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

Lenny Rachitsky and Julia Schottenstein on julia Schottenstein on M&A, competition, pricing, and product bets.

Julia SchottensteinguestLenny Rachitskyhost
Jul 13, 20231h 0mWatch on YouTube ↗
How to evaluate and join early-stage startups (people, market, product, distribution)M&A strategy: creating ‘plan B’s’, inflicting pain, and running a sale processdbt Labs’ growth, open source strategy, and competitive philosophyPricing, willingness to pay, and designing value capture vs. value creationWorking with strong user communities and open ecosystemsProduct development philosophy: shipping fast, tech debt, and zero-to-one betsTranslating venture investing skills into effective product leadership
AI-generated summary based on the episode transcript.

In this episode of Lenny's Podcast, featuring Julia Schottenstein and Lenny Rachitsky, M&A, competition, pricing, and investing | Julia Schottenstein (dbt Labs) explores julia Schottenstein on M&A, competition, pricing, and product bets Julia Schottenstein, product leader at dbt Labs and former VC, shares how her investing background shapes her approach to product, company selection, and strategic decisions like M&A and pricing.

At a glance

WHAT IT’S REALLY ABOUT

Julia Schottenstein on M&A, competition, pricing, and product bets

  1. Julia Schottenstein, product leader at dbt Labs and former VC, shares how her investing background shapes her approach to product, company selection, and strategic decisions like M&A and pricing.
  2. She explains why effective M&A starts years before a sale, how to ‘inflict pain’ on potential acquirers while staying friendly, and why founders should be transparent when running a sale process.
  3. Julia breaks down what made dbt a default standard in the modern data stack: simplicity, timing, open source, ecosystem-led distribution, and deep immersion in customer problems via consulting.
  4. She also covers dbt’s philosophy on competition, open source vs. proprietary features, pricing and willingness to pay, and how PMs can make higher-upside bets by thinking more like investors.

IDEAS WORTH REMEMBERING

5 ideas

Treat joining a startup like making an investment: assess people, market, product, and distribution.

Julia evaluates companies the same way as when she was a VC—looking for a rare founder, a growing market with room for a new entrant, clear user love for the product, and a realistic distribution advantage.

Start your M&A strategy long before you need it by building real optionality.

The strongest negotiating position is having a credible independent path; relationships with potential acquirers and partners should be built early, before any explicit sale discussions.

‘Inflict pain’ on likely acquirers, but stay friendly and collaborative.

There are usually only two to three buyers for whom you’re highly strategic; win users in the area where you have an edge so they can’t ignore you, while maintaining positive, open lines of communication for future deals.

Use corp dev and your investors as leverage when selling, and be transparent if you’re in a Hail Mary situation.

Corp dev teams exist to find companies like yours; when time is short, it’s better to plainly say you’re running a process and use your investors’ networks than to try to hide your situation.

dbt’s success came from simplicity, timing, and an open ecosystem flywheel.

A simple, SQL-based model at the right moment in the cloud data warehouse boom, combined with open source adoption, community-driven evangelism, and partner integrations, created powerful network effects and default status.

WORDS WORTH SAVING

5 quotes

M&A is always about creating plan Bs.

— Julia Schottenstein

I would inflict pain on that potential buyer. Make it impossible for them to not notice you.

— Julia Schottenstein

You don’t get to decide if you’re going to have a pricing conversation. You only get to decide when.

— Julia Schottenstein, paraphrasing Madhavan Ramanujam

We are more concerned with value creation than value capture.

— Julia Schottenstein

‘Worse is better,’ and tech debt is a champagne problem.

— Julia Schottenstein

QUESTIONS ANSWERED IN THIS EPISODE

5 questions

How can a startup practically identify the two or three acquirers for whom it would be truly strategic, and what specific signals should it look for?

Julia Schottenstein, product leader at dbt Labs and former VC, shares how her investing background shapes her approach to product, company selection, and strategic decisions like M&A and pricing.

Where is the line between ‘inflicting pain’ on a potential acquirer and becoming so threatening that they avoid partnership or M&A conversations?

She explains why effective M&A starts years before a sale, how to ‘inflict pain’ on potential acquirers while staying friendly, and why founders should be transparent when running a sale process.

For open source companies, how should founders decide what must remain open vs. what should be proprietary to build a sustainable business?

Julia breaks down what made dbt a default standard in the modern data stack: simplicity, timing, open source, ecosystem-led distribution, and deep immersion in customer problems via consulting.

How can product teams build stronger muscles around pricing and willingness to pay without slowing down feature delivery?

She also covers dbt’s philosophy on competition, open source vs. proprietary features, pricing and willingness to pay, and how PMs can make higher-upside bets by thinking more like investors.

What concrete steps can PMs take to think more like investors and make higher-upside product bets while still managing execution risk?

EVERY SPOKEN WORD

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