How Bird Eats Bug CEO Jacky Chung grew to $21.4K revenue and 600 customers in 2023.

hey folks my guest today is dan makroff he spent most of his career in product management roles in companies like google bcg ventures and rocket internet now together with 2x colleagues he co-founded a b2b sas startup building a new kind of dev tool that helps software development teams report and fix technical issues 30 faster it's called bird eats bug.com dan you ready to taste the top yes absolutely so when did you guys start writing the first line of code for this tool um about two years ago like in summer we had the idea and the first line of code was written and i think two months later we already launched the mvp so like the minimum viable product on product hunt and we got to number five product of the day and that basically kick-started the the company and this was in 2019 uh correct okay and and tell me more about the product hunt launch uh why do you think it did so well were you guys intentional with that launch or do you just sort of get lucky um i think it's a combination of both i think there's a like a big element of luck when it comes to product hunt launches um but we tested the waters like we did some uh preliminary let's say launches for like smaller products um like useful for the community just to get a feel for product hunt in general um but i think the the main advantage for us is that like usually for example we heard that the audience on product hunt doesn't have very good retention and i think that the reason for this is that you have a lot of repetitive products like a lot of website builders for example and in our case like we were very unique um and i think also the name helped and like the the whole branding um and like we see a lot of the uh people who tried bird on the first day like on the launch day still with us today so um that's very interesting to see you got 319 uh 361 upvotes on that day uh this was back uh september 23rd 2019. do you remember what your web traffic looked like like how many leads did you get from product do you remember um like we we didn't have signups at the um at that stage uh i can share the how many um chrome install uh chrome extension installs we had and that was about five six hundred installs and um i think about like seven to one hundred thousand bucks reported on that day and um like it was like a massive peak then it first went down and it took us probably like a year to get like consistently to that level of usage where are you now in september how many bugs reported on your platform i assume that's your critical usage metric right uh correct um like we have about uh sixteen hundred bugs a week um so uh that would be like what six thousand uh a month roughly and we're growing like um in the last uh quarter we were growing 20 month over month and how do number of bugs reported correlate back to revenue is that how you price um sort of so like we have a generous free tier but then once you run out of feed here so like on a free tier you can store up to 30 bucks you you can access up to 30 bucks and then you need to upgrade but then once you upgrade we don't have like a specific tiering so like we just have one plan for simplicity and the um the correlation is pretty direct although there's like a time lag because it takes you a while to like uh go through your freemium uh plan and then upgrade how long does it take your you know obviously you track onboarding so if i sign up today how long will it usually take for someone to hit that 30 bug limit um like it really depends on average it's uh two to three months uh that we see a company but that was before our pricing change that was like 50 bucks per person we were giving and now we're given like 30 bucks per company um partly to reduce that amount and um i think that's going to be like within a month like most companies will hit that i see okay so how many paying customers do you have today uh we have about uh six percent um and that's um like the target like it's kind of an interesting story so we took dropbox um as an example and because they have like a a free tier as well and they have a lot of word of mouth and in our case we have forty percent of uh signups coming through word of mouth which is like crazy um and uh we decided not to make uh the free plan too restrictive to keep the word of mouth going on but also like we want to know that we're you know spending uh time on something worthwhile that companies are willing to pay for and i think dropbox is at about four percent and then we're like targeting roughly um that amount to um to stay happy and so dan when you say six percent six percent of what uh six percent of uh all of the sign ups are now in paid tiers i see so how many total sign ups do you have you had then uh we had about 10 000 signups we got it so you've got about 600 paying customers right now yeah i see okay cool so tell me more about that obviously product hunt which is an initial strategy to get a bunch of these signups what else did you do in the early days to get your first sort of ten thousand signups um like once we launched the product hunt um most of it was like seo and and direct traffic and like we listed on a few platforms like captain for example or get up and at the moment we're like essentially trying like every single channel that we can get our hands on um in terms of the most successful like in terms of signups i would say it was google ads um and we're like advertising you know for general screen recording um i guess categories um and other than that um it's uh like it's interesting like because you have kept error and get up and software advice and that's like one umbrella um but like we get more leads via get app although we were originally kind of like betting on capterra and what also worked for us um is newsletters i can i can recommend that i was not expecting this and also we we have an onboarding video and we just tried to like uh put it on youtube and see how it would perform and uh like that performed surprisingly well so like even for an ad like 75 percent uh watch time we're getting like on average watch time is 75 so looking just at your paid spend i mean what are you paying to get a new paid customer these days uh i believe it's going to be like under 10 euros oh prepaid customer that i don't know from the top of my head from the ups i think we're paying like less than 10 euros per um sort of sign up and then i guess you can uh convert that so like what about 15 sign ups yeah yes it takes you 15 times 12 right 10 euros to 12 so 15 sign ups for one paid times 12 dollars