Klaus Nyengaard, GenieBelt:
Presentation at SlideShare: Growth hacking in a scalable way – it’s about culture, stupid!
October 1, 2015
I don’t do a lot of this. I prefer to work with my team and spend time together with those guys, but at the same time, I think this is a great initiative that you have managed to get these series of sessions running about growth hacking, because it is super important.
Even though I don’t really like this term growth hacking, I really hated it when it came out, because it’s just another word for something that a lot of people have done for a long time. Because there are new principles, there are some new technologies around that can help, but I really don’t like. I think, in my mind the word growth hacking came from some marketing people that had an inferiority complex that we are hacking they want to be hackers as well so they say, yes, we’re doing growth hacking, we’re cool. We’re as cool as you guys. I don’t know, maybe that’s where it’s coming from.
I have not been involved operationally in growing companies for quite a few years. I’ve done that in the past, I’ll get a bit back to that but of course I see quite a lot across the companies that I’m involved with. You introduced me as an angel investor today. Actually, it’s not really how I view myself. I’m also doing investments, but most of my time today I am spending as an entrepreneur and as a supporter of entrepreneur. So I have a handful of companies that I’m very close to, where I work very closely with the teams, typically as a chairman which is not doing the usual chairman stuff around controlling and governance and all that, but more on what really matters, which is of course strategy, organizational structure, culture, commercial strategies, recruiting, fundraising and so on. And one of the companies that I’m close to is GenieBelt. I’m actually a co-founder of GenieBelt back 2.5 years ago. I’ll come back to that.
So why are we here today? That’s because we all have a big interest in growth, in growing solutions that can help out there. And that typically takes the form of having a company that builds a product and then tries to grow from there and helps to save the world, or a tiny part of the world. Growth is everything these days and as it’s been come known is the word. You can grow companies way faster than you could in the past. There’s no more good reason for that. But growth is really the big thing. It’s also because we have organized ourselves in such a way that growth is absolutely necessary, because we raise money to cover our expenses for 12—18—maybe 24 months and then we run out of money. And if we have not within that period reached some proof points then we are dead. So we just need to run incredibly fast and of course this way of growth and funding is related to ambitions. We all want to conquer the world. We only have one life.
Growth is getting totally crucial to our concept of building companies. That has changed compared to 20 years ago and it’s even more prevalent than it was 10 years ago.
In order to grow, you can put up all kinds of theories and templates for showing growth. This is a very simple version of it. You first need to get product/market fit, which means you need to develop a product, you need to iterate and then gradually get customers on board and get data and feedback from the first customers. At some point in time now you have product market fit. We had a long discussion about what is product market fit and how far you need to go down before you have proper product/market fit. But you have product/market fit at some scale. And then you decide now I really want to scale, because now I believe in it and I think that like 80% of the mechanism for how I operate the products and how I market and sell the product is kind of okay. So now I can put a lot of money behind my big growth engine. I’ve been hacking my growth a bunch, and now I will put money and resource into the engine and then we just go bananas.
And it’s two very different phases, obviously, two different kind of mindsets. Over here, you need to find the way you price it, it fits with the market, the product is fine and suddenly things takes off and it’s fantastic. It could go this way but that’s more annoying. But that’s kind of one mindset. I’ll come back to a concrete case in a bit on that. And then we have the scaling part. Some of you might have heard about this before. But I’m totally into how to think about the organization size and how the culture changes as you move through these different sizes.
There was a guy called Dunbar. 50 years ago he realized that you can only know 148 people really well. 148 is the number. I’m sure this number varies a lot from person to person. I’m sure it varies a lot also depending on social media and what is a friend, what does it mean to know someone’s personality and so on. Anyway, the number is 148. Another thing I then suddenly realized, and I don’t know if anyone has done research on this—so this is kind of my own research until someone tells me it’s not—is that there’s something about armies all over the world have organized themselves. It’s always the same numbers always. Don’t know how many of you guys have been in an army, but it’s always the same numbers they all have and have had for many—many years.
