Startupland. Svane Mikkel
you give up what you are expected to do and chart your own direction.
Living and working in San Francisco, I have the opportunity to meet with aspiring entrepreneurs, and I'm often asked the same questions: How did you do it? How did you move the company from Denmark to the United States? How did you get a visa? How did you get a green card? How do you get VC introductions? How do you pitch to VCs? How do you balance optimism with reality?
There are no simple answers to these questions. But there are many answers. I'll try to be as honest as possible. I'll attempt to answer these challenges by detailing our own meandering, up-and-down and back-and-forth journey to Startupland. I hope that our story inspires you on your journey.
I'll tell you about what led to the idea and why we left comfortable lives to take a risk and pursue it. I'll share with you how we built a founding team, and how we stayed together, even though we didn't always get along. I'll share our mishaps with almost-investors, and our virginal fear of the venture capital model and how we overcame it. I'll write about our move across the Atlantic, our false starts, and the big event of becoming a public company, and how that just becomes the beginning of a new story. But that's just a small part; our mistakes get as much play as what we've mastered.
I hope that what I tell you here will also show you that it wasn't all bad and it wasn't all difficult, and that it was always worth it. I'll tell you about building a product that customers love, and how we connected with and won customers in the most unexpected corners of the world. I'll include how we built a team with friends – dear longtime friends – with whom we got to share time, a cold suburban house, and a fantastic opportunity. I'll tell you about how other friends invested in Zendesk – and saved us from nearly going broke. I'll tell you what we did to disrupt the entire customer service and support industry and how we ultimately transformed an idea into a global company that's traded on the New York Stock Exchange.
Along the way, I'll share the unconventional advice you learn only in the trenches. I am allergic to pat business advice that aims to give some formula for success. I've learned there is no formula for success; the world moves too fast for any formula to last, and people are far too creative – always iterating and finding a better way. A better mousetrap is always possible. But of course there are things we've learned through experience, unexpected things. Take the value of adding spelling errors to emails in increasing customer response rates, the important practice of cursing around job candidates, or the upside to using a woman's name instead of a man's in customer correspondence. I hope that what we have learned may help you on your own path, or at the very least encourage you to think differently from the standard business-as-usual practices.
Most of all, I hope that you'll agree that this is a story about fostering fulfilling relationships. I'll share how our friendships survived as we changed, how our customers grew with us and motivated us, and how our families stuck with and supported this crazy adventure. Building something out of nothing is not easy, but nothing that is worthwhile is easy. And nothing is more fun. Being a part of a technology startup in San Francisco has been the most rewarding professional experience I've ever had. I wish for everyone to have that privilege of truly finding and trying what you're best at and succeeding.
Chapter 1
The Honeymoon: Believing that what you're doing is great and knowing nothing of what's to come
In March 2014, most of the publicly listed high-growth technology and Software-as-a-Service (SaaS) companies started to experience large pricing corrections. Some stocks lost 25 percent in value in a matter of weeks. Some lost 50 percent. The media was reporting “Valuations Will Be Cut in Half”2 and calling it the “Twilight Zone of SaaS.” Mad Money and Squawk on the Street host Jim Cramer famously yelled, “The software-as-a-disservice to your portfolio days are upon us.”3 In Silicon Valley, people were drawing parallels to Sequoia Capital's famous “R.I.P. Good Times” milestone presentation from October 2008.4 All of the analyst's models were ripped apart. Things were messy for tech startups and SaaS companies.
At the exact same time we were in the final stages of preparing Zendesk for going public on the New York Stock Exchange. Once again, our timing was not the greatest.
But let's start with the start.
The IPO and everything that came with it were all vastly different from everything that had started less than seven years before, working in Alex's tiny loft in Copenhagen, arguing about everything, and trying to turn an idea into a reality. The fact is, most of the time my entrepreneurial adventures hadn't gone very well, or at least they hadn't gone according to plan.
I'm not just talking about Zendesk. I'm not a big fan of being called a serial entrepreneur. Call me old-fashioned, but nobody brags about how many broken marriages they have behind them. However, for better or for worse, I was no stranger to startups. For most of my working life, I never had a real corporate job. Although Copenhagen – a city of about a million people, in a country with the smallest private sector in Europe – isn't exactly the epicenter of the startup world, it was what I knew.
Beautifully Simple, Round One
After I graduated from business school in the early 1990s, right when a recession hit, job opportunities were scarce. I hardly even looked for employment. Instead, I pursued something I was interested in – making things on computers – and started a small graphic desktop publishing company. At the time, I was fresh out of school, and 3D Magic Eye books, with illusions that allow you to see 3D images by focusing on 2D patterns, were the fad. I created an algorithm to create these types of 3D images or visual illusions called stereograms. I had serious headaches while working on this, but I loved being able to adjust my eyes to see the 3D element instantly. Then I turned that into a computer software program that made it easy for users to make these complex illusions.
This was my first formal foray into software, but the “software industry” was in such a different state then and had little in common with what we know today. Consumers and businesses had not begun to use the Internet, and software was kept on disks and used on desktop computers. There weren't any best practices for how to distribute software, and I was a one-man software shop figuring it out along the way. I took the packages to little computer shops to stock and sell. Customers sent me orders, and I shipped out the disks myself. I worked out of a teeny office space in downtown Copenhagen. It had low ceilings and crazy crooked floors. There were parts of the office where I couldn't stand upright. There was barely any room for me, let alone space to navigate large piles of inventory.
This effort didn't make me rich, but I didn't lose money. And although it was a terrible business in that it was very labor intensive, without much monetary payoff, I also found it was very satisfying to build a product. I loved creating something and having people use it. I was eager to read the reviews and talk to users. Most of all, I loved that I had taken something that was hard and made it easy for people.
This work led me to write a book that taught people how to create these complicated images.5 The book, which was released only in Danish, was sold in bookstores. People bought it and learned how to make these seemingly complicated images rather simply and quickly. I designed the cover for the book: it was a computer monitor with two eyeballs poking out (you know, 3D!). I rendered everything in a pirated version of Strata Studio Pro, and I scanned the iris from the cover of The Cure's Kiss Me, Kiss Me, Kiss Me album (I was a big fan of the album).
Importing the Internet from America
Although I was fascinated by computers and grew up using first a Lambda 8300, a ZX-81 clone with 2 KB of memory, and later an Amstrad CPC464 (with a built-in cassette tape!), no one would call Copenhagen a technology haven at that time. In the early nineties there were only metered, very expensive dial-up connections and only one internet provider. And there were very few people on the Internet.
This was the early days of Netscape Navigator, and the Web was just becoming searchable, but I certainly didn't know where the Internet was headed. However, a trip to San Francisco in 1995 made everything more clear – it
David Cummings, “SaaS Company Valuations Will Be Cut in Half,” March 18, 2014, http://davidcummings.org/2014/03/18/saas-company-valuations-will-be-cut-in-half/
Jim Cramer, “We Reach the Twilight Zone.”
Eric Eldon, “Sequoia Capital on Startups and the Economic Downturn,” October 10, 2008, http://www.slideshare.net/eldon/sequoia-capital-on-startups-and-the-economic-downturn-presentation
Mikkel Asger Svane,