A chat with Jack Altman, Cofounder & CEO of Lattice

Sar : You cofounded Lattice in 2015 and went through YC in 2016. If you could tell the 2016 version of yourself an important lesson to accelerate progress and avoid pitfalls, what would it be?

Jack : It’s really easy to lie to yourself about having product market fit when you don’t. In our first year, we were building a product that got some lukewarm interest, but we were very clearly pushing a boulder uphill rather than shepherding one as it rolled downhill. I sort of allowed myself to get tricked by supportive friends who could maybe convince their teams to give it a spin, but they had to fight to convince people and even when they did the retention wasn’t very good.

A year into Lattice we pivoted away from OKRs and towards performance reviews. I don’t surf, but the difference was what I imagine you’d feel between a tiny little swell and a serious wave. You know when you’re on the real thing and you wouldn’t really be able to get off it if you tried, so you just paddle and stand up and try to hold on.

Starting a company is scary for many people (it certainly was for me), and so you’re primed to listen to the market with “happy ears”, looking to spin every piece of data you get as positively as possible.

My advice to myself in year one of Lattice is to be extremely skeptical of whether or not you have product market fit, and assume you don’t until the evidence that you do is abundant and overwhelming. And until you’re there, iterate quickly and aggressively and be maniacally single-minded about finding it.

Sar : I love that description! I'm not a founder but have been involved with multiple product launches and projects in my short career so far and I can relate with the dynamic of deluding ourselves into thinking there’s product-market fit with the desire to listen to “happy ears” and positively spinning the little data we might have. It is a really unnatural to be skeptical of signals you are desperately wishing to see right before you ship something!

We use Lattice at work. We recently completed a performance review cycle using Lattice. That experience got me thinking about a few product ideas for your team. I reached out to you and you were very open to riff on ideas. I very much appreciate that.

People are messy. Interpersonal relationships are messier. Building software for people management feels much harder than most other categories where the outcomes are much more definable and quantifiable. How do you think about what the company should care about tactically to define the scope of what you should build? What I'm really wondering is how do you abstract human behaviors and relationships at the workplace into software interfaces to encourage desirable outcomes.

Jack : It’s a great question. One of the great things about our market is there are so many potential product expansions at all times; there are a lot of things you could imagine Lattice launching tomorrow and you’d think, “yeah, that makes sense.” Obviously this is also a potential pitfall, since we could easily go down unfruitful or distracting paths.

We’ve done what we considered major product expansions twice so far. After building the performance suite in 2016, we built engagement and pulse surveys in 2018, and then our new product, Grow, in 2020, which is infrastructure to manage employee career growth.

Here’s approximately how I think about what might be in scope for Lattice to build, starting at the highest level with strategy:

• First, our mission is to make work meaningful, and we believe that meaning at work comes through community, purpose, and growth. So it has to fit into that.

• Second, I believe that we should seek to ride the broad trend that Lattice has been riding its whole life, which is the transition in the balance of power from companies to employees. The world has changed such that employees are more in the driver seat than ever before, and to remain competitive for talent, companies need to build their people practices to serve the employee. So all our products must put the employee’s experience at the center.

• Finally, we’re a venture-backed company with big ambitions, so everything we do also has to address a big enough market. The simple heuristic I ask myself here to see if I think a new product makes sense is “can I imagine this being a line item at nearly every company in five years?”

When considering new product expansions, I first test it against these questions. Assuming it passes, we then look at a few more follow ups. Do we have a special advantage building this product, either because of the way it interacts with the rest of our products, because of the nature of our customer relationships, or because of some special knowledge we might have? How difficult and expensive is this product to build relative to everything else we could work on? How well does this product line up with today’s ideal customer profile, as well as the ICP we’re aiming for down the line?

So you sort of run each new product consideration through these interrogations, and be somewhat systematic about it, but at least in my experience, at the end of it all you never have perfect information and you need to have some conviction in your intuition.

Sar : I find that prioritization framework insightful. I’m glad you brought up the notion of special advantage in terms of ecosystem. That brings us to my next question!

We have talked about how a lot of products in this category are not great standalone businesses. Selling a package of products to People teams feels like the right way to go about building people management software to drive performance at companies. There’s a never ending debate of specialist versus bundles in enterprise software. ADP, Workday and SAP collectively have market cap of nearly $300 billion! Can you give us a high level overview of how you think about the modern landscape of companies operating in this area and where you believe Lattice fits in it?

Jack : I think this is one of the most fundamental dynamics in HR software, and probably in lots of other software markets as well. On one hand, bundling has huge value to customers, since it tends to make systems more integrated, easier to roll out across to employees, and cheaper. On the other hand, engineering resources are limited and building a broad suite necessarily trades off against quality, at least on some level.

You can think of HR software in three basic universes; the nuts of bolts of employment, the acquisition of talent, and the management of talent.

The nuts and bolts of employment are things like HRIS, payroll, benefits, time and attendance, etc., and here you tend to see the most successful companies being ones who consolidate. This is companies like Gusto, Rippling, or Paychex at the smaller end, and ADP or Workday at the larger end. Consolidation here makes a lot of sense for consumers, it’s just hard because each product is enormous. As a result, to compete here you need big teams and lots of capital.

