Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m so excited about this interview and the reason that I’m excited about this is because joining me is an entrepreneur who tried so many different things. Fair to say that, Frederik?
Frederik: Yeah, you’re right.
Andrew: And a lot of them failed. I think most people would just have said, “All right. This isn’t for me.” He had other options, but he didn’t say, this isn’t for me and I don’t know what kept him going. I don’t know why he persisted, but he did persist and he eventually ended up coming up with this company called . . . used to be called PhraseApp. Now he has the domain phrase.com, right? I keep checking it to make sure, did I miss something? Is it like dot-comx or something? No, you actually own the word phrase.com, not phraseapp.com.
Anyway, so the person who I’m mentioning, his name is Frederik Vollert. He is the co-founder of Phrase. They do translation, and I know that sounds super simple, but for companies that want to go internationally, that want to take their products international, it is really painful to translate their work internationally into different languages. He found a way to make it work. He found a way to make it work. Well, you know what, I’m going to talk about . . . I’m going to let the story unfold to show you what’s special about Phrase, and we’re going to talk about all the companies that he started on his path to Phrase.
This interview is sponsored by two phenomenal companies who make this happen. The first, one of the things you’ll notice about Frederik’s story is the very first thing he did was create a landing page without much more behind it. If you’re looking to create a landing page and then you do want to put more behind it, ClickFunnels will be there for you. I’ll talk about why they’re the right software to create landing pages and why if you want to do more, they will do it for you. And second, if you’re looking to hire developers or designers or as I did, hire a finance person, Toptal is the place to go. I’ll talk about those later. But first, Frederik, good to have you here.
Frederik: Yeah. Andrew, thank you for having me. It’s a pleasure.
Andrew: So I have your revenue here, but I know, full disclosure, you don’t want to reveal it. And since you told this to us in private, I won’t reveal it. What do you feel comfortable saying about how far you’ve come as a business?
Frederik: So I’m quite comfortable and happy to say that we’re a multi-million dollar revenue business.
Andrew: Okay. Profitable?
Frederik: Yeah, very much so.
Andrew: Outside funding?
Frederik: Because we bootstrapped.
Andrew: Because you bootstrapped. Bootstrap, profitable, growing, and the company started what year?
Frederik: The company start at 2009, but the product PhraseApp and kind of our switch after a couple of pivots was in 2012.
Andrew: Okay. Let’s go back and understand how you got here. Actually, you know what, one thing that I’d like to hear is, tell me about when you went to Japan to meet a client. Because I know that it’s not just numbers, there’s a feeling of pride that comes from meeting and winning over the right clients. Who did you go see in Japan?
Frederik: It was Daniel from the Stripe team. And it was actually a great experience because I was over there attending a conference kind of promoting the product and he happened to be in charge of the globalization efforts and especially entering the Japanese market. And as many entrepreneurs will know who’ve tried to enter the Japanese market, it’s quite special. You kind of have to adapt to the culture. You really have to understand how business is done there. You, of course, have to offer your product in Japanese and it needs to be well done.
Andrew: And did they already become a Japanese company, too? Did they do all that?
Frederik: Yeah. They had a country office. It was still starting out. It was really, really not a large team at that point in time. But they kind of realized that they needed a specific approach for Japan. And so basically, it was just by chance that I was there. But we recently chatted with each other because he was kind of exploring and checking out the product. But Stripe wasn’t yet at the point where they were going full in on internationalization. And so it was just great to meet him, to talk about the opportunity, to talk at this in a completely different country at this point in time. And then afterwards, it took a while, but it still took a month of communication . . .
Andrew: But did they become a customer?
Frederik: They became a customer.
Andrew: They did. And I freaking love Stripe. I think that they’re not just a great company for us to work with and we use them for credit card processing, but they’re just an incredible company to talk to when there’s a problem or a question. They’re just so on all the little details. I’m looking at a Wall Street Journal article here. Stripe now is worth $35 billion according to “The Wall Street Journal” worth more than Airbnb and Palantir. Wow-wee. All right. So they’re a customer of yours. You help them go international. That’s one of the reasons why they’re doing so well. Let’s understand how you got here. Before we . . . I want to get your background before we even get into how you started Phrase and how you got customers like Stripe for Phrase. You started Hip Hop Links at an early age. How old were you and what was Hip Hop Links?
Frederik: I must’ve been 12 or something like that.
Frederik: Yeah. It was like the starting point. We call ourselves Script Kiddies, like the people that try out programming on their own and write a website or delve into some HTML to kind of make something about the hobby and my hobby at the time and one of my friends was just listening to hip hop, and we felt there was an urgent need to have kind of a block-like website on German rap.
Andrew: With all the links that anyone could possibly want.
Frederik: Yeah, pretty much. And a couple of years later kind of like playing around with the web stuff, I realized that there was this thing called a press pass kind of way to get into concerts and to festivals using press credentials.
Andrew: Ah, yeah.
Frederik: And if you’re a teenager and offering one of the most important hip hop websites at least in your own mind, that felt like a natural choice to go there and kind of be able to interview your heroes at the time. And that was a great experience. So kind of software, yeah, fulfilled my dreams at that point.
Andrew: I’m looking at the early version of the website. There are links to . . . where was that? Biggie Smalls, Notorious B.I.G.’s . . . oh, shoot, there was something about like his death. Oh, there it is, his wrongful death lawsuit is reinstated. So you’re linking to an article about that, but you also have links out to personals, to classifieds, to places where people can buy jewelries, to adult interests, triple X. And I’m guessing those were affiliate links.
Frederik: I think that’s the wrong website. That’s like hip hop minus linkz . . .
Andrew: Oh, really? It’s not hiphoplinks.com?
Andrew: It’s what?
Frederik: Hiphop-linkz with the Z dotcom.
Andrew: Got it. Not with a . . . see that.
Frederik: You will only see it in the Internet Archive, because . . .
Andrew: That’s where I’m going.
Frederik: . . . it’s from like a couple of years now.
