How Tyler Denk Raised $50 Million to Build Beehiiv

When I did decide, like I actually do want to raise a Series A, we had a term sheet. Four or five days later.

That's Tyler Dank. He's raised over $50 million to build a platform for newsletters called Beehive.

Now that we have tens of thousands of active newsletters, we're sending 1.5 billion emails a month.

And he's gotten Arnold Schwarzenegger, Josh Richards, Colin and Samir and so many other huge creators to use his software to start their newsletters.

You kind of like have to be delusional.

In 2020, he was working at Morning.

Brew and realized something crazy.

There's so many players in this space, yet I almost felt like we had a better product in house at Morning Brew than what they just raised $650 million for.

So he left his high paying job and took the risk to build his own startup.

We already did this. We built this at Morning Brew and we're building the same tools but better.

But it wasn't always easy.

When I Show up with 0 users, 0 revenue and tell these seed investors that I'm going to take market share from Facebook and Google, that takes a lot of intuition to think that that is how the market is going to play out over like a three to five year time horizon.

He told me how he only raises money when he has the leverage and how he built a product that gained users trust before it was even out, as well as how he now manages a team of 80 people completely remotely. This is Tyler Dank's founding journey.

Tyler, great to have you here man. I know we, I've, I've stopped us from having this chat like three times now. So ready to dive in.

Can you explain real quick actually the three different reasons as to why we canceled previously?

Yeah. So one was just had to move and then my laptop died and then I broke my toe on my coffee table. So three weeks in a row, been having some struggles. So hopefully it's worth it on this fourth week here.

Yeah, but for, for context, for the audience, we've had this scheduled for. Yeah, three consecutive weeks and each day I've woken up with an email from Mike being like, yo, something happened. Like you'll never believe it. And like the toe at, at that point I thought it was just a joke, but glad to be here.

You don't want to see my toe right now. It's, it's gross. But let's dive in now that we're here, now that we're actually doing this. Welcome to the podcast. Let's just Dive right in. You guys launched Beehive originally in a hyper competitive market. Substack had been growing like crazy. There's other players in the space as well. How do you sort of convince customers early on to use a solution that was, you know, newer, not as proven in the market, and maybe didn't have all the core functionality that folks might have expected? What was the insight there that got them to use Beehive?

Yeah, I think there were two main things. One is kind of a cheat code that I'd recommend a lot of founders doing, which is finding angel investors who are your target audience. And so when entering a very competitive market, like, I wasn't naive. I was fully aware that we had the least polished product, by far the worst product on the market by nature of being a few weeks old. But when we raised our seed round, we actually raised from different strategic angels who had a newsletter on a competing platform. So really aligned the incentives of one. You just wrote a 15 to $100,000 check. So you are backing us, you believe in us, and we kind of need your help now more than ever to build some early momentum. So a very simple ask in the early days was to have a lot of our angel investors move their newsletter over to Beehive. So we had, I mean, for example, liquidity, the. The meme account on Instagram and whatever he was using. Another competitor had 100,000 subscribers. At the time, I didn't even know that we could handle 100,000 emails being sent at once. And he moved over, no hesitation, and gave us like a ton of credibility. So that's one that I think a lot of founders should lean into when possible. And then the other thing that we did was like, really lean on our credibility. And so I was the second employee at Morning Brew and built a lot of the product, the engineering, the growth tools that led to the success of Morning Brew. My two co founders were also software engineers there as well. And so in the early days when the product wasn't up to snuff with the competition, you were kind of selling the vision of, we already did this. We built this at Morning Brew and we're building the same tools, but better for you. And maybe it's not there today, but if you believe and follow the success of Morning Brew, you're kind of selling the narrative and the vision of what's to come. And that buys you a bit of patience with your users. So it's kind of the combination between those two.

Yeah. Having that credibility in particular is huge and smart strategy with the Investors, you know Morning Brew exited for I think it was like 75 million million. That is a great exit, but I think for building a SaaS on top of that that market. How did what convinced you that it was a billion dollar opportunity to build the newsletter?

Newsletter product Building an audience is a full time job or at least it can feel like that when you're busy running your startup. But with AI making software easier to build, getting distribution is more important than ever.

I can help.

After growing my LinkedIn to over 40,000 followers and having 100,000 across all platforms as well as a 60,000 subscriber news.

I know how impactful having an audience.

Can be when you're building a startup these days. So I started Megaphone Studios, a content agency specifically designed for founders and their startups. Think of us like your startup's chief Content officer. We turn your LinkedIn X or newsletter into a machine for lead generation, follower growth and building your influence as a thought leader in your space. Our process is super lightweight for you while still delivering content that only you uniquely could write. And our plans are flexible with no long term lock in because we know how fast things can change at startups. Oh, and I brought my buddy Blake Imal along to help me run the business. He has even more followers than I do. So email me@houcaphone.network and mention the pod for a first month discount.

