Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy.com. It’s the place where I’ve done interviews with proven, successful entrepreneurs since 2008.
And I do it because I’ve got an audience of diehard entrepreneurs, business people who are really building up companies and very often what they do is they listen to these interviews as they build up their companies and then they come back, sometimes months later, sometimes years later to do interviews of their own and say, “Here’s what I did while listening to Mixergy. That’s my vision. That’s the circle of Mixergy.”
And in this interview, I’m going to be interviewing someone whose company I’m seeing a lot now. When I research companies, I often see that they have this little logo on their sites. It’s the Trustpilot logo. And I’ll be honest with you, when I first heard about this company, I thought, “There’s no way it’s going to succeed, it’s too hard. But it did succeed and it’s growing and it’s a really impressive company and I’m curious to see how they did this thing that I couldn’t even fathom succeeding.
The founder of the company is called Peter Muhlmann. He is the founder and CEO of Trustpilot, which publishes reviews for online businesses. This interview is sponsored by two great companies. The first is HostGator, website hosting that I’ll tell you more about later. And the second is a company that will help you hire your next great developer or incredible designer. It’s called Toptal.
First, Peter, welcome.
Peter: Thank you so much. Thank you for having me.
Andrew: What kind of revenues are you guys doing over at Trustpilot?
Peter: Enough. We’re creating a healthy business, but I think at this moment it’s not something we’re disclosing.
Andrew: Like $2 million a year roughly?
Andrew: More than that. More than $10 million?
Andrew: Wow. And how much money have you raised?
Peter: We’ve raised a lot. We’ve raised $114 million.
Andrew: And part of it is so you can take some of the money off the table and be able to buy a house, etc., right?
Peter: I wish. Yeah.
Andrew: You didn’t take any off the table?
Peter: I’ve not taken a single dollar off the table. No. A lot of people have told me that’s a little bit foolish, but I thought it was a good signal to send to basically everybody who’s involved and I’ve got enough money as it is, I think.
Andrew: And where are you now in the world?
Peter: So, today I’m in Copenhagen in Denmark in Europe.
Andrew: So, I’m looking at your environment. You’re past 10:00 p.m., right?
Andrew: You’re doing this interview from home. You’ve raised enough money. Your company is successful. Why are you doing this interview with me at 10:00 until what’s going to be past 11:00 p.m. your time? Why bother?
Peter: So, I said yes to the interview and then I think from when we said yes to you guys like coming back with date and then saying, “It can be at this time,” and then they asked me like, “You up for doing an interview at 10:00?” And I was in a great mood and one of these where I was like, “Yeah, I can do anything.” And then an hour ago I was like, “Oh my god, I said yes to doing an interview at 10:00. I’m such an idiot.” But I thought it would be fun, so I hope it will be fun.
Andrew: But you’re not in the place in your life where you want to be doing something fun. Is there a strategy to doing interviews like this?
Peter: To a certain extent there is.
Andrew: What is it?
Peter: You get your name out there and it’s this value, like I give something in the sense that I hopefully give some advice to future entrepreneurs and that pays off in a number of ways. Sometimes it’s potential employees who they’ve seen an interview with me and they like what I stand for and they like what the company stands for. So, it’s good for employer branding.
Then there may be some listeners, they go in and they leave a review. There may be some listeners that are business owners. They want to show they have great customer service. Sometimes actually the interviews, they can be very interesting.
Andrew: I see.
Peter: Because I think a person like yourself, I saw some of the other people who have been on this interview. So, usually you’ve seen things. You may ask me in a way that provokes thought, where I’m like, “Huh, how did I say that?” And then ultimately, I think this was also about sharing some of the mistakes, some of the experiences of what it’s like. I think that’s just rewarding in itself.
Andrew: You said you were feeling at the time that you said yes to this interview kind of like you could do anything. How much of your personality is that, that sense that, “I can create this business, I can do anything, I can overcome these problems, I can raise over $100 million,” how much of it is this sense of personal confidence that you have?
Peter: Wow. Good question. It’s a big part of it. I think it’s something that I always had an inner confidence that I could do things if I wanted to do them. And then I’ve seen things become possible, either by doing them myself or by seeing other people do these things. Usually your greatest limitation in life is what you think is not possible, right? So, that’s one half of it.
Then the other half is this oscillation between–I’ll wake up in the morning and I have a ton of energy and things are going great and I can take over the entire world and life is good and then maybe at like 4:00 in the afternoon you get this email like, “Sales are down,” or, “This bad thing happened.” Then you dig into it and it’s because we made a lot of foolish mistakes and then that energy can also like as quickly be drained out of you.
Andrew: But how do you bring it back up when you suddenly feel that? When you feel, “I don’t have that energy. I don’t have that confidence,” but you need it even more because of the situation, what do you do to bring it back up in yourself? Do you know?
Peter: So, there’s a distinction between moments where you can be in a crisis, but then say 30 minutes later you have to go in and do a big and very important presentation.
Peter: In those cases, I don’t know. I just do it.
Andrew: You just do it. You don’t have a process for getting–I saw one entrepreneur. I don’t know if he talks about this publicly. He has certain music that he plays for himself. Now he uses Amazon Echo. He calls that music up and boom, he changes his personality. You don’t have that?
Peter: I think I have it inside me. I just somehow do it. I’m actually less impressed with that. That’s a little bit like you can get all kinds of coaches to do it. What impresses me much more is if you have six months of resistance.
Andrew: Did you ever have six months of resistance? I’m looking at the story, and it’s going to unfold in this interview, of a guy who started out as a kid selling different things like cables from China online, as a guy who came up with this idea and just seems to have gone from success to success, did you have a six-month trough of sorrow?
Peter: Yeah. I think there are multiple low points. I think a lot of entrepreneurs, when we’re reading about other companies, it’s like you’re seeing everybody who’s like dressed up for the party and it’s a little bit like social media, where you see your friends, like the pictures they post on Instagram and Facebook and all that. So, that’s what you read about. You don’t see them when they’re down…
Andrew: When were you down? What’s one time that you can think of that you were down so low that you almost didn’t think you could do it?
