of different sizes and cohorts to get feedback on what mattered most to get to the first set of things that were most important to what we thought would be the most customers and then we'll build out from there.
Dan Blumberg (16:18):
I understand that Lattice itself, you've been dog-fooding this product internally. I'm interested in the how and why you did that and what you learned from your own employees using very early versions, I'm guessing, of the software.
Jack Altman (16:31):
The earliest customer zero. You can't always dog-food obviously. So sometimes a company builds a product that they're just not the customer of. Happens all the time. Probably more often than not actually. But when you can, I'm a huge believer that the best feedback you could possibly get is going to be from the 500 and change employees that work at Lattice who really care that we have a great product for the market but are now also users of the tool themselves. That's end users, managers, and it's our people team who are the ones who are trying to orchestrate a whole HR stack inside Lattice. And so if there's something that's a hair on fire problem for them or something that's really frustrating, we're going to have the tightest feedback loop possible by dog-fooding internally. So I've always wanted to do this with each of our products as much as possible, and I've found that that's where we make huge strides. We happen to be a company that can use our own products. So I think if you're able to, it's a huge advantage.
Dan Blumberg (17:29):
And now that you've announced it publicly, what's the feedback been like? Any surprises?
Jack Altman (17:34):
I've been surprised that people have been as receptive as they have. I was hopeful and I suspected that people would be interested, but I've just been really gratified that we've heard from so many HR people that this has been something they've been hoping Lattice would do. This is something they've been hoping would happen in the market. And so now the onus in my view is on us to just build and deliver something really great to stay true to the way we build product, to being extremely centered on their experience, what they need from us, and just constant iteration and improvement.
Dan Blumberg (18:04):
Right on. I'm interested if you could talk through a couple of different inflection points as you've grown and scaled.
Jack Altman (18:11):
Yeah, there've been a bunch. A couple that come to mind were going multi-product, so releasing our second product and realizing that being a multi-product company was really important to us.
Dan Blumberg (18:22):
What was the first and then what was the second product and tell me why that was such an inflection point.
Jack Altman (18:27):
Performance management was the first, and engagement surveys were the second. And I think the reason it was important was because it turned out that if you're able to build, in this case, those two products, well, from a customer perspective, it was truly all upside because you don't have as many vendors, you're going to have a lower cost of ownership. You're going to have the data talk to each other. So now I can ask the system questions like, are my top performers engaged? You don't have as many rollouts that you have to deal with employees, you just don't have as many points of integration. So it's strictly better for the customer.
(19:04):
And then we quickly realized it was also strictly better for Lattice. It's much cheaper to sell to existing customers than new customers. We are going to have all of these ways in which the product build compounds on itself where we have reusable components, we have an architecture and system that's already in place. We already have a team that's there. We have more touch points. Even though we are less expensive than buying two systems separately, we still get more revenue per customer. It helped our retention. So it was a true win-win, and those are hard to come by, and it just had a big impact.
Dan Blumberg (19:39):
Another inflection point for Lattice was the pandemic.
Jack Altman (19:43):
At first, the world shut off, and so we were afraid that nobody was going to buy software ever again. That was what happened first in 2020. We very quickly realized that wasn't the case and that actually tools like Lattice are extra helpful in remote context where you don't have the in-person touch points to be giving feedback and asking employees how they're doing and having career conversations. And so a tool like Lattice is a big support system for remote companies, it turned out.
(20:10):
And then I think in the last, call it 18 months with the tech downturn, there's another completely separate dynamic going on now, which is that the relationship between employees and companies has shifted again. In some ways, I think in healthy ways and others not. But that has led to a dynamic where the employment relationship and the power balance has shifted. It got very extremely in favor of the employee, obviously in the sort of height of zero interest rates, and it's kind of swung back somewhat. And I think our customers are grappling with what does that mean for how you should do a talent management program? What does it mean for the way you should think about raises and career trajectories? So I think a lot of that stuff has changed in the last couple years, and so you still need to use tools like a Lattice, but the orientation for some meaningful set of our customers has changed.
(21:05):
Honestly, I think the question of what does work look like is still in many ways hanging in the balance and influx. I think inside every company, Lattice included, I think the dynamics of work got so upended in the first two years of covid that I think there's still a lot that is shaking its way through.
Dan Blumberg (21:26):
I feel like it would be weird if I didn't ask you about AI. I basically ask every guest about AI, and I know it's not integral to what you're doing at Lattice right now, but I'm interested in if you see ways that Lattice or HR teams in general might be using it in the not too distant future.
Jack Altman (21:39):
I think so. I would bet a lot that they will be. I'm skeptical of approaches where AI wants to replace human interactions. So a natural consideration for Lattice, both from our customers and internally is like, could the AI just write performance reviews for us? And the answer is, it could. You can go into ChatGPT and say, please write me a performance review about this employee. I think these good things about them, I think these are the constructive areas. Can you just spit out a performance review? And it will, there's nothing wrong with that. It can be a helpful prompt. But my experience with management and just being in this space for a while is that the value of a performance review is mostly not contained in the document. It's mostly contained in the thought process, in the conversation that happens. So just creating that document is not where most of the value is.
(22:38):
And in fact, skipping the part where you do the critical thinking to get to that outcome circumvents some of the very important work. So it's not that I don't think there's any role for it to support, I suspect there is, I'm just cautious about it. Versus AI as an interface to get data out of a complicated system or to query unique insights that would be hard to find, like who are my top performing employees who are below the appropriate comp band and are showing signs of being disengaged in New York? And it's not that you couldn't necessarily use the tool to get that data out, but AI might be an easy way to quickly access stuff like that. Or show me a report of X, Y, Z. So I think there's going to be a lot of ways that AI makes software easier to use and more valuable in terms of just getting what you want to get out of it, out of it. But I'm hesitant about the places where AI would replace the parts that I think are uniquely human.
Dan Blumberg (23:43):
What's next for Lattice?
Jack Altman (23:45):
Make this HRIS successful. That's the thing that matters. It's tempting when you build a big product like this to ship it and be like, great, we're onto the next thing. In fact, one of Lattice company values is, what's next? So I'm the biggest culprit of all time of this, but this is foundational software for our customers, and so it's extremely important that we get it really, really right and invest not just in launching it, but really landing it super successful with customers. So what's next is make this successful.
Dan Blumberg (24:18):
Jack, thanks so much for taking the time. I really appreciate it.
Jack Altman (24:20):
My pleasure.
Dan Blumberg (24:25):
That's Jack Altman, CEO of Lattice. If you are ready to turn your aha moment into a working product or need to scale it up, let's talk. At Artium, we can help you build great software, recruit high performing teams, and achieve the culture of craft you need to build great software long after we're gone. You can learn more about us at thisisartium.com and start a conversation by emailing hello@thisisartium.com. If you like today's episode, please subscribe and spread the word. We're eager to hear your performance review.
Jack Altman (24:56):
It was a true win-win, and those are hard to come by.