Yeah, I'd say a few different things. I think the beautiful thing about email is how easy it is to connect with the people receiving the email just through replies. And Morning Brew actually did an incredible job of curating that inbox of replies and like dishing them to different people. I'd say 80% of them were people complaining about the content because it was semi political and they didn't agree with it. But I would say at least 100 replies a day were something about the referral program. And it was a huge driver of growth for us. It led to over a million subscribers for us. So a massive growth channel and we really refined it and optimized it and a lot of people look to Morning Brew and like always reference like the crew neck, the coffee mug, everything. So that was like a software piece that we did in house and apparently like struck a nerve with the readership because they wanted to tap into that same growth channel. And if it wasn't the referral program, it was something about the format of the email or how it rendered in Outlook or how compatible it was. And there's this clearly something that Morning Brew did really well from the finished product that was very polished, to the growth trajectory to the monetization through the different premium ads and sponsors that we are working with, where our readership, most of them probably didn't work in media or gave a shit at all. But there was definitely a segment of people who either had their own newsletter or worked at a company or business that was sending email and wanted to imitate what Morning Brew was doing well. And that was kind of like the early signal for me that there's so many players in this space, yet there are so many people that are responding to Morning Brew, trying to imitate what we're doing. Because there wasn't a solution that spoke exactly to what we were doing really well. And what we did really well was really polished, clean email growth strategies, from the referral program to dashboards, understanding where growth is coming from, how you can optimize audience development, retention and then monetization. So a lot of people, monetization was such a distant thing to consider as a newsletter. You think that you have to hire like some third party agency, you have to hire a sales team or you're just not monetizing. And there was something between the combination of like seamless content creation, growth and monetization that I don't think any of the existing email players really focused on.

When you went to investors with that, what did they say?

Depends. I mean for the seed round, it was tough. More so time and place. So you mentioned Substack was Venture Back. They started three years before us. Actually one of the big signals for me wanting to go into this was when substack raised a $650 million, well, valuation series B. And at the time, like I think their product has gotten much better. But at the time they were kind of like pretty commonly dragged on Twitter for like lack of product innovation, not really listening to user feedback. And from an outsider that didn't have a dog in the fight, seeing from a product perspective getting dragged so much, but raising at a $650 million valuation and then seeing what I had already built with my team within Morning Brew, the success that it led and how well it worked, I almost felt like we had a better product in house at Morning Brew than what they just raised $650 million for. So that was actually like a huge push for me that there was like appetite one from investors and like a market opportunity. But yeah, I say that because Substack already had like a multi year lead with probably at that point 80, $90 million of funding already secured. Mailchimp's massive. They've already been, they've exited but multibillion dollars in revenue. You could list two dozen other email providers. And then at the exact time that we went out in market, Twitter had just acquired Revue and Facebook had just launched Bulletin, which never really made sense. But all in all, like it was established player legacy players, there was new wave VC backed players that already had a head start on us and then there was big tech investing into newsletters. And it makes a lot of sense why a lot of investors said no to wanting to invest in our seed round.

Yeah, I think one of the things I really like about the journey you guys have been on, obviously I've gotten a close seat to see it has been the sort of maniacal focus initially on building the best newsletter tool available. Whereas some other competitors were trying to do more things, become a social network or what have you, you guys just focused on being a newsletter tool and then only after building the brand, getting the product to the point it's at now starting to build these other business lines like the ad network like Boost, that can be gigantic businesses in and of itself and sort of the TAM has naturally expanded for you. Reminds me of the the Peter Thiel thing of be as specific, be a monopoly on one specific thing and then expand tangentially from there. Was that like a conscious decision or is that something that just sort of evolved naturally?

Yeah, it's a bit odd to say because in a sense what my initial vision for the roadmap is kind of come to fruition in that we haven't had like any wild curveballs of things that we built that we totally didn't consider previously. And for example, like when I went out and market to raise our seed round, I had pitched the ad network knowing that we were never going to write a single line of code for the Ad network for probably a year and a half to two years. And it's because you have to do so many things right before even getting to the ad network one is scale. So if we had ad network month one, advertisers would say you're doing 100,000 emails a month. Like that is zero impressions for me to get in front of. So you really need to hit scale first. But yeah, I'd say like we've always had a vision and that's also like now that other competitors in the space are playing with the concept of also launching ads in some capacity where I think we have such a fundamental advantage. That day one, when we built this as a side project, we were building different dashboards, queries, our database structured around like this data will eventually be used for optimizing ads at some point in the future. Whereas a legacy platform that's been around for 10 or 15 years has to work through so much tech debt to retrofit their platform to be hyper optimized for ads. And so I think having that vision from day one, building everything leading up to the point of now that we have tens of thousands of active newsletters, we're sending 1.5 billion emails a month and we're working with these top brands, there is like a natural ecosystem where it serves brands really well to reach these really niche audiences and it serves newsletters to have access to these a list brands without having to pay a sales team or pay commission to any like third party vendors.

When you're talking about that in the early days though, before it's built, right before you get to the point you guys are at now, you've raised the series, baby, back to the seed round. You know, you're telling investors, I'm going to do this, it's going to be here, it's going to be part of it. We're preparing for it from the early days. Do you get questions like. Or did you get questions like, you know, well, what proof do I have that that's going to happen? Like your focus isn't going to get diluted and what was your pushback if you did?

