Turning a Vision Into a Massively Profitable Business with Max Lytvyn of Grammarly

Courtland Allen 0h 0m 7s

What’s up, everyone? This is Courtland Allen from IndieHackers.com and you’re listening to the Indie Hackers Podcast. On this show I talk to the founders of profitable internet businesses and I try to get a sense of what it’s like to be in their shoes. How did they get to where they are today? How do they make decisions both at their companies and in life in general? And what makes their businesses tick? The goal here is that the rest of us can learn from their experiences and go on to build our own successful companies.

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Today I am talking to Max Lytvyn. He’s a serial entrepreneur and the cofounder of a company called Grammarly. And I’m guessing that many of you have heard of Grammarly and might even be Grammarly users because they have over seven million active users every day. I found Max to be an extremely rigorous thinker. He’s not somebody who enjoys leaving things to chance. Instead he’s always forecasting, planning ahead, trying to figure out what pitfalls await him in the future, and how he can best avoid them in the present.

And he’s got a lot to say on those subjects that we can all learn from, but I also thought it would be fun to talk to him about something less tangible. So we spent a good deal at the beginning of this conversation talking about what it means to have a vision for your company. How do you come up with one, and whether or not it’s something that actually helps you grow your business or if it’s just some sort of fluff that you tell the press so you look good.

Anyway, it was fun talking to Max and hearing what he had to say. So without further ado, let’s jump into it.

Max, thanks for joining.

Max Lytvyn 0h 1m 47s

Thanks, Courtland. It’s a pleasure to be on this podcast.

Courtland Allen 0h 1m 50s

Yeah, it’s a pleasure to have you. I’m excited to talk. So you are the cofounder of Grammarly, which is set of products that help people communicate better. And maybe that’s little bit vague, so why don’t you tell us what Grammarly is and why so many people are using it?

Max Lytvyn 0h 2m 3s

I think your description is a pretty good one. It is a set of products that help people communicate in a way that’s clear, effective, and error-free. So kind of focusing on three pillars of communication: clarity, making yourself understood; effectiveness, achieving the goals of your communication; essentially making it error-free, because if it contains errors or if it is not a quality writing or not quality communication, it can cast a shadow on the credibility of what you’re trying to say.

So essentially, having all these three things in check and having them to be as good as possible is a goal of Grammarly. And as you said, it’s a set of products, so we started out as a standalone web-editor app, where basically, you could write your text document mostly, and then have suggestions for it. And then we built a Chrome extension, now mobile keyboards, Microsoft Office add-in, and so on. So it is essentially a set of products that can help people communicate better wherever they communicate.

Courtland Allen 0h 3m 11s

You guys first popped up on my radar last summer when I read, I think, a TechCrunch article about how you raised 100- or $110 million, some astronomical amount of money. And I thought, “Okay, well, of course, this company – this is a Series-C or a Series-D or something. And I looked and it was your very first fundraising round. You had in fact bootstrapped, from just this nascent business with you and your cofounder, into this gigantic company with hundreds of employees. And you were killing it before you ever decided to go to investors.

I thought that was amazing. I’ve heard of very few companies who followed a path like that. And I would love to dive into sort of this pre-fundraising period of Grammarly just to find out how you did it. How do you go from just a couple of people to such a massive business without raising a dime?

Max Lytvyn 0h 3m 54s

So my cofounder and I – we know each other since 1997, so quite a long time. And Grammarly is not the first thing we’re doing together. Before Grammarly, we sold another startup, which was much smaller and it was in a similar space. It was in writing space. It was plagiarism-detection technology.

While working on that, while working on that startup, we often had to answer a question asked by our clients: Why people plagiarize in the first place. What do we do to discourage that and what do we do to make it less likely? And we kind of researched the topic and we realized that, well, most people actually do it because it is just so crazy difficult to put your own thoughts into writing, put your own thoughts into a document or a message.

Then we decided to – when we sold that company, we decided to address this problem on a more fundamental level: Build a tool that makes it easier to just take what’s in your head and communicate it in a way that somebody else gets exactly the same image in their head. So that’s how the idea came about.

Courtland Allen 0h 5m 9s

Can I ask what your goals were at that point? Because I think for a lot of people who are trying to start a business, coming up with an idea is really hard. There are a lot of constraints on the ideas that you can come up with: Is this idea going to make enough money, or is it going to be impactful enough, or is it something that matches up with my skillet? How did you guys decide that helping people improve their communication skills and helping people with their grammar was a place that you guys wanted to start at and a problem that you felt good about solving?

Max Lytvyn 0h 5m 36s

So first kind of why we decided to do that in general, to do another startup or to do another technology company as opposed to, I don’t know, taking a job somewhere or doing something else, I think at that point both of us tried the taste of doing something on your own and kind of being a master of your destiny. And we were at the point where we would not want to be employed by anybody. So that left starting something new as the only option we liked.

