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SaaS Founder Lessons: On Startup Failures, Vulnerability & Leadership – with Dennis van der Heijden [229]

230_ Dennis van der Heijden

SaaS Founder Lessons: On Startup Failures, Vulnerability & Leadership

Dennis van der Heijden is the co-founder, and CEO of Convert.com, an A/B testing and website conversion optimization tool.

Dennis has grown Convert.com into a profitable multi-million dollar SaaS business. His fully remote team is spread across 9 timezones. And he's built a company culture that he's proud of.

But things weren't always like that. When he started out, he faced failure after failure. And he'll be the first one to admit that he did just about everything wrong.

He was living in the Netherlands and read TechCrunch every day. His dream was to get VC funding. He wanted the Silicon Valley startup experience. He wasn't thinking about customers.

As Dennis told me I wanted to get VC funding and customers were just a way to get there.

And when he did raise funding, he celebrated as if he'd achieved his end-goal. But that money soon ran out. And that's when he started to realize that VC funding wasn't the answer.

But things got even worse before they got better. He struggled with the business and his personal life for a few years. In fact, it took almost 10 years for things to come together for him.

What I loved most about talking to Dennis is how open and vulnerable he was willing to be during the interview. He lays it all out there and shares all his failures and mistakes.

And the lessons he shares are powerful and inspiring. It's a great story and he's a great guy.

I hope you enjoy it.

Transcript

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Omer Khan [0:09]
Welcome to another episode of The SaaS Podcast. I'm your host Omer Khan. And this is the show where I interview proven founders and industry experts who share their stories, strategies and insights to help you build, launch and grow your SaaS business. In this episode, I talked to Dennis van der Heijden, the co-founder and CEO of Convert.com an AB testing and website conversion optimization tool. Dennis has grown Convert.com into a profitable multimillion-dollar SaaS business is fully remote team is spread across nine time zones. And he's built a company culture that he's proud of. But things weren't always like that. When he started out he faced failure after failure, and he'll be the first one to admit that he did. Just about everything wrong. He was living in the Netherlands and read TechCrunch every day. His dream was to get VC funding. He wanted the Silicon Valley startup experience. He wasn't really thinking about customers. As Dennis told me, I wanted to get VC funding, and customers were just a way to get there. And when he did raise funding, he celebrated as if he had achieved his end goal. But that money soon run out. And that's when he started to realize that just getting VC funding wasn't the answer. But things got even worse before they got better. He struggled with the business and his personal life for several years. In fact, it took almost 10 years for things to come together for him with his business. What I love most about talking to Dennis is how open and vulnerable he was willing to be during the interview. He laid it all out there and shares all his failures and mistakes. And the lessons he shares are powerful and inspiring. It's a great story. And he's a great guy. So I really hope you enjoy this interview. Real quick. Before we get started. First, don't forget to grab a free copy of the SaaS toolkit, which will tell you about the 21 essential tools that every SaaS business needs. You can get your copy by going to theSaaSpodcast.com. Secondly, enrollment for SaaS Club Plus is now open. Plus is our online membership and community for new early-stage SaaS founders. So if you need help launching and growing your SaaS business, and you want to connect with other founders around the world, and build recurring revenue faster, then Plus will help you to do just that. Just go to SaaSclubplus.com to learn more. Okay, let's get into the interview. Dennis, welcome to the show. Thank you or so. Do you have a favorite quote something that inspired So motivates you or gets you out of bed to work in your business?

Dennis van der Heijden [3:03]
I'm not a super cool person. But I know what gets me out of bed every day is youngest daughter at this moment. And as I don't use an alarm or something like that, so the kids wake me up. And from that moment, I just try to focus on having a great day and trying to offer them interesting experience and try to be patient, kind person. And that's how my day really start.

Omer Khan [3:26]
Wonderful. So for people who aren't familiar with convert.com, can you tell us about what does the product do? Who is it for? And what is the problem that you helping yourself?

Dennis van der Heijden [3:39]
Yeah, well, I'm the fortunate person to be energizing most of my team at gmail.com. That is an AB testing and personalization software solution. We mainly focus on marketing agencies and internal optimization teams that grows revenue on their website. So we are fully remote team have no managers and mainly our customer base is small enterprise team focused on I think mostly affordable AB testing tools without jumping through too many sales hoops. So we kind of like the IKEA of the space like affordable enterprise but self-service sales cycles.

Omer Khan [4:22]
Love that the IKEA of AB Testing.

Dennis van der Heijden [4:25]
Yeah, it's like, I mean, it's just simple. We don't want to get it all too complicated. He was like 28 and we're doing a couple of million annual revenue, so it's going really well.

Omer Khan [4:35]
Okay, so let's go back to early I guess 2007-2008 when you started the business, like where did the idea come from? Why did you decide that this was the business you are going to invest your time and money in?

