Zeb Evans on how ClickUp got to $10M ARR in 2 years (now over $200M)

0:28We did like social hacky things, I would say. a million ARR. Welcome to the SaaS Revolution Show, a podcast by SaaS.com. Here, we interview SaaS founders from around the world who've been there and done that. They share the ins and outs of how they built their businesses, their operations, their path for securing investment, and more. Our mission with the podcast is to help you, the founder, learn how to scale your SaaS, maintain your well-being, and navigate the complexities of this ever-changing industry. I'm your host, Alex Thiemann, and together we'll explore the good, the bad, and the ugly in the journey to SaaS success.

1:04All right, welcome to the SaaS Revolution Show. I'm your host, Alex Thiemann, and I am delighted to be joined today by Zeb Evans, who is the founder and CEO of ClickUp. Welcome, Zeb. Thanks so much for having me, Alex. Yeah, great to have you on the podcast. We've got you on just in time, just before SaaS.2022, which we were just talking about you're flying over from San Diego to come to Dublin for the first time, I believe. I am. I'm really excited to get out there. It's my first time actually in both London and Dublin, and we've got a large EMEA presence out there. So I'm really excited to see both our customers and employees.

1:44Very cool. Very cool. And two great places as well. Two very fun cities. So I'm sure you have a good time. Zeb, we always like to start to get to know, I guess, a little bit better. So I'm going to start with the question. Who is Zeb Evans? Look, I've always been an entrepreneur since I was born. Since I was three or four years old, I was that kid that was selling everything I could get my hands on. I was creating experiences from scratch. I got suspended three times in elementary school for selling things like Beanie Babies and candy. So I think at my core, I had always been an entrepreneur. I don't know where it came from.

2:23I didn't have anybody in my family that was an entrepreneur. As weird as it sounds, it just feels like I was just kind of born to do it. And I'm from North Carolina. And so out there, it's not much technology. It's more traditional businesses, especially when I was growing up. And I kind of got exposed to technology by chance. I've had several near-death experiences. And one of them, I was in a hospital for two months and there was a laptop in the hospital that I started using. And that was before really anybody had access to technology, especially where I was from. And so that kind of gave me this marriage between technology and entrepreneurship.

3:02And largely that is who I've become today. I'm very passionate about making people more productive and using every minute that we have on this planet for improvement. Very cool. Thanks for sharing that. I mean, similarly, it must be an entrepreneurial thing, potentially. But, I mean, as a kid as well myself, I used to, like, after church, you know, get my dad to take me to the sweet shop or, you know, the candy store to buy loads of sweets so that I could then sell at school, you know, that week. And, you know, run my own, you know, illegal bootleg candy store, which I, you know, inevitably, as a child, you do get caught doing these things.

3:39And I don't think I got suspended, but definitely I got in a lot of trouble as well. But good markup, good margins on those things as well. Yeah, good margins. And it just doesn't last quickly because as you're alluding to, the teachers find out that their lunch money is being spent on candy. Exactly. And I know, I think what is it from Scarface? It says don't get high on your own supply. But I don't want the candy equivalent. But don't get the sugar rub when you're in candy. I saw on LinkedIn that you mentioned you were a monorail driver at Walt Disney World. I'm sure you've been asked this before.

4:16Is there anything that you learned from doing that that has helped you as an entrepreneur? Absolutely. I think Disney World in general has a great brand for customer support. And to be honest, I don't think it's as good as it was back when I worked there 13, 14 years ago. But the point is that working there, you experience a real empathy for customers. You are on the front lines. You learn to speak to customers. I really learned to ask the right questions to get the right answers because everybody's been at a restaurant where a waiter comes around and says, everything good? Or how's it going over here?

4:59You never give them bad feedback or even neutral feedback. It's always, yeah, everything's good, even if it isn't good. I think what I learned at Disney was true empathy for customers and really being able to get to the bottom of their issues and get them to describe the issues and the solutions. You can get them to come to the solutions many times. Now, I've taken that to ClickUp in a really, I think, more exponential way than I did at Disney World, where we intimately connect with customers on a daily basis through our feedback platforms and listen to what they're really thinking, how they feel, what solutions do they have, what solutions do we have, making sure that they are aligned to the solution that we are building.