The acquisition of talent is things like applicant tracking, sourcing, background checks, and candidate experience. Here we see much less consolidation, and instead see more of a hub and spoke model where applicant tracking systems like Lever or Greenhouse live at the center with a broad ecosystem of integrations. I think this is partially due to the face that there are just so many different solutions recruiters are looking for.

And then finally is Lattice’s world, the management of talent. I think this part of the market is in the most flux; it was less than a decade ago that it became popular to call for “the end of performance reviews”, which led to a complete shake up in best practices around feedback and performance conversations and goal setting. And in that same period of time engagement surveys went from a cool niche tool to an expectation from HR leaders and employees.

So things are still moving here. But broadly, I think the future looks more consolidated rather than less. I think companies in our space that can do more for the employees as their customers will win, and being able to connect disparate moments in the employee journey -- whether that’s a promotion, a tough conversation, an unhappy quarter, an ambitious goal -- will be very valuable. Whether that proves to be right or not is to be determined, but we’ve certainly been building the company against that view of the world.

Sar : I believe your team was predominantly in SF all these years when it was safe to assume that most of your existing and new customers have employees that are predominantly co-located in offices. Has the pandemic shifted the internal thinking on those assumptions and how you go about building products? If so, in what ways? Have you become hypersensitive to behavioral changes you now notice in the covid era to come up with product ideas?

Jack : That’s right; before the pandemic basically all of our customers were co-located, and now basically none of them is (Lattice included). We’ve felt some benefit from our customers doing remote work, since software now stands in for a lot of in person interactions, although it’s been offset by the negative impact to the economy.

In terms of making product decisions based on the “new normal”, we’re trying to operate the same way as before for two reasons.

One, we’re not really in the business of predicting the future of remote work. It seems clear to me that a lot of people are realizing they like remote work, a lot of people couldn’t be more excited to get back to the office, and a lot of people aren’t sure what they’re going to want to do when coworking is safe again. If we were in a business that was massively impacted by remote work, we might be forced to take a stronger view on remote work despite not feeling very sure about it. But since things are mostly steady, we can “place our bets” on other dimensions that we have more special knowledge and conviction in.

The second reason is that I fundamentally think, as far as our mission at Lattice goes, there’s not a whole lot we’d change even if we believed remote work was for sure the future. We’re trying to build for the “vegetables” of meaningful work -- purpose, career growth, a sense of belonging -- as opposed to things I think of more like “candy”. So I’m just not that sure what we’d do differently even if we did want to bet on a long term future where most people work remotely.

Sar : When I was drafting these questions, I had assumed your answer to this question would be more or less “of course it has impacted our thinking on what to build and how to build”. After reading your answer, I am surprised that I thought so! I very much appreciate your humility on how we simply do not know how all of this will shake out and your clarity on how what you are building for fundamentally remains unchanged.

You guys have clearly invested a ton in producing superb highly quality content. I have really enjoyed it from time to time and I often send your interview with Stripe COO Claire Hughes Johnson to people. It is the kind of content that makes you want to buy the product. Is it all just content marketing or do you have a more layered vision for it? Everything from the substance of it to how you present it on your website is very impressive.

Jack : That interview with Claire was one of my favorites, I learned a ton from it!

It might just all be content marketing, but that’s not the goal and certainly not how I think about it. I’d say our goal, which we will probably always fall short of but will always strive for, is to build a media company inside of Lattice. The content should be so good and informative that it’s something we’d be proud of if it were a standalone project without the software company it sits on top of. It should be something that helps our customers run better companies, just like our products do.

Fundamentally doing marketing with this mentality requires a certain leap of faith, and who knows whether it pays off; it’s time and money intensive, and like everything else it comes as an opportunity cost of people’s time.

Compared to most SaaS companies, our marketing efforts are much more focused on the brand end than the data driven end. Obviously, in our view, this ultimately leads to better demand gen and a healthier overall business. I believe this investment has paid off, but I suppose we’ll never really know for sure.

Sar : A recurring hot topic on tech twitter is the role of product managers at startups and when is it appropriate to hire your first PM and have a PM led product culture. What is your take on this?

Jack : I think it really depends on your product and market, but by and large I think PMs are overused and over-relied on.

As a disclaimer, at Lattice, PMs play a very important role and are equally important legs of the overall stool alongside design and engineering. But that, in my view, is a function of our strategy and the nature of our product. We’ve got a high velocity EPD org that builds a lot of features across a lot of products for a lot of customer types, and as a result the exercise of prioritization and scoping is incredibly important. So in our context there’s enough work to go around to have distinct roles addressing the questions “what should we build?”, “how should it work?”, and “how should we build it?”

But I think a lot of companies have shown that you can get really powerful results by keeping the “product work” sitting with the engineers and designers. It keeps feedback loops shorter, pride of ownership higher, and leads to fewer things getting lost in translation and they move between the brains of different people.

The early versions of Lattice were built by product-minded engineers and product-minded designers. They were certainly doing product management, but they didn’t have the title. I think almost all companies start this way, and just some choose to scale it up.

So my take on this debate isn’t a very hot one; it’s “it depends”. If you’re building a company with tons of features and prioritization, build a strong PM practice. If you’re building a company that is heavily based on engineering or design, you probably don’t want to exercise that muscle quite as much.