From running a tech media outlet in New Zealand to building for creators in America
My chat with Sid Yadav, Cofounder & CEO of Circle
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Last year, there was an inescapable amount of enthusiasm, chatter, hype, and funding for creator economy startups. The dust seems to be settling now. Most big VCs have placed their bets, the tourists have moved on to the next hot trend, the social networks are retreating from creator-focused initiatives, and online chatter has faded away. We are arguably in the trough of disillusionment right now. Teams with the strongest conviction have been chugging along in a quieter environment. A popular category has been software for managing and monetizing online communities. One of the prominent players in that category is Circle.
In this conversation, Circle’s CEO Sid and I talked about :
Growing up in New Zealand & a childhood desire to move to the States
Media entrepreneurship during his teens & competing with TechCrunch
Evolution of the creator tools landscape from his time at Teachable
Building in a category that’s going out of fashion
Positioning against the social networks
Bundled product strategy of offering building blocks
Evolution of the product to incorporate synchronous communication
Redesign of Circle & evolution of the architecture
Team design and prioritization
Learnings & challenges around biz model, go-to-market, roadmap
Sar: You grew up in New Zealand and moved to the States a decade ago. What was growing up like for you? What about American culture surprised you the most when you first moved? What would your friends back in New Zealand get most intrigued by when you talk about your life in the States?
Sid: That’s a great question — no one’s ever asked me that. New Zealand has a fairly relaxed lifestyle. Most people work a typical 9-5, so it’s not surprising that an office turns into a ghost town at 5 when people start heading to a bar or their families. I never had a full-time job in NZ, but I remember temping at a design agency during college and being told to go home at 5:15 by the HR person because they had to lock the office. I found this to be super weird and depressing. Most people from NZ I know are nature-oriented, love the outdoors, love BBQs in the backyard, and so on. They like to balance work and leisure, which I now appreciate as a 30-year-old family man.
I never related to this kind of culture as a young person, and I remember having the deepest desire to immigrate to the U.S. as a 14-year-old. As a teenage tech blogger, I had great exposure to the American (or at least Silicon Valley) ethic. I would get home from school and spend 4-6 hours writing about new startups in the 2005-2010 “Web 2.0” area. I followed every Obama speech before he entered the White House and looked up to America as a whole. I was ready to do pretty much anything to immigrate to the States when I turned 18 (I had multiple plans and backup plans — including working an exchange visa job at Disneyland!)
Nothing surprised me too much about America when I immigrated. It was everything I expected and more. Perhaps one thing I was taken aback by was the incredible opportunities I was given by strangers, which were greater than I’d even anticipated. I could email anyone I looked up to in NYC, and there was a chance they’d meet me for a coffee. I don’t think someone like me would have received these opportunities in any other country. I see all the bad press about America these days, which doesn’t match my personal experience. Maybe I just got really lucky and have survivorship bias, but I love what America stands for, and my experience in the country has been nothing short of incredible.
Most Kiwis would probably find it surprising how hard people choose to work in the States and that I still continue to work very hard, even though I’m now more financially independent. I’m probably more balanced now as a father to a 7-year-old, but that American spirit of hard work is still ingrained in me. In the past couple of years, I’ve surprised some of my childhood friends with how little I’ve changed. But I guess I’ve always been an American at heart!
Sar: You are not alone in how you feel about America. I share your sentiments. You mentioned your teenage blogging phase. You had created a tech media outlet competing with the likes of GigaOm, Mashable, and Techcrunch. This was the 2005-2010 era. What are your fondest memories of your time being an editor and writer? That writing muscle must come in handy now running a fully distributed company!
Sid: Nothing compares to 2007 for me. There was so much to write about and so much happening with the iPhone, Facebook, Twitter, AWS, Netflix, GitHub, YCombinator, Google’s G-Suite, and so on. Each has unlocked hundreds of billions in direct revenue and perhaps trillions in second-order opportunities. Even crazier is that we aren’t even at the tail end of these innovations’ S-curves.
