Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy where I interview entrepreneurs about how they built their businesses for the audience of entrepreneurs. And the reason people listen to these interviews and have now for 10 years is, if we are entrepreneurs, I don’t think we want to just sit down and get lessons from other people. The worst lately is these Medium posts by someone who just started a company, and now they’re going to pontificate about what it’s like to build a successful company when they haven’t done it yet.
What we want to really hear is real entrepreneurs talk about how they are building their companies, their real successes, their real challenges, their real failures. And along the way, we’re going to learn a few things that we could take away for ourselves.
Joining me is an entrepreneur who is a whistleblower. And he says his whole life got turned upside down because of this discovery that he made. And one of the things that it led him to was the creation of software for whistleblowers. His name is Sylvain Mansotte. Did I pronounce your name right? It’s okay to say no.
Sylvain: Yes, all good.
Andrew: Sylvain Mansotte. He is the founder of Whispli. Whispli is whistleblowing that’s made safe and easy by enabling trusted conversations. We’re going to find out how he built this company, thanks to two phenomenal sponsors. You’ve heard me talk about them endlessly. You can probably, if you listen to me, do the ads yourselves in your head, but I’ll do them quickly later on. The first will host your website right. It’s called HostGator. The second will help you hire phenomenal developers. It’s called Toptal. All right. I’ll talk about those later.
Good to have you here, Sylvain.
Sylvain: Thanks for having me, Andrew.
Andrew: You started a job where this whole incident happened. What kind of company was it?
Sylvain: So the company was called Leighton Contractors, and they do mining, construction, and engineering in Australia headquartered in Sydney.
Andrew: And your job was Risk and Fraud Manager, so that was your title?
Sylvain: Before I, actually, moved into that role, I was actually working in procurement, and that’s what led me to actually uncover a fairly large fraud in the company.
Andrew: So you’re in procurement, and then what happens that led you to discover this?
Sylvain: So two months into my role where I was just part of a really small team, trying to figure out how we would, you know, manage that spend for the company, I was reviewing a few of the vendors and bumped into some interesting names and amounts. One was that a cottage and we were spending about $2.2 million in the previous 12 months. I was like, you know what? For that amount of money, you better buy the bloody cottage and rent it yourself. And so I wanted to dig deeper on a few of those vendors and this one in particular.
Andrew: And as you discovered and dug in, what did you uncover? What happened?
Sylvain: So actually, I rang accounts payable. They read to me that it was for consulting services for some large amounts. Every two weeks, we had a new invoice from that cottage. And then, I put that company name on a government website in Australia and got a name, put that name in the company directory, and that’s really when my whole life went, actually, upside down because I saw the face of an individual that I, actually, interviewed a few weeks prior.
Andrew: Okay. So why would that make your life get turned upside down? So he interviewed for a job. You saw that his company was getting paid by your company. What was it? Consulting services for $57,000 every two weeks? So why was that shocking?
Sylvain: Yeah, so the amounts varied, you know, anywhere between $57,000 and $20,000. There was 308 invoices, all from that cottage. And the person behind the cottage was, actually, an employee of the organization, so that’s when . . .
Andrew: Oh, you interviewed . . . I got it. I see. It wasn’t that he was interviewing for a job at your company. He’s one of the people who was interviewing you and you go, “Wait a minute.” If this guy runs a company that’s getting all these payments, something is just not right here.”
Sylvain: Correct. And I was interviewing that . . .
Andrew: And what do you do?
Sylvain: I was interviewing that guy as part of my job to understand how we’re spending money. And so three weeks before, I actually checked for an hour into that person. And so that’s really when I realized that, you know, things were not right. And the first thing that happens when you actually, think that you’re uncovering a fraud is you blame yourself because it can’t happen that someone is stealing, you know, $20.7 million over 12 years without nobody else noticing it. I was new in the company. I was two months in. My wife was pregnant with baby number three. I was still on probation. Of course, I had to be wrong. And that’s exactly what happens to most people when they face something like, you know, fraud and corruption, even sexual harassment, they will blame themselves, trying to convince that they’re part of the problem. So this is what I was facing.
Andrew: But you thought maybe there is something here. You look at the company’s Code of Conduct. You say, you know, “This actually isn’t right. I need to go and talk to someone about it.” And they give you a place to connect with the company. What are the two options that they listed for you?
Sylvain: So they, actually, did things fairly well, or they thought so. And a lot of companies do the same. They get access to an external, you know, whistleblowing third party and they’ve got, like, a hotline, a fax number, sometime type of P.O. box, an email address. And even sometimes, a form on the internet. And you know what? I had access to all those reporting mechanisms.
Andrew: Oh, you did? It wasn’t just a fax number and a P.O. box? It was also an email and all that. So your company did have a third party. Why do businesses use third party instead of saying, “If you find fraud, just contact someone here internal?
Sylvain: So some of companies that would have a system in place would actually outsource it to actually remove themselves from the situation and say, “Listen, if we’re involved in anything, we want an independent third party to actually take care of it so you can reach out to those guys.” And that’s what I had access to, but I didn’t feel like I could, actually, do it.
Sylvain: Because those [mechanisms 00:05:44] are even not anonymous or not enabling the two-way conversation. And you know what? I’ve got a lovely French accent. Even though I spent 13 years in Australia, I’m originally from France, and they would have picked up my accent, you know, within no time on the phone line.
Andrew: Oh, so even if you are anonymous, they’d go, “There’s only one French dude here who’s Australian who’s . . .
Andrew: What is it that you call French Australians?
Sylvain: Yeah, I’m a Frozzie.
Andrew: A Frozzie? So they’d go, “Of course, you may not be telling us his name, but we know who he is.” Got it. So you didn’t feel like you could like you could be anonymous.
Sylvain: No. I mean, How do you, actually, submit 308 invoices on the phone? You can’t. So you can’t submit evidence. A fax, I mean, I’ve never used a fax in my entire life. And I guess, you know, in our generation, nobody has. And a P.O. Box, I didn’t know if someone, you know, would pick up the mail and what they would do with it. Maybe someone did it before. So all of that is not conducive to actually enabling people to speak up.
