Mikkel Svane is one of my personal heroes. He has quietly built Zendesk into an extraordinary business which IPO’d earlier this year at just under a $1b market cap and which today is valued at nearly $1.8b – and growing fast.
They have over 50,000 customers globally and have grown revenues substantially over the last few years – $38m in 2012, $72m in 2013 and are on track to hit $125m this year! It’s nothing short of amazing and this is why I was so excited to learn that he had written a book to tell the Zendesk story.
I’ve just finished reading Startupland: How Three Guys Risked Everything to Turn an Idea into a Global Business. It chronicles Mikkel and his two cofounder’s, Alex Aghassipour and Morten Primdahl’s journey from building the product on nights and weekends to quitting their fairly comfortable jobs as as they reached their mid-30’s. He then recounts his time raising money from US VC’s and moving for a short period of time to Boston before ending up in San Francisco where they built their global HQ.
It kills every other founder’s story that you have ever read.
Svane, in a very Danish way, is incredibly humble and honest about how effing hard it was to get to where they are today and how much luck was involved along the way.
I highly recommend it to any startup founder as it chronicles the joys and pains of transforming a startup into a company. He shares so much about what they didn’t know and how they screwed up along the way. I especially recommend Startupland to European founders who want to learn how Mikkel, as CEO of Zendesk and his two cofounders launched the company in 2007 from a loft in Copenhagen and just 7 years later IPO’d the company in the US. It covers a lot of the questions that founders are still asking themselves today.
One of the most common questions I get asked by founders is whether they should stay in Europe or go to America. I think it is a very personal decision to make. If your family/support system is here and your have a large enough target market to go after, then there is no reason to get to the Valley sooner rather than later. In fact there are many pro’s of building up to $5-10m of ARR and hiring local talent in Europe before going to the US – engineering talent is just as strong, there is readily available capital, early adopters to use your product etc.
There are now dozens of examples of European companies that are market leaders in their product category that have successfully launched into the US – TrustPilot (another Danish company!), Adyen, Alfresco, Criteo, ElasticSearch, Klarna, LogMeIn, Markit, and Qlik all come to mind.
I don’t want to spoil the book, so here are some of my favorite short quotes from Mikkel:
1. On transitioning from being a small family creating a product to a large organization
“But soon the honeymoon ends. The idea becomes a reality, and you discover that even though you never really wanted to build a company, all of a sudden you are doing just that. And the reality is that building a company is hard – it’s no longer about just pursuing an ida. The idea has taken off, and it becomes all about executing and scaling.”
“Before you know it, you have all these real customers who need real attention, and you need to start building the beginnings of an organization. With all the bureaucracy and management that comes with it. And the realities of your own life creep in. No one tells you in advance how little you get paid to get there. How in the early days you are constantly running out of money. How much credit card debt you accumulate. How many fights you have with your cofounders. How you have to live with their weaknesses and oddities How there’s the constant temptation of flashy objects and shiny new things. How much you keep from your spouse. How you over leverage your life. It quickly becomes very complicated.”
2. The Emotional State of Running a Startup
“You are balancing two extremes: one, you are completely invested and narrowly focused and wholly dedicated; the other, you are hyper aware that there is very little chance you will make it. You are at odds with yourself, consumed by both ecstasy and fear. You have no balance, but you have found meaning. This is the every day, every moment dilemma of a startup.”
3. Maintaining a Good Relationship with Cofounders
“The priority remained that our kid felt good, even if we didn’t. Our baby united us – even if we didn’t like parenting with one another.”
4. Building a Culture
“Hire for differences, not similarities: try to have as many cultures and backgrounds as possible. Tech companies can become a posse of young white men living in jeans and hoodies. But having diverse backgrounds creates a much better culture. There is a tendency to think that everyone needs some common ground, but that’s a myth. It’s much better to be like the United Nations, made of different cultures and backgrounds, and to be forced to make it work and to find a common language. A diverse workforce enables the company to make sure no predominant group sets the tone. Instead the company finds its own common tone.”
5. SaaS Pricing
“When it comes to pricing, we also learned that you don’t raise your price for an existing product for existing customers That’s the relationship of a subscription service. And this makes sense; things get cheaper over time as you democratize the product stack and make it more accessible to more people. And if the mission is to democratize software, that inherently means that it becomes cheaper and cheaper. That’s what makes the model great for everybody. SaaS companies must show ingenuity to prove the value of new features and incentivize their customers to upgrade or buy add-ons to their products in a way that feels natural and organic.”
The now famous selfie of Alex, Mikkel and Morten at the Zendesk IPO