WEBVTT 00:00:00.000 --> 00:00:09.823 And we had an error. And we went to go look at the data and there was no data in there. And so I sent an email to the customer support and they wrote back and I'm like, yep, there's no detailed data. That was it. 00:00:09.823 --> 00:00:24.736 That pissed me off. I was like, you just told me what I told you? That's not very helpful. And so I turned to Star and I'm like, you know what? We should build a product that can do better than that. That's how we got started. Hello, everyone. 00:00:24.736 --> 00:00:38.576 This is Builders Gonna Build podcast, episode nine, but I think we should just call it season two. So we are restarting the podcast. And I'm your host, Eli Bezdeliv. And with me today is... Arnab Deca, co-host, both from Metacast. 00:00:38.576 --> 00:00:51.695 And today we're going to talk about Honey Badger with, let's introduce Josh and Ben, say hello. Hey guys, happy to be here. Hi, I'm Josh Wood, one of the co-founders of Honey Badger. And I'm Ben, the other co-founder of Honey Badger. 00:00:51.695 --> 00:01:06.031 Welcome to the show. Really cool to see you there, here, I guess. And I've been listening to your podcast, FounderQuest, for about a year now. So I thought we would invite you because you guys have some really amazing stories to share about you building a company. You've been building Honey Badger for... 00:01:06.031 --> 00:01:20.239 13 years at this point, since 2012. So you've been at this together for so long. There are really great stories that I've heard in your podcast that we want to sort of rehash and retell all in one single package for people who are just getting started. 00:01:20.239 --> 00:01:35.231 with their businesses or in the beginning of their journey, they can learn from you and maybe follow your footsteps and avoid some of the mistakes maybe that you've made. Just to get us started, can you give us a brief introduction of what Honey Badger is for people who don't know what it is so they get an idea of what you do? 00:01:35.231 --> 00:01:43.632 Yeah, sure. So we're a web application monitoring tool. We do like error tracking and performance monitoring. 00:01:43.632 --> 00:01:57.936 for primarily full stack applications. So like Ruby on Rails, Laravel, Phoenix, if you're an Elixir developer, that sort of thing. We're a little bit like a New Relic or a Sentry or a Datadog sort of SaaS application. 00:01:57.936 --> 00:02:10.719 Lately, we've been calling ourselves Datadog the good parts, but we've been trying to provide just the 20 or 30% of what developers want in a nice, simple, easy to use monitoring tool. That you don't have to sell your kidney to use. 00:02:10.719 --> 00:02:21.295 And we're also affordable. You don't have to sell your kidney, like as Ben said. Yeah, that was actually someone said that about us recently, which was funny. We took it as a compliment. 00:02:21.295 --> 00:02:28.032 So I'm curious about your product because I'm personally not a Ruby on Rails developer, so I actually know very little about the ecosystem. 00:02:28.032 --> 00:02:41.104 More recently, I've been doing Next.js development, which is also full stack. So we are hosting in Vercel and there is still much to be desired in terms of observability. For example, we cannot get notifications when our site is down or when we got 500 errors. 00:02:41.104 --> 00:02:55.472 Recently, actually, I was looking at Vercel's web analytics, and it's like nice and simple, 20% of what Google Analytics does. But it's just so much nicer because it just gets me what I need without bombarding with me like 500 different parameters. 00:02:55.472 --> 00:03:02.719 I don't even understand. Would this be sort of a fair comparison between Honey Badger and some of those bigger tools? Yeah, I think so. 00:03:02.719 --> 00:03:17.008 We provide probably a little bit more than some of what web platforms like Vercel provide in simple metrics, dashboards and things like that. But we try to provide that out of the box experience of just, we're not going to bombard you with everything that you might ever. 00:03:17.008 --> 00:03:26.623 want in your monitoring in the future but we also try to be configurable and you know like under the hood be advanced enough you can do more when you need to 00:03:26.623 --> 00:03:40.975 And we support Next.js, so you can definitely check us out for your application. And we do uptime monitoring and cron monitoring as well, so you can know when your site's down if you're using HoneyBadger. Simplicity has really been a focus for us. We have customers who told us that they prefer having 00:03:40.975 --> 00:03:50.991 the UI that we go with versus like a 747 cockpit that some of our other providers, other competitors might have all the buttons and knobs and dials and things just don't care about. 00:03:50.991 --> 00:04:05.360 Cool. Let's jump into the genesis of Honey Badger. Maybe let's start actually with the name. Why have you named yourself after an animal? The meme, of course. Of course. If you're familiar with the Honey Badger video narrated by Randall. 00:04:05.360 --> 00:04:17.711 then that is where we get our name. Some listeners are not familiar with that video at this point. We're old enough that we might have to explain this. And when you find yourself explaining a meme, I don't know if that's a good sign or not. 00:04:17.711 --> 00:04:27.728 Definitely too old when I explain the meme. But yeah, if you haven't seen the YouTube video, go check it out. It's funny. There's quite a bit of profanity. So trigger warning if that's your thing. How did you guys start the company? 00:04:27.728 --> 00:04:34.384 So we started back in 2012. Star and I were working at the time together at a startup in Seattle. 00:04:34.384 --> 00:04:46.863 Star is the third co-founder of Honey Badger, who is no longer with Honey Badger, and we can talk about that if you want. So Star and I started Honey Badger. He and I were looking for a side project to do for a long time. 00:04:46.863 --> 00:05:01.136 Josh and Star and I have been working together probably since 2008, 2009, that timeframe. I had a freelancing business, Star had a freelancing business, Josh had a freelancing business, and we all worked together as we shared clients and have each other out. Star and I decided that 00:05:01.136 --> 00:05:15.184 we wanted to have a product, of course, because everybody who does consulting decides they want to have a product, right? And we just never really could settle on what kind of product we wanted to build. But as we were kicking it around and thinking about it, one day we were working on our own app at the startup and we had an error. 00:05:15.184 --> 00:05:26.639 And of course, we were using an exception monitoring tool. At the time, it was called Airbrake. And our error got sent to Airbrake. And we went to go look at the data. And there was no data in there. All the detailed data was missing. 