My fondest memories of that era involve (virtually) bumping into people early in their careers who then did great things. Since I would write about literally any new startup I found, it was much easier for them to get coverage on my blog than on TechCrunch. They would then use my piece on them to pitch TechCrunch and other more notable blogs on a story. I interviewed the founders of YouTube, Weebly, Box.com, Justin.tv (now Twitch). These were day one launch type embargo pieces when no one was writing about them. I wrote briefly about pretty much every startup in YC’s earlier batches, as well as most startups that launched at TechCrunch40. In hindsight, I remember realizing that entrepreneurs I encountered at the time and who went on to be very successful seemed so ordinary in the early days! They were just like everyone else I was talking to, and their startups were no different at the time from so many others I wrote about, which eventually ended up in the coffers of Web 2.0. As I grew into adulthood, this exposure and seeing ordinary people succeed gave me the confidence to pursue my path as a teenager in New Zealand with working-class parents and no connection to tech.
Here’s something funny: one of my freelance writers became an incredible entrepreneur in his own right. We’re the same age, but I had to put up a persona of a “20-something” online so that people would take me seriously, and I could never tell him my real age when he was writing for me. Years later, we met in NYC, and I had to break it to him that we were the same age! (He’s since invested in Circle, and we’ve since become friends.) Looking back, it’s just so crazy that two teenagers like us were able to catalog this era despite not knowing anyone in the industry, bump into many great entrepreneurs from this time, and years later go on to have meaningfully successful startups of our own. If anyone doesn’t feel like the Silicon Valley-rooted tech culture is meritocratic, I beg to differ, given my experiences.
Your observation about distributed teams is on point. My blog had six freelance writers across three countries, and we communicated only in async. I was a 16-year-old entrepreneur who had to become a much better writer because I had to write and edit thousands of words daily. I also had to manage the writing schedule, do international payroll (with PayPal), act on feedback from readers, run the tech stack of WordPress, and so on. My skills in online collaboration and multi-tasking are deeply rooted in these experiences.
Sar: I’m younger and far less accomplished than you are, but I wish I had started my tech journey sooner so that I could have had a similar perspective and nostalgia around 2005-2012! Switching gears, let’s talk about the ecosystem you are in now. You and your cofounders spent years at Teachable and have been involved with the creator tools landscape for a long time. How would you compare and contrast the creator tools landscape you were in during your time at Teachable versus now with Circle?
Sid: The space has evolved a ton after my time at Teachable! We didn’t even use the “creator” word when Teachable launched to describe our audience, and there was no such category as a “creator economy startup.” We were squarely edtech. Few people paid attention to this space. Circle’s payment stack is built entirely on Stripe, including the community monetization layer. We have a payments team of 4 engineers, and that’s it. On the other hand, we had to literally build our own payouts system at Teachable since Stripe Connect wasn’t as advanced as it is today. And since we were responsible for paying out customers manually every month, we had to hire fraud analysts and build out the finance function meaningfully to handle chargebacks, fraud, and everything else. The fintech side of creator monetization is so much better these days; it’s saved us from so much schlep!
Sar: There were a few months last year when you saw a new creator tool funding announcement multiple times a week! Is the creator economy dying?? From your vantage point, has the environment changed post-pandemic?
Sid: I think it’s helpful to break “the creator economy” into two parts: first, there’s the idea of “creator economy startups” in the minds of VCs and entrepreneurs in tech. Then, there is the actual creator economy, more like the economy of “independent entrepreneurs on the Internet.” The latter is a long-term movement of people passionate about building an audience, engaging that audience, and monetizing this engagement to build a real living.
The former, in my mind, really did feel like a fad in the past couple of years. We benefited from it during fundraising, but I remember not being bothered by it. It’s very hard to build a great company, and it takes years of dedicated work. My co-founders and I would often observe certain “hot” startup launches and see them for what they are: an entrepreneur temporarily capitalizing on a venture fad because it allows them to raise millions of dollars and look cool. I always observed that for those types of folks, it will be the creator economy today, crypto tomorrow, and AI the day after. Rinse and repeat. A lot of these companies weren’t really “real” in the first place, so if their companies fail to get traction or fundraise, it’s no surprise.
