This week, we’re back with another installment in our Paths to PMF series with dbt Labs co-founder and CEO, Tristan Handy.
How dbt Labs Built a $4.2B Software Business out of a Two-Person Consultancy
Not many breakout software companies get their start as a consultancy. It’s the business model most VC-backed founders fear slipping into.
So how did Tristan Handy forge a billion-dollar SaaS tool out of a bootstrapped consulting business?
It’s not the entrepreneurial path he expected to take — he didn’t set out to sell software. After a decade leading analytics teams at places like Squarespace and Deloitte, in 2016, he started a consultancy called Fishtown Analytics (named after his neighborhood in Philly) to help startups scale up their data resources.
Within a few months of running the company, Handy and his business partner spun up a tool to help with their consulting work, which they named the data build tool, or dbt. They threw an open-source repo up on GitHub in the name of public knowledge and carried on with their day-to-day consulting.
Handy even floated the tool he was building to VC friends, but they didn’t envision much of a market. “VCs told me, ‘dbt sounds interesting, but you might be an N of 1 user who wants something like that,’” he says.
They were wrong. Over the next few years, dbt quietly amassed over 1,000 users at a 3X year-over-year growth curve thanks to word-of-mouth traction via GitHub and a devoted Slack group.
In this exclusive interview, Handy takes us through dbt’s transformation from hacky internal tool to a staple of 50,000 data teams, along with his reflections and advice on:
- Building a community engine
- The undeniable signs of product-market fit — and the moment he knew it was time to raise money
- Navigating the operational (and emotional) pivot from consulting business to VC-backed startup
- Monetizing an open-source tool and cracking the code for enterprise buyers
“There isn’t a ‘venture-scale’ exit potential in a consulting business, but there is a really satisfying founder-scale potential,” he says. “Sometimes you need to give yourself time to innovate, and earning revenue buys you time. And you need to stay close to customers — which a consulting business lets you do.”
Thanks, as always, for reading and sharing!
-The Review Editors
Recommended resources:
-Tristan Handy's thoughts on how AI will shake up business intelligence
-Nikhyl Singhal on when to hire your first head of product
-Brian Chesky’s rule for co-founder relationships
-A curated list of Maven Lightning Lessons for the AI-powered IC