From bootstrapping a business to building a cohesive culture across continents, our SaaStr Europa 2018 session featuring Meltwater Founder and CEO Jorn Lyseggen in conversation with Creandum’s Carl Fritjofsson covered a wide range of SaaS industry topics and left attendees with loads of helpful insights and advice. Be sure to check out the full session video and transcript below.

And don’t miss out when we do it all again — even bigger and better — next June! We’ll have two full days of thought leadership content, networking opportunities, fantastic French food, and fabulous evening events, all in the heart of Paris — snag your Europa 2019 tickets and catch up with us on the other side of the Atlantic next year!


Carl Fritjofsson: My name is Carl Fritjofsson. I’m a partner with a Swedish venture fund called Creandum. We’re early backers of companies like Spotify and iZettle and a bunch of others.

Today I’m here with Jorn Lyseggen from Meltwater. This is one of those companies that wish we had invested in, and we’re going to talk a lot about that. So we’re excited to be here.

We’re going to sit down—I hope you don’t mind. Because we’re tired.

So to kick things off, I’m devoting my career to invest in early stage companies with the business model that a lot of companies need external financing to overcome the first cost hurdles in order to build a business of substantial revenue. And we’re really lucky, in my profession, we invest tens and often hundreds and maybe even billions of dollars into a company and they become worth more than $1 billion. And we call them unicorns. This mystical creature that is rare to be seen.

So this topic up here is about unicorns, but I almost want to call this something else, because this is not really a unicorn; this is another mystical creature. Maybe Bigfoot or something like that.

So this is the story about Jorn and Meltwater, where they really didn’t raise any capital. So, just give us a sense of where Meltwater is today, and then we’ll go back into the history of how you came there.

Jorn Lyseggen: Yeah. So we are, A&R wise, we are $320 million. We are headquartered in San Francisco. We have about 50 offices across the world.

Carl: How many employees?

Jorn: Yeah, 1,800 employees.

Carl: And you didn’t raise any venture capital into this business, right? So how did it really get started? When did you start the company?

Jorn: Yeah, I’ve been at it for a while! So it was started in 2001. And we didn’t know it was a SaaS business at the time, but it just seems logical that it was a software that was delivered through the browser.

So it was early days. And we started with $15,000. And the reason why it was $15,000 is that what it takes to incorporate a company in Norway. So that was the basic logic.

Carl: And what was the original idea of Meltwater?

Jorn: The original idea was really trying to solve the problem of, there is so much information on the internet, and it’s very hard to keep track on that manually. So the idea was to create a software that did that for you, and the product vision at the time was that when executives come to work in the morning, and have their normal cup of coffee, by the time they finish with that cup of coffee they have a good overview of the world, what happened in last 24 hours, about their competitors, clients, industry brands, et cetera. So our slogan was “Informed decisions.”

Carl: And this is pretty much what the company does today, still?

Jorn: Yeah, basically. In the early days we started out with online news and tracking company websites. If your competitors changed their prices or issued any press releases you would be notified. Over the years it’s moved into social. And now we are also making a big push into patent filings, job postings, ad spend, basically trying to understand all the external signals to help you understand your competitive arena.

Jorn: And for that reason also we invested really, really heavily in data science. So, the company has over the years become much more of a data science company than it was in the early days.

Carl: And if you go back to those early days, did you contemplate raising external financing? Or how did you think about growing the business from day one?

Jorn: So, no actually we felt pretty good about things. And the funny thing is that the aspiration when we started was to create the world’s smallest software company. We wanted to be four engineers, just create an amazing technology, sign up a couple of resellers, and just sit back and watch how revenue was going through the roof; that was kind of the game plan.

Carl: Nice, that’s nice.

Jorn: Yeah. So the first year we poured our heart into building the product. I signed up two resellers in the Norwegian market. Because the company comes from Norway. And they presented the product to 1,500 companies. And that’s a lot in Norway.