Dennis van der Heijden [4:55]
well know where you were in 2008, but it's one of those years. That. Most people remember I was a co-founder at a startup in the Netherlands. We did some Legion for business offer like EUP and CRM software tools. And we generated leads using on 200 websites, I'd say, where we collected the leads by sending like a physical box of them with books and checklists, and they sign up for a form. We send them 24/7, like within 10 minutes, ask them a whole bunch of like qualification questions sorted out which providers would be best fitting a.k.a which would generate most of the lead revenue for us and then send off that box and that was kind of the start of this business in a way because I started it as as a business where I had to walk in with cups of coffee in the Netherlands, visiting customers getting them on board to become part of our Legion box, and I slowly moved it as a remote company to Mexico where I lived, and I migrated to in 2008. And somewhere along 2008 I think it was like May, between May and August, like the financial crisis, just hit everywhere. And basically, it meant basically overnight, like 50% less revenue. And yeah, I had a small baby at that time. She was like, almost two years old. And I just emigrated, and I was like I am. And I was just by myself and a couple of freelancers. I was like, I can't make the end of the year. This is like, we're not getting anywhere. And those. Yeah, scary. It was really scary. And I think one of those moments. I worked with a really good developer at a time, Claudio from Romania. And he was studying his master and helped me on the kind of WordPress plugins. And we, almost one of those whiz kids that we hired for a $50 WordPress plugin. To begin with, and within like a year and a half, you kind of ran the whole IT department even though I never met him. So it was, it was like the beginning of the whole remotes hire Freelancer by gig and I think it was the site was called Script Plans. I think that's eventually absorbed by Upwork right now. We never met, but based on the plugin we designed, we could kind of personalize the 200 websites based on the keywords that Google gave us at that time, which is like now just not going to happen anymore. Well, we have people like searching for Microsoft CRM, landed on one of our sites, and eventually then maybe next week, it was something like Microsoft ERP in the production industry. And we combine those two searches and then displayed Microsoft logos and the word production industry and in boxes in and around the article. And that did really, really well. I didn't know what that was cool. But we manually like coded like a couple of hundred rules for that. And we doubled conversion rates. The end of the year, I'm basically was able to stay with an income in Mexico where I was basically a guest in that country. So that eventually turned into Convert, we took it out of the company where we were, and I flew to Bucharest, the capital of Romania and actually meet this Claudio that I've never met, and basically draw some designs have talked about a partnership. And on that first meeting, after I think worked with him flight for three years, we basically decided that we would be Co-founders of the startup that's now Convert. So that's how that all started. And he's still your CTO, right? Yeah. He's still the co-founder and CTO of Convert at this moment.

Omer Khan [8:51]
Okay, so was it just the two of you at that point, when you kind of started this sort of convert.com or the idea started in emerging, or do you have other people helping?

Dennis van der Heijden [9:02]
No, we were really two and that I, I sometimes laugh about how he did that I was in Mexico like in Starbucks, drawing papers, counting that sending it to him. And by email was almost faxing like how old I feel. And basically I was designing that UX for that little monster that became covered that we called it and that time “Reedge”. That was the first iteration of Convert. So we were just two of us was trying to make things work in 2009.

Omer Khan [9:32]
And then you mentioned the WordPress plugin. So did you focus initially on some WordPress AB testing tool, or you kind of went broader than that?

Dennis van der Heijden [9:42]
No, we felt like if we wanted to do this, we had to find them a simpler way that everybody could do it. So we found out that you could do things like that with just a snippet of JavaScript. So that was the start. We wanted to do have like a universal way on any website to make changes and a JavaScript snippet turned out to be the best way. So it could be integrated in anything.

Omer Khan [10:05]
And how much time did you spend looking at competitors? Do you do some research? Find out one of the products were there. Like what went into from a competitive landscape? What went into the decision-making process when you guys decided you're going to build this business?

Dennis van der Heijden [10:20]
This is so embarrassing. I, I didn't even know this cold at that time, what we're doing. So the whole idea of AB Testing and personalization, I didn't even know that was cold like that. I was just making more money because I had the client.

Omer Khan [10:33]
So you're building an A B testing tool, but you didn't know that it was cold AB testing.

Dennis van der Heijden [10:37]
Yeah, that's it. Basically, we're just trying to solve the thing that half of the traffic, double the revenue, and so we had to find a way to do that. And that was it. And along building it, we found out that there was this other company called Omniture at that time, I think now it's Adobe target, they are acquired, and they were selling that for like, 100,000 A year and I was like, oh, man, this is like, okay, let's start at $29 a month. So yeah, that's kind of how that started.

Omer Khan [11:08]
Okay, so you've got the product built. And you know, a lot of people, when they start out, they're thinking about, okay, how do I kind of think about the market? If I go too broad and make a product available for everybody, it's gonna be really hard for me to reach my target customers, because I won't really be speaking to anyone specific type of customer. So how did you go about finding customers for this product?

Dennis van der Heijden [11:38]
We weren't even thinking about that. At that time. I was really focused on one thing, I wanted that tech, Silicon Valley kind of startup, that's how that really started. It wasn't even like, focused on the revenue. I was like, I read TechCrunch every day and understand I'm from the Netherlands. So that's like US like Oh, that's cool. And move to Mexico. Closer to US has been maybe I could drive to Texas and taste a little bit of that whole US thing. Like, oh, man, I need to get VC funding. I'm like, my customers are like, we need VC funding. How does that work? And so customers were even not part of that first initial thought. We're like, we have a product. So what's the next stage? And basically, we thought the next stage would be incorporating in Delaware. That was really that's, that's that next stage, we just put in the $15,000, flew to the Bay Area and found a fancy lawyer and an incorporated that's where we thought it would start like it wasn't even about customers that moment. It was like, do the right thing. So you can get series A or whatever they were called these funding rounds, and I never heard of, it's like, I really wanted the experience of the Silicon Valley startup feeling. I didn't think about other things at that time, to be honest. I mean, that was really like the cool thing to do.

Omer Khan [13:00]
Did you actually do that? Did you get on a plane and go to the Bay Area and incorporate?

Dennis van der Heijden [13:04]
Yeah, I did.

