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So basically I I'm we were Facebook friends now so we talk a little bit there but I first met you at Hustle Con I think this event that I hosted in 2000 and 19.
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And you're one of the best people we've ever had.
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We've had hundreds of people and I'll I'll tell you why. Two things.
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The first I think you spoke right when So this is Max he started Grammarly we'll do an intro in a second but I think you spoke when you guys had just raised maybe a hundred million dollars at a billion dollar valuation or something like that. Is that right?
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Yeah that was yeah that was 120 and we didn't disclose valuation at the time. Yeah.
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But if I had to get yeah you didn't but I think I'd heard rumors and like I just I'm guessing it was like in that range and it doesn't matter but but basically um I made a comment to you I'm like that's pretty cool right and you you kind of
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replied back you weren't cocky but you were very confident and still humble but you kind of had a grin and I forget exactly what you said but it was something like yeah it's going to get much bigger too and I I loved that like
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a subtle confidence and then at the event what you talked about I don't even remember the title but the idea was basically like you're an engineer but you've done a really good job of like evolving past just engineering and you
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like said this is how like I engineer like good products and this is how I like everything you looked at was from an engineer like about reverse engineering different stuff and I thought that was incredibly fascinating. Do you do you remember what I'm talking
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Do you do you remember what I'm talking about?
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Oh yeah I know I I remember that.
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I actually use that mantra a lot in inside a company as well when we look at different markets and where to go next and it's just a universally good framework that works for many things.
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Yeah, just kind of looking at things narrowly, identifying the sweet spot, and then just going broader from there. is Max Litvin. Litvin.
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He started this company called Grammarly.
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Before Grammarly, you had another company called like Blackboard, I think, right? That was not my company.
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That was a company that bought my company.
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So, my company was My Dropbox, not to be confused with Dropbox.
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It was a plagiarism detection company, and it was bought by Blackboard in 2007.
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Um and then they spent 2 years with Blackboard, kind of a part earnout, part just being being there.
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And that was like a a a compared to Grammarly, a mild success, right?
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Like it was it was financially good, but it wasn't like this huge huge multi-billion dollar company. Oh, yeah.
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It was that was just a start.
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It could have grown big, but education is was at that point a relatively difficult market to to be in, and wasn't as big of a market.
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Plus, our product was fairly narrow.
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It was just doing one thing for one group of people.
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So, we kind of saw that it can grow to this point, but further it's going to be very slow and very difficult, so that's why we decided to sell.
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Plus, we had bigger ideas.
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And you started Grammarly, and at this point, can you reveal can you reveal how big it is?
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Because I like it's shockingly large. Yeah.
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So, we raised at 13 billion valuation, and we disclosed that valuation.
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I still think it's a conservative it's conservative one. Why?
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Because Grammarly is a very non-standard company and very non-standard product.
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Uh it's easy to see it for less than it is.
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And and that that's kind of reflected often in in in perceptions of of everyone of investors of sometimes even potential team members.
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We have to explain why it's big and you know, but that also helps with less competition.
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Well, and like and by the way, you guys bootstrapped it for a long time.
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So like you and your co-founder like it's not like you own like 4% of this company.
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You guys probably you own like a very substantial amount.
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So like actually so you're on paper you're you're probably a multi-billionaire at this point.
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Uh it depends on whom you believe.
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There is some information that's not fully accurate.
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But yeah, we we we managed to keep significant portion of the company with the founders and employees.
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Employees own actually quite a lot.
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Did um when I heard about Grammarly, the reason why I wanted you to come on to the podcast and at Hustle Con is because I think my reaction is the same reaction most people in business had which is like A, this is just a Chrome plugin.
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B, this is just spell check.
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Like there's no way that either of those things are interesting.
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And then I learned about it and I was like, oh, this is like way bigger than it just looks like that. It's way more than that.
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Did most people or like there's were most people dismissive of like it just being a Chrome plugin?
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Some people are dismissive.
