Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com. It’s the place where I interview entrepreneurs about how they built their businesses. And I do it for an audience of real entrepreneurs, not the wannabes who just kind of like to be entertained by stories of entrepreneurship, but for the real practitioners, the people who are building a business right now the people who are looking to keep building businesses for the rest of their lives. And that’s why like to get into the details of entrepreneurship, not just the, “Hey, congratulations, you quit your job. Yay.”
There’s this piece of software that I use that’s built by the entrepreneur you’re about to meet today. It’s called Pipedrive. You’ve heard me talk about it forever because it changed our whole business. We used to struggle so much to keep track of all the potential interviewees that we have here on Mixergy to figure out what to do to convince somebody to say yes to an interview.
And then I interviewed this one guy who said he uses this software called Pipedrive to close sales and it changed his business. And I was so desperate that I finally just tried it out, “Let’s see what this thing is.” What I liked about Pipedrive is unlike other CRM–and this isn’t a commercial, I’m just telling you what they do because I’m excited about it. Maybe it sounds a little bit like I’m advocating for it. But I’m excited about this business, excited about the software.
What Pipedrive did was it said instead of being a CRM that helps you keep track of all the data and all the useless stuff, it said, “We’re going to organize your sales process.” For us, selling means convincing somebody to do an interview.
And the first thing it said is lay out your steps. What are the steps for getting somebody to do an interview? So, we said them out and said, “All right, great, who’s responsible for these steps?” So, you add all your team members, which we did. All you have to do not is just have everyone on the team do their step and trust that the process will work and you will get sales or our case you will get people to do interviews.
And man, it worked. It helped us stay organized. It helped me see who is submitting new potential interviews. Who’s moving those interviewees along to get them to say yes to an interview? If somebody drops out, why did they drop out? Where did we screw up? How long is somebody in our system? Are we taking too long to get them to do an interview? All that stuff just works for us and we don’t have to think about it anymore and we all just work together as a team.
Anyway, I got really excited about it about three years ago and I said, “There’s got to be an entrepreneur behind this business. I have to have him on here to do an interview.” And I did. If you go back to the interview I recorded with today’s guest, July, 2013, you’ll see that I talked to Timo Rein, the founder of Pipedrive, about where he came up with this idea, how he got his first customers, how he grew it up, how he struggled to get funding, how his cofounder got into a little bit of health issues, how he was rejected by Y Combinator when he tried to get funding from them, how he really struggled and how he celebrated when he hit 1,000 customers.
And that’s where we left the interview, 1,000 customers. If you haven’t seen that interview, I really urge you to go back and listen to it. You don’t have to watch it, there’s nothing really visual on the screen. But the audio of it is exciting and you’ll learn a lot about how to take an idea from inception to 1,000 customers.
But that’s not where the story ends for businesses. Ideally, you go beyond it. Timo has. He’s grown his business dramatically. I don’t know how much he’s going to tell you about his numbers on screen. I’ll do my best to get it from him. But I’ve heard and I know numbers are dramatically better.
I want to know how do you take a business that’s doing well and get it to scale up even bigger? What happens? What goes into it? So, I invited Timo to come back here and do a second interview and we’re going to find out what happens after you find product market fit, after you get your first thousand customers, how do you grow from there/
And this interview–I’m still dealing with my cold–this interview is sponsored by two companies, a company that will host your website, I’ll tell you more about them later. It’s called HostGator. The second company will help you find your developer or designer. It’s called Toptal. But fist, Timo, welcome.
Timo: Hey, Andrew. It’s really great to be back. How could we follow this?
Andrew: That was a pretty long intro with a lot of excitement.
Timo: Probably one of the best demos of Pipedrive even though it’s a use case that you have and it’s not classically sales, but I’m really happy to see that it’s been a value for you.
Andrew: Yeah. I love it. I’m glad to see that you’ve come so far. You told me the numbers. What are you willing to say to my audience about how big the customer base is right now?
Timo: Well, we’ve been really lucky to have maybe the best customers in the world. And them talking about their experiences to their friends and then people they know. So, we’ve been able to keep the company growing and from a 1,000 customers that we have at that time when we talked. We’re now over 10,000 paying customers all over the world.
Andrew: It’s dramatically more than 10,000. Are you willing to say how many more?
Timo: I’ll keep it as it is right now.
Andrew: You’re going to keep it at just 10,000, but it’s way more than 10,000.
Timo: Yeah. We’ve been able to grow beyond that point.
Andrew: Okay. So, in the last four years or so, three and a half, you’ve more than 10x your customer base. When you say 10,000 customers, I know when we pay for Pipedrive, I pay not just for me, but I pay for Andrea to use it, I pay for Ari to use it, I pay for a couple of other people to use it. Do each one of us count as a different customer for you because I’m paying for each one of us? Or is it just one company counts as one towards this 10,000 number that you shared with us.
Timo: Yeah. One company counts as one customer.
Andrew: One company.
Timo: There will be users in any company like you have. We don’t count them as customers, they’re users.
Andrew: Overall revenues, over $1 million a month?
Andrew: Wow, dramatically bigger. You’ve raised money. I want to know what’s happened, how you go beyond where you were before. Why don’t we look at a few different areas of growth? First is let’s look at revenue. I asked you before the interview started, “What did you do to grow revenue?” And you said, “Andrew, support helps.” And I said, “No, come on, tell me where you bring in new customers.” And you said, “Support helps for that.” Why does support bring in new revenue instead of just maintaining the customers’ satisfaction you have right now?
Timo: I think it also is dependent on the business model that each company has and they are different. For us, obviously the business model is that you find Pipedrive, you sign up for a trial. It’s a 30-day trial and then when you like it, you start paying for it and hopefully you will have a software which really helps you, like in your case.
For us, to help you when you just can’t find all the answers or can’t find solutions to some of the problems that you might encounter, you have a chance to reach out to the people that are working and supporting. And these people for us, we’ve always looked at them as really our sales group because they work with so many free trialers at any given moment helping them to convert from being a trialer, a person who tries it out and sees how good that works for them to a customer, who’s convinced that’s their tool.
