How Fig Reached Tens of Thousands of Monthly Active Users Pre-Revenue with $2.2M Raised (Interview with CEO Brendan Falk)

Introduction and Background

Nathan Latka

00:00Hey folks. My guest today is Brendan Falk. He's the co founder and CEO of Fig. He grew up in Australia, Sydney, did his undergrad at Harvard and now lives in San Francisco. The company has raised 2,200,000 from Y Combinator, General Catalyst, and founder at Stripe, GitHub, Heroku. He's also one of the fastest growing open source startups in the world last quarter. Brendan, you're ready to take us to the top?

Brendan Falk

00:20>> Absolutely. Thanks for having You me on,

Nathan Latka

00:22know, I I'm a numbers guy. So when I see in a bio fastest growing in the last quarter, I'm obviously gonna ask you to quantify that. Measured by what? Who who's the source? What's the ranking?

ROSS Index and Open Source Growth

Brendan Falk

00:32>> So there's a ranking called the ROSS Index. They publish the fastest growing open source companies by GitHub Stars, GitHub Forks, and a few other metrics. You could just Google ROSS Index. And in q three last year, I think we were number two or number three. And then q four last year, we were like in the top 10, I think maybe tenth.

Nathan Latka

00:51What factors going to that? Is it is number of developers who contributed at least one line of code to the open source project? Or like, what's the number?

Brendan Falk

00:59>> So GitHub Stars is is sort of like a like on Facebook. It's a bit of a vanity metric, to be honest. But then they also look at GitHub forks. A GitHub fork for nontechnical users listening is I go to a project online that is open source, so all of the code is available. And if I wanna contribute to it, what I do is I download the code that's called forking. I make my changes, and then I

01:19>> submit what's called a pull request, which says, Hey, I've made some changes. Can you review them? And then we review them and we click merge and suddenly they're available to every user.

Nathan Latka

01:28So a

Brendan Falk

01:29>> lot of our company is

01:31>> open and that means anyone in the world can contribute. And we have been growing so quickly because we've had so many contributors. We're at about 150 or more contributors at this point.

How Open Source Contributors Work

Nathan Latka

01:43Okay. That's what I was gonna ask you. So in q four, a 150 people downloaded the the, I guess, the fork to then submit something back to you to approve No.

Brendan Falk

01:49>> No. In q so q four, we probably had, like, hundreds if not thousands of forks, meaning they downloaded us. And then in terms of contributors, we probably had, like, 30 or 40 contributors just in that quarter. But over the course of our company, we've had, yeah, 160, 170 contributors. You can check out if you go to github.com/withfig/autocomplete, you can see all of the the open source success that we've had.

Business Model and Free vs Paid Strategy

Nathan Latka

02:17Well, yeah. You know, everyone is looking for the next the next Sid. Right? The next GitLab. Right? You know, I remember having Sid on many years ago, and I I asked him some tough questions around, you know, open source folks are generally givers. And when there's the big mean business guy that comes in and tries to make money off this Yep. It's a hard balancing act. So, like, he obviously figured a way to do it. How

02:39are you balancing that? How do you reward these contributors when it's clear like, wait, Brendan, you're making money on this. Your equity value is going up. You just raised 2,200,000. Where's our money?

Brendan Falk

02:48>> So I think a lot of developer comp developer tools companies that have done really well have realized that most of their money comes from massive enterprise deals. It's not from, you know, making $5 here or there from the individual user. So our focus is right now, let's just make sure individuals love our product. And so do you love a product that's paid or do love a product that's free? Everyone loves free. So we're making it free.

03:11>> We're really focused on growth. We're all about getting adoption, getting people to literally use Fig every single day, make it just a core part of their daily workflow. Because we know that like most SaaS tools, we're going make all of our money in enterprise. We're not worried about the money for individuals today, we can worry about that in the future.

