Work smarter, not harder. Jos White of Notion and Christian Lanng of Tradeshift team up to show you how to work within, and sometimes around, rules in the workplace. Join this discussion to learn how to maximize efficiency within your company.

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Jos White | General Partner @Notion Capital

Christian Lanng | Co-Founder and CEO @Tradeshift


INTRO by Christian Lanng: We do cloud based splicing for the Fortune 5000. It’s actually just connecting the hundreds and hundreds of thousands of companies that do business all over the world. We realized that in most company do not have access to the global economy. You’ll be completely free for sellers around the world to connect with largest buyers. “Oh it’s about failing fast.” It’s like, “No, it’s about succeeding before you fail.” Nobody had really done what we do before. Nobody ever build a social network for business on this scale. Is this good enough? Are we doing it right? Because there is not benchmarks.

Jos White: Welcome everybody. It’s great to be here at SaaStr. I’m thrilled to be sitting here with Christian Lanng, the CEO and Co-founder of Tradeshift. My name is Jos White. I’m the general partner at Notion. I’m an entrepreneur-turned-investor, co-founder of an early generation one, SaaS company called Message Labs that we founded in 2000. Did anti-virus and anti-spam and the cloud. Exited to Semantic in 2008 and had a good exit for the early SaaS businesses then set up Notion and we focus on SaaS companies, mainly in Series A in the European market.

Jos White: We were fortunate enough to lead a Series A investment into Tradeshift back in 2010, I think. Tradeshift now… I’ll let Christian introduce himself but Tradeshift now is one of the biggest, if not the biggest, B2B SaaS company out of Europe, valuation well above a billion dollars. We’re very excited investor and Christian has got a lot of interesting thoughts and opinions as you might expect.

Jos White: So, we’re going to talk about rules. I think entrepreneurs generally hate rules. Entrepreneurs like to break rules but there are probably are some that you should definitely follow so we’re going to get into a conversation about that and hopefully we can stir up some good conversation and some controversy at the same time.

Jos White: So, Christian, why don’t you introduce yourself first and we’ll get into the conversation.

Christian Lanng: Yeah, first off, the you Jos, so, yeah. Notion Capital was really the first fund to have the guts to invest in Tradeshift. We were pretty crazy even then. We told them we were going to build a B2B network that would connect every company in the world and they didn’t run screaming out of the room.

Christian Lanng: I’ve been an entrepreneur most of my life. I started when I was 19. Built my first company, sold it. Built the second company. So, I started in ’99 and at that time there was nobody who even understand what a startup were in Denmark. It was just like, “You’re stupid. You’re not taking a job for Accenture or go to school and do something real.”

Christian Lanng: And then later, of course, when we started Tradeshift… I have a background. I coded most of my life but I studied sociology because I think the interface between people and technology is more interesting than technology alone. When we founded Tradeshift, we really just… there was very, very few SaaS companies around. And, to be honest, and I think that’s still true today, but to be honest, nobody knew what they were doing. So I don’t think… you’re going to talk about breaking rules today but I think in hindsight we didn’t even know there was no rules. So, we didn’t know what rules we were breaking. People are now, “You’re breaking this rule or that rule or whatever rule.” But nobody knew and nobody knew what they’re doing. So, I thought this would be a really interesting chat with Jos, yeah.

Jos White: Yeah. Great. I think that’s a good way to start is with events like this there’s so much content, so much best practice out there now. We’re surrounded by rules, but my experience as an entrepreneur and as an investor, I’m interested in hearing what Christian has to say about it but my experience is that it’s much more fun to break rules than it is to follow them. We’re all trying to back, we’re trying found outliers, we’re trying to set up companies that can go on to completely outperform the market, so if we all follow the same rules then there aren’t going to be any outliers. So, I’m interested to get into the rules that you think we can break and have a conversation about that. So, do you want to kick off with one?