To be frank, I’m glad that much of that extraneous energy has died down. It allows the more legitimate players in the space to focus and attract the talent and attention they need without being lumped into a broad category of imposters. Regarding the impact of the pandemic on the actual creator economy, there’s most definitely been an acceleration and then a wind-down. We haven’t seen this in our numbers (at least yet!), but if you read Tobi’s recent post about Shopify’s ecommerce trends and observe similar GMV slow-downs in the bigger creator platforms, it seems to check out at the macro level.
I look at building a startup in this ecosystem as building for a 10-20 year movement, not for a 2-year blip. I’m convinced that the latter definition of the creator economy — independent entrepreneurs on the Internet — is a real change in how the world fundamentally works and one I don’t anticipate turning around. Circle’s purpose is to build the best platform for these entrepreneurs to engage deeply and monetize their audience. While our execution constantly needs re-calibration, I imagine a company like ours (ideally us!) will eventually “win” in the space and unlock an immense amount of value.
Sar: I like that framing. I want to talk about Circle at length but let me cover one last big picture topic. Do you believe the social networks, which I think are best positioned to help people manage and monetize their communities, shit the bed with this opportunity? A common critique of the big social networks is that they ignored the creator tools ecosystem for the longest time. There was a six-month phase when everyone announced new funds and tools to support creators. I have a pro-social network position on that debate because the people we call creators won’t be creators without them in the first place! It is where they find their communities! Also, if they had focused on more tools sooner, we wouldn’t have had opportunities for startups like Circle to emerge! What do you think about where you sit in the ecosystem?
Sid: I totally agree with you that without these broader social networks, creators wouldn’t be creators in the first place. I slightly disagree with your claim that social networks are the best positioned to help people manage and monetize their engagement. To me, social networks serve a purpose that tools like ours can seldom replicate: they have real network effects with a real consumer, exposing creators to meaningful distribution quickly. In this regard, no “creator economy startup” can compete with YouTube, Twitter, TikTok, and others. They’re a foundational layer of the stack and key to audience building. We still push people to build their audience on those products instead of starting with products like Circle.
With the way these social networks are fundamentally architected, they need to own the data on their platform, customer lists, branding, fee structure, and so on by design. While they’ll most certainly unlock direct forms of monetization, they’ll likely leave a lot of opportunity for startups like Circle if you examine their fundamental axioms. Their axioms prevent them from offering creators real ownership and depth regarding monetization opportunities.
Before we even get into technology, let’s start with 2nd or 3rd-order monetization opportunities. Let’s say you’ve built an audience on YouTube and exhausted the growth potential in revenue you can generate with ads. But you’ve built an audience, and they love what you do. So you may now want to engage some of them further with your own community and use the knowledge you’ve gathered to start an exclusive online course, a coaching program, or a membership with premium benefits. What are the chances that YouTube can be the one product to let you do it all? In my mind, it wouldn’t make sense for them to go so deep into these types of opportunities — and even if they could, I’m not sure they’re going to nail the depth needed.
Let’s now look at the tech stack. People often emphasize “payments” a ton — who charges the customer? Who gets the GMV? Something I feel is often overlooked is a deeper question: what’s behind the paywall, and who’s responsible for *that* value as opposed to the transaction alone? An analogy worth consideration would be toll booths and highways. The tollbooth collector may have a place in the ecosystem, but the highway builder provides and controls value up and down the chain. Tying this back to payments, I think that the value *behind* the paywall needs to be meaningful and is connected (in some parts) to the buying experience. For example, online courses have an entire learning experience, including community, self-paced content, resources, a member directory, etc. You can be the payment provider — but are you delivering the value? Over time, if you aren’t the entity delivering the value, you’ll likely be commoditized, given how accessible the payments stack has become to everyone.
