What's up, everyone? This is Courtland 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 at their companies and what exactly makes their businesses tick? The goal here is always so that the rest of us can learn from their examples and go on to build our own successful businesses.
Today, I'm excited to be talking to Andy Cook one of the two co-founders of a company called Tettra. Andy, thanks so much for coming on the show.
Thanks for having me, Courtland.
Tettra is Wiki software that's made to help teams share knowledge. Can you explain a little bit about what that means and why people want what you're building?
For sure, so it's a knowledge sharing system for growing teams. What that means is we allow you to take all of the scattered documents, emails, chat logs, GitHub issues, whatever you have and aggregate it all into one central repository.
Then we make that easily accessible from your chat tool primarily Slack, which is what most of our customers use. The idea is that Tettra makes it really easy to onboard new team members and answer repetitive questions.
The reason why that's important is more and more as knowledge workers become more prevalent in the workforce most of the value is around getting people ramped up quickly and getting them aligned with the mission as fast as possible. So the faster and sooner you can do that with new people that you hire, literally the more progress and more money you're going to make in the long run.
Your co-founder Nelson actually came onto the Indie Hackers website about a year ago and did a written interview where he talked about Tettra. At that point you guys were doing just over $23,000 dollars a month in revenue. Where are you guys at now?
We're at $40k MRR in revenue.
That’s awesome. How does it feel with it almost doubled in the last year?
It feels great. It was a tumultuous year with a lot of struggles and took a lot of discipline to get through it. Now that we're in clearer pastures, I'm feeling good and I'm excited about getting to $500k ARR and then a million and beyond.
Yeah, that's I want to dive into what exactly made this tumultuous year and what sort of struggles you had to deal with. Let's start on the high note to begin with.
I think where you guys are being an independently operated company where you're doing your own thing, you're generating enough revenue to I assume be profitable. Are you guys profitable?
We're not profitable right now, but we're default alive. So the goal is to get back to profitability with our current funding.
So it looks pretty likely that you'll do that. How does it feel in general to be living the dream, not working for somebody else and doing your own thing? Andy Cook [00:02:45] It feels great. I mean before I started Tettra I was working at a software company in Boston called HubSpot and that was a great place to work too. It's one of the best places to work in the country.
But the thing I really love about being my own boss and running Tettra is that ultimately the company is a great company to work for or crappy company to work for my whether or not I make that happen. So my goal is to make Tettra a great place to work for and do right by our customers by building the best products which is 100% in my control and I love that.
You are one half of the co-founding team Tettra. You also work with your partner Nelson. How did the two of you guys meet and decide to work on this business?
So Nelson and I actually met a long long time ago in 7th grade in Middle School. We both grew up in the same hometown. We bonded over skateboarding in 7th grade. Fast forward 15 years or something like that, my first startup RentAbilities was acquired by HubSpot and Nelson had been working at HubSpot for three years at that point.
The management team knew that Nelson and I were friends and they knew that Nelson had a good understanding of how HubSpot worked internally and I had a lot of startup experience around how to get products out in the world very quickly.
So they teamed the two of us up to build a skunk-works style startup inside of the company and we got to work alongside each other for two years. So we've known each other for a long time.
We've been friends for a long time, but being friends with someone and working side by side on a team with them are two completely different things. So, I'm really thankful we got to test the waters of working together on HubSpot’s dime instead of just jumping into it together and hoping it worked.
Yeah. So that sounds like a dream job situation as well where you're inside of a company, but you're sort of running a startup and you're working on it with one of your best friends.
Let's rewind for a bit and talk about your past history and sort of what drives you. I mean, what led you to become an entrepreneur and why aren't you satisfied just working at a normal desk job for somebody else?
I don't know what led me to become an entrepreneur but thinking back to my early childhood, I've always been really entrepreneurial. You could probably chalk that up to the fact that my dad owned his own small business.
He was a landscaper for about 30 years. So from an early age it never seemed weird to me to own your own business and be making money by selling things. I was always trying to make money as a kid, we would go out and collect bottles and cans to around town, literally picking up garbage to trade them in for money.
We would start lemonade stands on the street and I had a paper route for years. Yeah, just from an early age. I just always was trying to make money probably because I didn't get an allowance. You could only buy candy if you made the money, then it snowballed from there as I got to my professional life.
How did that lead to the creation of your first business?
So my first company that I started was called RentAbilities. I started it with my older brother. The backstory behind that one is my older brother, Alex is his name, started to learn how to do web design in high school.
Then he taught me how to do website and web design and we both really liked it. When we were in college we made a website for one of my Dad's vendors that he worked with for his landscaping business, which was actually a rental store and the rental store owner's name was Steve. He was literally on two phones all the time taking orders.
So we were like, oh we can build a site where you can take orders online and hook up your inventory management system to your website, does that sound good? He's like, yeah. So we ended up doing that and selling it to him and he did $25,000 of rentals through the site in the first year that it was online.
We were both probably 18 or 19 at this point and being naive we thought to ourselves like, oh, well this works for Steve, this will probably work for other rental store owners too. So we decided to team up give it a name and then try to sell it to other stores. We ended up getting 20 or so rental stores to buy it in the first couple of years, which was really cool.
Great. So it didn't work the way that you expected it?
Yeah, and it was funny because when you don't know what you're doing, you do things that you probably wouldn't do when you do know what you're doing.