Dennis van der Heijden [13:07]
But yeah, we actually got there, I visited all these lawyers, which I couldn't afford, basically, because we put in 15,000 around money or like, okay, we need to do this. So we flew in and incorporated got a name, because we could find a .com for that that was called “Reedge”. I'll spell it later for you. But that was one of the problems that we had later on. And basically worked on it for another full year is like everything you can do wrong in the startup, we kind of did just worked on it on the little monster for a year not showing it to anybody, not talking to anybody just like building it. And I think one is classical mistake, three lean startup.

Omer Khan [13:47]
So how are you generating money? Like how are you paying the bills at that point,

Dennis van der Heijden [13:51]
I still have one one foot in the previous lead gen company and trying to get this rolling. And so that's how it started. As soon as it became clear that my attention was elsewhere, one of my co-founders in Holland said, Why don't you just sell me the other 50% of the business and we call it quits, and I will focus on it because I didn't lose focus and in the lead gen that was paying the bills, but it just lost focus. And I think he helped me kind of like, cut loose from there. And then we started focusing on getting that first hundred customers. That was like the first thing in 2010.

Omer Khan [14:33]
So how many customers Did you have at that point?

Dennis van der Heijden [14:36]
Does my mom count as well? It was basically I think, a five, six people were trying it out word like, what most startups don't do any more. But at that time, pretty lean startup was you know, you have to build it. You can't show it to anybody. It has to be perfect. It was one of those things that I had. And yeah, so we only have like five, six people trying it. Basically, when we actually went into beta, we, we generated, I'd say 20-30 customers and we had like $500 in monthly recurring revenue. Before we kind of thought we could even approach a VC. Again, the focus, in the beginning, was really wrong. I'd say it was like, focusing on the VC part. And maybe on if there's some still people out there that think about it from that point of view, we really wanted that experience. And customers were way to get there, like it was completely in reverse at that time. So I would never do that again. That is really how how it went down.

Omer Khan [15:46]
So yeah, I mean, it sounds very much like start with the technology, the idea, build the product, get funding. And at some point, we think about Castro So you said you had like five or six people trying out the product was that after the three, four years that you had been focusing on building and improving this product?

Dennis van der Heijden [16:10]
I think we incorporate it. If I look at every once in a while, look at those incorporation documents that I send over 2009. We incorporated I think, in the summer 2010 I would say we had $500 in monthly recurring revenue, look at those records. I don't have anymore because we switch bidding system so many times, but that was wrong. A year, maybe 12 to 18 months after we started building, we went beta and we have our monthly recurring revenue.

Omer Khan [16:40]
Okay, and like I think a lot of people would probably after working on it for a few years and having a few hundred dollars in MRR would probably be thinking maybe this isn't the right business, right maybe I'm wasting my time here. Maybe I should do something else. But you kept going. And why?

Dennis van der Heijden [17:05]
Yeah.

Dennis van der Heijden [17:07]
Because the dream was VC money, right? That's the thing. And there was no VC money I needed to get going. So the, it was significantly harder than I imagined. So the dream of VC money was important for me at that time. It was almost the goal of the whole thing. And I think that is yeah, embarrassing. But you know, the younger me was like that. And when we actually found a VC, it was like a Mexican US fund that started to focus on Mexico and I was there and talking to them on on some meetups, and we were one of their first portfolio companies. And we got $250,000 in. That felt like you that's the celebration. That was the thing, and I think some people may still think like that. It was something like oh, this is the achievement and now do what we do. Like that was it. We got $250,000 in. We're living in Mexico. Yeah, lean startup book was kind of just written. And I was reading it. The investment firm called Alta Ventures it's still called Alta ventures. And one of the partners there, Paul Ahlstrom written a book with Nathan Furr kind of called “Nail it then Scale it”, which is very similar to Lean Startup. And so I was just starting to read these books. And from that moment on, yeah, certain things really start clicking about what was going wrong, and how I should be going to fix it.

Omer Khan [18:39]
And what was some of those insights? What was like the big insight for you in terms of what was going wrong?

Dennis van der Heijden [18:44]
Hmm. What was going wrong is we build a product before we launched and talk to customers. That was like the biggest thing. And so I basically went out there on talking to customers. But again, even though it was learning, there are still there are still this thing I was I was very connected to the VC in that sense. So we got $250,000 in there. And we basically, were getting trenches that money. I don't know how people worked out, like you have to reach milestones and then you get not a trench after 250. So we basically took still over a year, I think after we got that money. And we then by that time flew the co-founder, Claudio to Mexico, and we had a local team. I think it took basically a year to realize that our ugly little monster needed to be like torn up and we have to pick a features like the real feature that were needed in the market. I think there are still big mistakes in there. We just wanted to hit those milestones, right? Again, focusing on what the VC wants and doing it the right way because the VC si nos and Silicon Valley kind of knows and a trend she should meet the criteria. And so we focused on the criteria. And I think when you focus very much on getting to the next milestone your next trench and and i think later on for funded companies is more like your next round. Like you have to focus on the next round when you're ready, just close this one. And what investors would like to see on the next round, there was so much part of what I did even on the small scale, we're talking about 50,000-100,000 trenches and, and those milestones. And I think only when we kind of completely blew all that money and still didn't know which features we are going to launch with and don't get me wrong. We are still growing a little bit like you're still growing like 10% a year 15% of years like when it's slow. And I think the realization that was really, really, really wrong, is when we ran out of money we didn't have enough to even support the team more than my, my family on monthly recurring revenue. And we had to kind of ask for another 150 to the investor, I was so disappointed in myself that I kind of had to do that. And the investor basically said well, against the same valuation as a year and a half ago, and we basically like, lost quite a bit of stock on that. And I think it's, that's part of that realization, where I was like, this is not going anywhere like this. They're just like, I'm playing the game of investors, and I'm playing the game of Silicon Valley, but it's not a game. It's really about finding product-market fit that by then started to hit me a little bit in that 2011 release. 2011 2012 we got the money we we launched we basically burned 250,000 without getting much traction. So

Omer Khan [22:02]
do you remember roughly how much you were doing in MRR when you ran out of the 250?

