Building two companies in the same space

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The thing that I’m especially curious about today’s guest is that his current business is very similar to his previous business. Why is it that more entrepreneurs don’t do that?

Anthony Welgemoed is the co-founder of Ziflow, creative collaboration and proofing software. I’ll find out from him what the advantages and disadvantages are of staying in the same space.

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Anthony Welgemoed

Anthony Welgemoed

Zilflow

Anthony Welgemoed is the co-founder of Ziflow, creative collaboration and proofing software.

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Full Interview Transcript

Andrew: Hey there, freedom fighters. My name is Andrew Warner. I, uh, record these interviews for an audience of entrepreneurs. And joining me is one of the listeners. Somebody who’s listened to my podcast, and I’m very honored to know that he has, because boy, this guy has had so much success in his life and I’ve invited him here to talk about his latest business was just doing well.

And the thing that I’m especially curious about and excited about with Anthony Welgemoed. His current business Ziflow is very similar to his previous business. And I’ve often wondered Anthony. I’ll, I’ll bring you in here to say this. Why is it that more entrepreneurs don’t do that? And maybe it’s just my personality.

I like to just keep working on a thing and getting better and better at it. I don’t start running one year and then the next year take a basketball. And just when I’m getting good at basketball up skiing, I want to keep repeating and getting better. What I’ve seen you do after selling a previous company in this space.

And now buildings I flow is just get better. And I want to find out about that, but I also want to take an honest look at it and see what are the challenges that you’re seeing? Does it get boring? Does it feel like maybe you’re repetitive? I don’t know. Anyway, invite an Anthony on here to talk about his latest business.

I flow and to understand what they do. You have to have had any kind of video. Or artistic collaboration. And I know I have in fact for my li for my book, which is called stop asking questions, I needed to record a video where I was being interviewed and I want it to be edited well. So I found a guy who’s a great editor.

There’s one mistake. And in order to tell him what that mistake was, I said, can you fast forward to minute three, 14 seconds in and notice that there’s this thing on the screen that needs to be adjusted. we went back and forth a few times. It was so frustrating where in Google doc, I can just highlight the section and say, this is what I’m talking about.

Anyway, that’s what flow is here to solve. They’re here to make it easier for. Creative teams to collaborate. And when you, when you see how Ziflow works by just going over to their website, you’ll understand immediately why their customers love them and why the business is doing well. And I could talk to him about this business.

Thanks to phenomenal sponsors. The first accompany, he and I are both familiar with it is called lemon for hiring developers, go to lemon.io/mixergy. And the second is one that’s a. Not exactly yet as sponsored. This is going to be me introducing them to you as an upcoming sponsor. It’s a way to invest in artistic work.

It’s called master works, and I’ll tell you later why you should go to masterworks.art/mixergy. If you want to have this opportunity to, to invest. But first Anthony, good to have you here.

Anthony: Yeah. Great. Thanks Andrew. Thanks for having.

Andrew: No, I want to jump in time for a moment to proof HQ. Do you remember the day that you sold that business?

Anthony: Yeah, I, yeah, we do. Um, we remember the day vividly getting the offer that we, that we accepted verbally and also the day that, um, that the cell went through, uh, we, we were actually in Poland on the day that it went through. I remember still being in the hotel room, et cetera. So.

Andrew: Wow. And how did you know, what was it that did a doc come in? Did money go into your account?

Anthony: Yeah. I mean, so, uh, firstly, the, firstly, the docs came in and then yeah. I mean, I’ll be honest. It is. Yeah. Money, money landing in, in, in your account is obviously the one thing where that’s, when you know, the deals closed, uh, before that, you know, nothing’s closed until the money lands.

Andrew: And proof was the previous company, also collaboration software for creative teams. Did you take any outside funding for it?

Anthony: We were bootstrapped actually. Um, so math’s my co-founder now he was CEO. Uh, he, he initially founded, uh, prophetic and I joined him just a couple of years later and we both said, yeah, we want to bootstrap this business. And, uh, yeah, really, really enjoyed that, um, doing it that way.

Andrew: What was the hardest time as a bootstrapper. And I understand that partially looking for funding is what led you to sell the business, but what was the hardest time?

Anthony: Um, I think getting the external advice. So it’s very much you and yourself and your team. Um, but there’s a lot that goes out in, on, in the market. And if you have a bow, you know we, we didn’t have a board as such. So we did find an advisor, someone from open view, um, who joined us as an advisor eventually.

And that helped a lot. But getting that outside advices is very, very new.

Andrew: I know what you mean. I noticed that people don’t really brag about the money that they get from the first seed investors. What they’re proud of is that they now had somebody else. Whose success rested on their shoulders, who could help them get there? Who had some experience and everything that went along with it.

Was there a period there where you were close to, uh, to, to running out of money or anything? It doesn’t seem like it, it seems like you were bootstrappers who were profitable, who had a solid business. You just weren’t like maybe reaching the potential that you wanted on your own as easily as you could have.

Anthony: Yeah. I mean, I think, you know, we were, we had prioritized growth and, you know, with my SAS businesses, if you want to keep that growth rate, you know, 80, a hundred percent. You know, as you go through that 10 million ARR mark, there’s a point there’s a tipping point where you need, I think the additional funding to, to keep that growth rate up.

And that’s, that was sort of one of the decision points we had. Um, but before that, I mean, we had some venture debt so that, you know, we were lucky. I mean, we were one of the early, uh, SAS capital, um, customers, and it was a great facility for us at the. And it came at a perfect time for us. So we, we were still burning some cash during that time.