5:40And I think that at its core is something that's really important for all businesses, especially on the early stages, is to talk, talk, talk to your customers. Every single person in the company early on should be talking with your customers. So if you're under 10, arguably 15 or so people, every single person should be monitoring customer support. They should be listening and interacting with customers and responding to them. And I think you end up building this extreme empathy for customers that enable you to build a much better product. And it gets customer support built into your DNA. Because at the end of the day, people do have options regardless of what category you're in.

6:19There are other options. There is competition. And if you can stand out through customer support, it's a huge leg up. I mean, great point. So it's one of these things that certainly I hear often from podcast guests about the importance of speaking to your customers. But then I also probably see that in practice happen, you know, less less than it should with a lot of companies. right but uh we i mean i don't know uh and i'm sure we're going to get into it but whether speaking to the customers and from that lesson from Walt Disney is perhaps one pillar of the the secrets to your success with ClickUp would you would you attribute that to be true yeah absolutely and then ClickUp so look i i mean let's not make assumptions like i i we're customers uh we see it all over the place so when when you come to London you'll probably see it uh I mean, if you're running campaigns on the Tube, but we've seen that and, you know, probably at airports, et cetera, you know, it definitely is very present, you know, around the city.

7:21What is it? What is the founding story? We actually built ClickUp as an internal tool at first in order to solve our own frustrations with productivity software. And like I mentioned earlier on, I've had several near-death experiences, and each of those really gave me this kind of obsession with productivity and efficiency. And I had started a previous company before that did basically social media automation and engagement and reporting before that stuff existed. Through that journey, which ended up being a small company about 20, 25 people, we had this dance with productivity software where we started with just a single tool.

7:59We started with Basecamp and then we ended up literally with 15 different productivity tools at a 25-person company. And I could not help but think that each of these tools, yes, had a reason and a purpose. And we had to use additional tools in order to accomplish what we needed through a project management lens and productivity lens. But that it was not net positive using these tools because of the inefficiency in the way that they're connected to each other, which at the time they weren't connected to each other at all. So we built ClickUp literally as an internal tool to make ourselves more productive.

8:34and the first premise was just being able to put all of our work in one place. Having a platform that was extremely customizable and flexible so that there aren't all of these opinions on how you have to work and that itself just enables you to do so much more in a single platform rather than having to use so many different tools. This wasn't a Slack story where it took us years to figure out we wanted to do it as an internal tool. It was literally weeks. It was probably four weeks where we didn't even have anything close to an MVP but we just knew that this was the thing that we were going to focus on for the rest of our lives in many ways.

9:08And I was so obsessed and still am with productivity. The team became very obsessed with efficiency and saving ourselves time. And early on, we changed that script to not saving ourselves time, to really saving the world time, making people more productive. So we're not fully there yet when it comes to our vision, but we've made huge leaps forward. And I think the category as a whole and productivity has started to head more towards that convergence that we saw early on. Just jumping on something that you said there about the near-death experiences, we're not talking or are you talking startup near-death experiences or are you talking about your own self near-death experiences?

9:46My own self near-death experiences, although there were many startup near-death experiences also. okay uh anything you can i mean do you want do you want to get into that anything that you can share in terms of like what what happened there um uh so the audience can understand that or is that is that something that you don't want to discuss no i'm i'm always happy to i think everything happens for for a reason and and like every every time i tell people about a near-death experience you almost feel like people are like feeling sorry for you i'm like no like this is the the best thing that could have happened to me each of them changed my life i think it's important to look at everything in life through that lens, every negative event that happens, there can be positive that comes out to it.

