Founded in 2017, Retool is a low-code tool that helps companies ship internal software fast. In 2023, Retool hit $93.5M in annual revenue, serving 500,000+ customers like Doordash, Mercedez-Benz, NBC etc. It last raised $45 million in its Series C2 round at a $3.2B valuation in 2022 and is backed by Sequoia, and founders of Github, Gusto, PagerDuty, Plaid, Segment, Stripe, and Y Combinator
David Hsu founded Retool 6 months after graduating from Oxford University in the UK with a degree in philosophy & computer science. Back in his Uni days, he had started Cashew - a Venmo for the UK market and faced firsthand the problem of building & scaling internal tools for KYC, fraud management etc. He realized that every engineer had to build an admin dashboard but hated doing it. This became the inspiration for David to start Retool.
The idea behind Retool is that there could be a much higher level way of building internal tools. Instead of writing JSX, developers could have a drag and drop interface where the user could create standard components like tables, buttons etc and make it do things, like connect to an API endpoint. This way, developers could get to 60-70% of the way super fast and then customize the remaining 30% by actually writing code.
Retool got into YC in the summer of 2017. Their mantra was simple - stay default alive. In order to not burn money, they just didn't spend any money so they didn't even hire anybody, and did everything themselves.
Since Retool was a product that was similar to FileMaker, Microsoft Access, David tried to find similar customers and convince them to try Retool. (FileMaker is a cross-platform relational database application, MS Access is a database management system). This seemed like a very plausible path to finding product-market fit.
Hsu “infiltrated” several LinkedIn groups for FileMaker developers and did extensive outreach. He sent out a few hundred cold emails, received three replies back and got one person on a call. That developer pretty much said that Retool is a horrible idea and wouldn’t ever consider using anything other than FileMaker.
He also experimented with language-market fit. At the start, he positioned Retool as an “Excel sheet with higher-order primitives.” (David even posted on HackerNews with this headline). Nobody knew what that meant. So the team continued iterating on the messaging.
One day, Hsu sent a cold outbound email to a startup called Rappi, positioning Retool as a platform that helps companies build internal tools faster.
Within 15 minutes, Rappi’s CTO replied asking to get on a call - that was the first sign that the messaging & positioning was hitting the right person.
Based on subsequent conversations, he zeroed in on his ICP- software engineers who are building internal front ends with React, Vue, Angular etc. Hsu also discovered that Retool was very useful for a CTO or a VPE of a fast-growing operationally-heavy company, such as a delivery company or a fintech company.
Hsu didn't pivot the product but instead pivoted the market. His research revealed that the market for Retool was significantly larger than originally anticipated. They discovered that 50% or 60% of all the software in the world is actually internal facing.
Hsu sent outbound emails, got demos booked. A lot of people said no while some said yes. Some of the people that said yes weren't ready for them. And so Hsu would go build all the features required to actually get them to use Retool. And he did that over and over again.
One of their first customers was an app that allowed drivers to work shifts with both Uber and Lyft at the same time. This startup needed a lot of internal tools to manage the billing process and be compatible with both ride-sharing apps.
But the company didn’t have its own backend servers and therefore relied on public APIs for integration — something that Retool didn’t yet expose. So their first customer couldn’t actually use the product. Hsu stayed up all night to build it.
Their approach to pricing was pretty simple as well. For the customers David would just quote progressively higher prices (like $2k a month) and see what they would say. If they said no, David dropped pricing a bit back down.
This approach worked great because the customer felt like they got a great deal, David got a customer and also discovered that $2K was probably too high for this particular customer. He rinsed and repeated this process over and over again. And he made sure to never quote pricing via email because they might go away and David could not have any idea what the reaction was.
By just doing this, Retool made $500K in revenue in the first 9 months. For the next 9 months, they streamlined their outbound processes.
