Morten, CEO & founder of Siteimprove on the success of the company

Hi. Happy to be here. So, yeah, it was founded in 2003, the company, but the idea came to us in 2003 when I worked as a consultant for a large Danish digital agency. And they said, go fix, go make a tool that finds broken links on a website. That was the basic idea. So we did that, and we thought, okay, if they need it, there will probably be someone else needing it. So that was the background. So at that time, I worked with my brother in traditional CMS. We were doing a company, we were doing sidecar solutions. So what we did, we split. So he kept 75% of his business. I got 75% of my business. There's no notes here. Sorry. And then we were started. So we started out. I took... Two guys from Netmaster. We decided we would be independent. We would have no loans. So up till now, almost 13 years later, we have never had a debt. That has been the principle of the company. And we were very happy in 2008 when everybody had struggled and spent their days, hours fighting for getting money or funding. So if you want to get rid of some hassles, though, make a profitable business from day one. The other thing we decided was that we would not outsource. We would make all the development in Copenhagen. Because imagine me coming home from a sales meeting with a customer and going to the developer and say, we should do this. They just had a great idea. Let's implement that. And it could be ready the next day or the next day. Or the day after. You can't do that if you want to outsource. All you need to do is write all the documentation and send it and test it. I mean, it's not fun. So that was one of the other principles. So that was the basic idea. The first year was struggling. I mean, you had to survive from consultancy work from a browser company. Which was okay. But it wasn't what we wanted to do. So we sat down. And you should remember, in 2003, there was no SaaS solution. I mean, I looked it up in my email yesterday. The first time, and I have all my emails from 1998, the first time I ever saw the word SaaS was in 2008. Right? So what we were doing was nobody would do that. They would make on-premise software. Right? Install it on a computer and run it from there. So how do you price a tool like that? The other problem was nobody knew they needed our tool. So how do you sell a tool nobody thinks they need? And how do you price it? So in the beginning, our price was 129 kroner a month. And we soon discovered that we couldn't live off 129 kroner a month. Especially if we invoiced it every month. So what we did was we said, okay, we need some funding from our customers. So we invoiced it on a yearly basis up front. And that has been the recipe of growing without any... funding or any debts. We grew for our customers' money, basically. So it can be done. Just don't go bankrupt because they'll get pissed off. So we also knew that we would never be a huge success. And that's what we wanted. We would never be a huge success by only... doing this in Denmark. So what we did was we, 16 days after we started, we incorporated a British subsidiary. So, and the reason why we have done that, we have 17 subsidiaries now. 40% of our business comes from central and local governments around Europe and the Western globe. They don't like receiving an invoice from another company. Transfer money to another bank, etc. So that's why we have that model. I've never seen anyone before use it that way. So I don't think you necessarily should do it. But that's why we, that's how we have set up the business. So after five years, we have reached 10 million kroner in what we call the contract value. So the contract value is the base you have to invoice on a yearly basis. We did the same last December in a single month. So I think we have cracked the code. But it also tells us that we had to be very patient in the beginning. But there's also been a lot of good moments. I mean, the best moment I've had personally was the day we had four new customers from four different countries. On a single day. I knew there, and that was in 2007 or 8, that we had cracked the code. So 2007, one of the Netmasters developers went to a bar Saturday night. He saw a girl. Started drinking. Started chatting to her. Talking to her. And next month, he moved to the U.S. So the story was, she was from Minnesota on a scholarship here in Copenhagen. And she wanted to go back. And that was the breakthrough for not only our American market, but also for Siteimprove. Entering, if you should do only one thing, will you go back? One thing will your company make it happen in the U.S. It wasn't easy. We had no money. He went on Craigslist, I think it was called. Like the flow of ease in Denmark. And he found two, they weren't sales guys. We couldn't afford sales guys. So he went. He found a bartender and two bartenders actually. And he paid them $10 an hour. And then take the phone and call them. And that was it. That's what we could afford. It took us 11 months to figure out how to do it. It was, we had decided if we are not successful within a year, we are out of money. And we'll close down the American business. But in June, 11 months after he came in July, we made it. We had a revenue of $30,000 in a single month, which was enough