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Quite a lot and I wouldn't say dismissive it's not like completely all this is nothing, but underestimate the impact and importance of it.
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And that's that's an interesting conversation always always very similar because they kind of think, oh, this is a good product.
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This is a cool product, but not for me because well, I know what I'm doing.
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And then they try it and it helps.
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It helps in the ways and especially when you measure results.
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Cuz you know, when you don't measure things and and just, you know, typing away, it saves you from an embarrassment or helps you phrase something more clearly.
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Kind of yeah, that's cool, but what's the impact of that? And Show me the money.
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But when it's done on the business scale and it's measured and it's kind of assessed, you can see like percentages, improvements in in different metrics, productivity, satisfaction, so on. And that adds up.
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That adds up pretty quick.
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it at the Hustle, so I I had it for the whole company.
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Um I don't remember what it what what it cost, but I remember seeing the bill every month, hundreds of dollars a month that we and everyone loved it and I love it. I I still use it.
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So like I totally I totally buy it.
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I I totally Once I started using it, I was like, oh my god, I get it.
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But one thing that I've always been fascinated with is is just plugins as a business.
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Um particularly two types of plugins, WordPress plugins.
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Um there's a bunch of guys that have like some substantially size substantial size businesses selling WordPress plugins, you know, like 25, 50 million dollars a year.
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And then Chrome plugins, which do you I don't know if you like describe yourself as a Chrome plugin as a business.
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I I don't think you are, but like it's definitely like the one of the main ways in which most people interact with you, right? Uh for now, yes.
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Uh we just recently switched over to our flagship product being operating system level integration.
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So it works similarly to Chrome plugin, except it integrates with all the apps, not just web apps.
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Uh so that's that was a big switch over that happened in December.
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So just about a month ago.
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Um so that's uh it expands the surface area for Grammarly.
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Now it's in Microsoft PowerPoint and you know Oracle applications and wherever wherever you want basically.
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Did you why did you hire a CEO and when did you do that?
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It's kind of jumping topics but yeah we we brought in a CEO I think in 2011 and one reason one big reason for that was that both Alex Macafee and I we have a philosophy that everybody should be doing should be in their zone of genius doing what they like and what what they're good at and nobody no one of us was really experienced or or even that passionate about scaling organizations.
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And that's what we were kind of the biggest thing we were looking for from from CEO.
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Teaching us and and doing that basically scaling the company because we realized that to do what we need to do we need a lot of people we need a big company.
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It's kind of a number of people and and size is not a kind of a desired outcome in itself it is a necessity because the goals are so big that you can't do it with 20 people or 30.
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employees did you have when you hired Brad? I think 20 something.
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Oh wow nothing I mean small.
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Small yeah yeah we were fairly small.
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We were we were making good revenue and being profitable at the time already but the company was still very small and that's that's kind of a that that realization we need to the opportunity is big and we need to scale that pushed us to look for kind of external expertise.
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How did you because at that point you I guess you didn't raise money so you and your partner like it was like your business it was your company and like your money, how did you how did you not micromanage Brad?
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Um, because I did the same thing, and not micromanaging is tough, because you're like, "Oh my god, if you make a mistake, you're going to lose money, and that's like my money."
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And so, it's like really stressful to like let someone fail sometimes and learn.
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Were you micromanaging, or were you pretty emotionally healthy about it?
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I like to think we were emotionally healthy.
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Uh, maybe Brad would disagree, I don't know.
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I wish he I actually will ask him.
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But, um, I think part of it was out of necessity.
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There was just so much to do that if you micromanage, you get stuck.
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You don't you don't make progress.
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So, there was just no time or resources or energy to micromanage anybody.
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Uh, we had to divide and conquer to to actually keep making progress.
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Uh, cuz it's a it's a lot of work.
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So, just just from the volume of things to do, everybody had to do their own thing.
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So, that that happened naturally.
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And part of it is is a philosophy that again, Alex and I share that.
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Basically, if you bring in smart people on board, like not listening to them or not letting them think independently is a waste.