Andrew: I love the Internet Archive. I feel like it’s so interesting to see how people got here. It’s interesting, for example, to go back and see how the people who created Basecamp, how they rose to prominence by recreating webpages for FedEx, for example, back in the early days when they were doing web design. It’s interesting to see what their site looked like back when it was simple and then watch it evolve over the years. I do that from time to time when I’m interested in someone to see how they got here. All right. HipHop-Linkz, it does not have any triple X links on it. Was there money though in your version of HipHop-Linkz?
Andrew: It was just press pass to get access.
Frederik: Other than getting the press passes, there was no money involved, unfortunately. I didn’t develop a business sense about programming at that time.
Andrew: And then you ended up working for Simfy or co-creating it. What is Simfy?
Frederik: Simfy was Germany’s first licensed music streaming platform. So it was kind of a Spotify-like product. But we were the first ones in Germany to actually be fully licensed and have the back catalogs of the big labels. So it was huge. It combined like my interest in music and being able to provide such a great product to use and to have basically every friend and family use the product you work on. That was a huge experience. So I was lucky to join the team quite early. And then from that experience, I founded Dynport with a college friend of mine
Andrew: Before we get into this. How were they able to do this? It seems like what you guys did at Simfy was you had an iPhone app, an Android app, you had an Adobe Air client, right? You had all these different options. And from what I understand, I could, if I bought the CD, play it and stream it from anywhere, right? And then if I . . . First of all, is that right? Only if I bought it?
Frederik: And so the first concept . . . the basic idea behind Simfy was we wanted to make listening to MP3s legal. That was kind of the vision. And the first idea that was developed was just basically make it easy to buy MP3s, so like a price comparison, which didn’t work really well because iTunes became such a platform that nobody had the desire to select different vendors. But then we thought about like, well, if you buy a CD, you can sell it and you can exchange it with others. And so we wanted to make that with MP3s. So basically, if you have bought an MP3, you could exchange it with others if you wanted to listen to a new album, for example. And so we did kind of legal work on it and figured out if it would be possible or not. And then kind of it became clear that it would be an option to do just a flat rate for music thing. And we already built the streaming technology, the MP3 exchange technology the service, the platform, the music library with all the background information about the artists and . . .
Andrew: They got a social networking site there, too, right? There was a social networking component.
Andrew: Got it. And so the way that you . . . You said, look, the music companies are not allowing people to create a service like what we now know as Spotify or Apple Music where people can pay a monthly fee and get any song they want. They’re not allowing us to share our music with our friends. What if we reproduced the CD-sharing experience online? If Andrew gives Frederik the song that he bought, we delete it from Andrew’s computer and we put it on Frederik’s computer and now it’s completely legal. Everything is fine. And it turns out that was legal, but it didn’t work out as a company. Why not? Why am I getting a lot of dead pages when I tried to go see it today?
Frederik: I think actually the brand is still active, like, because it has been licensed to some country markets and it’s used kind of as a brand still. But actually, I think the competition just grew faster. So we were all . . . because of the licensing, we were always very focused on a specific market, which was Germany at that time. And also, the company’s structure wasn’t ideal at the time. So kind of team broke apart early. Everybody kind of followed the interest and Spotify was so quickly entering the market that kind of the niche we were operating and wasn’t interesting any longer.
Andrew: Why did Spotify get the ability to make deals with the music industry that other companies weren’t able to do? Do you know?
Frederik: I think one key component is their investors. As they kind of were open to investment by the music industry itself, so they kind of have a pool of investors from the industry, which I think helped them in licensing arrangements. Also, at that time, I think everybody in the industry was very scared of Apple. And so any competition around music, like SoundCloud, like Spotify really, really got a push from that.
Andrew: Got it. So when it closed down or when you left it, how did you feel about it? Where you at a point yourself in your life where you said, “Oh, this thing is not for me”?
Frederik: I still love it. Because, like, working with music applying a skill like programming and building the platform, you really, really know what was a very, very nice combination. So if I could do like a music-driven project again, I probably would do it. So that’s always been a passion. But at the point in time actually when . . . we still worked with the company I co-founded for Simfy for quite some years. But we did other projects because we were always interested in new domains.
Andrew: Simfy wasn’t exciting you. It wasn’t working. It wasn’t . . . I guess I’ll leave it at that. It wasn’t exciting you and so you and a few friends said, “Let’s solve other problems.” Am I right?
Andrew: And you just started looking for different problems to apply your software writing skills to? Why were you looking for problems? You specifically use the word problems with our producer and I highlighted it for myself to ask about that. Why is it that as we’re looking at some of these other ideas that you pursued, problem was at the core of it?
Frederik: Well, you can frame it positively and like looking for opportunities or chances, but I think a lot of opportunities just occur from problems. Like, if there are hot problems to solve, you as a founder have an opportunity to look into it. And with advances in technology, more and more hard problems become really solvable. And if you’re at the right point in time and you got the right problem, the right market, that’s a great opportunity to go after. But the validation phase is really important because you may think that it’s an important problem, but the market has to think that as well. And that’s the thing that we kind of got wrong in a couple of ideas where we participated or we started.
Andrew: Let’s look at one of the things that you created, a pizza delivery portal. What was that and what was the problem that you’re going after?
Frederik: So in Germany, there was a very specific thing. There was kind of one and key name domain, which was pizza.de and it was the most important delivery ordering system, but it was really just providing you with basically the phone numbers. It had no digital buying experience and so forth. And so kind of there was no real e-commerce component, but companies were kind of listing their shops there.
Andrew: So it was still really big, but there was no way to actually order a pizza from this directory?
Frederik: Exactly. And they were really old school, like they used fax machines and it was really like the internet age, but it didn’t reach kind of this company at this point in time. And so a founder who was actually involved in franchising, so he had a couple of franchises of like Subway and like typical restaurant chains, came to us with just the inspiration that there is this opportunity because it’s not tackled yet.
Andrew: Got it. So, since nobody has made it easy to order pizza online, we’re going to be the ones who solve that last problem. You created a site from it. And what happened?