So I remember one of the campaigns that I ran was I figured out how to go on Google Maps, which was new at the time, get all of the addresses for the rental stores and then I went on the business directory listing for the state of Massachusetts and found all the store owner's name. Then I hand wrote them notes.
With some information about RentAbilities and invited them to a video webinar series that I was doing at the time about how to get more exposure for your business online.
These were like 50 year old store owners who barely could use the Internet, we were savvy young college students who knew how to use the Internet. I think I got back 10 responses from these handwritten notes.
People literally just called me or emailed me and then I would go up and drive out to meet them and sell them in person as a 19 year old with my khakis and my polo on. That's how we made our first sales.
What was your goal at this point? I mean, what did you see this business turning into?
I’ve got to be honest, there really wasn't any goal besides make money. This was probably about 2008 or so and at the time really the lore of startups hadn't been developed yet.
People weren't really talking about Angel Investors and Venture Capital and unicorn startups. This was the year that Facebook got the two billion dollar offer or whatever from Yahoo, and they turned it down and that was heresy. It was a very different world.
So our goal was literally just to build a business and make money and have it sustain us. It was really nothing more than that and to learn too. We're having a ton of fun working together and learning how to do this stuff.
So before we started this episode, you told me that this business eventually got acquired by HubSpot. I wonder how you worked out that acquisition and what that process was for you because a lot of people listening in have never really heard what it's like to have your company get acquired. So what led to that series of events?
I'll give the highlights because there's some interesting anecdotes here. It's obviously a long three year story but the highlights are when my brother Alex and I were in school we heard this radio advertisement for this startup competition called MassChallenge.
When I was about to graduate, we were going to go work on it full-time, our startup. So we decided to enter the startup competition. This is the first year that they did it. It was based out of Austin and we got in. Every Friday they would have local founders come in and talk to the startup founders inside of the accelerator.
One of them that came in was Dharmesh Shah the co-founder and CTO of HubSpot and I had just read his book a couple months earlier, which I think actually inspired that whole webinar video series to reach out to the rental stores. So I was a huge, for lack of a better word, fanboy of his. So when he came in to MassChallenge, I was actually waiting for the elevator and I hear, hold the hold the elevator door. I open it up and look who walks in but Dharmesh Shah.
So at this point you think that'd be the perfect time to give an elevator pitch to a potential angel investor, but I couldn't even muster the confidence to do that. So I kind of just looked at him and said good luck with your talk. Then he just looked up at me and said, okay, thanks. Then that was it, so I thought I blew my opportunity.
So anyways he did his talk and because I was such a fan of his book I had it in my cubicle on the floor. So I went and got it and had him autograph it. We got talking a little bit so that was my second chance. Then that following night I went home and I was doing a lot of blogging about startups and my lessons learned at the time.
I wrote a blog post called 14 lessons From Dharmesh Shah or something like that and published it. It went viral at the time, which on Twitter was 200 retweets or something that and Dharmesh actually liked it and commented on it.
Then we became friendly from there. So we raised funding a few months later for RentAbilities and he was actually our first angel investor and so we got to know him more over the three years that we worked on RentAbilities.
When we ultimately decided that we're going to sell it because we didn't want to really work on it anymore, we were pretty tired at that point. Dharmesh was like, you should come work at HubSpot, I think that would be great. We have a perfect project for you two.
What do you think led to you guys wanting to sell your business and being tired of working on it? Because most startups don't succeed but they all fail for different reasons. What was the biggest challenge with RentAbilities?
I mean the biggest challenge and this is kind of trite but we were underfunded for the scope of the project that we tried to take on. The company started off really well, we had 20 customers. They were all paying us a couple thousand dollars a year. It was an inventory management system that let you take orders online. We probably could have scaled that up to a couple hundred businesses and actually had recurring revenue that could sustain us and hire people and grow over time.
Along the way we decided to build a B2C two-sided marketplace where we took all those store owners and hooked them up into a centralized marketplace to let consumers find whatever they needed to rent and book it online and compare prices from all the local merchants. The tough thing about two-sided marketplaces is you're really building two businesses at the same exact time.
You're building the side for the business owners, so that's a whole SaaS offering for the most part and then you're also building the demand for the consumers and have to build all the tools for that type of stuff too. At our largest we were four people. So it's just really really challenging and we worked our tails off and everything.
We tried just everything, we got traction. We did really well from generating a demand and figured out how to get merchants to actually use our system. But our biggest issue was we just kept getting disintermediated on the actual transactions, where maybe the consumer would do the first transaction through us but then the following year when they needed to rent another bounce house, they would forget that they rented through RentAbilities and rented from the store that they knew they rented from down the street.
Or the merchants would try to get the consumers phone number and just call them directly so they didn't have to pay a transaction fee. So it's just death by a thousand cuts and after three and a half years of really sprinting on something non-stop and running low on the funding that you raised, you just get tired and burned out. We just decided maybe we let this one go and try to get some of our investors money back instead of just riding the rocket ship into the ground.
How do you recover psychologically from pouring your heart and soul into your baby for three years and not having it work out the way that you want to? I mean, how do you start another company after going through that experience?
The first time I would say I didn't recover well, it took a long time. I guess in hindsight I should have taken more time between the startup and then going on to my next really intense project, which was working at HubSpot on this new start up inside their company.
So I didn't really give myself any time to recover, which was dumb in hindsight. Now though, I realized that starting a business for the long term is not a sprint. It's not okay, I'm going to do this for two years and I'm going to sell it and everyone's going to make out great.