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Basically, there is no point in bringing smart people on board.
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Uh, so that's uh that's that made it easy to kind of uh give freedom and give space to to Brad and and other um leadership team members of Mention.
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What were your girl goals early on?
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Like, were when you started the business, were like, "Man, I think this can make $10 million a year and provide a good lifestyle."
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Or, like I think this could Or was it like, "I think this could be like a multi-billion dollar thing."
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Like, what were your girl goals early on?
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Um, I think we decided that it could be a multi-billion dollar business during our conversations with Brad, partially.
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Uh, so kind of Alex and I, we we we hoped that it could be, but then once we started talking with Brad about valuation, plans, and all that um, when he was thinking about joining.
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Then it became pretty clear that yes, there is a multi-billion dollar market out there.
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Are we going to capture it or not?
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To be to be determined, but at that point but there is definitely an opportunity.
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So, the size of the opportunity became clear fairly early but past there that that took years to develop.
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What was the vision that made or what what did you see that made you feel that it could be a multi-billion dollar opportunity and what was the vision?
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And were there any were there any numbers that you saw early on that would say like, "Oh my gosh, there's something here."
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Yeah, so I think the breakthrough moment was when we saw that it is possible to help not just professional writers, people who write for a living every day, but also help casual writers or people who write as part of their job but or part of their life but not like a key part.
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So, writing is not their like main product.
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They're no no like novelists or or researchers who are published and so on.
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So, when we saw that it's possible to make a product that's useful for everybody else, then it clicked. And very simple formula.
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If you look at amount of time we spend communicating and creating knowledge as a humanity, as all people in the world, it is a huge percentage of our time and it's increasing because we spend less time doing things with our hands.
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Manufacturing is being automated.
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It's not like we were doing it manually anymore as much.
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So, if you take this time that we spend communicating and creating knowledge and make it even 1% more effective, the impact is in trillions, not not even billions.
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So, can we do something that makes communication 1% more effective on average for everybody?
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That doesn't sound impossible.
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That sounds like something's doable. Uh that's doable.
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So, so we decided I had that aim same insight except I did it in such a horrible worst way.
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So, basically um I learned how to be a copywriter.
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So, like I read books on copywriting and like on persuasive writing.
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And my theory was like, "Oh my gosh, like with texting or like online dating."
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I I was single at the time and and 21.
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So, it was all about like dating.
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I'm like, "Oh man, if I were learn how to write better in my messages to girls who I match with, like my life is going to be better."
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And then I was like, "Wait a minute, if I learn how to write better, I could sell more stuff.
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If I learn how to write better, I can make people feel emotions about like this cause that I want them I'm like, just writing better like it changes it makes it life more practical, but also it it uh makes you think better.
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So, like if you can if you have an idea for something and you're forced to write it out, you'll see all the holes in the idea and you'll and you'll force yourself to like lay it out.
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And so, I was like, "Oh, I'll teach people how to write better."
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And so, I created a course on how to write better.
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Of course, like obviously creating a software product was out of my league, but like that was clearly the the better move to do.
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But, the same insight was like everything that we do is via a text, whether it's a text message or an email or a website.
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And even if it's via like the spoken word, I have to write that anyway.
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So, like writing is like the the most important thing that you can master.
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I just wish I would have approached it in a software way as opposed to just selling a $300 course.
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Yeah, software is more scalable. That's that's true.
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And uh and actually what what what what what you said about writing, uh it also applies to speech.
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Uh we when we do user research, we noticed that um people who use Grammarly repeatedly um adopt patterns of communication more effective patterns of communication translated to non-written communication as well.
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So, for example, if Grammarly keeps suggesting that you don't use kind of a wordy or vague or weak sentence structures, you stop or reduce use of them in speech as well.
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So, I So, kind of good habits rub off and then translate to other modes of communication. So, here's my opinion.
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So, have you ever heard of copywork? No.