And when thinking about what exactly to do, it was just so obvious to us. We knew the problem, we knew the technology that can solve this problem. And yeah, we questioned two things when we started. We questioned whether this is big enough, and there the answer was pretty simple. We communicate all the time. We are moving from (inaudible) moving from manufacturing economy to knowledge economy, where most of what we produce is knowledge, information. And this information is in documents, and we collaborate as teams with messages – emails, text messages, just communication in general is our medium of collaboration.

So fixing or improving these documents and messages and just communication in general is a huge problem and a huge opportunity for humanity in general. If we can improve productivity and success of people by even 1%, it is going to be gigantic.

So that’s why the question of whether this can be big wasn’t a question for too long. But the question whether we can do it, that’s something that lingered for a little while. Because when we just started out, what we wanted to do, it was not possible technologically. It couldn’t be done. Of course, we realized that technology is moving forward at a very rapid pace and in year two, maybe five, it is going to be possible and we wanted to be the first ones to get it done. But when we started out, when we just considered the idea, we realized that, well, right now if we try to do it at this very moment, kind of complete this all at this very moment, we’re going to fail because there’s just no technology there. We’ll have to invent it. And inventing it requires tremendous resources and a lot of time.

And that kind of goes back to what you mentioned. You mentioned grammar, fixing people’s grammar. And that wasn’t really part of the original idea. The idea was about communication, but you got to start somewhere. And a smart thing for somebody bootstrapping is to start with something that’s more obvious and simpler, and that’s why we started with grammar. It’s an element of communication that’s easiest for computers to grasp, to help with.

Courtland Allen 0h 8m 30s

How did you guys go from having this tremendous, massive vision to improve communication for the entire world and whittle that down to a product that would help people fix their grammar mistakes? I mean, did you talk to customers and discover that that’s what they wanted, or was this more you guys looking at what was realistic given your finances and the technology that was available at the time?

Max Lytvyn 0h 8m 51s

It’s a combination of that, a combination of what we could do given the resources we have and what problem would resonate with the target market. So where we started, we picked the smallest possible target market that was the most motivated to look for a solution to this problem. At that point, it was academic market, researchers and students.

Why? Because in academia, the standards for writing and standards for communication are very rigorously defined. Basically, it needs to be perfect grammatically, it needs to use certain conventions; otherwise it’s not publishable, otherwise you’re going to get a bad grade, something like that. So a very well-defined standard and a lot of work evaluated through writing were clear criteria that made this pain very strong and very visible in academia.

So we picked this market because it was essentially cherry picking (inaudible), picking a target that’s the easiest to get to. So yeah, so basically, simplest element of communication from the technology standpoint plus the market segment with the strongest and most obvious pain. And that kind of converged in this first version of our tool, which was something – which was kind of a online text editor that helped write documents that were more consistent with academic writing standards.

Courtland Allen 0h 10m 24s

So I talk to a lot of early stage founders who often feel pulled in all directions, because they have to simultaneously figure out what their vision is going to be, what features their product is going to have, what their business model is going to be, and oh, by the way, they’re not even sure if anybody is going to use any of this stuff. How did you guys early on at Grammarly reconcile your vision with the actual practical features that you needed to build into the product?

Max Lytvyn 0h 10m 50s

So we combined kind of vision, what we just wanted to – how we wanted the future to look like, kind of almost like a dreamlike, imaginary world we created, with conversations with real users. So we started, of course, with vision and was just mocking up how our product is going to look now, how it can look in five years, what we can do, and we went really far there. I remember our discussions in early 2009 where we went as far as kind of – as drawing things similar to what Alexa is now. Then we pared it down to something that was manageable and was easier to explain to users, and went to users to start to explain it to them.

We tried to kind of sell product before we even built it. We tried to sell it to academic institutions first; then we tried to sell it to individual students. We saw feedback from both; universities, colleges, and individuals, students and individual researchers. We took that feedback into account and then we actually built the product.

So it was kind of interesting. Then we went to several tradeshows to kind of presell the product that didn’t exist. And we, of course, were upfront about the product not being ready. But it was a very, very useful thing that we did that because we got a tremendous amount of feedback from potential buyers and potential users, and it helped us focus our very limited time, resources on what was really important.

Courtland Allen 0h 12m 33s

I like what you said earlier about having some sort of dreamlike vision for how you wanted the world to be, and then constructing a product to make that vision a reality. And I think that’s the opposite of the approach that most entrepreneurs take. Most of us look at the way that the world is and we try to predict the way the world is going and we look for some sort of opportunity or gap in the market that we can exploit and create a product that fits into that particular shape, which just feels less risky

How did you decide that having this sort of vision-led product was the way that you wanted to operate? Is it just a part of your nature to do it that way, or is it a result of experiences that you’ve had in the past?