Bringing it back to the bigger social networks, I don’t quite look at it as shitting the bed on their part as much as staying focused on what they’re great at — generating distribution and monetizing that directly. It’s really hard to maximize both the surface area of monetization *and* get to own everything. Plenty of opportunities will show up in 2nd and 3rd-order monetization.
Sar: Let’s talk about Circle now. You say you are creating building blocks for people to create and manage online communities. Spending just a minute on your website makes it clear you want to become a one-stop shop for creators. You are not taking an opinionated stance on how communities should function or what their creators should do in a prescribed way. I want to explore a few threads on that approach. Given your product’s breadth and shipping velocity, I’m curious about your decisions regarding the organizational structure and technical architecture.
Sid: Great question. As you point out, I deeply believe in our all-in-one value proposition and in taking a building blocks approach instead of a one-size-fits-most approach. If it doesn’t end up being us, I imagine a product like ours will hit it pretty big in capturing a lot of the opportunity we’re going after.
In terms of our architecture, it’s turned out to be a lot about having a decentralized team structure vs. how “monolithic” the technical stack is. For example, in the early days, most startups grow to engineering teams of as large as 20 before they start thinking about having multiple teams with multiple team leads, roadmaps, goals, etc. We started with that decoupling very early on. Last year, we spun out a team focused on Payments, and one just focused on Live & Events. This year, we’ve spun out teams for Chat, Growth, and, most recently, Courses. Each team has an incredibly strong lead engineer leading efforts end-to-end.
On the technical front, our infrastructure is a traditional monolith with React on top of Ruby on Rails. So long as teams are independent and reviewing each other’s code, this aspect of our stack hasn’t posed too much of a challenge, thankfully. We deploy 5-10 times a day, and anyone in our engineering team can deploy whenever they want. We feature-flag everything and do staged roll-outs. We invest a lot in DevOps and internal tooling. Our engineers have scrapped or rebuilt almost all of the code my co-founder and I wrote in the early days (thank god!).
It’s taken a lot of hard work, but I think our engineers would agree that we’ve avoided crazy amounts of tech debt since we’ve taken on major refactoring efforts as we’ve matured.
Sar: You touched on having lots of independent teams. Walk me through how you broadly think about designing the organization. What do you draw inspiration from?
Sid: It might surprise you that Circle still doesn’t have any PMs today, even with 35+ engineers and an 85-person company. That is intentional and by design. As a former Head of Product, I went pretty deep into this topic before Circle and had certain convictions that differ from how most modern Silicon Valley startups work. There was a time in my career when I read pretty much every book on Product Management. I read a lot of literature from the 80s and 90s about how cultures at Apple, Microsoft, and others came to be and watched a lot of interviews with engineering and product leaders on this topic. (By the way, a quick shout-out to 2-3 hour long interviews on the Computer History Museum channel, which has interviews with some of the all-time engineering greats from the 70s, 80s, and 90s. One of my favorites is the 5 hour Avi Tevanion interview about Apple’s culture after Steve Jobs’ return!)
After looking back at how some of the greatest companies came to be, I concluded that engineering teams at most companies are not structured with the shortest path to incredible innovation. Modern books in product management don’t really mention this part. I believe that really strong engineers — dare I say it, 10x engineers — are highly capable of being team leaders, engineering managers, product managers, and even CEOs. This checks out when I read about early Apple, early PayPal, early Facebook, early Google, and so on. When I was an engineer, I distrusted anyone who wasn’t coding and telling me what to do, especially if they called themselves a “manager.”
So at Circle, we give our tech leads a maximum level of responsibility outside their technical realm as much as they can handle. We’ve been lucky to have incredible tech leads who take this as an opportunity and show up for the job. While my co-founder and I are heavily involved in the product roadmap and making key decisions with these leads, the leads take extreme ownership of their area and execution. It’s my dream to produce next-generation entrepreneurs at Circle, and I see many of our tech leads have the potential to be great entrepreneurs in the future. The multi-faceted multi-tasking demand for their time and skills is no joke.
