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Interviews with world-class startup founders about their unique paths to uncover tactical insights they've learned about how to fundraise, grow, validate, hire, scale, and lead teams while building your startup.
Get full access to detailed takeaways on each episode, additional case studies, and more at join.foundingjourney.com
When I did decide, like, I actually do want to raise a Series A, we had a term sheet 4 or
Michael Houck:5 days later. That's Tyler Denk. He's raised over $50,000,000 to build a platform for newsletters called Beehive.
Tyler Denk:Now that we have tens of thousands of
Michael Houck:active newsletters, we're sending 1,500,000,000 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 kinda like have to be delusional. In 2020, he was working at Morning Brew and realized something crazy. There's so many players in
Tyler Denk:this space, yet I almost felt like we had a better product in house at Morning Brew than what they just raised $650,000,000 for.
Michael Houck: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.
Tyler Denk:When I show up with 0 users, 0 revenue, and tell these seed investors that I'm gonna 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 3 to 5 year time horizon.
Michael Houck: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.
Michael Houck:Tyler, great to have you here, man. I know we, I've, I've stopped us from having this chat, like, 3 times now. So ready to dive in.
Tyler Denk:Can you explain real quick, actually, the 3 different reasons as to why we canceled previously?
Michael Houck:Yeah. So one was just had to move, and then my laptop died, and then I broke my toe on my coffee table. So 3 weeks in a row, been having some struggles. So hopefully it's worth it on this 4th week here.
Tyler Denk:Yeah. But for for context for the audience, we've had to schedule for, yeah, 3 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 tow at at that point, I thought it was just a joke, but I'm glad to be here.
Michael Houck:You don't wanna see my tow right now. It's,
Tyler Denk:it's gross.
Michael Houck:But let's dive in now that we're here, now that we're actually doing this, and welcome to the podcast. Let's just dive right in. You guys launched Beyhive originally in a hypercompetitive market. Substack had been growing like crazy. There's other players in the space as well.
Michael Houck: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 to use Beehive?
Tyler Denk:Yeah. I think there were 2 main things. 1 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 raise our seed round, we actually raised from different strategic angels who had a newsletter on a competing platform.
Tyler Denk:So really aligned the incentives of 1, you just wrote a 15 to a $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 MEW account on, Instagram and whatever.
Tyler Denk:He was using another competitor, had a 100,000 subscribers. At the time, I didn't even know that we could handle a 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's 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 2nd employee at Morning Brew and built a lot of the product, the engineering, the growth tools that led to the success of Morning Brew.
Tyler Denk:My 2 cofounders that 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're 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.
Tyler Denk:So it's kind of the combination between those 2.
Michael Houck: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, 75,000,000. That is a great exit. But I think for building a a SaaS on top of that that market, how did what convinced you that it was a $1,000,000,000 opportunity to build the newsletter newsletter product?
Michael Houck: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 a 100,000 across all platforms as well as a 60,000 subscriber newsletter, 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.
Michael Houck: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 Eimal, along to help me run the business.
Michael Houck:He has even more followers than I do. So email me at hauk@megaphone.network and mention the pod for a 1st month discount.
Tyler Denk: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.
Tyler Denk:But I would say at least a 100 replies a day were something about the referral program. And it was a huge driver growth for us. It led to over a 1000000 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.
Tyler Denk:So that was a software piece that we did in house and apparently 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 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.
Tyler Denk: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.
Michael Houck:When you went to investors with that, what did they say?
Tyler Denk:Depends. I mean, for the seed round, it was tough, more so time and place. So you mentioned Substack was venture back. They started 3 years before us. Actually, one of the big signals for me wanting to go into this was when Substack raised a $650,000,000 valuation series B.
Tyler Denk: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 $650,000,000 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 $650,000,000 for. So that was actually, like, a huge push for me that there was, like, appetite won from investors and, like, an a market opportunity. But, yeah, I say that because SubStack already had, like, a multiyear lead with probably, at that point, 80, $90,000,000 of funding already secured. Mailchimp's massive.
