How Amplitude leverages AI to help giants like Walmart behind the scenes

Ahead of this week’s earnings call, CEO and cofounder of digital analytics company Amplitude Spenser Skates spoke with Sherwood News briefly about his company’s recent AI acquisitions, how Big Tech acquihires could affect the industry, and why he believes smaller AI companies have an advantage. Amplitude has a $1.6 billion market cap and it’s stock is up 17% year to date.

This interview has been edited for length and clarity.

Sherwood News: Pretend I’m 10 years old. Tell me what your company does.

Spenser Skates:  We do digital analytics, so we help companies understand how their customers are using their products — companies like Walmart or Ford or DoorDash or Intuit. We help companies understand how their customers are using it: what features they’re using, where they’re getting stuck, what keeps them coming back.

Sherwood: Like the Big Tech companies, yours has done a number of AI  acquisitions or acquihires recently. Tell me about them.

Skates:  We just did three this last quarter. 

One was Kraftful. That does voice of customer, so it takes feedback from lots of different places — support tickets, app store reviews — and synthesizes and aggregates that.

If you have ten thousand or tens of thousands of different pieces of plain text you’re looking to summarize, it turns that into clear insights and does that with a bunch of LLM technology that it’s created. Another was Inari. Those founders have been building a bunch of AI products in LLM analytics.

And the last one is June. The June founders built a competitive product that was very focused on ease of use in digital analytics and built this amazing, simplified product and community around it. 

Sherwood: I’ve been thinking a lot about the rash of AI aquihires, especially among Big Tech companies, where it enables them to basically acquire a company more cheaply. What’s stopping Big Tech companies from simply buying up all their competition?

Skates:  It’s ultimately up to those founders, what they’re going to do. There are some that choose to remain independent and go on to build great companies that compete with larger companies, and there are some that don’t and get acquired. Either path is great. I think just the more options for founders, the better. 

What we’re seeing is that yeah, there’s real disruption coming for these larger companies from smaller ones, and that’s a real threat. All of these big companies are trying to figure out how to compete with them, so they’re being very aggressive about offers.

 But ultimately it’s up to the founders of these companies. They don’t have to take them. A lot of them are choosing to remain independent. Cursor was a great example recently where the founders felt strongly about staying independent, so they have been doing that and the company’s been doing incredibly well.

 But there are other paths, like the Windsurf deal where the founders opted to join Google. I think it’s just a great opportunity. It’s a recognition of the value that these new companies are creating, which is just a fantastic thing for the ecosystem overall.

Sherwood: What’s stopping them from buying you?

Skates:  We just don’t have to sell. They’re certainly welcome to buy our stock as a public company, but nothing forces us to sell.  We have a huge opportunity in front of us. 

Sherwood: What should people who aren’t in this space know about what’s happening in the AI industry?

Skates:  The big thing is that I think a lot of larger companies have a lot of hype with AI, but there isn’t much substance to how their products are changing. As much as these larger companies have been talking about it, I think very few are actually doing it. And that’s what I’m focused on here, which is like, how do you transform this organization with AI?  They might brand some stuff with AI and have a bunch of hype, but look at the demos and look at the products and what they actually do. For larger companies, most of them aren’t doing much from a product standpoint. It’s more hype than it is real.

On the earnings call, I’ll show a demo of what we’re doing on agents, which is the first time anyone in our space has been doing anything meaningful.

[Editor’s note: The company showed an AI agent that identified customers who abandoned an action — say, buying a product on an app — figured out why, and recommended strategies such as changes to the design to improve conversion.]

If you look at who’s coming out with these great products and great demos, it’s smaller companies. 

Sherwood: Why do you think that is?

Skates: Because they’re incapable. It’s much slower to change as an organization to get your team to understand this technology. So as much as they talk about it, they’re really far behind on it.  That’s why they’re doing these acquisitions and that’s why they’re threatened by smaller companies. 

Sherwood: That makes me think of Meta and how it’s trying to run its AI department as a startup within the larger organization. 

Skates: Absolutely.  It’s the exact same thing that’s happening here. 

Sherwood: Is it just that they’re too large?

Skates:  Once you get to thousands or more, it’s impossible. The inertia of the existing organization becomes too much and you just get lapped by a startup that knows the technology in the space better. 

 It’s very disruptive. People have to retrain their jobs, retrain their skill set, retrain the way they think about goals. It’s the classic innovator’s dilemma where you’re scared of disrupting yourself because your job, your career, your livelihood, your ego is all wrapped up in how you currently do things. To be able to embrace, “Hey, AI actually automates a huge part of my job, or the way I build products is different,” is very hard for people.  Even for us, at 800 people, which is not that big, it’s still difficult.