To build something of substance really takes five to seven years. So now at Tettra I've learned not to sprint and I've learned to give myself the time to maintain my health and keep my relationships with my family and my fiance and my friends going and really disassociate my own sense of self-worth and my identity from my startup.
Have other things going on outside of my life. Which in the long run makes it much easier to run the marathon instead of the only thing you think about is your startup. So yeah my diet exercise and things outside of your company I say would say are important.
It's funny because we all hear this before we start companies and businesses. Hey, it's a marathon it’s not a sprint. It's going to take a long time. We are like yeah, yeah, I get it.
Then we do it, at least for the first time we spent anyway. It's very hard to internalize that lesson until you've actually been there. You put all your effort and energy into this thing and go as fast as you could and burn yourself out and realize that didn't really help you in the long run.
For sure and I think for RentAbilities never, not until the very end did it ever feel really hard and I think the reason why is because even though I'll be honest that problem space was not necessarily the most near and dear thing to my heart. I liked helping the small business merchants, they reminded me of my Dad, helping people rent stuff.
At the end of the day if you would ask me what is the one true thing that you care the most about? Helping people rent stuff probably wasn't it. I didn't even own a house and I never rented stuff personally. So working on my RentAbilities though I was learning so much about startups and coding and business and meeting all these people.
That really what made it great with Tettra. Now, what's much more important to me is solving the problem that we work on, which is helping people build high-performance teams. So that the people they hire actually enjoy their work and their life.
So you spend eight hours a day working, literally one third of your life and people should actually enjoy that. So now that I know a lot more about startups and I have a network and I actually don't code that much anymore, really the solving the problem space that I work on is the thing that sustains me over the long haul.
So let's talk about Tettra. You end up selling your other business to HubSpot, you're working at HubSpot with one of your childhood friends. What leads you to quit that job and go on to form another startup or the early days of Tettra?
Nelson and I thought of the idea for what is now Tettra about a year into working on the startup style project that we were working on inside of HubSpot so I which was called LeadIn. The impetus for the problem was that our team first year at HubSpot was just Nelson and I literally doing everything with no help from anyone.
We did all the support. We did all the coding. We did all the building, we figured out the problem space, we grew the thing and we grew this thing, LeadIn, from literally no idea to seven thousand small businesses using it for free but having it on their website within the first year. So then HubSpot gave us more budget internally, which they call funding and so they literally just had another engineering team that was working on a project that they wanted to sunset and pushed them over to our team.
So LeadIn went from just Nelson and I working on it to six people overnight and that was compounded by the fact that these four engineers that joined our team, they were in Dublin. So as you can imagine that just as the two people sprinting as fast as they can on a project, you develop all this institutional knowledge. Then trying to unload that onto four new team members all at once who are literally across an ocean was really challenging. At the same time Slack was starting to blow up and we use them.
We were like, man, Slack is amazing. This is the best chat tool ever used and we had used a lot of wiki's. We thought why hasn't anyone just built a Slack quality wiki-documentation and asynchronous communication tool. It seems a fundamental need for all teams. Why doesn't this exist and why doesn't it hook up to chat, which is how we talk to our team.
So we came up with the idea. I think it was January, February of 2015. The original name was actually Knowl. So the word ‘know’ and an owl and there was gonna be an owl mascot. It was a bad name. Then we sat on it for nine months. But the thing was it kept coming up for us over the course of nine months.
So then that fall we were like, we need to go do this. Then the project we were working on was past the zero to one point where they wanted to absorb it into the main company which really wasn't that appetizing to us. We had this founder mindset. And also I was 28 at the time too, wasn't married, didn't have a mortgage, didn't have kids and I had developed all of this startup knowledge working on RentAbilities and also knowledge around how do you actually run a high performing team at HubSpot.
They were a really well run company and so for both of us if found it kind of felt like we need to do this right now because we don't have these responsibilities and we can really focus on this. We don't want to look back in five years when we do have responsibilities and say we should have taken a shot on ourselves. So that really gave us the confidence to quit our jobs that actually paid us well, to then not take salaries.
So one of the first things that Nelson said you guys did before you write a line of code before you actually started. Building the product that you'd envisioned was you spent six weeks doing customer interviews and research so you can sort of make sure that you built the right thing. You're wasting your time building something that nobody wanted. When did you guys do this before you left HubSpot after you quit and what was the process
So we did it after we left HubSpot. I was really we both were but we were really cognizant to not work on Tettra at all while we were at HubSpot. wine it was in our contracts alike. Then this is the common thing it with all this is not just helps polish anything you build their think about their belongs to the company.
Not you but in reality, I'm a type of person who's I need to be all in on something and so it didn't feel fair to HubSpot to be thinking about something on the side while I still work there. So it was after we left this was the same process that we use for LeadIn too where we didn't write any code for the first eight weeks and just figured out what are the problems that people have and we do customer interviews.
We created fake mock-ups and then we show them to people and got people to agree to use a product in both instances. And from there They're like, we just learned so much about the problem space that we were working on and it gave us more confidence to actually that people would actually use the product that we were building.
How did you know that was the right way to go? I mean had you done it the wrong way before with the previous company or had you been reading online and said, okay well what we need to do is talk to people before we build anything.