00:05:26.639 --> 00:05:36.048 And so I sent an email to the customer support and I'm like, hey, we sent this error, but there's no detailed data. What's going on? And they wrote back and I'm like, yep, there's no detailed data. That was it. 00:05:36.048 --> 00:05:43.151 That pissed me off. I was like, you just told me what I told you. That's not very helpful. And so I turned to star and I'm like, you know what? 00:05:43.151 --> 00:05:57.487 we can do better than that. We should build a product that can do better than that. That's how we got started. So it was one product, we wanted to build a product that actually worked, but two, provide a customer support that actually was helpful. Because when developers are having a bad day with a bug or a problem, you don't want to make it worse. 00:05:57.487 --> 00:06:11.696 by not having a tool that supports you, right? That's how we got started. It was just a spike kind of thing. Scratch our own itch. Even just like looking back on that story now, it's funny, like just thinking, how often do we do that? We say that when we have like a bad experience with a product, we should build. 00:06:11.696 --> 00:06:26.560 a competitor and replace them. But this time we actually did it. But yeah, you wonder how things could be different if which one we had picked. And Josh, you joined a little bit later, right? There's a story there that you told on the podcast. You refused to be paid and you wanted to be a co-founder. Can you talk more about that? 00:06:26.560 --> 00:06:37.951 So Ben had a consulting company and Star and I were working with him before they took a job at office space together. I stayed freelancing. I think that was like a period of what, like a year? 00:06:37.951 --> 00:06:52.639 We had like a campfire chat at the time, which was like Slack back then. We all stayed in the chat room because we were all remote employees, basically. We'd hang out in there and just talk about Ruby and what we were working on and things. So I was watching this develop. 00:06:52.639 --> 00:07:01.935 as I was working on for clients and things. They worked on it for maybe two or three months. It wasn't very long. It might have been like one to two months. And they realized they were going to need some help. 00:07:01.935 --> 00:07:13.887 It's a big problem you're solving once you get into it. It's got back end and front end and it has like client libraries and SDKs that you need for integrations with all these different things like the frameworks and all that. 00:07:13.887 --> 00:07:23.920 not to mention third-party services like GitHub and Slack. So they came to me, obviously, because I was freelancing at the time, and they offered to hire me part-time to work on it with them. 00:07:23.920 --> 00:07:36.016 And I said, no, Ben figured it out that I would rather have been a partner in the business and what they were starting. I was interested in starting companies as well. I was wanting to get off the hourly grind of consulting. 00:07:36.016 --> 00:07:50.288 What kind of like life space were you all in at that time? Like what led you to have the conviction? I mean, it's not easy to like leave your jobs and go start something, especially like a infrastructure kind of service, which will take at least a few months to. 00:07:50.288 --> 00:08:04.624 build and then to market it, sell it and all that. So it's not like a very simple, I'm going to build this app in like a week and launch it. How did you decide what kind of life space were you in? Yeah. I've learned over the years of running this business that I'm somewhat impetuous. 00:08:04.624 --> 00:08:15.279 I dive in without considering all the ramifications sometimes. And that was definitely the case of starting Honey Badger. We did not think of the infrastructure, that's for sure. Really had no idea what we were getting into. 00:08:15.279 --> 00:08:29.584 We hopefully and naively were optimistically thinking, hey, this could just be a side project. You know, we can keep the revenue from our day jobs, have the revenue from the side business, and it'll be great. And it did not work out that way. But we're just like, hey, we want that product. Let's go build it. That was pretty much the extent. 00:08:29.584 --> 00:08:43.792 of it we all were definitely like in the headspace of just doing our own things building working for ourselves i think that really helped like before they worked for office space ben and star had been in the bootstrapping community for years and had started their own products in the past 00:08:43.792 --> 00:08:58.080 past as well. And then I had been freelancing for like a decade or something like that. And so we're definitely in the mindset of working for ourselves. So it felt kind of natural to me anyway. I'd started projects in the past as well. We were primed and ready. 00:08:58.080 --> 00:08:59.919 We just wanted one to work. 00:08:59.984 --> 00:09:14.576 One of the other things you did really like a good decision is you focused on a very specific niche of Ruby and specifically Rails right in the beginning. And the whole community probably jumped over because were you in the community at that time already? 00:09:14.576 --> 00:09:29.488 Yeah, so that was definitely a consideration because all three of us were Ruby on Rails developers. Like Josh said, I had products already that were in that space. I created Rails Kits before we created Honey Badger. So Rails Kits was basically a ready-made template. 00:09:29.488 --> 00:09:43.696 You can see starter templates today for build your SaaS by using this template. Rails Kits was the first one way back in the day. That was obviously focused on Ruby on Rails. And so we already had a pretty good connection in the community. We had people who knew us. And so it was pretty easy for us to get those first. 00:09:43.696 --> 00:09:48.303 paying customers because we were known quantities air break at the time was 00:09:48.303 --> 00:10:02.576 I think they supported other things, but they came from Ruby as well. I think they pretty much owned the Ruby market for error tracking. When we started to feel the pain after they were acquired by private equity, it turned out that others were frustrated as well. 00:10:02.576 --> 00:10:03.903 that helped a lot. 00:10:03.903 --> 00:10:18.272 Actually, now that I'm thinking about that timeframe between 2011 and 2014, I was working at LivingSocial. It was one of the biggest Rails apps in the world at that time. Everyone I knew was working at LivingSocial. Yeah. 00:10:18.272 --> 00:10:32.591 The most beautiful thing I remember about that time period is the Ruby community. I'm not talking inside LivingSocial. That was nice. But the whole open source community was amazing. I went to quite a few Ruby cons, Rails cons, spoke at some of the... 00:10:32.591 --> 00:10:40.735 smaller ones as well. It was like a beautiful, and I'm not surprised the community like fostered and helped you along with that. Yeah, it's a great community. We love it. 00:10:40.735 --> 00:10:55.183 So for founders who are in a situation like yours, you've built a product where you're almost done with MVP and you want to get your first customers. So how did you approach the first users? How did you sell them on the idea? How did you charge them? So if you could talk a little bit about it. 00:10:55.183 --> 00:11:09.392 Those very first sales, how do they pan out? The first sales, in quotes, I guess, were zero dollars because we just reached out to some friends who we knew well. I mean, we knew this was something you had to plug into your app, and so there's some risk there. So we wanted people who trusted us to not break. 