This decentralized ownership structure allows us to move fast in different areas. For example, our Live & Events lead is an incredible domain expert on WebRTC/HLS technologies and works with a very strong team of 3 engineers who spend their entire days shipping and improving our live product. He does all the hiring, project management, and a lot of communication about the roadmap. We collaborate intensely on the roadmap and what to prioritize, but I’ve never had to get involved in the code-level execution of any of their ideas. You can say this about many of our teams: Core, Payments, Chat, Courses, Growth, iOS, Android, DevOps, QA, etc.
I’d suggest a great book on this topic is Creative Selection, by one of the Apple engineers responsible for the original iPhone keyboard, Ken Kocienda. Going by Ken’s description of how the iPhone was built (without any product managers!), this structure seems similar to the Steve Jobs era of Apple.
Sar: Man, you have touched on so many hot-button twitter topics! The second thread I want to discuss is the product surface area and strategy. You have a master space for a community and sub-spaces for different types of engagement and subsets of community members within that master space. The feature set can broadly be categorized into three buckets: 1) Creation (profiles, member directory, branding, domain, etc.), 2) Engagement (feeds, chats, events, groups, video, courses), 3) Monetization (subscriptions, one-off transactions, trials, upsells, gated access). People can hack together best-in-class point solutions to offer a permutation of most of those things today. Talk about how you think about an integrated offering and the benefits you see of that approach for building the best experience for your customers.
Sid: We have a simple heuristic of building with an 80/20 view of it all: we want to build 20% of the features in each area that deliver 80% of the value, and we want each component to work really well together.
Dharmesh Shah, CTO of Hubspot and one of my favorite investors of ours, has a great video on this topic. Dharmesh points out that with all-in-one products, it’s not about building the “best X feature” but the whole product and how it all works together. That’s the differentiation — that’s the value prop. Our Courses feature doesn’t need to be the best, deepest offering in the space, and it won’t appeal to everyone for that reason. For the people we’re going after, it just needs to work well with our spaces paradigm, paywalls, live events, chat, member profiles, and so on to be extremely useful and enable novel things.
I should point out that while we’ve launched so many of these features and expanded our surface area in a pretty meaningful way, we’re nowhere near where we need to be on the integration level of these building blocks. There’s still so much work to get the 80/20 composition right and make it all work together. It’s really complicated work. That said, my co-founders and I are truly amped about this. We aren’t simply “cloning” other products when we do this work: we’re actually at the cutting edge of it all and figuring out what’s possible beyond the individual building blocks.
Let me give you an example: we’re the only platform that lets you natively charge for access to a course, share event pages to have folks RSVP, host live sessions, have the session automatically recorded and shared, and store all of your self-paced course content in one location. Each one of these features exists independently, and we’ve seen some mind-blowing workflows people have put together. When we see a bunch of repeatable workflows, I often ask myself — “why can’t the entire workflow be automated?” Imagine setting up a sequenced workflow, so you have an event described as an input on one end and the event recording automatically posted into a self-paced course content library on the other end. Entirely automated. Imagine doing a 12-week cohort course and having to attend those live sessions, knowing that the “before” and the “after” tasks have been taken care of for you. Imagine doing this without VAs or any kind of manual work. Imagine not being the one to figure any of this out but instead relying on a “kit” you find somewhere to get you started with templates inside Circle. That’s the opportunity the all-in-one stack unlocks, which few products in our space are tackling, and we hope to nail.
Sar: What I find fascinating here is this notion of depth. You talked about how social networks cannot go deep on creator tools because of the trade-offs they have to make, given their nature. Your product strategy also sets constraints that keep you from going deep on every tool you offer. In some sense, depth comes from the experience of using a holistic toolkit.
