We Survived 2020 But What About Our Growth Rate?

It's a new year and a new season of FounderQuest! Season 3 starts things off with the founders recapping Honeybadger's 2020 growth numbers and where they are hoping to go in 2021. They also review the performance of the blog after a year of commissioning articles from outside authors and its impact on sales.

New Relic

Full Transcript:
Starr:
Okay, so you are listening to FounderQuest. We're a bunch of founders, we're on a quest. Thank you for listening, we are back after a rather long absence. Basically, people were gone different days during the holidays, and it was just a weird scheduling situation, so we just decided to take, I guess, two months off? A month and a half?

Ben:
Something like that.

Starr:
Something like that, yeah.

Josh:
A little more than we normally do at Christmas.

Starr:
Yeah, a little bit more, but I've got to say, I feel a little bit refreshed, I'm ready to talk into a microphone again, I missed talking to y'all.

Ben:
Likewise.

Josh:
Yeah, same. I also missed the routine of just having this call every week.

Ben:
Yeah, and our listeners missed us. I had people reaching out to me saying, "Hey, is the podcast coming back?"

Josh:
Nice, well that's a good sign.

Ben:
Yeah.

Starr:
I know, that's so sweet. You've got to get all your business tips in before it's just a bloodbath. You've got to prepare for the anarcho-capitalist future.

Josh:
Well there's some hope on the horizon, right?

Ben:
Of course. Well I've got to say, I'm having a great day so far. I was able to upgrade one of our repositories from Tailwind 1 to Tailwind 2 without any snags or hiccups whatsoever. I'm pretty excited.

Josh:
Wow.

Starr:
Oh, nice.

Josh:
Nice Ben.

Ben:
It's not every day an upgrade goes off without a hitch.

Josh:
Yeah, for sure.

Ben:
It's kind of compensation, I think, from the universe, for how badly the upgrade that I'm trying to do with our Elasticsearch cluster is going. Because upgrading from Elasticsearch 6 to 7 apparently is not in the cards for me, so yin and yang.

Josh:
Yeah.

Starr:
Well that's a shame. So what are we actually talking about today? It took everything we had just to make it here at 10 am on a Friday together. I don't know if anybody had the energy to think beyond that, so...

Josh:
Yeah, I think that's a fair assumption.

Ben:
Well actually I had a thought on something that we could talk about, something that's been kind of on my mind for the past few days, and that is perhaps a slight recap of 2020. Because as I took the break, I was thinking goals for 2021, and things I wanted to see, and looking back at 2020, and looking at some numbers. And to be honest, I'm kind of disappointed with how 2020 went from our business standpoint. The growth was not great. We had growth, but it was definitely off from previous years. And obviously coronavirus was a factor no doubt, we saw our revenue take a hit in March-April. So there's that, but still, it just feels kind of eh to have the worst growth year... I don't know if it's the worst, I don't know, I'll have to go back and check previous years I guess. But it was not a fantastic growth year, and I'm just like, eh, what can I do during 2021 to make that a different story? So that's been on my mind.

Josh:
Yeah, I think I was telling you the other day, I've had the feeling that it just felt like a stagnant year, just in general. And I know a lot of that is because just of the conditions, and things that were out of our control. But then also, you can only sit and stare at the news for so many years in a row before we get back to work. We did a lot of work last year. Thinking back we did do a lot of work, but I also feel like... I don't know, I'm just looking forward to doing some new stuff, and getting back to innovating.

Starr:
Yeah. Well first of all, I have to say that it's not nothing. I also looked at our growth numbers, and it's not nothing that we grew, we had growth. We are making more money now in the midst of a global pandemic than we were when it started, so that's definitely something. That's definitely a blessing. Maybe we wish it was more, but it's still there. 

Ben:
Yeah, I agree. Having some growth is certainly a blessing. We had customers, and obviously in the news there are a bunch of businesses going out of business, and they have nothing now.

Josh:
We have nothing to complain about.

Ben:
Yeah, for sure. I guess I was thinking of it in terms of... As being three developers who started this business, three technical people, it's always been a weakness of ours on the growth side, the getting customers in the door kind of side. Yeah, we've done some things, and we've stumbled on the way, but we're not experts. We're not sales experts, we're not marketing experts, we're just doing the best we can. And that's been great for us, we've got a nice comfortable business, things are good, growth has been good every year. But as I was thinking of these things and I was thinking about, well, growth last year wasn't great. And yes, there were extenuating circumstances, but looking forward, what can I do that's different than I've done in the past, right?

Ben:
So one of the things that I've been thinking about... I'm not a huge fan of New Year's resolutions, but I am a big fan of goals. Not that you need a new year to set goals, but... So I'm thinking, my goals for the year, my goals for the quarter, and so on. I'm like, eh, maybe I need to get better at this whole figuring out growth thing. Maybe I should really spend a fair amount of time just trying to get into what that means, and doing some... I don't know. That's the problem, I don't know exactly what that means for me, but the one thing I had thought so far is, maybe that means I spend a little less time on the detail, getting things done, upgrading Elasticsearch clusters, and that sort of stuff, and a little more time than I have in the past on, "Okay, how do we get growth in our business?"

Josh:
Yeah. It's easy to fall back into the comfortable routine. Believe it or not, upgrading Elasticsearch clusters is comfortable for you. It's not enjoyable, but it's... You know how to do it.

Ben:
It's the well worn rut in my experience.

Josh:
Exactly, and I have the same thing.

Starr:
The nice thing about technical tasks is that generally you know if you did it right, you know if you succeeded. And with marketing it's like, oh, I don't know. Or marketing, or sales, or whatever. I guess sales would be a little bit more direct feedback, but with marketing, it's like, "Okay, let's circle back in a year and see if we can notice any change." Yeah, well that sounds really good. I would love for everybody to be involved in chasing growth and all that. A couple interesting stats I just want to throw out there that I was looking at yesterday, and I'm not going to throw out absolute numbers, but we all agreed it was okay to discuss percentages, or percentage changes, and everything. So I think this interesting just to show how 2020 has been different than previous years.

Starr:
So what I did is, we use ProfitWell, and I went in and did their... They let you export a CSV of pretty much every page on their site. And so I got a CSV of customer numbers, right? Total customers, new customers added per month, customers who downgrade, who upgrade, et cetera. So the majority in the change in our growth... Our growth was lower this year, and the majority of that change came from having fewer upgrades, and... I forget the exact days, that kind of makes sense to me because we were doing this thing, I think in 2019, where we were asking people who were basically using too much of our service on an old plan, we were asking them to upgrade. We were asking them to either choose a higher plan, or we were going to choose a lower plan for them and they were going to lose some of their errors, because they were just not profitable for us to service them.

Starr:
And in 2020 we had done all that, and so we didn't really have that upgrade revenue stream, so that was maybe two thirds of the change. And the one third of the change, roughly, was due to increased downgrades, and this really surprised me. Essentially what I did is I just went into these spreadsheets, and I just added up the total customers who downgraded in 2020, total customers who downgraded in 2019, and just looked at the change. And over twice as many customers downgraded in 2020 as in 2019, and if you plot it on a chart by date, you see there's a definite uptick at March. So I think that is a legacy of coronavirus for us.

Ben:
Interesting.

Starr:
Yeah. And we also changed our plans around then, so I don't know, maybe it had something to do with that as well.

Ben:
Yeah, I was going to ask. I can't remember, when did we release the better basic plan, the new and improved free plan that we have? Because that, I think, would also encourage some downgrades, wouldn't it? If people are like, "Oh, I have a minimal usage on this plan, I can downgrade to the basic now that they're giving me more."

Josh:
I don't remember the date off the top of my head. I think it was like mid summer, mid year.

Starr:
Yeah.

Ben:
So yeah, it kind of feels like coronavirus plus the basic could be a good explanation for seeing continual downgrades. And from the coronavirus perspective, I can totally get why people are like, "Oh, we've got to find ways to trim our costs, how can we do that? Oh, well let's cut the amount of traffic that we're sending in errors."

Josh:
Yeah, and back then our main focus was retention, and that's part of the reason that we really juiced the basic plan in the first place. I don't know, I still think that it's interesting, because we have a lot of... That plan has been very popular it seems, relatively.

Ben:
Yeah, very. In fact I was just starting, just this morning before we got on, doing some analysis of people who are on the basic plans. Maybe we're being a little to generous with that plan, so I'm going to run some numbers and see. Maybe we need to adjust that.

Josh:
We've had a few people on Twitter mention that we're the best value at the moment, which...

Ben:
Yeah. We've had people in the onboarding say, "Hey, your basic plan gives a lot away." So yeah.

Starr:
Oh, that's so good. So nobody sign up for a basic plan, none of our listeners. So, y'all want to hear some numbers? Because Josh mentioned that we changed our plans around to try and increase retention, and so we've actually got the year-over-year churn numbers. So year-over-year, our voluntary churn, which is people who hit the cancel button, went down 8%, so that's not bad. Our delinquent turn went down 20%.

Josh:
Wow.

Starr:
Yeah. I suspect that's due to maybe our using ProfitWell Retain, because I started that.

Ben:
Yeah, I would definitely say that's a factor, that's cool.

Starr:
Yeah, and this is total numbers of customers, it's not dollars. And let's see, and while I've got you here, I've got a spreadsheet open. Our new customers, we got more new customers than we did in 2019, it was up by 6%, which is not amazing, but it's not lower than it was.

Ben:
I'll take it yeah.

Josh:
And that's customers excluding free basic plan users?

Starr:
Yeah, that's paying customers.

Josh:
Okay, paying customers, cool.

Starr:
Yeah, and then upgrades were down 9%. And again, that is users, numbers of users. In dollars, upgrades were down 30%, and then downgrades were up 130% in terms of numbers of users. So yeah, I think that's the story of 2020, is lots of people just trying to trim costs, and downgrading and stuff, and not as many people actually leaving us, which is nice.

Ben:
Yeah, that's cool. It gives it a lot of good context, I appreciate that.

Josh:
So you're saying we need to put the squeeze on everyone in 2021?

Starr:
2021 is the year we get blood out of that turnip.

Ben:
What we need to do is send out holiday gifts to all of our customers that is just a case full of whiskey or something. Get them all smashed, and so they make really bad coding errors, and then they deploy that stuff and create a bunch more traffic, and so they have to upgrade, that's what we've got to do.

Josh:
Just do that all year.

Starr:
Yeah, it's a shame that Trump lost, because there might have been a place for you in his new administration.

Ben:
I just checked the Stripe Dashboard, and our basic plan was created on May 19th 2020.

Starr:
Okay good, my brain works. So here's an interesting little tidbit, even though our numbers of new customers were up by 6%, our growth in new customers was up by 6%. Our customers weren't up by 6%, but the growth was up 6%. The growth in revenue from new customers was down 26%, and yeah, so that might be due to us lowering our plans and our prices for our plans. That makes sense that that's how that would work, I guess.

Ben:
Yeah, we're going to have to knuckle down. Well, we did warn people when we launched the basic plan, and we announced it the podcast, you'd better get it while the getting's good, because it's not going to stick around, right?

Josh:
That still stands, go get it now.

Ben:
Yeah, totally. So we're now coming back, and we're doing the analysis, and low and behold, sure enough, having a very generous free plan does reduce the gross revenue's numbers.

Josh:
But in our defense, it also did what we set out to do, which was increase retention, hopefully. I guess we don't know because people stayed, but I have a feeling that it increased retention somewhat, some of the stuff. And lowering our prices in general.

Starr:
That's true, and one interesting thing about this is that the better free plan didn't cause an overall decrease in the number of paid signups that we got. Yeah, you could argue that we would have got more paid signups had we had a less generous free plan. But when I was looking earlier at the conversion rates of the different plans, the conversion rate didn't really change when we introduced the new free plan. That's good to know, and we're getting a lot more free signups than we used to with our old free plan.

Ben:
Yeah, and that was the other goal, right? To just get more acquisition, got more people using Honeybadger and trying it out with the hopes that they will eventually get really sloppy in their programming and have to upgrade.

Josh:
Or work with more people, or their business grows, and...

Ben:
So you know some companies, they build products or product families around the notion that they need to have... Like cyclical kind of companies. Like, if I'm a lawnmower manufacturer, obviously my sales are going to go down in the winter, right? So I should also build snowblowers to even out the thing. So I think what we need is some sort of product that rewards good developers who have code... That is not deploying much errors. I don't know what the product would be, but to kind of balance out, that we've got the ones that are doing a lot of errors, and we've got the apps are really pristine, so we need that product to balance out our product offering there.

Starr:
That's a super simple deal. So what we do is we just modify our existing Honeybadger client, and just have it count the error rate, and if the error rate is low, it just does a Webhook request, or it does an ARP request, or API, and we send people a cookie bouquet.

Ben:
Yeah, I like that. Or maybe it sends an email to their boss saying, "Look how awesome I am."

Josh:
From their own email account?

Ben:
Totally.

Josh:
It's just a time saver.

Ben:
Yeah. We totally should add that though, bragging rights. We could add that in our current app, right?

Josh:
That's a little bit like the gamification stuff we've been talking about.

Ben:
Yeah, but you can't reveal the secrets Josh, we've got to hold back.

Josh:
Yeah, we won't reveal the details, that's just a little tease.

Ben:
Little tease, yeah.

Starr:
Oh, I don't know if I should talk about... I don't even know what this is, and I don't know if I should keep going, because I don't want to give away secrets that I don't know. I was just going to say that would be fun to have an option for the Slack notifier, where if the error rate is really low, we can post a, "Good Job." "Good job everybody." To Slack.

Josh:
Oh yeah, I like that.

Josh:
Oh I like that, I really like that. We totally should do that.

Ben:
Yeah, we totally should do that.

Ben:
Add that to that. Yeah. We could have a new kind of event, instead of the, "You've exceeded the threshold." Event, we could have a, "Your threshold is zero." Or something like that, I don't know the name for it. But, "You're so awesome." And it triggers a Slack notification-

Josh:
Yeah, you don't want it to be semi random, and it's not going to happen on a regular basis, like, "Your errors were zero this week." But if it was just a nice little surprise that it happens one or twice in their life cycle, that would pretty cool.

Ben:
That would be cool.

Josh:
That's a nice touch. And also, adding little features like that that reach out between, if things are quiet, because it's easy to forget that you have Honeybadger if you're not receiving error notifications. I don't know if it's a good or a bad thing to remind them that we're not delivering any value at the moment.

Ben:
Well there's also the wondering. There's forgetting, and then there's also the wonder, like, is it still working. It's gone kind of quiet, is that a good thing, or is that a bad thing, and you kind of get that anxiety. So maybe it could be, if there's a quiet period for a few days or whatever, it's like, "Oh, we're still here. Oh, your app is still up." No, it's just great.

Josh:
Well we do have the digest, which I think we don't send them, though, when there is no traffic, I'm pretty sure. Do we send one that just says, "There are no errors this week"? I can't remember now.

Ben:
I can't remember now either. I think I've gone a week with no errors.

Josh:
We'll have to look at that.

Ben:
Yeah. Love it Starr.

Starr:
Well, I just hope that Slack lets you post little animated gifs, like through their API.

Ben:
Yeah, the Giphy integration does that, so.

Starr:
Oh, yeah. Okay, great.

Ben:
Speaking of, in our household, we have two teenagers, and they have opposite views on how you're supposed to pronounce gif, and it causes some heated arguments around the dinner table, let me tell you.

Josh:
In the same household, that's rough.

Ben:
Yeah, at least it's not Vim versus Emacs.

Starr:
Yeah, my take on it is that I just switch randomly. But whichever one I use, I just fight to the death that it is correct.

Ben:
That's what you're got to do, because there's opinions strongly held, right?

Josh:
You get to have an argument every day.

Ben:
So back to the growth things. So I was just thinking about this, and okay, what are ways you can get growth? Obviously you can do more advertising, get more people in the door. But you can also do, which we don't do, you can also do outbound, right? You could have a direct sales force, or salesperson, or some sort of thing that effectively is sales. And I was wondering, okay, yeah, that's cool, but I hate getting emails from people like, "You should buy my thing." And it's like, I don't care about your thing. And so my question is, how do you do outbound sales that's not really annoying, that's kind of where I'm stumped. So you guys have answers? You want to help me out here?

Josh:
Yeah, that's a good one.

Starr:
I don't know the answers.

Josh:
I think one thing just to always remember is that everyone is not you. So I think it's a pretty safe assumption that most people don't like cold sales emails, but they obviously work, or people wouldn't be doing them since the invention of email. So yeah, I don't know.

Ben:
Yeah, I do have to admit, I do get the occasional email that's blind, and I'm like, "Oh, that might be something I should check out." But it's rare.

Josh:
Yeah, I think out of the few that have caught my attention, it's usually someone that's doing something different from the other sales people that are emailing me. And if it's whimsical, or they're actually giving me some sort of value immediately... I don't have any examples of that, but it's just a vague thought, that that maybe one way, is to try to be unique in the way that you're reaching out to people. Or maybe be self aware, even, about how this... I don't know how you do that, but...

Ben:
So you're recommending the purple cow approach, right?

Josh:
Yeah, basically.

Ben:
Yeah, that's good, I like it.

Starr:
I'm wondering-

Josh:
Sort of like a self deprecating comment.

Starr:
I'm wondering if our current pricing model would support outbound sales. Because it takes a certain amount of time and effort to do a sale, and I'm just wondering, what does our price need to be to have positive ROI?

Ben:
Yeah, well I read-

Starr:
This isn't an objection, I'm just wondering out loud.

Ben:
No. Yeah, totally. It just so happens I read a blog post the other day that answers that question. Jason Lemkin, SaaStr frame. He addressed this question this last week, I think it was, in a blog post, and we can link it up in the show notes. But basically, the TLDR is, you could get away with less, but $299 a month is really the floor for having an honest to goodness outbound sales organization that works.

Josh:
That's helpful.

Ben:
Yeah, and we totally have customers who are paying us than $299 a month, so if you find them via sales, then that could work, right? Of course the majority of our customers are spending, I would say... I think the majority of our customers are spending less than that, so we wouldn't want to find them. So we'd have to do some segmentation work, and find out how to really get to customers that we really want into that kind of pipeline. But it could work.

Josh:
Yeah, it seems like you'd still be going after the medium to enterprise people.

Ben:
And as I started to think about this, you start going that path, and it's like, well, at the same time, we don't really want to go exactly the same path that our big competitors are going. We don't want to try and do the same game plan that Sentry is doing, right? Because obviously they have more resources than we do, and so that's just not going to work. So yeah, you can't say, "Well I'm just going to do the enterprise call down playbook." Because that's presumably what Sentry is doing right now.

Josh:
I had a thought based on that recently. Just because Sentry is changing so much, and it seems like since they're the large player in the error tracking market, it seems like there are people out there that are the small to medium people that are being alienated a little bit by some of the changes that they're making. And also that they're departing from just straight error tracking and going into the APM performance monitoring space, and really obviously targeting more enterprise people. And I think we heard recently, even some people were complaining that they had made their free plan even less useful to them, and that's a reason some people were switching recently. So it makes we wonder, since that has always been our target audience anyway, maybe there's an opportunity there for us to double down on the smaller accounts, which is kind of what we're good at capturing in the first place. And both capturing the free users, but also figuring out how to convert them, and capture more of the mid paying customers as well who maybe just don't want another New Relic, or soon to be New Relic.

Ben:
Right, I think the good news is the blog has done a great job of getting those kind of customers in the door. I guess it was Ben Findley's idea, I can't remember who's idea it was to have the onboarding survey that we have as part of our onboarding process, where any new customer who signs up, they're asked, "Any thoughts for us, or anything you want to tell us as you get started?" That has been a goldmine of information. Hearing people say, "Oh, I saw this blog post that such-and-such wrote, and I decided to check you out." Or like that tidbit about Sentry changing their free plan. That came in, we got it though the onboarding.

Josh:
A lot of people fill that out.

Starr:
That reminds me, I was meaning to go and do a report of all those comments. Everybody who left a comment, and what action did they perform? Are they a paying customer now, what happened to them?

Ben:
Oh yeah, that would be cool.

Starr:
Yeah, so thank you for mentioning the blog. That was a big thing I did in 2020, and overall I think I'm pretty happy with how it's going. I'm sort of still in the middle of working up a sort of end of year analysis, like what do I want to change going forward, and stuff like that. But overall, we produced a bunch of blog posts, we got a bunch of authors working with us, we know that some of those are leading to conversions. I have a nice little chart of blog post traffic. Our blog post traffic correlates extremely well with our plans page traffic, and our plans page traffic correlates pretty well with our signups. And so you can overlay blog post traffic with our signups, and you can kind of see how the curves follow each other. And it's a little bit hard to see because there's a lot of noise and stuff, and it may just be completely in my imagination, hopefully not.

Starr:
I do have a vested interest. But yeah, I'll share those charts with you two later. And so what I am currently working on is figuring out what direction we want to go in the future with the blog. Because this year, basically I was just trying to get this system up and running. I wanted to have a post every week, I wanted to have people other than me writing them, and essentially have this process that is kind of mechanical, and spits out content for our blog. And so I think I've got that working pretty well. Overall it's caused our year-over-year traffic to increase by... I don't know, I think it was 40% to 60% depending on what month you look at it.

Starr:
Yeah, so going forward it's like, okay, now which topics performed really well for us, and how does that correspond with the people who are actually signing up? I don't know, I asked Ben Findley to run a report of how much traffic each blog post got, and it's a little bit... I don't know, I'm a little bit torn, because the most traffic that any of our blog posts got was an article about Go, and I shared this other report with y'all earlier, where basically Go users account for like no growth. We don't have a lot of Go users, and so I don't know if... Is this an opportunity for us to target Go users, or is this just a red herring? And is Go even amenable to the Honeybadger way of doing errors, or are people using Go more likely to want an APM type solution?

Ben:
It's a good thing we have you here to figure all that out for us, Starr. These are the hard problems to solve.

Starr:
The hard problems, yes.

Josh:
One thing to keep in mind is that some Go users do use Ruby. A lot of Go users are using multiple languages, I think, too. Or a lot of developers in other ecosystems will use Go as a utility, I think, in some cases. It may be like a gateway. It's not like they're going to sign up for Go necessarily, but maybe go brings them to the blog.

Starr:
Yeah, that's true. I don't know, I think it's a matter of percentages, right? Because all users aren't Go users. Is it 5%? So then you multiply that traffic by 5%, and is that greater or less than just our straight Ruby articles where 100% of those readers are Ruby users. One thing that I'm intrigued by going forward is the second... If you ignore JavaScript, which I do if I can, our second biggest language is PHP, and we haven't published any PHP content on our blog. So I'm curious, if we're able to do more PHP, if that might be an easy source of people who could be customers who we are not targeting.

Josh:
Yeah, that would definitely be worth trying. Trying some experiments around...

Starr:
As we define-

Josh:
We've done some advertising in PHP land, which is probably some of the users that we have.

Starr:
Yeah, I'm sure it accounts for it, yeah. I'm pretty sure that PHP, the reason it's our second biggest language is simply because that's the other language that we've put a sustained marketing push behind. And even though that marking push isn't really there anymore, it was sort of a one time thing. It has continued to pay off.

Ben:
And we still are-

Josh:
We do a little.

Ben:
Yeah, we do a little. We still engage with it, like we did Laracon EU sponsorship for a week. So that's coming up I guess. So yeah, here and there, but definitely not the concerted effort that we did in that one quarter where we really pushed it.

Starr:
Yeah, so if your listening to this, if you're a PHP developer who wants to write a blog post and get paid a substantial amount of money for is, go to honeybadger.io/blog, and look for the, "Write for us," link, and it will have all the instructions. That page doesn't really mention PHP, but it will soon.

Ben:
So speaking of spending money on authors, which I think has been fantastic. But it made me think, have we looked at our cost to acquire a customer? Have we looked at all of our expenses for blog, and ads, and podcast, and et cetera, then divided that by the number of new customers that came in this year, and see what that number is? I haven't done it.

Starr:
I haven't done it either.

Ben:
We should do that.

Starr:
Okay, we'll do it live, we can-

Ben:
We'll do it right now.

Josh:
We'll do it right now.

Starr:
Our readers get to see the fascinating process of creating spreadsheets.

Ben:
But no, I don't know why I haven't thought of doing this before. But we should really do that, because we have a set budget, right? We've determined a blog budget, we determined an overall marketing budget, and we should say, "Hey, are we getting the ROI? Are we getting some benefit out of all this money we're spending?"

Starr:
Yeah. It's probably because I never got an MBA or something, but occasionally I will stumble across something, and I'll just be like, "Why have I not been doing this for the past 10 years?" For example, I did a deep dive while we were mostly gone on the podcast into our conversion rate, and our conversion rate has always been... If you just look at our global conversion rate, it's always been a little bit suspiciously low. If you believe it, it's like, okay, we've got just tons of people just signing up and then immediately really not doing anything. And so I was just like, "Okay, what happens if we do conversion rate by country?" And then suddenly the fog clears and everything makes sense.

Starr:
And it turns out that through this... And there's a lot more steps involved, but basically figuring out our conversion rate is significantly skewed by people who are pen testers, people who are probably hackers, people signing up for an account trying to enter in a quick SQL injection into some form, and then ditching. And so if you look at conversion... And most of those people are coming to us, not all, but most of them are coming to us from South East Asia. So we have wonderful customers in South East Asia, and I'm not meaning to denigrate anyone from there. I'm just saying that if we exclude those numbers from out conversion rate, it's like, okay, suddenly things make a little bit more sense in terms of our effort. And it turns out that we actually have a pretty good conversion rate, especially among Rubyists. Yeah, essentially, if you're a Rubyist, and you sign up for a Honeybadger trial, there's like a 50% chance that you're going to become a paid customer, which is pretty awesome, I think. So good work everyone.

Ben:
Totally. Yeah, that was an awesome analysis that you did.

Starr:
Thank you.

Ben:
And that makes me think that when we do that customer acquisition cost math, we should cut out the numbers of people that are showing up from just doing pen testing and going away after a day.

Starr:
Yeah, so it's always weird, I did this deep dive into the spreadsheets, and I'll sort of continue that a little bit in this blog end of the year review. But now it's sort of a matter of, okay, now what do I actually do based on this knowledge? It's always a little bit harder. There's some things that seem to be clear, but I don't know. I guess it's just a process of getting the train moving, right? It takes a little time to get up to speed.

Ben:
Yeah, so I think one of the questions that came out of that, what do we do with that information, is, okay, maybe we should double down on talking to Ruby folk. Every Ruby podcast should have a Honeybadger ad embedded in it, right? Because we know that they convert really well. Or, is the better answer to... Okay, well we need to juice the numbers on our other languages, so maybe we need to double down on everything PHP so we can get them to a higher number. So-

Josh:
Or both.