So I wouldn’t say we were, we were actually in, in profit, but we, we were very efficient, um, with, with our capital. Um, so we learned a lot from that.

Andrew: You told our producer what you sold it for? I don’t know if you feel comfortable sharing it here, since you told her in private, I’ll keep it private, but what do you feel comfortable saying about how much the business was?

Anthony: Um, so yeah, I don’t know. That’s a bit of a tricky one to, to, um, to make public, um, just because it’s myself and my co-founder that’s, uh, that I went through that, but, uh, what I would say is, um, you know, it was?

a good, it was a good exit at the time. Um, probably if we hung on for another two years, we could have doubled our multiple on the revenue just without the markets went.

But you, you just never know.

Andrew: what was the revenue at the time of.

Anthony: Uh, we were just shy of 10 million ARR.

Andrew: Okay, impressive business. Then after that, you and Matt were thinking through different ideas. One of them was some kind of backup.

Anthony: Yeah,

So that’s, that was a one I sort of pitched to Matt saying, um, you know, I, I was CTO tech, tech, background engineering background, and my feeling was all, you know, just working with customers. I prefer HQ. They would make mistakes and they’d want to roll back some data or find out what happened. So we had very extensive audit trails in

Exactly what happened, what changed? So I said to Matt, what if we developed a system that could back up SAS cloud data, but literally like from a user’s perspective, say for you in Monday dot come or, or, or Salesforce, and you can backup the data you take snapshots. Um, so yeah, we sort of went through that.

It was, that was one of the ideas and we sort of parked that. Um, so yeah, but we can see now how well own backup state.

Andrew: how well his own backup doing I’m on their site right now, but I don’t know the business.

Anthony: Yeah. I mean, same, some government stepped in as CEO. Um, so was it, I think it was two or three founders initially and they, um, started that business. I think they launched in 2015, uh, just as we also sold prefetch gear at the time. And, um, yeah, they worth a few billion now. Um, if I’m not mistaken, I think they raised, uh, I haven’t checked in a while, but I’m sure that,

Andrew: in venture funding.

Anthony: yeah, so growing super quick.

Yeah.

Andrew: I wonder how you are thinking through what the next business idea would be. Was there criteria, was there stuff that you did right in the past that you wanted to reproduce things that you wish you’d done, that you want to do differently? How are you thinking about what to start.

Anthony: Yeah. It’s so the one thing that, that we sort of, uh, I think worked out or figured out is we knew this marketing creative space quite well, and just naturally, um, Looked in that area for inefficiencies. And, and one of them was, there was, um, an on-premise system called sign net, uh, quite quite popular with, uh, with, uh, teams, um, you know, w for work in progress, assets and automation.

And we said, what if we could do some of that in the cloud? So it’s a bit of like Zapier, but for marketing teams and automating tasks and so on. So we said, well, connect with Dropbox, connect with Google drive, and then just. Transform files and move them around, but it was very much in, you know, looking in areas that we know well, so I was probably looking more on the tech side and then we also had the sort of creative marketing side as well, uh, in experience looking for ideas there.

Andrew: Meaning it was what space do you know? You know, creative, you know, SAS for businesses. You’re not going to go into consumer, uh, photo sharing apps or anything. That’s not similar. Okay. And then, um, you hit on the original idea. What, what was it exactly? I I’ve got screenshots of it and understand what, how it worked, but I’m trying to understand what was it trying to do?

What’s the problem. It was trying to stop.

Anthony: Yeah. I mean, if you’re going to large scale, uh, teams that that are, that are creating content and, you know, large volumes of those, um, there’s there, there’s a lot of admin around CF to move these faults around. So if it’s work in progress, it lives in one folder then before it’ll go through Q1. It’s Got be being able to do a pre-check a preflight, maybe on PDFs, videos might be checked, um, you know, some automation software to check it. and then there’s some transformation of these faults.

So now they have to share these files out for feedback, and often they’ll transform them lower the resolutions or whatever. So we wanted to take care of those tasks, but more in the cloud. So you don’t have to have it on prime.

Andrew: Got it. Just that whole automation of all this stuff that people have to do manually, you’re going to automate for them. That makes sense. You saved them time. I guess there’s not a savings of money really. Right. But it’s

Anthony: It’s a time. Yeah. It’s more of a, uh, I have to use the word efficiency. Um, we, we, we actually try and, uh not, not use that word because it’s such a broad term, but yeah, it’s, it’s just trying to it’s really, I mean, it was, we were looking at, um, does what’s painful. I mean, in terms of, you know, even now with cipher, the way we actually message and position.

The the, the, the actual, um, the actual platform, we try and give them back time so they can focus on what they do best, and that is creating the best, you know, the best creative that they possibly can and all these admin, uh, manual tasks. Yeah. It sort of, it drains your energy, even if you let’s say, spend an hour on, and it’s not just the hour, but it’s the actual, how much tie it are you off to doing, having to deal with.

Andrew: You know what, and it was also partially inspired by the success of Zapier. And I’ve got to tell you, I’ve seen other people come up with businesses related to Zapier, but none like XY flows, first version, we should say it’s adjusted. It’s evolved beyond that. The most creative one that I saw was this company that said, why should anyone even leave your SAS to go to Zapier, to create a connection from your software to some other software?

Why don’t we just create a Zapier that software companies can integrate into their site? So you could imagine if, for example, MailChimp, instead of sending you away from MailChimp to Zapier to say that when someone fills out your, your email account, they should also then actually, what is it? It would probably be from type form instead of type form saying when someone fills out your form, also sign them up to MailChimp instead of having to go to Zapier to do that, it should be within MailChimp.