Dennis van der Heijden [22:06]
I think we're doing maybe 20,000 monthly recurring revenue. And must understand we had liking it, like six or seven people, which only the founders eventually left because I let go of everybody. At that time, we're like, okay, going back to skill to, like, we were we scaled up to six, maybe seven, and then we scaled back down to just a two founders. It was tough because it was my mistake. It was the mistake. My learning, right? So I think that's that was a hard time.

Omer Khan [22:41]
So today, you think very differently about the way you run the business. And apart from that 400K in in seed investment you raised. You never went out to raise any more money after that. You've been pretty much a self-funded business and you're also a multimillion-dollar business today. You don't talk about specific numbers here. But I think we can share that with people here. Tell me about the moment when all of that changed. When you sort of let go of this thing about the VC money and started to focus on customers?

Dennis van der Heijden [23:17]
I think it's got a little worse before it got better still. So sorry about that. I think I think it's honest, I think it's important to know that these things can can get really nasty. I not only realized that I wasn't even making payroll for my team. I was also going into a divorce at that moment. So that was like complete refocus on a country where I wasn't a citizen at that time. It was trying to keep access to my now oldest daughter. And and so in that time, the focus completely shifted from growth, which I actually was emotionally ready for, to kind of like, just keep what we got, like, I need to save this money because I'm already losing big parts of my life. So after that, I think that's why my story I think, takes around 10 years to get to somewhere. I think after that moment, I think it took another two years to clean that up. That was the moment where I just picked up my self-esteem again, and basically flew to conferences and started closing deals right there on the spot. That was a moment and I think that was like 2014 even so now we're already not five years into the story and still, probably no more than 30,000 monthly recurring revenue.

Omer Khan [24:51]
So 2014 so it's five or six years in. Yeah, and you get to around 30K, what was going on during that time? So while you're dealing with, you know, the divorce and the personal situation, was the product still evolving? Were you in Claudio, kind of figuring out how to kind of grow the business or did it sort of go into a sort of a plateau during that period?

Dennis van der Heijden [25:21]
I think we grew. We were always a little bit in that time, but we picked a kind of like a safe strategy, which kind of slowed down our positioning because at that time, when we started, we only had one competitor in that space or entering like 2011-2012. By the, by the time of 2014. There were quite a few people coming into the market with similar tools. What really happened was, I basically picked up where I left off, and just started investing in direct sales. There are things that I didn't know how to do in the first couple, couple years of off the Convert story was basically spamming forums as a tactic, writing some articles, grabbing comments and anywhere and direct people to the site. When I feel better, I basically was able to kind of okay now I can show the confront the world again. And I got invited. I think the biggest thing that happened to me around the time that I was invited to speak at a San Diego conference and understand even though I, I do 70% of our businesses in the US, we hardly went there. So we didn't know any of the culture or systems or ways to grow there at all. So I went to a conference and it was a two day conference. I was asked to speak on a Sunday. I think it was a Saturday, Sunday conference and had this weird format. I'm not sure if they still do that what it was like, you basically speak like 400 people in the room at the end of each speaking gig people just get their checkbook, which was something new is we kind of abolish checks like 10 years ago in the Netherlands already get a checkbook and they write checks of like several thousand dollars for that product and a coaching session and a very very salesy approach friends like, Okay, this is interesting. They wanted me to make an offer, it says like, Oh, I just sell software, no, no, it has to be an offer of several thousand dollars, like maybe a ticket value of $4,000. And we take like, 50% of that and, and at the end of your speaking engagement, people just walk up to the bank and buy that, like, Okay, well then I don't know what to sell at $4,000 but I can sell let's say, six months or eight months of software and put some services in it. So we help those customers and then we kind of combined SaaS and services. Maybe that's something and I mean, that was really I think that one of the turning moments for me. I was onto something. I just talked to, I think 100 people in that conference from the first day. And I found that there were like three or four customers in there because only really techie marketers were using us at that time because it's really complicated to kind of get started. And there were a couple of people already using us. And so that was really nice. I made friends with those lunch with them. And then the next day, I did a website tear down of like five websites from people from the audience. They gave me permission to do that. Yeah, I mean, almost a standing ovation. That was so much fun, like tearing down a website based on conversion optimization. quick wins that I saw on those websites live on stage and playing that confused user and emphasizing that and it was great. I basically sold 50 customers on the spot that was like, like the cool one of the coolest moments of that started like it took me five years and then sell 50 in one room. I was like, okay, there is something here and…

Omer Khan [28:59]
You sell the $4,000 package to those 50 customers?

Dennis van der Heijden [29:02]
Exactly. And, and the organizers of this conference like took 50% of that. So we walked on wish a lot of money for us, because we were still like, small scale for us. So those 50 customers, and we already had, like, a couple of those in there. And that really got it close to 100 if not over 100 that was like, a big moment for me. Like I really prepared well, being on stage was so energetic and I wasn't very familiar with doing that. And I felt really comfortable with a lot of fun and just the energy of like the end of the conference people saying and I sold 40 packages like, quick math 44,000 and then half is mind, like wow, this was this was worth the trip to San Diego.

Omer Khan [29:48]
Yeah, so it sounds like you did close to like 100K just for that.