Christian Lanng: Yeah, I think the rules you can break, right? We originally founded Tradeshift out of Denmark, so we started in Europe. We were told all of these things, right. Your burn shouldn’t be too high, you cannot have a disappointing product, you should build a full-fledged product before you launch, you need to be in a massive market, you need big commercial traction to build value, you need to be in the US, really all those things.

Christian Lanng: And I think you can break all of that. And actually just to add to that, I’ll take a few examples. If you go on Twitter today and if you follow VCs… by the way, don’t follow VCs on Twitter except for Jos, because Jos is smart. But most VCs, the amount of bullshit that they write about how you should run a company and most of them have never run a company, never built a product, have absolutely no idea what they’re talking about. And to be fair, most of us building companies, building products all of that, we have no idea either. We’re really trying to make this work.

Christian Lanng: So, I think the rules you can break is… let me talk about burn for a second, right.

Jos White: Yeah.

Christian Lanng: Just senseless burn… I mean rooftop parties and big offices is stupid. But if you have access to capital and you can get access to capital, spend it and spend it fast would probably be my first advice. Because, market share is really number one metric. And I also think if you start in a really, really huge markets, which you learn a lot, you’re also just going to remember it’s going to take a long time before you have a big share of that market.

Christian Lanng: So we started with something very, very narrow, which was invoicing. It’s almost so boring, half of people fall asleep when they hear about it. But invoicing happens to be connected to something really, really important, which is payments. So if you get the invoice, you get the payment and that’s a lot more interesting. So, I think the burn side, right? Spend to get market share and be okay with the small market because you can saturate that market really, really fast.

Christian Lanng: I think the other thing about spend is you want to make sure that your investors know who you are. I mean this is a little bit provocative, right? But I see all of these party rounds right now where everybody is trying to get everybody into. They’re like “Oh, it’s supercool. We have Atomico and Greece and all of these guys. Everybody is there.” But that also just means you’re a very small steak for a lot of people. We made sure very, very early that Notion Capital definitely had an interest in us succeeding because we were spending significant amount of capital and we’re taking a huge bet.

Jos White: It’s interesting with burn because I think, particularly in Europe, it’s a bit of a dirty word. The founders are worried, investors are particularly worried about the high burn rate and yet, almost every successful SaaS company has gone through periods where they’ve had a really high burn rate. They conceived it takes hundreds of millions of dollars to build a successful SaaS company that goes on to be public. So, the best companies do go through, do consume a lot of capital but I think you’re right. It’s not necessarily about having a high burn rate, it’s about ensuring that you don’t run out of money, right? And ensuring that your investor are aligned, that they understand that this is going to be… this is going to require a lot of capital. The strategy of the business is you have a big vision, it’s going to require a lot of capital but as long as you’re doing what you plan to do, and if you plan to burn but you can continue to raise money off the back of it and your investors are aligned, it’s not necessarily a bad thing, right?

Christian Lanng: No. It’s also about remembering nobody knew earlier on what could be the size of a SaaS company. Nobody had an idea, right? I was just talking to Jason and the break… of course, Jason who runs this whole thing and he said, he was still getting shit for the Box post. He wrote about Box will be a billion dollar company in tech funds and everybody was just laughing at him and saying, “But God no SaaS, B@B boring software company is ever going to be a billion dollars.” And now we have the first crop of hundred billion dollar SaaS companies, right? And I think every single IPO you see in spring so far, everybody is talking about, “Oh my God, is the market going to break. There’s probability, all of these things.”

Christian Lanng: All of those companies you see IPO now, most of them are going to be hundred billion companies within the next 10 years. And so we have continuously underestimated the market size and the market value of SaaS companies because people do not understand compounding value. Compounding value is literally the most powerful thing in the world. If you look at burn in relation to that, right? If you think the top market size for a company is 500 million, you should probably not spend 500 million dollars building that company, right. If you think the top market size for a company in our hand is 10 billion, it’s a very simple bet to spend 500 million building that, right?