The third thread I want to touch on regarding your building blocks strategy is how you measure the success or health of your product internally. Does the choose-your-own-adventure style approach to the product make it harder to create and understand user analytics? You not only have lots of offerings but also serve many creator types with varying levels of importance for your offerings. How do you make quantitative and qualitative assessments at the company, offering, and user levels?
Sid: You’ve touched on perhaps the hardest part of having building blocks + an all-in-one strategy. Every customer is slightly different from another. People have different uses for spaces and expectations of success and vary in terms of where they are in their journey. Just because a community has zero posts doesn’t mean they’re not very active: they could be doing all their communication in chat spaces and using Circle to host their live events and find tremendous value in that!
I’m being very honest; I don’t think we have a great answer to the quantitative measuring part yet, though we’re working on it. I’m by nature “qualitative first.” I like to get a feel for things and greatly value judgment and intuition. Qualitative improvements are much more critical early in a product cycle than quantitative improvements. Quantitative iteration matters a lot once the focus is more on optimization as opposed to figuring out the basics.
Since we’re still in year one of our major offerings, such as live, payments, chat, and courses, we’re still very much in the early qualitative days of figuring out the basics. Simply put: it’s obvious what we have to work on to improve these areas of the product, and there are a lot of common feature requests with each of these. We don’t need to “measure” too much to know that recurring events need to be editable, and many people find it very annoying that they can’t be yet, for example. Or posts need to be schedulable, or that chat spaces need threading and reactions. Because we’re following other products in these surface areas, the roadmap isn’t intensely hard to figure out just yet!
Over the next year or so, I hope to have a better answer to your quantitative question. As we go beyond the table stakes of each feature set and into more complex integrations across features, such as Workflows and Templates, which are all about personas and use cases, I think we’ll need to be a lot more measured in our approach.
Sar: That makes sense. You have an endless list of low-hanging things to build. Have there been any hard lessons on focus and prioritization?
Sid: Yeah, there have been a few. Getting the 80/20 balance right is hard, and timing is more important than anything else. For me, the biggest learning has been to curb the excitement you feel when you get an idea about how an individual feature could be better and to constantly zoom out to examine trade-offs, opportunity costs, and other priorities. Often, you know an idea is very obvious and should be solved at some point. I’m guilty of saying, far too often, that this point needs to be “now.” Our shipping velocity is pretty cool, so anything we say needs to happen now generally does, but it has consequences. When you make enough such mistakes, you see those opportunity costs and trade-offs show up in different areas, and you realize that you could have waited a little longer, timed it with some other change, or used those same resources to work on something else, and so on.
It’s still an area of improvement for us, but we’re getting better at phasing out our obvious ideas into longer-term initiatives and being slightly more mindful about things. We’re learning how to say “no” or “not now” more often as the surface area grows and being OK with a certain amount of flak or pushback on aspects of the product we won’t overly optimize for right now, as obvious as it may seem. It’s still a work in progress!
Sar: What have been the most challenging go-to-market problems? You serve so many different personas. You serve both companies and individuals. What segments are you weakest / strongest in? I imagine it’s one of the biggest challenges in an organization run by engineers!
Sid: You’ve nailed it. Our greatest GTM challenges are structured onboarding and product delivery based on our various personas. Our building blocks paradigm is very flexible, but it sometimes makes it challenging for our Sales team to deliver a demo with the exact features a customer cares about or for our Product and Customer Success teams to onboard the customer in a personalized way.
We’re strongest with a persona we call “the sophisticated creator.” This type of person isn’t just someone starting to build an audience. They’ve figured out who their audience is, they’ve figured out their product lines, and now they need the best place to run it all. They need a platform for their community, payments, courses, etc. They don’t want too many constraints because in their journey to get to this point, they’ve figured out what works for them and would like to keep delivering based on the structure they’ve come up with. Our product is the best for this type of person.
We’re also a great option for brand and startup communities. For example, we dogfood our own product to run a customer community, collect feedback, run beta programs, run weekly office hours, and so on. I love using our product day-to-day like this. Some other notable SaaS companies have started to use our product in a similar vein to ours. It feels like we’re all on the cutting edge of how we run beta programs and collect customer feedback for new product launches from our customers.