Dennis van der Heijden [29:52]
Yeah. And that was really like, man, this is this is something fulfilling that in services was terrible. Not service people, we are not an agency. I basically designed a package that we've never done. We are not an agency we don't have the infrastructure for it and it became like a disaster to actually fulfilled is but like many people stuck with us for years even after it out six months support helped because we basically promised to make AB test for them so they can design the AB tests and the suspects will call it up for them and then they will launch it and yeah, so that was really really heavy on cloudy and my co-founder because he did most of that work and but it gave us a glimpse of what was coming like that was there was coming something there's potential here.

Omer Khan [30:45]
So did you start looking for let's do more events?

Dennis van der Heijden [30:48]
Yes, but not the service part. So we went to more events and specifically in Silicon Valley. What I was cool that was like energetic, so I went to some conferences and did some stuff. speaking engagements, we did some research. Like I think that was really important for each conference, we did dive in the database, we collected lots of numbers. And we basically presented like results from 1000 AB test and that that time, when you are one of the few that that knows about 1000 AB test, you have something this year, because not that volume didn't exist at that time and specific enough public information. And so my conference talks were more confident they were better. And I did end up with quite a few business cards. And I think from there, it wasn't all that much Indian, the thing of him to free more and maybe we grew another 50 customers at that time, more the SAS oriented, like not so much services. Although we went once back to services just for a cash flow gap. I mean, when you were I didn't take any money afterwards because I was kind of like this game of VCs is not for me. I don't know how to play this game. I know how revenue works, get more revenue, you spent less the revenue. I'm not a great mathematician was like just make sure costs get 80% of the revenue and you're all good. And I was like, let's do this. And so we basically focused more on on bootstrapping it from that moment on. So I really made a kind of a mental shift. I just said goodbye to the whole VC thing. Even though my VCs are awesome, I really they're helping me and they're massively patient, as you understand with a company of our speed. They're patient, and they give advice every couple of weeks when I need them, but we've never took any money. Because we're like, Okay, this is not it. We don't know really how to play this game. We don't know how to scale fast. What we know is make money, make revenue and just figure this out little by little and so in the end, I stopped going to conference and just focused on on revenue channels will works and internal optimization is making things better.

Omer Khan [33:00]
So it took almost six years for you to learn that lesson. To get to that point, which was I guess, around 2014-2015. And then am I right, it was 2016 that you guys hit your first million ARR? Correct. So what happened in that year? What else do you do to drive that growth?

Dennis van der Heijden [33:27]
Or something we did, which was kind of starting from the moment, I was not really emotionally capable of running a company, which I did anyway, I basically said, we're going to keep feature parity to competitors. That's it. Just that's what we're going to focus on, which is easy as a founder because you don't then have to kind of give strategy or something like that. It's just like, keep up with everybody else, and we should be good, which is kind of silly, but that's kind of what we did. I'm sure you're listening, like how did you even get to the several million if this is all fuck-ups. But it was really important for me to kind of go through this stage because I basically had to make a really big jump somewhere in 2016 saying this feature parody thing is not working. because by then we had companies left and right with massive amounts of funding, testing Obama websites and like getting a story to get rid of which I was like applauding for like, wow. So this is how you do that whole VC came. This is really awesome. Sisterpedia is not my company. And you're my competitor, but I was like, this is really cool. I am not that. So we basically landed I think on a spot number six in the world, I think of our software. So there were lots of companies around us. And what happened around that time was, was something strange that I couldn't even expect. There were like more acquisitions and, and quite a few of our key competitors basically went all enterprise, basically saying, We are now the new amateurs you have to pay us $35-$100,000 a year and firing their old customers and not grandfather and everybody and people got really mad in that space. There's like, we help you get there. And who do I turn to? And there was this, like small startup with a couple of people from Europe. They're like, Ah, you know, we're feature pair on those things. So without actually realizing it, the strategy of least resistance basically got us massive amounts of customers in that year. And it was because we were just like, okay, we might not be unique, maybe not have a story. But if two companies in our space merge and disappear, to basically kick out All their customers and go enterprise. We are at that at that moment. We're like I said, I was $29. We grew to like 200, 300, $400 a month kind of startup. And that's kind of the space where everybody was was left. And you just do the simple Google search. And we were there to pick up the, I would say, the scripts of everybody else. But that didn't go and make us that first million.

Omer Khan [36:25]
Did you ever think about going after the enterprise market as well? Like, hey, why is everyone running there? What's the opportunity? Are you missing something?

Dennis van der Heijden [36:33]
Well, I realized that was like, obviously, it was like, oh, man, we should go there. But by that time, I felt the whole feature parody thing, even though it got us to that first million, wasn't a great strategy. I've listened to enough podcast, I read enough books by then to actually realize that so the enterprise market is still here for us, but more the enterprise market that basically says deliver, just add a credit card and just pay you $900 a month and I'll do it kind of myself, not the enterprise market where we have to like, do our RFP's and things like that. That's something that is just not in, in our genes. And it's just something we're not comfortable with. And our sales organization have structured for that. So it's, yeah, we have a lot of enterprise customers, we have a lot of governments we do a lot, but they just basically have to throw in a credit card, or we send an invoice for years. And that's it. I mean, we keep it simple. That's kind of the IKEA thing that I mentioned is like, we are basically if you send us an RFP, where you're going to say so sorry, not that we're not going to answer that. That's not for us. It just takes too much time. We don't have the sales engine for that. So that's not it. It's self-service with a little bit of support in the beginning and then you're amazing and onboarding and making sure customers don't leave.

Omer Khan [37:47]
So today you have a team of how many people

Dennis van der Heijden [37:51]
28 now and I think 35 by the end of the year.