10:24It's very hard to see it immediately. It's hard to train your brain to see it immediately. But it is very, very obvious in hindsight that those those events, if you use them right, can be very pivotal pieces in life. The second one that I had, I was I was robbed at gunpoint in a home invasion. And I was put in a closet by a 17 year old kid with a gun in my head and was looking for things to steal that I didn't have. And he thought that I had more money than I had. And I didn't. Um, I, I, I had a very small entertainment company at the time and, um, there was no money. All of that money was, was wrapped up in our expenses.

11:01And, uh, you know, I, I, that, that was the first time where I thought I, my, my other near-death experiences were very quick and I didn't have time to think this one. I had several minutes, which felt like a long time to think about the future of my life. And what I realized during those few minutes, and it wasn't an out-of-body experience like everyone talks about. I've never actually had one of those. But this was more like a futuristic experience where I was just envisioning what is going to happen in five years, 10 years, 20 years from now if I'm on the same path. And I realized I had to change my path significantly.

11:34And so a couple of changes I made in my life were I dropped out of college. So I went to college for about a year and a half. and then I dropped out immediately. I actually learned how to code. I always knew basic HTML and CSS, but I didn't know how to actually program. So I learned PHP and I started actually programming and coding after I dropped out of school. So that near-death experience, really, if I hadn't had that one, it wouldn't have enabled me to create my first technology app that ended up being a small business, but also I would not have been exposed to those productivity problems that we're solving with ClickUp today.

12:08Therefore, ClickUp wouldn't exist. Awesome. Well, thanks for sharing that. And I've heard, but not that often, but similar things where, let's say, such a situation has really kind of forced somebody to kind of change perhaps who they were and then actually then create them on that path to be an entrepreneur and a very successful one at that. And now ClickUp is a very large company. I think I saw like 919 employees on LinkedIn. Can you share a little bit of data in terms of, well, I kind of said like how many employees, but maybe how much you've raised, revenue if you can share. Anything just to help the audience get a better picture of the size of the business that you have today?

12:57Yeah, we raised$535 million in three rounds of venture capital, our Series A, B, and C. And they all happened within a very, very quick period of time, actually. About a year and a half is when we raised our first time until we raised the last time was our Series C, which was about a year ago today. And I think something to understand is we grew the business to a very profitable business until we were roughly$10 million in ARR. So we did not raise venture capital at all because I was from North Carolina and I didn't know how to raise venture capital. And frankly, I was a little bit scared of venture capital people.

13:40I watched the movies and heard the Steve Jobs things about investors pushing you out. And I didn't have any experience with it. So we didn't raise capital. My whole goal was building a very profitable business. And we did. We built a very profitable business until two years ago when we first raised funds. And then you raise funds and you kind of go more towards the inefficient but growth, grow at all costs mentality. And now it's about building a happy medium between growth at all costs, but really just growth at efficient cost is a better way to say it, and efficiency on this side. And I think that's the best way to build a business is to have both of those.

14:17But the point I'm making is that early on, you really should be focused on efficiency and building that product first and enabling product market fit, which I see as generating revenue from a product. If you can generate revenue from your product, if you can actually get people to pay for it, then that's when you're really ready to raise a lot of funds. So even though we have raised half a billion dollars, I am not the person that is out there saying go raise, raise, raise. It's raise, raise, raise only when you're ready to. And I think being ready is very, very subjective in many ways. But the things that are objective is that you really have to have the product there where you're confident that you are ready to go off to the races when it comes to acquisition marketing, buying customers.

15:05And you have to be confident that your customers are going to pay for your product. And when you have those two things, I think it's important to consider raising funds, especially if you're in a competitive category. As far as scale goes, yeah, we're roughly 1 ,000 employees today. We don't disclose our revenue numbers publicly, but we are above 100 million ARR. And I think we're very much in that mindset right now of scalability for the future. How are we, when the things figure out early stage on the product is product, later stage, it's people. And so my job right now is really building our leadership bench and ensuring the organization is running efficiently and operationally.