But it was a kick in the teeth when we discovered that we got 1,499 nos, and one maybe. And the maybe was really a no; he didn’t want to say no.

So then we were really worried. I was like, are we completely wrong? This is not a market? But then, looking at the data, we discovered that we had focused too much on technology. There was definitely a problem there, that we had to approach it differently.

So what I did was I brought in a couple of salespeople that I worked with before. And I told them, “You’re not allowed to talk about the product until you understand and empathize with the pain points of the problem. At that point you can talk about the product.”

And the funny thing is, without changing the product, without changing pricing, without changing anything but the way we sold it, it was like flipping a switch. So from actually no sales, when we sold it a different way, we just started to get real traction.

And when we saw that it was something that we could get traction on, it was repeatable, then we were really trying to set down, how can we optimize the business model so that this can really scale? And that’s where we came up with a lot of hacks that enabled us to do this in a bootstrap fashion.

Carl: Maybe we can go into those hacks straight-away, because I think those are really insightful. So, I know you’re a big fan of cashflow in general. Which is essentially important if you’re bootstrapping your business. So what did you do in those early days to really fuel the growth of the company by using your own cash?

Jorn: Yeah. It’s all about cash. I don’t think we really had so much good metrics but cash. But we were completely on top of cash all the time.

So the kind of things that we did in the early days, one thing that was really, really critical was that we started to model out how cashflow would look like with different invoicing models. So at the time, most subscription services were invoiced monthly and quarterly. And we just modeled that out and we just saw how it was just completely driving a massive need for funding. It was just, for every time you hired a person, every client you got onboard, it was just draining cash.

So then we realized, if we were able to invoice upfront for a year, it was just a completely different picture. And then we discovered that, you know, the unit economics was incredibly attractive. So the more people you hired, the more cashflow you generated, provided you were able to create enough sales per person. So once we realized that, we started to tinker with the models to see is it possible, are we really able to invoice up front?

So then we did a number of things. We just made sure that the price was reasonable. Because at the end of the day, our cost was really how many touch points we had with the client before they converted to a sale, right? So the overall cost of the product, you know, gross margins, we had gross margins in the 90s at the time. So that it was all about how many times we need to touch a client before they actually sign on. And with a lower price, you can invoice up front, and you can get a number of different buyers in the same company.

So that was one thing. So we had to invoice up front, and initially we got some pushbacks. But after a while we were able to do it. But we did also all sorts of important things. One really small detail that actually had a massive impact on cashflow was actually the day we paid our salaries. So in Norway you typically pay salaries on the 20th of the month. But the problem with that is that if you have monthly quotas, most of the sales happens in the last few days. I think actually most of the sales almost to these days, is, you know 40% the last two days. And what that means is, the 20th of the month you are really low on cashflow. So we moved the day for paying salaries to the sixth in the next month.

And also what we did, we signed up for the factoring service. So whenever we had a contract that was signed, we could ship that over to the factoring company. And I think it was within 48 hours we would then get cash. You had to pay a little bit, but with 48 hours they were willing to upfront everything. And that was really, really important for the cashflow.

Carl: I just want to pause there to make sure that everybody really captures this. Because instead of selling 20, 30% of you company to someone like myself, all you did was really tinker with the economics of your business, and you could fund this yourself, right? And that is actually fantastic. And it’s not about product or technology and writing code, it’s about understanding the business that you’re in. I think that’s very, very powerful.

Jorn: Yep, thank you.

Carl: So-

Jorn: Maybe what I can say is that, so one thing is the product and all that, but the pricing and the packaging and all of the business side of it is really, really crucial.

Carl: Yep, yep. So at a certain point of time you realized you’re onto something with this company and you’re starting to scale internationally and whatnot. And the bolder your ambition becomes, the higher I guess the pressure on your cashflow becomes. So did you ever, throughout this journey, start thinking more around external financing?

