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Here’s the program.
Andrew: Hi everyone, my name is Andrew Warner. I’m the founder of mixergy.com Home of the ambitious upstart. What the means is this I bring on successful entrepreneurs, to talk about the stories, behind their businesses. So that you the ambitious up start, watching me can pull out the best ideas that you can use them to build your business, and come back and do what today’s guest is doing. Do an interview where you can teach others.
Big question for this interview is this, how do you start a company with a tweet? And grow it to over 60,000 organizations all within a year.
Christian Lanng is the founder of Tradeshift, an online invoicing service, that includes a social network and offers apps.
The 10s of thousands of organizations that use Tradeshift, includes, and Christian you tell me if I’m wrong on this, The Danish government, uses your service. The UK National Health Services, uses Tradeshift. And others as I said, 10s of thousands of other organizations. Got that right?
Christian: Yeah. Absolutely.
Andrew: Do you by the way, I know that when you said that you have these guys, my researcher must have seen this in some landing page. It increases conversions, just get their permission to use their name to say, ‘The Danish government uses our software’, or can you just as long as they are using it, get to mention it?
Christian:
Yeah. So all the companies mentioned here have a public profile. So it’s actually on Google, you can Google a lot of them. And just like you have a link, you can actually go to Tradeshift and you can search for these companies. So they are there and they made it public that they are there, so we can use them.
Andrew: All right. So that brings me to the social element of this. There is a public profile, there is a social network, around invoicing, how does that work?
Christian: I think it’s actually something that existed for a very long time. I think most of the successful social network are building on existing relation, that exists in real life. I think what we saw there was a gap in the markets for something like this. A lot of the market places are businesses that works out there, was really build to facilitate it’s taxes between companies within each other and finding the supplier to buying the goods.
But what we saw was, there’s all these companies all over the world, doing business everyday, you know you sending invoices, orders, and your interacting with account payable divisions, the secretary having the invoices. Inherently that side of the social process is that probably when you call somebody, you ask them what’s going on here, and you have all these interactions. So we talk a lot about, what we call hard business processes, which is the invoicing and the payment. And all the soft business processes around somebody calling somebody, saying I have an issue with this. And inherently that is a vital process. So if I invoice you as a company , you have to invoice somebody else, otherwise, you’re going out of business. And all that is the relationship as a sender and as a receiver.
Andrew: I get that. So the idea is this: first of all, I can send in voices with this. So I’ve got Scott Walker, who everyone knows is one of my clients, one of my sponsors. I can use TradeShift to send him an invoice. He and I are connected. He might be connected to another one of my sponsors, Grasshopper, because he’s a customer of theirs – they’ve got a connection. I understand that money goes back and forth and bills go back and forth but, how is that a social network and what’s the purpose of having a social network? And by the way, this whole interview is not going to be about the software; I want to know how you got customers. Because my audience cares about what you do, just to understand it as a background. But what they really care about is: how did this guy get all those users and how can I bring it back to my business? But tell me about this: why a social network?
Christian: So we actually talk about it as a business, that we’re going to think, that’s a real thing. It’s about the transactions, it’s about sending that [??] and it’s about getting paid. But a very big part of that is if somebody has a question or something, they can actually just add a comment on that in any words, they can interact with you. They can send you messages, they can update the status of their new prices. So I think, it’s not social in the sense that you know, I think like Facebook, but it’s probably more social in the sense that, from sales funnels, if somebody else is pushing the price right now.
Andrew: OK, I’m going to come back and I’m going to ask you more questions about that because in the pre-interview, when you and I talked about why you guys were able to grow so much, one of the things that you said helped – in fact, I think you said, THE thing was this business network as you call it, but first, I said in the intro that you started with a tweet. Can you explain to my audience how that happened? What was that tweet?
Christian: You know, at the time when we launched TradeShift we actually just jumped out from a very high position in the government and we were so smart to do it in the middle of the financial crisis; I think my mother, she actually cried a little bit when I told her I was quitting my government job. And we had absolutely no funding. We met Morten Lund, who is one of the original investors for Skype and at the time he was actually also bankrupt.
Andrew: Morten Lund. Yeah, he came here to mix with you to talk about how he lost all his money. I thought it . . .
Christian: Yeah. So we all agreed that TradeShift was an amazing idea but there was no cash. So what we did was, we decided we had [????] but it’s an asset to build a cloud platform on that scale today. So Morten, he did a tweet saying, “Are there any developers who want to work for equity in this new secret startup?” And we couldn’t believe the response. There was more than 200 different developers and teams all over the world. We’re talking Africa, India, the responders to that tweet. And we actually put together 50 developers globally in different teams working with our own team and building the first version of TradeShift.
Andrew: So the first version of TradeShift was built by 50 developers around the world who were working not for cash, not the stuff they could take to the grocery store, but for equity?
Christian: Exactly.
Andrew: And you gave equity to at least 50 people in the business.
Christian: Absolutely, yes, yes.
Andrew: How do you get so many developers? I know someone in my audience is going to hear this and say, “Alright, I’ve got to go and do this,” but they’re not going to get, if they tweet out, “Hey, come work for me for free or in exchange for equity,” they’re not going to get the response. Why did YOU get it – or you didn’t get it, Morten Lund got it. Why did Morten get it?