Frederik: Well, actually, it was really hard to get the restaurants kind of to participate and list their products there because you kind of . . . it’s the typical like a chicken and egg problem. For users to find you, you have to have interesting products. You have to kind of provide the different food categories that people might want to order. And for the restaurants, you kind of have to prove that you’re a valid listing partner and of course, you’re out for exclusivity, for example. So you don’t want that their products are listed or their shops are listed on other sites. And so it’s hard in the beginning. And what ended up happening with that project was that it actually got bought by one of the largest brands in the market in the German space, Delivery Hero, which now is also part Rocket and so that was a nice experience.
Andrew: For your company?
Frederik: For our company, not so much because . . .
Andrew: Your company got bought out by . . . No, the other one, pizza.de, got it. Okay. You ended up coming up with other ideas in trying to solve other problems. Let’s talk about one other one and then we’ll see what happened next.
Frederik: Yeah, sure.
Andrew: I was excited about Rocket Internet because that’s going to play a part in a moment. But first you had a travel site, you told our producer, it was like Airbnb. What was it exactly and why didn’t it work out?
Frederik: Yeah, that’s actually Rocket. So it was a Wimdu and it was . . . I realized it’s now Reid Hoffman famous because he featured it in his book, “Blitzscaling.” And it was, yeah, a similar product offering to Airbnb and the idea was basically building this company up as fast as we could on a global scale while Airbnb kind of was reaching their first million booked beds, which was quite late after their start of a company. But they were amazingly successful. And so kind of in the Rocket ecosphere and this, this idea came up that this market could be a great opportunity.
Andrew: Was this within Rocket Internet or you just did this on your own?
Frederik: No, this was within Rocket Internet.
Andrew: Within Rocket Internet. All right, let’s take a moment and I’m going to talk about my first sponsor and then we’ll come back and talk about how you got involved with Rocket Internet and one of the creators of it. First, I’ve got to tell everyone, if you’re looking to hire developers, in fact, let me ask you this, Frederik, what’s a tip that you have for somebody who wants to hire developers? As someone who’s a developer yourself, as someone who’s hired, what’s one tip that you can give somebody who’s listening to us here about how to hire the right developer?
Frederik: Hire for passion and spirit.
Andrew: Passion and spirit.
Andrew: Okay. What do you mean? What do you look for when you’re hiring for passion and spirit?
Frederik: You don’t want a hired gun. You want somebody who really can feel and understand the pains you’re solving for your customer. And who is really motivated to work in the specific domain. And of course that that can be just by technical proficiency, just being a great coder in their sphere, but they have to really, really be passionate about what they do.
Andrew: Are you guys on mobile? Do you guys have a mobile app?
Frederik: No, we do not have a mobile app.
Andrew: All right. Here’s where if you decided to go to Toptal, here’s where it might make sense for you. What you could do is go to Toptal and say, “Look guys, I need somebody. I see that more and more people are coming to my website using iPads. Apparently, CEOs love using iPads instead of computers. We need an iPad app, and we don’t want somebody who’s never done it before. We want someone who’s built an app. Here’s the things that we plan to have in our app, we want somebody who has experience doing that. Or here are the problems our app should tackle, we want someone who’s tackled those and we want them to have the right spirit. We want to make sure they fit in with the culture and that they’re not someone who’s just a hired gun who’s going to put this together and disappear.”
You leave that with the matcher, that’s the name of the person at Toptal who will find the right person for you, and they go off into their network. And they might even come back to Frederik and say, “Here’s a team of people who work before. They work really well together. They could co-create this for you and if you like, you can continue to work with them.” Or you can say, “Guys, pass this on to our team. Our team will then take on the iPad development from there.”
But they will introduce you to a few people, a few teams, whenever it makes sense. You get to talk to them, get to interview them. If you’re happy, you can hire them and often get started right away. If you’re not, you get to move on. Now why would someone like you, who has developers need someone from Toptal then? Well, what you might want is someone to just go work on this as a side project. Someone should not distract you from the rest of your business. That’s why many people go over to Toptal to hire the best of the best, who’ve done the work before, who can fit within the culture that they’re looking for and allow them to focus on what they’re doing and let the team go do their greatness.
Or frankly, Frederik, some people just say, “I want them to be fully integrated with my team. Act like they’re fully integrated, act like they’re part of our team. Get up to speed on what we’re working on and continue to develop it.”
So lots of different ways to work with Toptal. And even you, Frederik, if you want to work for Toptal, I’m going to give you a special URL where you’re going to get up to . . . what is it? Wait, let me go to the URL. I could do this, like, from memory and suddenly I’m pausing. I said, wait, I don’t think I’ve got it. Here we go, Mixergy listeners will get 80 hours of Toptal developer credit when they pay for their first 80 hours.
Let me think about that. They’re giving you 80 hours of free development time. And in addition to that, there is a no risk trial period of up to two weeks. Here it is. It’s top as in top of your head, tal as in talent, toptal.com/mixergy. You see that beautiful model on that page, too. Okay. How did you end up connecting with Rocket Internet?
Frederik: It was actually through the two founders off the of Wimdu and because . . .
Andrew: The Samwer brothers.
Frederik: Yeah, the CEOs. So the two CEOs, Hinrich and Arne, where we knew them because we help them on a project they built before where it was about monetization of online games and which was later as successfully sold. And we help them to build up some technology for that. And they basically came to us and said, “Hey, look, we had this one investor in the company before, which was [Oliver Samwer 00:23:11] and he’s building big stuff like no startups, like really, really big from the get go. And we have this amazing opportunity, we’re looking at this model to rent out apartments and to do it over the internet and kind of to rent your own couch, to do couch surfing for money. And we would really like to have you onboard kind of as our tech team.”
That sounded really, really amazing to us because from the beginning I was always out to kind of learn from the best and to kind of understand new domains and understand new people. And Samwer was kind of the prodigy of the German internet at that time. He just did the Groupon exit. Zalando already was on its way and so it like, he was German internet. Even though like not really original with a lot of the ideas. Just a brilliant sharp guy . . .