Peter: Yeah. Almost.
Peter: So, we had multiple times where we were very, very close to running out of money. I recall a time where we had raised the first investment. So, that was $200,000 or $300,000. We couldn’t really get the sales to scale. I was sitting on the phone every day trying to make deals for nine months. And you could just see the cash in the bank just go down, down, down, down and sales not keeping up.
And it was winter and winter here in Denmark, it’s like you get three hours of daylight. I would go to bed at 12:00, 1:00, 2:00 and then I would wake up at 4:00 just with this adrenaline shot. I would come into the office and one of the other guys–we were going to this important customer meeting together and he asked me, “Peter, why did you go out yesterday? Really, we’re in this situation and you’re out partying yesterday?” because I looked like it. I was like, “No, I didn’t go out partying. It’s just a rough month.”
And ultimately we had to borrow some money from a relative of mine to make the paycheck. Finally we managed to close another round of investment. But in those moments where you have to tell your employees, “Guys, we’ll probably have to cut pay,” that just goes on and on and on and there are months and a half a year and then nine months where it doesn’t really feel like you’re coming out of that month. I think that’s when I really give credit to people for putting their game face on.
Andrew: What kept you going then at that point?
Peter: Ultimately I never really doubted that we were onto something.
Andrew: Why not? What was it about the environment? You’re a guy that went to business school. You don’t just go by heart and gut, do you? Don’t you look around and see there’s some evidence that tells me this actually makes sense? What was that evidence that told you this idea, Trustpilot would actually work?
Peter: I think it was the entire rest of the world. If you look at what happened, ecommerce was growing enormously. So here we’re in 2008, 2009-ish.
Andrew: I think the site launched 2008, the business launched 2009. Is it 2007? Sorry?
Peter: We launched in 2007. This hard time where I am now is 2009-ish.
Peter: So, you see opinions being shared online in a way they were never shared before. If you could do a graph of the number of opinions being shared on the internet every day over the last, say, 10 or 20 years.
Andrew: Shared on Trustpilot?
Peter: Not just on Trustpilot, but just really everywhere–on TripAdvisor, on Yelp, on Facebook. You can even say a tweet is an opinion. The IMDB–I don’t watch a movie without checking it on IMDB first, books on Amazon. So, I could just look around me and I could see that–or on Airbnb or an Uber driver.
So, Airbnb and Uber, I’m not even sure they existed back then. But whenever I looked around me, I saw that the world was materially going in our direction, so that gave me–I thought for sure sooner or later consumers will realize that it’s smart to read other people’s opinions and sooner or later businesses will know that they will need to show that it’s a great place to buy from.
Andrew: Okay. Let’s go back then and understand how you got here and then get to why you are seeing this work out. You’re a guy who, as I mentioned earlier, it feels like you were entrepreneurial from the beginning. A friend of yours came to your house with a Sony Ericsson phone that he bought for $1, which was phenomenal. How did he get it for $1?
Peter: So, actually what he bought was not the phone, but it was the cable connecting the computer with the phone.
Andrew: Okay. That makes more sense.
Peter: But getting it for $1 was still phenomenal because it would cost you maybe $20-$30 in the store.
Peter: So, he got it because he bought it from some–I think he bought it on eBay or from some guy in China. So, it was somebody was selling cables wholesale, non-branded and the price difference was just enormous.
Andrew: So, what did that make you think?
Peter: Not a lot until he showed me the price difference.
Andrew: Did you come up with a business idea based on that?
Peter: Yes. So, we basically had–it was the world’s simplest business, there was such a price difference between eBay in Germany and the prices in Denmark, which is much smaller and they were a far less competitive market that we could literally go onto the German version of eBay and buy stuff there and then sell it on the Danish side and…
Andrew: And is that what you did?
Andrew: And you started making money from it?
Peter: We invested–we had a total of $500. So, we were students. We didn’t have a lot. So, we each like chipped in with, I think, $250 or something like that. We bought 500 cables and we sold all of them for 15x that.
Andrew: That’s phenomenal as a kid especially.
Peter: Oh yeah. As a student, I was the King of Zamunda. I was just like…
Andrew: And then you started doing other things. You started to sell memory sticks and cables. You became this little entrepreneur, right?
Peter: Yeah. It started with one product and then it was just about adding more and more products and then unfortunately like other kids in Denmark would start to do the same. The prices would spiral down and then you had to find a new one. But like a year later, we had a business going.
Andrew: And a real business, one that was legitimate making how much money are we talking about, roughly?
Peter: Not a lot. In a month maybe $20,000 in revenue.
Peter: And making a $5,000, maybe $10,000 profit.
Andrew: That’s pretty decent.
Peter: On a good month and then other months you had a $20,000 loss.
Andrew: How old were you at the time?
Andrew: Okay. All right. So, that’s a start. Is that why you decided to go to business school, to start to figure out how you could grow this business?
Peter: No. I started on the business school because I think I wasn’t very imaginative. Actually, the real reason I started in business school is I didn’t know what to study. My uncle then took me and he let me meet three people. One had studied in the business school and he was the managing director of a company. Another had studied political since. So, he was working for the government. I think a third was an engineer. I thought the guy who was running the company, like he was the man. So, I thought, “I have to go to the business school.”
Andrew: Was he right? Was your analysis right? Did that really make you into the man the way you hoped it would?
Peter: I think I should have learned to code instead. That would have been a much better use of my time.
Peter: I could have done great things if I could code today.
Andrew: You told our producer that you would sit in a class. You’d watch everyone get all tense about a test and you wouldn’t get nervous. You weren’t that tense because?
Peter: because I had started a business. So, I recall having the business and you have a real business. You have real employees, a real income. Here I am sitting taking a test on some random subject and I know I’m spending four hours and we didn’t have computers, so I had to write it with my hand and my hand was like cramping because you had to write with the pen.