Christian: I think at that time Morten was down and everybody was waiting, what is the next big thing from Morten? I think that’s definitely a huge part of it. But I also think all these people that were interested and they’re curious and when he explained the idea, the began to [??] and I think the most typical reaction to TradeShift is really, “Why hasn’t anybody done this before?”
Andrew: But um, but he didn’t even release the idea; he just said, “Top Secret.”
Christian: Yes, exactly. And we had top secret conversations on Skype accounts with codenames and you know, talking about the project also with codenames. But I think it was a process, and not just getting the inbound but you definitely need somebody who can get some attention for you on the first part. But I think actually today’s the same as back then. There’s a lot of software companies out there, there’s a lot of consultancies, really smart people who have a lot of time, that is not always so, and if they couldn’t create people they might want to help and you just need to ask, actually.
Andrew: Alright, you just added a whole other category of conversation that I’ve got to have with you. I want to find out how you got all those users and then I also want to find out how you organized these developers and got them to produce something that was useful. You don’t know this but…I’m a good guy, but when I have a guest here, I’m just trying to milk him for information. So I’m going to try and get as much as I can from you on behalf of my audience. And you said that you’re mixed with your viewers so you understand this and I know that when you’re in the audience, you want this stuff.
Christian: Exactly.
Andrew: So I’ve got to dig in more on this Morten Lund thing. You said this yourself just a moment ago: he was out of money at that time. I think he even told me that because he was – he’s Danish, right – because of where he lives there isn’t this cult of the startup, there isn’t this acceptance of failure, and here he was tweeting out at his worst moment and the world said, “Yeah, we’ll come and work for you. We trust that you can do this, and you’re not some guy who pissed away his money and will never be back on top.
Why? What’s the mentality that you saw there? I want to understand it, so that when we’re down, we know that this exists out there, and why it exists.
Christian: Yeah. But I think, your fellow entrepreneur, you know more if you ever met him. I think you know that the man he’s not really down, even when he’s down. I think as an entrepreneur, you’re simply have to keep that energy and keep wanting it. And I think Morton hasn’t talked about any project for six months and suddenly he was tweeting about a new project. And I think everybody got interested, ‘What, is this?’ and ‘What is going on?’.
And I think we didn’t expect to meet Morton and Morton didn’t expect to meet us and I think, when we all saw it, we saw we couldn’t help doing it.
Andrew: OK. So what you’re saying is, ‘Yeah, maybe the Danes aren’t as excited about failure as the Americans are.’. Sorry?
Christian: Yeah. Exactly right.
Andrew: But he had a community of people who are start-Up entrepreneurs and believed in that world, that it didn’t matter what the everyday person thought.
Christian: Exactly. And I think it’s also so much, I mean Twitter is global so, it’s outside their market. Most of those developers are not Danish, but knew more from his experiences around the globe.
Andrew: All right, and I hear also that the people in Denmark did admire what he was doing. He was pushing out beyond the limits, and they thought, ‘Hey you know what, we can stretch that way too.’.
So I understand the mind set, I understand now how you guys had 50 developers come together. it’s hard to even organize five developers, sometimes, five people in a company. How do you take this 50 group of people, whom you haven’t met, and organize them to create a first product.
Christian: That is hell. That’s very, very hard and I, going back this probably would be one of the things we would be done differently, today. But on the other hand we didn’t have a lot of choices really.
We worked a lot before we scaled out the software teams, working from different locations. But you have to be extremely tight with your processes. You have to be extremely tight with knowledge sharing. And you really need to make sure the other side understand what you wanted, what you’re doing.
You can’t keep anything back, you really have to share the vision and idea, really what you’re trying and not just say, ‘Hey, I wanted to do this very specific narrow type’. And I think it’ll really help to use a little and a lot. We use stories as out primary way of structuring the product. I think that helped a lot, because when you use stories, your are not trying to do, a true specific description of feature as a system requirement, but it’s really, what is this feature going to do for the customer.
Andrew: OK. Here’s what I wrote down. The tips that you have for other people, who might want to organized so many developers. You said, ‘ You have to be clear about the vision’, ‘Have a lot of knowledge sharing.’, ‘Be specific about the process’, and ‘Talk in user stories’. I want to break this down and understand each part of it.
First of all the vision; what was the vision that you had, and how did you communicated it?
Christian: Yeah. I think it’s very simple. We had one vision, that is imagine all companies on the planet connected in the same network, doing business in one network. And I think, just like how people connect on Facebook, more or less the same can be true for companies. But companies are so much more than just sharing pictures and so on. It’s real transactions everyday.
Andrew: Beyond invoices what kind of connection? I see what you thought, the invoices would be our foot in the door, and then once we had our foot in the door, we build our relationship. What would flow back and forth, once those connections were made.
Christian: But it’s basically anything, company exchange picture, today I mean, it’s payments, it’s job offers, it’s opportunities , it’s prizes, it’s really everything that you interact, and above all that you have the social craft, that is sort of like the network.
Andrew: Now that I hear from you, I understand it. The vision is you have all these companies connected, and once you have them connected. It’s unlimited the possibility of what you could do to them.
Christian: Exactly, yeah.
Andrew: How do you communicate that in a way that keep you from sounding crazy. Because there are a lot of people out there right now, who say, ‘I can connect every pizzeria in the world, whatever, and it doesn’t work for them.
You communicated to strangers, in the way that got them to be impassioned and to Morton Lunt, in a way it got him to care.