Andrew: What do they do to take somebody who’s just trying out the tool for free? You guys don’t even take a credit card on the trial. What do they do to help get that person to actually go onto the site and put a credit card in and actually use it?
Timo: They don’t even have that sort of a goal. What they want to do is focus on what they really need to be doing, which is if you initiate a contract through phone or email or chat, they’re just there for you and answer all your questions. Sometimes that means that they involve other more technical people, support engineers, but most of the time they are able to give you the solutions, probably set something up for your company, get through the more trickier places and give you a really good chance to get running real quick.
Andrew: What about the–this is something you told me when we did the pre-interview before we recorded. You said that when someone tries out the software, you also get them on the phone with a human being, right?
Andrew: How does that help you close more sales, to get someone who’s trying out software on the phone?
Timo: Well, I think it’s in a way psychological. People still like the fact that we’re buying something from other people. There’s a real face to this company. Our customer support function has always been our face, really, for most of our customers. I do think that helps a lot when you see that somebody is genuinely trying to help you get started and also figure out whether this is a product for you because it’s not for everybody.
There are a number of use cases besides sales like yours where it can be applied, but there are also cases where Pipedrive is definitely not the best fit. Just figuring that out in an honest way is also a plus. I think many, many customers really appreciate that. Now, we’ve added a new group to these guys in support, the people who in our own initiative, reach out to you when you start a trial. We’re trying this out mainly because we want to scale our business, help our customers better.
Andrew: How do you make that make sense? I’m looking at your prices. That’s $12 per user per month. That’s not huge revenue.
Andrew: Right? That’s not a lot of money for an individual customer. If you have to hire somebody to make a phone call to that person and spend time on the phone, it’s going to cost you more than a month’s revenue. So, how do you figure out whether it’s going to make sense or not?
Timo: Well, it’s really through testing. Obviously it’s knowing also that we’re not looking only at a customer for a month, but for a longer time and making that work sort of unit economically. But we are looking at this as a test. If that test helps us to understand that if we are there for you and we have a larger number of customers converting that way, we definitely will make that investment and not foolishly but really looking at the numbers at the same time.
Andrew: So, that’s a test right now.
Timo: Yeah. Okay.
Andrew: The other thing you said was going into new languages helped you get more customers, how did that help you get more business?
Timo: Well, most of our business really is global, which means that we are not focused on any single market. That also means that we don’t have the challenges of going to any single market. We do have the challenges of going to all markets.
As you know, only some of the markets in the world are English language markets. A large part of the world, just one example, South America, they speak Portuguese or Brazilian Portuguese and Spanish, mostly. It’s difficult when you have an SMB with a very self-serve model to enter that market when you don’t have the product, the website, the knowledge base, the customer support talking to you in your own language. So, we made a very dedicated effort to get that done early on.
Now we just deepen that experience so that when you’re in Sao Paulo and you pick up the product, you really can’t tell whether this product is speaking to you in any other language because you only know it by it being in Portuguese.
Andrew: So, what is it? It’s Pipedrive.br if I want to see that?
Timo: Yeah. You can also change that from your English site through language. But Pipedrive.br.com, it could be that. I’m not 100%.
Andrew: Or .com.br maybe. So, is this data that I see from SimilarWeb accurate? SimilarWeb says that 23% of your traffic comes from the US, about 6 from the UK, 5 from Brazil, 5 from Spain, 4 from India, but the US accounts for less than a quarter of your traffic.
Timo: Yeah. I think it’s more or less right. I’d say that roughly a third of our customers are coming from North America, another third from European area. And then the rest of the world another third. And then we have South America there, probably around 10.
Andrew: So, Timo, someone is going to listen to this interview and say, “I could actually go beyond my market by going into different languages. Brazil is an easy one to get into because you see how big the market is. Maybe Spanish is another one to go into. It seems tempting. You can change your site pretty easily. You can change your software with a little bit more difficulty.
But it gets really complicated when you start getting into tech support in Portuguese, when you get into support docs in Portuguese. You guys are really big on creating videos to explain how the software works. To do that in Portuguese becomes really expensive. How did you figure out that it was going to be worth your while or did you step into it?
Timo: I think it’s a bit of both, really. First of all, it was just us stepping into this because we were reacting to–we had a proactive sort of approach that we should be a global business and then we reacted to the actual customer voice, which was saying that people from South America, “Hey, guys, if you were in Portuguese, I could use you, but right now I could but some of the other members on our team couldn’t,” and these sorts of things.
So, we reacted to this by putting out the Portuguese version of the product. But that’s just the first step, like you said. So, the other thing is how do you scale from that to be able to not only add other pieces like website in Portuguese and support, but even how do you iterate your product, how do you develop that product further so that you can always add new lines of languages in your code?
That took us quite a number of years to work out and to build a system where we can really do that sort of on the go and in a very automated way so that our coders really don’t think about any other languages, obviously, in terms of Brazil English. They just work in any way that you work as a developer. Then the localization, automation and the department, which is very small, but it’s very strong. It takes care of all the rest.
Andrew: Do you do tech support in all these different languages, Spanish… What else do you have, Portuguese?
Timo: Currently we provide support for you in both English and Brazilian Portuguese.
Andrew: But not French, not Spanish, not Italian?
Timo: No. We have the product in these languages and a lot of marketing going on there as well, but that’s the depth we’re trying to get to. Portuguese is the first besides English. One thing I want to point out here is that in a way, it’s probably only happening because we have the goal there. It’s very difficult to react and then build things. We knew from the beginning that that’s what we wanted to go to. I think that has helped us a lot.
So, we’ve scaled our organization in a way before we were able to do these sorts of things. For example, we have, I think, roughly nine or ten Brazilians working in the company right now. So, we do know that not only the market but also the language really well and then we’re able to serve these people.
Andrew: So, if someone is looking to copy this or learn from it and adapt it to their business, what’s the first thing they should change? Is it about changing the sales page, then changing the app, then changing tech support or is it a different way to step into this?
