While I'd agree that $1M is a lot, it's not altogether that crazy. (Full candor: we are ourselves a managed auth company, so I naturally have a vested interest in people wanting to pay for auth)
We could start by drawing an analogy to another vendor: Stripe. Our company pays much more than 1% of gross sales to Stripe for handling our payments. I wince a little every time I see our revenue leaking out to them, but I also don't have a great alternative. It's basically fine, and it's just the cost of doing business.
Relatedly, if you're a $100M business, what alternatives do you have to Clerk (or equivalent vendors)? One option would be to run auth in-house. If you do that, you pretty quickly hit $1M in headcount costs alone by staffing ~3 engineers + ~1 product manager to build and maintain an auth service. (Bear in mind that the fully-loaded cost of a hire vastly exceeds base salary). I don't think many CFOs are going to lose sleep over the cost/benefit here.
And in practice, that's exactly where a lot of companies land. Lots of companies pay Auth0 seven figures annually. It's expensive, but it's still a pretty good deal for some companies.
Do you have any inside info on how some of these big LPs are modeling opportunity cost against their growth equity commitments? My understanding gleaned from friends has been that they're generally just cutting exposure to growth-stage software and planning to park the capital in pretty vanilla/liquid public equities and fixed income anyway.
Seems like no one really wants to be interested in increasing their exposure to PE or growth equity anymore.
Yeah, SAML will probably fade away (slowly). And sometimes, you might be able to convince the customer just to use OIDC.
But human behavior change is hard and expensive. For the most part, it's just easier to give the customer what they're asking for / what they expect, even when you know they're wrong.
When you're trying to push an enterprise deal over the finish line, this is often just not a good enough reason to introduce friction with your buying committee.
And if you have to support SAML for one stubborn customer eventually, you might as well support SAML for all customers that really want it.
I have done four things in the past when working at / with big companies:
1. [Usually the best option] You escalate to your manager. If they're unsuccessful, they can escalate to sufficiently high layers of management that bureaucracy doesn't apply. You can't always do this, because it requires getting other people to care. It's also kind of expensive -- you only get so many social capital points to spend.
2. [Second-best option] You don't take the first 'no' as the final answer. Most people go away after getting rebuffed once, but if you keep pestering people, they might give in. Again, have to be careful with how you spend social capital.
3. [Not always applicable] If your ask involves an external vendor, this is exactly the scenario where enterprise sales representatives become really valuable. Good ones know how to climb the management ladder and build cases for change.
4. [Generally not advisable] You can sometimes just 'break the rules' and accept some risk of consequences. Some rules are real and inviolable. Others can be nonsense bureaucracy. Need to be sure which you're dealing with and whether your reputation would carry you through if you got in trouble.
Speaking as a YC-backed startup founder myself, you should have more confidence in your ideas! But not for the reasons you might think.
It's not that your ideas are good or bad. Most of us have mostly bad ideas. Some of us sometimes have good ideas. But there's really no way to tell if your idea is good or bad until you try. No amount of intellectualizing will give you a trustworthy answer.
We started our business with what seemed (to me and my smart friends) like a great idea. It made tons of sense. I had this whole 48-phase plan for how we'd conquer the world. And then ... it turned out that people didn't really want the thing. The idea was actually bad.
By contrast, the business we're working on now has started to work pretty well. I have to admit, the business didn't make much sense to me at first. I could conjure a million reasons we'd struggle to compete. And then ... when we went to market, the thing started to work. Still early days, but there are lots of positive indications.
My biggest lesson in the last year-and-a-half has been that I just don't know that much :)
Yeah, I think it's the compatibility with 'business language' for collaboration.
Most white-collar workers know how to use Excel to a really basic level of proficiency. Not many people know how to parse Python code.
It's also just a lot easier to work quickly in Excel. I dual boot Linux and Windows on my laptop so that I can have Windows keyboard shortcuts in Excel. If I need to do some lightweight financial modeling or analysis, it's dramatically faster (10x or more) for me to build a spreadsheet than write some Python/R code from scratch.
That bit about auto-generating BOMs is awesome. Any chance you've thought about supporting the engineer with cost-saving recommendations?
I met a bunch of aerospace engineers a long time ago -- thinking about working on a software product in contract manufacturing or PDM -- and a common theme was the struggle to optimize the design for cost of manufacture.
Seems like something you guys are thinking about if focused on manufacturability.
I think this is one of the pernicious things about OKR-type organizational planning. Companies get so fixated on generating results -- quick wins -- that they kind of flail around doing stuff that gets measured on a dashboard.
For what it's worth, I think this is often what we mean when we complain about "MBAs" controlling companies.
I feel that people spend insufficient time deciding why they're choosing a course of action. Companies need to allocate more resources (i.e. time) deciding what they're not going to do.
The best executives I've known have invariably shared one trait: they've been decisive in killing decent/good ideas to focus on important problems. This often makes them unpopular.
By contrast, I've found that middling executives agonize over KPIs.
> The molecule, DDL-920, works differently from recent FDA-approved drugs for Alzheimer’s disease such as lecanemab and aducanumab, which remove harmful plaque that accumulates in the brains of Alzheimer’s disease patients. While removing this plaque has been shown to slow the rate of cognitive decline, it does not restore the memory or remedy cognitive impairments.
Thankful researchers are exploring some new approaches now. The amyloid hypothesis was fine, but its dominance seems to have set Alzheimer's research back by years.
Nice! I was looking for pretty much exactly this a few weeks (months?) ago. Drove me nuts that everyone wanted to bury my link behind some link shortener and make me pay to keep the redirect pointed to the right place.
Ended up writing an admittedly pretty crappy wrapper around some Python QR code library. This is a strictly better version of what I made. Thanks for putting it together.
I can identify basically three criticisms of my argument in your post.
(1) That I assume companies never have market power.
(2) That I suppose "market power" implies monopoly
(3) That my example was cherry-picked.
1. I did no such thing. I explicitly acknowledged market power several times.
2. Again, not correct. I explicitly mentioned oligopoly (assuming that 'imperfect competition' wouldn't land).
3. Of course it was. I acknowledged as much! I quite literally said the example doesn't generalize. The example serves to illustrate a 'there exists' claim. I felt a concrete example would be easier to follow than some kind of generalized model.
Your own comment claims that "actually competitive" markets can't have price discrimination. Sure, we can suppose the law of one price applies to perfectly competitive markets, but there's no sense in which a perfectly competitive markets "actually" exist at all! The obvious observation we can make is that such competitive dynamics imply that no one would make any profit!
My appeal to the airline industry as an example was not an accident. There's a very well-established literature on the relationship between competition and discrimination in the airline business. It's *certainly* not a settled question that discrimination decreases as competition intensifies. I included a classic from Stavins below that finds precisely the opposite of your claim.
My argument here isn't perfect. I can think of many flaws, many reasonable objections. But I don't think you're using any of them here.