They scoured Crunchbase pro to identify 10,000 companies that fit the description of the companies they wanted to introduce Retool to. They filtered companies that had raised money in the past 6 months. They used Upwork to hire freelancers to gather verified contact details for these 4 people at the 10,000 companies: (a) Head of Engineering (b) VP of Engineering ((c) CTO and (d) Head of Ops.
David used PersistIQ, a sales automation tool in order to reach out to the 40,000. After A/B testing the email copy & messaging, they finally found the subject line and messaging that worked and hit their inboxes.
At a conversion rate of 8%, 2400 people said they were interested to learn more and they became early adopters. They even signed an enterprise customer pilot worth $1.5M right before YC Demo day. At this stage, they hadn't made a single hire outside the founding team yet.
But growth was linear since it was all outbound. Now they shifted their focus on getting exponential growth.
On August 9th, 2018, after a year of growing Retool through sales & cold emails, David posted about Retool on Hacker News once again, kickstarting their inbound lead gen engine. At this stage, they had 40 customers and had $2 million ARR. Hsu knew that developers had very high standards so he wanted to make sure that when Retool was public, the developers would be able to use a product that was functional & bug-free.
Since the launch, they discovered that 15-20 companies were signing up for Retool every day. They started by hiring an early go-to-market team, including Devon Groff, who joined as one of the first two associate sales engineers.
The goal was to optimize onboarding inbound signups. They wanted to delight every early customer—in spite of having a relatively new product and lots of bugs. The goal was to build a really great product that generates a lot of word of mouth from friends to tell each other about.
To optimize for customer success, they built 3 tools to ensure they could intervene at any step:
In 2022, Retool raised $45 million in their Series C2 round at a $3.2 billion valuation from Sequoia. At this stage, they realized the market for internal tools was huge. Their focus was on triggering user awareness aka how do they get more developers aware of Retool.
This was a challenging problem because developers know how to build digital tools. They're not googling how to build simple stuff related to building internal tools. So it's hard to capture them when users are in the intent phase.
They invested in brand marketing. Their post about Visual went viral. They also started to invest in content marketing, writing high-quality content around Retool. They also optimized for Google search intent. For example, users would search for the best firebase front end and Retool would show up in the search results.
During this time, Retool also shifted its pricing to a freemium model triggering its PLG efforts. The company tested two versions of a freemium plan in different markets – neither of which was a runaway success.
The goal was to make Retool as open and accessible as possible, and optimize for usage rather than revenue. The idea was to attract a big pool of users at the ‘base of the pyramid’ who are using Retool’s products regularly (North Star metric: # of active customers) who would eventually become paying customers 3-5 years later.
They tested different experiment iterations like giving a certain number of app building blocks for free versus allowing a certain number of users for free. Retool tested these experiments in Canada and India and monitored the data. They set up a feedback loop with customers of the free plans in order to determine if they were seeing enough value in the free product.
All of this research led Retool to launch a modified third version. The new free plan includes an even more generous set of product features, an unlimited number of applications, and unlimited collaboration – but a cap of up to 5 users for free. This allowed Retool to show the true value–and full capabilities–of the product, not just a sampling.
Retool's earlier outbound sales system became a lot more sophisticated. Account execs work primarily within five sales channels: (a) Inbound leads that come directly to the sales team (b) Outbound leads that come from account execs or business development reps ((c) Conversions from the self-service motion (d) Expansion of existing customers (e) Self-Serve Conversion + Expansion. The entire sales team is optimized around a single metric - Net Dollar Retention (NDR).
80% of Retool’s customers come from their self-serve business. In 2021, 20% of the revenue that Retool’s AEs booked came from self-serve conversions, so this is where AEs are especially focused on nurturing and expanding accounts.
Once businesses are using enough seats in Retool that they’re ready to move off of a month-to-month plan and make an annual commitment, they’ll reach out or their AE will start the conversation around a volume discount on an annual contract.
Usually when a company reaches around 500 people, they want to start using more sophisticated tools to manage the platform they’ve built in Retool. At this point, they’re often ready for a discussion about upgrading their accounts.