00:11:09.392 --> 00:11:23.600 their stuff. And if we did break their stuff, they'd be okay. They'd be forgiving. Then we reached out to five or six friends and just asked them to try it out. We didn't charge them anything initially. And then we only charged them $1 a month afterwards when we had our billing stuff in place so that we could actually test the billing. 00:11:23.600 --> 00:11:25.440 The first real customers came about 00:11:25.440 --> 00:11:39.711 probably through my mailing list, like from Rails Kits. I think it probably had maybe a couple thousand people who were on that list because I'd been doing that for four or so years at that point. So I had a little bit of audience and we just emailed them and I said, hey, I'm working on this new thing. Come check it out. 00:11:39.711 --> 00:11:54.000 We used Twitter. That helped us out a lot in the early days. People were following us on Twitter because our community connection. So we just said, hey, we're live. I think initial pricing is like $9 a month to get started. It's kind of a no-brainer, really. And people just started signing up. And I think we had ping. 00:11:54.000 --> 00:12:04.672 customers within a month or so of actually publicly launching. So how long was it from like you deciding in 2012 to build it till Josh came along as shortly after to the first launch? 00:12:04.672 --> 00:12:18.960 Like Josh was remembering, I think we're about a month in after we first wrote code. So that was like May 31st was actually the first commit into our Git repository. So Josh came out in the summer. By the end of the summer, we had friends and family who were trying it out and then our alpha testers. And then I think by September, 00:12:18.960 --> 00:12:26.672 September, October was when we had our first paying customers. When you started to charge first paying customers, like real customers, people who you didn't know, right? 00:12:26.672 --> 00:12:38.384 What kind of milestones did you have? Maybe, I don't know, like 50 customers or like $1,000. And how long did it take you to hit that? And how did you sort of approach that? The only milestone that I can remember... 00:12:38.384 --> 00:12:52.336 and maybe Josh has better memory than I do, but we wanted to make $40,000 a month. That was our first target. Each of the three founders would be able to make $10,000 a month, and we wanted the 25% to be for infrastructure. Every dollar, we said 75% goes to founders, 25% goes to the infrastructure. 00:12:52.336 --> 00:13:06.639 I don't remember exactly when we hit that. I think it was sometime in 2014. It took a few years. Yeah. That was another thing that we can talk about if you want. But that's the only real goal. I don't remember having numeric customer goals. We just wanted that magical $10,000 a month. 00:13:06.639 --> 00:13:07.471 figure. 00:13:07.471 --> 00:13:21.903 I think this question is emotionally connecting with Ilya and me quite a lot because we're kind of in that space where we launched our app in September. And now we have about 75 paying customers. 00:13:21.903 --> 00:13:36.128 Revenue is nowhere near what we need to sustain both of our lives. But 75 paying customers means there is some traction. People are actually using it. People are retaining the subscription. I'm curious to know at... 00:13:36.128 --> 00:13:49.679 What point, right? Because you also said it took you a few years to get to that kind of milestone where you wanted to be. What was the points along the path that made you have conviction that, yes, this is actually progressing towards that? 00:13:49.679 --> 00:14:02.096 Just having any customers in the beginning was like huge for us. Yeah, we weren't sure what was going to happen. I think we were a little bit lucky, to be honest, too, that we built this thing at a time when people had a specific... 00:14:02.096 --> 00:14:14.272 frustration we were basically just replacing something that they loved that was no longer working for them that worked really well for us but still we weren't sure we didn't know that going into it of course we just knew what we felt 00:14:14.272 --> 00:14:29.216 when people started actually signing up for it i just remember that was kind of mind-blowing to me that people were actually paying for our thing at all our growth has always been like slow just slow and steady it wasn't like a rocket ship but it also was pretty steady more people paying over time 00:14:29.216 --> 00:14:37.456 That gave us some encouragement that we were going the right direction. It wasn't like dropping off. It was slow momentum, but it seemed to be continuing. 00:14:37.456 --> 00:14:48.559 And I think one just clear demarcation point was just when it got to the point that we couldn't focus on our day jobs as well as we wanted to because Honey Badger was... 00:14:48.559 --> 00:15:01.871 taking up enough of our thoughts and time. You know, we would have some sort of fire happening with the HoneyBatter server, and we'd have to go and switch to that, right, on our lunch break. And eventually got to the point, it's like, can't keep doing this. And if you want to be honest with ourselves, we're not giving 100%. 00:15:01.871 --> 00:15:16.176 to our employer, we got to leave, right? It's just not fair to them to not be committed to what they're doing. We wanted to stay with our employer. We liked our job. We wanted to have both. But we realized that Honey Badger was actually becoming popular enough that we had to spend more time focused on it than we had anticipated. 00:15:16.176 --> 00:15:25.456 So that, to me, was a sign. Okay, we should leave the job. Let's focus on getting Honey Badger. And that was promising. After how many months have you switched to full-time? 00:15:25.456 --> 00:15:39.792 There was this little gap, unfortunately, between leaving the full-time job and having Honey Badger pay us a full-time salary. One of the things that I really, really wanted to do was not go back to freelancing. And one of the things that we ended up doing was going back to freelancing. 00:15:39.792 --> 00:15:52.687 That gave us the time and the revenue we needed to be able to continue to bootstrap ourselves to actually having full-time salary. Star and I left our full-time employment in the summer of 2013, if I remember correctly. So about a year after we launched. 00:15:52.687 --> 00:16:03.008 And that's the point where I was like, well, we just got to focus on this because there's something there. And it was probably summer of 2014 before we gave up our last bit of freelancing. 00:16:03.008 --> 00:16:17.519 The thing that we didn't think about going into it was the infrastructure, how a tool like ours scales. It was great that we were getting customers, but then these customers were basically DDoSing us. When they were getting DDoSed, yeah. When they would have error. 00:16:17.519 --> 00:16:31.056 They're having a bad day. They're sending that bad day our way. We've definitely learned a lot since then about scaling and running high availability, high throughput services like that. But I think it was definitely newer to us in the beginning. 