Andrew: Meanwhile, though, your company, as you said, did end up doing fairly well. Once you brought this up, it was rushed fairly quickly to the CEO of the company, right?
Andrew: The person who did this was, apparently, with the company for 30 years, and for 12 of those years, as you noticed, was apparently committing fraud. And what happened to him or her? What did the CEO do?
Sylvain: So actually, the only mechanism I had to speak up was my manager. And the reason why I did that she was the head of procurement, and I trusted her. She was new as well, so she couldn’t be part of the fraud scheme. And within minutes, she went to the CEO. The next day, the guy was interviewed by HR, and a few weeks later, he got 12 years behind bars. So, you know, he’s enjoying some time, you know, behind bars for the crime that he committed. In the meantime, that’s when asked me if I wanted to become like a risk manager and just stick around and see if there was anything else happening.
Andrew: You know what? I see the article, I see his name, I see the whole thing.
Sylvain: It’s a huge story.
Andrew: It’s a huge news story. I didn’t read about it here in the U.S., but ABC Australia covered this. Wow. Okay, can I mention his name?
Sylvain: Yeah, of course.
Andrew: Peter Gregg, right?
Sylvain: Peter Gregg was the boss of the company. But Damian O’Carrigan was actually the person committing the crime, you know, at the time.
Andrew: Oh, it says look at this, “Former Leighton executive Peter Gregg found guilty of cooking the books.” Is he the guy or not?
Sylvain: Yeah, he’s the boss. They had several problems in that company. This one was the CFO and it was a different matter.
Andrew: Oh, got it. Wow-wee, all right. Okay, so I see they . . . Okay, is . . .
Sylvain: Put my name and Whispli, you’ll find it very quickly.
Andrew: Okay, and so I wonder what you were doing there. You’re an entrepreneur from birth, like, it seems like it. You told our producer, “I was even as a kid, as a 7-year-old, I was entrepreneurial.” What did you do as a 7-year-old that was so entrepreneurial?
Sylvain: I managed to sell a teapot I was playing with in the gardens to my grandma. She actually gave me a lot of money for it. I was probably 7 years old, and I really enjoyed it. I thought it was great to make money out of nothing. And she actually kept that teapot, you know, until the very end, so it was, actually, in hindsight, she had a very good deal on it because it lasted for years. That’s how I actually sold it to her. But that’s how I started to, you know, have a feel for what entrepreneurship is like.
Andrew: You know, I’m glad that she encouraged it. I’ve been going through the kindergarten application process here in San Francisco. I’ve talked about it a little bit. It is so freaking tough. It was easier for me to get into NYU than to get there, than to get my kid into a kindergarten. And one of the questions I ask is, “If the kid expresses an interest in this, in like entrepreneurship, what do you guys do?” And I could see in some places, there’s a disgusted look on their face. And it’s like, “Well, I don’t know.” In other places, it’s just not a problem at all. Like, one school said, “We have cash registers with plastic coins. We teach kids about money, so they have an understanding about how that part of life works.”
So I’m glad that you had someone who encouraged you, because as you got older, even a little later in life, you were able to buy a car because you said you’re also good negotiator. How did you negotiate your way to a car as a kid?
Sylvain: Yeah, so I think for me, it was a little bit, you know, looking at an opportunity, knowing how to negotiate the price down to what I thought was, you know, fair market value, which was definitely not the selling price. And then to, you know, enjoy the car for a few weeks or a few months and then sell it back and make a profit. So everybody was telling me, “Sylvain, you can’t make money out of the car.” Actually, you know, I very rarely lost money on the car until very recently, when I was starting to buy, you know, newer cars. But there was a way for me to actually make money out of selling cars.
Andrew: Because you were buying them cheap and then selling them and negotiating your way through it?
Andrew: And so you did end up in corporate world. You actually, every year, it feels like you move jobs. I’m looking at your LinkedIn profile. It’s like . . .
Sylvain: It’s pretty depressing.
Andrew: Why? Why would you move? What happened that you kept doing . . . in fact, before we get into that, why did you even end in all these corporate jobs instead of being an entrepreneur?
Sylvain: It was cushy. It was easy, no stress. You get a paycheck every month. You get some interesting project to work on. The only problem is you want to get a lot of those projects and the company can’t go as fast as you, and so you kind of can’t go up the ladder as quickly as you’d like. So every 12 to 18 months, I was getting bored and either getting a new role in that company or moving to a different company to get the excitement again. And of that, you know, was really bugging me because I really enjoy working for, you know, large organizations, and so I couldn’t see any anything being different really until I actually, you know, went on my own.
Andrew: And the reason that you went on your own was after you had this big fraud discovery, you had this light bulb that went off in your head and said, “You know what, it was kind of hard for me or I was lucky that it worked out, but what if there are other people like me out there? If the company that our business contracted out to was using post office boxes and faxes, that looks like an industry ready to be disrupted?” Am I right?
Sylvain: Yeah, correct. So even before Whispli, I had two other, I’d say, smaller companies. One was a consulting business, and I felt that I was selling my brain all the time, so I got bored again, say in 18 months. The other one was more of a recreational business with big plastic bubbles and kids in it that rolled like a hamstring and a ball of a swimming pool.
Andrew: What is that idea and what happened with that?
Sylvain: This one was great. It was a recreational business. Made a ton of money. The money came quick and it was fantastic. The negative was it’s weather dependent. It’s also school holidays dependent when kids are outside and want to play. So there was a lot . . . it was cash. The cash is the problem when you manipulate cash, so a lot of that was not working for me. And it was also very exciting, but not great for my brain. And so I needed to get back into the game. And so that’s when I got that job.
Andrew: You’re saying at some point in the past, I forget when it was in your timeline, but within these corporate jobs, at some point, you noticed that kids like these inflatable pools full of those balls. My kids had that. Those are fun. They brought to birthday parties. You said, “You know what? This is my business.” You started it out. You did make money, but it was cash businesses, which are pain in the butt. Also, weather dependent, which means in the winter, you get no money coming in and also look at you. You’re not a guy who’s into, like, being the king of birthday party inflatable pools.
Andrew: That’s what it was. And so what ended up happening with that business?