Andrew: One of the things that Rocket Internet was known for was seeing what’s working in the U.S. it’s taking the Americans too long to get to Europe, let’s be the first ones to bring it to Europe with the European spin. And they were also known for often selling their European version back to the company that they mimicked, right. And so you saw that you said, “I like the way he thinks. I liked the, how fast he creates. I like working with him. I’m going to do it.” The thing that I wonder though is you’re a guy who was an entrepreneur, did you feel like, “Well, it’s a step back. I’m taking a job working for somebody else who’s great versus being great myself. If I just keep up with these ideas, one of them will work out.” Did that happen?
Frederik: No, because at that point in time, like I and my co-founders, we already had the idea that we wanted to start our own business, but we were still on the learning path and we understood that it takes time to kind of understand the business side right. And it’s an amazing time to learn from others while you still can because later, it becomes harder and harder to have like a peer group that challenges you and that kind of gives you the input you need to move forward.
Andrew: Got it. Okay. All right. So then I could see why they would be so good. They had a project that was funded with 40 million Euros from day one. You’re up and running. The issue though, or one of the issues that you found was you wanted to translate this site into different languages. Am I right?
Andrew: And this was an Airbnb-type site, sorry. Right?
Andrew: What was the name of the company?
Frederik: Wimdu, W-I-M-D-U.
Andrew: Okay. And so I thought it was fairly easy, Frederik, to get your content translated into different languages. I interviewed a few companies that did translation services. What’s the problem that you had?
Frederik: I think the problem that we encountered was it’s really great and really easy to get services to translate documents and just if you have your contract documents or something like that, written documents and all the translation agencies are kind of built for that. They know that, that’s their business. They have customers who need that. But we were in a digital space. We needed weird formats of files to be really well localized, like all of these programming languages, like your iOS app or your Android app come with their separate localization format with kind of the files that are needed to localize the interfaces and kind of have all the copy in them.
Andrew: Why couldn’t you just take all the data out of that, put it in a Google doc and say, okay, here’s all the different screens with screenshots with the techs. Translate this back to us, hand a copy of that to each a translator who’s going to translate it to different languages.
Frederik: That’s exactly what we did in the beginning. Like with that . . .
Andrew: What’s the problem you had with that?
Frederik: You’re waiting for feedback, like you’re waiting for emails coming back, for example, with Excel sheets, you need access to the files. At that point, Google Drive wasn’t even a thing so it was really early for that. And on the other hand, like having this in a spreadsheet, this is all good and fine, but then you have developers who are really well paid and who you need kind of you talked about Top Talent, like you really, really need to work on your product that kind of do copy-and-paste work from Excel sheets, which is just a waste of money and talent.
Andrew: And so this is what you kept going through over and over. I’ve got a list of some of the complaints that you brought up in your conversation with someone on our team. You said, “Look, translators would reply via email to us. And so you had to keep track of all these different emails coming in. We never knew what the turnaround time would be, different translators worked at different time, programmers had to edit the translation, put it back into the code. It took us weeks to finish each feature just because of the translation.” This little thing that I assumed was just a solved problem because people had been translating for years, right, for millennia, was a huge issue for you. At what point did you say, “All right. We’re going after this, this is going to be the next thing for us”?
Frederik: Yeah, pretty much after a couple of weeks because we actually got the deadline that we kind of had to build the prototype and release it in 20 plus languages within a month and we failed miserably.
Andrew: Because of the translation issues you failed at Rocket Internet? With 40 million Euros, you weren’t able to get your stuff translated into all these different languages?
Andrew: Okay. Wow. I had no idea.
Frederik: It wasn’t about money. It was just about efficient technology. And so even when we got things translated, it was out of context. Like the translators looking at an Excel sheet didn’t know what they were translating, like if it was a button or some texts, a block on the website. So the basic inspiration for the whole thing was, “Hey, we want to ship products on the same day. Like we want to develop a feature and be able to release it as quickly as possible. And why don’t we give our translators the same kind of access to our product that we have. We can see it, we can play around with it, we can work in it and we can, for example, do quality testing using the website itself.” And that was the technological idea behind the product. Why couldn’t we make translating inside the product possible so that the translators would just get a link to a feature and be able to edit the product on the spot.
Andrew: Once you realize that this is what you needed, this is what the world needed. Did you at that point quit working on Wimdu and then go and do this? No, you stuck with Wimdu for a while.
Andrew: I’m sorry, go ahead.
Frederik: Yeah, we stuck with Wimdu actually for almost two years. But I left the project after like half a year because it lost a bit of traction and I also wanted to explore the idea and so we started doing a prototype on the site that we could already employee at Wimdu. So we used Wimdu and the product management team as kind of our first test customer.
Andrew: But you were going to own your business by yourself, they were going to be one of your first test customers. Did you create the product first or the landing page that is now infamous or famous?
Frederik: For Phrase, we created a landing page first, because at that point in time I think Lean startup came out.
Andrew: Lean startup. Yeah, Eric Ries’ philosophy of starting quickly, getting feedback and rapid iteration. Right. So you read that book, you said this feels right to us and the very first Lean thing we could do is create a landing page.
Frederik: Yeah. Because we weren’t always in on agile and prototyping and so forth, but prototyping for us always meant it needs to be a working product. And with Lean that now became more of the idea to sell the value proposition to get, for example, a kind of buy the product page with just visual teasers or some text explaining the product. And that to us sounds like a brilliant idea to play around with. And we actually went wild. Like we didn’t commit on Phrase at the beginning, but we tested out various very different products.
Andrew: You mean different product ideas on this landing page?
Frederik: Exactly. We did not have a clue of what pivoting means. So for us, it was just one business model a week. And we would kind of like pitch the business model, check if there’s a market, if there are competitors, if there’s anything like it. And if not, we would put up a landing page, give it some SEO spending, some paid traffic and then look how it works.
