Why Did ThoughtSpot Acquire Mode? Why not FiveTran or Atlan or any other cool modern data stack company?

I have been thinking about Reese's Peanut Butter cups more than usual lately. Remember the commercial when Hershey’s and Reese's first merged? It showed how chocolate and peanut butter were accidentally combined when two people riding a bike crashed into each other. What a delightful, but unexpected combination - together or standalone!?

Not all great things belong together, though, and when it comes to mergers and acquisitions in the data and analytics industry, the failures loom larger in my mind than the successes.?

As I evaluate mergers and acquisitions past and present, I frame them in terms of what is the combination bringing and whom is it good for, investors or customers:??

• Grow market share
• Expand the product
• Gain customers to cross sell to?
• Gain talent
• Gain unique IP or processes

To take a few historical examples:

• Oracle is a classic for buying market share, adding companies like PeopleSoft and Netsuite to its eBusinessSuite portfolio.? Each of these products and customer segments often competed with one another.?
• When SAP acquired BusinessObjects in 2007, it was to expand and improve SAP’s then Bex (Business Explorer) product.? When BusinessObjects acquired Xcelsius it was to bring better dashboarding capabilities.
• For Tableau, acquiring ClearGraph that became AskData, was a combination of product and talent in the NLP space.

For publicly traded companies, so many acquisitions are good for investors but not necessarily for customers. One would think that these interests are aligned, but it’s the difference in time horizons in short term stock price impact and revenue growth versus customers’ longer term horizon of product innovation and vendor relationships.? We see this playing out once again as Salesforce doubles down on integrating Tableau with its business applications, while customer support and Tableau roadmap degrades.

Mergers are messy, no matter the acquirer.?

And yet, it’s a part of every tech company’s strategy.? So there we were in a ThoughtSpot executive offsite last November in a hotel in California, with a list of 35 potential vendors to acquire. With a healthy cash balance, as we assessed each company, we framed it with, “What is the problem we are trying to solve? What is the opportunity and benefit for our customers?”

This is the same approach ThoughtSpot has taken with our three earlier, albeit smaller acquisitions:

• SeekWell in 2021 - tech and talent to expand our PLG and reverse ETL capabilities that continues to be sold stand-alone as well as included in the ThoughtSpot platform as ThoughtSpot Sync.
• Diyotta in 2021 - tech and talent as we initially OEMd their product to ease data ingestion into our then in-memory database and later to improve our range of data connectors and SpotApps.?
• SagasIT in 2023 - talent and processes as we support customers with quick starts and migration from legacy BI tools.

We didn’t reach any clear conclusions in that November meeting. As we rolled into 2023, increasing economic volatility seemed like a window of opportunity for us to make a move.?

So when our CEO called me from Japan in February 2023, and asked me what I thought of Mode, could I compare notes with our head of product, Bhargav Addala (fellow BI industry veteran who hales from Birst), I reverted back to my tried and true research skills:? customer references, community comments, and hands-on testing. (Please, do not ask me to assess something based on websites and slides. No matter the purest of intentions, things get lost in translation.)? The other factor I consider in assessing a start up is the pedigree of the founders.? What’s their proof of grit and understanding product market fit? Are they selling tech for technology sake or do they have true customer empathy?? I recognized some of the names of the Mode founders from my BI Scorecard days and their times at Oracle. I had never met Benn Stancil but his blog certainly made for juicy reading, and I liked that he had started in this space as a data analyst at social platform Yammer.

Could a combined company deliver self service analytics better than each of us could stand alone?

Self service analytics has been a vision and mantra for many, but expectations historically have not been met with adoption stagnating. I presented on the right capability for the right user at a Gartner conference circa 2016 and offered this spectrum graphic.?

In order to deliver self service analytics, we need to solve for the varying skill levels. A highly skilled data analyst may like SQL for self-service, while a SQL editor would terrify a business user.? At the other end of the spectrum, natural language search is ideal for a business user but might leave a data analyst feeling constrained.

From a conceptual viewpoint, this is where Mode and ThoughtSpot nicely solve for each end of the continuum from expert data analyst to business user with data questions.? I love this spectrum graphic the teams put together recently.

We each have been innovating to move across this continuum.? For example, from ThoughtSpot, we added TML and enhanced SQL editing in the data work space in the last two years.? Mode, meanwhile, added Visual Explorer last year for data analysts who wanted more drag and drop and less code-first approach.?

In test driving the product back in February, some things I saw in Mode that I especially liked that complements ThoughtSpot:

• Visual Explorer that gives analysts more control between a query and layout.
• The ease at which code for charts can be copied and modified.
• Integration with Python for data prep and transformation.?

As an example here you can see how Mode Visual Explorer allows an analyst to see the query, data, layout, and formula creation all within one screen. Tableau and PBI authors will appreciate the functionality and familiarity.

A ThoughtSpot pivot table, meanwhile, focuses on the business user with the query being a search phrase and more limited formatting options to avoid overwhelming a non analyst.

In considering our customer segments, I liked Mode’s focus on the commercial and digital native segment of the market, a segment that we had only truly begun pursuing in fall 2020 with our release of ThoughtSpot Cloud. Up until that point, much of our expertise, product capabilities, and go-to-market motions had been focused on enterprises. Mode will only make us better in our PLG motion and understanding the unique requirements of commercial customers; conversely, we will enhance their enterprise capabilities and understanding of this segment.

Last week, the joint product teams met to level set and align on a future roadmap to emphasize our strengths and our synergies. And of course, we played together.? Because we know that no matter the product and market fit, melding of cultures is what can sabotage any merger.?

Back to my peanut butter cup analogy. Sweet and savory do not always go together. I recall a high end dessert at a New York restaurant with chocolate and curry (Darren, Rebecca, remember that?!). Oh, my gosh, awful!?

We’ll experiment, we’ll iterate, we’ll bump into each other and learn. Our north star will remain customer value.

Hear more about our plans in this on demand webinar.

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