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So, in like the um 1700s, 1800s, and up until like 1910, one of the ways in America that we would teach children how to write well is the same way that we would teach them how to play an instrument.
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So, if I wanted to teach you how to play the piano, I'm not going to say like, go ahead like write go write a piano song.
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I would say, well, let's play Jingle Bells, let's learn how to play Happy Birthday.
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Then after that, we can move to like some more pop songs that you really like.
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And then you do that for like 2 years, and you like see patterns, and you like understand you just copy other people's music, and in doing that you see patterns, and then eventually you're like, oh, I know the rules to the game now.
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Now, I can decide to follow them, to break them, but I can make my own.
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And it's the same thing with writing.
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Um, but we don't do that.
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And so, what that means is I think one of the easiest ways to learn is you find great writing that you really like, and you just literally copy it by hand.
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And in doing that you like see the patterns, and that's called copywork.
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It's not a very popular way to learn how to write now, but in my opinion it's one of the most powerful.
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I would say Grammarly in a sense it's doing that because in real time you're learning, but it's far better than just saying like go and write like just like spend a lot of time writing your own stuff.
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I think copying other people is far better.
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Um, anyway, it's something I've been playing with.
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I'm sure I'm I'm not a lot of people have heard of copywork.
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I thought maybe you would have, but uh it's like not very well known.
17:18
No, I haven't heard about that, but I've seen it done in many many fields.
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Like at one point I was passionate about photography and same there.
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You just basically try different try to basically copy different photographs and recreate them and and this way you learn the language of that art.
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So so yeah, that applies to many many areas.
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Were you how technical were you and your co-founder?
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Were you technical enough to build the first handful of iterations?
17:49
Um, so I was very technical.
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So for example, the previous plagiarism detection company, I wrote the core the core algorithm and and most of the code originally.
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Most of the kind of back-end code, not the front-end.
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But when we were working on Grammarly, I don't think I did any production code.
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I coded some of the like experiments, landing pages, payment checkout processes.
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Like some stuff that Stuff Stuff that you don't even need to code anymore today if you didn't want to. Yeah. Yeah, yeah.
18:27
Yeah, so I coded some of that, but I didn't code like like a real production grade stuff.
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Mostly because I'm I'm not a formally a software engineer.
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I'm a kind of a self-trained coder, but kind of building a real complex software is not my thing.
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Plus I had to I had to manage the business full time.
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So when we started out, I was responsible for finance, marketing, uh like pretty much like lots of lots of things.
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Like basically everybody has to wear a lot of hats in a small company.
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So the running of the business occupied pretty much my whole time.
19:05
So was no time for for So you just hired you did you guys just self-fund it and hire a couple people to help build the first version?
19:14
Uh we hired quite a num quite a significant number of people.
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Uh we also had a technical co-founder on board.
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Um demo leader uh who helped to build out the technical team.
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Uh so he was responsible for um for the technical side initially.
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Uh but yeah, because of our previous exit we had um some savings that we could put into Grammarly and some substantial savings we could put into Grammarly.
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So basically we were both founders and the first investors.
19:46
How much did you spend to get the to to make it work until like it was a sellable product? Uh I don't remember.
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But it was quite a lot of money.
19:56
It was like or 10 million? 500,000? Do you remember?
20:00
Uh I think it was close to a million.
20:05
Um but it was a product that worked only for very small audience with a very small use case.
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And it was not real time.
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So basically what happened was you write a book a chapter of a book cuz it couldn't check the whole book at at once.
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Uh or you write a research paper.
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You submit it to uh the initial like the old Grammarly.
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Uh and then you go make a cup of coffee and then you drink the cup of coffee and then you wait a little bit more and then it spits out the result.
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Uh and the result was probably half of it was real issues and half of it was false positives.
20:44
But at the time the audience the the target market was fine with that because if you spend like two months writing a book like what's extra half an hour to review all the potential issues, right?
20:57
Even if they're not real.
20:59
But that won't fly with with business writers for example.