It is probably a mix of both reading this is how you should do it but also living a lot of failures over the course of my life. I've built so many things over the years where I got really excited about them. I built just because I was like, oh this is going to be amazing. Of course, it'll be amazing. I want it, everyone else will want it too.
You build it, you spend all this time, you launch it and then no one cares. So really it was just from a standpoint of okay, I don't want to just build things for building things sake anymore. I want to build things that actually solve customers problems and the best way to figure that out is just to talk to customers or potential customers and really learn what their problems are and understand them.
Then from there that informs what the actual solution should be and then you can start coming up with ideas showing those to people. Then by the time you're ready to build something you should be fairly confident that people will actually use it and you're not hearing anything new or learning anything new from those conversations. The only way to learn something new is to really get something in the hands of someone.
How does this process work out for Tettra? You guys spent six weeks talking to people, what happened once you actually built your product instead of testing it with real customers?
So once we decided to build the product we took the mock-ups that we had shown to people and we had maybe two dozen teams that said they would use the thing and we built an MVP, a minimum viable product on top of WordPress in about six or eight weeks or something like that. It kind of was an internal blog of sorts but it was the exact thing that we mocked up and showed people and they said they would use.
So we built it, we gave it to them and lo and behold no one used it. So the first thing we did from there was, one, don't freak out. The thoughts are going through your head are should we really have quit our job? Was it a huge mistake? Then from there we reached out to everyone and we said, why aren't you using this thing that you said you would use? and the answer we got back over and over again was oh, yeah I’ve been meaning to use that but I just keep forgetting.
You're like, oh, okay. That's a problem because you can't use something if you don't remember to actually use it or that it even exists, right? So from there we kind of are like, okay what can we do to get into people's existing workflows and fortuitously Slack launched their platform around the same exact time where they opened up the Slack interface to actually have integrations in it.
So we were like, oh this is interesting and we know there's tens of thousands, if not hundreds of thousands of teams using Slack. We know it's really taken hold in a lot of workplaces. So we went back to those teams, we said, what if we took the thing we had and hooked it up into Slack in this way, this way and this way and everyone their reaction was completely different.
They're like, oh really? You can do that? Is it ready? I want to use it right now. I'll pay you for it. So that was a much different reaction. So then we were like, okay well we can keep working on this thing, the MVP that we built that doesn't seem to be working. Or we can try something new with this new data point that we learned.
So we made the decision to scrap the entire project that we've been working on for three months and self-funding and build a new version on top of the Slack platform where we actually just rebuilt a new interface and use the Slack API as our database and our back end. We literally didn’t store any of the data it just was on Slack’s platform. We did that in two weeks over the holidays and then we launched that in January of 2016.
We had 200 companies sign up in the first 48 hours. These are really big companies, the Texas Rangers and Walmart and it was crazy. Then from there we said okay, this is definitely a thing that people want and we kept talking to people and learning, why are you even signing up for this thing? What are you trying to do?
And the problems were exactly the same that they described to us. But because we were hooking into the space where their team hung out all day, which was inside of Slack, people would actually remember to use it. So that was the missing key.
We had a good problem that we're trying to solve. We had a good solution which was documentation, actually writing things down. We had to hook into people's existing habit loops to get them to actually build the habit of using our tool to solve their problem. So then we just went all in on Slack from there.
So much good stuff there that I really want to dive into. To begin with you guys spent six weeks talking to customers trying to figure out what problems they had. And then you guys built this product that they weren't really engaging with, they didn't really even remember to use.
Do you think that you could have discovered this through your prior questioning if you'd have asked better questions or do you think this is something that you just had to sort of learn about on the fly once it happened?
It's probably more of the latter. I think it's really hard to get honest answers out of people, especially if you're asking your friends and family, but even strangers. If you ask someone, would you use this? The chances are they're going to say yes, I would because they're talking to another human who they know is pouring their heart and soul into working on this new venture and they're really excited about it.
They don't want to squash your dream as the entrepreneur. So they'll aspirationally tell you that they'll use something and if you build it they'll use it. But then when you actually build it and deliver it to them, they don't because it's not actually a hair on fire problem that they need to solve.
So it's a tough balance and to be honest I don't have a perfect answer for it. I prefer the general flow as a maker of talking to people at first to gain insights instead of just building something from the get-go, but talking to potential customers to gain insights, learning what their problems are and then building an MVP as fast as possible and getting it in their hands.
Ideally you would if you're especially a SaaS company you would get the customer to pay for it before you've even touched a line of code and built a thing, get their credit card from them because that really signifies this is a problem that they really have and they're trying to solve and they show that by actually giving you money to do it.
I think reaching the point where you guys have done all this research, you guys have spent weeks building something people aren't using it could be discouraging for a lot of people.
I mean a lot of people will just give up and quit right then and maybe completely pivot into a totally different business. How did you guys decide to double down on Slack and focus on that? And what kept you going despite some of the bad news of when what you had built and the research you'd done wasn't good enough.
Great question. I'm a big believer and that a founders number one superpower is managing your own psychology and what I mean by that is when the lows get really low, you're able to pull yourself out from underneath those and not give up. Also not being fueled by high highs too is the only way that only thing that motivates you to do your work, right?
So you have to really get good at managing your day-to-day psychology and having discipline of okay, I'm just going to keep working on this thing and keep trying to make progress every single day knowing that over time the progress will compound and eventually result in something that's valuable.
