The Start:

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.

Getting their first customers:

Retool got into YC in the summer of 2017. Their mantra was simple - stay default alive. To not burn money, the founders 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.

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