I think we had read somewhere that the average time they spend on grading you afterwards was four and a half minutes or maybe five and a half minutes. So, then there would be two dudes sitting there like giving me like some A, B or C or whatever. And everybody just looked at it like it was the most important thing. Somehow it just felt less real than the very, very real context. So, I just recall at some point I’m putting my pen down and I’m just like, “I’m out of here.”
Andrew: I get that feeling like when you’re starting a business, a lot of other risks in life don’t seem that big. Like I just became a dad a couple of years ago and I take it all in stride because if my kid s screaming while I’m changing his diaper, it’s not the end of the world.
I just had a guest just before you came on here, we spent half an hour on the phone because I published his interview before he was ready for his interview to be published. His company was about to get sold. He obviously had a reason to freak out. He had to coordinate with the people who bought the company and he couldn’t reveal this to the world. To me, those are bigger issues than the kid screaming. Business makes me think that other issues aren’t quite so big. Do you find that too in your life?
Peter: To a certain extent yes and to a certain extent no. I’m actually mentally going the other way, where I’m sometimes thinking that the business, I’m giving it too much importance and philosophically I’m asking myself–if you’re bad feeling bad about something, what’s really worth feeling bad about?
Andrew: In business you’re saying that to yourself?
Peter: No, in life. I’m just meaning if business is giving you a problem and for some reason that’s giving you like a bad time, I think people should ask themselves like why do you let something give you a bad time. If you have a relative that has, say, cancer or something dreadful, that’s a bad time. That’s genuinely something you should feel terrible about.
Andrew: How did you come to this conclusion? It feels like something you had to realize for yourself because of a life event?
Peter: More like a continued life event that I would equate the success or failure of the company with my own happiness.
Andrew: I see.
Peter: And to a certain extent, I think that’s healthy. It’s good for the business. You shouldn’t just be blasé about it. But at the same time, I think I grew tired of worrying.
Andrew: I see. Are you in a relationship?
Andrew: Were you in a relationship during the tough period?
Peter: Yeah. It has been–not in the tough period, but I’d say overall the business has not been good for…
Andrew: Why not?
Peter: I think because I go all in on the business because it requires that I go all in. It’s a little bit like on a bike, you can’t stop it. You stop, it falls. Also, it is extremely–it’s almost narcotic in the sense that it’s extremely satisfying when everything just runs like a clockwork and it’s extremely dissatisfying when things are not running like a clockwork.
Peter: So, I think the business, sometimes just from a positive side has a tendency to take over because it’s so much fun and I’m enjoying it so much and then other times it’s so damn difficult that if I want to maintain it and keep it going, then it just requires everything I have for a very long period of time.
Andrew: It sounds like you were in a relationship at some point during this running of Trustpilot. Did it make it harder?
Peter: Oh yeah.
Andrew: It did. Because you couldn’t spend enough time together because of what?
Peter: Yeah, just like your ability to be in the moment.
Andrew: I see. You were so focused, so all in, literally all in. You’ve got your money on this. You wouldn’t take any of it out. You’ve got your attention on this. Now 10:30 p.m. you’re up doing work.
Peter: Yeah. I have to say I consider this less work and more you can say I’m actually having a pretty good time.
Andrew: Especially since I’m prying into your personal life here. Do you want to get a scotch while I do my commercial break right now?
Peter: I’m happy to. Thank you if you’re having one with me.
Andrew: I can’t. This is middle of the day now or else I would. I will quickly say to my audience my interview here is sponsored by two companies. I don’t know if I said it at the top of the interview. One of the two is a company called HostGator.
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And if you’re unhappy with your current hosting company, you shouldn’t have to deal with it. You can switch over to HostGator. All you have to do is just migrate. In fact, if you’re on WordPress, they will migrate for you. They will move you off of the site that you’re not happy with. Go to HostGator.com/Mixergy. Sign up. You’re going to get a 45-day money back guarantee.
So, if you’re not happy, they will give you your money back. They’ll give you free shopping cart software, easy WordPress installation, 24/7, 365-day tech support, 45-day money back guarantee. I already said that, unmetered disk scape and bandwidth–I’m just now reading for their website, which is not doing anyone a service. So, I’m going to tell you–go check it out, read it for yourself, tons of reasons to sign up at HostGator.com/Mixergy.
So, Peter, a few years ago I was listening to my friend Jason Calacanis’ show and this guy called up with your idea. I almost thought it was you, but as far as I can research, it’s not. The idea was, “Look, I think people need to have ratings on their website, but no one is going to trust a website to put ratings on themselves.” I’m kind of doing this from memory, so I may not have it exactly right.
He said, “My idea is I’m going to install ratings on other people’s websites.” And I remember thinking, “That’s not going to work because if the ratings are good, the site holder will keep the widget up and as soon as ratings are bad, he’s going to delete the widget and move on to something else.” It felt like–was that your idea too? Is that the beginning?
Peter: The beginning is a combination of a lot of things. I think when you start a company it’s less like–at least for me that was the case. It wasn’t like I was imagining what Trustpilot is today. It was more I said, “Hmm, there’s something here that’s really interesting. I’m going to make something.” And I then made a number of things.
So, we made a toolbar where if you would visit a website, it would tell you what the media thought about this website and what other people thought. As a little bit of a side thing we made a website where you could leave your own opinion and read other people’s opinions.
Andrew: Like a Yelp, standalone site anyone could go to?
Peter: Yeah. Then it turned out that nobody actually liked the damn toolbar. Even my dad uninstalled it. But people loved the website.
Andrew: Why didn’t they like the toolbar?
Peter: I think because technically we couldn’t really make it work and also because like there are so many toolbars. Who wants another toolbar?
Peter: I’m not sure there was a compelling reason for you to install a toolbar always or maybe we were just not smart enough in getting it to work, whereas let’s say you were buying a new couch from a website. You think you can save maybe $3,000 from buying it in the store if you buy it online, but will you actually get it? They’re shipping it from Hong Kong. I don’t know. At that point, you are very motivated to check something on a website.