And so someone built that and that makes so much sense. Keep the customer there. Don’t require them to pay a subscription fee somewhere else. Um, anyway, I feel like that whole area is, is interesting, but it’s hard to find something as powerful as Zapier itself, the software company that connects others.

Anthony: Yeah. They did very well. I mean, they, they SEO, um, content engine is just what was, was amazing. Um, and the way they, they got that market share and it’s, it’s a good solution. It’s a really good, um, application. So they, they nailed it. But yeah, as you said, there’s, there are a lot of other, um, uh, platforms that come up.

So now you can integrate Zippy, like, uh, functionality into your SAS platforms. There’s quite a few of those,

Andrew: Oh, there are, I only saw one. It makes so much sense just to have that whole functionality within your app. And now you’re able to say whatever you want to do with our app and another app, you can do it and you don’t even need a Zapier account. I wonder if that Zapier will end up doing that too.

Anthony: I think they do allow that, um, I have to check. So we, we haven’t been in the market for it because now we have what we call cipher connect, which is the initial version of Ziflow that’s become our integrations platform. So, um, it’s been very, uh, it, we we’ve had the advantage of developing that and now being able to integrate with any other application, plus automating a whole bunch of tasks for teams.

It’s given us an advantage of, uh, you know, other, other platforms in

Andrew: Ah, there’s built in. Okay. So let’s go back then to the early days as I flow, you found your idea, you said we’re going to do this. You then launch a site or do you start getting customers first?

Anthony: Yeah. So we started building, um, we did do some interviews with people we know in the industry. Everyone Was super keen and thought. Great idea. Um, and then I remember we launched, uh, so we, we built for a year, so he started, uh, writing code beginning 2016, launched on the first or 2nd of January, 2017. And it was very quiet.

Um, it was that sort of that crickets moment. So just, you know,

Andrew: Was there a free version two.

Anthony: Yeah, I as free and paid. Um, but essentially we realized there wasn’t enough product. It was a feature. I wasn’t a product. So we realized that stage. Okay. Yeah, we, we need to add on and we, we started doing that. Um,

Andrew: How do you know that it’s just a feature, first of all, these customers that you’re talking to, that you had experience with, you had credibility with you went and you talked to them before, when it was time to launch, how do you know that they, that it wasn’t enough for them where you talking to them? Is that what they say?

Anthony: Yeah. I mean, not, not specifically saying it that way, but you know, as, as you start showing them. Uh, the, the solution, they start coming up with feature requests and they said, okay.

but what if it could do this and that, then, you know, then it’d be real if we could solve this problem specifically. So, um, I would admit, I mean, we probably didn’t do the best job in and figuring out the exact requirements initially.

I mean, we, we spent quite a bit of time in, you know, getting all the, all the plumbing work, um, in place and, you know, Nowadays. I mean, if you want to launch a SAS product, you need more product than you did back in 2008.

Andrew: Can, you be more specific? What was it that they were asking for that you didn’t have that they said, if you had this, then it would be.

Anthony: yeah. So it was just more, um, you know, more integration. So we had Dropbox and drive and there was like, okay, we use box or we use one drive and doing. Doing those actual implementing those integrations where we’re a lot of work, much more than I thought, oh, well then we expected. So it’s very much like getting more cloud storage integrations and then more features in terms of the automations.

And then they ended up saying, okay, we want to have some integrations. And that’s where it sort of started overlapping with SAP. And we were like, okay, well, hold on. You know, do we do that? Or, yeah. Where were we? Where do we go?

Andrew: How did you decide whether to do that or do something else?

Anthony: Yeah. I mean, so we spent, you know, it was about six months. Um, and we were coming to a no compete and that, that expired, um, in terms of off to the, uh, to the exit. And we sat down and again had, um, you know, had a meeting in London and at the team across and said, okay, what are we doing? Um, and we wasn’t specifically, are we doing this, this feedback platform, but what, what is it that we are doing with was I flow?

We, you know, stopping or doing something.

Andrew: And so how’d you decide what to do.

Anthony: Yeah, it was a gain. Um, you know, some ideas on the. And yeah, I was still, I still said, Hey, it’s, it’s not too late to do the, to do the backup idea Because we had this connect platform, which is great. Uh, you know, it can connect into SAS absence on potentially. And we had a few others and we looked at the market and as we had launched live flow, in that time we had previous customers and even prospects through LinkedIn say, Yeah.

You know, they’d like to, you know, buy, um, an online proofing platform, standalone your privilege gear isn’t there anymore. Can we recommend something? And we’re looking out in the

Andrew: HQ had done one right now. It’s part of Adobe, right?

Anthony: yeah. And put a Workfront,

Andrew: Okay. Yeah. Right. Workfront it’s. Yeah. Proof HQ is Adobe Workfront, but

Anthony: um,

Andrew: it was Workfront to the quilt. Other acquired you and then Adobe acquired Workfront with, with you. And so even after the acquisition, was it now part of their software or what happened?

Anthony: Yeah. I mean, um, they basically took the, you know, the, the website down off the couple of years and, um, they had already integrated pre veggie Workfront was a partner of . So, um, The way a privilege. He was the son who was a little bit like we were just talking about, you know, embedding that, that, uh, that capability in another SAS platform with prefetch you could do that.

You can embed, um, review and approval of that feature. And the view inside of any SAS, um, application Workfront had done that. So they were a really good partner of ours.

Andrew: Well, was it after that acquisition? Was it a standalone product anymore or no?

Anthony: You could still use it standalone, but after a few years you couldn’t, I think, you know, they stopped selling it standalone so you can, um, yeah, they were trying to get more people onto the work from platform, I think.

