Andrew: Hey, they’re freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses. And joining me is a guest that I had on over a decade ago, back in 2011. And I remember what the world was like back then.
And I remember what I was fascinated by back then, Christian Lange had this idea. For a social network, essentially for business, it was like Facebook for businesses. Shouldn’t business. People get to talk to each other a little bit more like in the, in the work together spirit than LinkedIn ended up being LinkedIn is more like where you find people who are doing the kind of work you’re looking for.
His idea for Tradeshift, I think was. How do we get people who are working together to talk to each other and to see who else they could be working with. And they’re connected with, he’s kind of smiling as I’m saying this, because does it feel a little naive to you now looking back.
Christian: Oh, Jesus. Uh, yeah, look, I mean, Andrew, um, you know, 10 years ago we knew one thing, right. And that was cop computing was coming from. And class concluding was forming networks everywhere. Right? I mean, if people think about cloud computing, a standalone from networks, but it’s the same thing. The moment you don’t have cloud computing cost of connecting stuff drops dramatically.
Right? So it’s no mistake that we got talked about Twitter and Facebook and all of these. They essentially all came from that phenomenon in, in, in executives and in business. Right. And massive opportunity in helping businesses connect and not just the people in the businesses, but the businesses themselves.
Right. Could you, if you’re a small business owner, create a profile for your company, go out and find other companies to do business with and the people inside. And could you make it as easy as you and me? We can connect on LinkedIn, right? Which is not really the case today. You know, I’m in Germany and you’re in France and we need to do business.
There’s all sorts of stuff. Right. Compliance tax, but also just collaborating. Um, so, so that was the original.
Andrew: this is if Andrew wants to collaborate with say a podcast editing company in Germany. You were going to help me find the podcast and company that my friends or the people that I work with already use connect with them and say, Hey, you’re already editing my buddies podcast over for HubSpot.
Will you edit mine? They say yes. And then instead of communicating by email or using project management software, like a sauna, I would use Tradeshift. That was the vision. Find them and talk and work together.
Christian: Yeah, that was the vision. Right. And then to connect that, not just with the check, but with the ability of cost for you to develop a vendor relationship where, you know, you could, you know, get paid or receive an invoice and then pay it and so on. So. Half accounting system, half social network. Right. And, and with sounds, you know, um, but, but that’s actually what we do, right.
Businesses, social. A lot of people think it’s, it’s, you know, very automated and very dry, but, but all business in the world is social spot. People having connections and relationships and, you know, working together.
Andrew: What I remember of the time was you talking in terms of social network? Because this was a period when there could have been multiple social networks and that was exciting. That’s the part that makes you smile. I saw the corners of your mouth curl up as we thought about it. What else, when you go back, what do you feel a little bit naive that you said back then, and then obviously the business grew phenomenally to the point where you couldn’t have even, I don’t think that your young brain back then understood the depths of business as it operates today.
Even though it might’ve been staring at the face, the guy who delivered your package, you might’ve known that the business was big, but you didn’t know how intricate it was. So you didn’t know it. You got huge. I want to know how you got huge. Um, what didn’t you, what was a little naive about your vision for the business back then?
Christian: Oh man, everything. We were like, oh yeah, we’re just going to build this thing, launch it out in the world and companies all over the world kind of stopped connecting. Cause that’s how social networks work. Right. And
Andrew: Ah, yeah,
Christian: they’re just going to connect and find each other and do business.
Andrew: and they, to some degree they did in 2011, when we talked, I think it was 60,000 different people that are already joined, which meant that you were starting to get network effects.
Christian: Yeah. I mean, it was early network effects and there was, you know, um, it was, it was sort of, you know, above what people were doing, which surprised us was they didn’t really collaborate a whole lot, but they did a lot of business. So like, oh wow. This makes it easy to send that invoice to somebody else and get paid.
And I can see the status in real time. So having all of this inside a net. Where you have the relationships. So while we were a little surprised about what it was, but people relented the market was multiple on this sort of contractual and payment and business side that it was maybe so much initially the collaboration.
And, you know, let’s talk about this project here, right? As we know that. So a lot of other platforms over time, but you know, um, the, the transactional side we hit spot on at the time, but the other side, I think we would probably fight and taking. If we could combine those two episodes, the way we follow.
Andrew: What would you did? That was brilliant. Businesses need invoicing. We’re going to give it to them for free. And essentially invoicing with FreshBooks does at its core is very basic. Doesn’t cost much to operate. Now. Obviously FreshBooks has gone up and up the stack and they’re doing more. Um, but that was a big feature, right?
Christian: look, and it’s interesting, right? I mean, that’s back to the network model. If, if you think about yourself as a SAS company, you can’t really go out and give free invoicing. I mean, you can use, cause you’ve got to charge to use of something for all you do. But if you think about yourself as a SNF work, right, it’s very different because you’re thinking, oh wow, we want to connect all of these companies.
And those connections will drive value. Those relationships will drive value and we will learn a lot from that. value added products, services, and build out from, so, because we had a network business model, we were able to think very differently about how we use free than if we’re a pure SAS company.
And I think that was, I mean, I say that, like I said, we were geniuses. We hadn’t thought that out really when that happened, but that’s sort of how it became clear that we could offer free because we’re a network and that’ll be very hard to do.
Andrew: No. I mean, when I look back on that, that just made sense at the time and it makes sense today offer free software that then allows people to connect into your world. The other thing that you did that was ahead of your time was, uh, you hooked up with Morton Lund, the investor, who at the time was most famous for investing in Skype.