Nathan Latka

03:30Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders. But imagine if we took all of the valuation data out from over 2,807 interviews I've done manually, saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second. But you log in, you connect

03:53your Stripe account, you see your valuation real time, you can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna

04:17get a different valuation. A VC is gonna pay a different valuation, Private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here. Right? So the teal is what a VC would pay. Yellow is what private equity And red is if you sold the whole thing outright. Now what's cool about this is this is

04:39not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founder share with us on the show. So traction 1,200,000 seed round 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that have been acquired the valuation and the multiple. Maybe you're

05:05going out right now and you're raising your seed round. We'll go in here and look at all this recent seed deals that went down, what they raised, what valuation they raised at and what percent that they sold. There's never been a larger dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. All right. We're gonna go back to the YouTube video here in a second, but

05:27if you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link. This link, founderpath.com/products/valuations. Or if you go to founderpath.com and hover over products, click on get your valuation here, and go ahead and sign up to give it a whirl. Again, all that valuation data live right inside the platform. I hope to see you there. Alright. Let's jump back into

05:53the interview. So let's say I was one of the the 30 or 40 developers that that pulled down the pull request, submitted something back, thousands of forks in q four. Let's say I write some code and then like a year from now, you're selling that code to to to Amazon, right, on your Fig enterprise plan. Like, do I get a kickback of that? How do you manage that storyline?

Brendan Falk

06:12>> So we aren't selling that exact code. We like, our model is some of our stuff is open source, meaning all of that code is public and anyone can contribute. Some of our code is closed. The stuff that we're gonna sell is the closed stuff. And so any of the open source contributions, we have basically said this is gonna be free forever. If you are familiar with GitHub, GitHub's model is for individuals, it's free. For open source,

06:37>> it's free. And then for private stuff for teams, it's paid. And we're gonna follow the exact same model. So anyone who contributes, we are just totally gonna say, this is free and open to the world forever. We're not gonna get rid of this. And that's you know, we've held that. And there's no like, the way this specific repo works, you know, I know it's a short podcast, so won't go in too long, but it's you download

06:58>> Fig and you use it for your workflows, but maybe there's a specific workflow that you do every day that not many other people do. And so that's where you go, hey, you know what? I want Fig to be better for me, So I'm gonna contribute the, you know, the what's called autocomplete spec, which is exactly what we're doing. We're going to it for me. I will contribute it so the rest of the world can also use

07:18>> it. That sort of makes sense, but it's it's basically fix solving your own problems, scratching your own itch, and then allowing other people to also get this access to the solution.

Nathan Latka

07:27So you would only experience a quote unquote community revolt if you took things that you said were gonna stay free and then put a paywall up and made them pay. That's the only time like that you would not wanna do that.

Brendan Falk

07:38>> I hope we never experience a community revolt. That would be terrible. But yeah, like that's just, you know, if we say one thing and then two years later do another thing, it's people don't trust us. We need we like want people to trust us. Want Totally.

Nathan Latka

07:54Digging here because I think there's a lot to learn about how folks like Sid and others, there's many others that have leveraged an open source community. It's the closest comparable we have to Web three, where everything's on blockchain, right?

Brendan Falk

08:06>> Where

Nathan Latka

08:06like you actually vote with Yep. The number of tokens you own of the Fig product. But this is a different structure, but it's it's like the closest bridge, if you know what I mean.

Brendan Falk

08:15>> Yeah. Yeah. There are a lot of different styles of open source. So there is what Sid is doing at GitLab where it is sort of the it's company led. Anyone can contribute, but at the end of the day, the company sort of has the call as to what's the direction we're going. And that it's sort of known as the benevolent dictator for life, if you've ever heard of that term. So big open source projects, specifically languages

08:37>> like Python have a benevolent dictator for life. Whereas a lot of other open source projects similar to Web three, they have some sort of set of rules which says, okay, with the community has to vote and then based on the community votes, something is gonna happen or something is not gonna happen. There are lots of different methodologies. I think the most important thing is for you to say upfront, here is, you know, who makes the final

08:59>> decision at the end of the day. Here are the rules. Because we don't say that. It just turns into chaos.

Team Size and Engineering Focus

Nathan Latka

09:04So how many folks today are full time at Fig?

Brendan Falk

09:06>> We're still small. We have a smaller powerhouse team. So we just hit seven and hopefully will be eight fairly soon.

Nathan Latka

09:13But How many engineers?

Brendan Falk

09:15>> We're all engineers. We're a developer tool, so we have to be coding every day. And I think it will be like that for a while.

Nathan Latka

09:20And pre revenue, are you charging already for some parts of the of the tool?

