How Stack Overflow CEO Prashanth Chandrasekar grew to $125M revenue with a 660 person team in 2024.

quick context this was recorded March 28th and 29th so a couple weeks ago at my live event SAS open.com we had a thousand software CEOs there if you missed it we hope to see at the next one September 5th and 6th in New York City SAS open.com but for now let's jump into the recording Microsoft was customer number one yeah over 100 million in Revenue so far yes that is over 150 can't say that over 125 can you say um [Music] how many of you have used sack overflow all right awesome of those of you who have who even knew that they had a SAS product one person literally one person it's good be a long way to go meanwhile what percentage of Revenue is it now it's now about 60% of our company's revenues and the SAS product so for those of you who didn't raise your hand stack Overflow has a collection of sites that every developer you know goes to to figure out the problems that they're wrestling with Fair y question and answer other developers helping each other what is the the SAS product then yeah so I think you know our community which is about 100 million people that show up every day uh to our website uh come because we have about 60 million questions and answers on every possible technology topic so many of you who have used uh the platform over the past 15 years contributed to that or consumed content from that and it's become the most trusted destination for all things technology knowledge uh so that is I think a very very important foundation the SAS business very early on in 2018 late 2018 some very large companies like Microsoft came and said we love using stack Overflow but we just want to use it inside our company because the same mechanisms really we would love to have internally for PR proprietary information Etc so we want a private version of stack Overflow for our company to use so that really what in you know initiated the SAS business uh oddly in the Enterprise with one of the world's largest companies today Microsoft was customer number one uh and then we went from Enterprise down to where we are today which we've now got 15,000 customers uh leveraging stack or for team so employees of Microsoft get to ask questions of each other and they they are the only ones who get to see the questions and answers that is correct and how much should they pay for that they pay I I won't say specifically Microsoft but generally speaking it's it has multiple tiers so the Enterprise tier is anywhere it's close to about $18 $19 or so per seat per month so it's just like any other SAS software that you would establish so before we got started I walked around I met as many of you as possible to get a sense of what you're here for what I understand that you're here for is two things one is to meet people which uh you're going to get to do throughout and the second one is actual tips techniques that you can use to grow your SAS your company's Revenue before we do let's talk about um what revenue is now is this is this accurate what we see up on on the screen no it's a couple of years old uh so you know this is uh you know you folks uh you know you're you're good researchers and folks who actually like went and pulled it from any public information but we're you know we're growing pretty quickly I think in the context of our forgive me over 100 million in Revenue so far yes that over 150 can't say that over 125 can you say um wow that's backing me into a corner uh it's certainly over 100 million that's fair to say over 125 though right um maybe maybe yes yes right so if it's over oh yes if it's over 100 million what percentage comes from this new new SAS product so over 60% uh we have about probably close to now 70% of our companies's revenues are recurring and they were actually nonre they were not recurring revenues when I started in 2018 meaning advertising we would go to to these different sites there'd be an ad at the top that's where the revenue was coming from now it's subscription mostly correct it's from the SAS product the internal question and answer site that you developed partially from the uh AI stuff that we'll get to later yes that's correct yeah so the for the first 11 years the as Andrew mentioned we were almost entirely an ads business and a talent job listings business some of you may have consumed that product in the past uh and then in 2018 2019 uh the whole goal was to Pivot the company to focus on just on SAS and for various reasons let's talk about why what was the company going through that made you say hey we've got a successful business we got a shift there was a challenge what was it yeah I think you know the uh you know we've got iconic set of Founders Joel Joel SP and Jeff hatwood who built sa go an amazing uh platform but you know if you think about the audience the audience actually doesn't care about ads I mean nobody loves ads period but especially for a technical audience it's actually extremely annoying to have ads floating around plus we all have ad blocker of course so in that context I don't think it was ever thought as thought of as like this kind of you know Perpetual uh Revenue model in the future and it was extremely episodic depending on the economy you know people obviously cut down an ad spend when the economy is not doing that well and so on so I joined in 2019 and immediately you know the pandemic in early 2020 hit and then we saw that very directly you know we had Talent job listings people stopped hiring so why would you actually put job listings and then why would you actually advertise on the platform when you're ad spend and marketing budgets are the first things to go so that gave us kind of this moment of you know realization that maybe don't let this crisis pass uh and let's actually double down on what we came what I came here to do basically which is to convert and transform the company into a sasco and my fear was anytime you have a Content based site that makes money from advertising it's so easy for it to go to trash to up the page views to create ads that get more and more pushy and the combination of all that would have ruined things and so you said it's got to be SAS how did you figure out what the SAS product would be well I think it was