Tyler Denk:They've already been they've exited, but multi $1,000,000,000 of revenue. You could list 2 dozen other email providers. And then at the exact time that we went on in market, Twitter had just acquired Revio, and Facebook had just launched Bulletin, which never really made sense. But all in all, like, it was established play legacy players. There was New Wave VC backed players that already had a head start on us.
Tyler Denk: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.
Michael Houck: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 a the best newsletter tool available, whereas some other competitors were trying to do more things, become social network or what have you. You guys just focus 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, they can be gigantic businesses in and of itself. And sort of the TAM has naturally expanded for you.
Michael Houck:Reminds me of the the Peter Thiel thing of being specific, being 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?
Tyler Denk: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 and that we haven't had any wild curve balls of things that we built that we totally didn't consider previously. And for example, when I went out in 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 2 years. And it's because you have to do so many things right before even getting to the ad network. 1 is scale.
Tyler Denk:So if we had ad network month 1, advertisers would say you you're doing a 100,000 emails a month. Like, that is 0 impressions for me to get in front of. So you really need to hit scale first. But, yeah, I'd say, like, we we've always had a vision and that's also, like, now that other competitors in this space are playing with the concept of also launching ads in some capacity, where I think we have such a fundamental advantage that day 1, 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 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.
Tyler Denk:And so I think having that vision from day 1, building everything up leading up to the point of now that we have tens of thousands of active newsletters, we're sending 1,500,000,000 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, 3rd party vendors.
Michael Houck: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 b, back to the seed round, You know, you're telling investors, I'm gonna do this. It's gonna be here. It's gonna 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 gonna happen?
Michael Houck:Like, I think your focus isn't gonna get diluted. And what what was your pushback if you did?
Tyler Denk:Yeah. I mean, right there. I I think it well, that was the pushback. Right? I think there's 2 main pieces of feedback that we got while raising money in the early days.
Tyler Denk:Even in our series B round, we received pushback on the ad network, but definitely the early days one, I mean, I just read a newsletter about this, totally delusional. You kind of like have to be delusional to say, this is how I think the market's gonna play out. When I show up with 0 users, 0 revenue, and tell these seed investors that I'm gonna 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 3 to 5 year time horizon. And it really depends on the investor and, I guess, your background and 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.
Tyler Denk: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 1,000,000,000 of dollars in terms of building a scalable programmatic ad network. And so, yeah, we got that 1st seed round.
Tyler Denk: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 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 hypercompetitive space where, like, you just cannot drop the ball in either area.
Tyler Denk:So we're kind of taking 2 big swings. But, yeah, I I think that's why most people
Michael Houck:passed. There's a big trend right now around people,
Tyler Denk:you know,
Michael Houck: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 the unit economics good unit economics.
Michael Houck: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.
Tyler Denk:Yeah. 1, 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.
Tyler Denk:I just wanna 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 wary of the downsides of raising venture capital. Because at the end of the day, they want to know that by wiring you $10,000,000, you're putting it to use and that they can report back to their LPs. Mhmm. 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.
Tyler Denk:The seed round time and place, I was 27, my cofounder's 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 2,600,000 there.
Tyler Denk:And then I'd say like 8 months later, we hit what I consider product market fit by 15 to $20,000 a month in revenue. And I made a classic founder mistake of thinking 2,600,000 when I have $0 in my bank account and you see 2,600,000, and it's just you and your 2 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 401 ks and health insurance and dental insurance. And And the engineers that you really want to surround yourself with cost $200,000 plus And very quickly you start to realize that 2,600,000 does not take you very far. And we haven't even gone on like the offensive on like growth.
Tyler Denk:So we did a 1,600,000 seat extension, which helped get us over the hump. And again, I was like, That should be enough. We have 4,000,000 in the bank. We'll never need to raise capital again. Things change.