Jorn: Yeah, at times, you know, we squeezed the limit pretty hard. So we were growing so fast, you know? And every time we enter a new market, it’s a pretty humbling experience, you know? It’s almost like starting your company from scratch. So we moved to Sweden; that was actually going really well. UK was really tough. Germany is actually the toughest market we ever entered. Harder than Dubai and Tokyo and exotic places like that.

So at times it was, you know, a strain on cashflow. So in a bad day you were thinking, maybe I should just raise some capital. But I think, I was thinking about, it’s also real expensive to be impatient. So if you were a little more patient, we were thinking that at the end of the day it would pay back, you know.

Carl: Did VCs knock on your door? Did you have options to raise?

Jorn: Yeah, we had lots of VCs, yeah, early days. I remember inside venture capital reached us, long before they were really, so there was one associate there that found job posting us. So he responded to one of our job postings, in Chicago I think he said, “Could somebody please forward this to the CEO of Meltwater? I’ve tried to find him in Oslo, San Francisco; I can’t get hold of him anywhere.” And that was the first VC I actually spoke with. Because I have a lot of salespeople out there trying to get the decision-makers as well. And then the first thing he asked me was like, “So what’s happening?” You know, “I know nothing about Meltwater but I see job postings everywhere, in Hong Kong, US, all over Europe.”

So we spoke with VCs, but we never ended up actually raising.

Carl: And at a certain point in time you did take on debt instead of equity financing, if I’m correct. How did that come about?

Jorn: Yeah, so part of that was, we were looking to acquire some companies, and we needed some additional cash. But actually when I say we haven’t taken any capital at all, that’s not true. So 12 years in we took in a little bit of money, because at the time we tried to take a publicly listed company private. And then we got the sponsor, and I was maybe a little naïve, and I said yeah we are happy to do it if you can invest a little bit in your company, regardless of outcome. So then we let somebody in. But that’s a small thing.

Carl: And last question on financing before we move into the other parts of the business which are way more important probably. But would you have done anything different? Would Meltwater have grown faster if you’d partnered with someone like us earlier? Or do you think you made the right choices?

Jorn: I can categorically say that we could not have grown faster. Because the bottleneck for our growth was not capital. Because we were growing so fast. The bottleneck for our growth was definitely management, our ability to attract, train, and develop managers at all levels in the organization.

I mean at times we were, I remember one summer we were shooting up new offices every third week. And the constraint was, who do we have to actually run that office? And if you find someone that I could actually send off, then the second question was, who do we have to replace that person, because if somebody’s good enough to be sent off to set up a new office, they will leave a big hole in your organization where they come from.

Carl: And I think that’s a good segue to the next topic here, which is really like the people behind the success. Obviously you’re a big contributor to it, but you also have a good group of people around you. And I’m fortunate enough to know a couple of your people from the management team, and what’s fascinating with them is that they’ve devoted kind of their entire career to Meltwater, right? They’ve been with you since they graduated from school, and they’re now 15, 20 years into their careers. And they still work side by side with you. And they have very senior executive positions within the organization.

So talk to us a little bit about your thoughts on leadership development and building that organization, in the early days until now.

Jorn: So, it was very clear for us that our biggest growth constraint was our ability to develop leaders. And I also think that in order for a company to be sustainable and grow longterm, it’s incredibly important to develop leaders from within.

And in the early days, we actually tried to hire external managers. So for example in the Nordics we did well. But when we entered the UK, we were thinking okay we need, you know, UK we haven’t done so much before; here we need somebody with a proven track record, that actually knows what they’re doing.

And we hired a very senior manager from the UK. We brought him to Oslo, trained him there for three months and sent him back. But it really didn’t work. And then we really worried, maybe what we do in Scandinavia doesn’t export easily to other markets. But then we decided, maybe we should try what we did in Sweden, and in Sweden basically we hired graduates straight out of school, and trained them, and then sent them off with adult supervision.