Sylvain: So actually, I started to sell the equipment because people were coming to me and say, “Hey, can I buy it from you?” And so I was becoming a seller. And then, I was becoming, I was selling them the concept because they wanted to start their own business. And then, even with that, I was not happy, so I actually sold everything. And that’s when I went back into the corporate world and became a whistleblower, which definitely, you know, triggered the appetite to build another business, which became Whispli.
And the genesis of Whispli was, as I became a risk manager, I actually noticed that there was a lot of stuff happening in my company, and a lot of people knew what was going on, and nobody wanted to speak up. And I thought that, you know, in any organization, your best asset are people, and we’re preventing them from actually talking to us. And it doesn’t have to be fraud. It could be, you know, “I’m burnt out and I don’t know what to do.” It could be, you know, “I’m being, you know, bullied or sexually harassed,” or whatever it might be that go on into people’s mind, and they usually don’t speak up about it for a very long time. And that is when I realized there was a gap in the market and that gap was very, very wide. And that’s when, you know, when I decided to build Whispli.
Andrew: As I heard it also, one of the tests that you made to see if this was an idea worth pursuing was you went to someone at your job and said, “What if?” Talk about that conversation.
Sylvain: So this was the very last few minutes, I think, in that company, where I went to the office of the head of internal audits. And looked I at him and said, “Listen, I’ve got the idea of actually building a secure, anonymous, two-way communication platform so that people can reach out to us, but we can also reach back and, you know, have a communication. And they wouldn’t have to disclose their identities, so we take away the fear that they’ve got.” And he looked at me and said, “Man, that’s a fantastic idea. I think you should do it.” And I resigned on spot. The only problem was that my wife was pregnant and I had to give her a call, and the good news that I was, actually, going back into the world of entrepreneur. And I don’t think she actually spoke to me for a couple of days after that.
Andrew: Wow. And then how did you reassure her?
Sylvain: I think she kind of . . . she knows who I am. She knows that I’m, actually, an entrepreneur. It’s in my blood. You can’t fight that. So I think, you know, she couldn’t go against it anyway. She knew that there was a problem out there. Now did she know at the time that I was the one that actually fixed it? That I don’t know. I think you should ask her the question now.
Andrew: All right, then you ended up meeting your technical co-founder. I’m going to take a moment and then we’ll come back to find out what happened with the co-founder.
First, I’m going to tell everyone, if you’re looking to hire a developer, go check out Toptal. I’ve got to tell you the story about this guy, Nathan Latka. He’s kind of been kicking around the startup world for a long time. And one of the things that he decided to do was instead of, like, starting a brand new big company, which is what he had. He had Heyo, raised money from some of the best venture capitalists. He said, “You know what? I’m going to go smaller.”
And one of the things that he did was he bought a Chrome extension that allowed people to send, I think, it was send their emails later. I forget what this . . . it was one small feature, either send their email later or know when someone opened their email. But, you know, it’s those little tools that sometimes people really need and they’ll go in the Chrome Store and download it.
He found a Chrome plugin that did that. He bought it from the makers, and then he said, “It’s making no money, but I know how I’m going to make it make money.” And he went directly to Toptal, and he said, here’s what the Chrome plugin looks like. Here’s how it operates. Here’s what I need. I need one of your people who’s going to let me add a simple way to make money on it.” And Toptal, of course, introduced him to someone, and the one thing that he got that person to do was set after a certain amount of uses, when someone goes to use it, I want the plugin to say, “Sign up for a membership to pay monthly and be able to continue to use this.”
And I said, “Okay, what happened if they paid?” He goes, “Well when then they paid and I got paid monthly from them.” I said, “What happened if they didn’t pay? Did the Toptal developer, like, shut down the app for them?” He said, ” No, they just, like, the next time they tried to use it, we bring up another pop-up. So they can either pay or hit the X.” I said, “Did that work?” And he said, “Yeah, it did. It suddenly brought in revenue. This thing that he bought that wasn’t making any money because of this one little change from a Toptal developer was able to bring in money.
That is a very simple use case. It goes all the way from that simple use case up to companies who need a full development team who’ve worked with each other for a long time, who get along well and can execute together. Anywhere from that one person who works on an individual project to a full-on team who could stay with you for months, if not years.
If you need to hire developers, go check out Toptal. I’m going to give you a special link, which you probably already know, but I’ll say it one more time where Mixergy listeners get 80 hours of Toptal developer credit when they pay for their first 80 hours in addition to a no-risk trial period. Here’s that URL to hire well to toptal.com/mixergy. Top as in to of your head, tal as in talent T-O-P-T-A-L.com/mixergy.
You were looking for a co-founder. Toptal is not going to help you find a co-founder. Why did you even feel like you needed a co-founder, and why not just hire a developer?
Sylvain: So I’m definitely not the tech guy in the team. And because my two previous ventures being consulting and the [inaudible 00:18:03], I thought it was kind of sad and sometimes depressing to be by yourself. And so in that one, I wanted be surrounded by people that knew tech, knew security, and that could hang out for a coffee, and also go through the ups and downs of a venture. So from day one, the idea was to get on board, you know, at least with one or two co-founders.
Andrew: How did you find your co-founder?
Sylvain: Interestingly, one of them was actually working in the company that I worked in when I uncovered the fraud. He then moved into the largest bank in Australia. So I reached out to him thinking I want to build a secure platform, secure equals being great security. So I rang the guy on a Friday night and say, “Hey, man. I’ve got an idea of building a secure, anonymous platform. Do you know anyone that can build it?” And Monday morning comes and he calls me and said, “I’ve got someone, but I want to [inaudible 00:18:50] because this is unique.” And so the three of us took off. The reason why I wanted that guy to be a part of as well was because he already had a startup that’s quite successful, so he went through all the hurdles of the early stage of a startup, and that’s how we started, actually, pretty much four years to the day.
Andrew: And it was one-third, one-third, one-third ownership?
Sylvain: Not quite. That’s not how it was negotiated.
Andrew: Well said. The company was called Fraudsec at first. Why?