The persona we struggle with the most is early and aspiring creators who’ve yet to build any kind of audience, community, or distribution. Often, they’re too early for Circle. We aren’t necessarily going to give them the distribution they need, and they still have to figure out their niche and how to attract an audience engaged in their niche.
Sar: Is it fair you had a strong bias toward asynchronous communication amongst community members in the early days? You are now moving more towards synchronous communication. How does how you design the product change to accommodate the evolution? To what extent was the original bias a way to counter-position against dominant tools like Slack and Discord? Do you believe the original idea was wrong, or are you over-indexed on async and now trying to find a balance? After all, there’s only so much time people can spend in these communal spaces online, and it can get overwhelming as communities grow.
Sid: That’s right. Our early differentiator was that we were entirely async and offered a tight community solution for those looking for an async product, allowing them to control how their spaces were structured. Our earliest customers preferred the slower pace of conversations. They found Slack and Discord were “too fast for them” and unmanageable as communities scaled.
I still believe in the async differentiator for most communities, particularly ones beyond a hundred members. I observed from the feedback that there are certain use cases for real-time chat discussions, even in async communities with smaller groups of people. For example, you could be running a community with five different “chapters” or groups of members, and you want each group to chat with each other in real-time. Or, you could be running a cohort-based course in which you want a lounge-like space for the cohort members to simply chit-chat and get to know each other. We saw communities supplement Circle with Slack, WhatsApp, and Discord for those use cases. Many would ask questions like, “would you ever consider allowing us to chat in the community area?”.
I was initially hesitant about this idea since I felt it might damage our paradigm’s simplicity, so we had a separate area for messaging and focused more on 1-1 DMs and member-created group chats. Over time, we explored this idea and found that there was a way to accomplish this without sacrificing our async-first approach: by offering it as a space type. That worked out great. The early feedback we’re seeing around people combining different space types with chat is quite promising!
Sar: You announced a visual refresh in September. Was the response what you expected? Did you make architectural changes to set Circle up for the next growth stage? Can you talk through a few changes made and the rationale?
Sid: Yeah. This visual refresh (or “Circle 2.0”) was an entire rebuild of the front end of our app in React. There were two reasons to propel us into the rebuild: First, the code had to be refactored to be faster and more reliable and to take advantage of performance techniques like lazy loading the entire app. It just had to be done for us to see the next level of boost in performance. Second, we saw the platform going beyond async to chat and, eventually, courses. We didn’t feel like our existing page architecture lent itself to a great experience for chat or courses. Our design team did what they could to explore the existing layout with these features, but it always felt super awkward.
On the whole, Circle 2.0 has been incredibly well-received. Opting into the experience is still optional, and it’s been bewildering to see more than half of our customers opt-in during the first six weeks. I thought this process would take much longer to get the buy-in from customers and that we’d see the typical flak you tend to see from any major design update. Thankfully, this hasn’t really been the case here.
Something that really helped was the way that we structured the roll-out. We spent a lot of time figuring out the phased approach. For about three months, we ran an intensely private beta with a handful of customers willing to give us extremely direct and critical feedback about all aspects of the update. We had six front-end engineers working closely with ~50 of our customers for three months in the private beta before anyone else could try it. That made the update more robust before most customers could try it.
Sar: To what extent is Circle intentionally trying to see the tech twitter vibe in structured ways for different groups of people? It is not a perfect analogy, but I think it’s relevant.
Sid: Here’s the biggest difference I see between the Twitter vibe and the vibe in our communities. On Twitter, you’re there to simply hang out, make smart, funny, or obscure tweets, and just connect with people. You’re looking for little breaks in your day. On Circle, most communities have a purpose beyond just hanging out. You might be there because you really like a creator and want to learn from them and other community members. You might be there because a particular niche is just your jam, and there’s no other place like it on the internet. You might be there because you’ve paid for a 12-week online course and want to get value out of the experience. This means there tends to be less “social validation” and more learning and exchanging knowledge or feedback. Things feel more serious, for better or for worse. You’re there with strangers but with a somewhat curated or self-selected group of strangers.