And to me in my mind, he was a guy who talked openly on my podcast about failure. And so I really liked him and. It didn’t have much money at the time. And he said, let’s just go to Twitter and see, will anyone join for equity and help build this product? And so I forget what it was. It was dozens of people, dozens of developers said we’ll help.
They help build a product. And then they ended up getting equity in the business. Do any of them still have equity to this day?
Christian: Oh, yeah, yeah, yeah, absolutely. And I mean, just think about this 20, 21 idea that you just go to Twitter and you get a bunch of people involved in idea. Um, we are in a different world today, right. In with the salary ranges and everything happening out in tech. It’s very different, but you know, that’s excellent.
Move. That reminds me a little bit about that. I don’t know if you want to talk about later now, but I actually think a lot of what’s happening with blockchain and so has a similar field, right? It’s people coming together, they’re collaborating from all over the world and they’re making it happen. Right.
So I think in the early days of Tradeshift, That was a great way I could. They started, I mean, we started, you know, thinking about this in 2008, it was a year where everybody be called about money. That just laughed in the middle of the financial crisis. So, so I think, you know, for the faucet, it was a great stop.
Uh, we were very lucky and, you know, Morton was, was grading and then he kicked that off. And, you know, I mean, today you have a, you know, thousands of people and, you know, engineers, and so-and-so, it’s a little bit of a different situation, but it was a great start. I think it actually, it did one more thing.
If I can just ask that it made us a global company out of the box, right? So David talk a lot about being remote, being hybrid, working all over the world, fucking off, fix it. I mean, we were born that way and we were born of Twitter. You can’t be more remote and in hybrid or virtual than that. Right. So, so I think that’s lucky today that we just got by accident.
Andrew: In the sense that open source was that way too. You kind of taken on some of the aspects of open source of people. Who’d never met people who hadn’t been screened, who were working together. Okay. I should say today, here’s the one sentence subscription that you gave me for the company marketplaces and payment automation for supply chains.
I want you to unpack that, but let’s start with, with where you are today. Since we talked about the early couldn’t raise money days. You where, or you’re in San Francisco with trucks are backing up loudly like that
Christian: Yeah, I’m so sorry for that. And apparently it needs to be back and forth.
Andrew: very long time. So are you, you’re a unicorn now. I don’t want to get too deep evaluations, but that’s true.
Christian: Yeah, we, we, uh, we, uh, we, uh, we are unicorn a few times over, um, B uh, we are, you know, uh, operating the four to three countries. Uh, we do business for probably the 2000, not companies in the world and around a 1.5 million off their suppliers. And
Andrew: What’s the revenue today.
Christian: um, we are north of triple digits. Uh, so, you know, um, yeah, in that
Andrew: So well, over a hundred million dollars in revenue to your business, not revenue done on the platform and a
Andrew: not revenue done on the platform, correct?
Christian: I’ve got the right itself. I mean, to give you that number for close to half a trillion a year now, so that’s trillion with a T. Uh, so, so, you know, we come very long way since, uh, since that, uh, 10 years ago.
Andrew: All right. I want to understand the transition, but maybe we can understand what you’re used for today. And I should say this interview is sponsored by two great companies. The first, if you’re paying your people, contractors, employees, you should go to gusto.com/mixergy. And the second, when you’re ready to hire developers, go to lemon.io/mixergy.
I’ll tell you about those later, but first let’s understand. Can you give me like a use case that helps me understand how Tradeshift is integrated into business?
Christian: Yeah. So, so the way we came into two businesses, so we started off with this idea. Competence all over the world to do business with their customers and really leaned into that popper and understood that with the primary use case. Right. And then what happened was, as these companies all over the world, stopped doing business with the largest customers.
These lots of customers knock on thousands of invites to join Tradeshift. Um, and they started calling us and say, Hey, we’ve never seen this before. We’ve been trying to digitize our supply chain for 10, 20, 30 years, and nothing has happened.
Andrew: What does it mean to digitize the supply chain?
Christian: It means, you know, most supply maybe, actually we need to pause here, right?
Because that’s unfathomable to most people, supply chains around the world today, run on PDF paper, fax, duct tape, uh, carrier,
Andrew: Meaning, what, like, can you give me an example of when someone’s trying to buy what?
Christian: who, you know what I mean? It’s still very common today for companies all over the world to receive the purchase orders on fax.
Andrew: Okay. And so, um, I’m just
Christian: the last company, like say I’m a huge fortune 500 company.
They want to put in a hundred orders for materials X somewhere.
Andrew: Okay. They need, let’s say I’m looking at a guitar right here. So I’m going to use that as an example, the maker of the guitar needs to get wood. They don’t just go onto a website. That’s the equivalent of Amazon and order wood and have it delivered electronically. They don’t, you’re shaking your head profusely at that.
No, instead what they might do is find a supplier online maybe or through connections, then
Christian: Most likely already half. Yeah. Yeah. They most likely already have long running relationships and the way they started doing business with these relationships, even if it’s 20, 30 years ago, they’re still doing business with those
Andrew: And if that meant that they have been always mail emailing or faxing over a purchase order document, that’s what they’re doing. And so for you, you’re saying you’re smiling at that, cause that is antiquated. And for you instead, what parts of that would happen electronically?
Christian: Yes. The suddenly the supplies. Right? So, so the bias has been selling new supply. So you’ve got to change because they want to save money. They want to be more efficient. They want to scale the business. Right. And the supply. So like, well, we don’t want to just change for you guys that’s chromosome. And then we have to get to do 20 different things and. supplies and settlers all over the world, they had Tradeshift, right. And they were using traits to run that business sent invoices. And so the bias that say, wow, we’re getting all of these dates of invoices suddenly out of nowhere. So they call it off and say, Hey, um, do you guys have enterprise software?