Sylvain: Because I was selfish. I wanted to solve my problem in the corporate world, which was fraud, and we thought Fraudsec sounds great, you know, corporate are going to love it. And it failed miserably. We had some really good PR from the get-go, you know, the articles in the press in Australia were fantastic and the phone is starting to ring, and we got a bunch of large professional services firm that wanted to partner with us, and that was fantastic. And then, we got schools and we got HK and we got journalists say, “Hey, can we use that as well?” And so, “You can, but, like, Fraudsec for, you know, bullying is not going to work.” And so we created six products out of that Fraudsec solution. One was SchoolSafe for schools, JournoTips for journalists, and AgedCareLine for aged care and the like. The list goes on.
Andrew: And it was exactly the same thing?
Sylvain: Same thing, different color, different name. And so, 12 months in, we said, “You know what? We just can’t keep up with that because it actually applies to any vertical, any industry virtually anywhere on the planet. Let’s find a name that can actually encapsulates everything.” And we came up with Whispli. And Whispli doesn’t mean anything, but a whisp is a little ghost that whispers and whis for whistleblowers.
Andrew: That’s what I thought it was. I thought it was like whisper, but, you know, we’d add suffix “li” to a lot of things online, so it was Whispli. I got that from it. But you guys did get a lot of press. And it’s all because you were a guy who blew a whistle.
Sylvain: Yeah, so no offense to, you know, whoever created BlackBerry. But if you are the inventor of BlackBerry, nobody cares, you know, in 2019. However, if you’re a whistleblower, you can serve that way for, you know, years to come because it’s always, you know, very topical and people want to hear the story of a whistleblower.
Andrew: Because they’ve been so many big fraud cases, because they’ve been so many big situations. I’m looking at the first version of your site back when it was called fraudsec.com. You had an SME . . .
Sylvain: I’m sorry for you.
Sylvain: I’m sorry for you. That’s actually [inaudible 00:21:10].
Andrew: I’m fascinated. You had two different plans. One was a small medium-sized business SME, small medium-sized enterprise, right? That’s what it stands for.
Andrew: And then enterprise version, $9 a month versus $99 a month. I would be that the $9 a month plan. What would I have gotten and were people at my size actually buying this?
Sylvain: You know what? I’m actually glad you pulled that up because I haven’t looked at that website for years now. But we still have, you know, one, our very first client is still paying $9 a month. It doesn’t exist anymore because we just didn’t know what we’re doing with our pricing. We didn’t know how much people would be willing to pay. Now, if you want to use Whispli today, it’s going to cost you anywhere between 10 grand and 250 grand a year. That’s what you’re going to pay for Whispli. So it’s far from the $9 a month. We don’t do [monthly planning 00:21:54].
Andrew: You just weren’t sure. Is it also undervaluing yourself or was it hunting around? What was it?
Sylvain: I think was just we just didn’t have a clue. And I think startups and that’s the problem for, I guess, all startups is pricing is really, really difficult. Even now, you know, I think for [$250,000 00:22:10] to, you know, a large corporate and I could have sold it for $500,000. I don’t know. It’s always, you know, kind of a game to try to position yourself. However, the good thing is they stick around because there is no channel existing, which means they get the value they expect. And we can always get more from, you know, the new clients.
Andrew: Here’s what I thought I saw when I was looking at the earlier version. It seemed like what you were initially doing was just creating a form on a dedicated URL, right? That’s what it was. You’re nodding.
Sylvain: Yeah, it was pretty basic.
Andrew: So if I wanted it, it might be like, mixergy.fraudsec.com. Anyone who filled out that form the message would then come to me and then, I could reply back to them because I think they would get their own dedicated email or something for follow up?
Sylvain: Yeah, they would have at their own little, you know, safe place to log back in and actually check out those messages whenever they want and whatever device they want.
Andrew: Yeah, it’s super simple, but it makes a lot of sense. And I’m imagining that that’s the type of thing, seeing your team, it didn’t take that long to build. How long did it take?
Sylvain: No, for us the first, like the very first version that we didn’t really sell, was about three months in. It took us another three months to get the first, you know, customer in the door. I was ashamed of what we were actually building at the time. It was not configurable. It was not looking good. And so I was struggling to actually put that in front of, you know, clients. But that’s what you do when, you know, you build a product, you do something scrappy and go and present it to clients and, you know, try to get them to use it. And I’ve got no regret because, in hindsight, by starting doing that, we actually had the right foundations to build more features.
Andrew: But do you regret not being prouder of it and selling it more in the beginning when people were reaching out to you?
Sylvain: You know what? I think it’s what you want when you have high expectations and because you’re touching, like that topic is so sensitive that you want the perfect product for your audience, which are people that could suffer or are suffering, and so you want to do good and you want to good now. However, when you’ve got a startup and you’re, you know, bootstrapped, you need to kind of take some shortcuts. And we didn’t take shortcuts on security, but we definitely took shortcuts on the look and feel, for instance, and the configurability of the tool.
Andrew: Okay, all right. And so the first people were people, if I understand it right, coming to you because they read these articles?
Sylvain: Oh, yeah, yeah.
Andrew: And some number of them bought on their own or did they talk to you before buying?
Sylvain: No, they usually always contacted us through email, phone or could see me at some of the events that I was speaking at, so we always used to have an interaction with them, but they always related to my story. They looked at me as being the thought leader, the company that knew what it was doing because I was that guy that was a whistleblower that became a case manager.
Andrew: And were you just going after people in Australia at first? Because the phone number on the website was an Australian phone number, the address was Australia. It was a lot of like New South Wales.
Sylvain: Yeah, so definitely a lot of traction from Australia, but very quickly, and thanks to my, you know, the fact that I can speak two languages and I’ve got two passports. And I also realized that Whispli kind of came out at the right time because there was a lot of stuff happening in the world with the #MeToo movement, with a lot of corporate scandals. And so you’ve got new legislations popping up around the world on whistleblowing, on how to actually protect people. And so we started to get a little traction actually outside of Australia in South Africa, New Zealand, up in the U.S., Canada and also in Europe.
Andrew: How did you know that you should be increasing prices and to what . . . what tipped you off to get to the $100,000, $250,000 mark?