21:03
If you're writing a business email that you need to send in 20 seconds, you're not going to deal with false positives.
21:08
And did that version get you to profitability? Yeah.
21:13
No And what did you charge for it? $100 a year?
21:16
Uh we charged, I think, $90 a year, something like that. Uh yeah.
21:24
Yeah, 100 Yeah, I think $95 a year.
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How did the people hear about it? The first users?
21:31
Uh so, that was interesting cuz we launched two parallel streams.
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One to consumers and one to uh businesses, uh educational institutions, publishers, basic companies, consulting companies.
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And um the consumer channel took off.
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Like, it grew exponentially from basically week one.
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Uh and enterprise or B2B, um it took a longer to build.
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So, once we kind of pushed both of them in parallel for about half a year, uh we saw that, well, kind of makes sense to focus on consumer for now because it's just growing like wildfire.
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Uh but B2B requires much more pushing, much more hiring, more people-intensive cuz you need sales team and all that.
22:23
So, we kind of decided to slow roll it a little bit um and focus on consumer for first few years.
22:34
And did you use it to paid marketing or organic? Uh we did everything.
22:40
Um we we tried all the channels available to us and obviously different channels have different benefits.
22:47
Um at the time, social was also easier to to get free promotion from.
22:54
Uh right now, obviously, kind of Facebook and others just want to capture all the value they create.
22:58
Uh but back then, uh it was easy to get easier to get stuff viral on social and and just get like free promotion from that.
23:08
Um, SEO was easier as well.
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Um, so many things were just, uh, like many channels were, uh, quite easier to do.
23:16
Uh, but we relied on paid, uh, early on quite a bit, uh, because it's, uh, it's a very quick feedback loop.
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Uh, you design an ad, you send it, uh, or kind of put it in a system and then you get back results like within hours.
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And it tells you if the message resonates, if there is a market for that, if you're finding that market correctly.
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You know that within like hours.
23:42
Uh, it's a in in more traditional world, it's a weeks of marketing.
23:44
Hundreds of thousands of dollars. Yeah.
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So, that's, uh, that was, uh, that was kind of why we were so, uh, bullish on paid from early on even though it cost a lot of money.
23:56
What companies are you guys trying to buy companies? Um, not specifically.
24:02
I mean, we're open to that, uh, but we're not like hunting to buy companies.
24:08
Is there a problem that you need to be solved and you saw that this other company was solving that problem that you'd buy it?
24:16
So, like, let me give you an example.
24:17
The, uh, the founder of Jet, you know, jet. com.
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They sold to Walmart for some billions of dollars and he's like, "Man, if Walmart, if we could figure out a way how to reduce returns by helping people pick the right sizes, we would buy that company for a lot of money."
24:34
Is there anything inside of Grammarly where like, "Man, we haven't figured out blank yet, but if someone did figure out blank, that's a cool company we would buy.
24:42
That's a cool problem solved that we would buy."
24:47
Uh, yeah, there there are many things.
24:50
Um, like things around, um, doing more on device.
24:55
Uh, like doing more and more processing on device.
24:57
I think that that that would be very interesting to us because um it it it enables better user experience, lower lag, potentially higher performance.
25:11
It also helps alleviate some potential privacy concerns.
25:15
So, kind of a no-brainer to do more stuff on device.
25:19
And it's cheaper for for for us to Sorry, what what does that mean?
25:22
You mean like instead of you paying for all this cloud space for everything for the for Yeah, calculating the suggestions on device.
25:32
So, basically, whenever we say, "Oh, this needs to be shorter."
25:37
Or we rephrase it, like that making that determination on your phone or on your laptop rather than sending it to cloud and and having our servers crunch the numbers.
25:47
So, that's that's kind of a that that that has number of benefits for for both us Actually, I I don't know what those costs are.
25:56
So, how much does it cost to like what percentage of your revenue do you spend on or maybe like how does the payroll compare the payroll cost compared to like your hosting costs?
26:08
I I would say it's comparable.