But the other thing too was I like to be really transparent it. So I'll be transparent that we had made some money off of the HubSpot IPO from working there too. So if nothing else that was a safety net that I had where if we completely screwed up and nothing worked, I knew I had some cash runway where I could take time to find another job that I really liked and didn’t just have to take on a ton of credit card debt or jump into something I didn't want to do.
And that's a really fortunate position that both Nelson and I were in and it took off a lot of the pressure as well. So that helped us maintain focus. We just made sure we were disciplined. I think having a co-founder also keeps you accountable too which I would recommend to anyone and then from there was the fact that the problem that we're trying to solve was really born out of our own need and we knew that it was a fundamental problem that almost all groups of humans have working together.
Which is like, how do you keep everyone in line and get people on the team ramped up quickly? So we knew there was something there from our own experience. We knew that existing solutions weren't that good. We just didn't know exactly what the exact right way to solve it was.
This is a pretty crowded space that you guys are in and I mean the problem that you're trying to solve you said there are existing solutions for a lot of reasons are not that good.
Why do you think that's the case and what gave you the confidence to enter this market where you're really going up against tools created by companies like Google, created by companies like Atlassian, that have been around for very long time.
We knew this was a crowded space going into it and we thought that was a good thing. The reason why we thought it was a good thing was that there was already companies spending millions, if not hundreds of millions of dollars on solutions that they didn't love.
That to us signified that there was an opportunity where as product founders we could go in and carve out our own part of the space for ourselves, based off of a really simple, easy to use product that integrated with all of your existing tools and we would get all the people who cared about design and product and usability.
Anyone who wants to use a super customizable product that lets you do anything they can use Confluence. Anyone who doesn't care enough about the problem of having a high performance team just wants to cobble things together, they can use Google Docs but there is a subset of people and it's probably a pretty large one that want a centralized repository for all their team’s knowledge that's easy to use so that they don't have to explain how to use the product to every one of their team.
People can just pick it up and it kind of just permeates their organization. That's scary going into a space where there's a lot of competition and 800-pound gorillas, but it also means that there's an opportunity there too.
So now you guys are at the point where it's just you and Nelson. You've gone through this iterative process of talking to people and building a product.
You listen to their feedback saying why it's not working, updating your product now to work with Slack and you launch. You said you have 200 customers, even famous customers like Texas Rangers who are paying to use your product. What was that process of launching like and why was it such a success?
Well, I'm gonna back up there and say they were not customers. They were just people trying out the product to see what it was all about, which is a big difference, right? No one was paying us anything for this.
They were just hooking it up to their Slack account. The thing that we validated was people would give us access to one of their company's most private tools, which is their chat tool that has all of their internal chat logs. They gave us a hundred percent access to try out this prototype.
Which meant to us it was a huge problem that we were solving where they were willing to give up that privacy to solve this problem. So from there, we realize okay we need to actually own the content that's inside of the system and not have it be hosted on Slack’s platform. So we rebuilt it, we threw out our version 2 and started building version 3.
So this is three versions in six months where we started building our own version on our own platform hosting, all the data that did the same things but was a little bit more robust also hooked up to Slack as well. At that point it was Nelson, myself and another contractor that we had who is an engineer and the three of us just hammered out this version as fast as possible which took about three months.
So the same time you're building version 3 I was also basically doing full time sales as well and I was taking all of these companies that were signing up for our Slack versions that were listed the Slack store and talking to them all and pre-selling them on this new version we had launching in May.
I actually took people's credit cards over the phone to validate that they cared enough about solving this problem that they would pay us and that was such a good filter to figure out okay is this new version that we're launching that's hooked up to Slack, is that valuable enough that people will pay us for it and basically signal that they'll use it in the future and the answer to that was yes, because we got 20 prepaid signups while we're also building the third version.
One of the most desirable things that you can reach in a startup universe is what's called product-market fit and that is being in a good market with a product that also satisfies the customers in their market. Would you say that at that point Tettra had product-market fit?
Personally, I don't think of product-market fit as a boolean milestone where once you get it, then you're in the promised land. Product-market fit is a moving Target over time. At the time, yeah, we probably had product-market fit because there's literally no other tool that did what we did, that connected to Slack.
So there's no other option. But we didn't necessarily have product-market fit if we were solving the problem that people had well because we were just missing so much functionality that people needed in the good knowledge sharing system over time. I would say yes, we got to product-market fit.
But then inevitably over the the six months or nine months or so from when we first started building the Slack version other companies started raising funding and popping up doing the same exact thing that we did and that raised the bar for what product-market fit actually was. So we've been constantly building over the last two years or so two and a half years trying to maintain our product-market fit and get to the next point of product-market fit. What I think is it’s just going to be a never-ending process to get to that level.
That's one of the things that a lot of founders struggle with which is how much should you be building? How do you actually solve your customers problems in a way that other solutions don't?
How do you decide where to draw the line between should we build another feature if we really want to land this particular customer or we should change our value proposition and go to a different direction and pivot. I know right now you guys on your website don't say very much about Slack but in the beginning days you guys were dependent on Slack. So I guess what I'm asking is how do you think about where to go next with your product?
In the early days of Tettra deciding to integrate and build on Slack was the best thing that we did and the reason why is that we were one of the very first Slack apps in the Slack app directory.
We were probably in the first 50 and so what that did was it opened up an acquisition channel for us to get our new potential customers to our site without really any work from us whatsoever. So the nice thing was that gave us a new cohort of potential customers to talk to every week that had fresh eyes and fresh insights that we could test our assumptions against and validate new mock-ups in the new product and see if they would buy the product.
