Scaling from Zero to $40 Million ARR in 6 Months - Eric Simons (StackBlitz) & Erik Nordlander (GV)

Alright, good afternoon everybody. We're here for the Erik and Erik show. Um, I'm Erik Nordlander, I'm a GP at Google Ventures, uh, and I was, uh, lucky enough to back, uh, this Erik right here, uh, back in 2020, back at the beginning of your company. And so I guess I'd like to just start with that, you know, before we get to this incredible accomplishment. Uh, tell us about your entrepreneurial roots and like how How did the business get started? What were you working on?

Yeah, totally. Yeah, it's good to be here with all of you. Yeah, so let's see. How far back do we want to go? So I started this company, StackBlitz. I imagine most folks here are familiar with us with our product, Bolt.new, at this point. But we started the company back 7, 8 years ago. And I actually started it with one of my childhood best friends. His name's Albert Pye, and he and I grew up down the street from each other in a suburb of Chicago. And I think when we were like 13, we learned how to program together. We were building websites with PHP and MySQL and stuff. And we just fell in love with it. And that's kind of our friendship. We bonded over that. And so ever since then, he and I have been building different product ideas and business ideas together. So after high school, he and I came out to the Valley, and we spent a number of years in Palo Alto and San Francisco just trying out different startup ideas. And the long and short of it is the idea for StackBlitz actually— the story for that actually started with us when we first came to the Valley. We just had the good fortune of bumping into Dylan Field, who was one of the co-founders of Figma. And at that time, it was embryonic. They did not have a product. And I don't know if anyone's ever seen the first pitch of Figma. But it was not like a design tool. It was actually just like this 3D ball dropping into water in a browser tab. And the pitch for their seed round or whatever was browsers have gotten very powerful. And you can actually do complex 3D graphics rendering in them. And so you could actually— it should be possible to build a rendering engine that you could then build a design tool around that would run in the browser. And that would be huge, because it would enable people to use design tools without having to install stuff. Where that's a huge barrier to entry. And so obviously, we've kind of seen how that story played out with Figma. And in 2017, we kind of saw that same thing happen for development. And specifically, browser APIs had gotten to a point where it was like, OK, it actually should be theoretically possible to run an operating system in a browser, which would be huge. Because that would allow you to take development, bring it into the browser, and you Allow folks to actually learn how to program and actually build full-stack applications without having to set up a whole bunch of stuff on their computer. So that was kind of the original idea. And then we can dig into whatever part's the most interesting of this. But the long and the short of it is we built this amazing core technology, could not figure out how to monetize it. And then last October, we launched Bolt, which was kind of like— we were kind of getting ready to spin down the company. At that point, 'cause we'd been around for 7 years and built some very cool stuff. A lot of developers liked it, weren't paying money for it. And Bolt was our way of effectively taking the generative AI for code gen, the frontier stuff, and merging that with the ability to have an in-browser dev environment. Think like ChatGPT, but for building real apps and websites. And I just took off like a rocket. And the first 2 months went from 0 to $20 million of ARR. In Q1 we basically doubled that, so, you know, hey, pretty bullish.

I remember getting the investor updates and I literally couldn't believe it. I thought there were extra zeros being added somehow. What was that like? What was that first moment like when you understood that, wow, we have product market fit and this thing is literally lightning in a bottle?

Yeah, it took me a while. It took me a while to understand and believe what was going on. Because typically when you launch things like this, there's the classic graph. There's the peak, the TechCrunch of initiation, then the trough of sorrow. So the first day, one of our engineers is like, oh my god, we added $60,000 of ARR. And I was like, OK, just temper the enthusiasm. It's great, but tomorrow it's going to probably be— half of that, but it just kept growing. In the first week we added like a million. And to be clear, the entire ARR of our company at that point, after 7 years, was $700,000. So $0.7 million over 7 years, and then in week 1 we had a million dollars of ARR after this product went online. And so we didn't know what to make of it. And then it just kept growing. It kept going. So by the end of month 1, we were at, I think, over 5 million. And then at the end of month 2, it was like 20. And then we were talking to people, the folks that were using the product. And it was kind of like, it was like a murder mystery where it's like, what is going on here? And you start to kind of connect the dots and it's like, oh, OK, this is, there's a tectonic shift here that's happening, right? Where there's PMs, designers, entrepreneurs that previously that were unable to build software products themselves that now can. We talked to just dozens of people that got quotes to make their CRM app or whatever from an agency and the cost was like $30,000, it was going to take 6 months. And then they spent like $300 in our product and in 3 weeks had their working product that they had gotten a $30,000 quote for. And it's just nuts. And so it completely blew our minds, and that was the moment we were like, okay, this is real, and this is not some transient kind of thing that's happening, you know.

And I mean, you mentioned there just like how much faster it is to build on Bolt versus, you know, hiring engineers or agencies or anything else. Talk a little bit about like what that speed means, what it means for your users, you know, for people here in the audience that may be building their own startup. Like, how does that kind of total shift in terms of how fast things can be built affect the whole ecosystem?