about 180 bucks per paid sign up something like that yeah yeah interesting and um let's talk about git app you know everyone always asks me nathan should i go on g2 first or capterra get up i would say it's like an underdog in this category but it's performing well for you you rank number five under the category bug tracking so you rank fairly high with 29 reviews 4.7 do you pay for placement here or is this are all organic um so i think on get up like you have to pay like if you want to track clicks um so like we're paying in some regions uh i think mostly like the us uh in like europe and north america um i don't know how much like the cost per click um i'm not that sure about like the the thing with getup is that like you have high purchase intent so that's great um and like if you have a good retention customer lifetime value i think that's uh that's also great i think the challenge that we find with getup um is that we are essentially creating our new um our own category so like we're not um something that's been that's existed before and like we're not technically bug tracking yeah so like people are like looking for adjacent things and then they find bird um so it's not always easy to kind of like um tell the person that it's not you know exactly a bug tracking for example yeah but get up i think works for us more because get up seems to have like more technical audience versus captera or like more like developers um uh looking for tools there how many leads do you get from github per month right now uh that's a good question that's uh or arranged could it's like in the tens uh but we're not you know spending too much money so um like because the cost per um sign up is um quite high like for us at least um we pay for the present i think like we in general on get up to terra like we're spending under like 800 uh dollars a month to list on all of them uh second to list on cap tara like all of them all together under 800. yeah okay interesting so let's let's go back to like again how you're currently building so bug tracking tool over ten thousand free signups which is great you're converting six percent which is high for premium tools so congratulations on that what are they paying on average per month um it really depends on the uh on the uh on on the size so sometimes like we have like a single bug reporter for example and they're paying like eight uh bucks like sometimes it goes uh over like 200 a month like for slightly bigger companies and the interesting thing that we found is that like a few bigger companies reached out to us like with thousands of people and we couldn't cater to them because all of them wanted things like single sign-on for example self-hosted solution and also sock 2 and iso 27001 certifications and we will get those for sure but like they take months to get and like their purchasing departments are like really ruthless about these certifications so so how many seats on average are the 600 customers paying for it sounds like a five-person team might be average something like that um yeah i would say like five to ten to ten people and um but it goes like from one to like a hundred uh easily so there's like high fluctuation yeah yeah but so if i ask you how many paid seats are on your platform across the 600 customers would be something like three thousand four thousand got it right uh from 600 paying cut no like 600 like paying customers would be like 600 seats essentially how many logos yeah okay got it so how many just companies yeah that would be about 16. okay got it 16 okay got oh well those are huge teams like six years like six uh six zero so yeah so those are average ten person teams exactly i see okay so six hundred paid seats times like a minimum of eight bucks per seat you guys are doing about 4800 bucks a month right now in revenue yeah okay and where were you if that's what you're doing today what we're doing about a year ago do you remember uh we were pretty much zero we just launched payments and like uh if i remember correctly that would be i don't know like maybe 200 bucks yep yep yep okay interesting so so how do you oh and and have you guys bootstrapped this or did you raise uh we bootstrapped our first year and then we raised um 1.5 million seats that was last year you raised 1.5 that was the end of last year yes okay interesting why raise capital why do you need capital to build this um it's technically difficult to build so something like um what we're building today was not possible like even let's say five or six years ago because of the state of the browsers and like um like the technical limitations um so that's one thing uh it just requires like more manpower and um also like more you know good developers um which is not uh cheap to get um and secondly i believe it's gonna be like the right strategy would be a combination of bottoms up like what we have right now and also top-down um approaches so like we would need to have like sales to in order uh to cater to bigger organizations which is i guess the more um interesting market for you know a company like ours okay that makes sense and tell me more about the team today how many people uh we have eleven full-time employees um and like a couple of freelancers how many of those folks are exclusively engineering uh five okay okay and are you so found are you the technical engineer technical uh i'm not i'm not technical we have three co-founders and uh and one of the co-founders i'm coming from like yeah product management space but uh i'm i'm not uh i'm maybe more technical than let's say an average person but definitely not the engineer level technical three people obviously the tough conversation when you get going to decide how to split equity how do you guys have that tough conversation and um a third or third or third exactly uh like we have the exactly the same stake and like we have the regular kind of like cliff and and so on um so i think that conversation was um like pretty easy like also because regular cliff you mean one year cliff for your investing uh one year for the best in like four year vesting period um um yeah like i think and and not just me that it gets really tough like if the uh split is not equal because then it's kind of like like who's putting in like more you know hours or like more nerves and and so on and that's uh like not a very stable i believe a combination like long term so like especially like if like especially if um you're starting at the same time and not like somebody's joining later and so on yeah all kinds of reasons so someone could have put in money someone could have been giving up