Timo: I think to start with, it has to be the belief or desire that you want customers from that region and you want to serve them and you kind of want to go the length of however long that will actually take you to get there. And then yes, build up something where you feel that you can actually serve them. So, for us it was product first. At the end of the day, that’s what people are using. Then we move to actually change the page in the marketing website.
Andrew: Product then marketing?
Timo: Yeah. I do think that’s the way we internally went about it. I don’t know the exact timeline. But that was the way we felt the product has to be ready before market it and we didn’t want to run tests. But obviously it could be done other ways. You can run tests and develop some kind of understanding of what sort of a traction you would have, but we went with product is ready, now the marketing side and then slowly we’ve been moving towards building up the support in that language as well as the customer base has grown.
Andrew: Timo, here’s what I’ve got. For growing revenues–we’re talking about over 10x, well over 10x’ing your revenues, doing better support including calling customers when they sign up, definitely being there for them when they have issues, knowledge base, including videos and articles on the site that helps people figure things out for themselves and adding new languages. I understand the value of all those. But it doesn’t feel like that’s enough to get 10x+ growth. Give me one other big thing, really significant thing that you did to grow your revenue.
Timo: Well, we talked about support and sort of customer front or customer-facing cooperation right now. But overall, it’s just the whole team and scaling that team. We started and every founder starts as founders and trying to take care of everything. So, the question is that’s not the way that your company can grow forever. You need to bring in people with energy, with clear understanding of how you can build things and different functions. That’s something that we’ve done a lot and focused a lot on after we reached 1,000 customer mark. Back then, we were really taking care of everything on our own. Ever since we’ve hired people to be the leaders of different functions like engineering, the whole customer support, they were people that we’ve actually brought in that had some sort of experience, some of them a lot, some of them less, but they all had very big ambition and wanted to play a large part. Building that team up so that we really feel that yes, we’ve give up a lot of control as to like how day to day operations go, but feeling that they are building it way better than we are.
Andrew: So, what are they doing for bringing in new customers? What’s one big thing that they did?
Timo: In a way it’s a combined effort that the organization is ready to build the product that is affecting so much of our growth.
Andrew: What about this–I do want to get into the product, Timo–but I’m looking at where you guys are getting traffic now. You guys are big ad buyers. You buy from services like Outbrain, from Google Display Network, from Adcash, from Traffic Shop. The list keeps going on and on and on including ClickBank, BuySellAds by a past Mixergy interviewee. You’re buying ads from there. You’re buying ads on sites like LinkedIn, like Ezvid.com, which I don’t know what that is, GetITC.com, Google–you’re buying a bunch of ads.
You’re getting really good at this stuff, right? Your landing pages are really well-targeted. I’m seeing some of the creative. This is all coming in from SimilarWeb. I see ads like Pipedrive, the CRM for small teams with big ambition and a rocket ship that’s taking off. Pipedrive even lets me see the landing page for it, where I can see in this case, actually, because I’ve already been on your sites. I can see in this case, actually, because I’ve already been on your site you have the Sales Pipeline Academy that I can sign up for.
This is all pretty sophisticated marketing that’s new for you. This wasn’t a first hundred customers strategy. This was much bigger than that, right?
Andrew: Who puts all this together?
Timo: Well, we’ve luckily had a non-founder but almost like a founder, I treat him like that, running our marketing from almost day one. Most of that time that we’ve worked together, he’s been a contractor, but luckily we’re able to form a full-time relationship with him, just one and half years ago, basically.
Andrew: Who is this person?
Timo: Andrus, probably you know him.
Andrew: I know him. I think I might have met him before you. I didn’t realize he wasn’t fully with you guys at the time.
Timo: He was fully with us with his heart, but not with his time at the time. He joined fully–I might be wrong here–but I think 2015 September. He’s been building the function up and the team up. But before he did that, he started with what we consider to be really important in marketing, which was what do we need to do with our limited resources to put the product in the hands of the right people–one of them being you at the time, obviously–the people who share, the people who are excited about new products and have a large group of followers.
He’s been one of the masterminds behind this. Not only that, but also working on the SEO. Early on, we weren’t able to put money into advertising, but we worked very hard on content, sort of like inbound marketing work. And very recently, last year and up until now, we’ve been able to increase our marketing spend and learn more about how to use paid marketing for our benefit.
Andrew: So, paid marketing has come in what, the last year, year and a half?
Timo: Yes, correct.
Andrew: I see. Before what it was, “Who are some of the influencers that are going to talk about this? How can we write some articles that get the word out?” What else?
Timo: I think mostly around that.
Andrew: And SEO.
Timo: SEO work, a lot of work on the content to help people really in sales.
Andrew: What other influencers did you guys go after?
Timo: I think we weren’t that smart about understanding who are the best influencers in the CRM world, but we were looking at people who are sort of entrepreneur, founders, tech startups–we felt like we are in that group. We tried to understand who are the best influencers in that world. So, that’s what we do.
Andrew: Is there one that stands out?
Timo: Not necessarily, just a mixed effort to go after and find people. I think quite often people and to see one silver bullet there. Maybe the only thing we found in Brazil was that early on we had a very good blog writing about the product that we had been building and that was quite an influential blog. I can’t remember the name unfortunately right now. But that was one. It’s never been a silver bullet and that really helped us. It’s making sure people like you talk about it and they share besides people actually sharing it to their friends.
Andrew: Okay. Quick sponsorship message then I’m going to come back–the sponsor is a company called HostGator that will host your website. Timo, let me ask you this. If you had to start over with nothing else, you’re brand new in business. All you have is a HostGator website. You have to start building up your business, your reputation with it. What would you create on it?
Timo: You mean like the whole business?
Andrew: Yeah. You wouldn’t recreate Pipedrive, but let’s suppose you lost it all. You have to start from scratch. I come to you and say, “Here’s a HostGator website. Do what you will. Be an entrepreneur. Turn it into something.” What would you start with?
