4000 Developers Pay Them To Catch Bugs, $9.5m Raised

James Smith

In Episode #762, Nathan interviews James Smith. He’s the co-founder and CEO of Bugsnag, the leading crash monitoring platform for web and mobile applications. The company helps companies like Airbnb, Lyft, Cisco, Pandora and Yelp catch and fix errors on their applications. Originally from London, James moved to the Bay area in 2009, leading the product team as the CTO of Heyzap. In his spare time, he likes hacking open source software, eating junk food and practicing his American accent.

Famous Five:

  • Favorite Book? – Radical Focus
  • What CEO do you follow? – Jeff Bezos
  • Favorite online tool? — eShares
  • How many hours of sleep do you get?— 8
  • If you could let your 20-year old self, know one thing, what would it be? – “If you don’t ask, you don’t get, apply it to your life”

Time Stamped Show Notes:

  • 01:11 – Nathan introduces James to the show
  • 02:00 – If a company has a software, Bugsnag detects when the software is broken
  • 02:22 – Bugsnag charges monthly
    • 02:28 – The price varies depending on the company’s needs
    • 02:36 – Price starts at $29 a month to tens of thousands a month depending on the scale of the business
  • 03:17 – Customer cohorts
  • 03:57 – Team size is 35 and will be 45 at the end of the year
  • 04:30 – James and his co-founder quit their job in 2012 and started Bugsnag in 2013
  • 04:40 – James was the CTO for Heyzap which was a Y combinator company in the gaming space
  • 04:59 – Heyzap wasn’t able to solve the problem James had with Bloomberg
  • 05:59 – James invested in Heyzap and learned a lot from his time with them
  • 06:40 – Heyzap was acquired by the German company Fyber
  • 07:06 – James’ experience entering the startup world
  • 08:30 – With Heyzap, James had to decide whether or not he’d buy his shares before the acquisition
  • 09:43 – James’ price was low because he was an early employee of Heyzap
  • 10:41 – James was 29 when he left Heyzap
  • 10:50 – Bugsnag was initially bootstrapped, then raised in 2013
    • 11:08 – Bugsnag went with Matrix Partners
    • 11:32 – Bugsnag raised a total of $9.5M
  • 11:49 – Customer number is around 4000 companies
  • 12:04 – Bugsnag has a free and premium model
  • 12:14 – There are 60K software engineers who are using Bugsnag
    • 12:21 – One third are organizations and the rest are using it for free
  • 13:00 – First year revenue was $4.5K in ARR
  • 13:27 – Bugsnag has broken $2M ARR already
  • 13:47 – “The expansion revenue is really, really strong”
  • 13:50 – Bugsnag is constantly in a net negative churn
  • 14:06 – Logo churn is around 1%
  • 14:40 – Bugsnag started with low deal sizes and grew them slowly
  • 15:05 – People try Bugsnag for free and see its value
  • 15:45 – Healthy net negative churn in the industry is around mid-single digit to low double digit negative churn
  • 16:41 – The best driver of growth for Bugsnag is word of mouth
    • 17:01 – Bugsnag also does conferences and had 18 conferences last year
    • 17:10 – Sponsorship price per conference can go up to $10K
    • 17:28 – Large companies go to conferences as well
  • 17:35 – Payback period is the 12-month which is the rule of thumb
  • 18:17 – Bugsnag is in a typical SaaS gross margin
  • 20:25 – The Famous Five

3 Key Points:

  1. If you don’t ask, you won’t receive; therefore, just get out there and ask for what you want.
  2. Small deal sizes can grow and expand to large ones once people see your value.
  3. Consider owning a part of a company—especially if it’s a company that you truly believe in.

Resources Mentioned:

  • Simplero – The easiest way to launch your own membership course like the big influencers do but at 1/10th the cost.
  • The Top Inbox – The site Nathan uses to schedule emails to be sent later, set reminders in inbox, track opens, and follow-up with email sequences
  • GetLatka – Database of all B2B SaaS companies who have been on my show including their revenue, CAC, churn, ARPU and more
  • Klipfolio – Track your business performance across all departments for FREE
  • Hotjar – Nathan uses Hotjar to track what you’re doing on this site. He gets a video of each user visit like where they clicked and scrolled to make the site a better experience
  • Acuity Scheduling – Nathan uses Acuity to schedule his podcast interviews and appointments
  • Host Gator– The site Nathan uses to buy his domain names and hosting for the cheapest price possible
  • Audible– Nathan uses Audible when he’s driving from Austin to San Antonio (1.5-hour drive) to listen to audio books
  • Show Notes provided by Mallard Creatives