Tettra Revenue & Funding (2024)

hello everyone my guest today is Andy cook he's building and is co-founder and CEO of a company called tetra knowledge-sharing for growing teams prior to he was probably manager at HubSpot where he helped start their free marketing product line he was the co-founder of rent abilities which was acquired by HubSpot back in October of 2013 and he already takes to the top I'm ready to go all right did you get rich from that acquisition why aren't rying a beach somewhere doing nothing I have too much adv not to work all right so how long did you stay with with HubSpot after that acquisition in 2013 I was there for two years okay so then would you go right into tetra on 2015 yeah we came up with the idea for tetra while we were growing our team the product at the time at HubSpot was called leading to regarding this product called lead in it kind of was like a start up inside of HubSpot and as we're growing our team myself it might now co-founder of tetra Nelson were in Cambridge and our entire engineering team was in Dublin Ireland and so we communicated a lot over chat and there are a lot of times where we needed like asynchronous you know more long-form communication and we just didn't have a good tool for it that was hooked up to chats we came up with the idea for a tetra is so would you compare this to slack today or no we're not like we integrate with slacks or a supplemental tool that works with the slack platform so like slacks more chat synchronous communication in tetras more documentation asynchronous communication I see I guess so I was getting at was did Brian miss out on this little science fair nest egg which could have been slack but it ended up leaving HubSpot and being spun out no so technically Brian didn't miss out on it because he invested in Tetris a you know become ex slack he's he's got a small piece of that and then the product we were working on inside of hub spots actually doing really well too it's their low-end free marketing automation a sidekick tool so if sidekick was like the free tool for sales lead in which is now called hub spot marketing hub starter or something that was the free tool for marketers yeah you know you become public and all the names become more complicated yeah I totally they made us change the name at one point but it was it was the right call that's funny and was this a science fair project I know bro gave great detail when he came on the show about how you may use science Harris drive innovation was this a science fair project this is a HubSpot labs project so basically the way it worked is my first company with rentability it was acquired will be up front as the talent acquisition so did not get rich but did okay for myself especially for like you know a 25 year old who invested all of his time and money into his first startup it's nice to have a job - that was a huge benefit and I learned a ton on spot but I'm so ledin started in HubSpot labs and on my first day they took me put me with another person who had been working there for three years who I also happened to be friends from middle school with Nelson and the then chief product officer at the time David cancel who's the CEO of Toulouse enemy David can sell proper pronunciation as the CEO drift he was the product chief product officer at the time and he just told us like hey we want to build marketing software for like very small businesses we don't normally sell do don't know what should cost don't know what you do just make sure you use orange in the logo go so we worked on it just the two of us Nelson and I for about a year grew to about seven thousand small businesses using it and eventually got more funding which is like budget headcount inside HubSpot from brian and our mash and JD and all those people to grow the team and build it out more and then having so how do you leave up spot oh yeah good question so we left UPS one on good terms so we came up with the idea for tetra probably the beginning of 2015 there's nothing fail like I mean what got you off with a small business tool oh right yeah so it didn't fail at all we hit our milestone which was to rebuild the entire product which was only built for WordPress at the time on the HubSpot infrastructure so there's like a cloud version and a wordpress plugin so we got we built that out with the team in dublin and then we actually got it announced on stage at inbound as like a big product launch as well so when we left it was in good hands they knew what they were doing there was another product manager who's recommended to so we kind of like transferred all that knowledge I was in our heads into the heads of the team moving forward and then we left to go start Tetris so all as well it's very good friends with so a synchronous asynchronous communication really got going 2015-2016 help me understand pricey model is a pure place and if so on average what our customers paying per month for it would you say IP replace ass our our pub so like ever driven per count is about 110 dollars so it's like $1,300 per year yep and and what is that typically plays at a team size of two people ten people so it's all over the map and like we've had many different pricing models and we just constantly changed with the gue change pricing like 8 times since we started to four years ago but the average team that works really well with tetra is between 50 and 500 people and they're growing and hiring frequently and walk me through how you got you how you got your first five or maybe first hundred customers this is really interesting so for the first six months we