Christian: Yeah. I think the basic thing is you don’t communicate this to the outside, in case you sound crazy. I think that’s what you have to accept.
I think we have one really, really big thing, in the back and that is I have two co-founders. And that was we have done it before in a smaller scale in Denmark.
And so in 2007, we build a open source based system got the Danish government. that connected all 25% of all companies in Denmark in 10 months.So we had a very big prototype, and we saw that a lot of ideas, and the biggest idea we have from that was if you chose transactions free, and you allow them to connect for free and transact for free, it just explodes. And a lot of these ideas that small companies won’t do real [???] and real base interchange, it’s been going on for 30 years. It’s really not true. It’s just that you have to lower the barriers.
Andrew: I see. So you already have proof that you were able to do it with government backing.
Christian: Yeah.
Andrew: So that there’s some sense that the government’s not going to trust this guy Christian, if he’s crazy, they see him as a visionary. All you have to do is take it and grow it beyond. And I could see that. All right, you also say that knowledge sharing was important. How do you communicate what’s going on to such a diverse group of people?
Christian: Yeah, so, you have a lot of Skype sessions, you have a lot of –
Andrew: Skype sessions?
Christian: Yeah, actually, Skype. So, Tradeshift was born on Skype to the point today where we still that with 150 people, we do all our calls on Skype. We have Skype chats that have lasted more than years, they’re just called The Big Chat, for instance. So, you’d be amazed how much knowledge sharing you can do on Skype. Beyond that we temporarily used GoogleDocs, we use DropBox. So we don’t have a single serve today in Tradeshift, everything is in the cloud. We use those tools to be integrated with people around the world from day one.
Andrew: Actually, let me break it down even further, I don’t fully understand this. Skype chat sometimes, can be hard to follow when we have just four people here internally at Mixergy communicating about a course that we are planning. Is it just chatter that’s randomly going on in the background all day, kind of like water cooler chatter and you ignore it and dip into it when you want it and dip out of it when you don’t?
Christian: No. So it’s purpose based chat. You have one chat that’s called The Big Developer Issue Chat.
Andrew: Interesting.
Christian: So, that’s like a topic. And I think a lot of that today when we matured has moved on to yammer and specialized tools for that. But in the early days, it was just one big Skype conversation with different topics.
Andrew: By the way, when I saw you on Skype, I saw that you looked like you were offline on Skype. Do you go invisible during the day to keep people from harassing you?
Christian: No, I actually think it’s just a Skype [???] issue. I think I’m more known for being online 24-7. I also think the only time I’m not online is on airplanes.
Andrew: Soon even on planes you’ll be online. What other tools do you have for keeping everybody in the loop but keeping the conversation from being chaotic?
Christian: Yeah, so I think it’s a lot about filtering information and making some clear choices on what we are doing. Because, when you are working with visionary people, when you are working with developers, when you are working with a lot of these things, new ideas pop up all the time. And I think that’s very agile. Development gives you a framework, saying, this is our backlog, these are our priorities, this is what we’re working on. I think anyone who has been an entrepreneur in a start up, they know it’s also the ability to let a lot of the fires burn, and just ignore them. So sorting information, then, is the only thing you can do with them. Being really harsh and saying ‘this is the best idea in the world, but right now we are moving on this very specific subject, so it will just have to wait.’
Andrew: OK, I see. I do imagine that a lot of people do toss out ideas. Give me an example of a great idea that came up that you had to say ‘that one’s really good, it’s the best idea in the world, but we have to focus on something else.’
Christian: Yeah, so earlier today there were a lot of people saying that we need to move full project management into Tradeshift. We need to have a whole project management package as part of Tradeshift. I think there’s a lot of good solutions for doing it, but it’s really not our business, and I think in the end staying true to doing one thing really well, rather than trying to add a whole business area you would have to learn from scratch.
Andrew: Christian, how do you keep the person who came up with that great idea of project management, right, companies do project management all the time. It’s a huge business. The person that came up with that idea, how do you say ‘no, we’re not going to do it,’ without hurting his feelings?
Christian: Well, we have very rough discussions. So everyone kind of knows when you’re going to a discussion about product features, it’s gloves off. And everyone really fights for their cause. They try to get the message through. In the end, you know, we make a decision, and it’s very very hard. Today I cannot even just say ‘hey, we’re going in that direction.’ Most developers will ask me why. If I can’t explain why, or rationalize it, then I have a big problem because they won’t buy into it. So you definitely have to bring the argument and have clear reasons for that. On the product management case, I made the case that we would be stretching everything too thin, and we would have too light of features in our areas instead of [???].
Andrew: Be open with me here. I mean, really bare your soul on this one, this next question. Was there ever an idea that you came up with that people shot down, and you saw you couldn’t get consensus around, so you dropped it, but internally you were seething. You said, ‘these guys just don’t get it, they don’t understand.’ Tell me about that, you’re nodding.
Christian: Yeah, so I’m just thinking that’s happening daily. You know, I think that happened a lot. And I think we had a very big discussion, so, I need a little context. So, we have some very, very large enterprise customers who are using Tradeshift to connect to all the small companies they’re doing business with. Basically they’re a supply chain. And to do that, they have to set up all their branches and all their invoicing entities in Tradeshift. And we had a huge discussion about how to structure this and should it also be social endpoints for these companies, and should it also have full workflow for these companies so they can interact with all the people inside. I had one idea on how to do it, that we could do it with Email based lists. The others shut it down and said no, we have to pull everything out through the API, and we need to do much more of a technical but a rest based model where people can subscribe to these discussions and so on. Still today, I feel that Email would be the natural medium, because that’s what flows inside an enterprise. It’s low tech but it works.