00:16:31.056 --> 00:16:42.015 There were probably times when we felt like we had to dedicate more time to like making sure we were available to scale the infrastructure and probably hoping that revenue would catch up to that. 00:16:42.015 --> 00:16:54.864 In your podcast, you mentioned that initially you had the all-you-can-eat buffet kind of pricing. So what happened, as I guess usually happens with this kind of pricing, is some people were just bombarding you with millions of events, right? 00:16:54.864 --> 00:17:10.832 so they would cost you a lot more than they actually pay you and then you switch to usage based pricing, which I think the cloud providers actually think about going the other way because nobody just can understand usage-based pricing of AWS, which has like, I don't know, a thousand SKUs, right? 00:17:10.832 --> 00:17:19.920 Whereas you went the other way. You talked in the podcast that it was sort of stressful. It wasn't quite clear. Can you talk about that story? And also, when did it happen? 00:17:19.920 --> 00:17:29.311 As you said, you give away everything, then you have some people that come in and use a whole lot of everything. We started that way because we were frustrated with the permanent limits that Airbrake had. 00:17:29.311 --> 00:17:42.448 Because if you're sending a whole bunch of errors, if you're having a bad day, you don't want your tool to stop reporting the errors, right? You want to know what happened. And so that seems like that was just the worst timing to shut someone off when they actually need the tool the most. And so it's like, well, we're not going to do that. We're going to have unlimited. 00:17:42.448 --> 00:17:50.607 You know, we learned along the way that was bad. One reason is because we as a team, we had always like, if there was an error, we would hop on it and fix it. 00:17:50.607 --> 00:18:04.976 And then we discovered there were other teams that weren't quite like that. They would just send errors forever. And so that was a learning for us. Over time, we figured out, okay, there is a certain class of company that they have some level of errors that is just noise, and they're just not going to get around to fix it. 00:18:04.976 --> 00:18:13.855 because they got more important things to do. Makes total sense. But that was beyond our area of expertise. That was not our experience. But we understood after a while that's how plenty of teams operate. 00:18:13.855 --> 00:18:28.240 And then we also just saw like there was this wide, wide spectrum. We didn't really anticipate that we would have customers who would send us one error a month and then customers who would also be sending us millions of errors a month. And so it's like, oh, yeah, I guess there is a big spectrum of size of companies, you know. So again. 00:18:28.240 --> 00:18:35.471 jumping into things, being a little naive. When we were looking at our costs after a while, we're like, you know what? We have these whales. 00:18:35.471 --> 00:18:49.743 on the platform who are just using way, way, way too many resources and they're spending 19 bucks a month. We're actually losing money on them based on how much traffic they're sending. Versus these other customers who are sending very little and we're basically overcharging them. They're subsidizing the whales, basically. 00:18:49.743 --> 00:18:52.880 And we're like, that's just not right. You know, we got to figure this out. 00:18:52.880 --> 00:19:07.152 We spent months thinking about what kind of pricing makes sense. We were very, very nervous about it because we had had this commitment to unlimited stuff and how do our customers accept this? So we handled that by just allowing customers to stay on their old plans when we launched a new pricing. 00:19:07.152 --> 00:19:17.776 launch a new pricing, we made the mistake of actually announcing that we had new pricing. And because we allowed people to stay on their old plans, everyone looked at new pricing and anybody who could benefit by downgrading... 00:19:17.776 --> 00:19:32.048 did, or I should say upgrading to the new plan. They did. And anybody who would be paying more, they just stayed where they were. So revenue just like dropped. We were just holding on bare knuckles to our desk. Like, did we just ruin the business? Did we sink ourselves? I remember Star 00:19:32.048 --> 00:19:39.759 was particularly nervous. And I was just like, just hold on, just hold on. It's going to work out. But I wasn't sure. I was just hopeful. I just believed. 00:19:39.759 --> 00:19:54.064 It did. It did work out. After a few months, new signups started coming in at the new pricing and it started working out. And then eventually we still had some customers who were like five or seven years later, still on that old pricing, still getting just way too much. And eventually I just, we had to reach out. 00:19:54.064 --> 00:20:08.271 to them and say, hey, this is not working. And I wrote this book of an email saying, this is when you signed up. This is when we launched this new pricing. This is why we did it. This is how much you're sending, blah, blah, blah. Let us help you reduce your volume, blah, blah, blah. Anything to keep around. 00:20:08.271 --> 00:20:11.776 send that out to some of the biggest whales and get them on the new pricing end. 00:20:11.776 --> 00:20:23.503 And everyone was cool with that. They understood the value we provided and understood that they had a pretty good deal for a very long time and that it was unfortunately going away. We only had one customer actually leave us over that. 00:20:23.503 --> 00:20:37.824 So that's fine. We felt like that was a good thing. But it definitely changed the trajectory of the company, no doubt. You can look at that moment in history on a revenue chart and you can see clearly when we made that decision. If I remember correctly from the podcast, your revenue actually only went up from there. Is that right? 00:20:37.824 --> 00:20:49.200 Yeah, that initial period where you had a bunch of downgrades and stuff, it only lasted about a month. So if you look back at our revenue charts, you can see, oh yeah, it didn't have this big dip and go up, it just went up. 00:20:49.200 --> 00:21:03.567 In another, I think, 2023 winter episode, you were talking about another episode where revenue was decreasing and you were constantly stressing out. Ilya and I feel like we're always in that mode, like every week when we... 00:21:03.567 --> 00:21:09.056 meet we look at our like plans and everything we always look at it like okay what's going to happen and all that 00:21:09.056 --> 00:21:23.344 Of course, the scale is like massively different, right? But right now at this point, how stressed are you like on a week to week basis about revenue and what's the comfort margin and how has that changed from like the early? 00:21:23.344 --> 00:21:35.567 I don't know. It varies, right? I think it's the rollercoaster of emotions. I think some weeks it's like, oh my goodness, everything's on fire. And then I just sit back and realize not everything's on fire. We have a bunch of recurring revenue. It's good. I think like doing it for this 13 years. 