Andrew: I see. And so at that point you wouldn’t necessarily know that Trustpilot existed, but you would go Google and see what do people say and then see some Trustpilot reviews.
Peter: Yes. Exactly.
Andrew: And you were kind of counting–was that the model that you were thinking about or did you think from the beginning people are going to put this on their website?
Peter: I thought that people would put it on their website because I had my own ecommerce gig, so I knew that I would put this on my website.
Andrew: Because people didn’t trust you. They thought you were just a couple of kids in a basement somewhere, which you essentially were?
Peter: We were just a couple of kids in a basement, but because we had 10,000 good reviews on the auction sites, then people didn’t care, they just bought from us.
Andrew: I see.
Peter: So, I knew that was going to be popular. But I don’t think I thought it would be as popular as it turned out to be.
Andrew: You mean putting it on a website?
Peter: Yeah. I thought we would just get a ton of traffic and then we would monetize it with Google AdWords. I think in a month we had 3,000 visitors and every time we had 1,000 we got $1. So, I could buy like two slices of pizza and a Coca Cola and that was it.
Andrew: That was the model. I’m actually looking at an early version of the site from 2008 and I see things like DenimSkirts.com was one of the top 100 sites on there. I see JR.com, which was the music store. I’m just wondering what incentivizes people to come to a site–how do they even think to go look for a site where the can go and write a review about J&R Music World?
Peter: Why do people tweet?
Andrew: People tweet because their friends are there and they think they can have influence, but do they look to say, “Hey, I had this great experience at J&R or a bad experience. I’m going to go somewhere and write about it?”
Peter: It turned out that when we started, people would ask me that question. People would be like, “Nobody does that. It’s never going to work.” I was like, “No, they will.”
Andrew: But you did something, didn’t you, do make it work? It’s not like you put a site up and people came. What did you do to make it work?
Peter: Sure. So, we did a number of things. We would get a lot of media attention around it. We would ask companies to invite customers to leave a review after they bought because we feel if a company is inviting all their customers to leave a review, that gives the most representative image of their business.
I would go into–on a forum, if people were talking about this company they bought, I’d say, “Oh, by the way, have you thought about you could leave a review?” And I’d get booted from that. We would really like–it’s sort of once it’s going, it’s going, like it has a good momentum. When people know it’s there, it ranks number on in Google. People today are familiar with being able to leave a review, but in the beginning it’s a little bit like a chicken and the egg. People haven’t heard about it, they don’t think about it, they don’t think about it, so you have to push and push and push.
Andrew: I remember actually in the early days of Yelp, some of my friends were–I forget what they called them, like Yelp delegates or Yelp superstars or something and they would invite them to these incredible parties. They would make them feel included in these cool inner events. Did you do anything like that? What was the thing that worked the best for you of all the efforts?
Peter: Of all the efforts, it was actually getting the companies to be excited about it too.
Andrew: I see.
Peter: So, I don’t want Trustpilot to be like consumers or normal people against companies. That’s a little bit of an old school way to see it. Like I’m the business owner, but I also buy stuff, right? So, we wanted it to be for both. So, having companies being proud that they have great reviews and to show that is a great way for us to spread–like you found us. You see companies display that. Then at the same time, companies inviting customers for feedback is also a great way for us to get the word out there.
Andrew: Was that your job at the company? Since you couldn’t code, were you the one who would call up companies and say–
Andrew: You would?
Andrew: And what’s the thing that worked best for you for getting them to install it on their site or to tell their customers about you?
Peter: Identifying what companies would be passionate about customer service and a customer experience. Some companies, they were just like, “No. That’s a horrible idea. People will say bad things about us.” Then other companies would say, “Hey, actually we’re doing all these things to ensure we have happy customers. It makes sense for us to put some effort into having our customers tell potential customers about why we’re good.” So, I’d spend a lot of time trying to find those businesses.
Andrew: I mentioned you weren’t a coder with a smile because you said earlier that you wish you’d spent more time coding. I wonder then how did you build the first version of the site if you weren’t a developer.
Peter: I hired a consultant, which is like the number one dumbest thing you can do.
Andrew: Why? Why is that a bad mistake?
Peter: First of all, if you’re starting a business, you need cofounders or you need at least one cofounder just because of the human condition. You need someone to share victories and defeats with, otherwise it just gets incredibly lonely. So, no matter what you do, get one cofounder at least.
Then the second part of that logic is it’s better if your cofounder can do something that you cannot do. So, I was the–I couldn’t really do anything. I could talk. And every single other person I had ever met who hired a consultant instead of getting a technical cofounder has failed. That’s probably 20 people.
Andrew: Because they’re outsourcing a key part of their business instead of partnering up with someone who could do it.
Andrew: I see. Okay. What happened with your consultant?
Peter: He turned out to be a miracle guy who did a fantastic job and acted like a cofounder.
Andrew: How’d you find this guy?
Peter: I went to the business school and I printed posters that I had this brilliant idea for a website. I needed somebody who could help me build it. So, I would go around with these posters, put them up and out of the blue I think it was one of my classmates who said, “Hey, I know this guy Mark. He’s done some coding. Do you want to meet him?” I was like, “Yeah.” That was it. I tried to give him some shares and get him on board full time but he took another opportunity and I think it worked out well, but he would have been better off then.
Andrew: So, he didn’t end up being your cofounder, partner in the business?
Peter: No. He did help me find one who eventually–he helped me find a lot of other very skilled technical people.
Andrew: What did you need the first version of the site to do?
Peter: You could leave a review and you could read other people’s reviews and you could look up a business. That was it.
Andrew: Wasn’t there already open source software at the time that could let you build sites like that?
Peter: Probably, maybe. Yeah.
Andrew: But you just didn’t know it or you didn’t want to do that?
Peter: I didn’t know a lot. Also, I was quite busy. I cannot code, but I’m still pretty technical. So, there was some software that allowed you to build search robots. So, I would teach myself how to build search robots and we would scan the internet for information about businesses and then add that to the business’ profile. Ultimately that’s a feature that we dropped again because it wasn’t really popular.