Max Lytvyn 0h 13m 10s

Yeah. I think it was a result of our previous experience, because before that, we were doing exactly what you said. We were looking at a gap in the market or a kind of unfulfilled need and build a product or service to kind of fix that, to bridge that gap. And it resulted in ideas, businesses, that had very limited potential. Once you plug that gap, the gap doesn’t exist. Where else do you grow? You cannot make the gap bigger to fill a bigger gap. You need to commit completely to do something different.

So we realized that. And instead of kind of fixing existing process or plugging an existing gap, we decided to try to invent something new, something that doesn’t exist yet. So that’s kind of why we went to just try to start with (inaudible).

Courtland Allen 0h 14m 8s

And the risk, if you do it that way, is also that it’s a little bit scary because you’re not sure if the dream is even possible. Maybe there’s some unforeseen force or something you’re not considering that will kind of lead to your company hitting a dead end. Was that something you guys ever worried about when you were coming up with your vision, or did you figure that no matter what happened you’d find a way to make your vision work?

Max Lytvyn 0h 14m 28s

We were very much aware of that risk, so there was a real possibility of it not working out, especially with this product where you have market unknowns. You don’t know if people are going to like the product or want the product, and you have technology unknowns. You don’t if you’re going to have enough people, money, or just technological capacity to make a good product.

So both these sides were very risky, and we were not certain it was going to work out. And because of that, we broke the problem down into smaller pieces and made sure that each piece is solving its own tangible problem.

So for example, just going back to my original story about us targeting the educational market or academic market, that was that small first piece. And although it was a piece of a big vision, kind of a building block at the foundation of a big vision, it was a complete product in itself that people were actually using, getting value from, and ready to pay money for.

Courtland Allen 0h 15m 36s

How much of your roadmap did you guys have planned out from the beginning? Because it seems like you had a sort of piecemeal approach to sort of, step by step, getting to your final endgame vision of improving communication for everyone. Did you have a path mapped out? Did you know exactly what would come after your grammar product, what would come after that, or was it more of a case of you guys would just figure it out once you get there?

Max Lytvyn 0h 15m 58s

It’s a hybrid. In our case it was a hybrid. And I think it’s a common approach in general, where basically you have a north star, you have a direction where you want to go, and then the detail gets fuzzier on how you’re going to get there the further you get. So the roadmap for next six months, next year was pretty well built out always, rather disciplined about that. But then next two years is a little bit open-ended; next three years is just broad-brush strokes; next five years kind of a more dreamy thing at least in the beginning.

As the company got more mature, of course, we had to have more precise, more rigid plans going forward. But initially, I’d say we had basically a six to maybe nine months of very well-detailed roadmap, and then everything else just kind of became less and less detailed the further in the future you go.

Courtland Allen 0h 17m 2s

So I know we’re talking a lot about vision here, but I have to say one of the things that’s always struck me is that when people tell me the vision for their company, most of the time I think it sounds like bullshit. I think it sounds like something that they put up on a plaque so they can hang it on the wall in their office somewhere and tell the press because it sounds better than saying, “Yeah, I’m here to make money and that’s my goal.”

How much of your vision for Grammarly is something that you guys care about personally and deeply, or is your vision something that you look at as a practical thing that actually makes your company more likely to succeed?

Max Lytvyn 0h 17m 35s

Just to remark on what you said in the beginning about vision often being something that’s hard to believe, and this was our experience as well. Just telling people that, “Oh, yeah, we’re going to build a software product that’s going to take whatever you want to say and help you say it much, much better and better in so many ways, clarity, effectiveness, correctness,” it just didn’t seem realistic to people, especially back in 2009. It was before even autocorrect got bearable. (Laughter.) So people are like, “Oh, yeah, this is not going to happen. Google cannot do that. How, guys, you can do that?”

So we ran into this challenge ourselves, and that was part of why we kind of created more palatable versions of our vision. We were comparing ourselves to, at some point, to automated proofreader. Because people know what proofreader is and we’re just automating that. Well, kind of sounds more palatable, sounds more realistic. Even though it’s not exactly where we’re going, it’s not the end goal, but it’s just a way to explain it in much fewer words. That’s kind of about explaining the vision.

But on having a vision, I think it is extremely important to have something that’s big enough where you can see that, “Yeah, well, if I can actually do that, I’m okay spending 10 years of my life on it or maybe even more.” Because it does take a long time to do something significant, so the vision has to be big and inspiring for you to be ready to actually put that long into it.

Courtland Allen 0h 19m 21s

Yeah, that makes so much sense. And I think it even really applies to people who have, I think, more modest ambitions. If you want to start a company and your goal isn’t necessarily to change the world – it’s to maybe provide a living for you and your family or to allow you to quit your job – you’re still going to have weeks or months where it’s a slog and you’re asking yourself why you’re doing this. And if the question is something that’s depressing, if you’re working on something that you don’t care about at all, then you’re probably a lot more likely to, I think, just quit and give up because you don’t care and the vision isn’t inspiring to you.

