The Exchanges

Q So 24 years old in 2013, a grand in your bank, a startup before that, it didn't work out. You launched a stat, you answer a stack overflow question on a whim. Before you know it, it takes off. You go, oh my gosh, when did you realize, okay, I could maybe build a company around this?

A Yeah, so I actually, um, in 2013, uh, you know, when, when I was like, okay, this is actually really, uh, taking off, I got a, a call from the Google Bay Area team where, uh, uh, they were like, you know, we are using, uh, Postman a lot in our day-to-day workflow, and we'd like to feature you on a new version of the Chrome App Store. So Postman actually became one of the few apps along with, like, NY Times, which got, like, this big banner on the Chrome Web Store. And along with that, you know, I had, like, an in-app purchase there. So, like, just the inflow was so much, and you know, coming from effectively some of the best developers in the world, I was like, okay, you know, there is a lot more than just a side project here, and I myself decided to take Postman much more seriously at that time.

AI assessment note: “there is a lot more than just a side project here”

Q Okay. Give me more of the backstory here. When did you launch?

A So Postman, uh, started as a site project in 2012, uh, effectively through a Stack Overflow answer that I put out, and it became very popular, and, uh, as a company, we actually started in late 2014, so there was, uh, there was a period in between where I was just hacking on it on the side and putting stuff out, but, uh, what we kind of realized was that it had become such a core part of the development experience of, you know, so many, uh, developers, whether they were experienced developers or small developers, and There's so many problems around this whole process that we were like, okay, there's a much bigger opportunity here. And, uh, what we also learned was that APIs themselves were becoming a very fundamental part of building software. Uh, so that was kind of our hypothesis that, you know, if you want to start a company today, uh, or you are an experienced, uh, you know, uh, entrepreneur who is, uh, you know, who wants to build a large company, you can kind of assemble these building blocks very, very easily through APIs, and that's just going to accelerate. So we started to solve this big problem in, in 2014.

AI assessment note: “started as a site project in 2012... as a company, we actually started in late 2014”

Q Yep, ok, and then when did you turn on a revenue?

A Uh, so I'd say that, you know, we are still, uh, focused more on just, you know, building the product on, uh, uh, just focusing on engagement. Like now we have more than like five million users, as you said, and more than 2.5 million monthly active users. Uh, we didn't build it as a SaaS company. We kind of focused on solving like the core problem because, you know, just if you think of a typical developer tools, like, you know, their core editor, their core repository, uh, like it, we were like, okay, you know, let's, let's just focus on solving the problem. And then we layered on these additional, uh, plans. It went through a few iterations. So we launched a cloud product in 2015, which became a pro product. And then in 20, uh, 18, we have the enterprise product.

AI assessment note: “we launched a cloud product in 2015, which became a pro product.”

Q That's great. So, okay. You stopped there about here, you know, here's what they started and here's how they download the product. Here's how they, you know, use it. Then here's how they become an active paying customer. What about after that? If people churn, what causes them to churn and how do you think about churn and retention?

A So, uh, you know, churn is basically for us a function of essentially the, uh, I mean, you know, uh, there are, there are multiple, uh, reasons. Uh, one of them is that, you know, there was just a single developer trying to, you know, they were just trying it out, you know, like they, they really, uh, with Postman, what you've seen is people really fall in love with the product and they just want to pay us sometimes in, um, uh, as the product usage expands, Uh, we have seen, you know, very, very low churn. Like, it's very rare that some of our larger teams will ever churn, because Postman kind of becomes like a source of truth for their API infrastructure.

AI assessment note: “one of them is that, you know, there was just a single developer”

Q So let me ask you, when you raise capital and the investor says, Abhinav, what is your fully weighted CAC? In your brain, you're thinking, well, we don't really do paid stuff. Our organic marketing is just our engineer salaries, build a great product, and there's a natural conversion from our five million free to about 7000 paid. How do you answer that question in that meeting?

A Uh, so, so I like to figure out, you know, what the model the investor has in their minds about a typical SaaS business. And when you talk to enough investors, you know that they have different models. Uh, so, uh, what, what's coming out in the market, uh, today is that, you know, great products, uh, which you sell online. Have very consumer-like behavior. And, uh, you know, people just are empowered, like developers are empowered to go and buy products for themselves, which was not true a while back. So, uh, Uh, when an investor kind of asks me that question, I look at, you know, how are they looking at Postman? Do they think of a typical enterprise company or more of a product led company? And then we kind of take them to the journey of like, you know, how we, uh, how we build the product and what, what are the steps that go from, you know, taking a user from downloading the product, eventually becoming a paid customer and why that, that varies. Yeah. So effectively like our CAC would be, you know, zero in some sense, But now we have some marketing costs and we have a customer success team.

AI assessment note: “effectively like our CAC would be, you know, zero in some sense”

Q you're growing a 102% year over year, somebody about this point would have put such a stupid valuation in front of you that it would have been so irrational for you not to take it, that you would have taken it. So that makes me think what there's something else going on here. And maybe the valuation's not, maybe it's a down round. Something's going on. Like what's going on?

A I think, you know, one of the things that has been, uh, is set in the ecosystem is that the measure of a startup success is like the next round. And we just kind of didn't believe in that. You know, when we started the company, we were like, okay, we're going to build a long-term company. We're going to choose a partner who's going to work with us for the long term. Are they aligned with our model? And, you know, the person is going to come, uh, uh, whenever we, we raise a round on our board, you know, are they aligned as well? So those are the factors that we look at. Uh, and, uh, what, what's happened in the ecosystem is that just the external optics of raising, you know, millions of dollars look so good that people like, okay, I'm just going to do it, uh, just for the heck of it. And, uh, that, that puts you in a trajectory that is not natural to your business sometimes. So we, we look at these factors, you know, you're already on that train.

AI assessment note: “the measure of a startup success is like the next round. And we just kind of didn't believe in that.”