Sylvain: So I think it was as we were building more features and we kind of . . . I always take the analogy that we actually build the Eiffel Tower upside down. And the issue with that is every time you add a feature, it takes longer to build it and longer to secure. But once we built the Eiffel Tower, we knew that we had a platform that people wanted to use, and we just had to actually flip it so we could build faster and quicker on the new version or the new iteration of Whispli.
Andrew: What do you mean?
Sylvain: So the goal of last year was actually rebuilding the whole platform. We just smashed the V1 and built a new platform based on what we learned in the first three years of Whispli. And that actually, allowed us to have a much more mature product three years in that companies wanted to or were willing to pay a much higher price point for it. The only problem we had is the users of our Version One were still happy with their product. They didn’t want to switch over to the V2 and so the struggle we had was to migrate them on to the V2. We’re actually still doing that right now. We’ve got, you know, we are about six months in and there’s another six months before we get all our clients onto Version Two because they can’t get enough of that [inaudible 00:26:54].
Andrew: That seems really hard. Yeah.
Sylvain: I want to decommission it by the way because . . .
Andrew: You what?
Sylvain: I want to decommission that Version One because I still can’t stand it, so I want to . . .
Andrew: Just for your own pain. The thing that strikes me was one of the first books I read about entrepreneurship with online software came from Jason Fried and David Heinemeier Hansson, “Getting Real.” And they’re all about reducing features, reducing decisions for your people, don’t add everything as an option in some hidden . . . behind some kind of hidden gear. Just make decisions for your people.
And still, when I talked to Jason Fried, he still keeps Basecamp 1.0 up, Basecamp 2.0 up, and Basecamp, which is currently in version three still up. And I remember asking him, “Why don’t you get rid of it?” He say, “It’s really hard to say that to a company, “You’ve been counting on the software, your workflow depends on the software, we’re going to get rid of it.” So the guy who’s all about getting rid of features, getting rid of options, has to keep his own earlier version, it makes me understand why you are where you are.
Sylvain: Correct. And, you know, I’m hopeful that we’ll be able to migrate everybody on the version two. But I was talking to a bunch of journalists last week, and they said, “Sylvain, we’re still love the v1. We’re happy with it. We don’t want to just move over to the v2.” So my answer to that is, “Let us do a demo of the v2 and then you’ll change your mind.”
Andrew: Right. And what will a journalist pay for it? Because I don’t imagine journalists have big budgets.
Sylvain: No, we actually give it away to journalists now. We used to sell it to them, and we changed our policy on January 1, where we actually give it away to investigative journalists. Because my view is that if you can’t report it internally, then you need to reach out to someone else, and that someone else could well be a journalist.
Andrew: Where do I see that? I don’t see that on your website.
Sylvain: No, we don’t advertise that.
Andrew: Got it.
Sylvain: We talk to journalists about it.
Andrew: And journalists will know it. And it’s also great publicity for you that they get to see it and understand the software. I find one of the hardest things to listen to is a podcaster, who has no clue about what they’re talking about. And the hardest is when it comes to books. Just read the freaking book and they won’t do that. I get it. I get it. And I also understand, frankly, as a person who’s trying to research you, you have a whole lifetime of experience that I’ve got to figure out really fast in preparation for this interview and that understand the challenge. So if you can actually get the software in their hands, it’s a huge win.
Sylvain: It is.
Andrew: For me, one of the biggest challenges as an interviewer was a lot of the people I interview are friends. They would give me free version of their software. And I found that if I used the software, I became a little too fawning of the entrepreneur because then I’d get it. I’d understand it. Okay. Let me talk about my second sponsor, and then we’re going to go right back into this.
Hey guys, if you have an idea out there where you want to create a sucky first version, I’m urging you to go and create that sucky first version on WordPress using HostGator super inexpensive, super simple to do. And many of the businesses that I’ve interviewed have been created on WordPress.
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The founder blew my mind. He created the whole thing in WordPress. Hello Bar has expanded way beyond that. There’s so many different things that you could create in WordPress. I feel like a large part of your business I could have created in WordPress. Tell me if I’m wrong.
Sylvain: You’re wrong.
Andrew: I am? The first version, not the current version.
Sylvain: Oh, the first version you could have used anything.
Andrew: Right. I would have custom created a WordPress site for each client, put it on HTTPS, right, so that have a secure site. Created a custom domain, every one of it would have been just a WordPress site. Fire it off. It wouldn’t have been, like, the best solution, but it would have been version one, bring your minimum viable product to WordPress. Or if you’ve got a content site, bring it to WordPress. So if you’ve got a business that has an app, create a WordPress website for it. It’s super easy to do when you’ve got a HostGator account because if you got that middle option on the page that I’m about to give you, they’re going to host unlimited domains for you.
So here it is hostgator.com/mixergy. You’ll get the lowest price that they have available online. But frankly, they charge pennies per month or dollars per month. What is it? Like, three, four bucks? I don’t even know. Go check it out at hostgator.com/mixergy. So yes, we’ll get you a lower price than they usually charge. But even that regular price is super cheap.
So why are you going to use my URL? Frankly, to give me credit. It helps me a lot. And also, it is nicer to save some money. And finally, anytime you use one of our sponsors through us, we will stand behind you and them make sure that . . . stand behind you and them? That’s impossible. We’ll make sure to take care of you with them. We have a contact when somebody signs up to be a sponsor, we ask them right away, “Give us a contact if any of our people have a problem, we all on our team need to know who to contact at your at your company to help you out.” And so you get that with HostGator and with any one of our sponsors. But you have to use our URL hostgator.com/mixergy.
You built the new software. How did you know what to build into this? How did you know what customers wanted and what they were willing to pay for it?
Sylvain: That was the learnings from that MVP that we’ve used for, you know, three years-plus now. And that was really the light bulb moment where I started to see the light at the end of the tunnel. We could see, you know, customers coming to us. We could see the response with the market. We could see the retention of those customers because we’ve got no churn. And so that’s when the time was right to say, “Okay, now I can see the light at the end of the tunnel, we just have, you know, to accelerate. And I don’t know how long is that tunnel, but I can care less because I’m enjoying the ride.” So it’s a really pretty good time to be in a place like that.