Tyler Denk:We raised our series A, we raised about a year after that. So in the summer of 2023, we raised 12 a half 1000000 from Lightspeed. For me, that was a realization of every person in the team was so burnt out and spread so thin. I was answering support tickets at midnight every single night, 7 days a week. And it got to the point where I was like, this definitely is not the greatest use of my time.
Tyler Denk: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 our revenue milestones, our growth milestones, like the big users that we are 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.
Tyler Denk:I spent one night and I wrote out, if we had $10,000,000 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 1,500,000 in the bank, and we're burning 200,000 a month. Mhmm.
Tyler Denk: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 calls, 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 gonna 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 reason 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.
Tyler Denk:We had 10,000,000 in the bank. We were probably burning $500,000 a month. So a good amount of runway, call it 2 years almost. And then there was like a bunch of unforeseen costs of like, hey, we actually kinda need a security team, and that's 2 hires that we didn't anticipate. And then this team's like, 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.
Tyler Denk: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 33,000,000 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.
Tyler Denk: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.
Michael Houck:So what's the plan now? Is the plan now take this 33 and never raise again once more?
Tyler Denk:So we raised the 33 with over 10,000,000 in the bank already. So we have, like, over 40,000,000 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 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.
Tyler Denk: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 3 new hires will will slow things down and prevent x, y, z. 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 40,000,000 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.
Tyler Denk:And, I mean, I literally got out of a meeting earlier today. I'm on the other end of the spectrum, which is maybe too extreme. Like, I prefer no managers and just flat org. Everyone knows what they're responsible for. We are pedal to the metal.
Tyler Denk:We push things through. The truth is probably somewhere in between, but I don't wanna fall into, we have money, so we're just gonna hire and do things that, like, larger companies do. I wanna continue to ship and operate as if we're a 5 person startup.
Michael Houck: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'd 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?
Tyler Denk:Yeah. When you go back to some of the stories I was sharing earlier, 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 1st 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?
Tyler Denk: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, like tackle whatever feature we were missing. And that is actually the DNA of the company. It and it does a few different things.
Tyler Denk:One, I think it shows when you can ship high quality, high value features week after week. When 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, so I think the broader market, that we are hyper focused on being able to improve the product.
Tyler Denk: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 6 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 like a lot of like psychological reasons to why we ship so frequently, but it really just boils down to a bit of everything I just said.
Tyler Denk:And the fact that it's such a competitive market and we just started 2 years ago, that there is a lot of room to make up. And I want I'm a product focused founder. I wanna 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.
Michael Houck:So you do something else at Beehive in that kind of vein that's interesting. You have 2 days a week where there's no meeting to. Tuesdays Thursdays are are no meeting days. They're deep work days. This is something that we tried at Airbnb when I was there on on Wednesdays, and it never happened.
Michael Houck:We always ended up having the most meetings on that day because we knew that people were available that day. And so 2 part question. 1, are these deep work days, like, real? Do you guys actually are you able to achieve them? And 2, do you think that the culture shipping fast is a cause to make you set up these Deep Work days, or is it a result of having the time for the developers to actually ship things on those days?
Tyler Denk:Yep. 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 1 or 2 meetings that Thursday, which is why I do it. I usually abide by it entirely.
Tyler Denk:I know that Tuesdays 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 7 people, we were 5 or 6 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 Brews, so my co founders, were very good with product and design, so there's no handoff.
Tyler Denk:Like, they intuitively know who the user is. They know exactly their 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.
Tyler Denk: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 when we initially rolled it out. So when we eventually scaled the team to probably 8 to 10 people, we had customer support, we had a growth person, and diversified a bit from the core nucleus.
Tyler Denk:There needs to be some level of communication and like touch points and check ins. 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 3 times a week or 3 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.