Andrew: The sentiment analysis is what you used to do.
Peter: Exactly. It turned out to be incredibly hard to get it to work. But I was busy with a robot and talking. Also I think when you’re saying it now, I never thought about this, not since I started it that I could just have found some–maybe I could. But still, if you want to just start a business, like the first business I did, which was half a hobby and half your first business, that’s a great idea.
It’s a fantastic way to get started. But I think if you’re going like, “Hey, I’m going to start a company and I want to make it big,” get a technical cofounder. Even if there are all these open source public systems, somebody who’s really strong technically and tying all that together and merging that with some other systems and getting it on Amazon so it scales, someone who can do all these things is just 100x difference your idea.
Andrew: I’m looking at some old material about your site. You guys used to do sentiment analysis like you said. The line on your site was, “Our robots will soon search the web for recommendations, opinions, mentions and buzz about companies in our database and they can independently decide if a newspaper article or mention of a company is good or bad. That’s one of the things you were working towards.
Another thing you were working towards was the Trustpilot guard in Google. So, in Google search results, people could see a check next to a company that had a Trustpilot review and if they moused over they can get a little more information like your mouse rating, etc.
Andrew: A lot of things you were kind of flinging out there looking for the thing that worked around your overall thesis. Your thesis was people are reviewing everywhere. They want reviews before they buy online. No one is doing this. We’re going to find a way to get this to work.
It may be on our site. It may be on our web. It may be in some Google Glass thing that hasn’t been invented. It may be in a toolbar. We don’t know, but we’re going to try until we hit it. And then you hit it. One of the things that you noticed you told our producer was that some companies started to put–I guess they made up this image or did you guys give to them that said, “We’re loved on Trustpilot,” or something like that.
Peter: It was a mix. They started to come up with it, to just display the logo like, “Hey, we have great reviews. We get good feedback.” People could praise it in a million different ways. Having seen that, we’re like, “That’s smart. Can we make a graphic that people would like to put on their site?” Then we did. Initially I would just call businesses and say, “I noticed you guys have great reviews. Have you thought about showing these reviews. And they they’re like, “How much do you want?” “No, it’s free.” They’re like, “Okay” That kick started it.
Andrew: It literally was you making phone calls.
Andrew: Wow. Let me take a quick second break, second and final one and then we’ll come back. The second company–do you know these guys? It’s called Toptal.
Andrew: This is a network of developers and they’ve got people who are all kinds of developers–WordPress developers, that’s what we hired form them, they also have iOS developers, Android developers, Ruby on Rails, tons of different people. They have them in their network. They test them. They have them talk to other developers to make sure they’re the right people.
Peter: Oh, that one. Yes, I’ve heard about them.
Andrew: You know them?
Peter: Yes, I heard about it. That’s really, really smart.
Andrew: Right? I don’t know why that’s working either, frankly. How do you keep this network of developers standing by waiting for–what do you think?
Peter: I think it’s absolutely brilliant. I wish I had come up with it.
Andrew: Why do you think it work or what do you think about the business model?
Peter: I just like the way as you say, why wouldn’t it work?
Andrew: Here’s the part that is exciting. From a customer point of view, if you’re a business and you need to hire someone part-time, full-time whatever, project basis, you call them up, they have their network. They find the right developer, they match them up and then they give them to you. The part that I don’t understand–this is what I’ve got to talk to them about–all these people that are in their network–oh, I was saying they’re probably sitting around getting paid. No, they don’t. They don’t get paid until they get matched up. Of course.
Peter: What’s to lose if you’re in it? A lot of these guys, they like to be independent souls and they’re doing part-time gigs while they’re in Thailand. So, a lot of people I know that match that description, they could definitely be doing like one or two projects and then still be open for new things.
Andrew: Yeah. I’ve got a friend who’s an engineer, just got a job at Google, but he says, “What I really want to do is not live in this city. Everyone loves Mountain View, but it’s just too expensive here. I don’t get to be outdoors.” So, that kind of person would be an ideal candidate. He would probably take the test to be part of Toptal. He would probably have to talk to some people at Toptal.
If he makes the cut, then as soon as they have a position for him, they pass that position onto him and then he does the work for the client. All right. That makes sense. For a second there I was just thinking, “Are they paying these people in their network even when they don’t have work?” Then I realized they probably are not. It’s probably people who are waiting to be matched up and then they get paid when they are.
But from a business point of view to hire them is brilliant. I’ve seen people who run dev shops do nothing but–actually not nothing but. They have a few developers in house, but they can’t have an iOS developer full-time because they don’t have enough iOS development work. They can’t have an Android developer, right?
But what they do is they tap into Toptal’s network. They say, “We now have iOS work. Do you have someone for us?” They get matched up with someone. That person can interact with the final client one on one even, but be a representative of the dev shop. That’s how good these people are.
Peter: That’s something we could really have used that early on. I don’t think it existed five years ago.
Andrew: No. It’s a really recent thing.
Peter: Times were tough. We needed someone who was really good at making the robots, the search robots, the toolbar, a website. And then mobile phones came out. I was like, “Oh, another platform. Now we have to find someone who can do mobile.”
Andrew: I didn’t even think to check you guys out on mobile. Let me do that. I just didn’t even think of you guys as a mobile company.
Peter: I don’t think that we are an app first, but definitely what we see is that a lot of purchases are being made on mobile, so we want to make sure that the reviews are available on mobile.
Peter: And then also we see that people somehow prefer to leave reviews on their cell phone probably because that’s when they are in the bus or in the tube.
Andrew: That’s when I’m feeling hottest, when I have my phone with me, not when I have to go back to my computer. Actually I should mention to people the URL–if you want to go sign up to Toptal, go check out the special URL they setup for us. They set one up that will give Mixergy listeners 80 hours of Toptal developer credits when you who’s listening to me pay for your first 80 hours. So, they’re giving you 80 when you pay for 80 in addition to a no-risk trial period of up to two weeks.