Andrew: And you just mis-guessed it.
Christian: So there’s been developers in Tradeshift for hanging this ‘Email is still the best’ charge.
Andrew: So, one other thing that you said is you have to be very clear about the process. You heard the Joel Spolski inteview. One of the things, for people that didn’t hear it, that Joel said was that in the past, he thought he would spec out every part of what he wanted to build. Now, he’s still specs, but he creates shorter specs for shorter timelines and more rapid iterations. He still believes in speccing. How do you do it? How do you get a project done with so many people?
Christian: So we have a system that we call the Bucket. And basically –
Andrew: What is it?
Christian: Bucket. And what that is, is everyone in Tradeshift, they have a bucket as part of their backlog. Everyone can throw items at this bucket. And then you can decided if you want to accept that item. If you accept it, it will go into Accepted Items,and then you can decide if you want to work on it. Finally, you have a state called Done. The big thing about Bucket is if you’re not working on an item, [???], so, just in case. So, everything you stop working on, will simply go away. People who create these ideas, these items, they will have to redo them, and hope that they will buy it. So we try to build a natural decay which really leads its way to –
Andrew: Forgive me, I wasn’t following and I think it’s partially due to Skype. I love Skype too and I build my business on it, but as you know, there are days when Skype just doesn’t work as well. Let me see if I understand you right. What you’re saying is, everyone’s got a bucket. Is it a physical bucket, do you actually give them a bucket?
Christian: No, it’s a software system.
Andrew: A software systems. A place for all their ideas. They have ideas for what should be added to the system, they add it to the bucket, that’s it. That bucket just keeps getting piled up.
Christian: Yeah.
Andrew: Anyone else can go into that bucket and grab an idea and do what with it?
Christian: So basically, as a team you have your own bucket, and everybody else can add ideas to that bucket. So if you’re a small business team working on features for small business users, you will have a bucket, and everybody else who has an idea for small businesses, they will add that idea to the small business bucket.
Andrew: Gotcha. So, I have an idea for the small business people, and even though I’m not working in small business, I just add it to the bucket.
Christian: Yeah. If that team doesn’t accept your idea, if it doesn’t get accepted to their work load, it will be deleted after seven days. If they accept it, it will actually be deleted after three days. If they don’t stop working on it, and if they stop working on it they will have a week and if it doesn’t finish in a week, it will move down to the previous state. So, we have a system that really tries to mix what we think is real life, ideas decay if they don’t get moved up.
Andrew: So, let me pause there for a second and tell you that if there was a to-do list that did that, I think people would enjoy that too. The idea that a to-do list just gets bigger and bigger until it overwhelms you until you can’t even look at it anymore, it’s just a big pile of guilt. That means it’s counterproductive. It keeps you from doing anything. What you’re saying is, this is kind of like a big to-do list, but if you don’t do something, if you don’t do an item on the list, it just gets wiped out. Don’t worry about it, you’ll get time to add it later on, but right now it’s wiped out, focus on what’s important.
Christian: That’s the point.
Andrew: And what you’re actually likely to do. So I understand now, everyone has this bucket that other teams add to. The team itself gets to decide what they want to work on?
Christian: Exactly. Yeah, so all the teams are cross-functional, so we have designers, developers, business people on each team. And we have mission and a strategy for the way we want to move for the area that they’re working on. We are exacting about those boundaries with them. But in the end it’s team who prioritizes the way they want to do stuff. Then they have some targets and metrics and stuff we are trying to reach.
Andrew: Let’s get more specific here, so we fully understand this. What’s an idea that has gone from a different department into a bucket and then made it’s way through the process? Give me an idea so we can trace how an idea becomes a product.
Christian: Yeah. So I think we start with an idea that, last year, it sort of started in the spring, that we want to add a whole new way to do a document search, inside the application.
Andrew: A new way of doing document search, inside the application.
Christian: Yeah. Exactly so put search, that’s a global search. You can just type like invoices, items, and it will pull up everything, all business content that has all those words inside them. Instead of having this sort of like structured view of invoices, purchase orders and so on.
In the beginning it was sort of like earlier big ideas, the gentleman, what they earned, based on what we had and so on. And it was rejected a few times, that this is not really important. But then, it finally connected to the user research team, and they took it out and they talked to some of us about it, and got really great feed back about it. And that was actually what made it to the development center said, ‘OK. We’ll take a look at it’. And actually, I maybe saying too much, I think we’re releasing early next week, the new document search feature.
Andrew: Let me pause here, and see if I understand this. This goes into a bucket, the team that gets to develop this product says, ‘We don’t want to do it, it doesn’t fit in our schedule’, ‘It doesn’t fit with our vision’, and so on.
Why did they even have a decision, why doesn’t it start all with the customer, why does it start with an idea internally and why isn’t the decision based directly on whether a customer wants it?
Christian: I think it’s a false, it’s very early you know and customers don’t even know what they want.
So you can ask them, but then again, I mean, you wouldn’t have an I pod today if you asked the customer, what they wanted.
So you have to go other way around it, say, ‘How can we build you work flows of processes, that are really ground breaking’.