Max Lytvyn 0h 19m 52s

Yeah. Some people, when they talk to some people about vision, they say, “Oh, maybe I don’t need a vision that goes this far because my technology or my company’s likely to be acquired in two or three years.” And I personally am not a huge fan of strategies of kind of counting on acquisition, but that aside, my response is usually, “Well, you still need a longer-term goal and a bigger vision for your product or your company to be attractive to an acquirer. Because why does it get acquired, why would anybody need it? Because it becomes part of something bigger and creates value for them. So you need to see, you need to foresee how that’s going to happen, how it’s going to play out in next few years.”

So that’s why even if you’re not envisioning building an institution, a company that’s going to, potentially, outlive yourself, you still need to have something – your vision still needs to be bigger than just, “Oh, yeah, I’ll build some technology for a year or two and then I’ll sell it.”

Courtland Allen 0h 21m 0s

So you’re not a fan of building a company just to get acquired, which makes a lot of sense because companies are typically bought, not sold, and so that’s out of your hands anyway. Where do you fall on this debate between bootstrapping versus fundraising? Because I know you guys bootstrapped yourselves for quite a long time before you ever raised any money. Was that because you felt strongly about bootstrapping or because it was your favorite particular strategy, or was it more out of necessity?

Max Lytvyn 0h 21m 24s

I don’t know. I would call bootstrapping my favorite approach. It is an approach we chose out of necessity, partially because we wanted to have as much control over what we do as possible and partially because our vision was fairly difficult to explain at the time, fairly risky, and we didn’t want to pay a penalty for that risk. So that’s why we chose bootstrapping.

But it may not be for every business; it may not be for every idea. Some ideas are kind of obvious enough or – I wouldn’t say “obvious” but are clear enough or are structured enough that you may be able to raise money right away at a pretty good valuation, and why not? Why not kind of get a boost, especially if you can do it with good partners that are on board with what you do? Maybe you’re going to end up losing some control, but it call can be done really well.

So I think early funding is not necessarily evil, not necessarily a bad thing. It’s just a different approach.

Courtland Allen 0h 22m 30s

How much of your decision to bootstrap is because you guys weren’t located in some sort of tech hub like the Bay Area with investors on every street corner, and instead you’re working out of somewhere else? I think – was it the Ukraine?

Max Lytvyn 0h 22m 42s

Actually, we were working out of Toronto, not out of Ukraine. But that did play a role as well. Yeah, we knew that the investor ecosystem in Toronto wasn’t as big as in Silicon Valley, especially at the time in 2009. It was smaller than it is now. So we knew that we had limited access to funding, but that wasn’t a big factor, to be honest. If we were set on raising initially, we would have been able to do so.

Courtland Allen 0h 23m 18s

Do you think your decision to bootstrap and kind of take on all the responsibility yourselves without any sort of external capital kind of giving you a head start affected your strategy a lot? I mean, did you have to start sort of earlier in your vision and not as close to your endgame vision because you bootstrapped, or do you feel like the path you guys took is the path you would have taken even if you had raised money?

Max Lytvyn 0h 23m 40s

No. Actually, bootstrapping did affect our strategy quite a bit. Because we bootstrapped, we had to rely on revenue to fund further growth, so we had to work toward revenue right away. And if we raised early, especially if we raised a lot of money, because it’s an expensive technology, it’s something that’s really, really hard to build – but if we raised a lot of money upfront, we could have maybe shortcutted some of the steps and not necessarily tried to monetize early on and spend maybe – not spend some of the engineering resources on building funnels and building ways to convert users into buyers and focus just on technology, only on technology, it would not have mattered that much, but maybe it would have saved us 10, 20% of engineering resources over that period of time.

Courtland Allen 0h 24m 45s

I think most people listening in are people who also kind of want to take that approach where – or maybe they’re in a situation where they can’t raise funding and they need to get to profitability as quickly as possible. So I’d love to hear more details about that sort of early phase in Grammarly’s history where you guys were trying to figure out how to make your first dollar and how long it took you to get to the point where you were able to sustain salaries for yourselves and hire your first employee.

Max Lytvyn 0h 25m 10s

I would say less than six months. It was very quick. It was very quick because we had really solid plan on how to get there. So we approached it from two dimensions. We didn’t know who was going to buy our product, so we tried to sell the product to institutions, to organizations, and we tried to sell the product to individuals, and we tried to do it at the same time to see basically what sticks, to see what starts to work better.

But as a result of those early attempts, us trying to sell the product before we even really built it fully, by the time we finished building version one, we had a pipeline of organizational buyers lined up and we had some good understanding of how to sell to individuals. We nailed down our messaging, we nailed down our advertising channels, we kind of understood unit economics. So by the time the product was ready, we were ready to sell both to organizations and to individuals.

Courtland Allen 0h 26m 16s

That’s so cool that you guys are able to approach it that way. It’s funny; I talk to so many people who lie on different ends of the spectrum in terms of how much they like to plan everything and have a very well-articulated and understood strategy before they go into things, and then people on the other end of the spectrum who are just like, “You can’t plan anything. You just got to go.”