Brendan Falk

09:24>> As I said, most of our revenue is gonna come from enterprise stuff. We know that. And luckily, we have so much good user adoption that VCs are willing to like, VCs look at companies like GitHub and GitLab and go, you know what? These companies weren't making a ton of money in the early days, but their users just love them because they were solving a massive problem. So like VCs know that this sort of bottoms up growth

Pre-Revenue Status and User Adoption

Brendan Falk

09:44>> is a like a very saleable product in the future, and they're willing to sort of subsidize it in the future. So yeah, pre revenue, but we have tens of thousands of users. You can see on our open source traction as well, like people are really engaged in the product in a way that like I've built products before, had never seen. Mhmm.

Nathan Latka

10:02So how how like, where can someone go to understand what you mean when you say tens of thousands of users? They're different than the contributors to the open source code.

Brendan Falk

10:09>> Yep. So we have, like, two sides here. There's actually building the product. Though those are where the contributors come in, and then there are the people who use the product. And that's like that's what I'm talking about with users. So GitLab is the example. They all of their code is open. Anyone can contribute and make the code better, but doesn't mean you actually use it every day. There's usually a high correlation between users and contributors, but

10:32>> not everyone who uses Fig has to contribute, if that makes sense.

Nathan Latka

10:35Can go to Fig. You can go

Brendan Falk

10:36>> to fig.io, download Fig, and get it going, and take full advantage of what we do. We make the terminal easier to use. The terminal is a place that developers use all day every day for, like, version control of codes. Like, I won't go into a ton of depth because I don't wanna go too technical, but we make developers lives in the terminal much easier.

Nathan Latka

10:58How many used it in January?

Monthly Active Users and Growth

Brendan Falk

11:00>> In January, the yeah. God. It's already February. People I mean, we're not saying the exact numbers, but we're in the the tens of thousands. Like, our monthly active users are in the tens of thousands at this point, but it's growing super quickly. Like, this time last year, we're almost at nothing. And now we're like, these are daily users as well as opposed to just monthly.

Nathan Latka

11:18Mhmm. Help me understand the growth in MAU over the past sixty days. So if you're in 10 tens of thousands in January, what was it in December?

Brendan Falk

11:27>> Again, not publishing exact numbers, but I can say last month, we were up 50% or something like that. So Okay. Yeah. We, you know, we launched on Product Hunt. We had the second product of the month, second top product of the whole month. Number one of the day, number one of the week. So it's just people love what we're doing to the point that they're sharing it with their friends and we're just compounding the number of

11:47>> users by 40 to 50% each month.

Product Hunt and Hacker News Launches

Nathan Latka

11:50You got about three seventy five upvotes on that Product Hunt listing. Did that

Brendan Falk

11:55>> three seventy five, I think you're looking at 20

Nathan Latka

11:57Oh, hold on. Hold on. Hold on.

Brendan Falk

11:58>> That's a different Yeah. We got a thousand, like 1,300 of That's a

Nathan Latka

12:02different that's a different you gotta you wait. That's the exact same name. 07/07/2020 Fig, visual apps and shortcuts for your terminal. What was that?

Brendan Falk

12:10>> That was really early on in Fig's history. We were still pivoting around. So coming sending a step back, what is Fig? As I said, we make the terminal easier. The terminal is really hard. There are a ton of different workflows that people do in the terminal every day. People also call the terminal the command line, the command prompt, the shell. I'm just gonna use the terminal because that's what we tend to take stand I tend to

12:31>> stick to. But we launched this like really a bare bones version of Fig just to see if like this was a big pain point just to test the waters.

Nathan Latka

12:40Got We

Brendan Falk

12:40>> got a lot of traction on that product I launched. And then since then, we focused in on one specific product, which was autocomplete at the terminal, and that's what we launched a few weeks ago.

Nathan Latka

12:47Did you write the first line of code for the for the business? What year?

Brendan Falk

12:50>> It was April 2020.

Nathan Latka

12:54Okay. 2020. So yeah, that first product launch of three seventy five upvotes was in 2020. The more recent one we did was 1,300 upvotes, number two product of the month in January. This is the last month actually. How many users did you get? Like when you look at your website traffic from product hunt, how much did you get from that launch?

Brendan Falk

13:09>> Yeah. We got several thousand. Wasn't Yeah. It was several thousand. Again, we're not saying the exact numbers, but it's not Like what we know is Product is one place where people, like technical people hang out. There's also Hacker News. There's also Twitter. There's also the workplace. There's also side hobby projects. There's also open there are also open source projects. There are a ton of different places. And so we Product Hunt is just one of many avenues.