So the learning loop at that point was super super fast. And really that was because we had all these new customers coming in from the Slack app directory that we didn't have to really do much at all to get to come to us and they were highly qualified. So we talked to them and learned a ton and then we take all that learning and go build that into the product and then repeat that over and over again.
I think it's really hard for founders when you don't have that sustainable acquisition channel set up and you have to go out and do outbound email and calls and meetings to acquire a new people because that just takes up so much time and you don't have enough time to code and do the acquisition at the same time.
So, I mean if I was to start over again, that would be one of the things that I would try to figure out as fast as possible, which is what is a sustainable acquisition channel that I can set up for myself where I don't spend money on it, so it's probably organic for the most part. Or a directory listing on another platform where it drives new demand to me over and over again, so I don't have to keep going on trying to find new customers in their early days.
Yeah, so let's dive into this a little bit because Nelson talked about this and your Indie Hackers written interview last year, that there really is more than just product-market fit. There's also these other dimensions that you really need to be looking at. So there's how well does your product fit into any particular channels?
Can you actually get what you're building in front of the right customers at the right time for the right price. There's also your pricing model. How do you make sure that your pricing model that you choose is something that's going to allow you to target the right channels.
So what you need to do is get customers through advertising but you're not charging enough money to really afford ads, then of course your business is not going to work. Have you guys thought about these other channels? Have you tried anything else besides Slack and how crucial have finding the right channels and getting the right pricing model been to the success of Tettra so far?
The framework that Nelson talked about in the Indie Hackers post is called Product Market Channel Model fit, summed up as the Four Fits. It's a concept we learned from the VP of growth when we were at HubSpot. His name's Brian Balfour, his blog is actually Coelevate.com and if you just Google the Four Fits, Brian Balfour you'll be able to find that post.
I highly recommend all founders read that, it was really transformational. We saw that as like, oh, right, this is why startups are really hard when you're thinking about not just product and not just the product in the market. But also, how do you reach those people? And how do you sell them? So for us thinking about product market channel model fit, I would say we messed it up for the first year and a half two years and we're just coming around to fixing it and it's still a work in progress.
What I mean by that is for the first year or so from when we actually had the Slack version 3 of Tettra working and out in the world we were doing an inside sales approach. Meaning we would have a salesperson, it started off as me and then we hired a sales person give a demo to the prospect and then get them to try to buy the product and the reason why that didn't work well was we charged initially $5 per user.
So we would spend all this time doing all these demos and then at the end of the call the prospect would say, okay yeah. I want to buy it. I'm ready to go. I mean great awesome. how many teammates do you want to buy for? Your company's a hundred people. The prospect would say like, oh, well, we're just going to start with three seats so it's $15 a month, right?
The economics of having a salesperson sell $15 a month subscriptions just doesn't work out at all. So from there, we kept raising our pricing to try to support an inside sales team, but the two problems that we ran into were one, the product is really simple and actually didn't really require a demo to learn how use it. In fact the people who got the most value out of the product were startup founders and engineers who don't want to talk to a sales person.
They just want to get into the product and try it out poke around and see if it does what they needed to do. So we're trying to do inside sales and no one wanted to talk to us. The most qualified people didn't want to talk to us and then also because we kept raising our prices to support an inside sales model. We actually priced ourselves out of the range of the people who would want to buy it.
So we eventually moved away from inside sales and are now using a freemium model where people try out the product first and we don't talk to them from a sales perspective. They just use it and see if they like it and then if they do and the product solves their problem, they just buy it. So the model that we use, which is freemium and the people that we sell to which are startup founders and engineering teams most commonly that dictates what channels will actually work for us.
On how we reach those people, so startup founders are always reading they’re always learning. They're listening to podcasts like this one. So content has actually been a really big key for us where we've put out a lot of content around how to build high-performance teams.
Why you need a wiki in your company all that type of stuff and that's been performing well and then also Integrations work well for us too because founders and engineers are really concerned about productivity and efficiency. So having all of your tools integrated in one makes it really matter to them.
And so those integrations get us listed another platform directories, which then drive more qualified leads to Tettra. So those have been our number one and two acquisition channels so far. We've tried many others and they haven't really worked so. Right now it's just all about doing more content and scaling that up where six months from now we'll probably see those rewards.
Another thing you guys have done throughout the course of your company is actually hire people. I mean, it's no longer just you and Nelson. You brought people on to the team as you've raised money and made more money from your customers. What has that process been and how did you learn how to make good hires over time?
So we've hired, our team right now is six people, soon to be seven. Our most successful hires are people who we say have a lot of potential energy, meaning they have the knowledge that they need to do a job and for whatever reason they haven't been given the opportunity to do that job yet.
As a founder, especially a founder without unlimited cash and $30 million dollars in funding from VC’s you have to get really good at arbitraging talent. What I mean by that is you have to see the potential in people and then give them a shot to do the job that they haven't necessarily been given the opportunity to do yet.
That can be really hard because there's a lot of learning that they have to do. So what I find works well is just over communicating and being patient with people and giving them the context that they need to make good decisions and do great work and for us that means being really really transparent around pretty much everything at Tettra and I mean almost everything. Including how much money is in the bank account? What's our burn rate? How many months of runway do we have left?