These are the numbers from the Danish army. A group is 6 to 8 guys. A platoon is 25 to 30. A company is 100 to 150. Notice 148. And a battalion is 700. And I’ve seen this, because I’ve been on the journey’s either inside the company or as an observer of the company from outside where I can see that every time you pass these thresholds, something happens. And it’s around culture. It’s around how you build your management teams and so on. It just totally changes. And if you don’t manage these transitions, well you are screw up, especially here, there’s a lot, even for successful products. With good commercial activities, they start around the platoon size. I’m sure you know a lot of companies that didn’t really manage to get moving from this level. Maybe they got a shit load of money and they moved to 75 or 100 people, but actually in reality, they never moved the business out of this size. There’s a very good reason for this. It is that the CEO needs to change completely the way he leads and many are not capable of doing that.
Let’s try and go through these two phases.
For GenieBelt we make a SAS workflow solution to manage construction projects. Construction, it’s a huge industry, one of the biggest out there and funnily enough it’s one of the ones that have been least disrupted by technology so far. The really big contractors on the big construction projects like making the metro, they have ERP based solutions only at the office. They don’t mean lot for what happens out in the field where really all the problems arise. So we thought let’s do this. I found a couple of guys that had proper construction background and we have been working on this for 2.5 years and it’s one of the most difficult things I have tried. It’s really hard, but now we need to make it bigger and prove the product/market fit in somewhat bigger scale before we can really get a lot of money involved.
There are tons of metrics I can show you. We have been born from day 1 with a lot of good data focus. Our CTO is a PhD in Physics, so he likes to put everything in a big database. And he’s sitting with a solution which is a pretty decent solution for business intelligence and he loves to pull out all these numbers and the commercial guys are all over the place and the product guys as well.
So this shows it’s basically the number of recurring users. I take now the numbers out here, because that’s totally confidential, but it’s like 1 and 4—it’s in the hundreds.
We started coding August/September 2013. After I would say half a year, we started getting something out that didn’t really work. In November 2014, we finally had something we felt now we can push it a bit more and said now we are launching. It wasn’t really true. We had launched before, but now we were launching the beta. And then we started working. So this is January which is high relatively. Around here we started pushing people to pay. So now we’re starting to convert. We feel that there’s so many users coming aboard and also all the other user engagement metrics around [Inaudible 00:10:04] and how we can now push for the payment part of the product.
Again, what have we done? I am not the operational guy. I haven’t been for quite a few years, but of course I know what the guys that are much smarter than me on this that they are doing. And I know you would like to see concrete things. Let’s try and be a little concrete.
On the commercial, what specifically has worked for us—remember this is a very big industry, but super fragmented and with a lot of people that are not necessarily very tech savvy. And then a few people that are super tech-savvy like engineers that are 30 years old would love to change the way construction works, because there are so many inefficiencies in construction, basically because of lack of communication. It’s totally incredible when you look into it.
PR activity, we have built on thought leadership in Denmark. We are also a lot involved in the UK and a few other countries. We were born international from day 1. The team is also international. But trying to think thought leadership of we can change construction. You can get quite a lot of good PR and CEO links and so on.
We are then also taking a couple of high profile products we’ve had and getting the most out of that with pictures of us standing on top of big towers and say look we helped to build this thing. And again, the guys are very good at story telling around the people in the team and how that links to the passion for trying to change construction for the better.
We get good PR, we get good CEO links, and we get a lot of publicity out of that compared to how big the company actually is.
The other channels—LinkedIn, the guys are very good at pushing the LinkedIn channel to the level where just before we are being banned. It’s not all dodgy, but it’s good and it works.
Email Cannons, and then there’s a solution called Outreach where we don’t have to sit and write all these emails and get them back and configure. Outreach is very good for automating a lot of this email communication back and forth. So it looks like we are personally on top of every single piece of communication out there. It works very well.