And you seem very much like a planner where you did things sort of a textbook way. You were selling a product before you really had the product, and you were acknowledging that you didn’t quite understand everything about your business. You didn’t understand necessarily why customers were buying or which customers would be best, or what messaging would appeal to them the most, and so you guys had a very targeted strategy for going about that, and it paid off.

How did you learn to do that? I mean, how long did it take you as an entrepreneur to realize that that’s the way to go? Because I think most people on their first or their second or maybe even their third business aren’t really that strategic and aren’t really that skilled at knowing exactly what to do.

Max Lytvyn 0h 27m 14s

One thing that made us do that was necessity. Essentially, we realized that building this product is really hard and really expensive. So by the time we were done with MVP, we’ll probably be out of money. (Laughter.) So we better have customers lined up by that time. So that’s why we worked in parallel on kind of figuring out how to sell it and how to build it (inaudible) building it. That’s why we kind of parallel processed it.

And in hindsight, it was a really good decision because it also enabled us to build a better product. The learnings from how the product would be sold, the feedback from potential buyers was invaluable to actually building a better product. But as a side benefit or as kind of the essential benefit, we got revenue very quickly.

Courtland Allen 0h 28m 12s

I like what you said about kind of projecting forward to what things might look like when you guys have finished the first version of your product and realizing that you’re going to be pretty much out of money by that point in time, and so you will hope that you had customers.

It reminds me of this book – well, it was actually this book review that I was reading the other day. The book is called The Time Paradox and it kind of argues that there are people who have sort of a past-focused vision of reality and there are people who have sort of a future-focused vision of reality. You can actually do a test and it’ll tell you what kind of person you are. And if you are a future-focused person and they give you a maze and tell you to solve this maze as fast as you can, all of the future-focused people would start at the very end of the maze and kind of work backwards, and the present- and past-focused people would start at the beginning and try to work forwards. And the future-focused people would win every single time because they would eliminate – they would see what’s coming well before everybody else was.

So it strikes me as very analogous to what you guys did here, which is to look at where you’re going to be in six months and avoid falling into this predictable situation where you finish your product but you run out money before you have any sales.

Max Lytvyn 0h 29m 15s

Yeah. And in our case, it was from the result of prior experience, where you build a product, you assume it’s going to be great, and it is great but then you put it out there and nobody’s interested or nobody gets it. And that’s terrifying because you spent all this effort, you spent all this money on getting something done and you love it, and it’s just out there and nothing happens. It is something – it is an experience that’s just terrifying and can make somebody not want to do that ever again.

But we’ve done it, we were in such situations, and were determined not to be there again. That’s why we kind of parallel processed channel work, sales, and marketing and learning more about our potential customers in parallel with building the core technology.

Courtland Allen 0h 30m 9s

So let’s talk about some of those earlier failures that were so painful that you were forced to sort of do it right the second time around. Because so far we’ve talked about Grammarly, which is doing excellent. We talked about your other startup that you sold to Blackboard, which seemed like a successful acquisition. Did you guys ever fail at anything?

Max Lytvyn 0h 30m 26s

I don’t really see anything that I could call a failure because of just my personal philosophy, philosophy of experimentation. When I try to do something, there is a very big possibility of me not being successful at that. That’s just a reality. So it’s like A/B testing, like experimentation in marketing where you build an experiment, you run a test, and test is either positive result or negative result. But negative result is not a failure. It’s just an expected – one of the expected outcomes, and then you just do it again. So basically, in my personal philosophy, you fail when you stop trying. As long as you can keep trying, you haven’t failed yet.

So that’s why it’s kind of hard to point to anything as a failure because, well, there is always expectation that there is a good chance that it might fail. And the more ambitious it is, the higher the chance of it failing.

But there was one instance that comes to mind that was very kind of blunt learning for me personally. It was before Grammarly in our previous company, Microbox (ph), which was plagiarism-detection technology. And it was really good, actually. It was better than (inaudible), which was the (inaudible). And we sent a whole lot of brochures to big trade conference and prepared for brochure emails and calls to buy our product, and there was no single reaction, nobody. Nobody cared, no single one.

And I was in such disbelief. I thought that maybe the brochures got lost or maybe they were not delivered yet. I just couldn’t believe it. And then I started calling people, like cold calling people who were supposed to receive them who were at those tradeshows and talking to them like, “What actually happened?” And many of them found it interesting, many of them actually read our brochures; just didn’t have urgency or didn’t have a trigger or didn’t have the budget.

So there was always some reason, but kind of that expectation of just immediate reaction that everybody is just going to learn about this great product and just go out to buy it or at least to talk about it with us, it just didn’t materialize. And it was stark learning that, well, it’s not build it and they will come. You need to be very much connected with your users and need to talk to them, need to kind of create a sense of urgency, and need to explain to them why your product is valuable and what you’re doing is important to them.