Andrew: Got it. And so that’s why you were seeing old customers say, we want this, just make it stand alone. We just want this one tool, not a suite of tools. Okay. And so was that a hard decision to come to and say, okay, we’re going to do.

Anthony: Uh, yeah, very, very hard. I mean, obviously we didn’t expect it and it’s, it’s hard. I mean, you have, um, you know, I still have good friends working at Workfront, Adobe, and, um, you know, couldn’t have that discussion, you know, Uh, decided to, to step back into this space. And I think, yeah, there would have been, I think that’s what people probably don’t do it is because they, they might think, yeah, you are competing, you know, you sort of taking a second bite, uh, you know, um, and you know, it’s maybe not fair or something like that.

Um, so yeah, it was, it was a very hard decision to say, yeah, we are. do.

this, but we will just look at the market and it was no one who was, who was trying to solve this problem standalone and specific specifically focusing on it.

Andrew: Did you check in with them and say, is this okay if we jump in? I mean, legally you didn’t need to. Did you feel like you had to.

Anthony: No, we didn’t to be, to be honest. Um, we did have conversations, obviously post, um, you know, coming, coming into the market again. But yeah, it’s not something we, we, we discussed with them before.

Andrew: All right. Let me take a moment and tell everyone about masterworks. Do you know masterworks, Anthony?

Anthony: Uh, I have not yet dealt with them. No.

Andrew: It’s one of the things that you notice when you start to read, um, about really successful people is. Yes. They continue to run their companies or invest in other companies. But often what they do is they start buying art and then they’ll buy art and they won’t even have it up on their wall. They’ll just have it stored somewhere.

And the reason that they do that is because art just appreciates and value. If you think about assets that have survived the test of time, you will probably see something like a BA Vango or a Banksy survive longer than you’ll see. I don’t know. Definitely today’s iPhone, but maybe even all of apple, because we see things that survive hundreds thousands of years.

Anyway, the problem with it is that as individuals, we have not been able to go and buy a bank CEO, Pablo Picasso, it just too expensive. And. You don’t want to put all your investment in this one or two works of art, well, incomes, masterworks, and what they do is they basically, they allow a group of people to come together and buy a work of art and then have an expert decide when the art should be sold when it’s at the top of the market and not just sell when you randomly won.

And they put this together and they’ve only had a by invitation opportunity up on their site. And I talked to them and they said that they can make masterworks available right now through a URL that they’ve given me. And I urge anyone who’s at all interested in talking to their people and finding out you have no obligation.

You just get on a call with them and see if it’s a good fit for you. Understand how it works. Bring them all your most challenging questions. See what their track record is. And also see if it makes sense for you. And if it does, you can go in for a very small investment and a piece of the business. Like you never buy, you never buy apple.

You buy a stock, a share, an apple or multiple shares, not apple. Why should you have to buy a whole work of art? Buy shares in it, buy shares in multiple WorkSmart. Anyway, if you’re at all curious about this, I urge you to go to masterworks.art/mixergy masterworks.art/mixergy. And they’ll. I don’t know what I’m allowed to say about what they’ll let you bypass because I don’t have any, like, anyway, listen, you’re going to get through where other people don’t.

If you use that URL, I don’t want to get them in trouble legally for what they’re, what they’re offering here, but they’re going to get you through and you don’t have to use. Invitation process that everyone else does go to masterworks.art/mixergy and go investigate this. This is a really good addition to your portfolio.

All right. At the, I feel like you should do that. Although maybe at this point in your life, you want to buy the whole work of art and put it up on your wall. Have you done that?

Anthony: Uh, I’ve got too much invested in his life to be honest.

Andrew: Is that right? You put all your money into the business or,

Anthony: yeah.

I mean, well, you know, I wouldn’t say it all the money, but yeah, we, we, we S we sort of skipped the seed round, um, to be honest, I mean, when we started SciFly we said, yeah, we’re going to boot strap again. And, um, you know, going to see where we go to, but we, we, we strapped the first few years. Um, so that, that, that was a plan initially.

And then we sort of switched, uh, tactics

Andrew: because.

Anthony: Um, it is, it is just more expensive to you to build a SAS business, uh, today than it was say 10 years ago, um, that the cost is much higher and, um, and we don’t want to sacrifice growth rate. Uh, we see the opportunities. So it’s, it’s, it’s sort of, you know, trying to balance, um, you know, do you do bootstrap?

You can definitely do it, but there’s the, the opportunity is there. So we, we want to grab it.

Andrew: I have noticed that over the years of doing mixer, G people would have back 10 years ago accepted. A product that wasn’t fully baked. That was just a feature. And, and so it was fine to just build a small product and take your time with it and then build it up. And then eventually the competition got so fierce that if you built just a small feature, there was someone else who builds something way better and you would not get the attention.

It became harder. And then at the other, on the other hand, Raising money became a lot easier. They’re more people who are investing on the side as angels. They’re more funds investing. They’re more incubators and accelerators and people pulling their money together. The opportunities to get money are bigger and the requests from customers are bigger too.

Anthony: Yeah. Um, the, the options and sources of funds for the last few years, I mean, it’s. Sort of be in this golden era where interest rates are low. There’s so much cash in, in the markets, even though things are changing. I think it’s going to get a little bit harder now. Um, in the next few months and years with interest rates going, going up, there is a lot of funds out there.

Um, it’s just going to be a multiple, um, did the, actual multiples will, will change a little bit,

Andrew: I also get

Anthony: starting.