Yeah, I mean right there, I think it, well, that was the pushback, right. I think there's two main pieces of feedback that we got while raising money in the early days. Even in our series B round, we received push push back on the ad network, but definitely the early days one. I mean I just wrote a newsletter about this. Totally delusional. You kind of like have to be delusional to say this. This is how I think the market's going to play out when I Show up with 0 users, 0 revenue and tell these seed investors that I'm going to take market share from Facebook and Google through their ad network and have brands actually allocate ad and acquisition budget for email through beehive. Like that takes a lot of intuition to think that that is how the market is going to play out over a three to five year time horizon. And it really depends on the investor and I guess your background and what you've done to be able to prove whether or not you're the right person to actually build out on that vision. I'd say most people, most investors would pass because the email space is super competitive. There's a clear winner in the VC backspace. There's incumbents and now there's big tech. So that was the most common feedback. But if we were to get past that to A, I think that you have a chance at building a SaaS platform based on what you've done at Morning Brew, that could fulfill a need here. I don't think you and your team are the right team to build an ad network that would actually attract billions of dollars in terms of building a scalable programmatic ad network. And so yeah, we got that first seed round, we got that series A and we even got that in series B. I think it is like a massive bet. There aren't that many super large ad networks and it hasn't really been done at scale super well in email. So it is like a net new thing that they don't have a pattern to match it to. And you're also saying that you're doing that on top of a SaaS platform in a hyper competitive space where like you just cannot drop the ball in either area. So we're kind of taking two big swings. But yeah, I think that's why most people passed.

There's a big trend right now around people, you know, experienced founders deciding maybe to forego fundraising in the first place.

Right.

We talked a few times throughout the journey. You mentioned the goal was profitability. The goal was getting to uneconomic good unit economics. Obviously you guys have had amazing opportunities to taking capital from great partners. What drove that decision? For you to say, oh yeah, we need to put the pedal to the metal, we need to raise this money. It's the right decision for the business.

Yeah. One, I respect the hell out of founders who bootstrap their business and can just build it in a way without taking outside capital. I'm someone who loves to have control, make decisions, have conviction on something and not having to report or even just like the unforeseen things of doing quarterly reporting and financials and things that like I, we're so early in this journey I could care less about like our product line profit margin when we have this much money in the bank and we're fighting for new users.

Right.

I just want to build a better product, attract more users and there will be like a financial optimization part of the business at some point in the future. So I'm very weary of the downsides of raising venture capital because at the end of the day they want to know that by wiring you $10 million, you're putting it to use. And that they can report back to their LPs. So that's all to say, I have said every single step of the way that this would be the last round that we're raising capital. And I've been 0 for 3 thus far. The seed round, time and place. I was 27, my co founder is 24. Didn't have a ton of excess capital in general to fund the business ourself. And there was like a step function in being able to pay sendgrid, being able to pay heroku aws, like we had to buy upfront contracts and was personally not in a financial position to do that. So that's why we raised the seed round. We raised 2.6 million there. And then I'd say like eight months later we hit what I consider product market fit, probably $15 to $20,000 a month in revenue. And I made the classic founder mistake of thinking 2.6 million when I have $0 in my bank account and you see 2.6 million and it's just you and your two co founders, you think that 2.6 is such a large number to build a business. And I just did the classic thing of to be competitive in this market, you also need to pay 401k and health insurance and dental insurance. And the engineers that you really want to surround yourself with cost $200,000 plus. And very quickly you start to realize that 2.6 million does not take you very far. And we haven't even gone on like the offensive on like growth. So we did a 1.6 million seat extension which helped get us over the hump. And again I was like, that should be enough. We have 4 million in the bank. We'll never need to raise capital again. Things change. We raise our Series A. We raised about a year after that. So in the summer of 2023, we raised 12 and a half million from Lightspeed. For me, that was a realization of every person on the team was so burnt out and spread so thin. I was answering support tickets at midnight every single night, seven days a week. And it got to the point where I was like, this definitely is not the greatest use of my time. I'm waking up exhausted the next day because I was up late answering support tickets. And we had the and part of the building in public journey. I would always forecast and show like our revenue milestones, our growth milestones, like the big users that we were attracting to the platform. And naturally that attracted a lot of investors to show interest in wanting to invest. And so by doing all of That I was basically spreading the team way too thin while ignoring inbound requests from the top VCs that wanted to invest in the company. And it just hit the point where I did the exercise. I spent one night, I wrote out, if we had $10 million in the bank tomorrow, what would we do? And I laid out a plan, slept on it, read it the next morning, and it just became financially irresponsible to not go with that plan. That was like just the, the obvious clear choice of more engineering power, more stability, less risk in the business. I think at the time we had maybe 1.5 million in the bank and we're burning 200,000amonth. So like things were going great and we were growing quickly. But I think Also as a CEO, like your job is to mitigate risk and 30% month over month growth isn't guaranteed forever. And the one day that we shipped one bug and it caused like, whatever issues, outages, thankfully that never happened. But in the hypothetical that it did, like if you lose revenue and you're assuming that you're going to keep having 30% growth over month over month, like, that's just. My job is also in making sure people continue to receive paychecks, can support their families, and we can live the fight another day. So that was kind of the reasoning behind the Series A. And then I think the long winded way of getting to your answer, the most recent one was like a much more calculated. We had 10 million in the bank. We were probably burning $500,000 a month. So a good amount of Runway, call it two years almost. And then there was like a bunch of unforeseen cost of like, hey, we actually kind of need a security team and that's two hires that we didn't anticipate. And then this team could use a little bit more firepower. And we just hired this person on growth that has the experience to really accelerate. But we're in this awkward spot of burning $500,000 a month. So it became like a very clear fork in the road. We're in a very competitive market and I think we can grind it out, stay super, super lean and conservative. But the opportunity cost of that is like really going after the market share in this competitive market where our competitors are launching new features, trying to take our users or with additional capital, and we end up raising 33 million from NEA and other investors. We can make the appropriate hires and not have to scale back. And I just, it's crazy because we've been doing this for two and A half years and I still feel like we're in like month one uncertainty. Everything is so fragile where if you have an opportunity to like pedal to the metal and actually take more market share, I would much rather take that and the trade offs associated with that than go the slower and conservative route given that we're in a very competitive market.

