How Codelingo CEO Jesse Meek grew 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 hard for them not to accept that because basically they've been shown to not follow their own standards so then basically you're proving value to the um to the owner of the repository you're proving value to the company behind the repository um you've proven value to the community of uh developers around that so it's essentially a bit of a marketing play where you're uh by proving that value in a very visible place you're actually getting a lot of eyes on that and then from that you follow up with that and you say hey did you know we can also automate reviews did you know we can also automatically generate computers what's your how many team makeup today what's the team size yeah sure so we're pretty small we're just seven okay everyone in new zealand yes everyone in new zealand we we tried remote at first but uh we just found that we worked better under one it looks so peaceful you have like the light coming in behind you they're like the belgian linen hanging down with the breeze slightly hitting it i'm like this is like perfect working environment yeah yeah middle earth that's right i'm actually working from home this morning it's a school holiday so i've just got my daughters here um we're at a co-working place down uh in dunedin so that would look much more like your your traditional the house like the house looks beautiful i worked every day so since i'm this isn't i'll just show you the harbor out here oh wow it's gorgeous yeah the advantage of working in new zealand yeah i work there every day um okay so how are you funding salaries for seven people do you still have some of the 700 grand in the bank account yeah that's right yeah so yeah so we just look we're um good old smell of the early rag um living the dream selling the vision um so we're we're paying salaries um there's a few grants coming in from um things like nzt new zealand trade and enterprise um so new zealand government grants to help innovation get off off the ground so we're certainly leveraging those obviously leveraging the investments um a bit of revenue from our activities with with uh past clients um yeah and just managing managing the the runway right like the where venture the vision was always to be uh eventually it's um so we plan from um race to raise and so we just just managed the the runway really tightly so what is your runway right now how much you have left yeah that's a great question you're asking all the hard questions yeah so we're we're looking at um doing our next raise pretty soon so depending on how hard we want to put the pedal down um we'll be looking to do the next round as soon as um a month or two away or or mid this year jesse is that is that code for you have about two months of runway left in the bank um depending on how you look at it i would say uh at would probably have four months if you really put the the pedal down okay or we can send that out yeah so you've essentially okay so you have a right now you're spending x amount per month you have x amount in the bank when you divide those two together you've got four months of expenses left covered in the bank in cash right now you're going to start raising in about a month and a half so you're giving yourself about what two three months to raise capital from start to money in the bank yeah so i always like to plan for about three months that's just based on um previous experience three months from kind of opening the round to getting the term sheets in and then getting uh uh t's cross and uh eyes dotted um but like i say there's always real room right like you can always uh that that's based on the most aggressive plan and if we need to extend that out we can uh we can certainly extend that out if we need more time yep yep very interesting okay great um let me let me see here so when you raise the 700 000 was that on a convertible note or was it equity or debt yeah no great question so the first round i did was just our angel investors so i'm a first time founder i'm completely unknown i'm um like i worked at canonical company behind ubuntu but other than that pretty much unknown in new zealand yeah that was on a note so the first the first one was on a convertible note at a 1.8 mil um cap and then the second round wasn't on the notes so the second round was our pre c that was from the the vcs so that was um that was just a straight so the the pre the the prevaluation was um 3.8 mil um so yeah around four mil um valuation and re-raise uh 540k on that when we went out we're actually just looking for a bridge we're only asking for 300 because we wanted to just a bit of extra runway to do the next round um all of all up all of the offers we got in um we had about 2.8 mil all up in term sheets coming in uh we over subscribed just to let on the two vcs we thought would work best with which is reinvention and um right click and so that's why we extended out to 540k for that round jesse you must be persuasive as hell i mean you basically have no revenue right now you're building a great user base it sounds like you have a really incredible piece of technology and you're selling it at a four or five million premium evaluation i mean you're a you're a skilled persuader it's pretty exciting i just imagine people listening going wait a second nathan am i getting these numbers right i'm telling you yes you're getting the numbers right but um again really what you're banking on is the piece of code and the fact this is a massive opportunity to go after technical debt yeah so i i think i think what's um venture capital allows you to do is act irrationally in the marketplace and that ability is what gives you the competitive advantage because we have this this capital we can do experiments and developments um not tied to a more traditional bootstrap model yeah um so yeah yeah absolutely and really this is an all-or-nothing play like and everyone everyone on board gets that like we're aiming to hit it out of the park um if we miss we miss um but we're not we're not here to create a small self-sustaining business yeah we're here to we're here to tackle technical debt which is one of the biggest issues in the software industry very good all right let's wrap up here with the famous five jesse number one what's your favorite business book um favorite business book man i'm going to really struggle with this you can pass you can pass um yeah can i pass i'm gonna pass no problem number two is there a ceo you're following or studying right now um oh look i hate to sound stereotypical but it was probably you know everyone says elon musk i mean he's certainly certainly inspirational so yeah number three what's your favorite online tool for building the company to be honest trello we look at that every day it's just yeah it helps us number four spreadsheets okay and how many hours of sleep are you getting every night um a little more actually i listened to this really interesting podcast on joe rogan and it talked about the importance of sleep and just how damaging it is if you um miss it so i'm making it a priority to get eight hours good and what's your situation i think you mentioned girls so married single how many kids yeah sure so three kids um two from past relationship one with a new uh a new partner um we as i showed you we live out here on a little bit of land just outside dunedin and we've got the um the startup hub down in the city how many out of curiosity where you are right now how many megs up and down do you have on your internet wi-fi um because here's what i always wonder i always see these beautiful locations and i'm like i do podcasts for a living and all this stuff i'm like i would love to like live in these locations but i have this fear that i'm gonna like buy a big beautiful five million dollar house in the middle of new zealand and then my my meg up and down is gonna be like 20 20 and i'm gonna be like crap i can't do interviews here dude where um where the giga town so we've got um fiber um throughout dunedin um and direct connection to the cable um we haven't had any we had one small glitch at the beginning of this uh conversation otherwise it's been smooth right yeah and i'm actually i'm out in the bush right now i'm just i'm not even using um um taking advantage of fiber here this is just um broadband that's amazing okay it's my problem all right so trello is a good tool there uh uh kiddos three of them how old are you i am 38 30. eight last question what do you wish your 20 year old self knew oh man where do i start um my 20 year old self i wish um man i'm just going to sound stereotypical again you know just that obvious just just believe in yourself believe in your instinct um yeah don't don't compromise uh don't give a [��__��] what people think just just find that thing that you're really really passionate about and uh and yeah look for it guys believe in your instincts again launched code lingo back in 2016 to help solve this massive issue of technical debt they built the company really around enterprises which were chasing kind of a 50 000 acv deal then looked at themselves and said oh my gosh we're basically an agency low margin high touch not productized we want to change this so they're going down market now relaunching really doing marketing strategy related to going after open source kind of specs and helping folks make their code stronger and adhere to their own essential policies they raise about 700 000 to do this seven people on the team in new zealand they've got about four months of runway left hoping to raise here in the next month or two or at least start we'll see what happens but in the meantime jesse thanks for taking us to the top awesome thank you cheers