Inbound leads typically come directly to AEs from demo requests. Often, these are from people who know they're going to need enterprise features — advanced integrations, security, etc. — and who wants to go right to the source and talk to a person.
Outbound leads typically come from AEs reaching out to VPs of engineering, directors of engineering, internal tools teams, data engineering teams, and other teams they know will benefit from Retool.
The deployed engineering team is a technical post-sale team that works with customers on building their applications. Deployed engineering at Retool is active in shared Slack channels, and does paired programming sessions with customers.
Customer Success Managers drive technical and business relations with customers, helping them exceed their goals in Retool. This includes everything from onboarding and launching new use-cases to helping them overcome technical challenges.
Retool officially launched their Retool community to the public in May 2021 until and has been growing since. Retool’s discourse forum is the hangout place for developers to get tactical help. Devs can ask for suggestions, get fixes, request feature updates, and show what they have been working on.
They also have an exclusive Slack group for Retool power users who have been engaged with the Retool community for a long time, with significant contributions. These power users get early access to beta features, get to show their best work, and collaborate with the best developers on the channel.
To get into the exclusive Slack group, users need to be skilled and contribute. To enable this, Retool gives users the resources from “what’s Retool”, all the way up to learning how to deploy and manage software at scale. They have also launched Retool University that includes the A-to-Z of working and building with Retool.
They have also built a library of templates to get people started on Retool quickly, with integrations across every type of database and API. Fast lead times and wide use cases ensure growth virality loops horizontally and vertically within organizations.
They have also set up the Retool Documentation for developers who need a little support to get through that extra mile. Retool also has built up a marketplace called The Retool Developer Network. It connects companies with qualified developers to build impactful internal tools.
They also offer free Retool credits to startups. They’ve also partnered with companies like HubSpot, Segment, DigitalOcean, and Brex to offer discounts for their software as well when they use it with Retool. Up to $200,000 in perks alone.
Founding Story
David Hsu founded Retool 6 months after graduating from Oxford University in the UK with a degree in philosophy & computer science. Back in his Uni days, he had started Cashew - a Venmo for the UK market and faced firsthand the problem of building & scaling internal tools for KYC, fraud management etc. He realized that every engineer had to build an admin dashboard but hated doing it. This became the inspiration for David to start Retool.
The problem
The idea behind Retool is that there could be a much higher level way of building internal tools. Instead of writing JSX, developers could have a drag and drop interface where the user could create standard components like tables, buttons etc and make it do things, like connect to an API endpoint. This way, developers could get to 60-70% of the way super fast and then customize the remaining 30% by actually writing code.
MVP & early traction
Retool got into YC in the summer of 2017. Their mantra was simple - stay default alive. In order to not burn money, they just didn't spend any money so they didn't even hire anybody, and did everything themselves.
Since Retool was a product that was similar to FileMaker, Microsoft Access, David tried to find similar customers and convince them to try Retool. (FileMaker is a cross-platform relational database application, MS Access is a database management system). This seemed like a very plausible path to finding product-market fit.
Hsu “infiltrated” several LinkedIn groups for FileMaker developers and did extensive outreach. He sent out a few hundred cold emails, received three replies back and got one person on a call. That developer pretty much said that Retool is a horrible idea and wouldn’t ever consider using anything other than FileMaker.
He also experimented with language-market fit. At the start, he positioned Retool as an “Excel sheet with higher-order primitives.” (David even posted on HackerNews with this headline). Nobody knew what that meant. So the team continued iterating on the messaging.
One day, Hsu sent a cold outbound email to a startup called Rappi, positioning Retool as a platform that helps companies build internal tools faster.
Within 15 minutes, Rappi’s CTO replied asking to get on a call - that was the first sign that the messaging & positioning was hitting the right person.
Based on subsequent conversations, he zeroed in on his ICP- software engineers who are building internal front ends with React, Vue, Angular etc. Hsu also discovered that Retool was very useful for a CTO or a VPE of a fast-growing operationally-heavy company, such as a delivery company or a fintech company.