Andrew: you tell me if this shoe, I also get the sense that there are people who invest in the stock market who say beyond a certain time. I’m okay. Just taking some I’m okay. Taking a risk with a certain percentage of my portfolio. And when their overall number goes up to take a small percentage becomes suddenly significant.

And then they put it into companies as long shot bets. And so as the market goes up, it’s given people more opportunities to invest.

Anthony: Yeah. I mean, that’s a, that’s why we have boom and bust, right? So as, as the markets go up, people are willing to take more risks because, you know, you sort of get into that sense that everything’s always just going to go up. Um, but if, if you live long term, uh, you know, you you’ll, you’ll always hit, hit the averages.

Um, and that, that’s the important thing.

Andrew: have you, by the way, using a gamer mic microphone from gaming,

Anthony: it’s, it’s actually, I’ve got my daughter,

Andrew: ah,

Anthony: she, yeah.

Andrew: like the lights changes we were

Anthony: I know,

Andrew: maybe you were moonlighting on Twitch.

Anthony: I have no idea how to change it. So now I’m, I’m way too old for Twitch and things like that. So, um,

Andrew: I don’t know what you should see. The people I see on Twitch, I watch recordings of chess dudes on Twitch or off Twitch on YouTube even. Yeah, there there’s massive audiences of people doing nothing, but that are, um, have you invested beyond, uh, your own business in other companies after you sold.

Anthony: Uh, so my co-founder has, um, he’s done a few, few investments, uh, personally, you know, I’ve put everything behind life, so, you know, sort of got everything in it and, uh, all my times in it. And, um, yeah, it’s, you know, that Simon saying, it’s like, you know, Always back yourself. It is scary. Uh, because I remember 20 16, 17, 18, all I said, okay.

If next year is not a decent hair here, we can have to figure out what we do and so on. But yeah, slowly but surely

Andrew: I was just listening to the book, the contrarian about, um, Peter teal. And it talked about how, at the end of PayPal, Elon Musk had a bigger payout from PayPal than Peter teal, even though Peter teal was running the company because Peter teal and PayPal took on more money than X. The company that Elon Musk built that was then merged in.

And because he used more of his own money to start the company, he had a bigger. I thought that I, I guess the book is getting a lot of negative reviews, but I thought it was fascinating to see what Peter teal did at the end to try to get more equity just before, uh, they sold. It was pretty interesting book.

Um, all right. And so coming back to this, you said, I think Ziflow needs to adjust our customers are telling us something. You told our producer that yes. You talked to customers before you built the original version of Ziflow with the XY bots and the automation and the workflows, but you want to have a different type of conversation now.

If you build it, they will not just come. They will pay. What are the different conversations? How did you qualify what people are telling you so that you can actually.

Anthony: Yeah. I think, you know, I actually don’t have a good answer for that. You know, I’m, I’m, I’m on the, it was some my covenant, my soccer, we, we sort of, of, of the, uh, of the thinking that, you know, get something out there as soon as you can and get feedback. And I still think that’s, that’s the best way. Um, There are probably different ways to test it, but, you know, we still haven’t found a better way of actually getting a product in someone’s hands to say, okay, oh, you’re going to be willing to actually.

put your credit card in

Andrew: Ah, so you still had to say, they’re telling us to build is they’re not committing to paying. We can’t be sure that they will pay. We have to build this thing and then see if they’ll pay and sure enough, you built it and you did start getting early customers, not a ton, but you got some, what was that first version that the first customer paid for?

What.

Anthony: No. So to be honest, our first revenue was actually only at the end of 2017 when we launched with the feedback, um, pot. So our original

Andrew: I mean, what, what did that feedback do? What exactly were the features that were in it?

Anthony: Uh, literally you could upload, um, some static files, PDFs, images, and you could provide comment. You could share it and comment on it. So that,

Andrew: PDF images, no video.

Anthony: no video, not audio, no, no websites or banner sort of just static.

Andrew: Wow. There was a need for someone to be able to comment on a PDF.

Anthony: It is still, I mean, in terms of volume, PDFs are still the most popular, uh, asset type that is, is shared within Ziflow.

Andrew: I wouldn’t have thought.

Anthony: mainly because you have to, to actually create that is probably a little bit quicker than a video video is a lot more work and a lot more time consuming, but in terms of volume yep. A PDM.

I I’ve had that a guest probably get 70% of the asset types being uploaded

Andrew: What type of people are using it? Is it for contracts? Something else?

Anthony: Uh, so, you know, people would actually export their designs also to PDF format. So it’s, it’s a great format to actually export anything, packaging designs. Um, I mean, it’s great because it’ll, it incorporates, um, you know, all of the, uh, uh, all of your, uh, colors and layers and so on. So it’s a great way for people to export anything, but yeah, it could be documents, et cetera.

Andrew: Right. And I think it doesn’t PDF have a native commenting feature. It does. Right. But it’s stinky because I think every software handles it different and they all, for some reason seem to like a version of a small icon of a post-it note that you have to see and then expand out and then you have the, just really bad.

Experience with that seems right.

Anthony: That’s correct. Yeah.

So that, that’s the thing we see is that there’s no, you know, so when you, when you providing feedback, you need all these different tools. So if you get a PDF, you have Acrobat. If you have video, you email it back or slack or teams message back. Not really any way for them to provide comments on and then websites again, same issue.

So I’ve got all these different tools, but Yeah.

it’s, it’s very, it’s very basic in terms of how you can provide feedback in some of this. And then the big thing is there’s no workflow. So if one group’s reviewed it and let’s say they approve it, moving it to the next team, it’s a manual process. So that’s where, you know, siphon.

