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Week 1151

It’s been a long week. I went back to work and found out this was going to be our team designer’s last week at Retool. I was really sad because he and I both joined as new grads last summer and we had become close friends over the course of this past year. He’s leaving to travel for several months so this will be the last time I see him in a while. I’m also very sleep deprived as I write this because the two of us stayed up until 4am last night with some other friends just chatting away. We talked about comedy, work, religion, relationships, wealth, memories and so much more. It was quite cathartic and bittersweet; I don’t enjoy staying up so late but this was one of the few moments where I felt it was absolutely worth losing a few hours of sleep for.

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Recently, I’ve been thinking a lot about picking markets to work in. My entire focus this past year at Retool has been on technical and operational skill development. I still have a lot more to improve on as an IC, but I’m realizing that I should invest more time and thought into picking the right problem to work on. Working on the right problem can multiply the value of your work by several magnitudes. Within a company, most people can only exercise this type of thinking when deciding what projects to work on. At a more meta level, I think it’s important to do some high level analysis about the markets you work in. If your company operates in a growing market, it will make everything you do much easier and more impactful than working in a stagnant or dying market. Given this line of reasoning, I’ve started to think more about Retool’s market and some other markets that are interesting to me.

I’d personally describe Retool’s market as low-code app building tools. It’s an extremely large market (which is promising for my equity lol) but also a fairly competitive one. There are huge incumbents in the space such as Salesforce (200B market cap) and ServiceNow (110B market cap) and a few others. There are also a bunch of startups trying to break in and displace the incumbents. It’s not immediately obvious that Salesforce and ServiceNow are in the low code tooling market, but their product is actually extremely similar to Retool’s. They both provide a low code development platform but they differ in that they package and sell the product for specific use cases. Salesforce sells a CRM tool and ServiceNow sells an IT management tool, both of which are customizable via a drag and drop app builder. Even though both app builders are slow and ugly, part of the reason both products are so sticky is because of the fact that they can be customized to meet bespoke needs. Retool’s product is also a low code development platform, but we focus on selling the app builder itself rather than a specific use case. We sell to developers instead of selling to sales or IT teams.

I should note that ServiceNow also sells their app builder product, but the IT management tool is where most of their revenue comes from. The company started by selling IT services and recently expanded into selling their app builder along with other use cases in HR, security, finance, etc. In their Q2 2023 investor presentation, 58% of their net new ACV came from their IT workflows while only 16% came from creator workflows (aka the app builder).

One natural question that comes to mind is why doesn’t Retool just sell use cases built on top of our existing app builder platform? There are at least two examples of 100+ billion USD companies with a similar product that have successfully executed a solutions-first GTM strategy. Airtable and Notion, who are basically variations of what is fundamentally also a low code app builder, seem to be pivoting towards this strategy as well. Airtable recently announced layoffs and a shift to focus on enterprise use cases (Forbes article). Notion recently launched a bunch of enterprise focused templates that are also surfaced in their onboarding flow. Here are some of my takes on this:

That was a bit of a tangent, but after going through this thought exercise I’m personally convinced that Retool’s TAM is extremely large and even has room to grow. The most important thing is just executing well to grow into that TAM.

Outside of B2B SaaS, I’m also currently interested in consumer and climate tech.

Consumer is very broad and I don’t know what exactly in consumer I’d want to tackle, but it’s interesting to me from a market and an operational perspective. The potential TAM for most consumer products is huge in that every person in the world could be a customer. Operationally, building in consumer is a very experimental and creative process that I think I’d enjoy.

Climate tech also very broad; there’s energy, agriculture, transportation, and more. These are all huge markets but also old and slow moving. I view climate tech as a disruptor and an opportunity for startups to break into these traditional markets. It would also feel very rewarding to work on something with an obvious positive impact on the world. A prospective climate entrepreneur’s job is to find some sort of actionable insight or niche they can start with and hopefully expand from there. The difficult part for me is that is there is so much to learn (about both climate and these existing industries) and it’s hard to find such an insight. Some potential insight discovery tactics could be to try selling Retool into this space or do a stint working in government.

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Fun stuff from this week:

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I didn’t get as much time as I would’ve liked to continue my climate reading. I took a look at some more charts from Our World in Data to get a sense of the scale of energy consumption. Here are some things I currently want to learn about in the energy space:

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Here’s some content I watched this week: