Jan 2020: The start
PostHog was founded by James and Tim on January 23rd, 2020.
We started working together on a startup in August 2019 with the first idea being to help engineers manage technical debt. It didn't work out, but we realized the power of treating growth as an engineering problem. We also knew that many engineers struggle to understand their impact on their users.
There are plenty of product analytics tools out there, but all the alternatives are SaaS-based. While they are very powerful, they can be frustrating for developers. From our perspective, these tools can be problematic because:
- We didn't want to send all our user data to 3rd parties.
- We wanted full underlying data access.
- They don't give you choice and control over pricing.
Feb 2020: Launch
We got into Y Combinator's W20 batch, and just a couple of weeks after starting realized that we needed to build PostHog.
We launched on Hacker News with our MVP, just 4 weeks after we started writing code.
The response was overwhelmingly positive. We had over 300 deployments in a couple of days. Two weeks later, we'd gone past 1,500 stars on GitHub.
Since then, we've realized that the same reasons that PostHog was appealing to us as individual developers are the reasons why many enterprise customers also find the software is very appealing. We got a lot of inbound demand, and realized we weren't just onto a cool side project, we were onto what could be a huge company.
Apr 2020: $3M Seed round
After we finished Y Combinator, we raised a $3.025M seed round. This was from Y Combinator's Continuity Fund, 1984 Ventures. You can learn more about how we raised the money.
As we started raising, we started hiring. We brought on board Marius, Eric and James G.
May 2020: First 1,000 users
We kept shipping, people kept coming!
Oct 2020: Billions of events supported
This was a major update - PostHog started providing ClickHouse support. Whilst we launched based on PostgreSQL, as it was the fastest option, this enabled us to scale to billions of events.
Nov 2020: Building a platform
We realized that our users, whether they're startups, scale ups or enterprises, have simple needs across a broad range of use cases in understanding user behavior.
PostHog now supports product analytics, feature flags, session recording and apps.
Dec 2020: $9M Series A
We kept growing organically and took the opportunity to raise a $9M Series A, topping our funding up to $12M led by GV (formerly Google Ventures).
Our focus remains firmly product, engineering and design oriented, so we're increasing our team in those areas.
We've now people in 10 countries around the world, and still feel like it's day one.
Everyone takes a mandatory two weeks off over Christmas to relax.
Jun 2021: $15M Series B
We raised a $15M Series B a little ahead of schedule, led by existing investors Y Combinator.
We're now focused on achieving strong product/market fit with our target segment in 2021.
Our team has now grown to 25 people in 10 countries.
Sep 2021: Product Market fit achieved for PostHog Scale
We now have product market fit for our open source product and PostHog Scale.
Our revenue has quickly risen as a result, now we need to optimize it.
We're 30 people in 12 countries.
Jan 2022: Sales comes from our team, not our founders
We've now got 2 Customer Success people dealing with all (inbound) requests. We hired two engineers since most questions customers have are quite technical.
Dec 2022: 6x revenue growth
We had a fantastic year. While the tech market crashed, we grew 6x and reached $MM in revenue, with a sub-2 month CAC payback period. We're now aiming to hit $10M ARR as our next goal, with a gross margin of 70% - both of which should mean we've got all the metrics needed for the next fundraise.
We optimized revenue growth, through implementing a product-led CRM for our customer success team, adding to our marketing team size, and creating a 2-person growth engineering team. These teams all make a big difference!
We deepened all of our product areas significantly - we're frequently winning as a standalone session recording, feature flagging or experimentation tool. Session recording usage started to match product analytics usage.
Our infra is far more stable and scalable - much more of it runs as code. We can now offer EU- or US-based hosting for our customers' data.
We're 38 people in lots of countries. We're not adding lots of headcount over the next 12 months though - we're staying lean and letting revenue continue to rise rapidly.
Feb 2023: focus on mass adoption
We're doing very well at monetizing high-growth startups due to our optimization work, averaging over 15% MoM for the last 6 months.
We've decided to double down on mass adoption of the platform in high potential startups instead of focusing on enterprise. Simply, this will better help us increase the number of successful products in the world. As a result, we've removed support for paid self-hosted deployment and are doubling down on our open source and cloud projects. We have released a PostHog free tier.
January 2024: Well, that was good
That was quite the year.
We wound up quadrupling our revenue, but only increasing our net headcount by three people in 2023. Last year, we validated that we could get multiple products to product-market fit.
April 2024: We're now the default for startups
54% of the first YCombinator batch this year adopted PostHog.
Tim and James turned up to talk at batch events and we were surprised at the number of groupies wearing PostHog merch – our merch is really cool now, we've gone way beyond the logo-on-a-black-t-shirt standard.
As far as we can tell, we're in the top three products used by YC companies.
July 2024: Price cuts ftw
We cut pricing by up to 80% for our two most popular products, including for our existing customer base. This was popular with users and led to faster growth.
We've started doing growth reviews for almost every product we have. We run through each product's metrics (revenue/usage/support/performance) and feedback / reasons for any churn that has happened, so we can truly treat each small team like a startup. This session is designed so the engineering team leads may choose to reprioritize work, or not.
October 2024: 100,000 customers, and speeding up – more products and more people
We hit 100,000 customers either paying or free, and over a quarter of a million users. We've started hiring a lot faster as growth has continued this year. We're now 65 ish people with ~9 products.
We've added some people in sales, but it is strictly (i) sales assist, talking to people that have asked to speak to us, and (ii) cross sell to existing customers.
We do not do outbound, so we can remain efficient and either hire more engineers or cut our pricing for our customers so more of them recommend us!
We've hired a sales engineer super early (Mine, she's awesome) and we're really working on the culture in this team proactively.
Strategy-wise, we're just leaning into our basic three principles, which we're seeing more and more evidence are working well:
All the tools in one – We want to go wider still. We think we can provide every piece of SaaS that startups use, starting with those closest to customer data. We want to expand to a customer support product, the marketing and sales stack of tools too.
Get in first – Don't go upmarket. We're closing enterprises regularly, but we're not trying that hard here. We're trying to stay away from complex migrations for users who use many products already.
Be the source of truth – Our own data warehouse is now available and very popular.
Revenue is in the low $10s of millions of ARR. We're very strongly default alive and will struggle to not end up profitable next year. Every time we get close to being profitable, we start speeding up hiring.
Revenue growth is fast enough and we're getting so many unprompted offers for investment (that we aren't taking) that money isn't really a meaningful constraint any more. Whilst we have a great grip on each product's individual performance, our understanding of cross sell is a little weak, so we're working on that now.
Our marketing is getting weirder. It's more and more fun. We've commissioned a puppet, coming in January. Watch this space. Our newsletter, Product for Engineers, now has 20,000 subscribers and it's growing fast.
We're realizing that the more ambitious we are, the easier it gets – customers get excited, investors get excited, employees get excited. We can now see a real path to being a $100bn+ company and changing how software teams work industry-wide.