Matthew: We know founders face unique challenges when they decide to start a company. What was the hardest part about starting or launching CrowdFlower, and how did you overcome this obstacle?
LuKas: I had no background in sales and marketing. I’m an engineer and I didn’t know basic things about how companies work. I probably couldn’t have told you what sales [inaudible 0:30] did at that time. It was really difficult for me to learn all that. It’s really difficult to learn how to do enterprise sales. This company is fundamentally like an enterprise sales business.
Asking people for money and space when you’re an unfunded company, nobody wants to talk to you. Even at Stanford and you’re on this escalator to success. Basically, you follow the rules and people are nice to you, they return your emails. As an engineer, people are nice to you. But when you say, “Hey, I’m running this unfunded company,” people say, “Do you want a job,” as if you’re unemployed. It was amazing how many customers we went to that offered me a job. I found that so deeply offensive. You putting your heart into this pitch and they say, “Do you want a job?” It’s like, “Fuck you. It’s not only that I’m not interested, but no one would be interested. You should come work for me.”
When we were pitching venture capitalists we got rejected so many times. It was back in 2009, so it was harder times back then. But everyone gets rejected. I think it’s harder to raise money than people will tell you. I remember one time I was on the phone with this guy, [inaudible 2:02], who’s actually an investor in the company. I hope he remembers this story. I’m ten minutes into the pitch and he says, “Look. I don’t want to waste your time.” And I’m putting my heart in this pitch. He says, “I just don’t want to waste your time. This is a terrible idea. It’s so bad, I don’t even want to even hear the end of it. I’m just going to save you the time.” Actually, by that point I had been rejected so many times that I said, “Thank you. Honestly, I appreciate this.” It takes a lot of rejections before you get to the point where you’re happy that someone rejected you quickly and didn’t lead you on.
Matthew: Since you’ve been in operation, what have you learned about your business and your users that you didn’t realize before you launched?
Lukas: I’ll be honest. I didn’t even know who the customers were when we launched. We were so stupid, we don’t have good answers to this. I basically had this intuition that this thing might be useful to people and I just tried to sell it to everyone who might possibly have a use for it.
It’s funny because our company hasn’t really pivoted a lot, maybe because we started with such a fake notion that it was more refining the pivoting. The biggest surprise has probably been that we mostly sell to really big businesses. Probably most of our revenue comes from Fortune 500 customers. I thought that it would be more small businesses that would be using this.
It turns out that small businesses like they way the incentives fall to [inaudible 3:44] tasks. Small businesses are really hard to sell to. Big businesses actually also like the volatile task thing, but they just operate at such higher volumes that it’s easier to do deals with them and the benefits get greater for them.
Matthew: A lot of people admire entrepreneurs because they appear to make starting companies look easy. We know it can be very challenging. We want to dispel some myths here. My question to you, Lukas, is what talent or skill comes easily or intuitively for you? What has been difficult and how do you manage that?
Lukas: Running a company is a real beating to your self-esteem. Nobody is going to tell you that you did a good job; they’re only going to tell you if they’re unhappy about something. That happens on every scale. We’ve grown to 50-something people, and I keep thinking it’s going to get easier but it never does.
The things that I’ve work on, like I was saying, are probably sales and closing big deals, staying aggressive about deals that you’re working on. When you run a company nothing is going to drop in your lap. Everything good that happens to you, you have to claw for it. Even the things that you claw for that you think are going to happen, only 20% actually happen. You have to be really relentless about following up with people and pushing every deal even when it doesn’t necessarily look like it’s going to close. That’s something I’ve worked really hard on because I think it’s important.
Matthew: What’s the most important lesson you’ve learned since launching CrowdFlower?
Lukas: One of the things we did that was smart that I was really embarrassed about at the time was that I had this blog and when we started the company, I loved the blog. The blog didn’t make a lot of sense. Ezra thought we had to have this really conservative brand because we were selling data and we should look like an outsourcing company. But we had this blog where I would just play with our software because I loved it. We would do these things that made no sense and some of them were a little racy.
You can look at the blog to see it, but we did things like show people different colors and say, “What color do you think this is?” Then people would type in things like ‘puke’ or ‘green’. Then we made a big chart about the range of things that you would call green or the range of things that people would call yellow. It was something that I was personally really interested in and passionate about and I think that feeling permeated the blog. It was a really popular blog because often on Y Combinator and on Reddit and Digg and such, you could feel the passion of it. I was always a little bit embarrassed by it but customers loved it and investors loved it. It actually led to a lot of people that invested in the company.
A lot of people complained about it. A lot of marketing people would say, “This is weird. It’s off-brand.” A lot of investors thought it was weird but they were never going to invest in it, anyway. At that time, focusing on one thing that I was passionate about that didn’t quite make sense for business actually paid a lot of dividends. We had this very strong, coherent brand, we had this really coherent, authentic voice. I kept trying to make the voice inauthentic. People kept giving me advice like, “You have to look like a bigger company than you are. You have to look more buttoned-down than you are.”
The most important thing when you’re a little company is to really be authentic in your voice because it gets really hard. Now that we’re over 50 people we can’t be authentic in our voice. It’s just impossible because there are always different people writing copy, emails go out, and I can’t control them all the time. When you’re a little company you have this big advantage. You really can have an authentic voice.
I think people lose it. They lie and say they’re bigger than they are. Everybody lies about that. No, it’s a beautiful thing that you’re a small company and I think that the people you’re selling to will often respect that. You come in and say, “Look, we’re three people, but we’re going to take really good care of you. You’re talking to your account manager and your salesperson and your CEO. I promise we can deliver on this.”
I think that it’s an advantage that we use despite the fact that we kept trying to not use it. I keep recommending to people that it’s a huge advantage of a little company; having a really authentic voice and then holding that. That is really powerful.
Matthew: What mentor has played an impact in your professional development?
Lukas: That’s a good question. There has been a ton. Travis Kalanick is the founder of UberCab, Uber now, and before he was running Red Swoosh. You should interview him, actually. He’s a cool guy. The reason he’s been such a great mentor is because he loves what we does. That’s really helpful for me. He’s been a really great cheerleader, and when things get bad he’s the guy that I can call.
Matthew: What advice would you like to share with our audience about launching a startup? If you have to distill it, what are the key elements?
Lukas: I only know about our kind of startup, which is like an enterprise sales startup. This probably doesn’t apply to other start-ups. I think you can’t spend enough time with your customers. I think that going in to your customers and showing them what you plan on doing, even before you write any code, is probably the most important thing to do. Even as an engineer, you’re saying, “Look, here’s what I plan to do. Would you buy this?” And then going out to ten people and asking them that. Everybody talks about it but nobody actually does it. Why not? It’s actually kind of fun.
Matthew: Before we close, Lukas, we would love for you to give our audience your vision for CrowdFlower and how you hope it will change the world.
Lukas: Sure. I think that we are going to be a huge company. I think we’re going to take on the 100 billion dollar outsourcing industry. I think this company has the potential to change the world and change the way that work gets done.
Matthew: Lukas, it has been a pleasure to have you as a guest on FounderLY. We’re rooting for your continued success at CrowdFlower. For those in our audience who would like to learn more, you can visit their website at HYPERLINK “http://www.CrowdFlower.com” www.CrowdFlower.com.
This is Matthew Wise with FounderLY. Thanks so much, Lukas.