IVP’s Hypergrowth Stories: How Grammarly Got to 30 Million Daily Active Users
In IVP’s Hypergrowth Stories series, CEOs of the fastest-growing companies share their ins and outs of company building in the hypergrowth environment.
Grammarly CEO Brad Hoover first found Grammarly when looking for someone to proofread his own writing. “I would make contextual spelling mistakes like there and they’re, your and you’re, to name a few,” Hoover explains. And that’s when he stumbled upon an early version of Grammarly. By then, Kiev-based co-founders Max Lytvyn, Alex Shevchenko, and Dmytro Lider had already developed Grammarly’s first version as a cloud-based service utilizing AI to check spelling and grammar to a degree unmatched by other services.
“After using Grammarly a bit, I was blown away by the quality,” Hoover recalls. “It was incredible that software — especially back in 2010 — could provide such impactful writing suggestions.” Part of the secret was Grammarly’s cloud-based approach, and so Hoover reached out to Grammarly’s founders and met them in Toronto. They hit it off, which led to Hoover’s consulting with the trio for a bit. “Through this process, we coalesced around a vision of building Grammarly into a broad-based communication assistant that went far beyond spelling and grammar, enabling people to fully accomplish their writing goals and connect with others.” In addition to a clear shared vision, the consulting work gave Hoover and the founders confidence they had shared values and complementary skills. Hoover joined as CEO in early 2011.
Before Grammarly, Hoover was an investor at General Catalyst for years. And with an investor as CEO, Grammarly might have been expected to raise money early. But instead, it followed the bootstrapped route for another seven years, focusing on growing its paid subscription service and launching a freemium service until it raised its first round of capital from investors including IVP, General Catalyst, Spark Capital, SignalFire, and Breyer Capital in 2017. (Grammarly has raised nearly $200 million to date.)
Evolving the Product
Like many startups, Grammarly evolved over time. At its start in 2009, before Hoover came into the picture, its founders called the service “SentenceWorks.” They aimed it squarely at the education market, believing students would be their target demographic. In early 2010 it became clear the service’s potential audience could be much larger. They landed on the name “Grammarly” and launched the Grammarly Editor, a subscription-based product available on its website. ”We quickly saw how Grammarly could help not just students but also nearly everyone who communicates in English, including for personal and professional reasons,” says Hoover.
Early on, Grammarly started to expand far beyond its original focus on spelling and grammar to provide much higher-order points of feedback on aspects like clarity, consistency, conciseness, tone, inclusive language, and vocabulary, to name a few. Grammarly’s suggestions are powered by an advanced system that combines rules, patterns, and techniques like machine learning, deep learning, and natural language processing to improve writing. For instance, Grammarly’s tone detector feature analyzes word choice, phrasing, punctuation, and even capitalization in order to tell the user how their message is likely to be received by the reader. All of Grammarly’s suggestions empower users to “help them achieve their writing goals and connect,” says Hoover, which goes far beyond just writing accurately.
To truly help everyone, Grammarly also needed to evolve into a more seamless experience integral to people’s writing workflows. To expand its reach, the startup executed on a slow but steady rollout of its technology through integrations on different platforms and devices. In 2013, Grammarly released a Microsoft Office add-in, followed by browser extensions in 2015. Grammarly launched its mobile keyboards for iOS and Android two years later, enabling most smartphone users to experience Grammarly’s product on the go and reach an even broader audience.
But universal availability was only the first step in helping a broad audience. Accessing the Grammarly Editor originally required entering credit card information, which wasn’t feasible for many of the world’s English writers. “It became clear we needed to introduce a free offering to deliver on our mission of improving lives by improving communication,” says Hoover. So Grammarly launched a free tier and adopted a freemium business model in 2015. The free tier included a subset of the Grammarly Editor’s suggestions, and a tantalizing preview of its full impact.
At this point, Grammarly started seeing the kind of hockey-stick growth trajectory all startups aspire to but few experience. And in 2019, the startup reached 20 million daily active users; just a year later, it hit 30 million. “Freemium was a huge turning point for the business. Word of mouth really took off. It was inspiring to hear from our users about how Grammarly empowered them to accomplish new things, improve their confidence and communication skills, and connect with others,” Hoover adds.
Managing Rapid Growth
As a first-time CEO, Hoover didn’t enter the role with a playbook. However, he did take to heart lessons imparted by Mihaly Csikszentmihalyi’s book Flow: The Psychology of Optimal Experience. “For people to be engaged and do their best work, at least three things need to be the case: we need very clear and ambitious goals, need lots of positive and constructive feedback, and need to be at the point of optimal challenge-not overwhelmed or bored,” explains Hoover. “Creating flow is a key tenet of our management and organizational philosophy, which we cover in management training and aspire to as a management team.”
The Flow approach is clearly working. Despite growing to more than 500 employees across 10 different time zones, Grammarly has maintained an enviable work culture. Inc. Magazine named Grammarly one of their 2021 Best Workplaces. And since July, the startup won five awards from the workplace transparency website Comparably: “Best CEOs for Diversity,” “Best Company Leadership,” “Best Company for Career Growth,” “Best Company Happiness,” and “Best Compensation.” The awards came on the heels of the startup also nabbing awards including “Best Places to Work in the Bay Area.”
Hoover, however, remains humble in his evaluation of such accomplishments. “Every time an organization doubles in size, the role of the CEO changes,” he says. “So it’s important to be able to see ahead and anticipate those changes and start working to develop the skills and the knowledge to be able to operate effectively in that new context.” To do that, he relies on a few coaches and peer groups to accelerate his own growth and see around corners. Hoover also makes it a point to solicit feedback, broadly and often. “When you see recurring themes of feedback, that’s gold,” says Hoover. “At the end of the day, we’re building a new category and a new industry, and we’re moving quickly. Learning and curiosity is the accelerant that allows us to accelerate.”
Originally published at https://www.ivp.com on October 25, 2021.