So what's the plan? Now is the plan. Now take this 33 and never raise again. Once more.

So we raised the 33 with over 10 million in the bank already. So we have like over 40 million in the bank and I have it on the front page of every slide deck that I present to the team. We are not hiring more people. And I, I say that because I think there are so many fallacies that companies like as they grow up. There's like accepted truths that I don't think are real of. Oh, now that we are 80 people, we need to hire that VP and then we need to implement this process. And then now we need to add this new process that didn't exist before. We've gone two and a half years without it. But this new process with these three new hires will, will slow things down and prevent xyz. I think there's like a lot of like accepted things that companies think they should do as they get larger. One being we have 40 million in the bank. So any problem that we have we can default to. Let's just hire someone to tackle that problem. Or let's add this new process. And I mean I really got out of a meeting earlier today. I'm on the other end of the spectrum, which is maybe too extreme. Like I'd prefer no managers and just flat Org. Everyone knows what they're responsible for. We are pedal to the metal. We push things through. The truth is probably somewhere in between, but I don't want to fall into. We have money, so we're just going to hire and do things that like larger companies do. I want to continue to ship and operate as if we're a five person startup.

Yeah, you guys ship things so quickly and that DNA is really rare to see. Actually I talked to someone on your team yesterday about the partner network you guys have set up and he compared you to, he worked at Ramp before and he compared you to the founders of Ramp and how you're just so focused on, on shipping Velocity. Do you think that that's been like a key or the key to you guys being able to take over this market?

Yeah. When you go back to some of the stories I was sharing earlier of like how do you win market share in like the earliest days when you have the worst product and you're so unproven, you have no brand name and every competitor around you is so much more polished and well known. And so I said like getting investors who would be early adopters and a lot of credentials of what we had done previously. The part of like the credentials of what you've done previously is acknowledging where we came up short. What plagued me for the first 18 months of the business was every day I woke up another one of our users would email me, hey, when are you launching X feature? Or like, hey, like substack and this company and like this other. ESP does these three things really well. I actually can't do any of that on your platform and whatever I thought that I had to do that day would always get derailed by over promising and getting engineers to shift gears to like tackle whatever feature we were missing. And that is actually the DNA of the company. And it does a few different things. One, I think it shows when you can ship high quality, high value features week after week. One, it shows your current users that you're investing in the platform aggressively. Most of the features we launch are derived from the feedback that we're already getting from our users saying, hey, I'd like to do this. This isn't available but in the other platform I use it was. So when we ship it, it gives them confidence that we're listening to them. It also conveys to I think the broader market that we are hyper focused on being able to improve the product. And then there's like some bit of doubt of maybe I'm like 7 out of 10 happy with using Beehive at the moment as a user and like it's because there's a few things that are missing. If I've seen for the past six months that they are shipping features every single week. There's like a little bit in me that thinks like, oh, it's not available now but it's probably coming and is it worth it to churn and migrate to another platform that's more expensive and probably worse and then find out that they just launched a feature that I was upset about. So there's a lot of psychological reasons to why we ship so frequently, but it really just boils down to a bit of everything I just said and the fact that it's such a competitive market and we just started two years ago, that there is a lot of room to make up. And I'm a product focused founder. I want to make sure that we have the most polished, best product in the market. And until we have that, our goal is to ship as quickly as we can.