Yeah, I mean, so it's like, if you, you know, like starting startups, or just like if you want to build a great product or a great business, if there's one thing you can optimize, it's how many shots on goal you get. Like how many iterations you get. And so this is like a lot of the methodologies around like Lean Startup and stuff effectively are, principles that you can deploy to shorten the cycle of, "I have an idea, I want to get it in front of someone, validate it one way or the other, and then learn from that, and then rinse and repeat." Right? And so if you kind of rewind to 12 months ago, if you had an idea for— whether you're at a big company as a PM, or you're starting a startup and you want to build an app or whatever. If you have an idea and want to validate that, step 1 is make making a wireframe, which takes, I don't know, a day or two or something. And then it's like, OK, that's— it looks great. Maybe get a little validation. Put it into Figma. And then you can make a Figma prototype, which is basically just like the user can click through static screens. It's like, OK, like that. And we're probably a week or two in at this point, right, into the cycle. Then you actually go and have to code it. And that takes like a month or two, even for something that's just functional in some way that you can actually use it. So you're talking all in weeks to months just to get the most basic of a prototype made for an idea. If you go to bolt.new, like right now, and you type in your idea, just an idea, you are going to get back a working application in 120 seconds, you know, end to end. And you can continue prompting it, right? And so that just completely drops down the iteration cycle orders of magnitude. Like for the same amount of time and a heck of a lot less money, you can go and have way more shots on goal to actually iterate and try and find a product that's actually got product market fit. And so a lot of the folks that are using Bolt really heavily, that's kind of what it's all about. It's product development teams using this to do rapid prototyping instead of Figma for this sort of stuff. Or it's entrepreneurs going to Bolt to make build the first version of their app, et cetera.

Yeah, and you mentioned, I mean, it's great obviously for young teams that are trying to find PMF, but even for— maybe talk about how bigger teams or even large companies are using it because they're obviously also trying to build new products or try new features and things like that.

Yeah, yeah, a lot of it is just around— it takes a long time to make Figma prototypes, like designs, pixel by pixel. And then especially if you want to turn it into something that's actually an app or a web app that you can put in front of someone and get feedback. Because like the most ideal prototype, right, is like an actual working piece of software because that's the most high fidelity, true to form, uh, version of your idea you're going to get versus screenshots or whatever else. Um, and so, you know, product development teams like PMs, designers, etc., uh, are, you know, they made— they will lay out maybe their design system in Figma and then they will import that into Bolt and then just go and start prompting out whatever pages, functionality, et cetera, they actually want to go and put in front of users, get feedback, and whatever have you. Because it's— one, it is way faster than dragging stuff around. And two, it's real. Like, the user can actually— you can have real functionality that it's— heck, you can have people putting in their credit card with Stripe in a prototype. That's really valuable. Like, that's, will someone pay for this? That's perhaps the most important data point when you're launching a product. But typically it's, you have to ask them, like, would you pay for it? And people, maybe out of, you know, feeling awkward, like, yeah, yeah, totally.

So there's been a lot of chatter about kind of vibe coding and obviously, you know, Bolt's in the mix and other companies. You've done an incredible job with the product to date. Can you kind of talk a little bit about where you see things going? Like, obviously it's only been, you know, months since the launch of Bolt. Like, maybe talk a little bit about where we are today and like where it's going to go.

Yeah. Yeah, it's like the entire software world order is getting rewritten because like there's kind of this like we've hit this inflection point where LLMs have crossed the threshold where they can write very good code pretty accurately and where the outputs are also beautiful. And, you know, kind of what that means is that, you know, when you're kind of looking at how teams build products, the composition of those teams and who's actually kind of writing software, quote unquote, is going to change dramatically. And this is, like, already starting to happen. Where, you know, you have PMs that, like, a lot of— like, if you look at, you know, PMs and designers typically have the best perspective on how to make a great product experience. It's what they care about and what they are great at. But the only way they can implement that today, at least, and certainly in the past, has been through the fingertips of a developer. And so what we're seeing happen is PMs and designers actually being able to code, quote unquote. Writing a Jira ticket and then assigning it to a developer to change basic layout or style things, they can actually just go and open up that application or website or whatever have you and go and prompt and make those changes themselves and commit them. So instead of putting in a Jira ticket, they put into a prompt box, hit enter, make some tweaks, and then actually commit the code. And so I think we're going to start seeing a lot more, a lot more tooling around that. And how the org charts of a lot of companies are set up today, I think, is going to change a lot. I think there's going to be a lot more emphasis on people that are extremely good at using these tools, that have the perspective and experience of PMs and designers and entrepreneurs to go and build these things. And developers are going to be able to focus on— more intellectually challenging workloads, right? Versus just kind of moving styles around and that sort of thing.

So let's talk a little bit about Bolt the company. When you hit this crazy inflection point, it was a pretty lean team. And then obviously, you know, tons of customers, tons of revenue. So you've caught lightning in a bottle. How do you make sure you don't mess that up as a founder, right? Because there's probably a lot of pressures from VCs like hire more, change this, do this. How do you make sure that you keep the thing that made you successful and that kind of continues through the arc of the business?