Omer Khan [37:56]
so tell me a little bit about like the culture of of the company and how you like to do things differently. I know you you've kind of told me that, you know, you don't have managers, the team is remote. So tell me a little bit more about the culture and what makes working at Convert unique from other places.

Dennis van der Heijden [38:19]
Well, I think it starts with you as a founder, like you set the culture and at 2017. And that means seven years into into the business. I really didn't feel very comfortable in my own business. I ran it in a structure that I picked up from the whole Tim Ferriss book four-hour workweek and the E-myth Revisited about processes and outsourcing on virtual assistants and things like that. And I was looking at my own company, I was like, this is just weird. Everything is processes. Everything is like robots is not a company. I really felt comfortable in And it was the same time that I looked at my I got remarried and have now two children, three and five. And at that time, we're looking at like, what is important in education, some lessons from my now 12-year-old. And I'm like, wow, I read a book. I think it's called carrots and sticks. I written it down, but we put it in the show notes later. And I “Carrots and Sticks Don't Work”. And I was like, it's just like that whole motivation. I didn't feel really motivated coming to work, even though it's like you can put on your pajamas and open the laptop. That's work. I didn't really feel motivated and like, my personal values are not anymore in alignment with this company that is just focused on growing revenue. And at one moment, on a Friday night, I got an email saying, and at that time, we're like, this is already more than a million ARR and then I got an email saying, Can I spins get a corporate credit card and that was it the corporate credit card to pay software for my job $35 a month and I was like we're doing 120 hundred 30 monthly recurring revenue and and somebody asked me to CEO for the corporate credit card because I'm holding it like it's my life this is so wrong. This is like a hierarchy I turned my entrepreneur freedom in a job and this is terrible. This is like this is not a cool company. thing maybe in 2016 at the end of that and basically I don't want to work in this kind of company. I was looking at a way where my children could have experiences lots of freedom. So we experiment lots of things at home about not not limiting children and we believe in unschooling and as a whole like, what my employees have to follow district processes set them record a video for an icon deviate from it. This is not the company that somebody wants to work in, let alone me. And so basically that moment, I said, I have to do differently when that happens to everybody. When you read a book two or three times or you see the same TED Talk pop over on the Facebook newsfeed in this case, it was a TED talk about Holacracy. And that clicked with me in that sense that there's no managers lots of freedom. It was just a process with a structure that you could move the company forward as long as you fought, it was the right thing to do and not move us backward. That sounds like that's what you want in life. You just want to move forward. You got to trust people, and I don't believe in all these processes anymore, basically threw everything overboard and a friend of mine which introduced you and me, Morgan, I just, I just hired her and say, I know you don't know anything about this Holacracy thing. But I turned into my own worst nightmare. And I am the manager of a hierarchy that I'm not really proud of. And so implement this Holacracy thing. And we did. And that became, I think one of the most wonderful journeys for all people on the team right now because we really wanted to change the world from that moment on and became something different, something not about the software company. And I was looking for a way to change the world. And I was like, I couldn't find it in AB testing and personalization is like, okay, that's not going to really change the way the people work. It's a great tool, but it's not going to change the world. And we've Holacracy and later on, I found ways to kind aof, don't harm the world be selective of customers and more carbon in the world that was already there. And eventually, it almost became like an NGO kind of B Corp. So at that time, we completely shifted the strategy to remote, more vulnerability, more empathy of employees, and everything trickled down to just better from that moment.

Omer Khan [43:12]
So yeah, I want to give a shout out to Morgan as well for being a fan of the show, and for introducing us, which I'm really glad that she did. The thing I kind of wonder about is like, you kind of had this business where you had, there's a lot of good stuff in books like the E-myth that make a lot of sense about processes and running an efficient business and making sure that you're not making unnecessary mistakes, and you can kind of hire people in and they can deliver things or do their jobs in a consistent way. So that kind of makes sense. But I think, you know, at some point, you sort of outgrow that. Maybe it's because just the way the businesses evolved. Or, or you, as a founder in your case, just has very different feelings about the type of business that he wants to be running. But I also wonder, like making that transition, it kind of feels like, there could be a period where you're going to go through a lot of pain, where there's a lot of chaos because you suddenly just threw out all those processes. Is that what happened?

Dennis van der Heijden [44:21]
I think we did a gradual because we were learning to do the process. It wasn't like we hired a Holacracy consultant to implement it and switch tomorrow. It's still in process. So looking at 2017, where we really started during this to now. We're really good at it now, but it's still learning. And I think that always these things are about learning. So it's gradual, and there's people that there were like, I am not a fit for this and that left and we also let people go that didn't work in this particular Holacracy model. So it is very much I'll give it to you in brief so people know what this is. is like you can Google it. But in clear, we work on a purpose, like we're trying to move the company forward in a purpose, then we divide the company in things that need to get done. And we call them roles if they have things in, in similarities, like things, we have a snail mailer, or that opens up our virtual mailbox. And so there is process in it in that sense, it's just cut down to the bare minimum person has many rules, maybe 20 roles. And each role describes really clearly what that is not how you do it, but what the purpose of the role is. So there are things like you know, there's somebody that should pose to kind of answer the guest post form that people want to, and you you have the freedom to select the best posts for that and then move it forward to somewhere else. And people have these mini roles that maybe take 30 minutes a week, and some are really big, maybe 20 hours a week, but they're really defined by that purpose and roles have something in common. They group themselves in a circle, like maybe call the department. But since roles are split over many people, everybody's kind of in every circle. So there's a maybe circle of marketing and smooth operations. And you find the same people. So it's not any more like a title. You can basically shake of your title. We said we don't care. We're tired of you, us on LinkedIn, we don't care. just invent something. Just don't call yourself a sea level because that brings some legal things of it, but invent the title that you think is fitting that makes you feel great. If you want to be senior, something fine. Be seniors something we don't really care. It's about what you do for the organization moving it forward and everything that you propose that is safe to try, you're free to proceed. We send out credit cards to everybody and spend the money as you you think it's wise. Everybody has their own perks. $500 spend as you please just move the business forward. And of course, we have like strategic things like we'd like to work in this next quarter to do something. And people self organize around that circle. And that purpose. And people come to work when they want and take days off when they need to as long as the work gets done, so it only works for really communicate with people with with higher self-motivation.

