SaaS Interviews with CEOs, Startups, Founders
How Stack Overflow Secretly Made $65,000,000 on its SaaS Last Year
18 Jul 2024
Chapter 1: How did Stack Overflow generate $65 million in SaaS revenue?
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Microsoft was customer number one. Over 100 million in revenue so far? Yes. Over 150? Can't say that. Over 125, can you say?
How many of you have used Stack Overflow? All right. Awesome. Of those of you who have, who even knew that they had a SaaS product? One person. Literally one person. Good. Long way to go. Meanwhile, what percentage of revenue is it now?
It's now about 60% of our company's revenues.
And the SaaS product, so for those of you who didn't raise your hand, Stack Overflow has a collection of sites that every developer you know goes to to figure out the problems that they're wrestling with. Fair? Yep. Question and answer, other developers helping each other. What is the SaaS product then?
Yeah, so I think our community, which is about 100 million people that show up every day to our website, come because we have about 60 million questions and answers on every possible technology topic. So many of you who have used the platform over the past 15 years contributed to that or consumed content from that, and it's become the most trusted destination for all things technology knowledge.
So that is, I think, a very, very important foundation. The SaaS business, very early on in 2018,
late 2018, so very large companies like Microsoft came and said, we love using Stack Overflow, but we just want to use it inside our company because the same mechanisms, really, we would love to have internally for proprietary information, et cetera, so we want a private version of Stack Overflow for our company to use.
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Chapter 2: What percentage of Stack Overflow's revenue comes from SaaS products?
No, it's a couple of years old. So this is, you folks, you're good researchers and folks who actually went and pulled it from any public information. But we're growing pretty quickly, I think, in the context of our- Forgive me. Yeah. Over 100 million in revenue so far?
Yes, that is right.
Over 150? Can't say that. Over 125, can you say? Yeah. Wow, that's backing me into a corner. It's certainly over 100 million. That's fair to say over 125, though, right? Maybe. Maybe. Yes, yes, yes.
All right. So if it's over 100 million, what percentage comes from this new SaaS product?
So over 60%. We have about probably close to now 70% of our company's revenues are recurring. And they were actually not recurring revenues when I started in 2018. Meaning advertising.
We would go to... to these different sites. There'd be an ad at the top. That's where the revenue was coming from. Now it's subscription. Mostly it's from the SaaS product, the internal question and answer site that you developed, partially from the AI stuff that we'll get to later.
Yes, that's correct. So for the first 11 years, as Andrew mentioned, we were almost entirely an ads business and a talent job listings business. Some of you may have consumed that product in the past. And then in 2018, 2019, the whole goal was to pivot the company to focus on just on SaaS. And for various reasons.
Let's talk about why. What was the company going through that made you say, hey, we've got a successful business. We've got to shift. It was a challenge. What was it?
Yeah, I think. You know, we've got an iconic set of founders, Joel Spolsky and Jeff Atwood, who built this ad for an amazing platform. But if you think about the audience, the audience actually doesn't care about ads. I mean, nobody loves ads, period. But especially for a technical audience, it's actually extremely annoying to have ads floating around. Plus, we all have ad blocker. Of course.
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Chapter 3: How did Stack Overflow's SaaS business model evolve?
So that was the impetus. It was straight from our users, straight from companies saying, we love the platform. Thousands of people within companies use Stack Overflow. All your companies, if you came from big companies, use Stack Overflow every day. So it is sort of already present in people's workflow. So the idea was, why don't we actually exist in the context of the company's workflow?
All right. So we're going to talk about how you got your first customers, and then we'll grow on from there. But what I've been showing up on the screen is what you're charging is in the middle graph over there. That's the price per seat. And you still do have a very healthy advertising business. I'm a podcaster. I've been one for years.
I actually wrote a book on interviewing, which Nathan kept up here. But you have podcast ads. You have banner ads. You have all kinds of ads throughout the network. OK. The very first customer you said was Microsoft. Where did you figure out? How did you get the first customer?
AMIT SINGHALAIRAJANANI- Well, I think it was the notion of them actually coming to us. So I think it was completely a user pull, a customer pull. You can't underestimate the power of your product.
Wait, they weren't coming to you and saying, how do we spend money with you? What were they saying?
The users basically said, look, we love to do this, but the thing was that when people were posting content on Public Stack Go Flow, that started getting people's attention on, you know what, we actually want to make sure that this content is not posted publicly with its proprietary information.
I mean, on a regular basis, they would say, we want to ask questions, but we can't have people outside of our organization give us the answer.
OK. Or post it externally by accident, as an example. Because if you're posting a piece of code from within Microsoft on Public Stack Go Flow because you want feedback, et cetera, that would be, I think, obviously a problem.
Period. Here's my understanding from the conversation we had before we got started. You looked at the people who are using the free version of the site. You said, what organizations are we seeing come up a lot? Let's go talk to them, right? Just put it in a spreadsheet or database?
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Chapter 4: What challenges did Stack Overflow face during its transition to SaaS?
Where do I see it? A lot of us here didn't even know that you had a SaaS product.
FRANCESC CAMPOY- Yeah, yeah, that's fair. Branding, so clearly we've got to work on that one. But I would say the biggest thing that has worked has been the bottoms-up motion, along with engaging with the CTOs and the CIOs and VPs of engineering that we typically engage with. And the specific problems that they are trying to solve, whether that is
transforming into the cloud, leveraging AI tools these days, or whether that is becoming more efficient with their developers in terms of productivity, or if it's onboarding people during a time when they're hiring a lot of people very easily, how do you get people, you've got to zone in on the top three problems that they actually care about.
And that messaging goes out very specifically to the personas that we care about, specifically the CTOs and
I'm going to spend real quick just on partnerships, and then I'm going to get to AI because we've done some big things there. Partnerships, you've got partnerships with Microsoft and others. What are they doing? How are they selling Stack Overflow teams?
Yeah, so I think it's part of the scale journey. We obviously started with our own user base. We went into these big companies. We built up an SDR team. We had a demand generation function that got built up. Then we had a more mature AE organization. And then we hired a lot of people who actually had SaaS backgrounds to go and kick off this entire transformation.
And then we said, OK, at some point, it makes sense to then engage with big companies as we think about big brother partnerships. We are a smaller company. We have somewhat of an outsized impact in terms of our user base. but we wanted to partner with who are the big ecosystem companies. So Microsoft is an example, one of the biggest companies in the space. We are very big partners with theirs.
We actually engage with them in their Azure partnership area, if you call it, the ISP program. And we align with their reps to be able to go and sell into accounts jointly. So that's another way for us to get the attention of a CTO or a CIO or a very large company. And so that is
They bring your salespeople in when they're making, when they're closing.
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