From Bootstrapped to Billions with Edith Harbaugh, LaunchDarkly

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K.com at the early days. Treasure every tiny bit of Traction you have. Like, we celebrated getting our first lead. We celebrated the first time somebody sent us a check. Like, sometimes Traction can seem extremely small, but those little steps are how you build up to big success.

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Hey, what's up, innovators, entrepreneurs, visionaries and disruptors. This is your Traction podcast host, Lloyd Lobo. We're a community of over 100,000 people just like yourself on a mission to help you get the methods, the money, and the madness to explode your business growth. Featuring stories and tactical advice straight from those who've done it before, like Shopify, Twilio, Asana, and many more.

So this is Jonathan. I have known Jonathan for about six years now. He has always impressed me with his deep knowledge of everything, infrastructure. And that's really how we hit it off, is I'm a big geek. He's a big geek, and we like talking about tech. He has a really storied background of the very beginning of the web. He was at opsware, which then became Loud Cloud. So if you've ever read the hard thing about hard things, he was there for that. And he founded a really cool group called Web Monsters. And in between all of this, he's also an amazing investor. So he's an investor in LaunchDarkly, so he's contractually obligated to say nice things about LaunchDarkly, as am I about him.

Thank you. And better intro than I would have done for myself. And so now I get to introduce introduced Edith, which is actually much more exciting for me because Edith started out, or didn't start out, but Edith graduated from Harvey Mudd, and I think that that set her on her course of engineering and product working in technology and led her to her first job building enterprise software. But a few years later, about five years later, she was enticed by product management, getting to work with customers and being out in the field and connecting the dots from requirements to Customers. After that, she spent another 10 years building really products for other people. And then one day, this itch that had been building, she had to go scratch it. And that itch was, she was a very successful director product at Concur, the expense management tracking company, and decided to start a company, to leave and leave this relatively safe job to be a founder. I think it's the most dangerous thing you can do and risky thing you can do. So maybe let's start off, like, tell us what was the trigger that caused you to scratch that itch and start a company?

So it's funny, I always wanted to start a company. I just didn't think I knew anything. So right out of college I worked for.com startups and then I was at Epicentric and got some patents on deployment, which was then acquired by Vignette. I was in enterprise software for a long time and then said, you know what? I. I'm tired of enterprise software. You know, I want to go and do a cool consumer startup. So I worked at an IoT company called PlantSense, which was way ahead of its time and not in a good way. And then I was at TripIt, which was the number one mobile app at the time, and they were acquired by Concur. So then I was right back into enterprise software again. My joke is that I just could not get away.

It keeps pulling you back.

So through all of this, I always wanted to start a company, but I just felt like everybody else around me had all these cool ideas and all I really knew was software. Like, I built enterprise, I built consumer. And my college friend John and I would just hang out and we would just talk about software. We would talk about product management. He was an architect at Atlassian. We would talk about agile, we would talk about product management of dev tools. And in hindsight, it's funny because we always felt like we wanted to start a company, but we're like, all we know is software. And so when we finally started a company together, we discovered that what we'd have been talking about for years in terms of software was actually a viable company. So that was fun.

There were other people out there that had the problems you were thinking about.

Just the stuff that we would literally we'd be at happy hour and just talking about better software development or things we'd seen was actually real problems in the real world.

And did you. So you had this idea you were brainstorming. Was it just like light bulb? I have one idea, that's what I'm going to go do. Or did you have a catalog of ideas to pull from?

Yeah. So the story of how we came up with the idea, I'll say up front, when we went out and pitched in the early days, everybody said, that's a terrible pitch, never say that story. So what you're supposed to say is that you had this bolt of genius and just started the company. The actual story was far more prosaic, which was we had about four ideas before we came up with this one. And we would work on an idea until it could go no further and then we'd come up with another idea. So there's the story that you have internally, which you know is the truth, and then you have the condensed version you say when you're pitching, which is my co founder, I really like software. And we had this idea.

Got it, got it. Well, and I think you started pitching that idea to prospective customers.