00:21:35.567 --> 00:21:49.839 You kind of learn to accept that stress or those fears a little bit. You get used to it a little bit. We've been through several plateaus in the business, for example, where at the time it's like you never know. You assume it's the end. This is it. There's no growth from here. 00:21:49.839 --> 00:22:02.304 And then you work, try new things, and you figure it out. And eventually, the growth continues. So we've been through a few of those. And I think that helps because once you have some experience, you see how these problems arise. But then... 00:22:02.304 --> 00:22:16.031 you solve them, you work towards solving them. It helps kind of calm those fears or let you be a little bit more calm in the middle of it. But I mean, like it doesn't go away. Like I think that the episode you're talking about, what was that like the end of 2023? 00:22:16.031 --> 00:22:30.319 Yeah. Yeah. 2023 was a tough year. If you go back and listen to that episode, we had done some extra spending like on marketing and things and had not managed our cash flow as well as we could have. We were definitely stressing. And then, you know, throughout that year, we worked. 00:22:30.319 --> 00:22:44.528 balance our budgets and stabilize our cash flow basically in the business stabilized. And it's been pretty stable since then. We're still trying to figure out how to get growing more. We always like more growth, obviously, but things have been stable. We're watching the revenue charts. 00:22:44.528 --> 00:22:48.784 the bank balance very closely now to make sure we're in a good place you know 00:22:48.784 --> 00:23:00.784 Yeah, I think 2022 was a great year for us. We got to be a little lax because of that. Money was just rolling in and all the things are going our way. And then when it wasn't, it was like, oh, wait, we actually have to pay attention to some things in detail here. 00:23:00.784 --> 00:23:08.768 When we were like surprisingly stable through the pandemic too, we grew during the pandemic just because the tech sectors were growing, especially with the remote work boom. 00:23:08.768 --> 00:23:23.056 the thing i like to focus on is if i'm feeling particularly stressed or anxious about expenses or whatever then it's like okay so what can i do to get over that frustration or that anxiety can i make another phone call to another customer is that going to motivate me to do something 00:23:23.056 --> 00:23:37.263 change that story. That's how I would try to channel that kind of anxiety because it's always going to be there. It's easier now than it was in the early days when I thought the whole business was going to go away at any time. I don't think that these days, but I do think, what if we don't X or what if we don't Y? And so I'm just like, okay, so how are you going to avoid 00:23:37.263 --> 00:23:49.903 X or how are you going to avoid Y? What are you going to do for that? You mentioned that in 2014, you hit $40,000 MRR. So like everybody could get 10 grand and also spend money on infrastructure. So before you hit that, how did you think about... 00:23:49.903 --> 00:24:04.240 paying yourself because there are three of you right and there are also expenses there is probably stuff that you may do with contractors how did you think about money when money was very limited in the very beginning when there was money but it was not like huge amounts that you can easily lavishly spend 00:24:04.240 --> 00:24:17.776 Yeah, our philosophy basically was we pay ourselves last. Pay the infrastructure bills first, of course. If you want to have a contractor do something, find them and pay them. And then if there's anything left over, then pay yourself. And we agreed that we will try to have all of our income coming from freelancing. 00:24:17.776 --> 00:24:32.175 so that we can leave as much money as possible in the business until it got to that $40,000 magic number. But I think we probably periodically took a distribution. I want to say it was like quarterly. We would just go back and look, okay, how much cash do we have in the account? How much do we want to keep in the account? 00:24:32.175 --> 00:24:46.384 And then we can just cut the difference as a check. I'm vaguely remembering that first distribution. That was like amazing. We were trying to funnel most of the money back into the business because we were trying to do some marketing and we were learning marketing at the time, really. But we knew that we needed to. 00:24:46.384 --> 00:24:59.968 continue to spend money to acquire new customers to grow and get there. And we had also each put cash into the company when we started. So it didn't make sense to immediately take cash back out. It wasn't huge, but it's probably at least six or nine months. 00:24:59.968 --> 00:25:14.319 maybe even a year before you even actually took the first distribution check because they wanted to keep as much money in the business as possible to help with growth. Sorry, technical question. What is your legal structure? Are you an LLC or a corporation? How is the distribution? Is it actually dividends? 00:25:14.319 --> 00:25:26.336 We were at the time a three-member LLC and we had each an equal ownership stake because we all put in the same amount of money. So we all took out the same ownership, just a distribution. So we learned that our distributions had to be equal or had to be. 00:25:26.336 --> 00:25:40.655 according to the percentage of the membership stake in the LLC, right? Which in our case was equal. I don't remember how we learned that, but our accountant was like, by the way, if you're going to pay somebody, you got to pay all three of you. Did you ever have situations, because Arnav and I can discuss that kind of scenario. 00:25:40.655 --> 00:25:52.864 Somebody is sort of in a dire situation, so they need a little bit more. Has there been something like that? And how did those discussions go? We have had discussions along those lines because, well, at the time we launched, I had two kids. 00:25:52.864 --> 00:25:55.903 And Star and Josh had zero. 00:25:55.903 --> 00:26:10.192 And so, yeah, I definitely had more expenses. And we talked about that, like, how are we going to do that? And we didn't end up doing anything special as far as revenue coming back out of the business. I just hustled on my freelancing more to be able to cover my costs. And I think Josh and Star gave 00:26:10.192 --> 00:26:21.872 me grace if I wasn't around for a day or two because I had to do some freelancing work. They're like, yeah, we can cover it for you. You were also kind of covering the infrastructure. So it was like, as long as the servers are happy, then I think we were happy. 00:26:21.872 --> 00:26:28.720 I also don't sleep a lot, so that helps. That's the key to the success. 00:26:29.359 --> 00:26:43.951 So speaking about founders and the relationships, because you guys have been doing this for 13 years and you've known each other even longer. And you read all of those books like Hatching Twitter, for example, about Twitter, where it was just a shit show between the founders. And there are multiple... 