Uh, and um, being entrepreneurs. Um, and again, maybe back to a little naive, we obviously said yes, uh, showed up with a PowerPoint. And, um, then, uh, I think, uh, you know, probably one of the best and worst things and tracer of history happened at the same time we sold. Um, and then we spent, uh, ended up spending the next two to three years building enterprise software, because that’s a lot harder than.
Andrew: I can’t believe that it would take that long when you’re signing up and okay. But if I’m understanding it today, it’s the idea that. The guitar maker needs wood. They would, then it’s more than just a purchase order. That’s digitized that they might be able to send by DocuSign. It’s more like an integration with their systems so that whenever they need it, they don’t have to sit and say, we need this much for the next month.
It’s more than. Our software knows. We need this, send the signal over to our supplier. The supplier knows how much to send over and it all happens faster, not just faster and smarter than it would, if it was a digitized PDF.
Christian: Yeah. And you can think about it’s also the different direction, right? So early on, we would get a supplier. They would go out and do business with all of their customers, but we maybe only have a relationship in one customer right. For that supplier. But that’s possible within saying that should be the very last I would say.
We want to use traits. You have to create relationships with all of our suppliers, you know, going on LinkedIn and setting on innovation to 10,000 people. Right. And that’s what we really started spreading. Right. Because we’ve got these super nodes and they would connect with everyone. And for that. That they could, you know, get all of the invoices, digital, they could get all of the supply relationships, they could get, you know, if there was an address change and the supply that would get that automatically, you know?
So, so really using the network to run their relationship with their supplier rather than on paper.
Andrew: So this was, it was DHL. That was a major change. Can we talk about that? They contacted you and they said what the shipping company.
Christian: The DSL said, look, we have thousands of suppliers calling us about traits you have now. And they’re all saying the same thing. If you can use this for invoicing. So do you guys have a corporate solution? And we were like 70 people in Tradeshift. Uh, we said yes. And, uh, you know,
Andrew: how could you afford 70 people back then? What were you doing that was allowing you to fund 70 people?
Christian: We had some revenue from, first of all, remember, we were sort of distributed, you know, not every bear in the same costs, but we also had some funding and revenue just on building network. Now, some people bet that
Andrew: were people who are paying for the network just for like accessing.
Christian: no, but they might be using the PayPal app. We had built for, for doing a payment on an invoice and we would get a small slice of that, but the revenue was tiny.
It was tiny from all of that, to the
Andrew: So it was basically giveaway invoicing charge for extra features on top of it. And if some small group of people pay that’s enough to make a nice little business, but not this business that you have today. Okay. Got it. And so they, DHL comes to you and says, we want more because our customers are asking to be invoiced by you, DHL using Tradeshift.
Can you figure out a way to work with us? And you go in and you give them a PDF or a PowerPoint presentation that says what.
Christian: Yeah, no. So we said to them, what if, instead of having your whole supply chain run on paper and everyone you interact with on paper, you had a digital network in place where every single action, every single transaction, if there was an issue with a transaction, Hey, I’m not going to pay you. Invoice should be to fix this.
What happened on the platform within the software. You’d never have to get out of that and really enable you to essentially, you know, The relationship with your supply base. Um, and that’s not a small thing. If you have a hundred thousand suppliers globally, that’s
Andrew: Why did they have so many suppliers? What are they getting?
Christian: fruitful waters around the world, taking care of getting goods, ready to be, right. They all supply us. So if you see that DSL truck that might not actually be somebody who works with TSL, it could be a freight forwarding company. That’s invoicing D itself.
Andrew: ride. Got it. It ain’t might
Christian: that’s a few of
Andrew: logo on. Right. Okay. So then they’re all the that’s considered a supplier, right? So you’re saying what if everything here was digitized in one platform and back then they will, what? They were still doing it all by paper.
Christian: Yeah. And I mean, look, people were still talking about even trying to put the ERP system in the cloud that was like, maybe we shouldn’t do that. That’s scary. Right.
Andrew: in the class.
Christian: that you’re the accounting system, right. There was still talking about putting that comics stuff. That was a very new thing. I mean, Salesforce was really just the only ones out there.
You should go digital, but enterprise software and people were skeptical. Like, no, we should probably keep it in our server room. Right. And so, so we were out there saying, no, you should take your most important process. The one that means you can build your products and deliver your services, and you should put this not only in the cloud, on our network.
And we were very lucky people trusted us, they trusted the vision we had. And actually it was part of investing in that mission, you know? Yeah, I think you’ve got to have some luck along the way as well.
Andrew: I’m looking at my notes for my producer’s conversation with you. You say, unfortunately, the pitch was so good. We closed the deal with the HL. Why did she, that’s not a typo, right? Did she make a mistake and say, unfortunately, why did you say unfortunately they signed it big customer.
Christian: Yeah. Like, look, you know, I think a as a company, right. And also to the lessons to people, you know, maybe different stages here. You gotta be really careful what you ask for, right. Uh, if you’re thinking, oh wow. I would love to sell my software. My products are some people who really pay a lot for it. Right.
Um, well, once you get that, you also suddenly, you know, these guys are gonna come and ask you for a lot of stuff, right. And DHL immediately turn around with a laundry list of stuff they needed. That was so huge. That’s why I said we spent the next year, year and a half. Just try to fulfill a built this enterprise software offers, enterprise software, assess products and software as a service product, which is called , which was the payment automation piece.