So, go check them out at this special URL. It’s Toptal.com/Mixergy. Top as in top of the mountain, tal as in talent, Toptal.com/Mixergy.
So, continuing on with your story, you also were good about getting media, which I didn’t know. You and your friends apparently did something to get some media. What did you do?
Peter: So, we had this game plan where I’d seen how companies do it. They’d call Michael Arrington and they’d get on TechCrunch. So, the idea was launch the site, get in the media, go viral, done. So, we just sat down for I think three or four days and just called every single journalist in the country, almost. And then on day four, we were on page 17 and one of the free newspapers was like this much of a notice. People just didn’t see the news worth in what we were doing.
Andrew: TechCrunch didn’t seem to have covered you, did they?
Peter: I think eventually.
Andrew: Once. They eventually covered you December 11th, 2012 after you guys raised $13 million from index and you had nearly $7 million reviews for 100,000 sites at that point.
Peter: Yeah. But they did definitely not want to write about us early on. But what we did do was that I think it was a lucky breakthrough. So, what happened was that a journalist just called me back out of the blue and I was at a family party. I didn’t expect any journalist to call me because I was like, “It’s over. We called all these guys. They’re not writing anything about us. I might as well have a good time.”
So, I’ve had a couple of drinks. Then this journalist calls me. Advice to future or existing entrepreneurs–never ever speak with journalists whilst being intoxicated. So, what happens is that he’s asking me all these questions and I’m pretty fired up and I give semi-controversial answers. Then we’re finishing the talk. I think we talk for an hour, maybe 90 minutes and I ask him, “Hey, do you think you’ll print this?” He actually says, “Unless nothing happens with the prime minister tonight, you’re on the front page.”
Andrew: Front page?
Andrew: What did you say?
Peter: Denmark is a small country. We’re only 5 million people. So, this is comparable to being on the front page of a local big American city newspaper.
Andrew: Okay, still big.
Peter: It’s still okay. We managed to be the debate of the country for a day.
Andrew: The debate of the country? What did you say that was so controversial?
Peter: I think what I said was that we would be–I’m not sure what the English word is, but in the medieval times when they wanted to punish people, they would put them on this thing and then it would stand like this and the local villagers would throw stuff at you when you were in this thing.
So, I said we would be such a thing for bad companies. Also, it was in the summer. In the summer, not a lot is going on. The politicians, they’re on holiday. Nothing really happens. They make stories that it doesn’t take a lot to get on the front page.
Andrew: So, you got on the front page. You got people actually talking about you. Did you become big in–why am I blanking on this?
Andrew: In Denmark?
Peter: Yeah. We got relatively big in Denmark. So, nothing actually happens after you’re getting on the front page.
Andrew: No extra users, no nothing. I’ll tell you what I was doing. As you were saying it, how do you actually say in Danish, how do you say “stocks” and then I can use that word to look up this article. I keep wanting to do research as you’re talking. Sometimes it’s a distraction. Usually it’s really helpful.
Peter: Do you want the Danish word?
Andrew: Yeah, but then I’d have to know how to spell it.
Peter: Oh, but I think what we had over-estimated was what actually happens–it seems like, “Oh, we got on the front page. We made it.” We got 30,000 visitors on the first day and then the second day, we got 2,000 visitors and then 200 and then the fourth day, 20. What’s interesting about this is that people don’t recall what was on the front page yesterday. That’s even more so today. The media landscape is even more fragmented.
Peter: So, we had a peak and then it was two years of hard work. And then it started to look better.
Andrew: You guys make your money now if I understand right by selling to enterprise, by selling to companies the ability to put your review system on their site. Am I right?
Andrew: And the first time you started to make that sale, how did that go?
Peter: Yeah. So, I was calling a company. So the backstory was that we needed a business model and we thought the Google AdWords didn’t really take as long to realize. We needed a lot. If you’re Facebook and you have seven percent of the internet traffic on the planet, then you have a good advertising business.
For many smaller sites, it’s hard. We needed a business model. I spoke with a lot of business. It’s like, “Why are you displaying that you have all these great reviews?” All of them said like, “Hey, because we sell way more because people can trust us and people can tell we’re great.” So, I thought, “Okay. If that’s the case then maybe if I charge you, say, $25 a month, is that okay?” And I spoke with this guy and we agreed that he would pay me $40 for two months.
Peter: And it was this upcoming mobile telephony company, like they were really trying to get a message out there that they had much better service than the old monopoly company. So, it was just perfect in their messaging to potential customers that they could really show, “Hey, we have great reviews.”
I think both of us felt like we made the deal of the year because he’s like his return on investment has been like ridiculous, like he was probably spending like $10 million a month or year on advertising. If that did like 10% better it would be a ridiculous payoff. I was like, “$40, I’m going to the movies.”
Andrew: And more importantly you found your model in that.
Andrew: Because for him, his analysis is, “If I put Trustpilot on my site, will my numbers increase? Will I get more orders? If I do, then it’s worth the money and if I don’t, then we can reconsider it.”
Andrew: Essentially that’s it. It’s a no-brainer for them.
Peter: Exactly. Let’s say you do $100 million in annual sales, that means let’s just say hypothetically you get 100 visitors, 5 people buy. So, if you can get that up to 6, whenever 100 people visit your website, you just made a 20% profit increase.
Andrew: And every time they do that, they have an incentive to keep increasing their reviews on your site.
Andrew: Today’s a light version–sorry?
Peter: It becomes self-reinforcing like that. Also what’s beautiful for you and me is that it becomes profitable and motivating for the business to invest in customer service, of course it already is. Like everybody knows you need have a good customer service, good customer experience, but by being able to showcase that, then you’re making that investment in customer service in the business experience that much more profitable.
Andrew: the price today is for the light version, it’s not $25 a month anymore or $40 for two months. It’s $599 monthly.
Andrew: How did you figure out where to increase the prices? What was your process for increasing prices?
Peter: It was primarily first realizing the value. So, speaking with businesses where like I just spoke with a company in England where we increase their total revenue with 56%.