just hustled reached out to people we built the whole product people said they would use it we built it like an MVP and I don't know eight weeks or so gave it to them no one used it that was kind of like the oh crap moment do we make a huge mistake quitting HubSpot but then we realized that the reason why they weren't using it wasn't because they didn't have a pain point ways the way because no no I want to get in your head here at this moment how much money had you spend the MVP at that point where you're like oh my god I hope this thing works so we I mean there was a big opportunity cost right like I and Nelson both left a bunch of unvested options that were worth actual money because how about a gun public at that point and then like salaries as well I put in a bunch of my own money just like fund our expenses because we didn't have any investors so it's probably like I mean in today's dollars like is the stock their stocks gone up like four four hundred grand it least sounds like doubling engineering opportunity cost all that stuff 400 count the MVP yeah well known on the MVP tweet you know just spent our time in like probably 10k of like my own money for like an office and random tools and that type of stuff I'm just thinking like opportunities here who are you the engineer while you're paying a team in Dublin I know so tetra was just Nelson tonight to start we're both technical I'm more like back in engineering he's more product from an engineering and then we kind of split the business so 10k and hard cash to get it going but maybe another 350 an opportunity cost something like that right yeah yeah exactly fair enough okay so you launch and then you go oh my gosh no one's using it well then what so at the same time fortuitously slack opened up their platform and so we took that product idea brought it back to all those same people were like what if we hook this thing up to slack which you're using and everyone was like yes I want that can I have that right now so we threw out the whole first MVP we had built rebuilt a new MVP 100% on the slack platform over two weeks at the end of 2015 launched that got in their App Store and got like 500 custom 500 companies to sign up like to author slack account and create at that time we we were onto something that the product was crappy over what period of time did the 500 coming out what heat a server that that was probably like three weeks maybe and it was released on slack yeah so we were probably I don't know the exact number but we were probably one of the first 50 apps in the slack App Store mm-hmm and now it's just really lucky to kind of realize that opportunity and ride that wave and it was also kind of the Wild West for the slack platform at the time we're like anyone on any team could off any app without getting permission so like we just had huge huge brands coming in and trying out the product and then we manually sold like the first ten of them with fake fake product mock-ups and demos did the did the slack fun invest in you guys we didn't take slack fund money because they have a requirement where you have to have institutional capital which we haven't raised any institutional capital so we can't raise from them how much have you raised to date we've raised 1.6 million did you how would you do that again or no I mean it sounds like you had some financial with all bootstrap for a while do you regret giving up that equity if I were to do it all over again I probably wouldn't raise that much in the get go so we raised nine hundred K in our first round and then kind of did a follow on angel round of six hundred K a couple years later if I were to start over again I probably would have raised like 300k maybe enough to to fund like you know life maybe one other engineer and they just kept it small and scrappy until we got to the point we were making enough money just to fund it or gonna raise a bigger round yeah yeah smart interesting good good learnings they're all around so you launched on slack three weeks in to get 500 installs and use some fake product mock-ups to really test pricing and you get some kind of people saying yes I'd pay for that maybe they Forge you some money and you say I'll have it in six months or something like that how many customers every scaled to now today we have 535 right now okay 535 okay so so of those 500 you start learning like what converts people to paid what is that today what do you know you have to get a freezer to do in the first week to draft increased likelihood they convert to paying so the activation event for us is creating four pages and inviting two team members if you do those two things you in the sorry in the first like 10 days if you do those two things you generally have a 50% chance like converting but you know it's all over the map really right now I'm digging into like what of the free account so the best fit customers that are gonna make us the most money and then how do we close more of those customers because you know a five person company is much different than a hundred and fifty person company revenue wise of course of course okay good so can I take 535 customers at the hundred and ten are put you gave me earlier you're doing about call it sixty thousand dollars a month right now in revenue nailed at sixty thousand one hundred and thirty nine at the end of June lovin man and what's growth look like so were you a year ago so a year ago we were at I just did this out but we were about half that okay we've grown 67 percent over the last year that's pretty good and now I'm assuming most that growth came from new customer