for us to believe that we have hidden it. So Torben is still over there. He is growing to 140 people. Great, great achievement. It's around 65% of our revenue now. The American market alone. Then we have Canada. So forget anything. Go to United States. Make it happen. You probably can't do it for one million as we did. But, yeah. So as we grew and as we got funding from the U.S. office, right? Because they really made it accelerate the sales. We also saw some bottlenecks. So we hired a sales manager and he could only have one new guy on board, a new sales guy on board every second month. Why? Because he had to sit with that guy, train him while he also took care of the rest of the people. And luckily, we have our chairman is a former IBM. He said, you need to make a sausage factory out of it. You need to hire your own recruiter. You need to make an onboarding program. And you need to be able to take ten people at a time on board. So we did it. And that's when it got there. Because we were able to, with the help of our own recruiter, to take in ten people. set them in a classroom. The sales manager who have been working closely one-on-ones with them could actually spend half of the time just educating them through the classroom. So that's why we – that is from last year's – we had a get-together last year in Copenhagen. We were 180 at that time. We're a little more than that now. This is actually Torben. So, yeah. This year we have taken on 130 people the first five months. So we've been busy. We probably – if we hadn't got the funding, we probably only have taken on 80. But it's – it's still a lot. And it also means that 35 percent of our employees have started this year. And in total, 75 percent of all our employees have an anniversary of one and a half years. So they're quite new. That's why it's important that you have the culture with you, that you have the people that were part of the success and stayed on from the beginning. So all the guys from 2003, they're still with us. We have five of the five people that started in 2005. They're also with us. So we have a lot of culture bearers. I don't know the English name. But in Denmark, it's – in Kulturbär. Someone that takes that – so not only me that addresses the culture. That's important. And, yeah. One of the things we also noticed was that two and two is not always four. So if you have 10 developers and want to grow to 20, you'll probably see that they have a productivity of seven, eight for a long time before they start to ramp up. And they might never ramp up to more than 15 or 16. Hiring developers is much more coaching and – and – ideas, breaking, et cetera. So it's hard to grow developers. We have had a lot of issues with that. I would like to hear if anybody has solved that issue. But we've had a lot of issues. Also, remember, we are 12 years old. So when we started this technology back in 2003, we did what we had. We had old Perl tools, et cetera. And at some point, you just need to get up to speed with a new technology. You had to rewrite it. And that – I mean, the customer can't see any difference. So for a long time, when you're that old, there's no output to the – to the customers. While all your competitors started by youngsters like you, just come in with the newest technology and steal our ideas. But that's okay. So you will see after some years that you need to rewrite the code, et cetera. And you should just bear in mind that you need to afford that. So in last year, we could see that if we – that was in May. That was actually, yeah, just a year ago. We thought of, okay, maybe it was time to – to find an environment. We were still making money. We were still profitable. But you could see that if we wanted to take the next big hit, it would probably make sense to have an investor in. We decided that it should be a minority investor. We also decided that the company should still reside in Copenhagen. And so we did that. And we wouldn't want an industrial buyer. So we hired a company called Nordic M&A. And what they do is they help companies like us build a prospect to bring in front of capital venture funds. So in June last year, we started a six-month process where they wrote 100-page prospects. They brought it. The longest half year in my life. The toughest. We met with 16 of them in London and in Copenhagen. And we could see prior to going into all this, we could see that – that we have a good – we had a good case, right? We had grown more than 50% year by year. We were profitable. So we knew how to keep track of the money. Not that that's necessarily a parameter, but I like it. We also could see that we had the churn under control. People were not losing us – leaving us. We could also see that those who left us, those who stayed, bought more. We had an increasing revenue per customer. And investors, they like that. They like that you are able to not only keep your customers, but also keep them in that habit that they'll buy even more from you. So we knew, or we thought, that with that and due to the fact that we were above the $20 million revenue market, that we would get – we were likely to get – we were likely to get a valuation of 10 times our revenue. So that's what we went into market with. And the first bids, they were disappointing. I