So then we tried that in London; we hired five university graduates, trained them there for three months, sent them back to London. And it went through the roof. Within nine month we had an organization with 22 people in London. They were signing up clients across the board. But maybe most importantly that office developed leaders that we later sent to Dubai, to South Africa, to Hong Kong, to Australia, and even to the US.

And that’s where we basically figure out the model with which we’ve developed and scaled the business. Is that we need to find the right people straight out of college, or very limited work experience, and then train them as hard as we can so that we are aligned.

So all our office across the world have been set up by people that have been trained internally. My executives have been in the company 13, 14, 15 years, as you say. Under them, the layer of management has been 12 to 15, 8 to 10, and so on. So it’s very, very deep roots.

So all business leaders within Meltwater has been developed from within.

Carl: So the lesson learned here is that you don’t necessarily believe that senior external hires is a shortcut to scaling your organization necessarily.

Jorn: So, I don’t think it’s a binary, right? I don’t necessarily think it’s binary. But for us, we discovered we were better at training young people and bringing them into the leadership roles than to hire external seniors.

But I also think that the challenge with hiring external seniors is that every senior has their specific worldview on how things should be done. And that can of course add to the overall ideas and so on. But from a cultural perspective, it’s very, very hard to create a consistent culture across the organization over time.

So when I say my executive team is only internally developed, that’s only on the business side. So my CFO is externally hired; my VP of engineering is externally hired, because those skills are very hard skills that really needs to be harnessed over many years’ experience.

But it’s very clear to me that, you know, you need to work a lot harder on those departments, because you have people from outside. And I think a company that relies too much on external hires in the development of the company, I think they lose a lot on the institution knowledge, culture, and ownership. And the people sitting there and not being promoted to these roles, that’s really demotivating.

And I think our policy on promoting internally has been serving us really well. In Meltwater now we have close to 100 people that have been in the company 10 years or more. And most of those are Millennials.

Carl: Are there any tangible tips or recommendations that you can provide to the audience regarding how do you hire people that have the leadership potential, or how do you nurture that leadership potential to come out within the organization?

Jorn: Yeah. So, we are very, very rigorous when it comes to recruitment. So we spend an enormous amount of time on recruitment. Even for entry level sales. So people that start in Meltwater at entry level sales, we hire for future leadership roles. Nobody starts at entry level sales at Meltwater without us believing that they have that potential.

And I think, if you think about leadership development, recruitment, and culture, in many ways these are very intertwined. So when I think of those things, it’s really very linked to what kind of culture you want to have as an organization. So a lot of leadership development and mentorship that we have done, I myself and my executives now, happens in the recruitment process. So when you go through a recruitment process, you clearly have to articulate or make decisions on what are the people we want on board, what are the people we don’t want on board. So a lot of calls.

So not only are we hiring based on capabilities and so on, but a big part of it is their personal traits, personal standards, drive. There are lots of these intangibles that you are looking for, that really is washed out during your recruitment process. There’s also really important building blocks for your culture in the organization.

Carl: So culture is another big topic I think that, I mean I’m personally a big believer that if you have a well defined culture and it really works, it’s a very unique competitive advantage as an organization. But when you talk about it, it often also becomes very soft and vague. So what’s your view on culture in order to like, how do you really enforce it? What tools are there out there to really build culture?

Jorn: So first all I’ll say is that, it took a little time for me to fully understand the importance of culture. So Meltwater is my fourth startup, and I guess over the years I realized the more you work in building teams, organization, and companies, the more humble you become for the importance of culture.

And the reason why culture is important is that culture can … Well first of all, any team, any organization, any company, has a culture. Intentionally or not. And culture can have a positive impact, if people can feel valued, people can feel appreciated. People feel they learn from others. It can be a very positive spiral.

But culture can also be a negative spiral. People feel like they are not listened to, the work that they’re doing doesn’t contribute, doesn’t go anywhere. So whether the culture is a positive spiral, a negative spiral, has a massive impact on the productivity, on your company.