Andrew: Uh, okay. You know what? I I’ve noticed a Google docs just now recently started to add some workflow and approval steps within their, their docs. You know, this, the, the Microsoft word alternative. And so you had that back then in the first version.

Anthony: Yeah. Correct. Yeah.

Andrew: Got it. So I can upload a PDF and then say if me and. Uh, the, the lawyer agree that this makes sense.

Then we forwarded over to the CEO and if the CEO likes it, then we could take the next step with it. And meanwhile, throughout the process, everyone sees the comments that have gone into it and can respond to comments.

Anthony: Correct. Yeah. So everyone sees a comments and you can involve people where you need them. And then ultimately the other thing is the version, uh, version control and management. So you can upload your version to the big air. Well, one of the other, um, uh, parts of the process that takes a lot of time is actually comparing version two with version one, have, have the comments been been implemented.

Um, so we have like order compare and you can tick off the comments and so on. Has that been.

Andrew: As far as I can tell DocuSign, still doesn’t do that. If you ask for a chain. Often both documents sit in your inbox unless the other person is smart enough to know or pays enough attention to go and cancel the other one. And then there’s still not an easy way to say this is all part of the same thing we signing the last one.

If you want to see what happened before you can see it, but we don’t need 50 different emails and 50 different URLs for every part of this process.

Anthony: Yeah,

So we have the site we have. Um, feedback from, from customers where they say, Hey, can you provide, you know, the, the option of us actually signing on documents like DocuSign. And it’s one of those where we say, okay, we not going to do it because it’s not core, uh, maybe one day, but yet it’s hard to say no to some of these features.

Andrew: right. Because you’re saying we do not want to turn into a document signing process where the document collaboration and feedback from.

Anthony: Yeah, we this so much, so much innovation left in this space that, yeah, we just, we just want to focus on this. Um, cause I think as soon as you get dragged into that and we still, that we still live with some of, uh, uh, uh, our competition back in, you know, with, with prefetch key where they, they got into project management, the next kid wall on it and.

We sort of outgrew them just focusing on this one problem. So yeah, it is, you know, the age thing, like get solve one problem solved really well. Uh, but if you do go across, um, you know, different feature sets, you know, you really have to execute on.

Andrew: Okay. I can see that. Um, all right. And so you got your first customer. How did it, how did it go for them?

Anthony: Yeah. So this is the funny story. So, um, so October 5th or sixth or seventh, we launched. And, uh, about a week later, someone signed up, uh, with with a credit card. that was great. We’re like, okay, we are. We’ve got this going and no other signups for October and then November, they actually quit. They churned.

Um, it was like, okay, fine. You know, we’ll take it on the chin November got another signup and no, no, the signups in November and December, they churned. So after two months we had know two, two customers and a hundred percent churn. Uh, so it’s a little bit concerning at the time, but yet December it started getting better and more signups.

And, uh, I think it was.

Andrew: only one customer that first month the customer turns another one comes in. They turn, I mean, seriously, if you you’re, you’re now looking in retrospect and it’s kind of a charming part of the story, but at the time, what did you do to not doubt yourself to not say we tried and then we try it again.

It still didn’t work. Other people are hitting it so much faster. This is just a failure. I’m a failure. How’d you know, that.

Anthony: Yeah, oddly enough, you know, it was that.

20 16, 17 was I think it was, um, Mentally easier than it is actually now. Um, you know, Because you didn’t have a growth rate, you need to try and compound on. So, you know, there’s, there was no revenue, your business year on year growth rate you need to look at. And we had the, sort of the bigger picture in mind.

So we went to concerned, um,

Andrew: Because you would just wandering around looking for an idea. This was just that wander. Try to figure it out.

Anthony: Well, I think when we decided to get back into the hole, uh, feedback is so solving this feedback problem that we, we, you know, that that’s where we had a clear vision of where we want to get to. So that, that was going to be a multi-year sort of execution and, and, uh, on the development side. So we knew the product, you know, The only sold for static, uh, fault.

At that point, we knew there was video and web, et cetera to do so. I wasn’t too worried at the time in December, we had three customers and they didn’t churn and it started rolling pretty quickly.

Andrew: How did you know that this was working? It wasn’t at the stage when you had three customers, was it.

Anthony: No, um, I’d probably say so 2018 was, was decent, uh, you know, signups and growth and then. When in 2019 we had about a three X growth. Um, you know, that’s where we sort of know, okay. There’s, there’s definitely market out there. Um, you know, and, and we’re growing at a decent, decent rate, you know, this is, this is working

Andrew: What did they come from?

Anthony: Yeah. I mean, it was a, You know, w again, organic, uh, really, uh, focused on, on, on SEO and then paid ads, Google ads, and. and then, uh, probably, uh, strong network a little bit, but yeah, I’d say mostly it was organic. People are reaching us directly at that time.

Andrew: were you in charge of the marketing and SEO?

Anthony: No. So we had, uh, we, uh, so one of our, uh, um, Micah was part of our team at a previous key towards the end. He actually joined us quite early on at Sciflies. So that’s one thing I’d probably say, I mean, uh, first hire was, uh, was, uh, uh, it was UX And was, uh, was an internal recruiter. And then, um, Apart from the engineers.

We also then hired Mike, um, as our, as our CMOs. So you’re getting marketing in early, I think is vital.

Andrew: And he was a person who was in charge of creating articles for you and getting you on other sites.

Anthony: Yeah. Yeah. Just generally, you know, the blogs, the content, et cetera.