Tyler Denk: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 I got more done on Wednesday than I did on Monday, Tuesday, Thursday combined. If only we had 2 of those days. And I said, say no more, Tuesdays, Thursdays, focus days.
Tyler Denk: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, contact switch. I have my to do list of 5 things or whatever it is. And, like, that is the objective of the day.
Tyler Denk:I think work 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 a 100, a 150, 200, like, it's very easy to view 2 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 gonna 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.
Michael Houck:You've mentioned in this conversation so far, like, answering support tickets at midnight every night, staying in every Friday or 3 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 cofounders. So, yeah, how does that play into things for you?
Michael Houck:How important is that that peace of mind for you as a founder to stay focused?
Tyler Denk:Yeah. I mean, that's, like, my theme of the week. Basically, it's 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 say with 4 bullet points.
Tyler Denk:Here's the 4 things I'm focusing on today. End of the day, he goes, here's the 3 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.
Tyler Denk:I know that they know what's most important. They've communicated to the entire team what they're working on. Then at 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.
Tyler Denk: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 2 AM at night, by all means, go ahead.
Tyler Denk:There are 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 org. I think the hardest part, which also completely contradicts what I wanna be doing because then it requires management and, like, thinking through, like, how do you like, people problems.
Tyler Denk: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.
Michael Houck:Yep. So
Tyler Denk: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.
Michael Houck:Yeah. I mean, you read 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?
Tyler Denk:There's a few different things that we do. I'd say, one, just, like, why I am so bullish on being remote in general is we for example, we open a new product designer role. And if we were headquartered in New York or Arkansas or 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.
Tyler Denk: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 and 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.
Tyler Denk: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, 1, they are more active, and, 2, we usually do, like, what is your top priority of the week, or what was your top accomplishment of the week for Monday Friday, respectively. And so I think a lot of it just comes down to, 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.
Tyler Denk:And, like, accountability should be the first thing that you are trying to prioritize. So, So, yeah, I 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're 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.
Tyler Denk:I think it kinda 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.
Michael Houck:So another thing you've done that you guys have done really well, and 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 recommend other folks to do?
Tyler Denk:Yeah. So my bet and I 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 a friend or colleague who is, and you expand the luck surface area of them making an introduction or recommending your product, the more people who know about it.
Tyler Denk:And so if I just created a 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, etcetera. And so what I've done very intentionally from day 1 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, 1, anyone who's kind of curious about what it is like to build a company or, like, to work at a start up, it kinda 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 1,000,000 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 1 we're creating the narrative that everyone is moving over to BeHive, which is what we do when our users move over and they share their experience and we retweet them.
Tyler Denk: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'm not I could keep going. It was 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, we'd love to lead your series c or or whatever it is to which I, like, I personally don't waste time on those calls. Like, I think that I have, like, different opinionated stances on, like, taking time to, like, nurture the relationship with, like, different investors.
Tyler Denk: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 off 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 7 days.
Tyler Denk: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 5 of our investor updates in a row, you should have such a good idea of 1, 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.
Tyler Denk:If they express interest in wanting to learn more about the company, throw them onto the investor update, let them breed 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 to really streamline. It's a huge shortcut for raising capital.
Michael Houck:Do you think there's any risks to 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 on the other side of that fence?
Tyler Denk: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.
Tyler Denk:I'll, like, call out milestones. Like, hey. We just hit a $1,000,000 of 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.
Tyler Denk:But for 9 out of 10 times, it's, hey. MRR was up 10% last month. So it's all 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.
Tyler Denk:So I'm never saying like, hey. We just made these 3 hires because we're kicking off this 6 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 x y z.
Tyler Denk: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 forwards 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, 4 or 5 investors I'm close with may respond and ask for specifics, and I'll follow-up.
Tyler Denk:But I just don't give away our strategy moving forward.
Michael Houck:Yeah. Having that be backwards facing is really smart. That does protect you guys, for sure. I think a common threat 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?