Um, you know, it almost killed us because it was such a big lift. It was such a big requirement. And then they go like, oh yeah. And what’s your plan for rolling this out in a hundred countries. And we were like, oh, let’s go hire some professional service people here. Right. So we went
Andrew: You’re using like Google translate at the time, which was a cool innovation, but that wouldn’t wouldn’t do here, but then do they pay you upfront for this? Is it like they do? So it’s like, they’re paying you like a service.
Christian: That’s a very important part, right? So they would pay us annually up front. It was this common for software as a service, right. And Dallas that changed our business model because we obviously were enough to attract enough revenue that we could invest in, in building new services.
Andrew: were they paying you essentially to build the thing that then you could reuse the same thing for
Christian: license. The they’re paying us to license the platform.
Andrew: Was that enough money to build it?
Christian: mostly not. So we also raised some more capital. Right. And that’s.
Andrew: on the back of that, you’re able to go and raise money and say, we need this money to build with DHL is saying that there, and they’re showing that they’re willing to pay for, and they’re paying and they’re not getting it for a year. Plus investors gave you the money, you built it, it nearly killed you.
Why you had money. You had a customer who is clearly asking for things and had influence to then push you to other customers. Why would that nearly.
Christian: I mean it’s, it’s it’s, you know, I mean, it was not just one customer, right. Then we started getting more like that. And, you know, if your operations are not ready to deal with enterprise level customers and not just enterprise, that would cost them a lot. Just companies in the world, they will suck a lot of cost out of you.
They will essentially just take all of your resources every day. Right. So you need to stay true to that product vision, not just delivering. And you can’t just become a consultant for the building, what they want. You need to sell them a vision that could be a product for many customers. Right.
Andrew: How’d you make sure that you were staying solid to that vision that worked for other customers.
Christian: being very stubborn. I mean, you just essentially going to say, look, it’s in your interest that we get a lot of customers on this and it’s not just custom built for the ESL. Then you share the maintenance costs you share, you know, all of these things, you’re in a bigger pool. Um, and so on. Right. So, uh, that was the important part.
Andrew: What about this cushion? You had this very internet personality back then. You were really in the throw in the thick of creating with a group of strangers of not having compliance of being this revolutionary. And now you go to enterprise culture. How are you able to adjust it without feeling like I’m now someone’s dad instead of being somebody’s kid in the basement.
Christian: Yeah, I definitely hope, uh, not all of our express customers go and pick up that first incident, you know? Um, it’s, it’s no, like, I think, you know, with Tradeshift. I actually met a really cool guy. I kinda mentioned him because he was an amazing guy and he worked for a big enterprise company. And, uh, it’s a very well-known global airline.
And if you know anything about airline, you don’t really think innovation as the first priority necessarily. Um, and then we’re looking to buy our software every with the smallest player in the bit that was four or five or the players, the fit. And he explained to me, he said, Chris, The recent via considering you, is that when we a company, this lodge, to be honest, he said he can’t really innovate. The only way we can innovate is by buying the people who are going to innovate for us. So he’s like, we need to buy a certain amount of rebels. We need to buy a certain amount of people who are willing to challenge the envelope. And he says, so I want to be clear that if we’re buying your software, you think. tomorrow and become the next, you know, SAP, Oracle. We want you to keep pushing us on this vision that we really like and agree with. Right? So I think you have a responsibility when you’re a smaller software company or a software company in general. I mean, it’s a small anymore, but that, that you understand that it’s not your job to deliver it to your customer’s requirements.
It’s your job to deliver. No innovation and change for your customers and that’s how you stay true to it. I mean, that’s how you can stay a rebel.
Andrew: Small thing, but now you’re wearing a t-shirt. I expected you in a tie because I’ve seen so many pictures of you lately in a tie, you look good in a tie. It’s like, what is it? It’s yeah, it’s a suit and tie. Even that I’ve got a photo of you here in front of me with, when you started going to DHL, did you change a t-shirt into a tie and jacket?
Did you start to get, no,
Christian: You know, I did. And, you know, because of course I was like, oh, you know, this is serious meeting. I mean, he was serious people. I put on a suit and tie and you know what? Then we’re like, oh, we were expecting, you are wearing a t-shirt. We were looking for this guy from tech crunch. We saw this into you with you.
So I stopped doing it right. Because, you know, you know, I kind of felt like I was disappointing, you know? I still wear sort of tie tired. I don’t think I wear a tie, but this is the nineties, but at least I wear a suit, uh, for many of our meetings today. But, but there’s this funny expectation that people expect to meet the founder, the tech guy, and you know, so, so it’s very important.
I think also not to change too much. We are.
Andrew: You started at the time when mark Zuckerberg had a business card that said I’m a CEO bitch. That I think what you’re saying to me is. I keep thinking that they were going to transform you into an enterprise vendor. And you’re saying they wanted an enterprise vendor, but they also wanted a startup entrepreneur.
And so that allowed you to be that person that you were, but there’s a, there’s a reality that you still have to adjust. Okay. Let me take a moment. I want to tell everyone who’s listening to me. If you’re looking to hire a developer, go to lemon.io/mixergy. When you do, you’re going to find that they will find.
Amazing developers who, because they’re in Eastern Europe where the founder lives are way less expensive than the ones that you get from the U S I could say all kinds of things. In fact, if you use my URL, you’re even going to get a bigger discount, but you’re not going to believe me until you talk to them.
So do this. If you’re hiring. Set up a call with them and see what they’ve got for you. Many of the people who I’ve had on here have found out about lemon. Many have asked me for introductions. If you need one, actually you don’t even need one. Just go to lemon.io/mixergy. They will give you a discount on their already low price because you’re using that URL.