Hsu didn't pivot the product but instead pivoted the market. His research revealed that the market for Retool was significantly larger than originally anticipated. They discovered that 50% or 60% of all the software in the world is actually internal facing.
Hsu sent outbound emails, got demos booked. A lot of people said no while some said yes. Some of the people that said yes weren't ready for them. And so Hsu would go build all the features required to actually get them to use Retool. And he did that over and over again.
One of their first customers was an app that allowed drivers to work shifts with both Uber and Lyft at the same time. This startup needed a lot of internal tools to manage the billing process and be compatible with both ride-sharing apps.
But the company didn’t have its own backend servers and therefore relied on public APIs for integration — something that Retool didn’t yet expose. So their first customer couldn’t actually use the product. Hsu stayed up all night to build it.
Their approach to pricing was pretty simple as well. For the customers David would just quote progressively higher prices (like $2k a month) and see what they would say. If they said no, David dropped pricing a bit back down.
This approach worked great because the customer felt like they got a great deal, David got a customer and also discovered that $2K was probably too high for this particular customer. He rinsed and repeated this process over and over again. And he made sure to never quote pricing via email because they might go away and David could not have any idea what the reaction was.
By just doing this, Retool made $500K in revenue in the first 9 months. For the next 9 months, they streamlined their outbound processes.
They scoured Crunchbase pro to identify 10,000 companies that fit the description of the companies they wanted to introduce Retool to. They filtered companies that had raised money in the past 6 months. They used Upwork to hire freelancers to gather verified contact details for these 4 people at the 10,000 companies: (a) Head of Engineering (b) VP of Engineering ((c) CTO and (d) Head of Ops.
David used PersistIQ, a sales automation tool in order to reach out to the 40,000. After A/B testing the email copy & messaging, they finally found the subject line and messaging that worked and hit their inboxes.
At a conversion rate of 8%, 2400 people said they were interested to learn more and they became early adopters. They even signed an enterprise customer pilot worth $1.5M right before YC Demo day. At this stage, they hadn't made a single hire outside the founding team yet.
But growth was linear since it was all outbound. Now they shifted their focus on getting exponential growth.
Public launch
On August 9th, 2018, after a year of growing Retool through sales & cold emails, David posted about Retool on Hacker News once again, kickstarting their inbound lead gen engine. At this stage, they had 40 customers and had $2 million ARR. Hsu knew that developers had very high standards so he wanted to make sure that when Retool was public, the developers would be able to use a product that was functional & bug-free.
Since the launch, they discovered that 15-20 companies were signing up for Retool every day. They started by hiring an early go-to-market team, including Devon Groff, who joined as one of the first two associate sales engineers.
The goal was to optimize onboarding inbound signups. They wanted to delight every early customer—in spite of having a relatively new product and lots of bugs. The goal was to build a really great product that generates a lot of word of mouth from friends to tell each other about.
To optimize for customer success, they built 3 tools to ensure they could intervene at any step:
- Big fish swimming: This was real-time notification alerting the entire company on Slack whenever a large account was using Retool
- Big fish errors - These were Slack alerts when users experienced failures or issues.
- Shared channels - These were shared channels with the developers to debug errors together.
Scaling up via PLG & product marketing
In 2022, Retool raised $45 million in their Series C2 round at a $3.2 billion valuation from Sequoia. At this stage, they realized the market for internal tools was huge. Their focus was on triggering user awareness aka how do they get more developers aware of Retool.
This was a challenging problem because developers know how to build digital tools. They're not googling how to build simple stuff related to building internal tools. So it's hard to capture them when users are in the intent phase.
They invested in brand marketing. Their post about Visual went viral. They also started to invest in content marketing, writing high-quality content around Retool. They also optimized for Google search intent. For example, users would search for the best firebase front end and Retool would show up in the search results.
During this time, Retool also shifted its pricing to a freemium model triggering its PLG efforts. The company tested two versions of a freemium plan in different markets – neither of which was a runaway success.