Andrew: I do see it. I’m on SEMrush looking up, what sends traffic to you and where you, where it’s coming from. And I could see, um, I could see how it’s, it’s more, it’s both on your site and it’s on other sites too, like articles on HubSpot and so on that are, that are linking over to you. And that’s all him being in.

Anthony: Yeah. Yeah. Um, so Yeah.

so that’s a marketing team. I mean, he’s, he’s since left. Um, but yeah, it’s, we, we still have that, that, that engine going. And so it’s really key part, I mean, or I think organic is where you get most of your it’s it’s where you get the lowest cost leads still.

Andrew: How much of an interest do you take in that? Is this something that you stay on top of on a regular basis or in the beginning you did.

Anthony: Yeah. Yeah, no, I still still take part in that. I still work very close. I mean, it all filters down into your, uh, you know, into, into the actual efficiency of the business and, you know, you, you don’t want to spend too many dollars on acquiring customers. So keeping that, that great down is, is important, you know, at every part of, um, of, of, of, uh,

Andrew: What about integrations? I see that there are a lot of search results that have to do with Monday or Dropbox that feed traffic to you. In addition to writing articles about them, do you also integrate with them and get traffic that way?

Anthony: Yeah, we do. And we actually also close deals with them. Um, so, you know, we, we did joint, um, Deals where they have some of this capability. Uh, but it’s likely it’s not as, as advanced as we have. So if they get into deals that need, uh, you know, the workflow, et cetera, then we’ll, we’ll go and join with

Andrew: Ah, so their salespeople will bring you in and help the customer see that they could do the, they could do the project management they’re looking for in Monday. And then. By working with Ziflow. They get all the approvals and feedback.

Anthony: Exactly. Yeah. Yeah. So it’s great. Yeah. Another good, um, you know, source of, of leads for us, um, doing these integrations, but also it’s not just that. Well, I’d say more than 50% of our, our customer base has some sort of integration, whether it’s within, you know, that those, uh, you know, uh, within those creative tools or within project management systems, Dropbox, et cetera, 50% more have integrations that, so that’s, that’s a key point in solving the

Andrew: your customers, aren’t using you as. Even though they could, they’re using you as part of another piece of software that you integrate in with.

Anthony: Yeah, correct. Yeah.

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And I’m proud to say that he’s also a sponsor. Thank you, lemon. Go check them out. People. One of the problems that now exist is yes. It’s easier to raise money. It’s harder to hire people. How have

Anthony: Indeed it

Andrew: beyond going back to your old friends? What did you do?

Anthony: Yeah. So we have an internal team, uh, that helps us find, um, you know, the, the best people, but it is, it’s definitely, it Is it is challenging. I think there’s, there’s two parts. It’s, it’s finding the right than the best people and it’s also then retaining, um, you know, team members. So it is, it’s definitely way more challenging now than it’s been.

And I think in, in the last 20 years

Andrew: Is that why you’re doing this interview? Is this like a way to let people know who you are, what you’re about and have them consider coming, working with you.

Anthony: Uh, no, uh, well actually Mo yeah. I mean, if, if it, if it helps her by all means, um, no, I think, I think with, with, with anyone, um, you know, I’d love to, you know, we we’d love to solve a problem for our customers and you know, the more people that can know about Stifler the better, I mean, it’s amazing. We’ve been doing, solving this problem for the last.

Uh, 13 years now, 14 years. And most of the people you speak to , they didn’t even know a solution like this existed. It is just it’s it’s it’s amazing.

Andrew: It does seem to fall into those buckets of a problem I’m having that. I don’t realize. And I don’t think there’s a solution. And even if I did, I wouldn’t know exactly how to look for it and what to search for.

Anthony: Yeah.

Andrew: I’m surprised that the, um, the freelance marketplaces, aren’t finding a way to integrate this.

And keep more of the conversation on their platform. Right now, people are often just exchanging, uh, links to Dropbox and to Google drive. And that just doesn’t seem like the right way to interact.

Anthony: Yeah. And it’s yeah. And they, and they solve the problem for, if you have, you know, one or two people involved in the feedback process. And as soon as you work in a team environment, Any, even a small agency, um, they will. They would create this artwork, they’ll have an internal review process. Then it goes to maybe the client team.

And then if the client team and present that thing goes to the customer and they internally have multiple review steps. So most of them solve the issue of like, okay, I can put comments on a video or on a document, but they don’t actually solve the whole problem from how do I move this documentary, the actual, or this, this asset through the a approval.

Andrew: How’d you know, this was an issue like I’m looking back, even going back to 2010, I think is when you log where you are a part of proof HQ, how did you had your co-founder realize this is a problem? The world has it, and we’re gonna see.

Anthony: He, so he started a prefatory back in 2007 and he initially, uh, that, uh, that a consulting project with, uh, with Warner brothers who had this problem. But honestly, at the time we just thought it’s going to be designers, thousands of individual designers signing up with a credit cards and using prefetch key to share their artwork with a customer to provide feedback.

But within 12 months, uh, we, we sort of saw all these companies, uh, large organizations and agencies sign up and, and talk about this workplace. Should they have. Well, workflow came up and we only launched that. I think in 2012, it took us quite some time to develop that. And that’s where it really, we started understanding that the, the broader problem, it’s not just work.

I mean, there’s all these different things around it, but yeah, that’s um, yeah, as we got into larger teams, we sort of saw the problem more clearly.

Andrew: So I’m trying to figure out what I take away from this. You’ve clearly had success here in this space. I want to know how, like, if you look back, if you’re going to tell your kid, your daughter with the microphone and say, I want to show you how to do this. If you want to do it, how would you help her figure out what idea to pursue and then how to, how to find the right customers, how to pivot with them properly.