Twitter filtering—some of you guys are probably familiar with that. A lot of followers, a lot of Ping-Pong back and forth.
And then we use intercom like a lot of other startups to really manage the communication with those that are already engaged on the platform to make that very personal and make awareness on how to use to get this kind of message and use another way and get another kind of message and if they haven’t used it they get a third kind of message and so on. This all works for us.
That’s on the commercial, and this for me is kind of growth hacking, because it’s a lot of it is driven out of data on how people are using it and put into some algorithms around triggering of communication.
Then the product activities—this is someone we all know for a long time. Please focus on one thing and make it really damn good. But we made this error three times. Okay we’ll just make this little feature over here, then we spent three months on that and scrap it and then back on what we started with. Please just try and focus on one module at a time. The core model is absolutely super cool. Someone made an international blog about the 10 best construction solutions out there and we were one of them. And out of 2 or 3 of them were proper modern SAS based. The rest were big enterprise solutions that you can’t really use in SME companies. So we started to get some publicity around what we can do.
Then on SEASER that’s one of our big things. We have this amazing product UX guy called Bob. He’s a former architect from one of the most famous architect companies in the world. He knows the construction industry inside out. He’s a. And he’s both data driven, he’s got flair, he’s got personality. He’s just everything. It’s fantastic. I love him.
One of the things he did a while ago is that he tried to take all the different main parts of our solution and put it into a fairly simple hierarchy of actions a UX user could go through. And then we measure these steps in a lot of details and also the dynamics between the different details and how they convert and how the font changes as we make changes and make AB tests and so on. And it’s called SEASER of course—Signup, Explore, Action, Share, Email, Reaction. And we’re doing this quite disciplined. And it’s not something you just say day 1, let’s do this and day 2 you have all the data. It takes a lot of time. You also need to have the right BI tools to show it and see all the patterns so on. So you need to have the discipline and the culture to actually have this as part of your product development process. And it really works. It’s been pretty cool. Without this we would not have been able to iterate as fast as we’ve done for the last half year. The last half year’s been super-efficient in this. The year before, not so much.
We brought Design and Development closer to iterate faster.elit.
Again, the usual thing. The product guy, he wants this and developer wants something else. Most of our developers are sitting in Poland, some really strong guys. We have five or six guys down there and there’s a distance, but we have been managing them to bring them closer so we are more efficient now.
What’s helped us to iterate and get insight is that user complaints are always right. Keep digging to understand if they say something, but just because they are always right in terms of the problem they aren’t necessarily right in terms of solution. We have something, and they wanted to get rid of it, but of course that was not the solution. The solution was to make it smarter and customized so you got what you needed and not all the other noise out there.
Robust Q&A has helped. Speed and Reliability is a classic thing. When you make a product it just helps that it takes a fraction of a second to log seconds. When you have a workflow solution it has to go super-fast. And we can see how metrics have really helped after this was fixed. Speed is super important. Again, in all learning all the way back from dot com days.
So these are some of the things on the commercial side and the product side we have been iterating. Data driven—the whole team focuses on this. It really helps.
It’s not like GenieBelt is the next Unicorn. I can assure we have a long way ahead of us, but we have come off the ground finally. That’s really good.
So this is what you do in the early phases. We have been doing this at GenieBelt for 2.5 years. We have hoped that it would take 12 months, but now we are 2.5 years in and we are not completely done with some of this. But let’s say okay fine, you are really there, you are now ready to pool a lot more money into this engine and keep exploding in a good way then it’s a different mindset. Something happens and there are some migrations towards for everybody to think in a slightly different way.
So I have participated in three really big journeys with companies that have grown into multi-billion phase and in three different kind of roles and three different kind of hacking methods and three different kind of cultures.