So you do something else at Beehive in that kind of vein that's interesting. You have two days a week where there's no meetings. You have Tuesdays and Thursdays are no meeting days, they're deep work days. This is something that we tried at Airbnb when I was there on Wednesdays and it never happened. We always ended up having the most meetings on that day because we knew that people were available that day. And so two part question. One, are these deep work days real? Do you guys actually, are you able to achieve them? And two, do you think that the culture of shipping fast is a cause to make you set up these deep work days or is it a result of having the time for developers to actually ship things on those days?

Yeah, it's a little contradictory because today is actually a Thursday, which is supposed to be a deep work day, but yesterday was Juneteenth so we didn't have work and we had to move like one or two meetings that Thursday. Which is why I do it. I usually abide by it entirely. I know that Tuesdays and Thursdays are free and I don't schedule meetings over them. I think a lot of it again a lot of it. The more I tell kind of the story and the journey that we've been on, the more I realize how much of it is derived from the early days DNA of like the team and what you prioritize. Early days, I think when we were seven people, we were five or six engineers and engineers don't need to focus on go to market and marketing campaigns and this and that. They understand the objective. Especially when the engineers came from morning brew. So my co founders or very good with product and design, so there's no handoff. Like they intuitively know who the user is, they know exactly the problems they're experiencing and they know that they're at point A, we need to get to point B before they churn and so we can reach the next level of customers who have not yet onboarded. And so a lot of what we do is derived from heads down focus. There's a lot to do, there's less of us than there is enough work to be done and meetings are not going to solve our problems. But putting in your headphones and just being able to ship code and make the product better is what will solve most of our problems. At least in the early days we did Wednesday focus days is when we initially rolled it out. So when we eventually scaled the team to probably eight to 10 people, we had customer support, we had a growth person and diversified a bit from the core nucleus. There needs to be some level of communication and like, touch points and check inside. So once that skewed too much to one side, we're like, okay, Wednesdays, no meetings. Because to me it was like you get bogged down in meetings and you just like collect action items on Monday, then Tuesday, then Wednesday, then Thursday and by Friday, which I've developed this habit of staying in Friday nights and working, which I do probably three times a week or three times a month. But that was like out of necessity because I had gathered so much shit through the week that I didn't have time to do. And Friday night was the only time that I could do it. So I just was like, if we did a Wednesday focus day, then that clears my to do my action list, like halfway through the week. And then it became such a hit that people would DM me frequently. Like, I got so much done on Wednesday, I got more done on Wednesday than I did on Monday, Tuesday, Thursday combined. If only we had two of those days. I said, say no more. Tuesdays, Thursdays, focus days. So very long winded story of like, how we got to that point. I personally love them. It's my. I wake up with like an extra pep in my step, knowing that I don't have to like, context switch. I have my to do list of 5 things or whatever it is. And like, that is the objective of the day. I think where it gets difficult and like, probably what you experienced at Airbnb is it's very easy when you're 10 people and everyone is so driven. Everyone has like a maniacal vision for what needs to get done and a ton of accountability. And I don't think we've hit that point yet. But as you get to employee 100, 150, 200, like, it's very easy to view two days without meetings in these marginal, more marginal roles where there's less like concrete action items, where it becomes like, hey, I'm just going to maybe sign off at 2 o' clock or 3 o', clock, which is again why I'm kind of pushing on like the culture thing and not hiring. The less slack and the more lean we run, I think the less opportunities there are to kind of hide behind big company type policies like that you've.

Mentioned in this conversation so far, like answering support tickets at midnight every night, staying in every Friday or three Fridays a month to get your work done. And then sort of the value that you've seen from the peace of mind of this new structure that you've set up for the team. How important is that peace of mind to founders in general? Because I think, I think about it, a lot of founders are not accountable to anyone except themselves and their investors and their co founders. So yeah, how does that play into things for you? How important is that peace of mind for you as a founder to stay focused?

Yeah, I mean that's like my theme of the week basically is just accountability and like I have it, but how do I ensure that every employee from 1 to 70 has the same level of accountability? We have one engineer on our team who starts every day with four bullet points. Here's the four things I'm focusing on today. End of the day, he goes, here's the three that I got done. The one is like the last one's about to be done. Full accountability. I never have to think twice about what this person is doing. I know that they know what's most important. They've communicated to the entire team what they're working on. Then at the end of day, this is what got done, this is what didn't. And it's like that level of accountability that some people could argue like, is like overreach, but in a remote first company that is so action oriented and like a bias towards just getting things done. We are so laid back. We give a Friday off every month. We have no meetings Tuesday, Thursday. We let you work on your own schedule. Like if you'd rather sleep till 11 and work till 2am at night, by all means, go ahead. There's so many freedoms that I think that we give in our company that all we ask in return is accountability and pushing the ball forward however you can. And yeah, for me it's. That is where I lose most of my sleep. There's not. If you were to ask me, like, what is the biggest risk of the business? I actually don't think there's like some technical hurdle or like competitive hurdle. I think it really is just scaling the team and processes to be able to achieve what we want to without losing the quote, unquote magic of the small company. Quick moving, lack of process, flat or I think the hardest part, which also completely contradicts what I want to be doing because that requires management and like thinking through, like, how do you like people problems?