00:26:43.951 --> 00:26:48.463 those like high profile stories but i mean you seem to be getting along quite well right 00:26:48.463 --> 00:27:02.432 How has that relationship evolved over time? Were there any downs and ups in there? Was it like more stable? So yeah, if you could talk about that, that would be really interesting. First, I think it helps to have like not three... 00:27:02.432 --> 00:27:12.208 um massive egos in the beginning i think we were all pretty reasonable and had good relationships going into it and had worked so well i think like 00:27:12.208 --> 00:27:23.872 it really helped that we had worked together for two or three years at that point i don't know about you ben but i would have been much more nervous to go into something like this with someone else or multiple people 00:27:23.872 --> 00:27:37.152 if i didn't have a good sense of how we work together i've always been glad that we had that time to get to know each other and it was really like there were no concerns at that point about the personalities and working together like we kind of knew that we could work together and had a good 00:27:37.152 --> 00:27:51.440 rhythm and we already had a little bit of a culture even between the three of us just because of that chat room the campfire room after that of course you get into these things and it's a marriage basically there's been definitely been challenges and we've gotten to know each other better 00:27:51.440 --> 00:28:03.071 and learned each other's personality quirks and what our issues are, basically. I think we've done a pretty good job of always giving the other person the benefit of the doubt and working through things. But yeah, there's definitely been disagreements. 00:28:03.071 --> 00:28:11.776 And then, of course, like Star ended up eventually leaving the business and we bought her out and we can talk about that eventually. It hasn't always been happy, but it's been mostly happy, I'd say. 00:28:11.776 --> 00:28:19.920 If you're around for 14, 13 years with somebody, you change, right, as well as they change. So there's been a lot of personal growth. 00:28:19.920 --> 00:28:34.256 Yeah, just like a marriage, right? You have to reconnect. You have to be communicating. I think it's the same kinds of interpersonal relationship kind of stuff that your therapist will tell you. At times, we are therapists for each other, right? Because we come in and we say, hey, how are you feeling? How is the business treating you? Do you need to take... 00:28:34.256 --> 00:28:48.463 a break, right? And I think it's just checking in on a regular basis. And like Josh said, giving grace, like, hey, it's tough. Like, this is a hard road to hoe. Like, my kids are now 24 and 20 years old. Josh now has two kids. You change. You have to allow for that and say, 00:28:48.463 --> 00:28:52.112 hey, there's gotta be some flexibility and some kindness, I guess, in there. 00:28:52.112 --> 00:29:06.960 Yeah, sometimes you're therapists for each other and sometimes you get therapists. And in the past, we've worked with like business coaches that have helped us work together as well. That's always an option. And it's not the same relationship that we had going in. It's always changing a little bit and developing. 00:29:06.960 --> 00:29:19.455 I think you really hit the nail on the head about the experience of working together because you know what to expect. You understand the work ethic. You know when this person freaks out and when they don't, when you can rely on them, when you can't and stuff like that. 00:29:19.455 --> 00:29:33.215 I think the quick formula, like a very short formula that Arnab and I have sort of come up with initially is your co-founder should not freak out when you freak out and the other way around, right? So you can always sort of counterbalance each other. 100%. 00:29:33.215 --> 00:29:35.231 Yeah, Josh is very good at balancing me out. 00:29:35.231 --> 00:29:49.695 And I think it also really helped that we had alignment on our goals. We wanted to bootstrap our business. We did not want to have a high growth VC backed kind of scenario. We knew we wanted a calm company before that term existed. We had families, like we were all married. 00:29:49.695 --> 00:30:01.392 We knew we wanted to have that balance. And so that was like a key part of our culture going into it. It's like, hey, yes, work is important, but family is more important. And we're going to take time for that. And we're not going to sacrifice our families for this business. 00:30:01.392 --> 00:30:13.759 We knew these things about each other because we had worked together for a few years. But having the goals in alignment, having the personalities click, I mean, made it all workable. I think it was the second episode on the podcast where you were saying that... 00:30:13.759 --> 00:30:25.039 I perceived this as sort of Ben and Star having stronger opinions, some clashes, and Josh was kind of the diplomat of the team. 100%. Yes. Always was kind of the diplomat, huh? 00:30:25.039 --> 00:30:39.311 Yeah, yeah. I always call Josh the peacemaker, because Star and I do have very strong opinions, and Josh could see that easily. And so Josh could see, hey, okay, Ben's getting a little upset, and Star's getting a little upset. So Josh would come to me and say, hey, I think Star's thinking about this. And Josh 00:30:39.311 --> 00:30:44.384 Josh, I assume went to start and said, I think Ben's thinking about this. And that was super helpful. Yeah. 00:30:44.384 --> 00:30:54.655 Have you ever had cases where any two of you in a set of three people wouldn't talk to each other for whatever reason, like frustration or something like that? And then did it happen? How did they reconcile? 00:30:54.655 --> 00:31:07.008 I think it did happen, but it's kind of hard to tell because we're all remote, right? So all you have to do is quit Slack for the day and then you don't talk to anybody. There might have been a few days or a couple of days here and there. 00:31:07.008 --> 00:31:21.392 Not for the most part, though. Like there's some tense periods, tense times during the buyout with Star and all of that. There's always going to be stress with those situations. So can you quickly summarize what were the difficult parts of dealing with co-founder like departing? 00:31:21.392 --> 00:31:31.071 there's the logistics within the LLC and all the paperwork and all that too. But other than that, yeah. The biggest issue was the valuation. Like, how do you value? 00:31:31.071 --> 00:31:45.167 a private business that's relatively small and make sure that the person who is leaving gets a good, equitable payout. When you have no money. We didn't have millions of bucks to hand out, right? And how do you make sure that the people who are still behind feel like... 00:31:45.167 --> 00:31:56.064 They got a decent deal and they can still support it without killing the business, right? Because that's a risk. Like, hey, we're all done here. We're just going to shut it down, right? That's a low percent of probability, but it still is a possibility, right? 