Very briefly, Scandinavia Online—how many have membership here, yes, fantastic company. Maybe not so much. I was a co-founder of a Danish company that then merged into a number of companies. We became the biggest online company in the Nordics. I was in the management team in Stockholm. I left a few months before the IPO. It’s a half a billion Euro company. And the dot com crashed and it was sold.
Point one; growth hacking back then was not data driven. We talked about Guerilla Marketing. That was like the big thing back then. Lots of destruction deals, partnership deals and banner exchanges and all that kind of stuff. That’s what worked back then. And it was not really data driven and maybe a little bit around conversions and so on, but that was really limited.
The best model of the company I would say was a bit dodgy. And the culture of the company was okay but not right either. The whole dot com thing was too messy and too out of touch with realities.
Just Eat this was from 2008 to 2013 and this one I was had a different role of CEO and Chairman. Growth hacking when I came abroad was a bit like growth hacking today. They sort of had a hybrid between good old days and what we have today, but not data driven either at all. We end up becoming quite good at it, but I would again say not like you do today. Not super data driven.
They were energetic and creative trying all kinds of things, but not like you would do today. The culture when I came in the company, part of it were really good and parts of it were awful so we had to go through a cultural transformation. We then managed to have a thriving culture that lasts almost till date. It’s a 3 billion Euro company. The culture has kept some of the parts of being a startup while also really having a culture with a scaling mindset.
Then Wahanda which is being renamed to treatwell, I was the chairman for the last three years, from 40 to 450+, European leader in the building space. And the company is a big company. With 75% exit. The growth hacking there is much more like the way you would like to do today. Lots of data put into a bid data warehouse with a lot of people accessing this. A lot of people on the commercial side, product side and operation side accessing all this data and trying to reiterate. We have the data, we have the mindset, and we have 5 — 6 fulltime BI guys on board. In Just Eat we maybe had 1, and we did not have a data warehouse and hacking was something different—way more advanced.
These are the three examples where I’ve been inside on quite different roles and very different experiences.
So what kind of culture do you need to make it big? You need to be creative, you need to be fun, and you need to be enterprofessional, because I invented this word.
What I’ve seen so many times, you have classic entrepreneurs, they’ve got green hair, is a bit crazy and opportunistic. He’s a risk taker but not systematic, this guy has so much energy, passionate and so on. The professionals over here, they are structured, they are strategic, analytical and all this. And what I’ve seen so many times is that these groups don’t like each other. But the people I like to work with and invest in are the guys called Entreprofessionals. They are the guys with a leg in each tab. They understand when we need to have this emphasis in our company. They can also switch to having this mindset. It’s super difficult. Not many people do this, but these are the people I believe, because they’re the ones that can go all the way. They can go through many years of scaling and bringing the history with them, throughout the growth of the company. These are the people I really like.
You need entreprofessional, you need to have passion, you need to have a great time, definitely ambition, energy, whatever! You need a lot of things in the culture and we can put a lot of things up here—all nice and fantastic things. But it misses a point a little bit. You have to find what your own culture is.
So this is another kind of hacking. When you hack you are very detail oriented and you try to observe a lot of things, get feedback and then you get details on how you execute and approach it. And the things about managing and building and leading a culture is almost the same mindset. You really have to be super disciplined and you have to be into the details, because often, tiny events in the company can drive a lot of bad or good stuff.
This is the CEO perspective—or at least a senior, top team perspective.
Be super disciplined. It goes for everybody. It’s a big thing. At the end of the day it’s the most important thing. You can run a company with a shity culture for year, but what I like are companies that are built to be sustainable. Real companies and not an exit of 2.5 years, because some strategic buyer wanted to have this patent over here in the corner. I am talking about real companies. And for that it is the biggest thing you have in the company. Screw this up, and you can’t hire the best people, you can’t make the best people work together and then you are becoming average. And if you are average—who wants to be average.