Yeah.

But funny saying as like CEO, like people problems are not my favorite problems. Like I Like to go headphones in and just knock things out. So that's like my personal founder like, conflict that I always feel is I love to make things more operational. But that's why my favorite hires are totally autonomous. They know what to do. They knock them out themselves.

Yeah, I mean, you wrote about this a bit in your newsletter a few weeks ago about, you know, you guys are remote first. A lot of people right now are, you know, saying, oh, we have to get back in the office.

You guys have found a lot of.

Success being remote first. What can other founders take away from what you guys have done well to stay remote?

There's a few different things that we do. I'd say one just like, why I'm so bullish on being remote in general is we, for example, we opened a new product designer role, and if we were headquartered in New York or Arkansas or wherever, like, restricting a talent pool to like a 30 mile radius of where you decided to make your headquarters, when you take a step back and think about it, I think is like the most ridiculously archaic model of thinking about how do we make the product better with the best person to do this job. We ended up hiring someone from India, and she's incredible, but, like, that would not be possible. I always joke that if our team was restricted to Los Angeles, which is where I'm located, we would have an eighth of the revenue that we have today. Like, when we open a role for a product manager, an engineer, support whatever, we pick the absolute best person irregardless of where they live. And I think that's so important. There's a few other things that we do very intentionally. We have an all hands Monday, Friday, every single person talks at the all hands. So for, for the longest time, my COO has been pushing back on, like, hey, at 30 people, don't you think, like, maybe just like team leads? But I actually think it's so important to have every person participate in the call because one, they are more active. And two, we usually do, like, what is your top priority of the week? Or what was your top accomplishment of the week for Monday and Friday, respectively? And so I think a lot of it just comes down to, like, subtle accountability that you can build into the culture. And it's not even trying to be like a big Brother, but, like, at the end of the day, the purpose of the company is to build to make a better product, to earn more revenue and to serve your users. And like, accountability should be the first thing that you are trying to prioritize. So, yeah, I think it really just comes down to over communicating whether it is the meetings, the all hands. I send a email every Sunday night of everything that we were prioritizing in the upcoming week, what we didn't do well last week and what we need to improve on for the week ahead. And it's really just nailing and like staying on top of everything from growth to product to security to risk. Like I am so deep in the weeds and I think it kind of just takes like that level of management, but hiring the right people that kind of operate in that type of environment and actually prefer that type of environment.

So another thing you've done, you guys have done really well. And you, your, you specifically is building in public. You talked about this earlier. It's obviously been good for generating revenue for you guys. Getting the word about Beehive out there. Did it also help with fundraising and did you find investor connections through that? And if so, what did you do well that you'd recommend other folks to do?

Yeah. So my bet and I wrote a newsletter about this as well is I think there's a market of people who care about emails and newsletter and what we do as a business. And I think there is a much broader market of people who care about startups, how they build a company, strategies, hiring and everything else. And my job is to get as many people into our funnel to know about Beehive as possible. Whether or not they are currently looking for a newsletter solution. They might have a spouse or friend or colleague who is. And you expand the lux surface area of them making an introduction or recommending your product, the more people who know about it. And so if I just created content around email newsletters and growth strategies, I think we can get very targeted and there's like a market for that. But I want the much bigger market of anyone who's interested in company building, startups, hiring, et cetera. And so what I've done very intentionally from day one is really just broadcast from LinkedIn, Twitter and now my newsletter. Every strategy, how we're thinking about hiring, different revenue milestones because it does a few different things. I think one, anyone who's kind of curious about what it is like to build a company or like to work at a startup, it kind of gives you a peek behind closed doors where a lot of founders actually don't publicize a lot of the decisions or revenue that they're experiencing. It also adds a lot of legitimacy to if you're using a mailchimp that's been around for 20 years and like this shiny little object is kind of tempting to you, but you have no idea if they actually have 1 million in the bank and a $500,000 burn rate, or if I'm constantly projecting how much and like, sharing how much revenue we're making and how much we're growing and all of the other big users that are moving over. It adds one. We're creating the narrative that everyone is moving over to Beehive, which is what we do when our users move over and they share their experience and we retweet them. But we're also showcasing that we're hitting revenue milestones, that the business is, in fact growing and that we can continue to grow. So, like, I don't know, I could keep going. There's like a bunch of different layers to why I think it is for the right type of founder and the right type of business, very advantageous to share your journey, both as a personal brand development, for getting more people in my personal funnel, and thus the funnel of Beehive, to add assurances to potential customers in the market, to build a narrative and then to answer your question directly, when we hit our 100,000 mrr or 500,000 mrr, whatever these different milestones are dozens of replies from investors and emails who want to say, hey, would love to lead your Series C or whatever it is to which I like. I personally don't waste time on those calls. Like, I think I have, like, different opinionated stances on, like, taking time to, like, nurture the relationship with, like, different investors. I think you should just spend time building. And I think if you continue to build a better product that people pay for and your revenue goes up into the right, you could have ignored every one of their 15 emails prior. Their job is to get access and deal flow to the best company as possible. And if you continue to spend your time building the company and hitting those milestones, they will invest in you without you building and wasting your time talking to them over coffee. So we raised our series A in seven days. We raised our series B in 10 days. That's because they were already, like, warm leads from. I put them into our investor update, which I send monthly. And the investor update is, I think you've seen a few of them, but full deep dive of everything that went well, that didn't go well. Our metrics, our strategies, how we're thinking about the business, what we're about to launch, what we just launched, like, different traction to the extent where if you read five of our investor updates in a row, you should have such a good idea of one how I'm running the business, how we're thinking about the business and our milestones and traction that it should give you enough conviction, more than any 30 minute coffee meet would, would ever do. And so for us, that's kind of like my funnel personally for like as a founder and fundraising is build in public, build general interest. And this is speaking more for like investors. Build interest and share your narrative. If they express interest in wanting to learn more about the company, throw them onto the investor update. Let them read as like a bystander. And when you're ready to raise money, you already have the warm leads from your investor email list that you can reach out to. And most of the time they'll respond directly asking if you're raising capital to each one of your monthly investor updates. So really streamlined, it's like a huge shortcut for raising capital.