Andrew: You know what, so I’m looking at this, I didn’t realize you were doing that. I’m looking at one of the early landing pages. It says, “Translating apps and websites is finally easy. Manage translations in your projects without a developer, easily edit your text and allow translators to adapt text on the website itself.” So that was one iteration. You thought maybe people want to actually go in and want their translators to go in and make the edits themselves. And so, if anyone was interested, they could just fill out a form on the bottom to get notified when it was available.
And I liked that you asked for email address, which is a standard, that’s how you’re collecting interest. But you also say what technology do you use because you’re trying to figure out who your customers were. And then you also said, give us a little bit more information, like framework, special requirements, etc. You are trying to not just see how many people were interested, but what these people were like. Right?
Frederik: Exactly. Because like we came from a very niche perspective, like we were Rails guys. We programmed Ruby code at the time. So all we could think of was like there’s this Rails community and you could sell this to other Ruby teams. And that was our niche market. But we quickly realized that we have to develop an idea on kind of what is the distribution of different frameworks, what software are actually companies using that have the same localization need as we did at the time.
Andrew: And were you right that it was mostly people who are Ruby on Rails developers?
Frederik: I think in the beginning, yes. But it really, really quickly changed. So we had to adapt quite a bit because in the beginning we thought, okay, this is a product and a market if we just serve Ruby and Rails. But it turned out that for us to build a viable business actually cross-platform was a huge thing. So to support kind of this explosion of different programming languages, mobile apps became more and more important, like we were, at the time when we started out projects thought about like if they would need a mobile app. And nowadays, it’s clear that most businesses have kind of develop a mobile app case so they have to support that. And we quickly realized that our sweet spot is actually being able to provide a single point of truth for copy all around different platforms and different programming languages.
Andrew: What do you mean by single point of truth for copy and all programming languages?
Frederik: Yeah. I think one basic assumption about localization and translation is that it’s about localization and kind of the act of translating something that is already written and that is final into other languages. That’s how most translation management systems are built. But our idea was, wait a second. It’s also about the initial copy. Like how do teams nowadays develop their UX copy? They need the same tools, they work in the same files, and it’s kind of a mix between content management and translation management. And you need to be able to do both.
And with a rapid changes, continuous deployment and so forth, you actually have to continue at least the change even copy that that is already there inside the product. Because, for example, you want to test a different claim or you want to test the different value proposition. Well, you need to have a tool that kind of is the single point of truth for what is the current copy, what do we need for this release, and do we have the translations for this copy already?
Andrew: And you want it all within one place on your site, not necessarily in the app itself so that if you want to know what are we saying in the UK while you go into this one place and we see what it is and if we want to change it, we know we change it there and not go into the app, not going to the webpage, etc., and that’s what you realize eventually.
Let’s come back in a moment. I want to find out how you got your very first customer, that person from Australia, what you did to keep on growing, why the 10th customer was so significant for you, and then you’ve also talked to our producer. I love that we’ve got producers here. You talked to our producer, Arie Desormeaux, about some of the problems and I love how analytical you got on it because I think that that helps us understand what you went through as a company, but I’ll tell you that, Frederik, you should know about a company called ClickFunnels.
I feel like in the software space, we don’t really spend a lot of time thinking about landing pages the way the direct marketers do, but direct marketers have miles and miles of progress on other people who are creating pages. One of the things that I failed to understand about ClickFunnels was I said, “Yeah, it’s a landing page, anyone could create a landing page. I saw your landing page, Frederik. It’s basic and it’s just straight up simple HTML.” What ClickFunnels helped me understand is a lot of times, once you’ve got your offer, actually a lot of times what you want to do is A/B test. So ClickFunnels does the A/B testing within the app. So you can say, “I want this page or this page and let’s see what works.”
Also, where you place the form that asks for the email address makes a big difference about whether people are going to fill it out. It’s not just that they’re not interested, it’s where is that form? Is it clear? Is it easy to see? Also, what does it look like on different devices? It might look great on a desktop, but if you have to hunt down, where do I put in my email address on a phone, it doesn’t work well. And so ClickFunnels makes all that easy.
And then another thing that I learned when I talked to Eric Ries about 10 years ago, the founder of the Lean Startup Movement was it helps to charge people that if someone says, “Yes, I’m interested, here’s my email address,: that’s okay. But if they say, “Yes, I’m interested, here’s my credit card,” then it’s a real understanding that they’re ready to pay. ClickFunnels makes that super easy and so you can easily drag a credit card field on your confirmation page and so after someone gives you their email address on the landing page, they hit Submit. On the next page it says, “Well, here, if you want to start paying right now, all you have to do is enter your credit card information. Boom. Now you’ve got a way to collect their credit card information.”
And as you developing this Frederik, you start to see other cool little tools. My favorite, and I’ve talked about this so much, is the order bump. Right after somebody enters their credit card information, you can have a checkbox that says, “For a few dollars more, you could also have this other feature.” And see how many people check that. We have found that lots of people, I think it’s the majority of people just check the box and say, “Yes, I want the next thing.” They’ve already bought, they’re going to go yes to the next thing.
And this is just one of many, many features that ClickFunnels has to help you explain your product well using landing pages that had been created and had been tested by others, you get the data on them so you know what works and what doesn’t and helping you to find all those features that you might be interested in, but go program them. You probably not going to like exit intent. We realize, you know what? Some people might just want to leave the page. Let’s ask them a question like, “Why are you leaving the page? Why is this not for you?” Or say, “Hey, you left the page without entering your email address, enter it here.” That little thing helps us improve and also collect more contact information.
Anyone out there who wants to see what we have done? I’ve built one of these funnels, which is landing page, credit card, etc. I built one of them that did over $1 million in sales. I will give it to anyone who’s listening to us as a template. All you have to do is go to clickfunnels.com/mixergy, clickfunnels.com/mixergy and you will get it.