And then we assist with the customer say, ‘ Would you really like this, this is a whole new way to think about this problem’.
So I think that’s the right way to go about it. And I think if you look at life at the software team, the production team is this case. Why can’t we really make the decision, well, they are the people who are close to the application. they are the people who has to assign us, working with the technician. And I think if you don’t have the business understanding among your software developers, and you don’t have the business understanding, you need to silence and just dictate everything, you know top down. It becomes very, very hard to manage today. I mean, you can do that in the objections of 7 people, but it’s very hard to do objections of 50 or 100. You get this control problem, control is very, very expansive to maintain. So you would much rather have people make no decision.
Andrew: So the team that developed it, the team that would have developed it, passed on the idea. You said, a customer group picked it up,
Christian: Yeah. Exactly. So user research people, they thought, we want to give ideas, and they look at it together, some customers, yeah.
Andrew: I see. so all these buckets are visible to everyone in the organization. If one team doesn’t want to do something with the item in the bucket. Another team can say, ‘Hey you know what, we’re going to do it, and we’re going take it on’. And they do it.
Christian: Exactly, yeah.
Andrew: So now, you’ve decided that you’re going to do the search. How is it spec’d out? Do you write a customer, excuse me, a user story, as you mentioned earlier. User sits down at the computer and decide he needs to find out how many shoes he sold, to which people, he just types in ‘Shoes’, we give him every purchase order, every invoice, everything else. That kind of story.
Christian: Yeah. So we do that in the start. But we actually tend to very quickly build full HTML prototypes.
So we build a HTML mock up of the feature, if it’s big enough, we do that.
And then we go to status again with some users, and we see the live interaction with real user interface, how the user respond to that and so on.
And so we like to talk about it like a concept car. Building it in HTML it allows us to do advance prototype and that also, because the problem with making mock ups, and drawing is this, it’s static, and the way most software is build to day is really, is all interaction influenced that I’m for. So that’s what HTML prototyping.
Andrew: So what you would do is, you wouldn’t go to Bal Samay and start to sketch it out, and start to make notes about what each item on the mock up does. No. you said, just build the freaking thing. Just build it, as quickly as possible. Put it out in front of real users, and see if they like it. If they like it, it’s ghetto quick approach, we’ll build one with the pent house. If they don’t like it, we’ll kill it and we don’t spend time.
Christian: Exactly and I think it increases the minimum viable products. That’s what we are trying to do as much as we can.
Andrew: OK. I see now how you build it all out. Let me ask you this, all these strange people working together, collaborating. It’s very hippy community, this whole tech world, if you ask me. But they’re all working together. What’s the first version of the product? What is that look like? What are the features? What was that first version?
Christian: It was awful. So, the thing that happened next, it was a month before we were ready to launch. And TechCrunch they did an article, saying this is the most disruptive start-up of the last ten years. And I think really the hype just exploded. They said, this kind of acid is going to disrupt the banks, disrupt everybody. So we went from having like few hundred people sign up, wanting to try the service, to maybe 10,000 out right.
Andrew: 10,000%? I know the number is not exactly right. But essentially 10,000 from one TechCrunch article?
Christian: More or less. It was also wired, I think the same day so.
Andrew: All right. TechCrunch, boom, 10,000 people. This is a dream for a lot of entrepreneurs. OK. So you got that. What happened to the business.
Christian: It’s also a nightmare. Because when you haven’t released your product and you know, your first prototype is a beta version, is absolutely crap. You’re not really… getting that much attention upfront, really put a lot of pressure on you.
And we knew we could not deliver, I mean we could not deliver to the height that they are starting to crave. So we actually made a decision that, actually, if we have to disappoint, we would rather disappoint fast.
And so we spend more or less two weeks in intense working, just building as much as it can be released. The first version it could even be a credit build. Like an exit invoice, so you can only do positive invoices. if you want to extract it, you couldn’t do that. Half the features, network features didn’t work, it was hard to comment, was very hard to see order things and so on.
Andrew: All right. I got to ask you about this. One of the first interviews I ever did, was with a guy named Roger Aaronberg, he’s an investor. Do you know him? He invested in lots of tech start-ups. He then got money to invest in a company called Monitor 110. He was building it out slowly, and then boom, Financial times wrote an article about him, I think it was Financial times. But I know 100% internally, everything changed. They said, now we can’t embarrass ourselves in front of the financial community, we have one shot to make a first impression. They went back in, they re-worked on their product, worked, worked, worked in hiding, because they didn’t want the financial community to see their crappy first version. When they finally rolled it out, it was so big, that they couldn’t change easily, and it was just out of touch with what the customers wanted. He said that is what hurt his business.
You went the opposite direction, I want to understand that. It seems like that’s one of the reasons why you succeeded where he ended up in a failure.
Why weren’t you embarrassed? That TechCrunch would see this, that the people who sat on the sidelines and believe me, they existed. And even though Morton is well loved, there are people who sat on the sidelines shot in [??]. They said this guy Morton loved, he thought he was on top of the world, invested in Skype, ha, ha. He’s nothing. You launched a product, people go, ‘He really is still nothing’.
Why didn’t any of those thoughts keep you from acting, keep you from launching something that was bad?
Christian: I think everything. That was probably one of the hardest decisions in the history of Tradeshift. But I think we had on our internet, the months before we launched. And we had a quote from Reid Hoffman, that said, ‘If you aren’t embarrassed by your product, by the time you launch, you launched too late.’.
