Why Coda thinks documents are the internet's next big platform
Oct 20, 2021
October 20, 2021
The way Shishir Mehrotra sees it, digital documents haven't really changed in 50 years. Since the days of WordStar, Harvard Graphics and VisiCalc, the basic idea of what makes up a document, presentation and spreadsheet haven't really changed. Now, thanks to companies like Coda — where Mehrotra is founder and CEO — along with Notion, Quip and others, that's starting to change. These companies are building tools that can do multiple things in a single space, that are designed both for creating and for sharing, and that turn documents from "a piece of paper on a screen" into something much more powerful. And to hear Mehrotra tell it, documents are headed toward a future that looks more like an operating system than a Word file. Mehrotra joined the Source Code podcast to talk about Coda's recent announcements, the two-year project to rebuild its core technology, Coda's future as a platform and why he thinks documents can be much more than just documents going forward. You can hear our full conversation on the latest episode of the Source Code podcast , or by clicking on the player above. Below are excerpts from our conversation, edited for length and clarity. Why is this all happening now? After decades of everybody just kind of trying to do Microsoft Word, but slightly better, it feels like all at once everything is changing. What is it about the world or the industry or the tech right now that is making this the moment? I think that it's been 50 years. The running joke at the company is that if Austin Powers popped out of his freezing chamber, he wouldn't know what clothes to wear, or what music to listen to, but he could work a document, a spreadsheet or a presentation. If you look at WordStar, Harvard Graphics and VisiCalc, we're basically living the same metaphors as what those folks did in the late '70s and early '80s. How the blinking cursor works, and what slides look like, and even dumb things like the way the spreadsheet is laid out. All that happened with VisiCalc, Harvard Graphics and WordStar. Not to sound too grand about it, but I can think of very few industries that have undergone less change than the document/productivity space, in that 40- or 50-year period. Operating systems? Totally different. You can't compare VMS and Unix to Android and iOS. Or databases, totally different, things like search engines didn't even exist, there are all these new things. And yet, the thing that we all stare at all day long, that runs our businesses, our teams, our families, that hasn't changed in 50 years. I can think of very few industries that have undergone less change than the document/productivity space. Why is that? I think there are two reasons. One, I think that every innovation we saw in the space came from a platform company, whose primary goal was to evangelize the platform. Microsoft was not actually that interested in building Excel, they were just super worried that Lotus wouldn't keep up with Lotus 123 on Windows. And the reason Apple built the iWork suite was mostly because Jobs was very worried about Microsoft's hold on Office driving all Mac sales. And then Google did the same thing: The reason why Google Docs came out was because the Google team was completely scared that if Windows continued being at the front of the ecosystem, then they could never innovate. And so they needed the browser to be at the front of the ecosystem. But what's required to operate that way is to realize that documents are, like, the most important thing, and that if you're Microsoft, and you lose Lotus 123, people will go find something else to do their documents. So how, for 50 years, does it not click in their brain that, "Oh, this is a fundamental thing that we have to get right, maybe we should care about it?" It doesn't seem like that big a logical leap to me. Oh, to be clear, they cared about it! They all recognize the importance, this is where people spend their time. Remember, through most of this period, a lot of this was packaged software, sold in boxes on shelves. There was a lot of data to say the very first thing people buy is a tool to handle their documents or spreadsheets or presentations. The second thing that I think happened, I call it the death of the file format. I think if you go look through all those arcs of innovation in this space, I would give the most credit to the iWork suite in terms of trying to be different. If you look at Pages, Numbers and Keynote, they're each different in pretty strategic ways. None of the three really worked — Keynote's probably the most successful of the three, but none of the three really worked. And I think the reason for that is that the world got beholden to file formats. You make numbers, it's a pretty good spreadsheet. And then somebody says, "OK, I'm going to use Numbers, I'm gonna produce this thing that I'm going to send it to my client, my friend, my team members." Now I have to think, does that person have a Mac? Do they have the iWork suite? In order for us to communicate, we all have to agree on the file format. Because of that, everybody had to be backwards compatible to the old file formats, which meant that you couldn't really innovate and you couldn't really do things that differently. Then 2004, the early parts of Google Docs come out, and we all get our first taste of what collaboration can feel like on the web. And it was magical, right. Early on, I think there were a lot of skeptics, but over time, all of us figured out, oh, that's way better. We can all work together, and we can edit together. But actually, I think the biggest thing Google Docs did was it broke the hold of the industry from file formats. All of a sudden, when I send you a link to a spreadsheet, you don't have to think about, do I have the right application and the right operating system and so on. I give them lots of credit for making that transition. But they still, for a bunch of good reasons, decided to mostly mimic the VisiCalc and Harvard Graphics. And that was because they were early in this transition. And to be frank, it's a platform company, whose primary goal is to make sure people use the browser instead of Windows. And so their incentive to dramatically innovate there was small. So it took probably five or six years of that getting popular, before a bunch of entrepreneurs popped up and said, hey, wait a second, we no longer have to be beholden to file formats at all. We can innovate, we can do this however we want. Now, if we were building from scratch, what would we build? And that's where I think things like Coda and all the other great tools out there have come from. The word "documents" almost feels too small for this thing that you're talking about. And I know your vision for this stuff is way bigger than just spreadsheets, presentations and prose. Is there a bigger rebrand you need to do here? Do you have a new word in your head about what we should call this