Andrew: Because you could see people are into what you’ve got. But then what were you doing to keep track of the features that bigger businesses were willing to pay for? What did you do to keep track of what they’re willing to pay for? What was your process?
Sylvain: So the thing is, you can’t always please every customer, and you need to keep to what its core to you. And, you know, we did a bunch of mistakes along the way thinking we could build, you know, another platform fairly similar for another use case and we failed because we were attracted by the money more than the vision of the business. And so, you know, it took away three months of our lives and our employees’ lives to build that other platform and decided, you know, to quit. So now the fundamentals behind Whispli is we need to build something that, you know, our customers want, and it’s not one customer. It’s today we’ve got [inaudible 00:33:02] of them.
Andrew: So then how do you know? It seems like . . . let me put out a theory there so that you can disagree with it, but it’ll help you see what I’m looking for. It feels to me like, every customer now they can sign up on their own, when you hit the pricing page or the sign up, it’s always, “Get on a call with somebody,” right? Because that’s what happens in enterprise. As you’re getting on a call with them, you’re understanding how they want to use this, and you’re getting to see when you tell them about a feature that’s there, what they get excited about. When they ask for a thing that’s not there, you get to understand why they need it. And that’s how you decide what to include. Am I wrong in that?
Sylvain: Yeah, the thing is, I come from their world. I was the investigator, so I kind of used case management tool as well, so I know what to expect. Now, we’ll build a platform that’s very different from what they used to have, because we think that those tools actually aren’t effective. So we have to guide them through that journey and show them what we have built. And that’s really when they open their eyes and say, “Shit, we can get actually a lot of people chatting to us using that platform and we can do all of, you know, the case management.” And it’s a lot more than we used to do in the past.
And yes, we can’t build features overnight even though we’re still a startup, it takes time to actually build a proper tool if we could. And so actually, we need to set expectation and say, You know what? That feature that, you know, analytics, for instance, we will get it done within the next quarter.” And they really [inaudible 00:34:15] to know how we build features, how we’re going to enhance those features. We’ve got a head of customer success and a team behind them that you get feedback from clients, we can feed that back into our dev team and product team to make sure that we always have, you know, a good product out there. But you, definitely, can’t please everyone. However, I think, the baseline is so much better than anybody else out there that it’s definitely a good start for them.
Andrew: Okay, and then the price? We were starting to talk about how you knew that you could jack up, increase the prices. How do you know?
Sylvain: You don’t. You actually do it . . . you cannot guess it at each time. You know that you can increase the bar a little and I think that’s really when you hit the wall that you need to go back. So we’ve got a simple way of doing it at Whispli is we charge per user license. Which means, you know, if I tell you that you need 100 user licenses for Mixergy, and the pricing is too high, say, maybe you can try to start with 75 user licenses. So we don’t have a pricing per employees, which is like, I can’t tell you, “You’ve got 50,000 employees, that’s what you’re going to pay.” And then you come back to me and say, “It’s too expensive. I’m going to say, “Okay, let’s pretend you only have 25,000 employees, that’s not going to work.” So we make a pricing, and then we play around with it, depending on what their budget is. So we first try to get an idea of the budget and then we know we play on that.
Andrew: I like how open you are with it. Why is it that that somebody would need a bunch of user licenses? I always imagined that this was an outsourced service that you guys were offering where anyone can just click the link and they don’t even have to tell you how many employees they have.
Sylvain: So about half of our client actually outsource their whistleblowing program to an external third party and they still use Whispli for that. But they always ask people within their organization that we call case managers that we be the recipients of some kind of report from their external third parties that’s still in use. And then, the other half would have users, but you can imagine a company that is in 40 countries, and they’ve got different languages and time zones to manage. A best-in-class client would get anywhere between three to five users per country. So you’d get, you know, 100-plus users fairly quickly. And that’s something . . .
Andrew: They need to have a user account for everyone who works at the company?
Sylvain: No, you need to have a user account for all of the case managers, all the people that are [inaudible 00:36:27].
Andrew: And they can have that many case managers?
Sylvain: Oh, yeah, yeah. We’ve got clients with well over 100 case managers.
Andrew: And the reason . . .
Sylvain: Some of our clients have, you know close to 300,000 employees globally.
Andrew: Got it. Okay. Okay. And then talk about some of the pressure then of having such big customers. You told our producer that this was . . . that you didn’t anticipate big banks, big insurance companies would sign up, that regulators would be involved. And that was a big challenge. How does it . . . ?
Sylvain: It was actually the best thing that happened to us. Very early on, the banks were actually interested in our technology and came to us and talked to us. And so we kind of built a platform for heavily regulated, you know, clients. So when you start with, I guess, the worst case scenario, which for us are banks and insurance and kind of government agencies, then the rest are a walk in the park. And so, when you start with that in mind, then you build everything around their requirements, which usually are around security, compliance, the fact that you can actually evolve with the regulators and they change their mind, you know, every blue moon. And so we managed to build a platform that is kind of, like, a pile of Lego bricks, and you just build your Lego. And that Lego can change shape, you know, as the regulation or the legislation change in one country or another.
Andrew: Your software, by the way, looks beautiful. It kind of reminds me like helpdesk software. I wonder how much of that was influenced by . . . how much of this was influenced by helpdesk software.
Sylvain: So we definitely got some influence from various type of software. The whole idea was to make it simple, look really basic in a way, and for two reasons. It’s actually for the two parties, the case manager blows to whistleblower. Some companies get a report every three months. So when the case manager log on, they freak out. You know, they don’t know what’s going to come, how to respond to it. And so you don’t want to have the burden of having to go through a 300-page instruction manual to actually interact with the whistleblower. And the same thing for the whistleblower. You have to make it really easy for them to actually interact. So the whole idea was to make it, you know, really, really simple in a sleek user interface.
Andrew: Yeah, it’s minimal but still complete. How do you get your customers? What’s your process?
Sylvain: So we did very poorly in some of in, you know, marketing and comms. Beyond family I think in the early days, it was purely me on the stage. It was a bunch of articles in the press. And then, it was a lot of word of mouth. When you’ve got happy customers, trust me, they will bring on some more. And then, you’ve got the other one that just moved from one company to another, and they’ll bringing in new clients. And then the other strategy for us was to go down the partnership path where we’ve got partnerships with, you know, the big four professional services firms and law firms [inaudible 00:39:07].