Timo: I’m a product guy. So, I’d have to start it with something I believe in.
Andrew: What product would you create?
Timo: I would create a product which would help people who are leading teams and help them to really work with the managers, work with the people. I haven’t still found–we have Evernote. We have Google Drive and all these tools. But there’s really not a very good tool to keep track on your one on one interviews and make sure that you scale that organization that you’re building in a way like every bit of interviews towards the goals that you’re achieving with other people.
Andrew: What do you mean by interviews? Interviews with your teammates?
Timo: I actually meant one on ones. Sorry.
Andrew: One on one conversations that you have with your employees.
Timo: Exactly. The way is you can do them in a way that we just talk. It’s sort of superficial. But you can also talk to your people and discuss your goals with them weekly or monthly or however regularly so that you know that we are right now doing the right things towards that goal. It takes effort obviously from a person who is responsible, but it also takes effort from you as you’re supporting that person as one of your leaders or as one of your individual contributors.
The question is how do you keep track of that? I’m very much about, I think, like Pipedrive is how do you keep track of something important which is happening on a larger scale? There’s a lot of movement. There are a lot of moving parts.
Andrew: I see. If I’m understanding you right, you’re saying tomorrow you might have a one on one meeting with one of your employees. You want to keep track of whether you express the vision clearly to them and what they’re working on.
Timo: Yeah. In very simple terms, what did we discuss last time? What was up? What did we promise to do? What’s the progress? What are the things that have gone well? What do we need to address? All these sorts of things, and make sure that happens forever, not just once.
Andrew: Okay. So, if I were going to come back to the sponsorship message, you start from scratch, all you have is a website, would it be fair to say that one tactic for doing this, one approach is to say, I’m going to start a blog where I talk to entrepreneurs about how they talk to their team and how they keep track of what they say to them and what issues they’re having with the way they communicate with their employees one on one so that you, Timo, can see what other entrepreneurs your size, like maybe Clay Collins of Leadpages, I know that he has this challenge, how does he communicate the vision to a team of about 155 people.
So, you get to see how they’re doing it. Then I would maybe if I built the site, get to connect with and learn from all these other entrepreneurs and what I take back, I create a product that solves and maybe I come back to you and other people I’ve had on like Clay and say, “Guys, here’s what you told me you’re having trouble with, keeping track of all the conversations you’re having in your one on ones. I think I can build the software. Here’s what it would do. If I built it, would you pay for it?”
Timo: Yeah, basically.
Andrew: And then take that money and create the software.
Timo: Yeah. You’d describe some of the things and how you could get the sort of early better customers or the group that you would test it with. I would still say that I would have to start with looking into my head and into my heart. Do I have a problem where I think that the product is missing and am I able to build it? I know that if you want to go for it, it will be really tough years ahead. It will be the years of building a product, building a team. So, it’s an effort. So, you really need to want it and like the idea behind that product.
Andrew: I see.
Timo: That’s where I would start, making sure that I have this idea. Everything else in a way becomes more technical. It’s like, “We have this idea. How can we test it? How can we put up the best website to present what we have and all these sorts of things, but how can we get the early traction and get into the conversation with investors should we want to raise money for this?”
Andrew: All right. Well, if you want to take that idea or any other idea, you’re welcome to do it. All you have to do is go to HostGator.com/Mixergy. When you go to that URL, they’re going to give you 30% off HostGator, which is already an incredibly low price. Did I just lose you, Timo? No. There. Skype just did something really funky.
One of the things I like about doing that is by talking to people, by talking to your potential customers and reporting back to other potential customers what you’ve learned from them, you do get to see if you care about these customers, if you care about the problem enough to actually build software to solve it and you get to start building a reputation with people who will eventually be your first customers.
Whether you want to take this idea or any others, just go to HostGator.com/Mixergy. Sign up. They’ll give you that discount. They’ll give you incredible tech support. They’ll be there for you and help you grow your business, incredible uptime. And of course, if you hate your hosting company, just switch over to HostGator. You’ll love them. They’re really good–HostGator.com/Mixergy.
All right. We have three other topics I want to talk about, which is scaling the team. You brought in a new CEO I see on your website. I want to understand what works for your customers because I know that’s a challenge for you and product, which is something that you love, you’ve always loved. Let’s start with what you told me about product. You told me before you started that you do exit surveys, exit surveys meaning people who leave, you want to find out why they left and what was missing, right?
Andrew: How do you do exit surveys? What’s your process for doing it?
Timo: Well, technically it’s very simple. It’s just figuring out a way of putting up a link or an email as soon as you cancel using the product and then you get a message saying that hey, would you like to take a quick survey so that we can improve our product. So, technically it’s really simple. But the overall, obviously, is to understand how you can keep your customers happy and how you can show them better what are you missing and making sure you understand it similarly in your own head and as they’re experiencing.
Andrew: So, what’s one thing that you learned from those exit interviews that you didn’t know otherwise?
Timo: Well, exit interviews is obviously the last point in time to check for this sort of information. There are better moments in time, like when people are still your customers. But what we found is that there are certain areas where we can’t do much about it because people, especially in SMB, go through different times.
We kind of looked at it and said, “Okay, there’s something that we can’t do a lot and we shouldn’t worry about this.” But there are also areas which we learned our missing from the product which we knew were missing from the product but we kind of got to know more how important they were.
So, getting that understanding was really important for us. Then I think based on what we learned from exit surveys, we also understood that we want to understand our existing customers better, so we developed a survey like NPS or Net Promoter Score survey where we reach out to our customers to try to understand how they’re doing and what sort of things are missing, what are they happy with.
Andrew: So, of all of those, what’s one that’s worked the best. Let’s focus on that.
Timo: I think exit surveys have given us a sort of more quantitative understanding of where customers really have struggled or what do they do next or why. But I think NPS surveys, which are basically just a questionnaire that goes out to people who are your customers, I like that probably the best because that helps me to understand what’s the pulse currently and how much that is…
Andrew: Where do you guys ask that? I don’t think I’ve seen it.