What’s the advice that you, that you’d pass based on what.

Anthony: Yeah. So I was never the ideas person. Uh, I, you know, my whole life, I was always like, you know, I want to start a company. I want to be, you know, I want to, I want to be a founder, et cetera, solve a problem. And I could never figure out an idea. And I think you sort of what happens. And I dunno if it happens to you to other people, but what happened to me is like, you feel like you need to solve a really big problem to make it successful.

And what I realized doing this a second time, Iranian. Just talk about solving a really small problem, a small as you can, and start getting feedback. And, you know, as soon as you show someone a product or some, or some concept, you get the feedback. It starts, it starts unearthing other big issues I have. So now I’ve got like for the first of my life, I’ve got this whole list of ideas.

I’d like to, I like to implement, but obviously too busy with flow, but you know, now you start seeing it more Kelly don’t, don’t try and solve too big. A problem. Just, just focus on something small initially.

Andrew: Finding a small problem. See if it solves it, I’m seeing I’m sensing also going back and making sure the customers are willing to pay for it is important to you considering what happened in the beginning of Ziflow. All right. And then some of the ideas that you have, is there one that you’d throw away that, you know, for sure you’re not pursuing, but you’d love to see somebody go and pursue

Anthony: Uh, yeah, backing up. I still

Andrew: you think backup

Anthony: a big

Andrew: an issue.

Anthony: I think, I think it’s a big problem. It’s like a, it’s a bit like security. I mean, there’s so many different opportunities in, in, in that, in that area, but, um, I think there’s still, you know, for, for me, I still think in a, getting a good SAS product of the ground.

I mean, there’s this, like I said, there’s all this like sort of, um, sort of all this, uh, base or plumbing work you need to do. Um, You know, one of the, I mean, I’ll probably put it up there. It’s one of the ideas I’d like to XQ and stuff, but I’ll, I’ll, I’ll sit in any case, but you know, I look at folders and workspaces and you think every single app has some sort of form of a folder structural project structure with.

Folders sub projects, et cetera. And we all develop that. And actually we spend a good year at cipher making sure that it’s scalable, it’s quick. It, you know, we can have thousands and thousands of folders and sub folders and doing that at scale is hard. And so we, you know, you almost have someone full-time on it.

So want to make that a product.

Andrew: for the servers. Okay.

Anthony: yeah, just, just by the SAS products. So, you know, you have like all the zero for identity management, so why not have that for other parts of applications that it’s, it’s semi core, but it’s not like, you know, everyone has some sort of folder structure, so why not have that?

And as a, as a SAS solution, and then it can have settings at the, at the workspace level and it could either be projects or dashboards or boards or whatever you want to call it.

Andrew: And so provide that to software makers is a way of keeping both the folder structure and the folder permission.

Anthony: Correct. Yeah. And, and setting. So, you know, you could make that, um, you know, so it says customizable so they can have any settings. They want sharing, you know, such, I don’t know if any, I think you can, I think you could build some sort of business out of it, but it’s a a hundred million business dunno, but you know, as a start, I think, um, Yeah. maybe,

Andrew: One of the things you’ve learned is it doesn’t have to be a hundred million dollar opportunity in the beginning. It just needs to be a problem. That’s a real problem. Right. And the other one for, for. Backing up data. You know what I have to tell you? I thought when SAS was starting to become a thing that, that when I saw Dharmesh Shah, I think invested in Backupify this thing that was going to back up all your online stuff, that that was going to be a huge winner.

I don’t, I’m still a customer backup. If I it’s been like 10 years, I paid them a few bucks a month. I don’t think I’m ever going to lose my Google drive data and Google drive is backing up. And so in that case, it didn’t really work out the analogy of take what worked in the offline desktop world to online backup the way that they did it didn’t seem to be an answer.

What do you seeing as, as a problem, the way that you described it earlier, about how within your project management software, they probably don’t have the revision history that you’re looking for. Let’s do that. What else do you see in the backup space? That’s not working.

Anthony: Yeah, I think it’s w as soon as you hit into any industry, that’s some, some sort of compliance around it or, yep. You need a very clear audit trail of what’s happened and what’s changed. Uh,

and maybe that’s that’s the other, uh, solution is, you know, what the whole workspace, uh, piece, you have something that plugs into your SAS product and just gives you a full audit trail of what’s happening because we have, uh, customers in finance and healthcare, et cetera, that need a very, very Kilda trial of his, uh, it may well come in approval, but also what changes have happened on the actual data that you’ve Got in your, your system.

So, yeah.

Andrew: Got it. So like an audit trail for the software that’s on that’s there. All right. It’s a grain of the idea. I think if I just call it simple backup, I’m not, not fully understanding of the problem, but as you’re describing it, I get it. All right. The website is Ziflow had you come up with the names. I feel, I understand the flow part of it is from like this process that flows where one step flows to the next where’s the XY, the Z I could come

Anthony: We looked for a domain that’s available to be very technical about it.

Andrew: Makes sense. All right. It’s Z I F L O w.com. And of course I want to thank the two sponsors who made this interview happen. The first, if you’re looking to hire developers, go to lemmon.io/. Uh, Mixergy. And the second, if you’re ready to consider investing in art, I want you to go and check out masterworks.art/mixergy.

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And frankly, that they’re expert pickers are picking right now, go to masterworks.art/mixergy. Anthony. Thanks so much for being on here.

Anthony: Thank you, Andrew. Thanks for having me.

Andrew: You bet. Thanks. Bye everyone.

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