So I think it’s also the thing that, I’m so happy that we did it, because we had this whole development road map of features we wanted to build, I promise you a week after we launch, that was just torn apart. and you saw, we need to do a bunch of other stuff, just to make this work. It was a whole lot of erasing like that, so it take a lot of the features .
Andrew: Tell me some of the things, that once your product hit the market, you realize, these items in the road map and is just wrong and out of touch.
Christian: Yeah. One of the things we were worried about is, do we have good enough institutional payments, we spend a lot of time doing that part. And then the users, they are much more interested in, ‘Why it’s so hard to add a contact’, ‘Why it’s so hard to add a manual contact.’. I might want to invoice on the network and so on.
So typically it’s in the much more simple stuff. You think that doesn’t really matter, that is the biggest issue, right?
Andrew: What you said earlier was, the reason that you did this, I can see how you learned so much from launching and how customers are now dictating the direction, not internal intuition about what you thought the customer should want.
But help me understand is there Reid Hoffman said that, ‘If you are not embarrassed by your first version, then you launched too late.
It’s so interesting, we always think, how much funding did a company get? What kind of investor help turn the company direction around?
But sometimes it’s just an idea like that, that Reid Hoffman puts out into the universe, and it gives others people an understanding of how the world works, and it gives companies internally justification of what they need to do and shuts out that inner voice that says, ‘You’re going to be embarrassed by this, stop it, don’t launch, people are going to laugh at you’ .
Ideas, I think, are some of the most underestimated assets on the planet. what do you think?
Christian: Yeah. I agree completely. And I think, ideas are one of the most viral thing on this planet. So I think what people are doing right now with the new start-up movement, I think is one of the most positive thing in the start-up community as a whole. I think that’s absolutely the right approach to doing a lot of stuff.
I did my first start-up, when I was nineteen, there was nothing like that around. So I think people talk a lot about smart money, but I think most of the smart knowledge that you’ll get from those investors are actually obliterated today. And you definitely don’t need to take the money to get that kind of wise.
Andrew: I promise you Christian, I promise you that right now, we spend maybe 30 minutes together. Right now you’re having that kind of impact on other people that maybe Reid Hoffman had on you or others had on you. What you’re sharing right here, I know as an entrepreneur, you recognize the value of it, you recognize it when you put this in other people’s heads. You shift their direction and their outlook on life.
OK. I understand now how you got all these people together, how you got them to work together. Now, let’s talk about how you got customers.
You and I talked about how, before you got funding, you did a thousand, two thousand people. How did you get the first two thousand companies to start using you? Those are some times the hardest to get.
Christian: Yeah. So I think when we launched we have this very elaborate plan. We’re going to launch in UK, Scandinavia and Germany. And we created language versions for those markets and we put it out. But we underestimated that the users are global, even small businesses today are global. Small German company they are buying stuff from China, and they are selling it to the US. So it spread so fast outside those markets. So it actually didn’t grow very fast, but if you look at geography, it just spread globally. So I think in six months, we were in 100 countries.
Andrew: Six months, 100 countries, boom.
Christian: Yes. Exactly. But maybe we were watching very, very first relations like five years in India, three years in Brazil, and so on, and you can just, if you’re really looking at those populations at how they are growing and can simply see, it was companies work collected some where or other, to other company, to other part of the world. And so, I think, it was really about nursing the first community and actually figure out who they were and asking if we can call you and talk about why you’re using the product. So from very early on we had, just like you have it now, we had Skype to use, with a lot of our users, we got to know through our support system.
Andrew: So they would send in support tickets. I like to know how you initiated and what you asked in these conversations. They would send in the support tickets and you said, ‘Can we talk to you?’.
Christian: Yeah. In certain occasions people, they deleted their accounts, which of course, never good, we always ask them, ‘Why?’. Sometimes they just wrote the support like, ‘We want to delete our account’. Of course we ask them here, can we just make Skype to learn…Everybody, you be amazed, most people, they like to take the time and tell you. A lot of those, they actually stayed on, we say, okay, we can fix that, if that’s an issue and so on. But I think, really the users will signed up to a very, very good product. They are really adventurous and they don’t mind spending sometime helping you, because that’s really why they signed up in the first place. So don’t be afraid just asking them, if you can call them or talk to them. And do it, I think, it’s invaluable.
Andrew: How structured was the conversations that you had with them? Was it a per-written list of questions? Was it something you were digging for? How did you make sure was useful and not just wondering?
Christian: So, in the very early days, we had various loose process, we just wanted to learn broadly. Today, we have an extremely structured process, we actually have an anthropologist running that whole program.
Andrew: An anthropologist is running your user experience program?
Christian: Exactly. So it’s structured, and she attacks it just like she would attack any other anthropological area. So she goes out with the users, she knows how to use the platform. She asks structured questions, and we have a way to record it, and typically what we do is, we have mock up of the applications, and we can map problem areas, so we can track mouse movements and so on.
But back in the early days it was really, it was almost, if you have a big thing, so it was people who were responsible for assign these features, just have the discussion, we just call the users and ask, ‘Hey, if we did this instead of this, what would you think?’, and so on.