Courtland Allen 0h 33m 13s

Yeah, I think every entrepreneur has been in that situation where we all are sort of in disbelief at how disconnected our own vision for our product is and how useful and good it is – how disconnected that is from what customers think when they actually see it. So that’s just one more data point in sort of the argument for building a minimum viable product and talking to customers and trying to sell what you’re building before you’ve even built it.

I saw you gave a talk at Hustle Con last year, and you actually spent a lot of time talking about building an MVP, which, for listeners, that stands for “minimum viable product.” And you had some really strong opinions about it. You said that most entrepreneurs approach it the wrong way. How did you guys approach it at Grammarly, and what is the right way to approach building an MVP?

Max Lytvyn 0h 33m 55s

Yeah. Thank you for that question because it’s one of my favorite topics. So I think the wrong approach, and unfortunately a popular one, is to kind of take your market, the market that you’re envisioning in the future, and build a little bit of everything for that market. And that’s spreading yourself too thin. That usually results in spending a lot of effort to build something that’s not quite good enough for anybody.

What I think is a better approach is to pick the enthusiasts from your market, pick the core audience, or pick even a subsection of your market, and build for them but build a better product; smaller, but a better product. That allows you to cross the threshold of building something really useful that your users can engage with and kind of make it part of their day to day and not just a toy. And it also, potentially, opens up opportunities for quicker revenue as well.

So I think that that’s an important distinction that MVP is not just minimum viable product for everybody, but it’s also picking a minimal viable market and then building for it, building a minimal product for it.

Courtland Allen 0h 35m 13s

I think one of the things that bites a lot of founders, especially first-time founders, is that as consumers we spend all of our time interacting with these very mature, very successful companies. And if you don’t have a lot of experience as a founder, you might naively assume that the way these companies look today is exactly how they looked in their early phases.

And so you’re sort of using them as an example, when the reality is they’re terrible examples for you. You should not be copying what they’re doing. You should be trying to find examples of companies in their early phases who eventually went on to success and try to figure out what they did early on because that’s the phase that you’re at. You don’t want to walk into a weight room and try to lift 400 pounds just because the biggest guy in the room is lifting 400 pounds. That’s not a good starting point, and yet that’s what most founders do because they’re obsessively copying their role models in these big companies without really taking the time to understand sort of the complex and winding path for how these companies got to where they are today.

Max Lytvyn 0h 36m 3s

Yeah, that’s true, that’s true. And in some cases, it’s just luck. Some companies, they build something and they see deficiencies in it and they just iterate, iterate, and get to something that looks very different. And in some cases, it’s planning and luck combined. Well, but there’s always some degree of luck, I think. (Laughter.)

Courtland Allen 0h 36m 25s

What do you think is the luckiest thing that’s happened to you guys at Grammarly?

Max Lytvyn 0h 36m 28s

It’s hard to say because same things can be seen as luck or as your doing, and even like increasing the odds is kind your doing, but the end result is ultimately luck. So it’s kind of a – you can argue in either direction.

One thing that was pivotal for Grammarly is switching from premium model, premium-only product, to freemium product where we have free and premium product. That idea, that kind of step was such crucial for our company that we were really luck that we didn’t kind of change our mind somewhere in the middle or didn’t – the test didn’t fail because of some issues or something like that.

Courtland Allen 0h 37m 18s

I imagine you had to be very nervous going into that, that it might not work or it might end up going the wrong way.

Max Lytvyn 0h 37m 24s

Yeah, we actually tested it for, I think, nine months before we pulled the switch. So it was a really long process for us because we had a functioning business model, we had a profitable company. So breaking that to build something better was a really big decision. That’s why it took us so long. I think we were really lucky we didn’t run into some issues that would have made us turn back.

Courtland Allen 0h 37m 52s

So let’s jump back into the Grammarly story. I think where we last left off, it took you guys about six months to get to the point where you were pretty much profitable with just the two of you. What are some of the bigger challenges and strategic decisions and changes that you guys had to make to grow from such a small size into a company that’s big enough to justify $110 million investment?

Max Lytvyn 0h 38m 13s

Yeah. So as I mentioned in beginning, we started experimenting with two markets, enterprise and consumer, and we quickly saw that consumer was growing much better, much faster. So we had to make a decision at one point to focus slightly less on enterprise and go full speed on consumer. So that was one of the kind of core key decisions.

Another interesting decision was to bring a CEO on board. Neither of us, nor Alex, so my cofounder nor I, are CEOs. We partnered with Brad Hoover, who’s now CEO of Grammarly. And our decision to bring on board an external CEO was driven by a realization that, well, the company is going to grow to a certain scale that none of us grew a company before, and it will require certain skills and certain talents that we may not necessarily have right now and may not be as passionate about growing necessarily.

My passion is around growth and around customers. Alex’s passion is around designing magical experiences for users and beautiful products. But building a world-class company requires many more things beyond that. So that’s why we decided to bring on board a CEO with a kind of more rounded experience and talent profile.