00:31:56.064 --> 00:32:10.352 What had happened over the years was we just came to separate goals. And that's why I mentioned the alignment thing. Josh and I really wanted to build new products and do new things and try and go big. And Star was like, I'm kind of happy with where it is. I don't want to build a new product. I like it. 00:32:10.352 --> 00:32:24.559 working on this product. And if you have different goals, then it makes it really tough to have a cohesive working environment. And so obviously leading up to that point, there's that friction around, well, you want this, but I want that. And you're going to butt heads. And we dealt with that. It was tough. 00:32:24.559 --> 00:32:31.680 at times but we always focused on we want to have a good personal relationship like we don't want to burn bridges here we want to still be able to be 00:32:31.680 --> 00:32:46.000 kind and still be able to talk to each other. There was no like ranting and flipping tables and stuff like that. But there were, you know, some walks in the woods and some time away from Slack, you know, things like that. So how did you do the math? Give us the high level like framework that you used to 00:32:46.000 --> 00:32:54.448 come up with the numbers there. It was actually pretty easy. And here's the super secret information. So we had an acquisition offer that had come in a few months before we actually had the buyout. 00:32:54.448 --> 00:33:08.751 And so we had a valuation that we could work from. And it was somewhat unfortunate because, like Josh said, we didn't have millions of dollars like the acquirer potentially would have. So Star is thinking, hey, well, the business is worth this because this acquirer said... 00:33:08.751 --> 00:33:17.728 it's worth that. And Josh and I were like, yeah, but we're not a multinational corporation that has all these funds to buy businesses. We're like doing loan. 00:33:17.728 --> 00:33:32.048 calculators and trying to figure out like, how screwed are we if we take out this massive for us loan? So if we could rewind, the problem was we didn't have a calculation in our operating agreement that said what the business would be worth if we came to 00:33:32.048 --> 00:33:42.223 this kind of scenario. We had some buyout scenarios explaining how the actual transaction would happen, but there was no like, this is how you're going to value the business. So that was unfortunate. 00:33:42.223 --> 00:33:56.528 A lot of times those formulas are just like inadequate. I went through a similar thing in a different business and it was like we ended up having an outside valuation come in just because it wasn't what we had thought would be how you would value a business in the beginning was just like not fair to anyone. 00:33:56.528 --> 00:34:08.335 we all recognize that was it an option for star to like retain the equity in the company and keep getting dividends without you buying them out or was that never on the table 00:34:08.335 --> 00:34:21.152 I think that was an option that Star wasn't particularly interested in. Because at that point, I think Star just wanted to be done. Didn't want to be involved. Would have been nicer for us on the loans that we took out. But I can understand why Star just wanted to be done. 00:34:21.152 --> 00:34:35.503 Star was generous enough to finance the loan to us. And so we're making the loan payment to her still. So hopefully she smiles every month when she sees that joke come in. But yes, that was very much appreciated. That was part of the negotiation. 00:34:35.503 --> 00:34:50.128 So it's like, well, OK, we got this dollar amount. We also have where the payment terms and how are we going to get this money? So in a way, she is basically getting dividends, but fixed terms and percentages and all that. And interest, right? And interest, yes. 00:34:50.128 --> 00:35:04.592 So speaking about the culture of your company, you already mentioned the Calm company before it even existed. I heard in your podcast that you had 30-hour work week. I think just before we started recording, we talked about, like, is it even possible to build a Calm company when your money keeps running? 00:35:04.592 --> 00:35:10.784 and you have to freelance. Can we talk about that and maybe the evolution of your ideas here in this space? 00:35:10.784 --> 00:35:23.152 Yeah, for me, I think a calm company is the goal is the ideal, right? Because obviously, it's not going to be calm all the time when the servers are on fire, and you're up at 2am dealing with that. That's not calm. But our goal was that that would be 00:35:23.152 --> 00:35:37.423 the norm versus the exception. The calmness would be the goal that we're striving towards, not just every once in a while we feel good. That made us make decisions like, okay, we're not going to take VC because there's a lot of pressure that comes with that path. That's how we felt we wanted to run it. And so we set the goal of, okay, we only want to work 30 minutes. 00:35:37.423 --> 00:35:48.128 hours a week because we want to spend time with our families now are there weeks that we work more than 30 of course probably more often than not that we're working more than 30 but that's just our guiding principle that's what we're striving for 00:35:48.128 --> 00:35:53.648 We were definitely grinding in the beginning, and I just think that it's probably impossible to have the ideal. 00:35:53.648 --> 00:36:07.983 in the beginning because things just take a lot of effort to start we're working nights and weekends i mean unless you're coming into it with self-funding or something like that maybe it's your second or third one which i have no experience with since we've been doing this so long but i can imagine 00:36:07.983 --> 00:36:20.351 maybe you could bring that into the beginning. But it does seem like when you're just getting started out, if you're early in your career, there is a period where it's appropriate to grind, I think. And then hopefully like later. 00:36:20.351 --> 00:36:30.239 in your career, you can chill out a little bit. It's also one of the benefits of having a co-founder, I think, right? Because one can be grinding, the other can be relaxing a little bit and you can trade off. Yeah. 00:36:30.239 --> 00:36:43.632 So at this point in Honey Badger, you have you two co-founders and then you have a few full-time employees. You have contractors as well. Like who does what? How many people are in there? Yeah. Ben is most of the business. 00:36:43.632 --> 00:36:57.903 administration and compliance. Primarily, I would consider him our CTO, manages our infrastructure and everything. We both do manage the product and are still working in the product on a fairly regular basis. And we're trying to like 00:36:57.903 --> 00:37:12.112 do less code in general. So we're doing more delegation and Ben's been learning enterprise sales lately, for example. I do the marketing and developer relations and all of that. I'm involved in the product and some of our 00:37:12.112 --> 00:37:26.447 open source projects and SDKs and that sort of thing. Wearing a lot of hats. Yeah. And then we share the executive decisions. We don't do anything solo. Neither one of us decides on big decisions alone. So I guess we're co-CEOs, basically. 00:37:26.447 --> 00:37:34.864 We haven't ever really landed on a single CEO, even back with Star. Three CEOs was a little bit much. Co-CEOs works a little bit better. 