And I’ll say one last thing about these guys. They are mensches, really nice people at ClickFunnels. I lost my EarPods. I took my kids on this outdoor train ride, you know, and I guess I was just sitting in a weird way. Oh, I know what it was. I think I was maybe on the swings afterwards with them. Actually, I don’t know where it was. I lost my AirPods. I posted a message on Facebook about how I spent two hours driving back to this place to look for my AirPods, couldn’t find it. Dave and Russell from ClickFunnels just bought me AirPods and sent them over to me. These guys are phenomenal. All right. Clickfunnels.com/mixergy, you’ll also see a great interview that I did with Russell when I flew out to see him in Utah. Lots of bonuses. You should see what we’ve got there for you at clickfunnels.com/mixergy.
All right. The Australian guy, where did that come from? How did this person find you and how did he lead to a sale?
Frederik: Yeah, we later found out that this was kind of the usual way how tech people sell their first products. We did opportunistic sales, so we kind of did the thing, we tried the landing pages with, we paid Google ads and we kind of did our AdWords and this guy found out about the promise of being able to edit in place and do the localization like that and really fell in love with the idea, like the typical early adopter.
Andrew: But he specifically said to you, “I want this. How do I buy it now?” That was the difference between him and some of the people who put their email addresses and filled out your form before, right?
Frederik: Yes. We did multiple iterations. Like in the first days we did like, okay, leave your email here. We did the questionnaire thing that you read and later, we actually put a price on it. We basically said, “Hey, we have two products. This is the basic product and this is the really cool advanced product. It will cost you, I don’t know, 200 bucks per month, but you will be able to do live editing.” And he signed up for that. But we didn’t even think about like charging. We didn’t implement anything to charge.
Andrew: You just wanted to see that he was willing to put a credit card in.
Andrew: Got it. Okay. And then now that you had somebody paying, did you decide we have to find a way to go build this?
Frederik: No, actually, like when we had 10 customers we thought about building charging.
Andrew: Got it. But did you actually do the service for the Australian guy? No. You just saw that he entered his credit card information and you waited to get nine more people and then you said, “It’s time for us to sit and actually create this,” right?
Andrew: Okay. Excuse me. So then what was the first version that you actually created then? Once you had 10 customers, what did you create for them?
Frederik: Well, we actually thought of the product of being like the editing interface in the website, that was our product. We didn’t think about providing an API or providing like a real . . . system in the background because we wanted kind of to hook into other systems. But when we talked to the vendors of these kinds of classical products, they just turned us down because we were nobody, we were just a team of engineers kind of with an idea and a couple of interested people.
Andrew: What do you mean? What did you want to hook into? What did you want to hook into?
Frederik: Like the kind of the classical infrastructure of translation management systems. Like the tools that your translation agencies of choice would probably employ to do their kind of their translation management which they had translated into . . .
Andrew: Oh, you mean they have software already in place to help them make their edits and submit their translations. You said, we will plug in and then your translators can still do the work. All we’re going to do is make it easy for the developers to take that work and put it into their sites, put it into their apps and they said, “Frederik, who are you? Go away. You’re too small for us.”
Andrew: Got it. And so you said, “All right, if they’re not going to work with us, we have to go and create that ourselves, the editing software, the software that the translators will go into and write their translations and edit it and submit it.” You had to go and create that, too.
Frederik: Yeah. And that turned out to be actually the easy part, like technologically, building that was just a matter of a couple of weeks. Of course, we did then kind of a minimum viable approach for that. We just built the functionality that our customers would need to have a working product. And then we pretty soon, like around the 10th customer, had like a version that could actually be used for productive usage.
Andrew: Okay. So you had that up and running, you gave it to the 10 customers, $100 a month I think is what they needed to pay for it?
Andrew: And then you did the translations also?
Frederik: No, because like the services isn’t part of our product. We now have kind of integrated partners. And we offer, of course, advise on selecting a translation agency that fits your business and your domain. But our view on this has always been we wanted to solve the technological issues of kind of working with copy and localizing. And nowadays, our vision is also that the machine translation aspect is growing so quickly and improving in qualities so so quickly. And that has actually been a good decision
Andrew: Because if you are working with the translators, eventually people would need you because software could do the work that the translators are doing. But because of your the software layer between the translation, whether it’s done by a computer or a person doesn’t matter, and the software itself, you have a growing market. Got it. And so you created this, you had to go and get more customers in the first 10. I’m looking at an early version of your website where you’re boasting that you have 500 customers. And of course, I see Rocket Internet on there, Wimdu on there. How did you end up with the other 498 customers? The first 500, where do they come from?
Frederik: Well, we didn’t round up in those days, so we’re at least close to 500, otherwise, we wouldn’t have stated it.
Andrew: But how did you find them?
Frederik: And it was a actually a bit of hustling because we kind of, of course, approached our network as we have worked in a couple of startups before. We kind of knew people from sales, we knew engineers, we went to user groups, we went to tech conferences and kind of pitched the idea. And it was hard in the beginning because a lot of people turned us down because they didn’t see the need for the type of product. They didn’t have the same pain.
For example, the projects they were working on were still very small and still in one market only and so forth. So we had a unique experience at that time working in this company that really had to go international that quickly. But over time, it became the norm. And like even smaller companies who like haven’t have a product in the app store that works in one market really, really quickly think about going into a different language now.
Andrew: They do? But back then they didn’t.
Frederik: Back then they didn’t.
Andrew: And you had to find the few people who were willing to go to a different market. And it was where, it was you working your network. What else? Buying ads?
Frederik: We still bought ads. We started a kind of a content marketing approach. So we wrote about how you start out as an engineer localizing your product kind of early trying to get information and customer leads early. And we also thought about, for example, other channels. How could we leverage other platforms or how could we reach more customers through organic growth just being about certain specific topics that may be relevant to teams that work on localizing products that have the need for that.
Andrew: You mentioned content marketing, so I went into a Ahrefs, I looked you up to see what some of your top pages are. Here’s your top blog posts. According to Ahrefs worth $3,800, “10 Must Read Blogs for Software Developers.” So you’re starting to write content or you were starting to write content to go after the developers who you wanted to integrate your software. And there’s another one, “19 Blogs Every Translator Needs to Read,” “16 Killer Blogs Every Product Manager Needs to Follow.” Then it goes into “Nine Steps to Get Your Website Localization Started” and it goes on and on and on. All these different articles designed to cater to the type of customer, the type of developer that you’re targeting. Right?