Andrew: And they told you this?
Peter: Yeah. And like they’re not like the employees are prouder because they can see people love them. I think the manager, he bought a new car. So, we realized this is incredibly valuable. Then the other thing is the process of learning to communicate this–I think if you’re starting a new company, then that’s really the fun part is also the hard part–how do you articulate value? How do you present an idea in a way that’s so simple that people can just understand it and say, “Yes, that makes sense?” That takes a lot of time also. That’s something that it’s not easy. It sounds easy. It isn’t.
Andrew: No. There’s this great story that you told our producer that I’m hoping you’ll tell about you going in to get to your lawyers after you raised $4 million. They offer you champagne to celebrate and what do you think?
Peter: I think they better because I paid for it. So, they gave me the champagne and I thought I better drink it because I paid for it.
Andrew: Do you look at money to that degree? You pay attention that much right now?
Peter: I try to, yeah. I try to. I think it just becomes symbolic because if you start showing that you don’t care, then people start seeing that you don’t care, it doesn’t really matter if they buy a bottle of champagne and so on, but it’s more the attitude. Then they negotiate less hard on the contracts you have and it just becomes a ripple effect.
Andrew: So, how do you express that? How do you show people that you care about that so that the ripple effect is positive?
Peter: So, first of all, I tried to negotiate my salary pretty hard with my direct reports in the hope that they get the message. Then it’s about on the one hand, you want to have an attitude that you should invest in things that have a good payoff. For example, we have great foods. We have great offices. So, I say, “Hey, that’s good at investing in.” Then at the same time insists on having boring things like a travel policy where you say how much people can spend on a hotel per night and you–
Andrew: And you look at it. If somebody spends too much, you pay attention to that degree?
Peter: No. Not me personally, but we’ve setup this process partially to approve larger purchases and partially also to approve payments of purchases. It’s an entire chain of approval process where if it’s a small amount, your manager can approve and if it’s a bigger amount, then the manager’s manager has to approve. It’s one of these things that just makes most entrepreneurs yawn, but I think it’s a part of something that requires a lot of discipline when you get to a lot of people.
Andrew: One of the best stories I’ve heard about that is I used to Mixergy events at offices of incredible companies. One was Oversee.com. The office was stunning in LA. I told one of their people, “Does the founder spend a lot of money?” He goes, “No way.” I say, “What do you mean?” He goes, “We needed scissors in the office. I once went and bought a pair of scissors and the founder was just irate, ‘How do you spend money on scissors.'” They ended up not taking the order, they cancelled the order before it arrived. The founder went home, brought home a pair of really rickety scissors and they used that to cut for the day.
Peter: I love it. When my cofounder bought a printer, I was also like outraged, like, “Why did you buy a printer?” He even bought it in color. It was one of those requiring extensive print cartridges, disaster.
Andrew: And you don’t need it because…?
Peter: Why would you want to print something?
Andrew: That’s the kind of thing that seems really small and petty, but the impact is that it becomes a story that other people tell and they remember. They’re not going to say, “We don’t spend money,” but they are going to say, “We don’t even buy a printer. We don’t even have new scissors.”
Peter: Yeah. Exactly.
Andrew: And you tell the story about the scissors. I’ve got to get that guy on here to tell that story and tell others like that. Why don’t we close it off with hiring and firing, specifically? That seems like the biggest challenge for the entrepreneurs who I’ve interviewed. What’s worked for you for hiring and what’s been the challenge for firing?
Peter: So, what works for me with hiring is really spending a lot of time on it. There’s this saying that you spend 2% of your time hiring and then you spend 98% of your time fixing that mistake. In hiring, I look a lot for simulating real work. Like if I want to hire somebody for whatever job they’re supposed to do, I somehow come up with a test, like if I’m getting somebody who is going to write, write a couple of blog posts for me. If we’re hiring developers, they’re going to do a coding challenge.
So, if we’re hiring people who are going to sell, then sell something. So, simulating work and then trying to be systematic in your screening process and then invest a lot of time socially and have numerous people spend time with candidates in a social setting and ensure that the people give a great energy from being with this person that you’re bringing on.
Andrew: What do you mean by great energy from being next to them?
Peter: You want to have a culture where people feel like yes, this is a very inspiring place to be. The people I’m working with are geniuses. They’re great. They give me a good energy. Some people, just by being around them you feel motivated and you feel inspired and you feel you’re having fun and I think of course you can go extreme on that, but to a certain extent, I do think you can demand that from your colleagues.
You can test for that just by spending time with them and asking yourself–we have like an annual Christmas party that we in the business. Ask yourself like, “Hey, would I want to sit six hours next to this person at that party?” If the answer is no, then don’t bring them on board.
Andrew: What do you guys do, is it meals, coffee, that kind of thing or do you have anything else for socializing with them?
Peter: It depends on … It doesn’t really matter. Just spend time together.
Peter: Just get them out of the office and get them out of all these classic settings. And see also can you have a conversation about other things. And then I think that some of the mistakes I made was that I brought to many people into my senior team too fast and that breaks some of the group dynamics in the team. I think unless you really have to, I’d be very cautious about how fast you expand leadership team.
Andrew: What do you mean by changing the dynamics, how to do that?
Peter: We went from being me and three other people, then over a year we’ve added an additional three people.
Andrew: So, people aren’t getting to talk to the first three, they have six other people to talk to and that breaks things up?
Peter: No. What I meant is from my team, I had three people reporting to me. Then over a year, I added an additional three so there were now six people reporting to me.
Andrew: You doubled.
Peter: And then the three of them in their original group, they knew each other. They’d been working together for a long time and then suddenly there are three new people and everyone has to figure out how to work with each other. Their new social dynamics and the group is then less functional.
Andrew: You told our producer that–
Peter: And if you have a lot of experience, then you can maybe manage that. If you’re green like me, it’s very unmanageable.
Andrew: For firing, you told our producer that the first time you had to let someone go you were tormented by it for months.