Courtland Allen 0h 39m 48s

That makes a lot of sense, but at the same time it seems like an extremely difficult decision to make because you guys have grown this company by yourselves the entire time. An outsider kind of risks ruining everything, so how do you even how about that process of finding the right person?

Max Lytvyn 0h 40m 1s

It was hard. We actually worked with Brad for, I think, six months or maybe even more in a consulting capacity before we started talking about him being the CEO. So there was a long process. But I think what helped us make this decision was that both Alex and I are generally very humble people. We didn’t have an ambition to, “Oh, yeah, I’m going to be the master of this company or I’m going to have the highest title in the company.” It wasn’t for us ever about that. It was just about doing something cool, something interesting, and seeing how far we can push it.

Because we were not focused on titles or power, it made the decision so much easier for us. It wasn’t seen as a sacrifice or as a step back. I often see discussions where founders vilify investors because investors suggest hiring an external CEO or hiring an executive of some kind, and that just doesn’t make much sense to me. Well, in some cases, there is something wrong there, but in general, that concept is very valid. Just because you started something doesn’t mean that you’re optimal person to be the CEO of it in every stage of that company’s growth.

Courtland Allen 0h 41m 17s

I think just as important, if not more important, is choosing your original cofounder. How did you and Alex start working together, and what advice would you have for people out there who might have an idea or set of skills on their own but who are looking for a cofounder and aren’t sure how to find somebody that’s worth working with?

Max Lytvyn 0h 41m 35s

Yeah. We started working together a long time ago, as I mentioned, back in college in mid to late ’90s. So we knew each other for a very long time. And what made our collaboration very successful was us being very different. And it may sound paradoxical, but it actually really worked, really clicked. Things that were inspiring to me maybe were things that Alex would overlook and vice versa. And because of that, together we would miss fewer opportunities. We would be discouraged in fewer situations and so on and so forth. So essentially, it’s just complementing each other.

So I think that’s one advice that I would give to somebody who’s looking for a cofounder. Don’t look for a person who’s exactly like you. Look for a person who’s compatible with whom you would be able to work and wouldn’t hate the experience, but don’t look for somebody who’s exactly like you because you’re going to miss out on a lot of things.

Courtland Allen 0h 42m 42s

What about areas where you guys align? Because at the same time, you have to both agree that you want to bootstrap the company or you have to both agree that you want to work on something with a really big vision. How did you know that Alex would be someone who would agree with you on stuff like that?

Max Lytvyn 0h 42m 57s

Well, we didn’t always agree. We had many discussions; some of them were heated, some of them were just very lengthy. I think that’s fine. One thing that absolutely needs to be common is values. You have to like similar things and think that similar things are good.

It may be hard to explain, but I’ll try. Let’s say risk tolerance. If it’s drastically different – let’s say somebody thinks that risk – one cofounder thinks that risk is inherently bad and another cofounder thinks that risk is thrilling and just looks for it just for the sake of it, it’s not going to work out. You have to be somewhere in the same ballpark. And for Alex and me, it was basically kind of in the same ballpark. So that’s just an example of matching values.

So as long as values match, the personalities, interests, everything else, you’re actually better off with having diversity there rather than similarity.

Courtland Allen 0h 43m 58s

That’s a good way to frame it. And it sounds like such a daunting task, especially if someone’s just trying to find a cofounder right now because it’s like, “Man, how long is it going to take to really spend time with the person and evaluate them and all these things, and I want to start right now.”

So I think one of the best things people can do is just work on smaller projects together. If you’re in a situation where you don’t have a cofounder and you’re trying to find someone that you want to be your cofounder, rather than dive in on some hugely ambitious thing, you could work on a few one-month projects or two-month projects and see how you guys click, and take the time to learn whether or not you align on values or whether or not you’re sufficiently different in your interests and stuff.

Is that something that you and Alex did, or did you guys immediately start working on really big things together?

Max Lytvyn 0h 44m 39s

We did exactly what you suggested. I think it’s a very good point and very good suggestion for somebody who’s just starting. You get to learn a lot about your cofounder. And the easiest way to do it or the best way to do it is to just do something together. It can be a project, can be hobby, it can be a hackathon. You can even be on some sports team together. That all will give you some opportunity to learn about each other’s values, temperament, many things. That is essential before kind of jumping in and starting something big.

Courtland Allen 0h 45m 15s

So I want to talk a little bit about you personally. How did you – I guess, what are your goals in life? How do you know that working on Grammarly is something that you really want to do? And how would you know, for example, if the day came where your time at Grammarly was done and it was time for you to do something else?

Max Lytvyn 0h 45m 31s

My goal in life is in general just to do significant things. And I’m not necessarily focused on specificity of those things. I don’t necessarily think that they should be growth, for example. I tend to focus on growth because that’s what I know and that’s what I’m passionate about. But if I have an opportunity to do something significant elsewhere, I will likely take it. But yeah, just kind of trying to make the biggest dent in universe, even though it’s a cliché. I think that doesn’t make it untrue. That’s what I’m looking forward to.