mean, so we were – we were ready to say, no way. But then two companies started bidding over each other. And after a long weekend at Begbroen, we finally made an agreement with – we finally made an agreement with Summit Partners. And that was good. They only wanted 25%. We had said that we are okay with 25 to 40. The other investor wanted 40. But I'm much more comfortable with having a minority investor than having a 40%. But that's – that's just me. So what does – what does a company like this do for you? So in the beginning, they do nothing. And that's a good sign, actually, because I would be worried if they came and interfered in the operations. They don't. They attend board meetings. We have had two since Christmas. They have a peak performance team that can help us go through. They go into new markets or new product strategies, et cetera. So they have a guy for free working with us two hours a week, a McKinsey guy, very smart. And he's helping us making our goal of $100 million revenue in 2018 a more likely outcome of – of this story. So this is the world according to sign proof. We have – as I said, we like the idea of having a subsidiary. So these are the countries we're in. Not all countries – we don't actually have an office in – we have an address, but we don't have an office in all countries. We have – we are not – we don't – they are going to France with staff, for example. And we have seen that we – while we have an office in Oslo, we have no – we have no office in Sweden, for example. We take that out of Copenhagen. And our newest – our newest countries are Belgium, which are run from the Amsterdam office, and then we have Spain and – and Italy will be run by – here from Copenhagen as well. So if you're Spanish or Italian and want to work for sign proof, go meet me afterwards. So – so we have – so as I said, we have 140 people in the U.S. office. We have around 140 in Copenhagen as well. We have 27 in – in London and 15 in – in Toronto and around 13, I think, in Australia. And why do we have local sales guys? It's still – it's still – it's not commodity. We see no one searching for web governance or the – what our tool does. So we still need to contact the customer and make them interested in our products, right? So we need – we need to be able to – to meet our customers. So these are my findings. The first one is simple, just hire the right people. But we can really see the difference. When we enter new markets and – and we have the right guy, this market will bloom and blossom or we have the right guy, we have no idea whether it's the market or the sales guy, right? So it's tough, but we are getting better. Learn to say no. In the beginning, you're so eager to have revenue that you say no to a customer that says, oh, I want a thing that can spin. And you say, okay, we'll make it spin. But then you discover no one else than that customer wanted it to spin that way. And then when you go and refactor the solution, you still need to make it spin for that customer, right? So stay true to your strategy. Say no, it'll pay off. I've said that before. I'll say it again. Make it work. And that's – of course, you should value your employees. But it's really, really important. So we have a – we have a bonus plan. So we give out 2% of our growth from years to years. And the only parameter is how long you have been with the company, not your position or anything else. And that being appreciated by people that we honor loyalty. Know your business. We went into the investment round. They were impressed with how detailed we knew our business. We could see from the first of January, 2005, the revenue per day, how much each customer had purchased, how the mix was, et cetera. So if you can, make sure to know your business and keep the data. Turn a challenge into an advantage. Don't fear competition. You'll learn from competitors, and you'll make your product even better, and you have a common enemy. Delegate. That's important. I only have five people that are pointing to me. And then stay true to your business. So you can imagine the kind of new people we have to take on to run this 350 -man operation, right? We need a CFO. We need controllers. We need accountants. And one day they came and said, oh, it's horrible. Someone just spent $700 on a bottle of wine at a restaurant. We need to implement procedures and guidelines and workbooks. Workflows. So this never happens again. I said, okay, stay calm. I mean, it's the first time in 12 years that this has happened. So we talked to the guy, which was actually Torben, who went to Toronto to celebrate with the team, and the bottle was actually a four-liter bottle. So stay true to the business. If you're an entrepreneur business, you shouldn't implement all those heavy systems all the big companies have. Keep it simple and talk to people. And they have a common sense. This is our new building in Minneapolis. It's our own. And this is our new building in Copenhagen. It's St. Danny Place. That's the Skosbillhus. Oh, sorry. Well, it is the Skosbillhus. It's a great location. Great to work there, by the way. So. Yeah, it's a great place. I've been. Yeah. You've shown me around. Yeah. It's an amazing big place. Yeah. So you should go there and have a tour of Sight & Proof at some point. Yeah.