26:08
Hosting costs are like even though we don't host much of the data.
26:13
Like we're not like Dropbox where we store files.
26:17
But the processing the processing is quite expensive, especially if you consider that we have tens of millions of free users who are not paying us anything.
26:24
Uh, and we're not we don't monetize them in any way at all cuz we don't we don't sell user data. We don't show ads. We don't do any of that.
26:34
So, basically, all the free users are not monetized until they subscribe.
26:39
So, that that makes it that makes us be conscious of processing costs, especially for regions where not many people can upgrade to premium, like developing countries.
26:50
How many employees do you have?
26:54
Um I don't recall exactly, but I I would say somewhere around 800.
26:58
Damn, so then you're paying a ton for those that hosting. Uh, yeah.
27:00
I I I would I would say it could be less than pure white.
27:06
I don't remember exactly.
27:08
Uh, but yeah, it is significant amount.
27:09
I mean, that many users supporting that many users and providing a reliable service, it it does cost money. Uh, it's mostly Amazon. crazy, man?
27:19
Like it just runs the internet. It's crazy. Well, yeah.
27:21
We evaluate from time to time bringing some things in house.
27:28
Um, and actually some things we do have in house, not not necessarily like the the hosting infrastructure, but like some train model training and all that stuff we do in house.
27:39
Um, but uh, uh, so we will look into that.
27:43
Uh, so it's not like we are just Amazon and forget it.
27:45
Uh, but it is an effective way to scale business. It is an effective run.
27:50
Yeah, it's just like crazy that it's crazy that it always freaks me out a little bit that like uh, we use Cloudflare and I remember one time Cloudflare went out and like our website was dead and so was like a quarter of the internet. Yeah.
28:07
Yeah, it's uh, it is um, this concentration, it is kind of scary. Um, yeah.
28:16
It freaks me out a little bit.
28:18
Yeah, it it has its benefits, but it is uh, yeah, a lot of places have a single point of failure for significant portions of our uh, infrastructure.
28:28
Are you uh, and we'll wrap up here in a second, but um I uh, I asked you about Hemingway earlier.
28:35
Do you do you view them as competitors at all? Not really, no.
28:40
They they they do something that's similar and something that's basically part of what we do and number of people use both products simultaneously.
28:49
So, we don't view them as a competitor because they don't take business from us. So, yeah.
28:56
So, it's not like Who do you view as a competitor?
29:00
Uh who do we use a competitor?
29:02
Well, the biggest one is complacency.
29:04
Just people not realizing that they can benefit from this.
29:06
I think that that's the biggest thing.
29:08
That by far bigger than any any other competitor.
29:12
Um but other than that, once you get a certain size, everybody becomes a potential competitor.
29:21
Uh cuz you know, when you look at big tech companies, they all compete in some ways and all do some things that are similar or the same.
29:27
So, that's that's kind of the mindset that basically at any point anybody can become a competitor.
29:33
Yeah, but are there any I've never seen any like upstarts or any small companies try to compete with you guys? Is there Is there many?
29:41
Uh there's some uh but most are focusing on either a niche, like a Grammarly for a specific market.
29:53
And uh I think that's that's a good way to start.
29:55
And obviously, we're watching them and and seeing what they're doing right, what they're doing wrong, and so on.
30:02
Um There There There's some more products.
30:06
Like Microsoft I think has some more product, but again, it it only does part of what we do.
30:11
Uh so, it doesn't take away much business from us if any. Um so, so yeah.
30:15
So, I wouldn't I wouldn't say that there are any kind of direct competitors at this point.
30:21
Um and um I'm not too worried about competition, frankly, because it's just such a new field uh that most of the market is just untouched by anybody. Cool.
30:31
Well, thanks for coming on.
30:31
I'm going to uh we're going to wrap up now and uh I'm going to let you know when this is live.
30:37
It should be live in like a week, I think.
30:38
But I appreciate you coming on. It means a lot. Uh great. Thank you.
30:41
Thank you so much for having me.