Yeah. It's a good question. It's definitely— yeah, because for the— our team's like 20-something people. So it's a very small number of people, and we're growing as fast as we can. But I think that like in these sort of like high-pressure situations where we have like hundreds of thousands of people that are paying for the product and we're getting hammered on support or whatever have you. It's like you have to, you gotta remain calm and just be very, very good at logically kind of processing where to place emphasis and where not. The analogy I've kind of used with our team is it's like, imagine you're in a town that is entirely on fire, right? And you're one fire truck and it's like, Where do you start? And the answer is you start by going after places where there's critical infrastructure and large groups of humans first. Like that's, you simply have to. And so you have to make these decisions that are very, you have to be very intentional about where you're gonna place your time. 'Cause it's incredibly easy to get distracted by the million things that are happening in our business and certainly in just the AI space in general. But our key focus is just by staying focused on our end customers and listening to them, and to the degree that we can, going and really supporting them and making them successful. And just given the size constraints and how fast this stuff is moving, there's only so many things we can do. So you have to be very intentional about where you're going to put your effort.

Right. I like that analogy. Let's talk about something fun that's coming up real soon. I mean, one of the benefits of having a tool that, you know, lots of different people, not just software engineers, can use to build software is that more people can come to a hackathon. So it turns out I think you're going to do probably what may be one of the most memorable hackathons of all time. So you can talk about that?

Yeah.

Okay.

So this is, yeah, kind of a crazy story. So it's some really awesome guy named KP. He's over at Paddle. He tweeted, like, hey, saying, "Hey, the Bolt CEO, here's an idea. You should throw the world's largest hackathon." 'Cause for the first time ever in history, everyone can code. Everyone can participate in a hackathon. You should throw the world's largest hackathon, have Guinness World Records, set a Guinness World Record of it, and it'll be the biggest marketing event of the year. And so I tweeted back and was like, "Cool, let's do it." And then within 6 hours of that, there's $1 million prizes that were lined up by people online. Next Wednesday, The Chainsmokers are throwing a concert with us to kick the thing off in San Francisco. So it's kind of spiraled into this wild, insane thing, which is just fun, because it's like, this is cool. I mean, this is a really cool moment in time where my 73-year-old mom, for the first time ever, built and deployed a website, right? Because it's the simplest thing. The simplest interface, right, to publish software that's ever existed. It's just a text box and a submit button, right? And so we're doing this, you know, what we're building is the world's largest hackathon. We want to get everyone on planet Earth to come participate and be aware that they can actually, everyone has the capability to take their ideas and actually turn them into reality and build businesses. So anyway, so like the website is hackathon.dev. So if you're interested in this, we're going to be, the hackathon itself starts starts at the end of the month. There's also a sign-up for if you're in San Francisco next week. I think there's some amount of spots still left at the venue in San Francisco. It's going to be across from Moscone where Figma Config is going on. But anyway, so you can go sign up for it. It's going to be a blast. Yeah, we're excited about it. It's going to be fun.

Can't wait. I can't wait to see it. And hopefully we're going to break the record and set a new standard for hackathons. Since we just have a couple minutes here, there's a lot of founders in the audience who are thinking about raising financing for their companies. You just raised an $80 million round from GV and Emergence and other great investors. What advice would you give to founders who are thinking about fundraising given the moment that we're in?

Yeah. Yeah, I think as you know, I think in the early days we have been very conservative about how we've spent the capital of the company. And, you know, StackBlitz has been around through the pandemic, the insanity of 2021, the inverse of the insanity of 2022 then, and kind of throughout, like, you know, our previous company, my co-founder and I bootstrapped it. So we have kind of in the DNA of StackBlitz is the— we know how far you can stretch a dollar, like truly. And my general advice would be if you are, you know, you want to go and raise a lot of money and increase your burn rate only once you have a product where it's flying off the shelf and it makes sense to go and blitzscale it. Everything up until that point is about preserving the maximum number of shots on goal that you can take. And often that is just about staying alive long enough for the factors of the environment you're in to even change. So for a tangible example, again, we were around for 7 years as a company. We were about to go out of business before we launched Bolt. The entire time we were a company, there was another company that launched back in 2017 that was our most direct competitor. We were always trading blows with these guys. They were better than us at a lot of things. Blah, blah, blah, blah. And they got acquihired 2 weeks before we launched Bolt, which is basically the same fate we were kind of looking at. They ended up spinning down. And it was tough. The entire market for cloud IDEs basically was terrible. Everyone got brutalized in it. But we were not running low on cash at that point. And that's because we intentionally were very were very scrappy and ensured we had a lot of runway to go and try a lot of different ideas and see them through. And that is ultimately why we were able to launch Bolt, right? And so until you kind of get to that point, it's all about just extending your runway, being able to take more shots on goal, and then if you have something, yeah, go raise money.

I couldn't agree more. And obviously Bolt is going to hopefully help hundreds of thousands or millions of startups stretch that dollar even further.

Totally.

All right, so I'll leave it there. Thanks, Erik Nordlander.

Yeah, thank you.