How Coda CEO Farid Sabitov grew Coda to $41.1M revenue and 10K customers in 2024.

hello everyone my guest today is the ceo and co-founder of a company called coda he was formerly an executive at youtube where he helped grow the platform the world's largest video destination helping lead operations there he also held leadership roles at microsoft and served as founding ceo of central which is acquired by launchers also an mit graduate shashi are you ready to take us to the top yeah sounds good all right so you launched this thing i think in 2014 you're still pre-revenue today but you're learning a lot based off kind of your alpha and beta launches help us understand what the company does and uh what what you've learned from the alpha launch uh sure so we we started the company 2014 the company we build a new type of document it's an all-in-one document that blends the best of documents spreadsheets presentations applications all into one new surface the thesis is that anybody can build a dock as powerful as an app uh we ran the company a little bit non-traditionally and and we're in quiet stealth for about three years building up the product with small number few dozen alpha customers we launched the beta in late 2017 that grew quickly into about 100 companies uh and we launched the 1.0 this past february about five months ago uh where now tens of thousands of users thousands of companies around the world will launch pricing in the next couple months okay so sorry how many companies are on here now about a thousand uh thousands mid thousands okay so call maybe four or five thousand something like that and where did you tactically how did you sign up these folks going all the way back to 2014 what channels did you use yeah most of it was word of mouth i mean there was a handful of things that worked well in terms of communities we dropped into the product on community is probably one of the best for for coda uh tends to tends to draw a lot of people a lot happened on reddit and various forums a lot of the demand for coda tends to come through uh sort of two different mechanisms one one is people that i think of as sort of tool seekers that are coming after coda as a new type of document purely but the other type generally come after a set of use cases and so they tend to they tend to arrive first in our template gallery i kind of think of it as front doors and side doors uh and in those cases we tend to be relevant in communities of particular types so you know we show up in community forums for you know uh people trying to track fitness or people trying to attract project management or people trying to run better meetings or so on so i want to actually quantify some of this because my team did some research on the distribution channels so back in october 2017 he launched on product hunt got about 5 000 upvotes quantify what that meant for the business so how many new signups did you see that day uh let's see so yeah five thousand up votes is a pretty it was pretty good um first launch uh tens of thousands of sign ups that day uh or that week i should say yep and these were all individual seats or did you see a lot of kind of at google and at uber and at you know you know airbnb signing up you mean as opposed to as opposed to gmail yeah as opposed to individual users using it like personally for fitness um we let's see early on and back then i mean it's probably about the same percentage we're about 80 businesses about uh uh 20 uh individuals and consumers okay now anyone listening to this is going to go wow this seems like they've done a great job signing people up is this like is he betting on a premium plan and also how the heck has he supported himself for the past four or five years with no revenue so you've either raised a ton of money or you've sunk a bunch of your own capital in which one is it uh we raised a bunch of money so we raised about 60 million dollars across a couple rounds financing six or six zero six zero okay so 60 million raised most that capital where's it been deployed uh well most of it's on the bank but the the capitals have mostly been deployed to engineering i mean we were we were probably 70 80 engineers for uh until uh probably in the last year okay so so what's the teams that look like today we're about 50 people all in there in uh san mateo uh no no we're mountain view san francisco and seattle okay very cool and then we have a few people spread out florida new york so on so you know i guess is it fair to say that your bet you're betting hard on a freemium model you want to get up to kind of millions of users quickly and then try and go four or five six bucks kind of a seat per month something like that yeah so it's definitely a freemium model i mean think products like this new documents on they they spread quickly and so you want it you want as few frictions as possible in that spread process and as they stick people tend to find uh more and more important use cases and upgrade through it in terms of the pricing model uh we're going through that now with all the different companies that are using us and you know we'll roll it out in the next couple months but the the current thinking is that it's a creator-centric model so that the the you don't pay for many parts of the space pay for all types of users our current plan is that you you recharge for creators and not for editors um that incense a certain type of behavior of allowing people to share more freely uh might mean the perceived price of the creators a little bit higher but when blended together with all the editors it tends to work out to um pretty similar so a team of 100 might use you but maybe there's only three people creating docs and the rest are actually editing you'll charge for the three that are creating yeah so the ratio tends to be eight to one ten to one tends to be the the general creator to uh contributor ratio uh and that's actually something that's part of the code of thesis from the start is uh before code i spent a while at google before i spent much time on microsoft working in office that ratio of maker to user is a ratio we've seen uh across the office suite as well the the way those products are used too and then so take me back again to kind of some of the earlier days here so your first round of you leave the company you leave youtube you jump directly into this um your first round of capital how much did you raise and the follow-up question on that is was it simply you pointing to your historical resume at youtube that allowed you to raise an evaluation that you weren't getting i mean you have no idea what the valuation is going to be that early how do you even think about that yeah i mean our fundraising process was pretty different than than most this is my second company i started my first one was 20 years ago and that one it took us you know six years or sorry six months for his 500 thousand dollars um and this one we you know managed to raise the first round was about 25 million and it was done basically over a weekend and you know i think there's probably a couple different things that went into it certainly the quality of the team uh was was high on the list as myself my co-founder alex and i both have pretty good track records um both with startups as well as with with larger organizations uh and then it was the market in the space and our approach to it at the time we hadn't really built anything yet but we had a pretty good idea of what we wanted to build um the pitch deck was basically 69 slides of uh of uh product marks and it basically had the the view of what we were going to end up building uh back then have you published that anywhere i haven't come on you you should release that now that's a really interesting story yeah at some point at some point i will there's nothing sensitive in there right it's just early it's early ui stuff right um is there anything sensitive i have to go back and look at it it's uh it i would say it's a it's a road map that we're still following so i go through it with the with new employees and i think there's many companies that start and you end up doing something very different than when you started this one is pretty true to our to our original path we're still basically executing on that plan so it does include a lot of stuff we haven't shipped yet um but other than that it's uh it's pretty close to what we built so 25 million rate is kind of on day one now when i look up your the actual docs you filed from a government perspective it all looks like it's in one round so did you basically set terms and then let it roll and you slowly added more on the 25 on the same terms going up to 60 over the past couple years no no we raised the second round about a year later um that was done so the first round was led by greylock and general catalyst and then we we raised another round about a year later led by um coastal and nea how much on that one how about 35 million that's the rest of it okay in both cases i squeezed in about uh 15 angels friends of mine and so on that that were interested in joining the company so so what do you i mean you were at youtube so you get this right what do you have to scale to okay this is going to...