15:51So congrats on bootstrapping, well, on everything, but bootstrapping it to 10 million ARR. What changed at that point? Why did you then decide, okay, we're now going to go down the venture path? I think the first thing is that I started to understand unit economics. And the unit economics, five years ago, we actually built our own billing system, right? You didn't really have Stripe in the same way that you do today, where it had a lot of SaaS economics and metrics for you right out the bat. So we built our own billing system. For the first couple of years, we didn't really understand our unit economics.

16:30We knew our revenue. It wasn't perfect, though, because the tooling there wasn't great. And when I started to do diligence on what is our net retention rate, right? What is our customer acquisition cost? What is our payback period? I realized that we actually have a really, really, really efficient business and that if we had more capital, we could buy more customers and those customers would expand and they would pay us back in a really short period of time. It was really just a couple of months payback period at that time. So I knew that from learning that piece, I knew that more revenue that we took in, instead of hiring more people, let's also spend on growth acquisition.

17:10So we started doing that. And at the same time, we had venture capital firms constantly reaching out to us. But we had Kraft reach out to us. And I really respect David Sachs. And I talked to him and he was really the first investor that I felt comfortable with having an investment for because he had seen what it looks like on the other side. He's been an entrepreneur. They understand exactly what you're going through. And it just felt like a really great connection. Somebody early on told me, take on investors who you would consider marrying. Right. And obviously it's a bit of hyperbole. But the reality is that you really want investors that you're going to have a long term relationship with because you take them on and they're looking for an exit.

17:59In many ways, IPO can take 10 years. And so you really want people around you that you feel comfortable spending a lot of time with and you feel comfortable on a journey of building a business. Great first investor to get there. And yeah, makes perfect sense. So we want to just focus on this piece about like that journey to 10 million ARR, because most of our listeners are on that journey. Can you take us all the way back to how you got your first customers? How did you get the first customers that click up that were not friends or family? I was always big on organic marketing. So SEO, I think people very much discount as SEO.

18:41I've been saying this for a couple of years now. And I think largely our competition has started figuring out SEO as well. But I'll say when we were zero to 10 million ARR, there really wasn't much SEO competition in our category. People were not focused on that. And so we were able to create search terms that ranked really, really high for free, right? Free marketing. You can write a blog. You can write a comparison page of your competitor versus another competitor. You can talk about industry knowledge and teaching people what project management is, teaching people what the GTD method is. And that's what we did.

19:19And we gained some early users literally just by writing blogs and creating content. And those users ended up signing up for our product. and we created a feedback platform. We actually used Kani, but there's many out there. We loved Kani. It's really simple and easy to get started. And those customers would give us feedback and I would be on there and I read every single comment on that feedback platform and I engaged with those users. And that was really important because you create this whole loop that happens, this feedback cycle. It doesn't matter how many users that you get early on. All that matters is that you're getting some users.

19:56You don't need a lot. In fact, you shouldn't try to get a lot of users early on because if you get too many users, you don't have time to figure out the product. So you get some users, you listen to them, you figure out the product, figure out their pain points, you ship iterations of the product. Then you continuously get more users, you get more feedback, and you create this flywheel of user feedback and iterating on product. And that was really what we did. And from those first customers to 1 million ARR, how long did that take? And let's say, asides from getting the feedback and SEO, was there anything else that you did to kind of get there?

20:36Yeah, you know, there were many things early on that we did to, I think we did like hacky things, social hacky things, I would say, is we would even go on Twitter, and we would just comment on other people's comments that they had. So we would reply to anybody that said, hey, I'm not happy with Jira or I'm not happy with Asana. We would literally go on there and say, hey, we have this new tool. We'd love to get you onboarded. We'll do it for free. Come on over. And so we would kind of just like handpick our own customers out of that. As far as timeline goes, it took us about a year to get to a million ARR.

21:19Cool. So you're doing things that didn't scale as like Paul Graham would say at that stage. We did things that didn't scale. We even reached out to, we would go to Capterra and there's other feedback platforms that people rate pieces of software and some of them show your name on them. And so we would look at people that rated other competitors poorly. And then we'd reach out to them on LinkedIn and say, Hey, we've got a new product. We'd love for you to try it. So it's very much things that don't scale. But again, it's just about getting, you don't need a lot of customers. You can, you can, you can do this stuff a day, an hour a day, set an hour a day of sourcing your own customers and you'll get their customers.