Timo: Yeah. We just send you an email at one point and you probably haven’t gotten this yet.
Andrew: So, you send me any email at some point saying, “How likely are you to recommend Pipedrive to a friend or colleague?”
Timo: Yeah and then you can also give us a couple of comments about the product. So, we are going to get this Net Promoter Score from you. But also what I think is more important for me is to see what is mentioned most, like when you say, “Hey, if there’s one thing that I could add or change in the product, this is it.”
Andrew: Do you remember one thing that you’ve learned from that?
Timo: We’ve learned many things from that. Yeah.
Andrew: What’s one that stands out?
Timo: Well, we have been building a–let me back up a bit. We’ve been building the product for the sales person so that they could feel that that’s really helping me close sales and control it and work my pipeline in the best possible way, like you’re doing in the interviews. We have deliberately sort of prioritized our roadmap so that we are not looking at what actual sales managers of these people are worrying about and what they want to see because it’s difficult to build for the sales person.
It’s a challenging job. We focused on that. We knew that all the reporting functions that we have in a product are really, really minimum. In a way you can say they are lousy and all these sorts of things. Definitely one part of the product that we knew that we were not happy about going forward, but at the same time, we knew that we had to make a choice. So, we saw that coming up there, which we expected. It was easy to sort of understand what sort of areas also in the exact reporting are missing and test with our own ideas.
So, that was definitely one, but there are more like that. That has helped us to understand how much can we go on without really addressing this and when we should actually be doing that, sort of synchronize that, let’s put it that way, the collective nervous system of our customers with our own and then just making the right decision in the product management.
Andrew: I remember I had an issue with your reporting too.
Timo: I’m sure.
Andrew: I don’t know if you guys solved it. But the one issue that I had was if I create a report, I wasn’t easily able to then copy a URL and share it with the team and say, “Guys, here’s a report of how Stephanie is doing for booking new guests.” I think it just was active for me. I don’t know if you guys have changed that or not.
Timo: Yeah. Some of the reporting was really done the way you just described it. You create some sort of filter and it gets to the report that you want to, but also the built in, out of the box reporting was really missing. So, some of the questions like yours right now is something that we wanted to address in a way that you don’t even have to think of it on your own, but we’re going to present it to you like, “Here’s one report you probably want to run, which is how like that person is doing across–
Andrew: Who’s closing the most sales, that kind of thing.
Timo: Yeah. Over time, who’s adding more deals than anybody else? Who’s getting through the pipeline quickest and all these sorts of things? And we have been building this part and we’re going to actually release it in a month and it’s going to be a really, really important change to the product.
Andrew: All right. You also said qualitative studies help you. What’s a qualitative study that you guys do you understand how to improve the product?
Timo: Again, a number of them. We’ve done some on the marketing end to understand the actual person that we’re serving better and create these customer personas, as they say, from sort of a marketing talk about it, really to get an understanding of what is happening with or customer in their life, besides using the product, but who are they, mostly, what sort of a position are they in, how big of a company are they in, what sort of problems are they trying to address and all these sort of things
Andrew: What are some of these customer profiles that you have now? What’s one example of them?
Timo: Well, one example is a person in a small company, not really your classical sales manager from a larger organization, but really the person maybe a little like you, you’re running the business that you really care about, you’ve hired a team and you really care about everybody doing the work at the best possible level and you’re worried about, “Are we doing this? Are we letting some of the opportunities fall through the cracks?” and all these sorts of things. And then getting understanding of who that person is and what’s surrounding them and what sort of things they care about, that’s definitely been one.
Andrew: So, how do you round that understanding out? What would you call this person that you’re talking about?
Timo: We definitely had a name for that person. Andrus used it, but I can’t remember. That was just the person’s name.
Andrew: So, you use an actual person’s name, like Steve.
Timo: Yeah, he basically used an actual person’s name. But I don’t think it was anybody specifically.
Andrew: So, let’s call him Steve for this example. Steve is somebody who’s not really a sales manager, but he does lead people who do sales and he wants to coordinate. How do you round out your understanding of who Steve is and what his problems are as you said, not just for sales and for Pipedrive but beyond that? What do you do to get that understanding?
Timo: What we did, like I said it was a qualitative study. It was us reaching out to a number of people who we asked whether you were willing to be in this sort of interview. I think we ended up talking to probably 40 of these sorts of people to get a more deep understanding
Andrew: You get on a call with their employees?
Timo: Yeah. Well, we actually get on a call with them to run a very deep interview to ask the questions that really matter for us and also record anything that was important for them as well in this conversation.
Andrew: I see. And then you bring that back into your doc where you explain, “Here’s who Steve is. He’s someone who’s running this company.”
Timo: Yeah, trying to find the patterns, trying to find things that make them similar, things that make them different and sort of looking for that characteristic that we can then use later on.
Andrew: Timo, you told me one of the problems with talking to customers like this is that they could start pushing you outside of your vision, right? Actually, part of the need for talking to them is to have them push you outside the vision, right? Actually, you tell me. I think I had an understanding of what you meant before.
Andrew: I’m seeing your eyes and it looks like I don’t have it right.
Timo: More or less. So, there are a couple of things. I think the first starting point is knowing which customer you think you are serving best and you want to serve best. For us it’s always been a sales person first and a small company second. We’ve always cared about sales managers in the small companies as well, but we’ve got to build things in a certain order.
It could be that for some reason–let’s put it in that way. You have an example. We had these, especially early days, when you’re approached by somebody in a larger company. They’re a sales manager, VP of sales and they’re going to tell you the guys are like, “What do you do? Could you host this product in our servers? Could you change a little thing here and here? We could actually pay you a lot more than you’re asking.”
That is one situation where you probably will experience are you able to stay true to what you still believe what your product is for. If you now go down that route that okay, maybe that is our key customer or, “Oh my god, that’s a lot of money,” you could easily get to the track. That’s what I think I told you is that where you now serve somebody else, not maybe the person that you were thinking of serving, what happens is that they also might have different requirements.