Do you think there's any risks of that? I mean, I've heard horror stories many times of folks, you know, sharing investors, sharing information with other competing founders who they then invest in. And I think there are founders who are concerned about that. I'm probably more in your camp here of just let's get them in there and let's bet on ourselves basically to win the market. But yeah, what would you say to somebody who's sort of on the other side of that fence?

Yeah, when I write the investor updates, I write them with the assumption that every competitor is going to find out exactly what I wrote. And so I do a few different things. One, I typically actually don't share the raw like revenue numbers or user numbers. Everything's relative percentage, which I think at our scale is more important anyway. I'll like call out milestones like, hey, we just hit a million dollars in revenue this past month. That's a cool milestone. I've probably already shared it on Twitter or LinkedIn. So it's like not a secret per se, but for nine out of ten times it's hey, MRR was up 10% last month. So it's all a relative number. So it's a little bit more obscure. And then I, it's usually always backwards looking in the previous month that we just wrapped up. So I'm never saying like, hey, we just made these three hires because we're kicking off this six month initiative to launch X. Like it's never projecting what we are currently building or what is to come. It's always like, hey, in the past 30 days we just launched XYZ. Here's the adoption. So it's anything that any of our competitors are already probably aware of from what we're sharing or just announcing publicly, pretty conscious of that. So it's like a backwards looking, not forward looking type thing. Every now and then if I get really excited, I'll hint something's coming. But usually use like a code name and like four or five investors I'm close with may respond and ask for specifics and I'll follow up. But I just don't give away our strategy moving forward.

Yeah, having that be backwards facing is really smart. That does protect you guys for sure. I think a common trend that I'm hearing here is you do a really good job of protecting the business and also like having, you know, not accumulating leverage, but just sort of naturally having leverage in these fundraising scenarios.

Right.

You talk about not planning to raise, plan to get to profitability, planning to focus on the product, not courting investors all the time. You do a really good job of that. Has that helped you in those conversations? Sort of make those rounds, be 7 days, 10 days, rather than having them drag out and be a longer, longer process?

Yeah, it definitely helps when, when it's time to raise, like go time. I think it has been a huge shortcut and accelerant to getting to like the, the term sheet and like closing the round. But there's also like the unaccounted for amount of time spent or time saved that I didn't take on. The 15 calls from every investor who has like, hey, you want to grab coffee? Want to go to the Knicks game? Want to do this? Like, the answer is no. I actually just want to build a business. And the 1 in 30 odds that we do end up doing a deal with you, like, it's not worth my 45 minutes of time or sitting in LA traffic to meet you for like a chance event that we might do a future round. And I also generally meant it every time I said it that I didn't want to raise another round of funding. So if my mentality truly is I want to build the best business that is profitable and, and we are not raising money. If your decision is not to raise money, why would you talk to someone whose primary role is to give you money? And so there was like always a disconnect there and it wasn't a front, it was a genuine, I don't want to raise money and I'm going to do everything I can to not raise money. So for the series A example, Faraz from Lightspeed had reached out on Twitter, LinkedIn, email, like a million times. And I just ignored all, like, I don't even read the emails. It's just ignore. It's just like, mark this done. And then he tricked me is really smart. So for any VCs listening, he said, do you want to go to a founder's dinner in la? And at the time, I mean, we're a remote company. I sit in my room 14 hours a day working by myself. So he called me at a time where I was like, you know what, I actually kind of do want to meet some other founders in la. Like a dinner sounds nice. So I agreed to go to that. And he goes, oh, do you want to meet for coffee first? And I was like, God damn it. Like, totally got me, Whatever. But at that point I was down to go to dinner. So the call went well and I just did the classic, I'll add you to our investor update list. I don't really feel like continuing to give you updates. I'll just give you the same update everyone gets. You'll get it every month. You'll know everything in more detail than I could even explain over a 30 minute call. Anyway, he was on that update list for three to four months. And then when I did decide I actually do want to raise a Series A, he was on the short list of people that I knew who had already expressed a ton of interest, shot up an email. He had the context of four months worth of investor updates and data and details of following the journey. And he was like, we're ready to ride right now. We had a term sheet four or five days later. So it's like looking for shortcuts and I think valuing your time as an investor and also, like, there's nothing I could have said in these 30 minute coffee chats or, or zooms that would have been better or more transparent than giving him like a full deep dive of every single thing that we're working on the business and how we're prioritizing things. So I think it puts us at a better position to negotiate in general, and it has our investors at a level playing field of understanding exactly what we're doing versus what I tell them on a pitch deck. Saying that we aren't going to raise and actually putting our business in a position where we don't necessarily need to raise is like leverage 101. Like, even in Series A, which was the closest kind of needing to raise, there was a perfectly fine path forward of just cutting our marketing spend and stretching it out until we turned it around or had better revenue before we ramped up, we could have just went slower. And so for our Series B, even more so. We had over $10 million in the bank. And when we got our first term sheet, I said, look, this isn't even close to what we're looking for and I have zero urgency to take any deal in this situation. We do not need to raise money at all. We have 10 million in the bank. We are totally good. Granted, I knew the fork in the road of we are good and we're genuinely good or we could have accelerated. And I did prefer the accelerated route, which is why we eventually got to terms that we liked. But having leverage is kind of the name of the game as a founder.