a better job to join all kinds of reasons but anyway so you guys are splitted a third obviously you let in investors now i assume you raised that 1.5 on a safe right uh no that was like a regular it was priced what what valuation do you raise that uh like we gave about like 20 25 um equity so like about 6 million okay 6 million post money yes was that fair do you think that was high or low looking back um maybe um i think the interesting part was that we were raising in the middle of the first wave of covet where um it was really unclear what's going to happen um and and how the the investments are going to go so like we um see that like for example if we were raising right now like uh we could have maybe gotten better terms but we're happy um in general and um i think that's um i think at that stage it's more important to get the capital to get going in the first place than to you know like um squeeze every penny out of it um and um we kind of like let's say reap the benefits today because uh now we can show like a lot more progress and like the next fundraise um looks a lot easier than uh than the first one dan how much of the 1.5 million do i still have in the bank uh more than a half more than half we still have yeah like we still have like a comfortable you know eleven runs of runway yep okay so so can i mean can i transfer that to saying if i can take 750 000 divided by 11. you guys are net burn about 70 000 per month yes somewhere around this does that make you nervous at all no um i think we're gonna fundraise um like if things go as as they're going right now we should be able to fundraise early like way earlier than uh we run out of money how much revenue do you want to hit before you go out and do your next fundraise um that's a good question i think we're not uh this round like um for the revenue game like we're mostly like looking at the the usage numbers and like at the growth and like if we can hit consistent growth um and i think uh we're on the path uh to do this um and that's gonna mostly depend on a like if we uh find good advertising channels um and b if we're able to build a solid product and there are a couple of like big things that we're working on like for example um at the moment we're working on something called instant replay so for example right now you need to record uh like you need to reproduce your steps to report a bug and you will be able to go back in time um instead of reproducing and then just export last let's say a minute of your actions uh with technical log so that the engineer can know like 100 of the of the time like what actually happened um and that's like basically a game changer that um uh can i don't say the word revolutionize but that can um really change the way that uh software development teams operate and i think that's our biggest like one of our biggest bets and like once people are on are they hooked what's your churn look like over the past 12 months um we have about 30 of um people staying um in week 10 and that really depends on the um on the role like because um so dan just be clear when everyone signs up if you go fast forward to week 10 30 of them are still there or thirty percent churned are still uh thirty percent are still there are still reporting at least uh one bug a week so like we um are they all paying though or is that just freeze or turn yeah that's for user trend like for what about paid um that's uh i cannot give you the specific numbers but that's like we have like one percent well one or two percent churn like month over month max okay got it do you have any expansion revenue yet or is it just 24 percent return um yes we we changed the pricing plans recently so like before we were charging packages and there you you barely get um um expansion because uh like if you have you know a seven person company like if you add another person we will not see this because we have a package let's say of 10 people so we only have like one uh month of data for uh the expansion um but even before like we were seeing like expansion of like if i remember correctly about like five percent but now it's uh it's more because we can measure it more granular so what's five percent per year expansion uh yes okay got it so net revenue retention is still below 100 but you're working on getting that above uh yes uh the like we don't have really full year worth of data like to uh to say yeah yeah fair enough fair enough i mean you can you mean the project launch was back in 2019 though you had a big swell there i mean what i would worry about is like you have 100 000 bugs reported that what yeah on two in 2019 we didn't have any uh paid plans no i understand that what i was going to say though is on if you're only looking at usage numbers product hunt on that day you had 100 000 bugs reported today weekly you're only reporting 6 400. no no not a hundred thousand like a thousand bucks uh on that week okay that would have been the best launch um in history well that's why i was a little confused got it so you had you said seven hundred to a thousand bugs reported that yeah yeah i see okay cool now it's 6400 per week very cool all right let's wrap up here with the famous five number one what's your favorite business book um i i forgot the name um it was about the uh um communication um let's keep it for now dan no i i can give you the second famous it's uh good to great okay good number two is there a ceo you're following or studying um no number three what's your favorite online tool for building birdies bug linear a linear yes it's a it's like a jared competitor oh okay number four how many hours i sleep to get every night eight and what's your situation dan married single kids uh married no kids okay and how old are you 32. last question what's something you wish you knew back when you were 20 uh it's hard but it's fun guys there you have it they got going on 2018 with the product hunt launch bird eats bug making it easy for your dev teams to squash bugs faster they've got 600 paid seats on the platform on an average of eight bucks a seat for 4 800 bucks a month in mrr that's up from 200 just a year ago 200 bucks so a lot of growth still early they raised 1.5 million seed to invest in mvp and growth at a 6 million post money valuation so they still own as founders about 75 the business uh investors on 25 looking to scale here uh quickly on a per seat basis with 11 months of runway left in the bank we'll see what happens next and thanks for taking us to the top sure one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares 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