We know that for us it’s always the challenge is how can we serve the customers regardless of how big the companies are, knowing that we want to serve the smaller companies more. We still have some larger companies. We can’t satisfy all their needs. Now if you wanted to, then we would enter a whole new world of looking at different sheets of requirements, building the product that we would also end up with a very different product in our hands and maybe not the one that we have a vision about. That’s what I meant.
Andrew: How do you know when to stop it? How do you know when you’re going down a path of becoming Salesforce versus staying what you want?
Timo: I don’t know if there’s a very sort of good prescription, like, “Do this, don’t do this.” What I just said is one. Know what you want to build and just build it. I think that’s what we’ve discovered and experienced.
Early days it was just us looking at each other and just saying, “Okay. We have this opportunity here. What do we think about it?” Everybody was looking at each other like, “We don’t like it. We don’t want to go there. We don’t want to do this. We want to build the business that way. We don’t want to build the business for the enterprise.” That was the prescription for us going forward.
And now later on, I think you have maybe a bit more of a challenge because you might have a lot of customers already paying you and they have certain requirements and the question is how do you know which ones you actually should be building?
Again, for us, the biggest thing is going back to our drawing board, understanding what the product strategies are all about, looking at the long-term vision and seeing, “Okay, do we have it on our product roadmap? Is it far away? Is it close? Should we do something about it based on what we’re hearing or should we just go on with the actual plan of action that we have?”
So, just testing yourself that way every time or as soon as something like that comes up, I think that just gives you the answer. I don’t think there’s a very good prescription that I could give.
Andrew: All right. I want to talk about Toptal, my second sponsor and then we’ll come back and talk about scaling the team and understanding what works for your customers and also I’ve got this package from Indonesia I’d like to open up here in the interview.
But first, Toptal–the thing about Toptal is they’re a network of great developers and designers that you can tap into. They’ve been pre-vetted, prescreened and you can hire them and often get started in days with the top developers. Let me ask you, Timo–is there an internal tool that you’ve built that helped your company grow, one that’s just for your team?
Timo: That’s a good one. We’ve used so many tools from other people, from early on and switching to things when they don’t scale and these sorts of things. Internal… I’m sure we have done something.
Andrew: Nothing that stands out?
Timo: I think the only thing we’ve really done that I can think of right now is the tool that we call back office, which is basically just our way of looking, whoever is looking, not only developers, but customer support people, everybody to get a really quick understanding of you as a customer, of the data of when did you start paying? How many users did you have in your company?
Andrew: So, it brings it all in together. So, if customer support is talking to me, they know it. If Andrus is talking to me, your marketing guy–
Timo: They have a chance to go in and see, “Okay, Andrew is that feature, but he hasn’t turned on this feature, for example.” These sorts of things show like a back off view into your account to help you when we actually get to this point. So, that chance, I think, has been for us to really connect with our customers in the best possible way.
Andrew: The reason I ask is because I think a lot of us think of Toptal as team of developers that we could hire to work on externally facing products. That really is what most people do. They’ll hire someone from Toptal to do a small project or to work with them long-term or part-time or even a team of developers from Toptal.
What we often don’t realize is that we need internal tools to run our business better, stuff that our customers are never going to see but that will allow us to give them a better experience. If there’s a project like that that you’ve been sitting on, maybe it’s one to understand like Timo has, to understand what your customer is doing on your site or maybe it’s one to just keep track of all the revenue that you guys are bringing in or all the communication that you have or whatever it is, you can have it built by someone at Toptal.
All you have to do is call them up, let them know what you’re looking for and how you work, how you want to stay in touch, how long this project is going to last and they’ll set you up with a developer that you can get started with right now. That, of course, is something you can do internally or if you have an outside-facing project, you can work with Toptal, tell them what you’re working on and they will hire for you that will solve that problem, you get to talk to them.
You get to make sure they’re the right fit and if they are. You get to get started with them quickly. I got started with my developer from Toptal within 24 hours. It’s no exaggeration. We pick the person. The first person they introduce us to, we didn’t like, I thought it was okay, but not a really good fit, we wanted someone who was really going to be like our CTO, the second person they introduce us to is so freaking good. He moved faster than we ever expected and we just kept working with them.
If you want to sign up for Toptal, go to Toptal.com/Mixergy. They’ll help you hire developers and designers. But if you go to that /Mixergy URL, they’re going to give you 80 free Toptal developer hours when you pay for 80 in addition to that, they’ve got a no-risk trial period of up to two weeks. That means if at the end of the trial period, you’re not 100% satisfied, you will not be billed. It’s incredible. It’s unprecedented.
Go sign up, they will start talking to you before you even get started with a developer to make sure that it’s a good fit for you. If it is, man, you’re going to love the developer you get from Toptal or, I should also remind everyone and myself, they also do designers now too. So, you can hire a developer or a designer.
Timo, coming back to us from the sponsorship message, the second thing, the next thing you said that you did was you wanted to understand where your customers were coming from. This shocked me because I did a BuiltWith search on Pipedrive and I see that you guys use SegmentationIO, you use New Relic, you use KISSmetrics, you use Google Analytics, you use Optimizely, you use Google Ad Tracking–I could just go on and on about the tools that you guys use to keep track of where your customers are coming from. You use something to do heat maps. Why is it so hard to understand where customers are coming from?
Timo: Well, it’s partly because of the way that we’re doing marketing from day one is put the product in front of us all and let that thing be our marketer, when that happens, you quite often don’t know how that organic growth is really coming up. We’ve been just trying to make sure that we have the best understanding of where the traffic is coming from and how customers become customers because a lot of them talk in the real world event and then just go to the web and type in Pipedrive and this is how they happen.
I think the reason that we use quite a number of tools is that we’ve always felt that it’s really–first of all, there are great tools around. And people are really building tools where it really addresses a problem. We just never felt really comfortable moving away from what we should be building and always felt that we should use other tools as soon as it’s not our core and not build anything for our specific use case. Like I said, we have built one thing at least, which was difficult to find, obviously for our own needs, but most of the time we’ve gone with different tools.