Omer Khan [47:26]
So we can include other crews a link to probably holacracy.org is a good place for people to start if they want to find out more about that. But I guess you had one more challenge in implementing something I've had with because your team is not all located in the same place in the same office where, you know, maybe it might be easier to kind of work through this, but you have a team that's remote. So how do you communicate? How do you kind of keep track of things and

Dennis van der Heijden [47:54]
So it starts with with the basic understanding that if you hire somebody you You have to trust them. Otherwise you shouldn't hire them. It sounds simple. But if you do this remote, there's just no other way. You have to trust somebody, because you can't really see what they're doing. And so in the more process-oriented model that's like, oh, we're going to check all these processes. And if you are a really strict company, you let them be always on a recording and videos, so you know that they're not in pajamas, or I don't know what you want to check the people watch. We're basically like, don't do that. It's like, we just make sure the hiring process is so good that we make sure that the people are trustworthy, and you get a free month contract, distressed start and then a year contract afterwards. And so it starts with trust. And then after that, it's about communication. So the first 90 days of your your start recovered. It's all about learning about Holacracy, getting to know everybody understand your purpose, training. There's a massive amount of investment in each person. To get there, but it is very much about yourself responsibility. So if if you are late to things, you just can't have task overdue, and you have to check in every Monday or what you did last week, and but eventually we have to trust somebody that holds 20 rules. And this week, maybe this is more important. And that means that more important, and if you disagree, then you just talk to somebody. And there is a structure in that way. So there's somebody sending if there's a conflicting variety, this is how it works, because Holacracy has a constitution. So there is a lot of structure with a lot of freedom. So you have to do things in a certain way. We don't tell you what to do. So you feel completely free every day, what to do, but you know, you have to check slack every 40 minutes. You can do whatever you want, unless you touch somebody else's domain, which is described in the Holacracy circle software that we have and if you took somebody else's domain and No go there. But if it's your domain, you're all free to do. So if your domain is bank wires, use it wisely. And nobody touches bank wires. If your domain is over admin for Slack, that means if somebody asks you to add somebody, you do that wisely. And for the rest, you are all free to do what you want in that area because you hold ultimate responsibility for that, which is scary for somebody that loves micromanagement like me. But I just found that the only way forward, like I wanted to have a life where I could be with my children at certain times. And I was like, I felt guilty you like I want this particular life. That's why I'm a remote worker. That's why I have I'm a founder a, I should have the freedom to do these things. And it's not only about the money, it's about having a great life now, not later. And then I felt weird that somebody else in the Philippines maybe making $5 an hour and follow the process, says it was like, that's not how I like to do business and how I like my money to be spent. I basically raised salaries and gave the same freedom that I have as a founder to everybody. Like if I want to work from a nice Cafe by the beach here in Spain, I should be doing that and send pictures about feeling guilty and so they should be able to do the same. So it's at that moment, I was like, this is a really cool company to work for. And then we're not taking any customers that harm the world, we are compensating all the carbon we put out there by 15X and all of a sudden they became almost like a not for profit, where people can actually talk about the problems that they have in life about kind of putting on that second mask for work. And that is something I'm like, super proud of that when I go to work. I am the same person, then I'm at home.

Omer Khan [51:55]
I love that. And I think in many ways, you know, we talked about Morgan early When you go into LinkedIn, there's a lot of, I don't know, I, sometimes I just kind of feel like my energy gets sucked out because it's just a place for self-promotion. And people do it in different subtle ways. But, you know, Morgan, kind of, and I connected, she was listening to the podcast, and then you know, when I'd kind of, you know, see something that she'd posted about what she was working on or about the business. That's what got me interested in Convert.com, because it just seemed really authentic. It didn't seem like a hit, somebody tried to find some ways to do some self-promotion or kind of, you know, it just seemed very genuine. And, and then that when I started digging into that, that's kind of what sort of piqued my curiosity and, and, you know, I was the one who said to, to Morgan, hey, you know, can you make the introduction? You know, I'd love to talk to Dennis. And we have to do a little bit of persuading to get you on. It did.

Dennis van der Heijden [52:54]
Yeah, like especially, I mean, your podcast, I sometimes feel it's the money is really important for founders and it drives a lot of them to do the next level even though if you if you run a couple of million-dollar company eventually that gets lost, you're actually starting to feel like oh, it's okay. All the basic needs are met, then you're feeling like that there's now a different purpose to the whole thing. But for me, it was like, how do I make the world a little bit better? I was like I was trying to align, call it maybe the midlife crisis or whatever I was trying to align how I saw the world now. From when I started, I was starting as a somebody that kind of wanted that whole VC seed funding a series A exit kind of thing. And now I'm like, you know what, we're just having so much fun. We don't need all the customers, we're very happy to say no to very big customers. If they're not in alignment with our core values, those values are not mine anymore. They're not a mix of what I thought was right for the world combined with the team members. And I was like, wow, this is really a company of the 21st century. This is a company where we're remote a central without the structure of processes, but with very clear guidelines of what you can and what you can't do. And within that so much freedom, and I really saw and I proven to myself that people are good on So, yeah, that was really important for me that it became not a software company became something of a family something that we could make things better.