22:00And people are, are very much, you know, not everybody's going to have time to engage with you, but most people we reach out to were actually pretty, pretty engaged. They really wanted to give something else a chance. You've got to find the right people for sure. You can't cast a massive net at first and just target anybody. You've really got to target the people that have the problems, the pain points that you're solving. And that's a really important niche to focus on, a segment to focus on, is find the people that have the problems that you are solving. And this seems very obvious, but solve problems that you are intimately familiar with.

22:35You can't solve problems well if you haven't been through those same problems and experience those same pain points yourself. What would you say was the hardest part about the phase of getting from zero to one million? The revenue itself is the hardest. I think the product, at least for me as a product founder, came really easy. The revenue side is the part to figure out. How do you price things? How do you get people to pay? Where do you package it from a paywall and positioning perspective. There is a ton to get right and there's a ton that you can get wrong. And frankly, early on, you don't have resources to figure out and run massive pricing tests.

23:15You don't have experimentation frameworks to know what pricing and positioning works. So it's up to you. We ran surveys. I love surveys early on. Like we ran a survey for everything. We would ask people, how much do you want to pay for ClickUp? And I think people would tell me like, hey, nobody's, everyone's going to say they want to pay free. And that's just not true. People would actually tell you like what they think is reasonable. Customers are generally going to be very honest with you, even when they're not customers, just potential customers. They're going to be generally very honest with you.

23:47So that's the hardest piece to figure out. It really is, is how do you price things? How do you get people to pay? Where do you paywall? What packaging and pricing do you put together? And what plans do you call it? That stuff is difficult. And it takes a lot of just intuition, I think, that there's some luck element with it, for sure. But it also takes a lot of research. What does your competitors look like? How are they positioning? How are they packaging? What are your potential customers think? Talk to them. Get to know them. And then once you figure that stuff out, that's somewhat the easier part.

24:22The hard part is now actually getting the people to pay. and we i think one of our near-death experiences was we were we ran out of money and i'm not generally the finance person at least at that time i was not the person that was paying attention to finances we didn't have a person paying attention to finances we were focused on product when i got a notification that our bank account was over overdrafted i was like shit um we don't really i've got a little bit more money personally but that's it and so i put that money into the business and that forced me to stop focusing on product and to focus on product market fit, to focus on how do we get revenue.

24:59And really, I just implemented more paywalls and I also ran promotions. I ran promotions to customers and said, hey, it's Halloween. Let's do a 30 % promotion. Please pay us. These are the things that we promise we'll get you there. We know we're not there yet, but we'll build these things and we'll get there at some point and we'll grandfather you into this pricing. So that's what enabled us to really start having revenue. And within that month, we literally had a cash flow positive business. Awesome. Awesome. Thanks for sharing that. So from zero to one million, taking one year, one million to 10 million ARR.

25:36How long did that take? And what did you need to do differently? Yeah, there's a lot of things that you need to do differently at 1 million to 10 million. But I think the, and by the way, it took us that next year, we were above 10 million ARR. You know, I think the things to understand, it's like we talked about those things that don't scale, right? And the things that don't scale, generally at a million ARR, that's when you start to realize that. And so those methods early on of us continuing reaching out to customers, that didn't work anymore. So from a million to 10 million AR, I would say it's more about figuring out the things that do scale.

26:17But putting in those loops, you can still try a bunch of shit, right? You can still try and experiment things and shoot for the moon. But you really have to figure out a way to scale those things so that you're not manually doing them and so that you are not doing them yourselves. And I think that examples of those things are instead of writing blogs myself, we create a machine of blogs where we have an SEO person that was writing content that at first we just contracted. And then we built in a CMS so that they could automatically post them without having touches from us. And then instead of me manually researching all of the SEO and keywords, I started teaching people how to do that.