Andrew: OK. One of the problems with talking to customers and asking them for feedback like this, is that they ask for things that seem easy to them, but would just distract you or be near impossible for you to code into your system. What do you say when a customer says, ‘Christian, all I need is an internal system for managing our projects, project management, that’s like Basecamp but tied into your system. Can’t you build that for us?’. Now here is the person who took the time out to help you, who you now gotten to know his pain, you don’t want to disappoint that person?
Christian: I think, we normally, we would be able to tell them why, like we try to explain, it’s actually harder than it looks. And if not you can always default it to the things like, ‘Right now we’re not doing that, but we have an open to make that, so if anyone wants to integrate if you want to use Basecamp with Tradeshift it’s actually possible.’ So, I think, that’s cheating a little bit, but I think that’s own real approach. I think the best thing you can do is, be honest with them, and tell them why. And I think, we have users disagree with some of our choices.
Paypal became one of our early partners and at the time there was a lot of controversy around Paypal. Especially around that they took off payments at weekly’s. We had users writing us and saying, ‘We don’t want to use Tradeshift, because Paypal is the investor and partner’. And I wrote them back basically, as a CEO and said,’ Hey, you know what I actually agree completely with that stand point. But here’s the thing, we thought that Paypal was the lesser of two evils. And banks today, they really control the cost of payments globally. And especially for small companies in developing countries like India and so on, this is a real big cost. So we build a very cheap payment product using Paypal’. So you try to explain to say, ‘Yeah, we morally and ethically, everything else we agree with you, but we also think that our, so much want in this device. I think that device is any in action use’ ., just be honest, because they respect that.
Andrew: OK. got it. I see what you mean. I get, even in these interviews people say, ‘Andrew, can you isolate, questions in these specific way, can you make it, can you organize the interview in a way, where I can listen to the question I care about most first’. All over the place, some of them I can do in time, others will just be distracting. You say, just explain to them why you can’t do it, put it out there say, ‘We’ve got another focus.’ or ‘We’re working on something else.’ or here are the APIs in your case, go to town on it.
All right. Two other things that you’ve mentioned that I’ve got to talk about when it comes to this.
You said, ‘We nursed the community’. How do you ‘nurse’ a community?
Christian: You spend ridiculous amount of time with user to help them with everything. So that’s the first thing.
They need to feel that they can not really fail with this application. Maybe not because the application is especially good, but basically because your support, your user service is so responsive and basically always asking up front, ‘Do you have any problems just right’. And we use real names in all our actions, so it was not the support agent 5, it will be Christia Lanng. it will be the real people in Tradeshift, exact name we uses.
The other thing we did first, that we talked to the users earlier on. I mean, we got our window cleaner to use Tradeshift, and we brought him together with some other people we know who use Tradeshift. It might be 10 people but still nurse them to want to take it to next 10 and so on.
Andrew: We talked about lots of different features that people wanted, internally and externally that you could’ve build in. And we discuss many of the one’s that you’ve got out. What my feeling is, you can get a lot wrong, but if get the key feature right, everything else is forgiven and in your case it seems one of the key features is social. How do you get that social component to work right, so quickly?
Christian: So I think you have to do that. I think we basically use the relationship that was already there.
Andrew: But everyone is using the relationship that’s already there. You and I have both seen the social network for softball players, the social network for whatever. So handsome people, I’m on there of course, I’ve got recruited by lots of people. But it doesn’t take off, even though these real relationships exist, it doesn’t take off. Yours did, what did you do?
Christian: No. But I think that’s the second thing. i think you need a real reason for people to transact. And I think especially the enterprise space, there’s a lot of talk about social right now. And I mean you have sales forces saying, social tools for enterprise, you have Yammer, saying exactly the same, I think. We don’t do social just…company they have all the purpose in being social but the purpose of a company is doing business. I think with Tradeshift just add in by doing business. That means you have business into actions. And the social is a tool to support those business into actions. So I think what really worked was that people saw, If I have problem with this transaction, I can comment, I can ask a question on the side. And that’s really the natural flow today, I mean, you have account payable department people, just calling each other from different companies, ‘Why is this invoice not paid?’, ‘What was the problem?’ or we got them in blue it ought to be in red and so on. And simply it’s much easier just to add an commend than to pick up the phone and calling us, I might be out. So I think we hit a very natural action pattern. And we didn’t force it, we made it natural, we say, ‘Hey, the primary focus is not to be social, the primary focus is actually to do business’. And the social is just a supporting part of that. And it was a business transaction that was viral, it was not the social part that was viral, that was the extension of the business transaction.
Andrew: Did you use any tactics? Like the founder of Goodreads told me how, I think it was him, in the early days, he would just let people auto import their address book, and then suggest to them, that they add contacts to Goodreads and tactics like that, worked for him and others at the time.
Did you use tactics like that, that other people can use?
Christian: We used some, most of them failed. We did one thing in the spring, where we did encroach campaign, like get $10 for each user, it was Paypal promotion, it was like get $10 for each user you get to sign up to Tradeshift account. That was a very early Paypal trick that worked very, very well for Paypal and it failed miserably. And I think one of the reason is, this is business relation, you don’t do stuff for $10 basically.
So I think whenever you’re in a new domain, you learn the rules all over. And I think lot of tricks are out there is from consumer based and you can not just replicate them on enterprises. One of the things we did do, that worked, was actually to make use of the, make it possible for them to recommend each other, to recommend our company. And that was something that actually worked quite fast and companies now recommending, if they had a good business partner, Tradeshift is a good partner and so on.