primarily based on the user pull I think a lot of the customers like the the the Microsoft of the World when they came and said hey this is what we care about the early version of the product was literally a copy of of the public stack Overflow but obviously completely uh a private version of it and just sort of tested in the context of these big companies and then we said okay now actually we need to go build a proper SAS product and so let's actually go do all the things that is necessary to to accomplish that uh which all of you I'm sure uh know of so that's that was the that was that was the impetus it was straight from our users straight from company saying we love the platform thousands of people within companies use stack Co flow uh all your companies if you came from big companies use stack C flow every day so so uh it is it is sort of already present in people's workflow so the idea was why don't we actually exist in the context of the company's workflow yeah all right so we're going to talk about how you got your first customers and then we'll grow on from there but what I'm showing up on the screen is what you're charging is in the middle graph over there that's the price per seat and you still do have a very healthy advertising business I'm a podcaster been one for years I actually wrote a book on interviewing which na Nathan kept up here but you have podcast ads you have banner ads you have all kinds of ads throughout the network okay the very first customer you said was Microsoft where did you figure out how did you get the first customer well I think the the it was the the notion of them actually coming to us so I think it was completely a user pull a customer poll you can't underestimate the power they weren't coming to you and saying how do we spend money with you what were they saying the users basically said look we love to do this but the thing was that when people were posting content on public stack Overflow that started getting people's attention on you know what we actually want to make sure that that this content is not posted publicly with a regular basis they would say we want to ask questions but we can't have people outside of our organization give us the answer okay or or post it externally by accident as an example because you know if you're posting a piece of code from within Microsoft on public stack oldf flow because you want feedback Etc that would be I think obviously a problem here's my understanding from the conversation we had before we got started you looked at the people who are using the free version of the site you said what organizations are we seeing come up a lot let's go talk to them right mhm just put it in a spreadsheet or database in the context of like Post customer one and two I think at that point we started saying okay let's actually think about every possible customer that is using stack Overflow so we actually had that very specific list of the largest users company-wise and we go typically went into companies and we said you know you've got 2,000 users using stack cflow and by the way here are all the tags that they're using they're using python they they're looking up content on python they're looking up content on PHP and by the way here's why you should think about having an Enterprise license with us so it very much a Bottoms Up tops down similar to a plg motion but this is more of a community-led motion if you will or CLG uh sort of motion that we that we went after a lot of microsoft.com email addresses registering you go to the person at microsoft.com who's the right person you say this is how many people are already on your network wouldn't you want to keep it private great you close some sales you told me earlier about sdrs yeah sdrs sales development reps what do they do yeah so obviously most SAS companies have a great outbound machine if you're actually good and that I think it's a f foundational way in which you generate pipeline so the no motion of actually going and figuring out hey which company do you Target and what do what do they actually use in terms of stack Overflow that whole work and actually putting out the outbound email or the or the call that itself is the first initial activity so I think it's just you know this has been well documented over 15 years of you know SAS companies existing you just need a machine to grow and as long as they're productive in terms of generating you know qls and sqls and sqs Etc in the funnel which ultimately will translate and convert at some level to pipeline then you start building the predictability motion which is the obviously one of the foundational characteristics of of SAS businesses meaning somebody registers with an email address your system checks to see what company they they're with how big is the company and if they're big enough email goes out saying can we have a conversation about how we can help you more that's right that's in the inbound uh SDR process the outbound SDR process is we're saying okay what are the th what are the the big companies over 5,000 uh you know users that we can go after and then in the context of you know getting them to pitch the product and our sdrs go make those outbound calls and go do them systematically over a period of time and then we measure that and we say how much of that converts into pipeline yeah now this is something that's being done uh by many companies anyone out here doing this right now have an SDR checking to see the email addresses of the people who are registering for your site and then you are okay so I'm seeing a couple of people here for people who aren't doing it what's a good way to get started and then we'll talk about for people who are doing it how to get it better start with one uh or start with two that's what I would say as long as they are able to be productive on their own there's no different get one SDR one get one SDR to look to see the email address of the people who are coming in use uh clearbit or software to check to see who's who they are and then start sending out offers to get on calls correct B get the first meeting uh and I think that you need you can do that on your own but it's probably not the best use of your time so in the context of a Founder so but you could probably get started by doing it