Omer Khan [54:40]
Okay, and on that note, we should wrap up and move on to the lightning round. So I'm going to ask you seven quickfire questions. Are you ready?

Dennis van der Heijden [54:50]
Yep.

Omer Khan [54:51]
Okay, what's the best piece of business advice you ever received?

Dennis van der Heijden [54:56]
What I think getting things done is important and we use a phrase “Raise income vertical progress, not perfection”. So PNP I think it's important for us to just move.

Omer Khan [55:07]
What book would you recommend to our audience and why?

Dennis van der Heijden [55:11]
I really love the “Power of Vulnerability” from BreneBrene Brown. I think it's one of the ways it helped me really transformed the business. When I was kind of tired of running it myself, I'm a huge fan of Renee and Corey to read a lot of books. I have another book pending My wife is just finished hers is uploaded to Amazon, Spanish about education. So I'm really looking forward to get the hard copy there. And like that's the next one in the list.

Omer Khan [55:40]
What's one attribute or characteristic in your mind of a successful founder?

Dennis van der Heijden [55:44]
I struggled with this a lot because there's so many different ways to be an entrepreneur and founder and going from zero to like, hundred million in five years is what I fought and two partners who was in the very beginning, but I think every founder has to kind of reevaluate every couple of years to see if you're still happy and realize if you have, if you have the problems like I have in your own business, and it's it's actually your business, you are the one that can change things and you're not a slave to your own business. I think a characteristic of reevaluating and understanding that you are building your business and you have the power to change that I think is really important.

Omer Khan [56:26]
What's your favorite personal productivity tool or habit?

Dennis van der Heijden [56:29]
I have a really strange morning ritual. I basically start waking up by one of the kids thinking basically of gratitude. What am I really happy about? I don't eat in the morning like I do intermittent fasting so I need eight hours a day. We're like second-hand clothes and all these like these little things. Make me focus on like the bigger decisions I have to make later that those so simple things like food or what clothes I wear, I don't worry about at all in my life? So I think focusing on the bigger decisions is something that is making me way more productive.

Omer Khan [57:08]
What's a new crazy business idea you'd love to pursue if you had the time?

Dennis van der Heijden [57:12]
I am super interested in some sort of community building, I really believe the foreseeable future will see more robots, more AI, less work. And I believe that there's more time to discover on our fellow humans face to face something in that space. And it's probably not online. But it's something local, some way where we can kind of connect with humans in a better way.

Omer Khan [57:39]
What's an interesting little fun fact about you that most people don't know?

Dennis van der Heijden [57:43]
I hardly told anybody this but this is I've delivered 200 of the most delicious donuts to the Twitter support to get that Twitter handler of Convert. That's something as a business idea, to get things moving. And on the personal load. I basically wore white clothes, no shoes for two years. And basically I wanted to feel how it felt to kind of be charged and strengthening my my mind because I always say to my kids, the inside matters but somehow I didn't really follow that I wanted to go really basic and see how that feels. So I, I can be true to my kids.

Omer Khan [58:24]
What so no shoes in the office are no shoes ever

Dennis van der Heijden [58:27]
20 foot anywhere. Wow, two years walking everywhere and no shoes, second hand, the white clothes. And when they were dirty, I had one pair and I promised that I would only change once a day in the evening. And that really felt pretty vulnerable. And I wanted to kind of strengthen myself from external judgment. And yeah, that was a pretty weird thing I'd say now, but I think it helped me.

Omer Khan [58:55]
Wow. And finally, what's one of your most important passions outside of your work?

Dennis van der Heijden [59:00]
I love soil. I, I love dirt. Basically, I'm learning how to kind of grow my own foods. I got a piece of land here in Spain, I'm really excited to do a little AB testing experiments and soil fruit and vegetables the next couple of months.

Omer Khan [59:17]
Love it. Alright, cool. So if people want to find out more about Convert.com they can go to, convert.com And if people want to get in touch with you, what's the best way for them to do that?

Dennis van der Heijden [59:29]
And just do dennis[at]convert.com or find me on LinkedIn.

Omer Khan [59:33]
Awesome. Thank you. It's been a pleasure. And I've really loved listening to your story. You being so open and showing your your vulnerability and being so willing to talk about the mistakes that you've made along the way. It really made this such a engaging conversation for me and I know a lot of people are going to enjoy this And get a ton of value from it. So, you know, for the bottom of my heart, thank you. I really appreciate you doing this and I wish you and the team or the best for the future.

Dennis van der Heijden [1:00:10]
Thank you very much. I really enjoyed sharing the truth and transparency about how we run this company. I'm really proud of it. Yeah, I'm looking for more customers that are in alignment. If you're not, okay, that's fine. Just not for us.

Omer Khan [1:00:27]
Love it. Cheers. Thank you. All right. All right. Thanks for listening. I hope you enjoyed the interview, you can get to the show notes as usual, by going to thesaaspodcast.com, where you'll find a summary of this episode and a link to the resources we discussed. If you enjoyed the episode, then please consider subscribing to the podcast. And if you're in a good mood, consider leaving a rating and review to show your support for the show. Thanks for listening. Until next time, take care.l

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The Show Notes

Omer Khan

Hi, I'm Omer, the founder of SaaS Club and host of The SaaS Podcast. I help early stage founders and entrepreneurs to build, launch and grow successful SaaS businesses. Join me on this journey.