Yeah, I mean, so we were very driven right out of the gate to make money. I had been a part of startups that had failed, I'd been part of startups that succeeded. And the one key to successful startup is having money in the bank. It doesn't matter how good your culture is, it doesn't matter how good your product is, if you don't have money, you don't have a company. So when we started the company, we put in $10,000 each to buy laptops and domains, you know, the basics that did not include paying ourselves. So we were living off of our savings. So I think a lot of people have this myth of a startup of, you know, it's like Silicon Valley where you have the shiny office and VCs throw money at you. The early days, we were two people in a co working office that cost us, I think $100 a month and living off our savings. So like getting all the free pizza we could find. And I was literally hitting up everybody in my email address book because I'd been in software for so long looking for potential customers. You know, we were not in stealth. I was very keen to say, hey, we need to get people. So our very first lead, I still remember it was so I'd worked at TripIt and the founder was this guy named Greg Brockway. And I asked him for advice and Greg Brockway had been funded by Tim O'Reilly of O'Reilly Books. So he told O'Reilly about this and O'Reilly was our very first lead that came into our lead form and my co founder are like, oh my God, Tim O'Reilly. And then we wrote him a Nice email saying, hey, can we come up to your O'Reilly office to pitch you? And he said, yes. And we were so excited. So that was our very first little bit of traction. The issue was we were so new that we did not even have a logo or business cards. And I said, you know, if we're going to do a business meeting, you have to have business cards and if we have business cards, you have to have a logo because otherwise it just looks weird. It's just like your name. So we got a logo for five bucks off of Fiverr. It's good value and it lasted us about six years until we got a new cmo. And the new CMO always says, hey, your logo looks like you cost five bucks. We're like, yeah.

The logo was. Can I say it's called Toggle, right? A little spaceman, very cute.

It's adorable. And it's now a vintage item for sure.

Well, maybe one day it'll be up on the big board at NASDAQ or nyse, depending on which way things go. But I think what you're talking about here is the grind and sacrifice of being a founder. It's lonely, it's hard, it's rarely a straight line to say I can empathize with that. I've been a founder myself, some successful, some not. But I think it's also important because now you're running this big, massive, successful company and it really doesn't get talked about as much. And in addition to that, you're also an endurance athlete. You do fifty mile, hundred mile runs, these huge efforts and feats. Does that mindset help you as a founder, CEO in how has that helped or how has that helped you?

Yeah, so when I started the company, I was also training for a hundred mile race with the idea being I had no money, so running is pretty cheap. And it was very good for me because you learn a lot about mental stamina. I was in the middle of trying to fundraise our first round of funding a friends and family round. And I was also. I went to Utah to run a hundred mile race. And around mile 40 of the race, it just started pouring down rain and it was miserable and I was slipping in the rain. And around mile 68 I dropped out and I felt like this total failure, like my friends and family round was not coming together whatsoever. And I dropped out of this race and it felt like the end of the world to me. I told myself that I would not drop out so easily again. I tried to raise, I think my friends and Family around. I wanted to raise 500k and hire two engineers. I ended up raising 240k, which was enough to hire one engineer. So we hired that one engineer. And then in the spring, I went on to raise 2 million. I could hire the other people I wanted. And the next year I went back to that race and I finished it.

That's awesome.

Because every single day I would wake up and I'd say, why did I drop out? You know, there's no worse feeling than regret than thinking that you should have, could have done it. And so I'll be honest, running 100 miles was miserable. Around mile 85, I did want to drop out. I'm like, nope, nope, not going to do it.

Yeah, can't give up. That's awesome. You talked to me about as we were preparing for this, when you started fundraising for LaunchDarkly, it was tough. Just like running that race, you had a goal of raising 500, you raised 240, then you raised 2. Then things maybe got a little bit easier from there. What was happening in the business in terms of the. The proof points and in your own mindset for fundraising? Kind of walk us, bring us into what was happening in your mind at the time.

Well, first, I was not very good at fundraising, so I'd been an engineer and I was used to speaking in terms of we. And I didn't really brag about my own record because that's not what you do in engineering. And the other part was I was. Though I was shy, I was very convinced that this was just so obvious to everybody. And I was completely wrong. It was not obvious to anybody except for me. So what we do is feature management, which is the ability to do rollouts, do a B testing, to turn features on for different segments. And I see a lot of nods because I know we have some customers here. Eight years ago, when I described this to people, their eyes just completely glazed over. Like, I would say it's a deployment system like Amazon has. They're like, oh, so you're like, webvan? And I'm like, no, not that kind of deployment.