And we even recently decided to make salary data transparent too, internally at least and what that has done for me is allow me to create a collective consciousness with everyone else in the team so that when they're making a decision they have all the same exact facts that I have is the founder.
Which makes for better decisions and really at the end of the day, if you want people to make decisions and do something the way you would, they need to have access to the same knowledge and information that you have as a founder. The only way to do that is to be transparent and centralize it in one place and make it accessible for everyone.
Let's talk about learning. Let's talk about your process for making decisions. There's kind of this balance you have to strike as a founder between learning on the job and learning before you really get to a problem.
How have you and Nelson navigated learning and figuring out what decisions you need to make. Do you have mentors that you rely on? Are you guys looking at other companies as examples or are you just doing trial and error and learning lessons as you go?
It's a bit of all of those. So we have a couple dozen investors which we’re really fortunate to have and they're all great. Most of them are former operators themselves. A lot of them are from HubSpot and they're able to help us with one-off questions we have about any specific thing to be fair.
They're all really busy too. And most of them are running their own companies as well. So we try not to bother them too much. A lot of the learning that I do is just from other sources so books or podcasts or blog posts. I love to read, we actually have a book club at Tettra where we all read a book together, but really the most interesting thing about books specifically are when you read someone's book, especially a business book, you're taking their most distilled cohesive thoughts and loading them into your brain.
I feel all these founders and I used to do this myself, try to spend all of this energy getting meetings with people and so that they can learn from them and really if they just read their book they would probably learn way more from them. So I'm a big advocate for reading books constantly, especially business books and then also just really what's helpful was talking to other founders as well.
I have a lot of friends who run early stage startups or friends who are a little bit further ahead than us. And that's super helpful too because one, it's fresh in their mind. All the struggles that they went through and how they solved them. Whereas someone who's like, running a 10 billion dollar company with 3,000 employees isn't going to remember what it was to have three employees and no resources.
To someone who's a little bit further ahead than you or the best mentors it acts as founder therapy, a sanity check to where it's akay, good, everyone else’s startup is on fire too. It's not just us. Which is kind of validating as well.
How do you get people to agree to be mentors and to be coaches for you? Do you just send cold emails? Do you meet people at conferences?
So we're we're really fortunate with Tettra where I've been in the startup game for almost eight years now. So I've built up a network of people over time, which I'm really lucky to have done.
Thinking back to when I was younger when I was 20, which I know is we're at that type of level is where most people are starting from. The way that I built up my network in the beginning was one, we joined that accelerator MassChallenge. We had to apply to it but we got in and that was hugely helpful for rapidly expanding our network and there's a lot of other ones as well. Techstars or Y Combinator if you can get in.
Those are really really helpful for meeting like-minded people who care about this type of stuff. Then from there it was just going to events and meeting people and then doing the work to keep in touch with people over time and making sure that once I had someone's attention I didn't just let that relationship fizzle.
So that might mean like sending them a progress update with how the company was going or asking them a question or just sending them thoughtful email hey, I read this I thought you might find it interesting.
Over time that helped build up my network of people that I could rely on. Now we actually have official advisors. Nelson and I we work with an advisor. His name's Patrick Campbell. He runs a company called Profitwell here in Boston and he's one of those people who's a bit further along than us.
He really understands what it's like to grow a company and he's bootstrapped his company too so he understands the resource constraints that we have and he's hugely helpful. We just got to know him by going to events that he was hosting and then just hanging out with him over time. Then we asked him to be an advisor and he's also a Tettra customer too so that helps.
Then we also were big proponents of mentorship here a Tettra too, sharing knowledge. So we actually give a grant to all of our employees as well in our management team to go and find their own mentors as well.
So people want to invest in them as well because this is a founder is you have access to these types of people, especially your investors, but if you're a manager, you might not. So we want everyone to be leveling up here and we try to make that possible.
You mentioned earlier that one of the most important things that you can do as a founder is to manage your own psychology. And I totally agree. I think being a founder mostly comes down to a lot of decision-making and depending on where your head's at you’re more or less likely to make the right decisions. What are some of the tricks and some of the things that you do to manage your psychology as a founder and make sure that you can do your best job?
So I'm still learning new tricks and new techniques and all that type of stuff every day. One thing that I've been doing lately is I read this book, it's called The Happiness Advantage, I think it is. But anyways, it's based off of psychological science where people who think about positive things actually rewire their brain to be more positive.
As a founder when you're constantly getting knocked down every single day, positivity is really powerful. It's simple things, thinking about three good things that happened during that day and they don't even necessarily have to be related to your company. It might be like, I got to stand up and the sunshine for 15 minutes and it was warm out in October in Boston, and that's great.
But by forcing yourself to think about those positive things and be thankful for what you have, to me at least it gives me kind of a sanity check. I’m like, oh things aren't as bad as they might seem yeah, we did have that customer churn, but it's okay. We will get more customers in two weeks and it's not a big deal. So that's been really helpful for me and useful.
What do you think is one of the more surprising things you've encountered about making your business work and being successful founder in the last few years?
For me as a B2B SaaS founder the most surprising thing is how willing your customers are to pay you when you just explain to them the reason for why you're charging them and what I mean by that is we've increased our prices a few times.
We've given people discounts and then later on we're like, hey, we don't want to give you the discount anymore. And every time we do that, it feels scary to go to someone say hey, you're going to have to pay us more now. Every time we explained to them.