yourself just to see you know what is the attraction if you're an early stage uh sort of founder but then that really gets you to understand okay what is catching the attention of this prospective company or this customer you know is it is it are you are you actually solving the right problem for them is it high enough on their list or do they care uh and that gives you a lot of intelligence in terms of messaging whether your product is relevant is it must have is it nice to have how much should you how much should you pay for it uh etc etc yeah okay and then for the people who are doing this what have you discovered about improving this process yeah I think it you should be I think the the landscape evolves pretty quickly so I think to be able to uh be able to add capacity only and when you know that these sdrs are productive that the intersection between sdrs and your account Executives I think that's a very important intersection because if they actually work uh collaboratively and they align together on which accounts to go after that cohesive relationship is super important especially as you have a bunch of AES U along with those sdrs so that I think is like the most probably the most important relationship the SDR and the AE relationship along with uh the uh demand generation organization who are obviously driving campaigns and you're doing all sorts of things on social media and Linkedin and Google and all the things but all that needs to come together between marketing AES and sdrs if it doesn't come together and it's somewhat of a disparate set of activities you're not getting the biggest bank for your buck you're probably actually being uh quite inefficient with okay all right one of the things that I did before we got started was I talked to people who are here in the audience Sandy Robinson who's a speaker uh who will speak later at the conference said talk about compensation so when it comes to sales compensation when it comes to SDR compensation when it comes to even the cro that you hired how do you think about compensation yeah I think it's it's mostly it's pay for performance I think you want to make sure that people have uh a base level of compensation on the base that people feel like they can pay the bills at a minimum level of course and that's that's important but most of the it's carrots more than sticks I mean it's really making sure that you have tremendous amount of accelerators you have the opportunity to overperform and you can make a lot of money as an SDR or an AE but I think with salese sdrs if they're successful they have a machine they think about diversifying their Pipeline with big big companies and big prospects and middle middle scale and then smaller companies you know as we talk about the uh Pebbles rocks and boulders combination uh then you've got the discipline and the predictability for them to start saying okay you know what I'm going to plan ahead 3 months ahead so that I hit my base number and then anything on top of that if I hit a whale or I hit one of these bigger companies I'm going to overachieve and my accelerators are going to kick in 1.5 times or two times and then the most successful reps and the most successful sdrs will plan ahead you know two quarters 3 quarters ahead and they have that machine going so there's like a massive pipeline just building and they're coming into the week with plenty of things to go do and they're not starting from scratch so I think but you need a little bit of maybe a couple months or three or four months of them the ramp obviously when they get started to build the machine and to get going so the flywheel is running but once you do that then I think you're on your way yeah are these your your customers that we're looking at here seens Bloomberg Microsoft that is correct yeah again based on 2022 uh some of the numbers and by the way it's not spying it's paying uh so but yes that's correct but we're looking at quarter million dollars yeah for an Enterprise customer how long does it take to close a deal with an Enterprise customer that's paying that much yeah probably uh between uh 9 to 12 months for the largest strategics like the Microsoft's uh the Enterprise is probably closer to 6 months and an SMB customer is probably anywhere between 1 and 3 months but you're going through the top and getting the deal with the company you're not having them start to use it and then going into the company we've done sort of both over time but as I've talked about already 100 million people us stack o flow invariably everybody within companies us stack oil flow because they've used it as part of their their work you know historically so that is in many ways our Bottoms Up plg motion or if you think uh community-led motion and so we we leverage that as our Bottoms Up motion which is you know very similar to a lot of SAS companies who provide people free trials and premium offers Etc this is our free offer you know our public Community people have been using it the same format exists Etc in the the private product yeah okay all right so now the next thing that you told me that you did was you said look we started going after our existing users and seeing if some of them would get their companies to convert into the team's product then you went into lead generation you started building marketing assets campaigns messaging what worked for you yeah I think having a very specific uh ideal customer Persona as many people here know ICP very important making sure that the value proposition or the what you're actually talking to them about actually solving an important problem for them versus just you know shooting and spraying and praying and hoping that you know something sticks but the more targeted you are to the people that actually matter with the problems that you actually uh are going to be solving for them in a very crystallized fashion by leveraging your strengths that whole process of this sounds very corporate yeah yeah what are we talking about like when you're saying that marketing is actually worked to pull people in what's worked where do I see it a lot of us here didn't even know that you had a sass product yeah yeah that's fair uh branding so clearly we got to work on that one but I would say the uh the the biggest