Ben:
Or both, yeah.

Josh:
Or all.

Ben:
Yeah, so even with good data, you still have to go with, okay, now figure that out. That's what I love about running a business, it's like, oh, who knows? No one can give you that answer until you try some stuff, and spend some money and time, and do some experiments.

Josh:
Well if we got that number of what is costs to acquire a customer, which yeah, we should do now, that makes it easy to spend money.

Ben:
So you just gave me a thought, if have to cost to acquire a Ruby customer, versus the cost to acquire a PHP customer, then we know how much money to spend on a Ruby ad versus a PHP ad.

Starr:
Yeah, totally.

Ben:
Segmenting for the win.

Josh:
That's always been the hard thing when you're talking about specific marketing efforts, that's been always the hard thing for us, is figuring what that number is. We've been chasing that number for our entire existence.

Starr:
Well here's a good goal for me, is to get... Let's grow Honeybadger big enough where I can just do spreadsheets and data analysis full time, because I just love it. I don't know why, it just makes me happy.

Ben:
Yeah, totally. I'm down with that. It's a good goal.

Starr:
Yeah, I'll just tell everybody else what to do. Or not even that, because I don't want the responsibility. I'll just be like, "If you do this, you have a 50% chance of success."

Josh:
So you're saying you want to start a lucrative live streaming career where you live stream yourself working on spreadsheets?

Starr:
No, I'm just saying I just want to be Honeybadger's in-house business consultant.

Ben:
I was about to say, it sounds like you want to become a McKinsey consultant. Like, "I've poured over all the data, and here's what you should do. Good luck with that." That is what they do, right?

Starr:
Yeah, when I do that for us I don't feel like a terrible person, I don't feel like I'm making the world a worse place.

Ben:
Well, I think overall 2020 was a good year. Obviously it was a really bad year, but it was also a good year. We had... Like Josh said, we got a lot of good things done, and we didn't die, we didn't go out of business.

Josh:
We learned a lot about ourselves, I would say.

Ben:
Did we?

Josh:
I think just as a company, I feel like I learned a lot about myself in 2020, and about the business. Before 2020 I didn't know how our business would respond to a crisis of that magnitude, and now I do. Every crisis is different, obviously the next one could wipe us out, but I don't know, I feel like we weathered a pretty big storm. I don't know, I feel fairly confident about the future still, so it's nice. There have been some lows, but I think it's important to come back to that optimistic stance on the future that's part of... As an entrepreneur that's kind of what keeps you going. So I'm always looking for that.

Ben:
That's awesome.

Starr:
Yeah, I think 2020 has definitely contained a lot of opportunity for personal growth. It's like-

Josh:
Understatement of the year.

Starr:
It's like another growth opportunity.

Josh:
Yay, we're going to grow some more.

Starr:
Yay.

Josh:
Do you think we'll grow some more in 2021?

Starr:
Yeah, probably, probably. Well, I think we did okay given that we were out of practice, and would you all like to wrap it up?

Ben:
Yeah.

Josh:
Okay, sure.

Starr:
All right, well thank you for listening to FounderQuest. Just so you know, when I draw a word out like that, it's not because I'm trying to sound like an announcer, it's because I'm literally trying to figure out what word comes next. That's probably what all radio personalities do it. Anyway, if you'd like to write for us, go to honeybadger.io/blog, we're looking for PHP people. We've got a link to a write for us page on there. And yeah, if you want to give us a review on iTunes, that's great. And if not, that's cool too, we love you anyway, and we hope that y'all are having an okay time as much as possible. Good luck.

Ben:
Happy New Year.

Starr:
Happy New Year.

Josh:
Happy New Year.

Starr:
May God have mercy on your souls. Okay, bye.

Copyright 2021 Honeybadger Industries LLC