Yeah. And also being able to negotiate on an even playing field when you're talking to professional negotiators. Right. They negotiate term sheets all the time. Founders only do it a few times in the journey of their company, so makes a lot of sense. Cool, man. Well, hey, this has been great. We have a couple of rapid fire ones that we like to do at the end. First one is just who's an investor, who you've worked with, who you'd recommend other folks reach out to or accept checks from as they're building their own startups.

Damn. It's like kind of like picking a favorite child, right? Because I actually talked to a good. A good bunch of them and like hate to pick one, but one actually stepped up so much that I'll give them the shout out because Sasha from Creator Ventures has always been. You said rapid fire. I'm going to go on like a quick one minute story on this one. One what he raised. He participated in our initial seed round. When we went to go to the seed extension round. It was when the market pulled back in early 2022 and no one was investing and he actually stuck his neck out and was like, I've read everything you've done. I am a huge believer in the business. Like, I will put together your seat extension round. He got his LP involved. He led the charge there when no one else was willing to write a check. So that was special. And then he also, when we were hiring a VP of finance, I've never hired a VP of finance or any finance role previously. I generally do not know what a great VP of finance looks like versus a good VP of finance. And he was like, send me every resume you think looks good and I'll actually interview them. And he literally inserted himself into our hiring process and ran interviews for our finance role. So someone who's punched way above his weight. Sasha is a legend.

That is value add right there for sure.

Dang.

Favorite startup like book that founders should read.

Oh, that's a good one. I feel like zero to one super cliche and I haven't read that in 10 years, so maybe not that I'd actually say one of my favorite books broadly is just Thinking Fast and Slow. It's more like a psychology book. But I think so much of what we've even talked about of accountability of psychology for customers, users potential, like everything in the world really comes down to I think human psychology and understanding it. And I think as a founder having a good understanding of how to leverage that to your advantage is super powerful.

Let's assume now that I'm a first time founder. I've never raised money before. I'm coming to you. You've raised money. What's the one piece of advice I need to know before I go out and do it for the first time?

First sign up for Bigdesk energy.com my newsletter. So that's my plug to sign up For Big Desk Energy 2 I think we also hit on but it's the investor update. I think the investor updates are so powerful even before you have investors. The investor update at the end of the day and especially I think a double clicking on the remote company and over indexing on communication and over communication is there are so many things happening at this business at all times and it's hard to keep track. And for me the investor update is how do I get all of my thoughts and moving pieces onto paper, make sense of them and do like a true assessment of this is working. This was a bet we took and we totally missed the mark. This is where we're totally lacking. And here are the numbers which is like the scoreboard of what we accomplished. I think forcing yourself to be accountable and write that every month is one extremely clarifying for yourself, for the team. And then obviously if you get that like investors into the funnel, showing them how you think about the business I think will do more than any conversation or pitch deck would do.

I completely agree. That's a good point. Okay, last one. I'll let you go. This is a little different. This is from Peter Thiel. This is his favorite question. What's something that you believe that most people disagree with you about?

It's a great question. Recency bias that I just went on a rant earlier that I think we should have no managers at the company and that it should be totally flat.

Org Tyler thanks man. This has been great getting the inside look on the journey with Beehive so far and your journey as a founder. Thanks for being here. Where can people find you?

Glad you asked. I gotta plug the newsletter so Twitter Dank Underscore tweets is where I'm most active and then personal newsletter sharing everything that we talked about and then some mail.bigdeskenergy.com love it.

I'm a subscriber. Cool man. Talk soon.

Oh yeah. Thank you.

Bye.

Thanks for listening.

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