Michael Houck:You talk about not planning to raise, planning 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 having to drag out be a longer longer process.
Tyler Denk: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 emailed like, hey, you wanna grab a coffee? Wanna go to the next game?
Tyler Denk:Wanna do this? Like, the answer is no. I actually just wanna build the business. And the 1 in 30 odds that we 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 wanna raise another round of funding.
Tyler Denk:So if my mentality truly is, I want to build the best business that is profitable, and we are not raising money. If your decision's 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 gonna 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.
Tyler Denk:It's just ignore. It's just like marked as done. And then he tricked me as really smart. So for any VCs listening, he said, do you wanna go to a founder's dinner in LA? And at the time, I mean, we're a remote company.
Tyler Denk: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 kinda do wanna meet some other founders in LA, like a dinner sounds nice. So I agreed to go to that and he goes, Oh, do you wanna meet for coffee first? And I was like, Goddammit, like totally got me, whatever.
Tyler Denk: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.
Tyler Denk: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 3 to 4 months. And then when I did decide that 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. I shot him an email. He had the context of 4 months worth of investor updates and data and details of following the journey.
Tyler Denk:And he was like, We're ready to ride right now. We had a term sheet 4 or 5 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 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.
Tyler Denk: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's 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. Like we could have just went slower. And so for our series B, even more so, we had over $10,000,000 in the bank. And when we got our 1st term sheet, I said, look.
Tyler Denk:Like, this isn't even close to what we're looking for, and I have zero urgency to take any deal on this situation. Like, we do not need to raise money at all. We are we have 10,000,000 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.
Tyler Denk: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 founder.
Michael Houck: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. Founds only do it a few times in the journey of their company.
Michael Houck:So makes a lot of sense. Cool, man. Well, hey. This has been great. We have just a couple of rapid fire ones that we like to do at the end.
Michael Houck: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?
Tyler Denk:Them. It's like kinda like picking your favorite child, right? Because I actually talked to a good bunch of them and I hate to pick 1, 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 gonna go on, like, a quick one minute story on this one. Yeah.
Tyler Denk:Sure. 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.
Tyler Denk: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.
Tyler Denk: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's a legend.
Michael Houck:That is value add right there for sure. Dang. Favorite startup, like, book that founders should read?
Tyler Denk:Oh, that's a good one. I feel like 0 to 1 is 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, but 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.
Michael Houck: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?
Tyler Denk:1st, sign up for bigdeskenergy.com, my newsletter. So that's why I would like to sign up for Big Desk Energy. 2, I 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, 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.
Tyler Denk:And for me, the investor update is how do I get all of my thoughts and moving pieces on the 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.
Tyler Denk: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.
Michael Houck:Okay. Last one. I'll let you go. This is a little different. This is from Peter Thiel.
Michael Houck:This is his favorite question. What's something that you believe that most people disagree with you about?
Tyler Denk:It's a great question. Why 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.
Michael Houck:Tyler, thanks, man. This has been great getting the inside look on the journey with Beyhive so far and your journey as a founder. Thanks for being here. Where can people find you?
Tyler Denk:Glad you asked because I gotta plug the newsletter. So Twitter, dank_tweets, is where I'm most active, and then personal newsletter sharing everything that we talked about and then some, mail.bigdeskenergy.com.
Michael Houck:Love it. I'm a subscriber. Cool, man.
Tyler Denk:Talk soon. Oh, yeah. Thank you. Bye.
Michael Houck:Thanks for listening. I write up my main takeaways from every conversation and make them available to all of our members at foundingjourney.com, along with a bunch of other perks and more content. If you found this conversation valuable, subscribe to Founding Journey on Spotify, YouTube, Apple Podcasts, or whatever your favorite podcast app is. I post a new episode every Thursday. Also, consider leaving us a rating or a review.
Michael Houck:As a brand new podcast, this is the best way for us to get out there and founders to find
Tyler Denk:us.
Michael Houck:See you next time.