Andrew: So, I always thought that it was just smaller companies getting started that have a hard time figuring out where their customers are coming from, like I sometimes can’t tell what got you to sign up. The problem with not knowing what got someone to sign up is that you don’t know how to bring more of them. Why are people suddenly signing up to Mixergy Premium this one week? I have to call them up. Even if I do, it’s hard. Have you actually made headway? Is there something that you’ve found that’s actually helpful?
Timo: Sure. Again, I think others in marketing would be a much better person to add to what specifically has helped at different times. But what I’ve seen is that we’ve had to use just a number of tools together to get the best help because again, one tool could help you maybe in one area really well and the other one in some other areas. So, largely we’re still learning regardless of our age or years in the market we’re learning become customers, like you said.
Andrew: What about retention? That’s also an issue, right? If you want to grow beyond 1,000, you have to retain the people that you have. What’s your churn rate right now?
Timo: Well, the biggest churn rate in the small business world obviously comes from very small companies. We start with any company who has at least one person in it. So, that’s where we get our biggest churn rates–
Andrew: You’re saying smaller companies that go out of business then end up having to cancel their accounts.
Timo: Them and also, I think, even if they stay longer and then sort of figure it out, not necessarily that’s the right moment when we become really useful. I think what we’re seen over time is our churn rates start to drop as soon as we have people using it, but they have a team like yours, like you have other people using it. You can make a good use case and you can see how that helps you. This is where the churn rate starts to be really lower, even small businesses.
Andrew: What do you use to figure that out, to figure out the difference in churn for customers that have one desk or one user versus customers that have multiple users? What software do you use for that?
Timo: That is one effort where we knew that that’s something that we want to do. We scale the team. We brought in Tarma. He was actually in Skype before that time that he is now in Pipedrive to build our data warehouse. He’s using the tools like you mentioned, like Segmentation and then adding Tableau, a little bit of visibility into this and getting an understanding. It starts from gathering data from the database.
Andrew: It’s your own tool or is there software out there that does that?
Timo: Well, it’s a combination again. But building that data warehouse–again, I’m not going to speak a lot about it because I don’t know so much about it, but it’s a lot of our own coding, a lot of our own work, but there are tools that help us do that. So, to map all the data, which is there about the customers and how they use the product, but also how they–
Andrew: What is your churn rate? What’s the percent?
Timo: We do lose differently when we talk about the actual number of companies and the revenue of the companies. So, the churn rate that we have for customers who are very small is really high. It’s around four to five percent monthly. But it then drops as soon as you have more users in a company. And then we can see the numbers where it’s already three, two percent a month.
Andrew: Three to two percent if they have more people.
Timo: Yeah. And obviously the numbers will be better when we have more users in an account.
Andrew: I noticed that about our usage of software at Mixergy. If I’m using it by myself, I could switch to something brand new easily. But if I have other people doing it, it’s such a pain in the neck to teach them how to use a new software, to get them all on board for it, to get them to change their habits. It’s such a pain that I will even stick with bad software. I’m dying to try–I like LastPass a lot–sorry?
Timo: Unfortunately, yes.
Andrew: You too, right?
Andrew: LastPass is such good software, but it’s also clunky. I’d like to try–what is it called, OnePass or something, the competitor? But I know it’s going to be such a pain to tell everyone to go and install this after they didn’t want to install a password manager in the first place. And then if I shared passwords with them with LastPass, I have to remember which ones and then go share it with OnePass.
And then after I use it by myself, I may not find any issues. But when two people use it, there might be issues I didn’t discover, so I have to tell them, “All right, we’re all going to go back to LastPass.” It’s such a pain that it’s not worth it. It really is good advice. Anyone who’s selling anything on a subscription basis should find a way to sell it on a team basis because you really get locked in there. You really get commitment.
Timo: Exactly, especially when it’s done in the right way so that you really help the team, not only that you are able to engage the team. Like a lot of enterprise software, I think one of the things with that is what you just said, that you onboard like hundreds of people. The question is how do you move from that? That’s something where it’s very difficult to do.
But I think what is the right way of looking at it, at least in our eyes, is that you built something which is really valuable for somebody, not only for one person, but for a team or teams. Then you can really retain them in a good way so that people don’t want to go away but they feel like they’re getting the value, but obviously at the end of the lifetime, that happens. One person can switch much easier.
Andrew: So much easier. All right. Let’s close it out by team. You kept mentioning that before we started how important that is. One of the things you said you need to do at this stage is help your team lead. What does it mean to help your team lead?
Timo: Yeah. I think that the more we’ve developed a company, the more I’ve understood that I’m really there to serve all the team leaders that we’ve brought into the company in the best possible way so that I like to look at this as if a team lead or–I’m talking about all of them right now, all the executive level, all the first level, just having a couple of people that you manage.
When we have an energy and an ambition to do the work, we are very tempted to give that person that chance. Now the question is how do you help them obviously. I think the help is different. The more experience the person has in this leadership role, the more it can be making sure they have everything they need to do their job. They know the goal. You can discuss that.
So, the topic of discussion will be much more about what’s keeping you from achieving things and what’s blocking you and what are some of the things you’d like to change if there’s anything I could do at all. But if there’s less experience and the person is just the first months in a team leading position, then obviously the question is how we can help that person learn more about that role and building a sort of like internal university, if you will, is definitely on the roadmap for us and we’ve started with that work.
I do believe that when we’re not able to scale the team so that you are able to get the new team lead started, they were individual producers yesterday, they now are in a team position. If we can’t help them to feel success and feel that they’re capable of doing their job really well because it could be something they haven’t done, then we’re really failing as a company. So, that’s what I mean by scaling the team throughout.
Andrew: Do you have an example of some way that you teach leadership now that’s actually working?