You need, as a CEO, to risk your own neck. You need to be able to ridicule yourself and be in the front of something that might be seen as totally ridiculous, and expose yourself. It needs a very strong character. As CEO to take your personality—because the culture in your company is totally linked to your personality. You can’t pretend to be someone else and you can’t drive a culture which is linked to some other personality. You need to be able to expose yourself really. That takes a lot of guts.
There’s lots of details. It’s how you interview when you recruit people. It is super important. And I give you tons of examples of crazy things that have happened in interviews that really shows why you are as a person, as a company. How you intro? I remember a company that failed but they did something really well. One thing they did was that when you came in the first day, they said you collect your own table. You just collect your own office. We are a hands-on company. We expect everyone to work hard and be hands-on. We don’t care if you are head of this department or junior guy. Get your stuff done and get up and running as quickly as possible. It sends a good signal.
Another example. The guy, my good friend who is co-founder and CEO of Wahanda, he don’t want people to eat McDonalds. He just banned McDonalds at the office. I think it’s totally weird. But it says something about who he is and what he believes in and the kind of people he want to surround himself. It’s a clear signal.
What you wear? I’m an economist by background. I was at McKinsey. And they are the consultants where you look like an undertaker most of the time. I had some partners and they were really into what tie I was wearing. I felt horrible to wear this costume so to have a little bit of personality I had the tie. So I put the tie with butterflies and they would ask me if I would take my butterflies to the client. It sent a signal about who they wanted to be.
Offsite activities, like did you join the strip club? Did you go to the strip club and get engaged there? This is a real life example. A company I know very well where when I joined this what the guys did. And that was part of what kept this company together.
Language you use, I find in a lot of companies that have built like a strong vibe and culture, there’s the language you use becomes really specific. Tikka-tik became a word we used in many situations. So you start to get your own lingo and it’s often you see in companies that create really strong vibe and culture.
And then one of my personal favorite is humor and how you use humor just every single day. I use humor a lot, because I love laughing and I realized that it’s a great way of building bridges between very different people with slightly different mindsets. In proper companies you have tech guys, sales, marketing, you have got the soft and hard guys, girls and boys and so on. And there’s a lot of conflict in that because you are pushing everyone to the limit of what they can do and forcing them to work together. So there’s all kinds of conflict and I see them all the time. So how are you going to defuse that? Humor is fantastic for defusing a lot of intense situations. I use that a lot. It just works.
That’s a bit about all the details that as a CEO or in charge of leading of a company, you have to be super detail oriented around your culture, even the small things, they can have a big impact.
The last thing I want to say is, these are two very different kinds of hacks. You have the Product Market Fit hack and you have the culture hack when you start to scale. And of course you also have a culture. When you are 15 guys. But the funny thing is it matters a bit less. What really matters is to have the right culture with 15 is so much easier to move it to 100. If you have the wrong culture, then 15 is a bit more difficult. As a CEO where you have the emphasis, you are not going to survive if you don’t get the PMF, and later on to be really big, this is where you have to focus in relative terms.
This is an external journey. You look at data from the outside, from the customers. This is very much an internal journey. It’s soul searching journey for the CEO and the guys leading. It’s about who am I and what kind of company do I want to create. What kind of people do I want to surround myself? What makes me happy as a CEO, as the guy who’s running the company? It’s a soul searching journey.
You adapt to the customers’ needs. But there they have to adapt to you. It’s difficult to be someone who you are. And you can try to, but in general there’ll be some tendency to surround yourself with people that are maybe different who have to adapt a bit to you.
Over here, you are constantly improving. Over here you are constantly defending who you are and what kind of culture you are. For example this is not the way we have lunch in the company.
This is particularly CEO focused in the early days. And here it’s particularly CEO focused in the later days. I am not saying you shouldn’t do this in the later days. Just saying there is a difference. And often in a very simplistic model where it goes wrong is when the team has to do this journey. Either the team does it, or they have to migrate to another team that takes over and do this journey for them.