thing that has worked has been the bottoms up motion along with h you know engaging with the CTO and the cios and BPS of engineering that we typically engage with right and the specific problems that they are trying to solve whether that is you know transforming into the cloud leveraging AI tools these days or whether that is uh you know becoming more efficient with their developers you know in in terms of productivity or if it's onboarding people during a time and they're hiring a lot of people very easily uh how do you get people you got to Zone in on like the top three problems that they actually care about and that messaging goes out very specifically to the personas that we care about right specifically the the CTO and C I'm going to spend real quick just on Partnerships and then I'm going to get to AI because you've done some big things there Partnerships you've got Partnerships with Microsoft and others what are they doing how are they selling uh stack Overflow teams yeah so I think as part of the scale Journey you know we obviously started with our own user base we went into these big companies we built up an SDR team we had a demand generation function that bu got built up uh then we had a more mature AE organization and then we surrounded we hired a lot of people who actually had SAS backgrounds to go and kick off this entire transformation and then we said okay at some point it makes sense to then engage with big companies as we think about Big Brother Partnerships you know we are a smaller company we have somewhat of an outsized impact in terms of our user base but we uh wanted to partner with who are the big ecosystem companies so Microsoft as an example one of the biggest companies in the space we are very big partners of theirs we actually engage with them in their um you know their Azure partnership area if you call it the IP program and we align with their reps to be able to go and sell into accounts jointly so that's another way for us to get the attention of a CTO or a CIO or a very large company and so that is a they bring your salese in when they're making mutally when they're cling got it it has to be done mutally yeah now let's talk about AI dude when I was looking you up last night the big criticism that I kept seeing was people aren't going to use stack Overflow anymore because developers are already using AI as part of the software they're using and you and I talked about what you did with Google Gemini can you talk about that and then we'll talk about Beyond yeah so I think you know our vision for in an AI world is all about bringing together the power of AI and humans on the public platform so you have this really high trust uh product and set of answers so because when we went and did a bunch of uh surveys uh in our user base 100,000 people responded and said you know 70% of them wanted to use AI tools for software development or for something related to technology development but only 40% of them trusted what was coming out of AI models because you know hallucinations and all the things that you know about which is f which is absolutely the case and so we say you know our role should be bringing humans and AI together on our platform on stack Overflow what does that mean it means humans do amazing things creating new knowledge validation of information you know the whole Community as we've been in the up booting down booing game for like you know 15 years of reinforcement learning if you will and then you've got AI that does all the things we know about you know summarization semantic search and all all the things that you've read about so bringing those two things together delivers highly trustworthy highly accurate highly attributed and cited information that are you know again they're leveraging gen and you're prob getting a gen on the platform and at the same time you made a deal with Google's Gemini where they can take data from stack Overflow and use it to inform their Ai and get links back yeah as a way of having people see the sources so that there's no concern about about um right uh bad information being on there have you made a deal with open AI yet can't comment on it yet uh but you know we are but it's a possibility absolutely I mean all the big a companies we went and basically got a bunch of inbounds from them when we announced our overflow API program which is basically to say how do we make sure they're focused on responsible AI so they're not just sort of scraping the web off of our web which is what been happening for the past you know several years meaning they've been scraping your data without your knowledge and consent historically historically yes but now when we saw that we said look there's a there's a responsible way of engaging with us and so we launched this program called overflow API and the first company that basically engaged with us is uh Google and so now all stack Overflow content when used within Gemini's AI capability will show up in their AI tools with links to stack Overflow back to the users who get attributed the work that you know all of you if you contribute to stack your names will show up when a Gemini answer uh is provided and by the way reputation acrs back to the user if you're the best JavaScript programmer your answer okay was used by Gemini thousands of times and you get the credit for it what's the deal with did you make a deal with anthropic uh there we have many announcements coming uh and you can expect some here in the next uh very short order actually with more than Google so all right thank you very much thank you Andrew give him a big round [Music] yes hey folks if we haven't met yet my name is Nathan lka I launched and sold my first software company back in 2015 and went on to write a book B about it which you guys made a Wall Street Journal bestseller purchasing over 30,000 copies thank you so much for that after the book I launched this show and went went on to create founder path.com I raised a large fund to do non-dilutive deals with B2B software Founders so far we've invested in over 400 software Founders totaling $150 million here in 2024 we're doing three to four New Deals per week so if you're looking for Capital and don't want to give a Equity go sign up at founder path.com for free to get your offer