How Codelingo CEO Jesse Meek grew Codelingo to $1.7M revenue and 4K customers in 2024.

hello everybody my guest today is james meek he's got 15 years of software development under his belt in 2016 he quit his job with uh canonical of the company behind ubuntu to found code lingo and tackle the technical debt crisis head-on in a 40-hour workweek developer a developer spends over 17 hours on technical debt he's become obsessed with fixing this and unlocking the true potential for development teams code lingo does this by transforming the whole software stack into a big data big data problem detects anti-patterns and then automates common development tasks such as code reviews bug fixes and generating contributor guidelines to name a few jesse you ready to take it to the top yep absolutely all right so tech debt is a very real thing it's even harder to actually quantify walk us through what you do and what your revenue model is how do you make money so we just cut out cut the cut out there briefly so yeah no problem jesse yeah so so again technical debt is something that there's a real cost to it it's even harder to quantify help us understand what you do and how you make money yeah absolutely so um just very briefly on quantifying technical debt uh strike came out with a really great report uh in september last year it's called the developer coefficient they estimate technical data cost companies 85 billion dollars annually and they estimate a developer to be spending over 17 hours a week out of a 40 hour work week one way or another managing technical debt or bad code so essentially we're in the game of saving teams time and money and helping them write better code faster so the the core of the problem is that software developers are great at scaling up anything except themselves so there's a core dynamic of transferring critical knowledge about the software system you're developing that works really well in small teams but starts to break down as the team grows and as the software grows so that's the problem we're solving is is how do you maintain that high quality code that high quality knowledge transfer as this as the team and the product skills and is it a sas model yes yeah so i'll tell you a brief brief story about journey there so uh initially i'm a developer um gosh uh probably close to 20 years now um uh initially i built the product and was getting uh traction with with enterprises um sorry i don't mean to cut you off but i want to get that story but first i want to get context where you are today so can you just give us real quick like average customers paying you about what per month to use the technology yeah sure so i suppose that's why i wanted to tell that uh until that story is that we actually pivoted so we were working with enterprises but then we realized we're just not going to be reached the scale we want to so we actually pivoted last year pulled back from working with enterprises and built a sas model first so a self-service model first and we're really just pushing out into the market we've just started pushing it into the market at the end of last year um and just starting to to pull up those metrics there okay but again so so i want to capture more of that story because it's an important pivot but if you look at your current customer base today on average about what are they paying per month um so right now the the model right now is sas is uh we're just going to beta so we're not actually charging uh charging anything right now we're just trying to prove the value and try to get it against them it's your pre-revenue yeah um as far as the sas model goes we're pre-revenue we did have revenue with uh some of the enterprises we're working with but since the post pivot where pre-revenue because we're trying to push a new model uh to go to a bigger scale walk me through kind of what you gave up the opportunity cost so so in the best month you had with enterprises what was your mrr um nothing to write home about we had a uh we had one install and a large enterprise we're looking at um so it's going to be around what we're looking at there was like around a 50k um recurring annual subscription there um but did it actually close well the problem no it didn't close um we could have pushed through with that but the problem is we're a small team and we really had to choose one thing or the other either we could be um essentially we're turning into like a professional services model uh interfacing with these large enterprises there's just so many touch points with those large enterprises or we could become a product-based company and try to practice assessment so jesse stick with me here i totally understand you want to tell the story i want to dive deeper into it but in your best month closed mrr from enterprises about how much we're talking about a grand a month or five grand a month um we're talking um so we're probably talking best month would be around yeah probably um probably around three grand a month okay and when did you realize that you're looking at your metrics you're looking at what your team is working on the products and you said oh my gosh we're like an agency like this doesn't scale and how did you just how did you send the email to the customers going sorry like we want you to churn we're moving down market in this ass play yeah it was really hard it's probably the hardest decision um that i had to make in the in in the journey um i suppose you you just look at what are you doing on a daily basis and what's what's the outcome of the the effort that you and your team are putting in and we're just putting so much effort into just uh landing one one client and there's just so much um bespoke work that came along with it um you have to get the whole um the whole on-prem piece sorted you have to interface with all those uh different players and just i took a step back and went okay if we put the same amount of effort into trying to crack a self-service model where code lingo becomes a toolbox essentially every developer's uh toolkit um we would get so much more bang for our buck if if if we spend as much time and effort that we're spending on just these one or two clients and actually treated the whole software industry as one client then the the payout of that uh would be would be much larger so and then put this on a timeline for me when did you launch the company what year yeah sure so um 2016. if it was last year yeah that's right okay cool interesting now you raised a little bit of capital how much have you raised to date yeah sure so um all up we've we've raised around uh seven seven hundred k um the the bulk of that came uh in 2017 so we raised from two venture capitalists um one was reinventure which is backed by westpac that's one of australasia's big four banks and the other one is right click capital which is part of the dfj network okay when you push them instead guys at the board being listened we've got to move to an smb model were they generally on board or what was their push back 100 actually they probably pushed me more uh in that direction um because they they jumped on board and they're just looking at the potential of this company and they're saying jess you're not pushing this to its full potential um you need to play bigger and really that was part of the part of the push but why i'm curious why the correlation to play bigger meant go down market because the exact same line of reasoning could apply to like we've had a lot of these companies on for example um uh qa rainforest right like they did the opera they did the opposite of you right they're playing they're selling to devs right and they went way upstream and they obviously just a massive merger and it would create a lot of value so i'm just curious why you're associating going bigger with cheaper price plans yeah sure sure so that um would have to delve deeper into our strategy essentially we're playing towards a two-sided market so don't get me wrong enterprise is part of the strategy it always it always will be part of the strategy but it's more of a stage two so stage one what we want to do is develop a really vibrant developer community and make sure that it's really quick and easy for these developers with their knowledge to encode their knowledge and help other developers write better code faster how do you measure that is it like how many people in your slack group or what um so the campaign we're hitting right now is hitting open source uh repositories um on github in the past in the past month we've had um so our bots automatically fines and fixes code we've had um pull requests landed by companies like google uber sky uk all in the past few weeks so we're just owning out a few issues there and then we hope next week or the week after to roll that out to about 2 000 new repositories so we're really hitting the open source domain trying to get a lot of uh traction and engagement there and then the idea is once once i don't understand sorry by doing that in the open source community how does that drive users back to code lingo yeah sure so um basically what we're doing now is um finding open source repos that have uh contributor docs that say hey this is our standards this is how we want uh contributors these are the rules we want contributors to follow when they write code to our repository and then our code lingo goes through analyzes that repository and says hey did you know you're actually violating your own standards then we make a pull request which fix it fixes those standards and then they it's very...