Andrew: And they work for which firms and law firms?
Sylvain: The big four professional services firms, in some countries, actually pushed our product to their clients. They may have a hotline or a fax and they actually use Whispli as their case management for that as well. And they push Whispli to their existing customer base, which is great for us because we don’t need to do the sales. They do it. They configure everything [inaudible 00:39:28].
Andrew: And they get a commission for doing that?
Andrew: They don’t?
Sylvain: No, because they get to use our platform. They get to be the recipient of those reports as being an external third party, and so [inaudible 00:39:38].
Andrew: And they get paid for them?
Sylvain: They get to know the problem before the client, so they can go and sell this service to the client and say, “Hey, you might need my forensic team to go and help you out here.”
Andrew: Okay, so they provide the service and they need the software to manage that service and then they say, “Okay, check out Whispli”?
Andrew: Got it. And I could see also there’s like the procurementandsupply.com sends you guys a bunch of traffic. I’m imagining because it’s a big issue in procurement.
Sylvain: Correct. Fraud in procurement is big. You know, we are working with one of the, if not the largest, [ERP 00:40:10] company in the world to build an integration into their procurement model. And I’m a procurement professional by background and I can tell you there’s a lot happening in the procurement space when you go out to tender.
Andrew: When you do what? When you go to tender?
Andrew: Because it makes sense for me to then get a kickback from somebody or for someone to say, “Andrew, I’ll take care of you,” even if it’s a small way, like tickets to a show or something that they give me. Got it. And then somebody who feels a little bit jealous that they’re not getting it or feels upset is a natural whistleblower. The #MeToo movement apparently also helped you guys out?
Sylvain: Yeah, definitely. I think it’s a trend and expectation, rightfully from, you know, most people on the world that they want to feel safe when they go into an organization. They want to feel that they can reach out to someone, and a lot more organizations now are conscious of that. So usually, the HR team is the one on the lookout for, you know, a trusted communication platform. And Whispli is definitely, you know, the go-to solution now these days because we built an anonymous inbox that behaves pretty much like your Gmail inbox, except that every conversation that you start on Whispli will give you a different avatar, so usually a mix of animal and color. And if you were to give away your name on one of those conversations, the company will not know who you are. So you can manage, you know, from one inbox multiple conversations and be anonymous on each of them and somehow give away your name on one of them if you want to seek help, for instance.
Andrew: Oh, so I keep myself anonymous with one issue, but I say my name with another issue. And you guys allow people to message in lots of different ways. Like, I could text message if I wanted to and so on.
Andrew: By the way, you guys are Y Combinator funded company?
Sylvain: So we went through Y Combinator, but we’re what we call YC dropout.
Sylvain: So dropped out the day before demo day for . . .
Andrew: But you got funding from them?
Sylvain: No, we didn’t get funded. We get funded from VCs that are fairly close to YC whether YC [inaudible 00:42:14].
Andrew: Tell me about that. So I went to research you. Y Combinator did this nine companies from the Y Combinator 2018 batch, just summer 2018 batch, your name is not in there. But when I look at your LinkedIn profile, it does say a Y Combinator company.
Andrew: So you got accepted into Y Combinator. They don’t give you funding right away when you get accepted?
Sylvain: No, because we had some paperwork to do. With Whispli, it was we already had an evaluation. We were from Australia, we didn’t do a [free part 00:42:39], so we didn’t have to, you know, put our head office in the U.S. And all that took a hell of lot of time. And then things didn’t work out. On the day before, you know, what they call Demo Day, which is when you pitch to investors . . .
Andrew: So you didn’t go to the three months of getting help from them?
Sylvain: We did.
Andrew: You did?
Sylvain: We did. Yeah.
Andrew: And you got all that help. You didn’t get any funding because the paperwork wasn’t there. And then, you didn’t have to give them any percentage of the business. But you also because of that didn’t get to go Demo Day, which was fine for you because you raised money?
Andrew: And so you still get to call yourself a Y Combinator company because you participated in the Y Combinator summer batch?
Sylvain: No, but we can say that we we’re a YC dropout because we did the program. We just didn’t do the last . . .
Andrew: Did you get access to Bookface, their internal software?
Sylvain: That was kind of off fairly quickly after we walked out of that room on the day before Demo Day.
Andrew: You are saying you were kicked out of that really fast?
Sylvain: Oh, yes. Within two, we were out of Bookface.
Andrew: Yeah, Bookface is their internal chat, their internal community. Wow, and you guys would be great there because all those businesses could use something like this. So it was just because of the paperwork? It was nothing else?
Sylvain: No, it was based on our valuation and, you know, it was more the angel decision than ours, unfortunately. All in all, it worked out really well for us anyway because we did the program and we, you know, benefited from all those connections in the U.S.
Andrew: Yeah, what did you get? What did you get? What did you learn? How did they shape your business?
Sylvain: Yeah, for us it was. So we were fairly advanced when we got in, you know, we were about three years in, and already profitable. So we had a product. We had customers. And for us, it was more about the connections to the investors’ community and also to some potential clients in the U.S. That was at the time when I relocated to Boston from Sydney, so the timing was perfect for us. It just happened that we, you know, didn’t manage to close the deal with YC and we had to move on.
Andrew: I think there’s even a picture of you. Is this a picture of, like, you at the Y Combinator office putting your logo up on their wall?
Andrew: Probably, but it’s probably down now. You mentioned you were profitable. Are you guys still profitable?
Sylvain: Yes. We are.
Andrew: You are? Even though you’ve taken on so much money?
Sylvain: Yes. So it seemed to two things is we might be too slow to recruit, but we’re also getting a lot more clients, a lot more traction, so definitely helping Whispli. You know, I think that’s reputation in the marketplace that’s built up pretty quickly.
Andrew: And I’ve got your revenue on my screen. I think. Why don’t you tell us what do you feel comfortable? I know you said that you don’t want to say everything. What do you feel comfortable saying about your revenue?