Timo: Yeah, a couple of ways. But like I said, we’re building something which we have seen in other successful companies which we really like. For example, MailChimp has built their own university where they teach the leadership to all the team–
Andrew: Leadership taught by people in real life?
Timo: Yes. They use both their own company people to teach leadership and mentor and also people who are experts from outside. But I think that’s just an amazing effort and a great return. So, we are trying to build our own and do a good job. So, obviously the things that help there is setting up the right sort of mentorships and know that this new leader has a great help as a mentor.
Andrew: So, you’ve done no leadership training up until now?
Timo: We’ve actually done just our first ever at the beginning of the year. But up until that point, we haven’t done anything specific.
Andrew: How did you do it at the beginning of the year?
Timo: We did it so that we brought in a good expert on that field that I knew from some time ago and just wanted to make sure people had a good framework or way of looking at me being a leader. What does that really mean? What’s the pain and what’s the gain and what’s the angle that I should have if I want to be doing really well.
Andrew: Who taught this?
Timo: It was a guy from Sweden. His name Sven Berg. He was a consultant that we brought in for that.
Andrew: Okay. All right. Let me open this. It came all the way from Indonesia, where I plan to visit. Do you still travel a lot?
Timo: Yeah. I need to travel a lot because I’m from Estonia originally, so I do go back there. We do have an office in New York. So, board meetings…
Andrew: Where are you now?
Timo: I’m in Menlo Park.
Andrew: Menlo Park. Okay. Not too far from us. I don’t know why we haven’t seen each other in person yet. Let’s see… I hope this is something I can actually show on camera.
Timo: Obviously for you, right?
Andrew: Can I rip it? Let me see… He made a bunch of cards with my face on it. That’s actually really good. I’m talking about a bunch of cards here with my face on it.
Timo: You have business cards now.
Andrew: I had business cards before. These aren’t so much business cards. I don’t know what they’re for. I think they might be for people who come into Mixergy for scotch, I guess. It says, “Thanks for visiting Mixergy.” I like how he got the logo down. “Please let me know that you got this. I’d really love to know what you and Olivia think about this. I hope that she’s going to love this.” Here is the photo that he created for me.
Timo: All right.
Andrew: Thank you Andre. I really appreciate this. I’ll send you a note privately, but I’m really grateful to you for sending it from Andre Oentoro–I always forget how to pronounce his last name. He runs a business called Bread N’ Beyond, which does explainer videos, at least according to this and I’m grateful to him for sending it over. Cool.
All right. Thank you so much for doing this interview, Timo.
Timo: Well, I was really happy to be in the show again. I’m hopeful that was of some kind of value for any of your listeners.
Andrew: I think it is. It’s cool to see how much you guys have grown internally. I’ve seen externally how much you’ve grown. I think the first thing that I noticed was a big change was when the iOS app moved from being HTML5, which was basically a webpage, right?
Timo: Oh yes.
Andrew: It was functional, but it was just like… to one that’s like a real app that if I get an email from somebody or a call with someone early in the morning saying, “We have a crisis about this guy,” and I don’t know who the guy is, I know by opening up the Pipedrive app I can get my understanding of who the person is, what we’ve talked to him about. Once I’m caught up, I can respond. That was like a big undertaking. I saw you guys spend a lot of time on it. As a user I saw it.
Timo: Yeah. I’m glad it made a difference. For us, it was some sort of thing we wanted to move away quickly from to a native app. Really, I just wanted to thank you again. I wanted to maybe leave you with this sort of example. I remember again when you first opened the show, I remembered one example.
I was in a session where people taught regular people like you and me how to play taiko drums. I don’t know if you know them. But they are from Japan. But they are all over the world. They are really, really loud sounding drums all about the rhythm and all about executing and playing together in a team.
One thing I really liked about it was that they taught the important lesson that when you want to hit the drum, like with a stick, you never should be aiming just the drum level, but you should be thinking of hitting through the drum.
Timo: So you could get the loudest sound possible. I kind of remembered that whenever we are planning something is that you should never just, “Let’s try to get there,” but always, “What is it we’re trying to get to?” Then all the efforts will be much more powerful and much more focused. I kind of remembered that when you said something. I can’t remember what at the very early on. I think that’s also been very important when we’ve been growing further, to know what we are getting, what’s beyond that drum that I’m trying to hit and then hit it through and move forward.
Andrew: That makes sense. I remember when I first started running marathons. The advice I got was don’t think of 26.2 miles, think of 30. Get your mind ready to go beyond the 26.2 and you’ll be a lot better about running that full marathon.
Timo: Exactly. Somebody told me something about dieting, why dieting doesn’t work is that people only think of this as a project of, “Let’s do this for 30 days.” But when the actual thought process should be, “Is that something I’m willing to do for the rest of my life?” I kind of liked it lie, “Okay. There aren’t too many things I’m willing to do that, but this is. It helps me in other areas, not only dieting.”
Andrew: You’ve come so far and I can only imagine how much more you guys are planning to do. You’ve raised money. According to AngelList, is it $11.4 million total?
Timo: Yeah, round numbers, more or less.
Andrew: Bessemer Venture Partners, what is it, Paua Ventures? I don’t know them, in Berlin.
Timo: Yeah. We have a large number of investors from different parts of the world, but Bessemer investment was the one that we really wanted to.
Andrew: Oh yeah, you guys have that seed fund also and AngelPad. Right. So, it’s actually much more than $11.4 million. It’s more like $12 million, right?
Andrew: Wow. Congratulations on growing so much. I know last time we were talking about getting or not getting picked by Y Combinator and how tough that was and man, you guys are getting picked by your customers and that’s even better. Congratulations.
Thank you all for being a part of Mixergy. If you want to check out the site, it’s called Pipedrive.com. That’s where you can find it. My two sponsors are the company that’s going to help you hire your next developer or designer. It’s called Toptal. Go to Toptal.com/Mixergy and the company that will host your website right, so if you hate you current host, go to HostGator.com/Mixergy. I’m grateful to them for sponsoring.
Thank you all for being a part of Mixergy. Bye, everyone.