And we have a shortcut for culture that basically says culture is what you do, what you say, and how you treat people. And the execution of that and implementation on that is very, very linked to some of the things we already talked about. What are the people you hire? Do you hire people that are very individualistic, have ego, sharp elbows? Or do you hire people that are collaborative in nature? That thrive on working in teams.

So who you bring on board in a company in the first place, who you promote as leaders, is massively important for culture. Because every leader puts their fingerprint on their team, their organization, or the company. And also, who you fire and demote is very, very important signals.

Carl: So two things I know within the Meltwater world that kind of, I guess, embodies your culture, is the Ghana school initiative and EDAF. Can you talk us through those two? Which are opposite ends of, I guess, what you can do as a group of individuals.

Jorn: Yeah. So, I can start with EDAF first. So EDAF is a cost item in every office’s P&L. That stands for entertainment, dinner, and fun. So we spend very little on marketing, so my joke is that I spend all my marketing budget on dinner, food, and alcohol, for people to hang out, you know? And actually related to culture, a big part of culture is shared experiences, that you do something together. So of course you can do a lot of things together at work, right? But if you, in social settings, have fun, do things.

In the early days we had two parties every year, a summer party where the whole company was attending, and a kickoff that was in January where we reviewed last year result and looked at the result next year. So kickoff, we’ve been to all over the world: Jamaica, Monte Carlo, Thailand, Morocco. And everyone in the company goes. And everyone is under one roof, and that’s a massively important shared experience. So that’s EDAF. And I think that’s been really important in building culture and building teams.

We also have something, maybe that’s a little unusual, but we have a school in Ghana. So if you think about it, as an entrepreneur, and Meltwater is my fourth startup, to be an entrepreneur is in many ways kind of a very selfish endeavor. At least it becomes a selfish endeavor, because in order to succeed you need to be so doggedly tunnel vision on what you do. And you’re obsessive; you’re obsessed about your client meeting next morning. And every next meeting is so important, so you become, at least I have become, I was like shit at showing up at friends’ birthday, or things that I was like, they have another birthday next year, I can go then instead. Because next day I need to prepare for this big meeting. So you always have these things that are so important that fundamentally maybe is less important in the long run.

So for that reason when I started Meltwater I just thought to myself that if you work so hard and you pour your heart into what you do, I just want to make sure that it was impactful, and it was more than just building a company and so on. So for that reason I decided to set up a school for software entrepreneurs in Africa. And I know myself; in order to hold myself accountable I decided to announce this at the kickoff, to everyone in the company. So January 2007 I announced to everyone in the company that a year from now, we’re going to set up a school for software entrepreneurs in Africa.

And the idea was really that, all the expertise that we develop in the company, nurturing talent, developing leaders, and all that, is really very applicable in a number of different contexts. So we were thinking if we can do that in Africa, to help and nurture talent there, for them to become software entrepreneurs, we’ve created something impactful.

So in February 2008, we started a school. We cut the ribbon. The first African startup that went to TechCrunch Disrupt came from our program. The first startup that went into 500 Startups came through our program. We have graduates that went into Techstars, other incubators, and accelerators across the world. We have a couple of exits; our companies start to acquire other companies. Six months ago we acquired a Rocket Internet company in Africa that was out-executed by our local graduates with much less cash and much less resources. So a lot of exciting stuff.

Carl: Beautiful. So last question, what’s next for Meltwater? A company of like 300 to 400 millionaires, or is definitely at the scale of where it could be a listed public company in the multi-billion-dollar evaluation? So what’s next for you guys?

Jorn: Yeah, we are very excited about our next phase where we are moving beyond news and social. A lot of people ask if you are going to list as a company and I actually did run a listed company back in the days. So I can say I cherish every day that Meltwater is a private company. But at some point, you know, we will see what will happen.

Carl: Continue to enjoy the journey. And thanks for sharing.

Jorn: Thank you.

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