Frederik: Yeah. You have to offer valuable information. So I think the most important thing is that whatever you’re providing to potential customers must have such a value that they like reading it, that it gives them some information, some insight, for example, from other teams experiencing the same difficulties and that they kind of make this checkbox mentally. Okay. There’s a product in this market. The guys from Phrase seem to know what they’re talking about or writing about and I’ll better check that out. Once I am at that stage where I actually need to grow globally fastly.
Andrew: What’s worked the best? Is it advertising? Is it content marketing? How are you able to get people? I’m looking at a SimilarWeb to get a good sense of where your traffic’s coming from, but there just isn’t enough for me to find.
Frederik: Yeah. Actually, the hard stuff has worked good for us. So SEO and organic grow.
Frederik: Yeah. It’s our like still we’re at the stage where word of mouth is one of our greatest referrals and organic is most important as a lead source.
Andrew: Let me take a look. Incoming traffic, top referral source is nothing. It’s direct. I guess, maybe textmaster.com. What’s that? That’s one of the top ones.
Frederik: That’s actually one of our integrated partners. So they are a modern translation provider and it’s really seamless to use them on our platform. So many customers enjoy using them.
Andrew: Yeah. Once I start to see the tools that people use just to log into your service, I realize it’s not about one site sending a bunch of traffic. So if I look at where traffic is coming to your site from, I see LastPass in there. Obviously, people are using LastPass to log in, Okta is in there, GitHub is in there.
Frederik: We, of course, get a lot of developer traffic so GitHub is a given for any developer. But we also have a lot of large corporations on the website. So LastPass and using like . . .
Frederik: . . . yeah, Okta for the logins, like all the big players do it nowadays.
Andrew: Were you running an agency at the time, too? Because I understand that you had to figure out when do we give up the agency? What did the agency do?
Frederik: Well, the agency did technical co-founding, that was our business. So we always knew that we could build anything but that we need to partner up with founders or investors who have some specific knowledge about the domain. And that was the business we were running and we were helping amazing people and amazing teams all across Germany. And we learned a lot. So that was kind of our learning experience. And it’s a profitable business. Like it’s a good business to have a software development [crosstalk 00:52:09] . . .
Andrew: Where somebody gets funding and then they come to you and they say, we need you to build a first version of this, go do it. I guess the company was called Dynpoint, Dynpoint.
Andrew: Excuse me, Dynport. That explains . . . that’s why I keep seeing it in like random spots, like your terms of service. Got it. That was the main company. You were doing that and at what point did you say, “You know, we’re stopping, we can’t run this profitable agency. We have to go all in on Phrase. How’d you know when the right time to do it was?”
Frederik: Actually, there was quite some time in, because we always set benchmarks for Phrase. So we basically said, “Okay, we must hit 10,000 Euros in MRR or we’ll quit after like six months.” And after like six months we had 10 customers. So we kind of broke or didn’t reach our benchmarks pretty much at all time, but we were always ambitious about it and we had good reasons to continue at that point in time. It was still fun. We were learning a lot.
But with the agency, we realized doing projects was a distraction because we couldn’t focus on one thing. We always had to put in so much of our hearts into the projects we were working on. Then it always distracted us from improving Phrase. And in 2015, actually, we decided to stop working as an agency and closed down all the projects we were still involved in and basically said, “Look, we have a gap of, I don’t know, it was a couple of 10,000 Euros at that point that we needed to fill by more revenue from Phrase, but we believe we can do this within a year.” And we did it and actually, during that year and since then, we more than doubled every year. So it’s a great experience and actually paid off that we put the focus on one thing and didn’t distract our self with the agency business.
Andrew: And it was not because the numbers made sense. It’s because you believed that if you focused on Phrase that it would hit the money that you need, the goal that you need. Why was it . . . you’re nodding. Why was it that you weren’t able to meet your goals? One of the things that I highlighted in my notes from the producers here, from Arie’s producer note is that you just couldn’t meet your goals for a period there. Why? Why weren’t you able to do it and why did you keep setting goals?
Frederik: And it was basically bad estimates. So we didn’t do . . .
Andrew: There’s somebody there. You’re at home right now. What is it? It’s 8 before 8:00 p.m.
Frederik: My two year old just walked in.
Andrew: I couldn’t tell who it was, but I saw a head. Got it.
Frederik: About hitting the estimates. Actually, I think we were bad at estimation.
Frederik: Because we were doing it for the first time. So we were always ambitious and we liked ambitious goals because we knew if we have an ambitious goal, it drives us. It will set free energy to go and reach that target. But we also realized okay, maybe the growth trajectory at that point is different or maybe we need to try something else. And so it’s always about taking risks and also be persistent about what you achieve and about what you aim for and to not give up on the first bump in the road.
Andrew: Are you now setting goals that you can hit? Or are you always over optimistic?
Frederik: And we have become way better in estimation. So we are now using Holacracy as a business operating system and OKRs as a planning system and it helped us a lot. It took a couple of iterations. So we’re actually now using it I think in the eighth or ninth quarter. And we’ve become way better in estimating and also, involving the whole team, having a culture of setting goals, tracking those goals, really making sure every week that the main goal, the main mission of the company is aligned and we are all aligned as team on these goals helps a lot.
Andrew: Holacracy is a known because Zappos started it and then I think they struggled with it. The idea was no more management. Everyone manages themselves where we’re all going to lead this company and I think it didn’t work them. I don’t know if they turned it around. What is Holacracy for you? I think it’s gotten a bad rap because of the Zappos’ experience. How do you use it and what’s been your experience with it?