And with Grammarly, Grammarly is just a rocket ship. It’s a quickly growing company that’s making a product that’s used by so many people and benefitting so many people. So it provides me with a tremendous platform to make significant things. That’s why I envision myself being with Grammarly for a long time.

Courtland Allen 0h 46m 34s

I think from the outside looking in, it’s easy for entrepreneurship to look super glamorous. It might look like nothing but numbers going up and to the right and large amounts of money changing hands in your direction. But the reality is that sometimes there’s drudgery and sometimes there’s too much responsibility that you don’t want to deal with; you just want a break. And sometimes there are times where you just want to quit because it feels like you’re not going to succeed and you’re working yourself to the bone.

Has there ever been a time like that for you? Have you ever thought that you might be better off getting a job, or have you always had sort of the heart of an entrepreneur?

Max Lytvyn 0h 47m 5s

I always had the heart of an entrepreneur. There were times when I was just too tired, but that quickly passes when you just give yourself a little bit of time to take a breath. Yeah, as soon as I saw the difference between working for somebody and working for your own company, I realized that, well, this is much better. And when I say “working for your own company,” it doesn’t necessarily mean being a founder, even though it was the case in my case, even can be a company where you just matter enough to be material to the company’s success or the company’s path.

Courtland Allen 0h 47m 44s

Yeah, you’re describing my exact situation. So I think you guys got acquired by Blackboard. Was that your first job at kind of a normal company?

Max Lytvyn 0h 47m 51s

Yeah, first real job, real full-time job at a normal company, yeah.

Courtland Allen 0h 47m 56s

So I’m also at my first real full-time job at a normal company as a result of an acquisition. But I suspect that most listeners are in the exact opposite situation. They spent their careers working as employees and maybe have never actually started a business before. So after your time at Blackboard, what would you say to somebody in that situation who wants to branch out and start a company? What are some of the big differences between being an employee and being a founder? And how can they prepare for those differences?

Max Lytvyn 0h 48m 23s

Well, there are positives and negatives, of course. And for many people, actually, negatives will outweigh the positives. Because on the one hand, you are in control of pretty much everything. You do whatever you want, or at least so it seems. You matter. Everything you do matters. But on the flipside of that, well, everything you do matters, so you cannot do anything wrong. If you do anything – anything you do wrong or sub-optimally, anytime you slip up, you’ll see it in disappointed faces of your team, you’ll see it in your bank account. You will know. So that’s – yeah, anytime you kind of stop working early, you’ll know.

So it’s a different experience. It’s very different and it’s a lot of pressure, a lot of risk. So have to go into that with eyes wide open.

Courtland Allen 0h 49m 20s

And what about for people who do have their eyes open and they know that this is something they definitely want to do? What’s some practical advice for when and how they should get started? Or what would you do differently if you could go back and start over?

Max Lytvyn 0h 49m 33s

First I would make sure that I have some savings and I have a lifestyle that can be supported by those savings for some period of time, because that just gives you more room for maneuver. You can maybe bootstrap for a little bit longer, maybe you can dedicate more time to get the product to maturity before you have to look for funding, maybe you can even hire somebody and pay salary out of your pocket. It’s good to have these opportunities.

And preparing for it, even though that means starting something a little bit later, I think is a good idea. Because if you just start something and you have to drop it because you have to pay bills, it’s just a shame. And I’ve seen people who had to kind of quit their startups because they either ran out of money or ran out of patience, and it’s just never a good experience. So prepare as much as possible financially and maybe trim down your lifestyle. But be as prepared as you can.

Courtland Allen 0h 50m 37s

I think it goes back to what you were saying earlier, that there’s really no such thing as failure because you’re always learning and you’re always moving ahead unless you stop trying, unless you quit. And if you put yourself in a position where you’re going to have to quit much earlier than you would really like to, then you’re kind of setting yourself up for failure.

So I think that’s great advice. Make sure you’re ready financially as well as mentally to be in a position to give your company your best shot and not have to quit early.

Max Lytvyn 0h 51m 3s

Yeah. And for some people, it may mean just keeping their day job or maybe quitting their day job but freelancing on the side. And I think that’s valid, but it requires an additional level of discipline where you can still give your idea, your startup, enough time and enough mindshare while also providing for yourself.

Courtland Allen 0h 51m 27s

Well, thank you, Max, for the great advice. Hopefully, our listeners will find it useful. Can you tell everybody where they can go to find out more about what you’re up to personally, and also the things that you guys are working on at Grammarly?

Max Lytvyn 0h 51m 39s

We’re very active on social media – Twitter, Facebook, LinkedIn – so follow us and me personally. So that’s how you can learn more.

Courtland Allen 0h 51m 50s

All right. Well, thanks so much, Max, for coming on the show.

Max Lytvyn 0h 51m 53s

Thank you, bye.

Courtland Allen 0h 51m 54s

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