That’s how they track me. Right. Use a URL. They track me, you get a discount, but more importantly, you’re going to get phenomenal developer. From Eastern Europe who will work at a much lower price than the ones who live, where Christian lives today and where I lived just a few months ago in San Francisco, really great company, um, and go check them out.
lemon.io/mixergy. All right. Took you how many years to develop for DHL?
Christian: It took me, uh, to me, you know, half, eh, not me.
Andrew: The team?
Christian: Cause of course we deployed some earlier, but before we were really there and had a solution that had product market fit, that could scale, it was probably a year and a half. And we got a handful of more customers in that time. But then we really started developing once we were there on the enterprise customer side and it becoming more and more on enterprise company on the suffers.
Andrew: And then, so one of the things that you kept saying to our D to our producer was compliance entrepreneurs. Don’t realize the importance of that one. How did you realize it and what did you have to do? What is compliance?
Christian: Yeah, no, I think it’s actually more than compliance. I think what I said to the producers, complexity and, and you know, everybody who ever learned how to build a startup, it’s like pick something simple. You know, focused on making that as good as possible and then scale and build. Right. Um, and that’s true.
That’s, that’s really, really good advice. But what you should remember is that if you understand something really complex, very few.
Christian: Um, that’s a very good moat, right? So it might be a lot more expensive to get to a market that might be a lot more friction, but compliance and complexity are great modes.
And today you see it rarely lose a customer once they’re alive, because the complexity and compliance we offer them.
Christian: We helped you do business in 43 countries, right? You don’t want to really switch this off and, and you know, that’s the problem. If you just have a very simple and easy idea is it can also be easy to switch off.
Right? So the complexity is not always bad, even though if you just listen to some thought on advice, everybody says what complexity I don’t tolerate.
Andrew: That makes sense. Right? If you had just stuck with invoicing with some bells and whistles, you could switch an invoicing provider pretty quickly. We’ve done that multiple times at Mixergy, but the more integrated and difficult to extricate a vendor is the more you’re likely to stick with them. And I do see DHL is still on your website.
You’ve got one of their, I guess, delivery people, uh, on like, um, like a model on your homepage. You also said it took connecting 20 different types of software, something for KYC, which is know your customer, something for approval, something for tax you didn’t integrate at all. I mean, you didn’t add it to your software.
You started working with the ones they used.
Christian: So, so very early on and chase of history, we had this idea that. Get everybody to use our network and put that business from taxing to know network. We had this opportunity to open it up to third parties, right? We have API, which allows software developers to build software on top of the network or connect it to our software.
We could open up a lot of business, right. And create a lot of innovation and business has been closed into these very closed system for years. So we saw that as an opportunity. And over the years, we have had hundreds of companies now have built. The integrated are running on top of our software and, you know, adding a, you know, an opportunity here and there that might be certain tax rules in a different country.
It might be the ability to, uh, go calculate, um, freight savings or something completely different. Right. And so that’s lucky for us, right? Because that means we don’t have to build everything ourselves and kind of create a competition, uh, to create better value for your customer.
Andrew: And so the first customers were coming to you because of the free software. And then they would start, the next batch of customers were coming to you because their suppliers, their vendors were using you. And then once you raise money in order to build with DHL and others needed, you hired a sales team, what was that process like for bringing a new business?
Christian: I mean, that was, that was a massive transformation, right? Because in the beginning, you know, it’s the founder and a small team was sell stuff. Right. And I think that’s really, really important because you got to meet your customers. You’ve got to spend as much time as you can with your customers because that’s understanding their problems, their needs, figuring out what you want to be, but then you hire your first VP of sales, your high first VP marketing, and.
Then you’ve got to build a process, right? Because, um, when you’re selling to a hundred customers at a time or a thousand minutes, Uh, it got to be a process. Um, and you know, it becomes through a math at this point in time. Right. You know, how big is your pipeline? How big is your Salesforce? What’s your conversion rates and what’s your domains and what are you paying per lead?
Um, so I think a lot of people think, you know, sales has got going out and talking a lot, but sales is. And, and especially in some software as a service, it’s really economics, right? That’s what all the great companies get valued on today is, you know, how good are their economics in sales? Um, and so we had to really, we’ve had to learn that from scratch, how to do that.
And I’m a product person. So to me, it was a long way of moving and, you know, uh, you know, offer a sales people was like, you know, off. stop talking. Um,
Andrew: Because you weren’t good at it.
Christian: I’m, I’m great at, I think I still am, but, but no, but there were like, they were more like, no, it’s not sales 10 surprise. It’s not about talking.
It’s about project management is making sure you meet everyone. It’s about making sure you get to, you know, because the might be seven different people. What does it help that you just talked to one person made really warm, but actually other people don’t really like that person. So if that person now starts pitching everyone, guess what?
You might actually have ruined the deal. Right. So, so, so, so that’s it. So, so that’s a whole different exercise when you stop doing. You got to understand your power map, which means where the decision makers what’s the landscape. And then you’ve got to make sure, you know, who are your sponsors, who might be against you, all of these things.
So it’s a very, very different exercise than you think. Uh, you know, if I was pitching a VC to get venture funding is a very much more straightforward exercise, right?
Andrew: I remember I got my first, well, I got a job with Dale Carnegie and associates, and I said, okay, you gave me a job. I’m going to read this Dale Carnegie sales book and the salesman who I worked for said no. Weird. That’s two basic sales. And he gave me a book on enterprise sales about understanding who the right people were.