Sylvain: We’re in the seven digits now, so definitely comfortable into more of our revenue.
Andrew: You’re willing to say more than more than $1 million, but not much more than that? Like, you know not willing to reveal more than that?
Sylvain: Yeah. We definitely passed the $1 million revenue. And VCs [inaudible 00:45:27] about, you know, it just sort of 200 clients to date.
Andrew: All right, look at this. You’ve even got like, YC, people who are part of the YC community invested. Like, is his name Louis Beryl?
Sylvain: Yeah, Beryl is one of our investors. So, you know, we did . . .
Andrew: He’s a partner at Y Combinator, he used to be with Andreessen Horowitz. Jason Gray is a is a Y Combinator alumni. Just like a bunch of people from the Y Combinator network still invested.
Sylvain: Oh, yeah, yeah. So then this was definitely a great opportunity, a great business, a great team, and that’s why they invested in Whispli.
Andrew: Fair to say that you got, like, all the good stuff out of it without having to give up equity?
Sylvain: Yes, we can say that.
Andrew: This is like one of your best negotiating things that you got everything that you needed from the program without giving anything that you’re not comfortable with.
Sylvain: Do not spread the word on the internet.
Andrew: I will not reveal to anybody. Wow, I had no idea this business was doing so well. I was really prepared for you to say, “Listen Andrew,” because the software looks beautiful. I was prepared for this to be one of these quixotic goals of the business and the software works great. “I don’t yet know where the money is going to come from.”
I had no idea, as you told me before we started we didn’t get fully into this, that there are companies that are required to have this. And then even companies that are required to have this and even in companies that aren’t required to have this want to know when there’s someone who’s just like pulling, like, money out of the business that they’re not entitled to. So even if there’s no legal requirement, there is upside for a company to have an open place for whistleblowers to come in.
Sylvain: Oh, definitely. Definitely.
Andrew: That make sense. All right, Congratulations, you’ve done well. Where are you now? What city?
Sylvain: So I’m in Boston. It’s where I am mentally, even though I spend a lot of my time, you know, outside of the country or around the country. And the reason why I picked Boston is because our main two markets are the U.S. and Europe. Being on the East Coast makes sense from a time zone perspective. And I’m a family person, so I want a city that I can rest in and New York was definitely not that. So Boston was the place to be and not a bad place to raise a family.
Andrew: Is your wife happy with all this?
Sylvain: Oh, yeah, definitely. The family is happy. We are from the Alps in France, so we love the winter and we love the cold. Yeah, and happy here.
Andrew: Cool. I was trying to check you out on Facebook. And now, I finally found you on Facebook. Here, I’ll send you . . . actually, there’s no friend request. It just says connect with him on messenger. I wonder why. But it’s interesting. What I do is search for you. What happens is a lot . . . you must speak at a lot of events still, or maybe there’s still links to those older events because, when I do a search for you in the word Facebook and Google, it’s to events that you’ve been an active participant.
Sylvain: Yeah, there’s . . . I
Andrew: Oh, here’s one.
Sylvain: I love events. Just spoke on . . .
Andrew: You spoke at IPPC 7 back in August 3rd in Bali. So you went to Bali to speak to people?
Sylvain: I went to Bali to speak. That is the only place that is quite exhilarating, I have to say.
Andrew: The rest are not that exotic.
Sylvain: No, no. I was in . . . I’m actually going to London next week to speak, and then I’ll be in Denver. I’ll be in Melbourne in three weeks. So I move around, not so often to Bali, unfortunately.
Andrew: All right. Cool. For anyone wants to go check out your business, it’s Whispli, W-H-I-S-P-L-I.com. And I want to thank the two sponsors who made this interview happen. The first will host your website right. It’s called HostGator. Check them out at hostgator.com/mixergy. The second will help you hire phenomenal developers. It’s called Toptal. Check them out at toptal.com/mixergy.
And finally, I want to tell you and everyone who is listening. I’ve been hearing, do you guys obsess about culture at your company?
Sylvain: Oh, yes.
Andrew: You do? Like what do you do to make sure that people actually implement culture?
Sylvain: So we actually walk the talk. So we give them the freedom they need. We give them the tools they need to work. We give them the hours they need to, you know, have a life. We’re very demanding [inaudible 00:49:17] delivery. But the reason why I built my business, because I wanted to manage my own life the way I wanted to, and I want my people to enjoy that as well.
Andrew: So I forever heard you have to have culture, you have to manage it. And I didn’t even know how to do it right. Then I interviewed this guy, Scott Bintz, he taught me how to do it perfectly. In fact, I invited him back to do a course on Mixergy about how to do it. One of the things that I took away from it, he said, he laid out the six principles that his company runs by, and I had, like, 10. I said, “You know what? I could actually cut this down to six.” And then he said, every month, they highlight one. And as a team, they say, “Let’s challenge ourselves to implement one of these.”
So last month, it was we do less. This month, it’s, “We change the world by teaching.” And so last month, everyone on the team had to find something to do less of, less editing, less publishing, less whatever. Find one thing that we’ve been doing just because we’ve been doing it and get rid of it.
This month, it’s if we’re teaching, let’s find somebody in our audience and teach them one thing that we do well. We put out this call. We got over 100 requests from people to just do one-on-one teaching. And so now everyone on the team gets to feel what it’s like to say, “Andrew, we’re going to do this thing less month.” Everyone on the team gets to feel what it’s like to teach something. So it’s not just we help Andrew teach, it’s we all have to teach. It’s incredibly helpful. I learned it all from Scott.
If you guys want to learn from him, too, go check him out. We’ve got this course with him. He took his company from like $6 million to over $100 million just by changing the culture of his company. Go check him out at mixergy.com/scott. He changed our business dramatically. I finally am implementing culture.
All right. I can’t stop talking about him. All right, and I tell him that like I’m in love with him. You know, I’ve never met him. I only talked to him twice, and then he sent me a bunch of coffee because he’s now, like, he sold his company. He’s making coffee.
All right. Sylvain, thanks so much for doing this. Congratulations on your success.
Sylvain: Thanks, Andrew. Thank you so much.
Andrew: Thanks. Bye, everyone.