Frederik: So yeah, with self-organization, they always comes to this notion of the mini-CEO like everybody and wants to set their own goals and is able to kind of decide what to work on next and how to optimize their projects. And what we have experienced is this is the case for a lot of talented people in our organization and we also have talented people that really need to know what they need to work on next tomorrow. So we kind of have a mixed approach. We take everything from Holacracy we need to work as a company. So the transparency, the meeting structures, it helps us a lot. The documentation and there where kind of self-organization doesn’t really work, we kind of add a layer of alignment using OKRs because with the OKRs you have a clear planning process, you have a quarterly goal and people know what their goals are. And I think . . .
Andrew: As a company.
Frederik: Yeah. That’s really important to combine those two.
Andrew: OKRs, as a company, you have these big goals and clear metrics. And I think the book on that that that people have been reading lately is “Measure What Matters” by John Doerr. And it’s got a bunch of well-known CEOs vouching for it. Right? Is that what you read to guide you?
Frederik: Yeah, actually. And the first idea came across when how we work at Google came out because it already mentioned that. And John Doerr is the guy who introduced it to the team there as well. And I think he used the methodology at Intel before. And it works great and it’s also a thing that cascades well so you can use it inside of teams and you don’t have to use it across the whole company. We actually, all of the things we do, we kind of try out in a small area of the company and then we expand them if they work well. And so with this also, we tried it out, we broke it down. We now have goals and objectives and key results per circles. We experimented with kind of the number of objectives we can set in parallel and the kind of the degree of ambition and all the goals so that it’s not frustrating for the team, but it’s still ambitious. And yeah, it’s been a great experience.
Andrew: All right. At what point did you reach profitability and feel like, all right, we’re safe, not safe, but we’re on a good solid footing?
Frederik: It was actually quite quickly after we decided to stop the agency work. So it took us about six months after that to reach profitability and we’ve been profitable ever since.
Andrew: All right. The website is phrase.com for anyone who wants to go check it out. How much did it cost you to buy phrase.com?
Frederik: Way too much.
Andrew: I bet. And you had to give up profits in order to do that?
Frederik: Yeah, we did. But like it’s a cool name. We always wanted to call the product this and actually PhraseApp was just about getting a domain that was still free. And once we had the money to buy the domain, we actually wanted to call our company like it was a clear and easy decision for us.
Andrew: PhraseApp actually is kind of a misnomer. I kept expecting it was all a mobile app when I saw PhraseApp as the domain. What did you pay, over $1 million for phrase.com?
Frederik: No, not that much.
Andrew: Oh, less than $1 million? Wow.
Frederik: Yeah, less than that.
Andrew: That’s a good name. It’s a good name. All right. So there it is phrase.com. You’re not willing to talk about how you got it, are you? You can talk about it.
Frederik: It took a while.
Andrew: It did?
Frederik: Yeah, it took a while.
Andrew: You know, one of the best stories that I heard about buying domains came from the founder of Groupon. From my memory, what he did was, and he talked about this on Mixergy and shocked people. He said, he didn’t own Groupon, somebody else did in Europe. So what he did was he got the trademark for the name Groupon. Then went back to that person, he said, “You can’t own the domain. I now own the trademark.” And he had to give up that domain. That story of him, I clipped it out, I put it in a video on my site with a transcript. That one story became one of the top pages on my site because people just kept going back to it, linking to it, talking about it.
Hey, by the way, why would people need to translate their sites? Why would Americans need to translate their sites to different languages? I think I should have asked you this before, but I get, if you’re in Germany, you’ve got a big market in Germany, but you know, there’s another big market right next door in France, there’s another one in England and one in the U.S. It’s really big. I get why you Germans need to do it. Why would Americans need to do it? Why not say, “We’re going to focus on this one market. We’re going to be really big here. We’ll figure out the rest way later down the road.” Why do they need you?
Frederik: Well, because of all those aggressive European startups that will kind of fight you. Because the European startups start out so quickly now and also, they have funding. It’s no longer that basically only the U.S. companies have funding to be aggressive on the market. They can capture markets. And I think a couple of U.S. companies already got burned when they kind of had to pay hundreds of millions or even billions of dollars to acquire companies that took the markets early. And it’s worth the effort to use lose markets in the first days.
Andrew: You know, I have seen that, that there are copycats all over because Americans are so focused. I think more and more Americans need to pay attention to what’s happening outside the U.S. and copy innovation there. Instead of saying we’ve got the best innovation, people are going to copy from us, we have to defend it. But we do still need to recognize that there are people out there who are so quick at copying and it’s so much easier to copy than to create. And if you’ve proven in your market, it’ll work in other markets. And having traveled the world now this year, I’ve noticed it. I’ve noticed a lot of competitors who just copy. Is it as easy as just having the whole site translated? Having the whole app translated? Don’t you have to also translate the experience?
Frederik: Yeah. It’s not just about copy. But copy goes a long way. And as you know in the early days, it’s about the landing pages. It’s about people understanding what you’re selling. It’s about being the first idea, the first product that comes to mind and copy takes you a long way towards that. Of course, if you’re talking about a complex product, you have to adapt to the cultures, to the market, to the ecosystem that is there in those countries.
Andrew: You know who’s really good at it? Pipedrive. Pipedrive was a small company from Estonia and I guess because they were in Estonia, they converted their stuff to all these different languages and one of the first things I noticed when I went on their site was it was in Euros, but with one drop down menu I could convert it to English to U.S. dollars. And now even on their website right now, I just went over to Pipedrive, I mouse over English and I could see that I can have the whole thing translated to lots of different sites. I feel like if they weren’t quick with that, their concept in the beginning was super easy. It’s basically a Trello board for your contacts to help you close sales and anyone else could have copied it, but boy, they were so good about translating and like you said, they didn’t translate everything. Their videos weren’t fully translated into every language, but they translated enough that it just worked.
All right. There it is, phrase.com. Thanks so much for staying up late in Germany. For everyone who wants to go check out my two sponsors, I really highly recommend if you’re creating landing pages and more than landing pages, the whole funnel process, go to clickfunnels.com/mixergy. And when you’re ready to hire developers, go to toptal.com/mixergy. Frederik, have a good night. Bye.
Frederik: Yeah, thank you, Andrew.
Andrew: You bet. Bye, everyone.