And it becomes this real complicated dance of both science and personalities. Like you mentioned, like who likes, who, who’s the person who likes your idea so much that they bring you in? It’s a, it’s like a whole. I dunno, it, it, it wasn’t something that I could fully learn and he didn’t expect me to fully learn and master.
It’s not something that I could imagine that you would fully learn in master. Who did you bring in and how did you find somebody to organize this, to take the guy who’s charismatic you and create a system?
Christian: Yeah. I mean, you got to take, uh, you got to get a great VP of sales, right? And I think, you know, a lot of people out there advocating it to first highest, gotta be a great software as a service price should be a great VP marketing and VP sales, because they’ve got to figure out how to put that system in place.
And they’ve got to figure out if they can take sort of distill what’s your product. Who’s the founder of what the. Distill that into a process, then you have a problem, right? If you hire a VP of sales that just do the same as you, you should be a little worried because now we just hired another person to talk.
Um, but I think you’re right on the method. Right? And I mean, for instance, when we use a lot is what we call challenger sales, which means we go in there and we challenge our customer’s assumptions. We don’t sit down and say, Hey well, can you tell us everything you think we should be doing? We go and say, we think you are. And then every goes, excuse me. Right. Because they’re so used to, especially if you work for the last company, that vendors come in and say, yes, you know, whenever you ask you, yes. All right. And we do the opposite. We say, I use. Sure. Um, and, but that creates great conversation and great engagement and that works for us.
Right. So it’s about picking your model and your method, and it benefits with how you sell your software, where you are in the market. All of these things.
Andrew: And so who guided you to find that? How did you go to, to build that?
Christian: So we were very lucky that one of our, I mean, our second, uh, was a pretty soft notion capital and notion capsule had just. Come out of exiting building one of the world’s first SAS companies, uh, that is sold for a lot of money antivirus. They sold it to Naughton and Symantec as it’s called today, for those who don’t remember Norton.
But, um, they, they need, I mean, there was not that many SAS companies around, right. So, but they’ve been true. The whole playbook. were definitely, um, great guidances in going in and helping scale my, uh, the early stages of our business, understanding enterprise sales and how to build out the process and solid.
Andrew: Alright, I’ll talk quickly about my second sponsor. It is Gusto. I’ve switched to Gusto. I think everyone out there who has a team of people that you’re paying, whether it’s contractors or employees, you need the right software to do it. Well, this is a good time of year to switch to Gusto, get started, right?
Gusto, make it easy for you, easy for your team. And also they’ve got the support to make it, um, to get you the help that you need. I keep mentioning easy because I do want it to be simple, to pay. I want it simple for everyone. Who’s getting paid to understand what they’re getting paid to understand about the benefits.
They’re getting to see it all on a site that’s just beautiful, clean and works well. And to have a team behind you, here’s the company that I, and many of the people that. It’s called Gusto. And if you go to gusto.com/mixergy, they will let you use their software for free for a few months. You really get a sense of how it works.
I urge you to get started with them right now, 2022 in the beginning, even if you’ve paid already, um, using other software, they will transition you. Well, go to gusto.com/mixergy C podcast sales is so much easier. You need to make sure that you like the product that you use it. And then if you do. And you just talk about it.
There’s no description like me and to sound like Christian, and I love
Christian: But I think that’s it. Can I just make a comment to that? Because actually I think this kind of have both right. In the early days of wide streets, it became popular was exactly that people just used our software and liked it. Right. And that came into the enterprises. And in fact, today we have a word for that, right.
We call that product. It’s the world of slack. It’s the world of, I mean, how did slack the company, right. People just start using them. And then, you know, um, eh, you know, it just got into the organizations that way. So I think, you know, um, it’s not sustained, but it’s very hot it’s to manage that transition from just spreading organically because people like your software to then managing the enterprise transition.
Right. And a lot of companies have a hard time doing that because it’s completely different.
Andrew: I think at the time that you were starting, there are a lot of companies that were also resisting it, it didn’t feel right. Like I remember people seeing HubSpot grow, but also feeling resentful. Why do they have salespeople? If they’re a software company, they’re clearly pounding bad software using great salespeople.
Right. And in reality, that was the right approach.
Christian: Even, even, I mean, even slack, right? I mean, what happened. know, they had a great product, but they didn’t really grow it in surprise until the hot facelifts by Salesforce. Right. And to be honest, I mean, Microsoft was, was handing them a behind on, on, on that simple thing because they had Microsoft had a great enterprise Salesforce for teams, right. picking sides of what suffer as best here, just using this example of the approaches.
Andrew: But from what I understand, what them, they never did get to that enterprise sales, they could have charged more. They could have given more support. Right. It wasn’t just about how Microsoft bundled. It was also how Microsoft sold and slack didn’t make that transition. Am I
Christian: Yeah. And I mean, but look at who acquired them, you know, Salesforce, probably the world’s masters at that discipline. So I think they have that covered. Right. And that’s why it’s, it’s an acquisition that makes a lot of sense.
Andrew: All right. And so, as you continued, you talked about how network effects got you started. Did network effects help you later on.
Christian: Yes. Um, they continue to help us today. I mean, network effects. I mean, 20% of the network growth that we see every year, it’s just supplies joining to invites some other companies. Right. So. That’s a, that’s a big factor and you can think about network, right? That’s the value that his favorite one, right?
Why wouldn’t a company you want to join the network? Well, because a lot of other companies are there. Um, I think the other thing though, we didn’t fully appreciate is that, you know, if you’re a software as a service company, just selling enterprise software, when you go live with one customer, you only have the cost of going back at one customer.