So any quick raise of hands, who remembers webvan? The really cool crates? I just use them to move. Not many people.

So my joke, it's not really a joke, is that it's like endurance running. Like, it's okay to be absolutely terrible at your pitch. At the beginning, like, every week, I would just be like, okay, I'm going to practice it one more time. And my co founder, who's a harsh critic, said, Edith Your pitch is different, but it's not better. And I said, well, I'm just going to keep doing this and it's going to get better.

That's a great epiphany. I think you also said that you don't go from zero to ipo. You have to learn to translate what your insight, your vision for a product, for the technology to your audience. And that could be to a customer or to an investor. That's a different kind of customer.

Yeah. And honestly, our early investors were people who had been in software, like Jonathan, who got it. When we tried to pitch to VCs who had never been in software, it just fell completely flat. They just did not understand it at all.

And in hindsight, do you think any of those regret, any of those investors regret not getting it or not connecting the dots?

Yeah, but I mean, investment is a two way street. You know, you also want to find an investor who like will be, will be on that journey with you, who believes, right? Yeah. If you're trying to convince an investor too much, it's actually a bad sign, you know, if they really don't understand what you're doing. It's like a sales process. Like if you want to go find somebody who believes in what you're doing and will help you on that journey. Not somebody who's like, huh.

Yeah. I mean, I think one of the practices we like at Vertex is it's kind of like a coach or a mirror. We are often skeptical, but we're always supportive. Hopefully that you feel that as my partner in crime there, but that it's not that venture capital is a villain. We're not here to take control of companies or take control of ideas. In fact, it's 100% the opposite, at least. Again, our view is that, you know, the founders have to be in control and the management teams have to be in control and really, really set that course. So maybe, you know, I'm sure there's a lot of other founders here in the room. It's mostly, mostly founders and people at different points on the journey. Are there particular anecdotes or things you've learned about how to work with your investors? Because now you've raised close to 330 million, you know, five, five rounds of capital. You've got a lot of experience, a lot of, a lot of good wisdom to share.

Yeah, I mean, the best advice I got was to treat an investor like a co founder because they're going to be with you for a long journey. You know, I text at least once A month still with our early investors, just because I value their advice. If during the fundraising phase, you have a partner that you don't like, but you're like, well, just hold my nose and take the money, it does not get better after you take the money. In fact, it gets much worse. So always make sure that you could disagree with your investors, but that you have a good working relationship.

Yeah, absolutely. I think that's great advice. All right, so we've talked about kind of your journey, launchdarkly, getting going and building. Now I want to talk a little bit about category creation, because something you talked about when you started the company, it wasn't like, there were, well, any competitors to look at and be like, oh, I'm going to be like them. I'm going to, you know, we're going to displace them. But it started with this itch that you have. And so I guess, did that worry you? Did that keep you up at night that you're like, there's no incumbents. I don't have an enemy, number one. Or did that actually give you the conviction that this had to happen?

I was actually surprised that we didn't have competitors when I started thinking about the idea of having a feature management platform. It was a system that I'd used at TripIt extensively. So TripIt was a mobile app and we would want to do releases independent of the App Store, for example, if we want to do a beta to some power users or just iterate quickly on something without having to go through the App Store approval. So I was honestly surprised that this did not exist. Like, I remember, like, Googling and being like, why doesn't this exist? Why hasn't somebody come up with this? Like, this seems like this really should exist. And I just couldn't find anything out there. The second step was to talk to my co founder and ask him if he could build it. There's a lot of cool ideas out there, but if you can't build it, it's a cool idea, it's not a product. Luckily, my co founder is a PhD in CS. Brilliant, dude. He's like, yeah, I can build that. So that was the first part of, okay, there's no competing product and we could build it. I thought the next phase was going to be super easy. I thought we were going to put down a landing page and we were going to get 100 or 1,000 customers a month. I still have the old spreadsheet models I made of we're going to get 100k users every month. On our landing page. This money will convert to trial. This money will convert to paid. It absolutely did not work like that at all. We got some leads, like I bragged before about Tim O'Reilly. We went up to O'Reilly and it turned out that at the time they had outsourced basically all of their development and they released once every eight months. They did not need us whatsoever.

They didn't have this problem. They didn't know that they could release so quickly and so confidently.