Sar: You have three pricing plans broken down by membership thresholds and feature packaging. What have been the most counterintuitive learnings from experimenting with your biz model?
Sid: We follow a similar business model to Shopify, which we were also heavily inspired by at Teachable. Our revenue is primarily SaaS-based, but we also collect fees from payments GMV when you monetize your community on these plans.
Counter-intuitive learning is that customers on higher tiers are less likely to churn and have much greater LTVs / CSAT. They tend to be our best cohorts by far. In the initial few months of Circle, I used to think that low-tier/discounted plans would turn out to be stickier, but that hasn’t been the case for us.
Sar: What ideas or instincts have you had in the first three months of starting the company, proven wrong or ineffective so far? What has gone right? You just had an offsite in August. What was most memorable?
Sid: In terms of instincts, the greatest change to how we initially approached the product vision has been to go from a horizontal strategy (“we’ll plug into your other product!”) to a vertically integrated all-in-one strategy (“we want to unify your stack!”).
We had our eyes on this fork in the road in our first three months, but we never had the bandwidth to go broad — nor the funding! Over time, when we saw customers struggling with integrations with other payment or course platforms, the decision to integrate vertically became super apparent. We saw many opportunities to simplify the stack, reduce costs and complexity, and improve the integration layer between features. While this was much harder to execute, it allowed us to become a deeper and more meaningful part of people’s stack and deliver a greater experience to creators and their members.
What we got right was the timing and the execution of the early product. We were blessed to go from $0 to $1m ARR in 3 months after launching at the end of 2020 and from $1m to $4m ARR in 2021. I hadn’t anticipated such an instant hockey stick — I’d advised our early team members to expect to spend years in the wilderness trying to find product/market fit!
In hindsight, this was likely a combination of good execution and incredible luck with macro timing. The timing and pace allowed us to raise funding rounds at generous valuations of 50-60x ARR and be well capitalized in our execution. Our team continues to grow, and revenue is still accelerating at 2x+ year-over-year. We can hopefully keep our burn capped at reasonable levels to ride out the next 2-3 years of a potentially turbulent macro environment.
Our recent offsite was extremely fun and somewhat emotional to me! We had people flying in from 20+ countries across all the teams for a week in Cascais, Portugal, where one of my co-founders is based. You tend to be very focused daily when you work in a remote international environment. You’re chatting on Slack, hopping on Zoom calls, and mostly talking about work. But when you meet your company in person, it’s a totally different experience to get to know the human beings that work at Circle as people first. You hope to hire the best, most talented people, but this is the part of your journey you can’t plan for. You just get lucky with the people you hire! I remember my co-founders and me just looking around at everyone having a blast on our company boat ride and various dinners and feeling incredibly grateful for the caliber of humans who choose to work at Circle.
Sar: When you talk about Circle these days with external parties (like myself!), what do you confidently say now that you hadn’t imagined you would when Circle was a year old? I ask this question because I think founders start to portray new narratives about their creations innocently as if they were old narratives after a couple of years of building and pitching. I do not think that is bad or nefarious! It’s only natural to fall back on the most recent instincts and beliefs when they get asked questions hoping to get soundbites!
Sid: This is a great point. I may be guilty of this when talking about our all-in-one approach. As I mentioned before, while we certainly talked about this in the early days, we didn’t start very committed to Circle being “the all-in-one platform.” We had a narrow focus and kept iterating on the async aspect of the product for the first three months, which we felt the earliest customers needed us to nail the most. Over the first year, it became apparent that the all-in-one direction of the product is what feels most aligned with customer needs, is a massive opportunity, and challenges and excites us as product builders. The combination of the above made me feel confident about committing to that path. We certainly didn’t have this confidence level on day one, but I think we do now!