It’s not like you have to do a lot more, but when you’re running a network, You also get the network effects on the cost side, right? So you go in your cell to a big company. They say not put 10,000 suppliers life. Well, that’s not one go live that’s 10,000 in one go lives. Um, and so we have to be very careful in figuring out how to make these large scale deployments and large scale network effects on both the cost side and on the winning business side.
Andrew: at one point that nearly not bankrupted you, but it was a real tough financial situation that you were in and you were also backlog with not being able to launch. What did you do to overcome all that?
Christian: Yeah, I think, think about this, a word I would definitely avoid. We would, we’d be one close to that, but, w you know, we, at a point where, you know, I don’t think any startup I’ve seen this right, where the cost side of the business was accelerating so fast, actually, due to how many customers. Right. We had a year voiced our customer base and we couldn’t get arms down.
It’s like, we’re so successful. This is amazing. And then we started having to deploy these customers and we realized that every single part of all racial infrastructure deployment professional services was not scaled for this. And not only did we, it wouldn’t help, it wouldn’t help. Let me hide, double them on a people.
We really had to completely react to. Software mistakes and everything to how we did this. And we had to do it in a very short amount of time or, you know, we would get eaten by it. And, uh, you know, I think I remember, you know, Reed Hoffman said that about PayPal, right? At one point they were burning so much money on the scale of the network.
This case also fraud. If they didn’t fix it in months, you know, it would eat the network. And that’s the challenge for that program when they’re really accelerating. If you don’t have a hamper on the cost, it can eat you much, much faster than what you know, from, from SAS or all of businesses. Right.
Andrew: So I’m wondering what you’re up to now. So bill.com, smaller company gone public. Your, what do you think of that? I, I, as I was saying it, I noticed something come across your face.
Christian: No, no. I asked to go, I was going to say congratulations to Renee. I mean, he has done an amazing job, uh, CEO, founder of he, he was one of those cases, right? Like it’s yet another overnight success that took, you know, 16 years or so. So whenever people see these companies and say, oh my God, that company is so huge and so valuable in no time.
I always find people. It take a lot longer than you might think. Um, I think the left column is an amazing business and I think that Don really, really well. They’re not really network. They are much more focused on building a piece of software for a four plus SMEs that work well. Um, and I think, you know, eh, you know, what I’m most excited about actually is he has proven to the market that a blended business model off financial services and software is a great way to go about it.
Right? 69% of his revenue is, is payment and finance. Right. And I honestly
Andrew: right? So for people who don’t know, bill.com is a way to pay your vendors. It kind of has an invoice and component in it, but essentially it’s, if you want an easy way to pay your vendors, that’s what they want to do. Am I right?
Christian: Yeah, exactly right. Very simple software. Um, and, and also, you know, easy to use. And, but what they really did was they embedded, you know, the payment and getting the money into that product. Right. Then. You know, that’s honestly, I think the way that most software is going to go in the future, if you’re in
Andrew: What’s the payment component for them.
Christian: So, um, if you are using the software or, uh, you know, uh, any other software, our software for that matter, uh, I better make sure I say that, um, you know, and send an invoice, you can then pay it straight for the credit card. You can pay it with, uh, you know, ACH bank account and you can hook it up to a bank transfer. That’s using their financial service infrastructure to do that. Right.
Andrew: Uh, okay. Got it. And so when I pay a percentage, they get it’s them who are doing
Christian: them. Yeah,
Andrew: Got it. Their processor, the way that Stripe is.
Christian: yeah, exactly. Right. And
Christian: that’s the way in supply softwares is all small business software. It’s kind of go in the future. It’s going to be a mix. Financial service and FinTech revenue combined with software revenues. And
Andrew: you give me an example of that? Let’s talk a little bit about the future. So what other businesses do you see that will have that financial component? And then we’ll talk about crypto and how that fits in with your business.
Christian: no, no. I mean, I’ll take a really good example from, from ourselves. We use a lot of artificial sentence and all software and different pieces. And one example is when you had working in a big company, you get an invoice. You got to figure out if you’re gonna approve this invoice or not. But do you mind this single person here might live thousands of invoices to approve that might not really remember who is this vendor or not?
Um, so our software allows us to say, we actually know the relationship. We know all the data. We can give you a very high confidence, right? So we can give you that as a rating. And we also could do, actually we could say, well, let us do that. Automatic, all invoices. $10,000. Right. And just that the AI took care of that and the paper.
And you could prove mathematically that you’re not going to take a loss that’s bigger than any loss you might have today. Now, when you explained that to the CFO, this and that sounds great, but who’s going to get fired if it doesn’t. Right. Um, and, and you know, it’s not until you start thinking, well, actually this is not a software problem.
This is an insurance problem. Right. So if I can go to them say, well, guess what the software works exactly as we say, and if not, Right. You know, we’ll just, so now you’re getting AI deployment into the enterprise, but we’re doing it because it’s embedded on a bundle with insurance. So I think that, you know, a lot of software that will need to go and change business processes in radical ways.
Take a bit more risk than they used to an enterprise will need to be bonded with either insurance or underwriting, all the things like that. And that’s much easier to do detain that was 10 years ago. Right.
Andrew: Yeah. I remember interviewing the founder of Dwolla years ago. And he said, he talked to me about how credit card processing and payment for enterprise and businesses is really expensive. And then I went back and sure enough, I looked one of the biggest expenses of my company. Maybe the biggest expense was just the cost of moving money from my customers to me.
And I know that my, I have a similar impact on the people that I buy from. It’s still an issue to this day, right? At what point do we see crypto make that easier, make it cheaper because you’re basically moving money from one company to the other, to another, and then right back to you. And in that whole little chain money disappears.