Andrew: I see. And recommendations are big because I’m imagining companies want more recommendations. So they encourage their customers to make recommendations. Once the recommendation is made, there is an encouragement for people to spread the word, that they just so proud to share on the site. Is that it?
Christian: Yeah, exactly. I think all companies they have this recommendation thing. If you go to your local whatever, they will have a quote saying, ‘Hey, XYZ come in, that is the best dentist in town’ or whatever, that’s right.
I think what makes it real in a social network is, the recommendation comes from the other side, not from you. It’s not just something you went online and put on your site. So somebody recommending Mixergy, on Tradeshift, you can see that quote actually came from our site. Just like recommendation in business is powerful.
Andrew: I should do recommendations on Mixergy and encourage people to share them. It would actually be nice, if I had software that would enable me to do something like, let people select the best question or the best answer or the key moment in the interview, and then recommended it to everyone else in their social network. And then of course, they want to broadcast that out. Stuff like that I love to do. But I got to use the tools I have.
Christian: Yeah. Probably just a start-up one right there, trying to do that, so
Andrew: Is there? Yeah, right.
Christian: No. I mean you might have created it now.
Andrew: I want to ask you a couple of closing questions, but first let me think, someone in the audience, I got an email from someone named Micky, in the audience. He signed up for a premium membership, sent me a thank you note. This is what Micky said, ‘Hi, Andrew, thanks a lot for bringing me into your inner circle, I love watching your show so much, so that when I have free time, I turn on Mixergy, instead of the TV. Keep up the great work and thanks again for the personal email address. ‘ which I always give premium members. this is Micky from Totalos.com. And that is really one thing I love about this, there is someone right now, instead of watching Dancing with the Stars, is watching Christian Lanng. Who instead of watching Jersey Shore, is sitting here and scribbling notes, about how you make your site more social, how you talked to customers. And I’m so grateful that I have that kind of audience, and if you took that extra step that Micky did sign up for a premium membership, let me suggest one course that you should take, based on what we just talked about.
Cindy Alvares of KISSmetrics. Do you know KISSmetrics, by the way Christian? What do you think of KISSmetrics?
Christian: I think it’s really great and I think you need to get that deep to metrics into most startups. I think, yes, everybody should be really, really using it doesn’t have to be KISSmetrics, but you need to understand these concepts and evaluate everything you do.
Andrew: Do you guys have KISSmetrics on your site?
Christian: We don’t have KISSmetrics. We have our own system, but it follows a lot of the same principles. [??]
Andrew: I got you. You guys don’t have 50 developers. KISSmetrics is great for keeping track of the funnel analytics. I think that’s what the specialize in. But Cindy Alvarez came here and she said this is how we did customer, not surveys, but customer conversations. They would find someone with a deep pain. And she shows how she finds them, and then she says, “These are the exact questions that we ask and here is the way we look to provoke the person to tell us what he’s frustrated about.” And basically she’s saying to do what you suggested to do on Skype. She giving people a framework for it. You guys should take the Cindy Alvarez course. Go to mixergy.com/premium. If you are a premium member, you don’t have to pay me anything. It’s part of the system. If you’re not, I hope that you join us the way that Micky did.
All right, now that I finished plugging. You’re in the dark. I feel a little guilty. I wanted to bring this up earlier, but I’m here in the afternoon. Life is comfortable. I’m drinking my coffee during my interviews. What part of the world are you in? Where are you today?
Christian: Well, right now I’m actually sitting in my apartment in Copenhagen. It’s in the northern part of the world. Today, business is global. It really doesn’t matter. In Tradeshift, we have 18 different nationalities.
Andrew: So you would be working now anyway?
Christian: Yes, so typically you would be working at this time. Yes.
Andrew: I saw someone walking in the background. Don’t the webbers walking in the background say, “Hey, we’re in a family here together. What are you doing working?” How do you deal with that?
Christian: Yes, I think they are quite used to it, so that’s just it.
Andrew: Why are you doing this? You had more people like that. In the next half hour, before I even published this, more people will have singed up for Tradeshift than will have signed up in the whole time that this interview is online. Even though I have a nice, great audience, you’re doing great without me. Why would you come here and spend an hour of your time plus the pre-interview, plus all of the prep to do this interview?
Christian: It’s really about having less people failing at what they are doing. I failed with my first startup, and I think I learned a lot. I think if everybody can take some of the stuff you’ve been doing and build a successful startup, I think we’re doing something great. So that’s really it.
Andrew: That’s a great place to leave it. I’m going to say two more things. First of all, Skype is the best tool and also the most frustrating tool. It looks like your video froze. Thankfully, it’s not an embarrassing shot.
Christian: I had a very nice time with you, really.
More than that, in all seriousness, Christian, thank you so much. I know that you said that you would be here working anyway, but you wouldn’t be here focusing the way that you did, being open the way that you did if you didn’t care, and I really appreciate the care that you put into this.
For everyone out there who’s watching, use whatever you learn from this and come back and share it with us. Tell me even if you say Andrew I’m not ready to share with the world the way some people do, tell me what you’ve done with this because I’m eager to see your progress. We’re going to get to know each other over the course of years and years and I want to know it. Even more important, find a way to connect with Christian and let him know what you learned from the interview and thank him if you can. Thank you all for watching. Christian, I’m going to thank you right now for doing the interview. Thank you, guys.