00:37:34.864 --> 00:37:44.559 I think there's pros and cons. Decisions take longer when it's multiple people. But yeah, it works well at our size and the way we run things. It's always been a good way to do it, I think. 00:37:44.559 --> 00:37:58.927 I like how Jason Fried talked about the CEO title that he has. He's like, I'm not a CEO. CEO is like a role that I perform for 5% of the time, right? And otherwise, I'm just a co-founder. I think that's how we've also been thinking about ourselves. 00:37:58.927 --> 00:38:06.335 here kind of technically because I'm the US citizen and our numbers not. So, and we have a C Corp. So only one of us. 00:38:06.335 --> 00:38:19.695 can't be the CEO just legally. But you don't think it can be headaches, to be honest. No executive power, otherwise you're just equal co-founders. Yeah, I like that framing as well. 00:38:19.695 --> 00:38:31.632 So for the full-time employees, about the culture of the company, right? Do you do equities and cash? How do you think about compensation long-term, having them in the company and all that? 00:38:31.632 --> 00:38:45.936 We have long wanted to do some sort of equity. We haven't figured out that yet. It's a little tough when you're an LLC, right? Because ownership means membership. That's a little different than having equity in a C-corp. So one thing we thought about doing is, can we do some profit sharing? We've even gone all the way to think, can we... 00:38:45.936 --> 00:38:46.784 do an Aesop. 00:38:46.784 --> 00:39:01.103 And we tried, look at that. And honestly, every time we started looking at it, it's like, oh, that's a lot of complexity. Let's get back to work. Give an employee a bonus and call it a day. And so far, that's been good. And I think one of the appeals of working for Honey Badger is that it is a calm company. Like, we take that seriously. 00:39:01.103 --> 00:39:15.311 the family slant. And so every employee knows that whenever they need time to do whatever, just do it. We believe in unlimited vacation and like you actually take it. You should just go when you want to go, like whatever makes sense to you. And I think that helps the overall compensation picture, right? We're not. 00:39:15.311 --> 00:39:31.840 focused on every dollar we're focused on having a good life the 30-hour work weeks are more serious for the employees than they are for the founders as well so someone's working over time it's going to be ben or i And are you all primarily remote or do you meet up once in a while? 00:39:31.840 --> 00:39:43.199 We try to get together at least once a year, two times a year if we can. And we just did that in January, and it was fantastic. It's awesome to be able to get together. But yeah, otherwise, we are 100% remote. It has its pluses and minuses. 00:39:43.199 --> 00:39:54.239 But you guys live in the same state, so you're probably like three hours away from each other. How often do you two meet? Once a quarter or something? Yeah, yeah. We used to get together a little more frequently, but these days, yeah, about once a quarter. 00:39:54.239 --> 00:40:01.360 And on the podcast, you also talked about the quarterly conclaves, which I kind of like the name. Do you still do those or is it a thing in the past? 00:40:01.360 --> 00:40:15.791 We do. Yeah. That's our planning meeting. It's a time for Josh and I again to reconnect. We have also many conclaves now, which we haven't talked about in the podcast yet, but we figured like quarterly was too long to go without a good talk. And so now we do that monthly where we just, again, talk about future. 00:40:15.791 --> 00:40:17.168 feelings and 00:40:17.168 --> 00:40:31.519 the status of the business and things like that. Yeah. And status of like priorities that we set in the quarterly because it's like big picture, more like high level things we want to happen during the quarter. And it's easy to have that conversation. And then you go and you work for three months and, you know, you forget. 00:40:31.519 --> 00:40:40.159 Yeah, so it's good to connect on those. So that's like all hands, like everybody in the company or just you two doing that? That's just us. 00:40:40.159 --> 00:40:53.360 We have monthly all-hands meetings where we talk about product and then also monthly we talk about ops. And do you use any framework for planning like OKRs or? No. Not really. We don't believe in that sort of thing. 00:40:53.360 --> 00:41:07.824 We've been loosely following the ShapeUp process with mixed success. On an ongoing basis, we've been like adapting it to our business and figuring out what works because it's probably different for every company. But as a general framework, I like it. 00:41:07.824 --> 00:41:21.983 And I think what you said, that you don't have a process, you go and you adopt that. That is the way agile is supposed to be versus what agile tends to become in most companies over time. So, yeah. 00:41:21.983 --> 00:41:26.704 We are really thankful for your time and all of the insights that you've shared. It was really cool. 00:41:26.704 --> 00:41:39.983 parking thoughts you want to share to people like us, just getting started, getting the sense of their first revenue, but they feel like, oh, it's not a hockey stick yet, right? And there's still a lot of grind ahead. What advice would you give to folks like that? 00:41:39.983 --> 00:41:53.423 Oh, be patient. We never had a hockey stick either. Like we've had definite changes in revenue growth, but it's never been runaway growth. It's just been daily grind. You got to keep doing things you know to do and be patient. You know, hang in there, like lean on your co-founder if you're having a low time. 00:41:53.423 --> 00:42:01.807 Talk to your co-founder and have them help you out. On the tactical side, learn marketing. I mean, obviously, like we all love to build the products, but you want to get people. 00:42:01.807 --> 00:42:16.239 buying the products that's the lesson we continually learn we realize we've been coding again and we need to get back to selling so that's really important in the beginning and throughout as you grow cool so where can people find you you can find us on blue sky 00:42:16.239 --> 00:42:26.480 I'm at joshuawood.net is my handle on there. I'm at bencurtis.com on Blue Sky. We're on LinkedIn. Honeybadger.io is our website, of course. 00:42:26.480 --> 00:42:39.519 Yeah, you can find all of our links on HoneyBadger.io because we have an About Us page that links to all the things. So check it out. Find us there. And then our podcast, FounderQuestPodcast.com or just search on all the platforms and you'll find us. 00:42:39.519 --> 00:42:50.320 Yeah, it's a great podcast. And if I was a new listener just discovering you, I would just go all the way down to the second episode because the first one I think was very technical about the Elixir hackathon that you guys had. 00:42:50.320 --> 00:43:02.480 But I think second one was very much actually one third of the stuff we talked about today, but it's for five years ago. It's a great episode, great podcast. Thank you. Appreciate that. Well, thanks a lot. And yeah, let's hit the stop button.