Christian: Yeah, no, no. And, and the banks for some reason keeps getting lots. And it’s funny how that works.
Andrew: And we see, and we see people like Amazon and Walmart get upset about this. I think if smaller businesses look, they would see that it’s a huge expense. But we don’t notice it. What do you see? Especially in bigger transition.
Christian: no. I think Luke honestly, um, I think the cost of moving money will go to zero over the next 10 years. Um, and, and unfortunately I think, you know, trips, we’ve got to figure out right now and it’s a lot of different, there’s a lot of different things, right. But all of the popular services, Bitcoin, if they’re on whatever.
They all have a challenge that actually the cost of moving money has gone all the way. It should be far more expensive to have money on a theorem that is using the bank.
Christian: I don’t think that’s really solving the problem. I think you’ve got to be, we can’t just say, oh, we’re going to invest, invest, invent this new technology that will solve it.
We got to figure out what is actually the problem. The problem here is just that there are middlemen that benefits from, from taking his life. Right. And you know, for us, we’re looking hard at, you know, we launched a product last year. That allows all of our companies that you straight, you have to get paid.
Uh, and guess what not on, you know, you send an invoice and the payment terms are 30 days, 45 days, whatever they are. But on the day you issue the invoice, no matter what the payment terms are. Right. And that’s a service that a lot of companies find really valuable. Um, we are not chasing for the payments. You can move your money for free. We will charge you a fee for moving your money payment. But on the other hand, then you’re getting paid, you know, 45 days earlier. So I think it’s about figuring out how to build value added products and services that actually benefit both sides. And, um, you know, I think far too often, whenever we have to do with money, we always start thinking about how can it benefit the business.
Um, instead of thinking about, you know, You always stop at say, how do you build a product that’s great for the user. I think we need to ask ourselves the same questions for financial services. And I think the people do that then we’ll wait.
Andrew: And I don’t know why it’s so difficult and there’s so much money to be had. If you do win.
Christian: Yeah, no, I mean, it’s, it’s, I mean, between companies globally, there’s $9 trillion outstanding at any given point, meaning customers that haven’t paid for the services they got delivered.
Andrew: But paying upfront, that’s more like a loan product, right? Where you get, you get paid for making that money move faster.
Christian: Yeah. But think about as a consumer, right? So as a consumer, if you go into an apple store, you don’t go and say, Hey, let me get that new Mac book, 90 days, full percent, you don’t stop negotiating. Right. You just take your credit card up and you run it. And the network has that. Right. And that’s a consumer.
You must less, let’s say pissed off that they’re taking a fee because they’re delivering a service fee, which is pay me, you know, I can pay every month already running balance on whatever I want to do. Right. Of course those fees are still high, but it’s really problematic, but it’s just taxation for movement, right?
Like moving money from a to B you know, as a consumer cost, 1.5% using the say, PayPal. I mean, it’s just, I mean, I can send you
Andrew: Right. And meanwhile, for me as a business, when I’m buying it from when I’m buying it from apple, apple has to pay what, anywhere from 1.5 to that’s probably roughly where they are. 1.5, maybe two on me. I don’t need the credit cards credit. I basically pay the bill automatically. Right. It’s just that I need the simplicity.
And there isn’t another system that’s simple that just takes the money out of my bank, gives it to them. And then maybe gives me a little bit of a discount or maybe makes them a little bit of a distance.
Christian: Yeah, but I think to do that, you’ve got to have scale. You’ve got to have enough scale that you can eat some meat, eat both sides, and then you can ask them, what is it you want? Right. Because if you can go to the buyer and say, what would you like? Right. The Bible would say, oh, we would like to pay a hundred.
300 days, right? That’s, that’s what they would love to do. And if you go ask the seller, what would you like to say? I would like to get my money immediately and pace your fees. Right. And the problem in between those is honestly just the financial structuring problem. And I think the reason we haven’t been able to do that, just because there was never anyone really with enough scale and enough data to structure that financial product.
Andrew: Do you think you have enough scale, this trade chip to have that?
Christian: You know, I mean, it was a half a trillion dollars of trade and we’re generating around a terabyte of data, you know, a month. I think we were close and, and, you know, obviously this is something we think about everyday, not for how it could benefit us, but how it could benefit everybody who uses that.
Andrew: Yeah, right, right. If you have it, then the thing is that you have enough people on both sides, people would be willing to pay money. Even 1% is a lot of money. Right. And so if they could, if you could get them to a quarter of 1%, that’s huge. All right. Thanks so much for being on here in 10 years, I’m looking forward to having you back on.
We’ll talk about how the IPO went. We’ll talk about Dubai. Do you do anything for fun yet? Yeah.
Christian: Yeah. Yeah, no, I,
Andrew: so well for yourself. What are you doing? Fun.
Christian: yeah, no, I worked some more. No, I look, I live in Marine, you know, I love going on road, bike rides. We have wonderful
Andrew: Marine road bikes is the worst. Cause there’s no shoulder. Someone’s going to kill you.
Christian: Yeah, I know. He’s just going to go grab a box and you never do that. That’s a little bit, you don’t have the cost there, you know, so.
Andrew: tough. That’s impressive. I think when you just say I go bike riding Marine, I think people should know. It’s a lot of Hills. It’s very little shoulders. It’s a tough bike ride, but
Christian: It’s beautiful.
Andrew: ride. It’s beautiful. It is beautiful. All right, Kristen. Thanks so much for being on here. The site is tradeshift.com and I’m appreciative that you have.
Christian: Thank you so much, Andrew. I really enjoyed it. And then see in 10 years,
Andrew: You bet.