ads you don't have a strong upsell muscle yet do you we actually do have a pretty good upsell muscle so forty eight percent of our revenue in the last twelve months came from upgrades and 52 percent came from new accounts interesting so if let's dive into churn an expansion real quick to get to net revenue retention so the core you signed up exactly one year ago you said on average they expanded about by about 42 percent yep okay and then what was churn in that same cohort over the past twelve months churn in that same cohort I can go back which is fine - so I'm gonna caveat this as last July we switched from a free trial model to a full freemium model where you get twenty three pages and so those cohorts are like slightly different because that would so dramatically like different business model that we changed - yep that card Annette Annette mr are like turn last month was negative three point four two percent okay so that would mean negative three point four so that's the same as saying net revenue retention is about a hundred three percent right yeah exactly yeah which would mean which would mean your expansion outpaces your churn annually caught by at least three or four percentage points yeah right now so we made a big switch like I said in last July which was to get people using the product first and get it ingrained in their company's operating system and then over time as they add more people or they need more of the pro features they upgrade over time like kind of similar to slack you have two team members again four pages and that's the metric why are four pages critical or talk to talk about I know obviously you talk about what the product does the why are four page is a critical metric yeah generally the people coming in right now because of our acquisition channels kind of know they have this problem they're searching for things like internal wiki you know internal knowledge base that type of thing or they're coming in through the slack app directory and they know that stuff's all over the place in slack and so what they're coming in with is a sense of like what they need a tool like ours to do and so they need to vet that the thing actually works has all the features that they care about and it's like pretty easy to use and connects into slack the way they want like 95% of our top cost top 100 M are our customers use slack so that's like a pretty key integration so they're testing it out and then they're also pulling in like other stakeholders as well so it's used like those two other people who are kind of involved in the in the decision making process and then at that point they're able to like make a decision by it load it up with more content roll it out to their full team which is how we get all that upgrade revenue interesting all right we're running out of time your last couple questions here with the team look like today how many people are seven people strong seven I love that all local there in Boston or you spread out we're all local co-located very cool and then earning cash say or breakeven are profitable we're burning cash but we're default alive pretty handedly okay good so you know translating that essentially have variable expenses you could turn off and be breakeven or profitable yeah exactly and like we'll be profitable I think by like March 2020 maybe sooner depend on growth rate and what are you mean right now are you talking like 10 grand net burnt even with variable included or more that's like 2020 net burn okay interesting it always gives me a sense of the founders risk profile right what that burn looks like relative to revenues yeah we're trying to invest in growth we're an ambitious company like even though we haven't raised like proper institutional capital like we want to grow and we think we can we just don't need a ton of cash to do it yeah yeah I love that mindset I think it's totally doable you don't have to subscribe to the VC only model alright let the good stuff here Andy let's wrap up with the famous five number one what's your favorite business book hard thing about hard things by Ben Horowitz number two is there a CEO you're following or studying I'm not a CEO but I'm following Jay Simon's the president it was last seen pretty closely their models pretty similar to ours yeah if you guys want to hear Jay on the show he came on and described a lot of their model about Oh two months ago you can look that up on on Google number three what's your favorite online tool Andy for building your company profit well you know number four how many hours of sleep to get every night eight and with your situation married single kids single okay no kiddos no kiddos but want them someday very cool and how old are ya thirty one thirty one last question what he was your 20 year old self knew that it's a marathon not a sprint don't burn out and remember to exercise and sleep guys tetra dotco an internal wiki really got a lot of traction built on top of slack now today doing about seven hundred thousand dollars in terms of ARR run rate from 535 customers paying on average one hundred ten dollars per month they're burning caught twenty thousand dollars a month right now but again really trying to drive growth they've grown about six to eight percent year-over-year in terms of revenue they've raised about 1.6 million dollars team of seven with about thirty eight percent revenue turn annually forty two percent expansion four hundred four percent net revenue retention annually as they look to as Andy looks to continue to scale Andy thanks for taking us to the top thanks so much appreciate for having me on