Hey, we're increasing your price, the tool is much more valuable now, we've built way more functionality into it. Also over the long haul we need to charge money so that we don't go out of business or we don't feel obligated to sell the company right away. This will give you a long-term tool that you can have access to. Once you explain that everyone is basically just like okay cool, sounds good. They understand and they're willing to pay you.
So for me the thing that's surprising is when you give people that context about how hard you're working and why the tool costs what it is, they're willing to pay you because they want to support you. Whereas it's really scary to try to ask people to give you more money and you shouldn't be scared. You should just do it because the worst thing they're going to say is no.
Yeah. It's counter-intuitive to how much more excited often people will be to pay for products that are more expensive than they are to pay for product that's super cheap, like $5 a month because usually that correlates with the product not being all that useful, not having that many features, not being really ready or as valuable as a more expensive product.
For sure and for us as a business that wants to be independent over the long term and not subsidizing their company off of venture capital it's really important to charge and I think now people are scared of products shutting down randomly.
Google shuts down a product once every month that millions of people use, right? So people actually want to pay you to keep your product up so that you can have a livelihood to keep working on it and keep delivering value to them in solving their problems.
You guys have raised money you've at the same time really focused on getting adequate rest and making sure you run the company the way that you want to and people often look at those as opposites.
People look at raising money from investors as locking you into a certain path and having to grow your company a certain way. How do you deal with this push and pull? Have you found that that's the case, that you're not able to run a company the way that you want because you have investors?
I think of money and funding as a tool and it's how are you going to use the tool and I feel there's this dichotomy that exists right now or a spectrum. Which is on one end of the spectrum you have the, never raise money, investors are terrible, just bootstrap. Which is the left side.
Then on the other end the right side you have raise as much money as possible and build a unicorn or bust type of thing. I think that there's room in the middle for raise some money to get going. Building SaaS software just takes a long time, it takes a long time to get the functionality and figure out what the problems that people are willing to pay for.
But once you figure it out and you also figure out your acquisition channels to use you can grow, it's hugely valuable because it's recurring revenue and so raising a little bit of money or raising some money in the beginning take some of the pressure off you as founders where you feel you're going go out of business every month. It's really hard to concentrate when you're constantly worried about your livelihood. So I think of it as a flywheel.
We raised a little bit, we raised some money to get the flywheel and then we wanted to charge revenue to make the flywheel keep going and get rid of friction so that we could be sustainable over the long haul and our goal in the long term is to build a big business and it just takes patience, but we needed some capital to get going.
This is your second business. You guys are generating hundreds of thousands of dollars in revenue from customers. You had a previous business. You've experienced fundraising all sorts of pivoting into the right product and the wrong product.
Out of all your experiences and the things that you've been through what would your advice be for somebody who's maybe just getting started or considering starting the very first business? What do they absolutely need to know?
I think it's really important to pick a problem that you are truly passionate about over a long period of time and what I mean by that is it's really easy now to get a new product going, cloud infrastructure exists, Stripe exists to take payments. There's always open source. You can cobble something together.
And so often people will get going on something because it's easy and it's fun and you're learning a ton in the beginning and then when it gets hard and inevitably 6 to 12 months in they don't have enough grit and persistence to want to stick with it. But if you're working on a problem that you truly care about it makes it much easier to stick with the difficulties that you'll inevitably run-in with.
For me, I've been thinking about internal communication and cooperation for a really long time because I ran into it on my first company RentAbilities. I literally just saw a tweet the other day for myself 8 years ago in my Timehop asking if anyone knew of a good internal Wiki, that would be good for a startup.
I've been thinking about this for a really long time and the problem space is near and dear to my heart which makes it much easier for me to slog it out and get through all the hard times. So the advice that I give or one piece of advice, there's dozens and dozens but one piece of advice that I like to give, it's counterintuitive is, when you think of a new problem try to talk yourself out of it.
What I mean by that is don't just start working on it. Write it down, write down your thoughts and then try to move on. If it keeps coming up over and over again over the course of a few months, it means it's one, probably a problem that you care enough about to solve and two, a problem that's coming up consistently for customers that's prompting you to keep thinking about this.
That's great advice. Just I think another way to manage your own psychology almost indirectly by making sure that the future you is still going to want to work on what you're working on today. Thanks so much Andy for coming on the show and giving us your advice and sharing your story. Can you tell us where we can go to learn more about what you're up to at Tettra and what's going on in your personal life as well.
For sure, so start with personal life, I'm basically AndyGCook on basically every single social network, I figured that one out early on. So if you want to reach me on Twitter, it's just @AndyGCook. My DMs are open if you have any questions, or you can email me directly at Andy@Tettra.co and that's Tettra.co.
Then if you want to learn more about Tettra just go on our site, same domain and then I'll give a plug to a series that we actually published over the last few months about our journey going from literally almost running out of funding to profitability over the course of a year.
It's just a really transparent look over all the difficulties and struggles that we went through and literally how we almost failed and it's on our blog if you want to check it out. And the reason why we wrote it is because I feel when people hear about companies, it's always oh we're killing it and no one actually knows it your company's on fire internally.
So we wanted to give people an inside look about like, hey, we were failing and we came out of the nose dive and here's what that looks like. So that other people would hopefully find that valuable.
Yeah, that sounds exactly what people need to read. Thanks again Andy for coming on the show.
Thanks a lot Courtland. Thanks for having me.
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