Peter: Yeah. It’s hard. You’re basically telling someone that it’s not working out. I think if you are–the mistake I made was that I wasn’t explicit enough before letting this person go that it wasn’t working out. There were so many times I could have told this person, “Hey, this is not good, that’s not good. This is not working out.” But somehow I was afraid of taking that conflict and I was like, “Surely he must get it.”
Then when I had to actually do it, then sometimes it’s a surprise for people that like why didn’t he just tell me, he could have told me months ago. I would have changed it. That’s when you really have the disaster. That’s really a shame. People should never be surprised if you let them go.
Andrew: I think that makes sense and it is really hard, especially when don’t have to. There’s no pressure to tell them in the moment why it’s not working. It’s a lot easier to not tell them.
Andrew: I’m just going to close this out by mentioning that I’m using SimilarWeb to see where you get your traffic–by the way, you guys have a ton of traffic, a ton of people on the site–and it’s a game site that seems to be one of your biggest sources of traffic, G2A.com. I’m now on their site and they’re featuring Trustpilot right on their homepage.
Peter: That’s beautiful.
Andrew: The second one is Salesforce. What are you guys doing with Salesforce? Is there some kind of partnership that you know of?
Peter: I don’t know, actually.
Andrew: I thought maybe they were somehow integrating you guys in.
Peter: What I think is going on is that you have all these companies using Salesforce. They’re using that to keep track of, “Is this customer happy? Is this customer not happy?” Then what happens is people get the reviews of their customers into Salesforce.
Andrew: Oh, they do?
Peter: Yeah. Let’s say you are now selling me some software. Then I leave a review of you. That review goes into your account on Salesforce. That means that when you’re calling your customer representative and your customer representative looks you up in Salesforce and they can see this person left a good review or this person left a bad review.
Andrew: I didn’t realize you guys did that.
Peter: That gives some context. You probably have a ton of employees and a ton of businesses clicking through.
Andrew: To check on my people.
Peter: To see if you’re speaking with someone who’s calling about a customer issue, it’s very nice for you to know what review they left.
Andrew: Well, this has really been a great conversation. I’ve enjoyed it.
Andrew: I had no idea how big you guys were. I had no idea. I think of it as this tool that I see online that I see the checkmark for a long time. I had no idea how big the business was below it. It’s impressive.
Peter: It was cool. The other day, we had a guy in England who started for us. He said, “I love working for a company that my dad knows.”
Peter: We’re not quite there in the US. There are a lot of parts of the world where we’re not even near there. But I think it will be one of those where people think it’s an overnight success until they realize how long we were at it.
Andrew: How about this? I looked at Trustpilot on Trustpilot. You know what your reviews are?
Peter: Oh, yeah. We could be a little bit better.
Andrew: You guys are three out of five.
Andrew: That’s painful. What do you think is going on? Where could you be better to improve?
Peter: I think what’s hard, what we’re still actually trying to figure out is–so, what happens on a review site like us is that normal people go in and they write about your experience with the business. Most of the time, they’re very, very happy, sometimes they’re upset. Something went wrong. They are then writing a review. We have certain guidelines of what you’re allowed to write. Sometimes people are so angry that they get personal and they step over these guides. So, they say, “I’m going to go after this guy,” or something like not okay.
Andrew: I see.
Peter: Or they say something and then the business is like, “That never happened.” So, what happened is that the business is like, “This review is against the guidelines. It has to go down.” So, we have to on the one hand you have the business, they want the review removed. On the other hand you have the person who left the review and they want the review to stay.
So, it’s very rare–so then one of two things can happen. We can have the review stay, then the business is really upset with us because they think it was an unfair review or we can take the review down and then the person who left it thinks that’s really unfair because the review was totally legitimate.
Andrew: I see one from four days ago. This person Tammy Honnery says, “What’s the point? I wrote a good, honest, five-star review for a company and it’s been flagged and removed straightaway. What’s this purpose of this site? I bet this won’t be posted either. Will not be using your service again.”
But Tammy got a response back from Jeff–and you guys reply back to everyone with a comment it seems. “Hey, Tammy, we’re sorry we ran into some trouble with your review. We’ve looked over your case and it appears the review was archived due to a technical glitch on our end. We’re sorry. We have gone ahead and reinstated your review. We sincerely apologize for any inconvenience. If you have any questions, here’s our email address. You can contact us.”
Peter: At least that got solved. That’s good.
Andrew: Yes. I do like to see how you guys respond to every one of them. All right. Well, cool, thank you so much. I think this could actually be something that I integrate into my research on companies that I interview. I should probably be going into Trustpilot to see what people say about them. Like imagine this next guy who I’m interviewing. I won’t say his name because who knows if it will work out. Sometimes the guests don’t show up. I should be looking him up on Trustpilot to see what his customers say about him.
Peter: Yeah. I think my advice to you would be do that, but just like with everything online, what I’d really recommend is if you want to know about a business, I’m even saying this about my own company, don’t just use one source.
Andrew: Yeah. That is part of the research I do.
Peter: I think as part of the research, it’s fantastic. But I think if you really want a full depth, then by god, use many sources.
Andrew: I like Glassdoor also. I use them. I use SimilarWeb.
Andrew: The thing about Glassdoor is I keep forgetting my account. So, without logging into my account, I can only get like three reviews and that doesn’t give me enough, but it gives me a little bit. I should figure out how to log back in properly. I think what they want, Glassdoor, is if you’re media, they give you an account. I forget what it was. But it was a little difficult.
Trustpilot is a lot easier. Anyone who wants to can check out Trustpilot.com. Tell you what, you’ve said that some people might be listening to this on the way over to a job interview with you. How do you pronounce your last name? They should know this for the job interview.
Peter: Peter Muhlmann.
Andrew: All right. So, they can hit rewind and listen to it over and over until they get it just right. Thank you so much, Peter.
Peter: Thank you. It was a pleasure.
Andrew: Congratulations on the success. Have a good evening. Thank you all for listening. Bye, everyone.