Nathan Latka

13:33Mhmm. Did what drove you more traffic? You know, you posted, I believe, Fig on Hacker News back in what was it? Eight months ago or so? Almost 600? Yeah.

Brendan Falk

13:42>> Maybe. Yep.

13:43>> Yeah.

Nathan Latka

13:44Did that work?

Brendan Falk

13:44>> More traffic was actually yeah.

13:45>> Hacker News. That's because I think I would say two reasons. One, Hacker News is a more technical audience. And two, there are a lot more this sounds weird, but lurkers on Hacker News. Those are people who don't comment. They don't really upvote, but they read it every day. And Fig was at the top of Hacker News basically all day. Like, it was a really long day for my co founder and me, but that got us,

14:07>> I would say double, if not triple the number of users from Hacker News as opposed to Product Hunt.

Funding History and Capital Efficiency

Nathan Latka

14:13Yep. Yep. That interesting. Okay. Talk to me a little bit more about how you funded the business. You're pre revenue. You gotta pay seven employees somehow. So you've raised some capital. When was the first round?

Brendan Falk

14:22>> Yep. We got into YC. We raised that money in April, like, last year is when it first hit our bank. It's not last year, April 2020. Then we raised seed straight afterwards, which was September 2020. We are a really efficient business. Like, not only are we software

Nathan Latka

14:41Well, how sorry. How much, Brendan? So how much did you raise?

Brendan Falk

14:43>> Yeah. We raised we raised 2,200,000. We raised from general catalyst was our lead, but then a bunch of really cool executives.

Nathan Latka

14:49That was all in 2020?

Brendan Falk

14:51>> That was all in 2020. Yep.

Nathan Latka

14:52Okay.

Brendan Falk

14:53>> So we're really happy as we raised from general catalyst, we have SV Angel, a bunch of partners from really cool companies like the CPO of Stripe, Will Gaybrick. We have the founder of Segment, Calvin. We have the

Nathan Latka

15:07But Brendan, what's what's going on? Right? When I see a company come out of YC and they do around instantly, you've already given up 7% for whatever it is, a $150. So dilution's a real thing here. I mean, you should be raising every twelve to fifteen months. Otherwise, something's wrong. Why haven't you raised in over twenty four months?

Runway and Timing of Next Raise

Brendan Falk

15:22>> We have so much money. Like, we still have more than 60% or 70% of our money in the bank. Like, we wanna grow, but I also don't wanna grow too quickly. I trust YC's advice. They say the worst way to kill the best way to kill your company is to just raise a bunch of money, hire a bunch of people when you don't have product market fit. We

15:42>> raised. I don't think we had product market fit straight after raising. Now we're getting, like, really good growth and really good traction. I think we will raise in the next, like, three or four months. I want us to grow our team before we raise. So I'm like, we're starting to hire aggressively. We were four engineers in December. We're seven now. So in a month, we've almost doubled the team. So we're really going on this quick growth

16:01>> trajectory right now. I agree, but I also don't buy into the metrics of, like, you have to the best companies raise in one and a half years or whatever. Like, we raise the best.

Nathan Latka

16:11It's not the best. You just do pattern recognition. Usually a negative sign it's usually a negative signal in the market if more than twenty four months go by and you're coming out of YC with 2,200,000 raise back in 2020. But I think your answer is also very valid. Know?

Brendan Falk

16:23>> Like, we have so much money in the bank. This is what I'm saying is, sure, engineers are expensive, but we weren't paying engineers for a long time. It was really just my co founder and me. You also look at Stripe and a bunch like Vercel, some of these other really big developer tools companies. Straight after YC, they raised the seed round, but then it took them a long time to raise their series a. Raising going from

16:40>> series a to series b, that was really quick for these companies. But they took two to two and a half years at least to go from seed to series a. I'm not too fussed about that. I want the engine to be going. I want us to be, like, really confident that, hey. Like, when we raise this series a, we are blasting off. I think we're getting pretty close. So I imagine

Dilution and Equity Breakdown

Nathan Latka

16:57And most and most in their seed, just to understand how you're managing dilution, most in their seed are selling between ten and twenty percent. Were you sort of right that same average?

Brendan Falk

17:04>> Yeah. We're around like 10 to 15%.