The goal was to make Retool as open and accessible as possible, and optimize for usage rather than revenue. The idea was to attract a big pool of users at the ‘base of the pyramid’ who are using Retool’s products regularly (North Star metric: # of active customers) who would eventually become paying customers 3-5 years later.
They tested different experiment iterations like giving a certain number of app building blocks for free versus allowing a certain number of users for free. Retool tested these experiments in Canada and India and monitored the data. They set up a feedback loop with customers of the free plans in order to determine if they were seeing enough value in the free product.
All of this research led Retool to launch a modified third version. The new free plan includes an even more generous set of product features, an unlimited number of applications, and unlimited collaboration – but a cap of up to 5 users for free. This allowed Retool to show the true value–and full capabilities–of the product, not just a sampling.
Sales-led growth
Retool's earlier outbound sales system became a lot more sophisticated. Account execs work primarily within five sales channels: (a) Inbound leads that come directly to the sales team (b) Outbound leads that come from account execs or business development reps ((c) Conversions from the self-service motion (d) Expansion of existing customers (e) Self-Serve Conversion + Expansion. The entire sales team is optimized around a single metric - Net Dollar Retention (NDR).
80% of Retool’s customers come from their self-serve business. In 2021, 20% of the revenue that Retool’s AEs booked came from self-serve conversions, so this is where AEs are especially focused on nurturing and expanding accounts.
Once businesses are using enough seats in Retool that they’re ready to move off of a month-to-month plan and make an annual commitment, they’ll reach out or their AE will start the conversation around a volume discount on an annual contract.
Usually when a company reaches around 500 people, they want to start using more sophisticated tools to manage the platform they’ve built in Retool. At this point, they’re often ready for a discussion about upgrading their accounts.
Inbound leads typically come directly to AEs from demo requests. Often, these are from people who know they're going to need enterprise features — advanced integrations, security, etc. — and who wants to go right to the source and talk to a person.
Outbound leads typically come from AEs reaching out to VPs of engineering, directors of engineering, internal tools teams, data engineering teams, and other teams they know will benefit from Retool.
The deployed engineering team is a technical post-sale team that works with customers on building their applications. Deployed engineering at Retool is active in shared Slack channels, and does paired programming sessions with customers.
Customer Success Managers drive technical and business relations with customers, helping them exceed their goals in Retool. This includes everything from onboarding and launching new use-cases to helping them overcome technical challenges.
Community-led growth
Retool officially launched their Retool community to the public in May 2021 until and has been growing since. Retool’s discourse forum is the hangout place for developers to get tactical help. Devs can ask for suggestions, get fixes, request feature updates, and show what they have been working on.
They also have an exclusive Slack group for Retool power users who have been engaged with the Retool community for a long time, with significant contributions. These power users get early access to beta features, get to show their best work, and collaborate with the best developers on the channel.
To get into the exclusive Slack group, users need to be skilled and contribute. To enable this, Retool gives users the resources from “what’s Retool”, all the way up to learning how to deploy and manage software at scale. They have also launched Retool University that includes the A-to-Z of working and building with Retool.
They have also built a library of templates to get people started on Retool quickly, with integrations across every type of database and API. Fast lead times and wide use cases ensure growth virality loops horizontally and vertically within organizations.
They have also set up the Retool Documentation for developers who need a little support to get through that extra mile. Retool also has built up a marketplace called The Retool Developer Network. It connects companies with qualified developers to build impactful internal tools.
They also offer free Retool credits to startups. They’ve also partnered with companies like HubSpot, Segment, DigitalOcean, and Brex to offer discounts for their software as well when they use it with Retool. Up to $200,000 in perks alone.
9 key takeaways from Retool:
- Be default alive
- Outbound sales led motion at the start is perfect
- You cant do PLG before you have PMF
- Language market fit is as important as PMF
- Stay lean as much as you can
- Price high and negotiate at the middle
- Optimize for customer support and retention at the start
- Cant go wrong with content / brand marketing
- Community led growth creates a moat
