@nrmehta my favorite version of this that someone asked me and I've since borrowed is asking a former manager what's the most thoughtful small gift you could surprise the new hire with on their first day
SF was over if not for OpenAI and Anthropic!
Before that, it was over if not for Stripe, Uber, Airbnb, Twitter, Salesforce, Visa, Gap... and if you go back a bir further - Levi's, Bank of California, Spreckels Sugar, Wells Fargo, Union Iron Works, Southern Pacific :)
The city gets “saved” by the next boom every time. After the gold rush, there was silver, railroads, shipping, banks, sugar, utilities, Pacific trade, defense, semis, PCs, biotech, enterprise software, the internet, social, mobile, SaaS, fintech, crypto, and AI.
I think that's just how it goes in this town.
@drewhouston@Dropbox congrats drew. dropbox was the dream company to start my career (and i met my wife at a 2015 whiskey friday at berry HQ!) - thank you!
6 Thoughts About Forward-Deployed Engineering (FDE) and Customer Success (CS)
FDE has been all the rage in startups in the last year. Originally pioneered by Palantir, the concept has been reinterpreted - and some would say overloaded - for many categories of companies. This is all happening while startups are trying to understand the role of CS in the AI world.
Having launched Gainsight and run it for 13 years, we spent a lot of time thinking about these problems. We shared our learnings in 5 published books and iterated with customers in hundreds of events worldwide. As such, I now get a LOT of questions from AI founders about CS and FDE. Some are “I have a CS team but I want to make them FDEs” and others are “I have an FDE team but I want to scale with CS.”
And now that OpenAI, Anthropic and Google have all launched FDE initiatives, this idea is going mainstream (side note: I love the sibling rivalry between the labs!)
So here are 6 thoughts on these related ideas:
1. The Goal of CS is the Goal of FDE - Outcomes:
If you rewind back to our original book on Customer Success 10 years ago (!!) that sold 100K copies, we defined the concept as:
"Customer Success is when your customers achieve their desired outcome through their interactions with your company."
Now let's go to the definition of FDE in the OpenAI Deployment Company launch:
"[FDEs] help organizations move from identifying high-value AI opportunities to building production systems that deliver measurable results."
This is why I’ve always believed “CS > CSM,” meaning Customer Success was a strategy with many roles, including Customer Success Manager (CSM), Professional Services (PS), Training and Support.
2. The Commonality Is Vendor Ownership of the Outcome:
The old pre-SaaS model, before FDE and CSM, was that the customer owned if they got value or not. Since they paid for software upfront, the vendor had no incentive to do otherwise. The vendor offered paid Support and paid Professional Services. But if the customer never got the outcome they were looking for, it was on them. They owned the outcome risk.
3. The Token Model Made This More Important:
In the SaaS model, a lot of CS work was defense. They could talk about revenue growth, but so much was revenue protection and churn mitigation. Hence, CFOs felt the link between revenue and CS was tenuous - it entailed proving the counterfactual (“would they have churned without this investment?”)
Tokens and consumption changed everything. FDEs removed bottlenecks to consumption (e.g., finding the use cases and implementing them) Now, the land can be less complex. But the real growth comes from customers increasing token spend, leading to some firms having absurdly high Net Dollar Retention (eg 400%).
4. Tokens Justified More Investment in FDEs:
CSMs always aspired to be the ones driving business outcomes. But two things prevented this:
The lack of clarity on ROI of CSM led companies to stretch CSMs across too many accounts, preventing them from getting deep enough with any given client.
The lack of business case also meant companies couldn’t invest in the appropriate amount of technical resource to take the learnings from a CSM and turn them into deployment changes or product changes.
Now, FDEs are core revenue drivers so companies are hiring more of them with more technical and expensive profiles.
5. But You Still Need an Ongoing Relationship:
Historically, PS and CSM were separate because PS could be “project-aligned” (start/stop) and CSM could be “account-aligned” (perpetual). From an operations research perspective, this makes sense. Otherwise it’s very complex to manage people doing deployments and then getting overloaded with existing customers.
I’m seeing the more mature AI orgs with FDEs adding in CSMs for the ongoing management of value.
6. Forget the Titles; This is Vital:
Some people say “FDE is what we used to call PS and CSM.” Others say “FDE is a brand new idea.” With all terms in tech, both extremes are true. Thesis, antithesis, synthesis, as they say. But one thing I can say for sure, it’s never been more important to invest financial resources into the success of your clients of AI products. Because in a moatless world, this is the best chance we’ve got of building durable businesses.
If you read this and don’t understand why it’s happening it’s an opportunity to reset your understanding of how the real world works.
The real world will need a ton of help actually getting agents going in the enterprise. Companies have legacy tech stacks they need to modernize, data in tons of fragmented tools, knowledge that isn’t captured or digitized, and change management needed to actually utilize agents effectively. And they have to do all this while still running their business day-to-day, unlike startups.
This is why there is so much opportunity for companies (software or services) to actually deploy agents in specific domains and workflows. This remains a big opportunity for both existing services providers but also tons of new startups as well. Every new technology wave produces a new era of consulting firms that can deliver on that technology.
It’s also why the FDE model is going to be alive and well for a long time because companies will want to have their vendor actually help drive the change management and implementation for their new workflows.
The people aren’t going away. Far from it.
The forward deployed engineer has rebranded from a niche role at Palantir to the hottest job in tech. Does your startup need one?
On The Review, we spoke with founders and operators who’ve successfully built FDE teams to reveal the nuances that make this idiosyncratic role work, along with advice for hiring your own team.
Our panel includes:
-@jakeserval, who’s building out an FDE team at @getserval
-@jameshonsa, who built and scaled Ironclad’s version of FDE
-Tiffany Siu, First Round’s Head of Talent and former recruiter at Palantir
-Shilpa Balaji, who leads talent and ops at Promise and was previously an FDE and hiring lead at Palantir
Read the full guide here: https://t.co/wFvJGQMUGF