stuff? I mean, we like to call them Codas. So we'll see if that sticks. You know, it's interesting, we had a lot of debate about the term. The rallying cry for Coda is that anyone can make a doc as powerful as an app. And I like to think that in this world of all-in-one documents, we're all going to take for granted that the new surface is all-in-one. And I think we're gonna take for granted that it has to have a fairly low floor and a very high ceiling. Low floor, meaning it's got to be a blinking cursor, useful right away for all modest needs; I'm trying to take notes in a meeting, I'm trying to build my grocery list, I'm trying to build my trip plan, whatever it is I need it to be super low-floor. And then high-ceiling is probably the thing that we feel more strongly than almost anybody else in the space. My view is that the world actually runs on these quote-unquote documents, not on applications. I spent six years at Google, most of the time running the YouTube group, and YouTube was started actually about the same time that Google Docs was. So we were kind of these two products that grew in parallel, and we gradually adopted all the different tools. We looked up one day and realized that we were running YouTube on Docs, Sheets and Slides. My view is that the world actually runs on these quote-unquote documents, not on applications. The most interesting example was, if you hit "flag" on a YouTube video, for years that would show up as a row in a spreadsheet on an ops person's desk, which sounded ridiculous, but that's that's how it ran. We would get these questions: Wait, we're really running this multi-billion-dollar company on documents, spreadsheets, presentations? When are we going to do it for real? And I would tell people, I'm not embarrassed about this. In fact, I think it's our strategic advantage: It makes us nimble, it means that if we want to change our planning process, we know how to do it. If I want to change how we do compensation or leveling or so on, we know how to do that. So I think the world runs on docs, not apps. And our view of the world is that there's going to be this single surface that stretches from that incredibly low floor to that really high ceiling. And that's our ambition. Now it's a good debate, what the hell do you call those things? You can call it the simple thing, call it the complicated thing, or you come up with a new word. And we decided closer to the simple thing. Let's talk about the high end of this. Because I think we are headed toward a pretty fascinating platform war in this space. And you guys are very much on it, with the gallery and the Maker Fund, and there is a clear creator space boiling up here, where people can make templates and sell their own tools. And you become something like the operating system on which people can build and sell their own apps. That feels like a big change. There's a book Geoffrey Parker wrote called "Platform Revolution," and it says that there's two types of businesses: There are pipeline businesses, where the company builds every piece of value for their customers. And there are platform businesses, where you set up a platform and the community contributes, and the value customers receive is a function of the rest of the community contributing. Car businesses are pipeline businesses, platform businesses are Airbnb, Etsy, eBay. And I think one of the things that's been interesting about the doc wars is we've reset expectations on the low end. But we're also resetting expectations on the high end, where people can actually run their businesses this way. And so our view of it was, that will lead to an ecosystem that is actually more similar to what we see out of ecosystems that traditionally haven't lived in productivity. The best compliment we generally hear about the Gallery is it feels halfway between Medium and an app store. It feels like Medium because I can go and I can read about all sorts of interesting things. But it feels like an app store, because I can go shopping: I need a way to do planning, I need to run my meetings better, I need a way to track my cap table, I need a different way to manage inventory. And I'm planning a trip with my friends. I need all these things. And from that perspective, it feels a lot more like an app store. For the people that are building these, it gives you an opportunity to build a business that way. When I joined YouTube, one of our aspirational ideas was that maybe someday if we're really successful, kids will grow up, and when they get asked "what do you want to be when you're an adult?" they'll say "I want to be a YouTuber." That went well for you! Yeah! And we used to joke and laugh about it, and be like, that's never gonna happen. This was before we did serious monetization, and even when we started doing monetization, it mostly went to big companies. But that was in the back of our heads: This is how we're going to create this next generation of entrepreneurs. And so I think for Coda, if David Pierce has a great idea for how journalists should work, I don't think you should have to hire developers to do it. I think you should be able to craft it and say, this is my way of doing it, put a price on it and people pay you for it. And you can build a business that way. Are people getting comfortable paying for that stuff? I see a ton of people posting Notion templates and other stuff on Gumroad for all these different apps. And it seems like still a bit of a novelty that people will pay for a thing that on some level just feels like a way to lay out a page. Do you see this as a small thing people might do on the side, or are there going to be billion-dollar companies built on top of Coda? Is that the ambition? Oh that is definitely the ambition. I do think some of the early experiments we've seen have been lightweight. But by the way, people have sold Google Doc templates for years. And also, when we say sell, one other thing to point out is that for a lot of people, what they're actually selling isn't the template. They're selling the service that goes with it, they have some other relationship they're trying to build with the customer. We think that people can build things that really compete with end-to-end apps. All that said, we think that people can build things that really compete with end-to-end apps. I think the fact that you can build in Coda full-on applications, that can really run whole companies, makes it much more realistic to believe that people are going to build big businesses on it. All that still remains to be proven, so we'll see. To use the YouTube analogy, back in 2009, nobody thought people were gonna build media companies on top of YouTube, and now there are so many of them. So I think we're headed the right way on it and it seems inevitable, but we'll see. So this is the phase where, like, SNL is starting to put its clips on YouTube, and movie trailers and music videos are starting to show up, but PewDiePie is not doing his thing yet. Somewhere in there, yeah.