Nathan Latka

17:06Okay. Good. So on the on the better end of that. So 10 to 15% in that seed, that's not including the 7% from YC, I assume?

Brendan Falk

17:13>> Not including YC.

Nathan Latka

17:13Yeah. So you've

17:14got like 20% equity or so owned by investors right now. The rest of the team, the ESOP pool, all that jazz.

Brendan Falk

17:19>> Yes. Exactly.

Nathan Latka

17:20And if you do raise the next couple of months, how much would you target?

Brendan Falk

17:23>> It depends who we raise from. If we go with a big VC like a Sequoia and Andreessen, I say go as if we're fortunate enough to go with one of them. They they're they're always taking 20%. Like, that's the way they work. So they'll increase the valuation, but they will no matter what take 20% versus if you go with just non traditional capital, they'll take between 1015%. And sometimes you can go with an angel a Sam

17:49>> Altman, for instance, who I think is sort of agnostic to this. They don't have fixed capital constraints. They just want to invest to be part of the journey. So I think it really depends at the end of the day who the partner we go with is. Partner is most important to me.

Nathan Latka

18:02Mhmm. Very cool. Alright. Well, it'll be fun to see what happens. And and when do know when it's the right time to put the paywall?

Path to First Revenue and Teams Product

Brendan Falk

18:09>> To get to put up the paywall? As I said Yeah. When when's your first dollar revenue? We will start charging teams, and we're launching a new product next month. It makes it easier to manage your dot files for technical listeners. Dot files are like your develop non technical listeners. Sorry. Dot files like your developer environment. We for individuals, Fig's always gonna be free. For Teams, up like 10 plus people, we're gonna start charging. And I think

18:30>> we'll get our first paying users in the next couple of months with this new Teams product we're watching.

Nathan Latka

18:34Alright, Brendan. Sounds good. In the meantime, let's wrap up here with the famous five. Number one, favorite book?

Famous Five

Brendan Falk

18:38>> Nineteen Eighty Four by George Orwell.

Nathan Latka

18:40Number two, is there a CEO you're following or studying?

Brendan Falk

18:43>> I am a big fan of Guillermo at Vercel.

Nathan Latka

18:46Number three, what's your favorite online tool for building Fig?

Brendan Falk

18:51>> Other than Fig, because we use it to build it every day, I would say this is more of a personal thing, but superhuman. I think building Fig as a company, you need to be really quick and responsive to people, and superhuman enables me to, like, 10 x the output I can do per day.

Nathan Latka

19:07Number four, how many hours of sleep are you in every night?

Brendan Falk

19:10>> I'm big on sleep, so eight hours.

19:12>> It's great.

Nathan Latka

19:13And situation, married, single, kids?

Brendan Falk

19:15>> No. Not married. I'm single.

19:17>> No kids? DM me.

Nathan Latka

19:18Don't worry.

Brendan Falk

19:19>> I have no kids. I'm 24. 24.

Advice on Focusing on Problems Not Solutions

Nathan Latka

19:20Alright, Brendan. Last question. What's something you wish you knew four years ago when you were 20?

Brendan Falk

19:27>> About building companies, it is focused on problems as opposed to solutions. What does that mean? When I was growing up, I used to build apps, and I used to think, oh, this is a cool idea. Like, everyone's gonna love it, but it would they'd just be ideas. I wish I knew to focus explicitly on, like, what YC calls a hair on fire problem. They're really, really painful thing. That's where the best startup ideas come from.

19:47>> It's where the idea for Fig came from. It's the terminal. If you speak to any user who uses the terminal, it is really, really hard. And Fig comes in and just makes that easier. The sale is so easy. So focus on problems, not solutions.

Nathan Latka

19:59Guys, Brendan Falk, Fig. First line of code written in 2020, came out of YC, raised 2,200,000, sold about 10 to 15% of the business. Obviously, YC took 7% as well. They're growing though nicely. Tens of thousands of monthly active users growing 50% their MAU month over month. So again, nice growth there. They're gonna use that growth to accelerate and go to market, hopefully raise some capital here again in the next two to three months. Team of

20:20seven right now as they continue scaling up their engineering team. Again, building a tool that makes it easier for developers to get more out of their terminal. Brendan, thanks

Brendan Falk

20:27>> for taking us to the top. Thank you, Nathan.

Nathan Latka

20:31One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU, CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday 1PM

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