Yeah. So what I had taken for granted was that everybody was moving to this model of continuous delivery like that. I had had a TripIt where you released multiple times a day, was actually very, very, very new in the market. So we had to create a category. When I didn't realize we had to create a category, the stuff I took for granted in terms of software development, we had to go out and evangelize. So it was me going to every conference I could think of and speaking about it. And then the second thing we had to do to create the category was to convince people they could trust us as a vendor. Because, you know, in the early days there was always two bits of feedback. While this seems really risky and wow, you're really, really sticky.

Yeah, yeah. But you created this very like customer centric culture inside of the company. Right. And that's. Now there's over 2,000 customers in the business. And I mean, it's working, it's great. And do you think, did you do things differently than what other people were doing?

I never took a customer for granted. So we're actually over, we're close to over 3,000 now.

Okay, let me update my notes here.

But the first customers were so painful because I had this vision that we were going to be this online self serve, you know, just go get it. We had to build so much trust. Like, so you know Andy Denmark, who, you know, he had worked with me at tripit and he was one of our first users and we went to his office in SF and installed it and sat with him and got feedback. Because honestly, unless we'd gone to his office and sat with him, he was never going to do it. There's nothing to force a customer to do something like saying, hey, I'm going to show up at your office and watch you. So so much trust had to be built with their customers because they were entrusting us with something very key to them.

And I think building that trust, it earns you the right to almost consult.

Right.

And be advisors to. In your case, you know, the People that are changing DevOps and development practices and sort of learning how to move more rapidly maybe than Tim O'Reilly was six years ago or seven years ago when you met him. But a lot of people then, they talk about category creation and sometimes it's necessary, sometimes it's not. But it's a sort of in vogue trend, at least in Silicon Valley. And today there's lots of other feature management or feature flagging types of solutions in the market. Some of them exist like as a product suite, right. From some of our competitors, some of LaunchDarkly's competitors. And so now as you look forward, you've got this great base, 3,000 customers. How do you think about sort of the product strategy and product roadmap of what goes in, what stays out so that it's not bloatware to service, just everyone.

Well, so true story. O'Reilly came back about three years after we first pitched them in Deadby.

Fantastic.

I told the rep to never beat that record for longest deal cycle. What we had started off originally was a very simple idea, just that you could toggle a feature on and off. And that's how we got our very first kind of foot. What we evolved to was actually feature management in terms of it's not just about turning a feature on and off, it's about having a robust system to segment your own customer base, to control it long term and to measure it, which is one layer and then the other which is the management, which is who in your own company can have control over that. Like so, for example, a DevOps engineer could have very different control than a customer success manager. And you can then have very different controls for a marketing manager. So that's how the product evolved from this very simple idea of just on off to this management platform. And the reason why I chose the name Feature Management was because I'd worked in content management, so I'd worked at Vignette. And the real sell of Vignette was not content, it was the management aspect, the workflow.

Right.

The business process that you actually go and touch get ingrained in.

Yes, absolutely.

Awesome. Well, we're pretty much at our time, so I was going to ask if there's any questions, but we're kind of past that. It's been wonderful chatting, hearing about the journey, but before we go, just one fun question. What's your favorite dessert and why?

Oh, my favorite dessert. Gosh, I thought you were going to ask something business related.

We've done enough of that.

You know, I don't really have a favorite. I'm sorry, I feel.

I guess I have the sweet tooth then.

Yeah. What's your favorite dessert, Jonathan?

I'd have to say galette. Like a peach galette is my favorite. You get a little crispiness of a pastry with the tartness of the fruit.

All right. Zucker tort. Zucker tort from my hometown bakery.

I like it.

And then I do have one final thing that I wanted to say.

Please.

I know the name of the conference is Traction. At the early days. Treasure every tiny bit of Traction you have. Like, we celebrated getting our first lead. We celebrated the first time somebody sent us a check. Like, sometimes Traction can seem extremely small, but those little steps are how you build up to big success.

Absolutely. That's great advice. Thanks so much.

Thank you for listening and we hope you enjoyed this week's episode of the Traction podcast. If you enjoyed the show, please leave us a five star review and you can find all the information mentioned in today's episode at Tractioncough IO that's T R A C T I O N C O N F IO.

I've done.

Some silly shit, focused on the tech stack, thinking it was brilliant. Now I know that it's no way for you to.