Christian Lanng: And so burn is always in relation to the market size and the valuation and of course, the value of the company you can achieve. I think the whole exceed ABCDE model is essentially going to be collapsed. If you look at what happened in China, they have all of the Kingmaker rounds where they just pick up a set of farmers they know that can do it, like have real experience. They go say, “Hey, we want… ” like they did it with DIDDY, we want to own ride sharing, and they put 500 million dollars into the, A round. And by the way… they gave them access to a search. They were being on the top of Google by research for ride sharing and it just took the whole market overnight, right?

Christian Lanng: Look at what Vision Fund is doing right now. Exactly the same strategy. They’re just collapsing the whole model and killing it with capital. And they’re killing it with capital because they’re starting to realize, a lot of players are starting to realize, hundred billion dollar valuations is going to be the norm. We’re going to talk about hundred billion dollar companies like we talk about uniforms today.

Jos White: Talking about burn, so how much capital is Tradeshift raised?

Christian Lanng: We raised 400 million dollars in total. Some of it from Europe, most of it in North America, Asia.

Jos White: But how do you… Just talking about making sure that your investors are aligned behind the journey, they’re aligned behind the hundred billion dollar vision. You talked about building a hundred billion dollar company when we investing at Series A, it hasn’t really changed, but how hard did you work to ensure that your investors were aligned behind that visions so they didn’t start to lose their nerve when they maybe looked at Tradeshift brand as it has been from time to time?

Christian Lanng: I mean, it’s of course goes without saying when you’re talking about rules you can break. I would say there’s a rule that you can break if you pick any of these. So, if you pick the one… you say I’m going to break the burn rule, you cannot break the rule that you’ve got to be good with fundraising. You have to be really good at fundraising. And if you suck at fundraising, please don’t increase your burn. But if you’re good at fundraising, that’s a strategic advantage. We spend a lot of time aligning with investors. Sometimes you got to push to the line and then have everything ready to go and say, “Hey, we’re doing this and we’re raising about 250 million. Here’s the payments and if you sign them within the week you’ll be really happy.” No.

Christian Lanng: But of course it’s also… we’ve been very, very clear that we are long term from day one. I think there’s a lot of pressure to be short term. But, again, if you’re talking about hundred billion dollar market cap, why on earth are you being short term. If you look Salesforce, right. Salesforce spent 10 years to go from zero to one billion and then they spend another 10 years to go from one billion to 90 billion dollars. Most people thought that Benioff, he should sell at one billion. That’s actually a 20 year horizon. So, that alignment with investors get really, really important and especially if it’s your A investors because they often have fun times and they get antsy, and all that, so you’ve got to create that alignment early on.

Jos White: All right. We hadn’t talked about this but in terms of the rules that you can break, I don’t think anyone expected Benioff to break his cloud-based software rule and yet he goes and buys Tableau, and that made their biggest ever acquisition. I guess for us, who live and breathe cloud, and live and breathe SaaS, to me that’s a slightly unusual move but he’s a bright guy, he knows what he’s doing. I think Tableau have some product in the cloud but not much. What do you think about that?

Christian Lanng: I think the way we think about cloud today is narrow defined as this thing that’s hosted in a web browser but if you look at Adobe, right. Adobe has actually turned around. They’re still most of the software run on your desktop but all of it is delivered through the cloud. All updates are delivered through the cloud. You pay a subscription. I think we’re probably going to talk less about the delivery model of the architecture of the services and function and we’re going to talk more about the subscription model. So, I think it doesn’t matter too much if it’s on from the Cloud, I think what really matters is it subscription based? Can it be delivered continuously, updated continuously? All of those things that you’ve come to expect from cloud.

Jos White: Yeah, and something that Microsoft and are now actually doing very well.

Christian Lanng: Absolutely. Microsoft is another good example of that. You don’t really care if it’s the offsite, online version of Microsoft but it just works because it’s a subscription model.

Jos White: Yep, okay. So, I just wanted to go to a different point which is the whole idea of valuation being tied to your financial progress. We allows talk about the most… and as an investor, and as a founder as well, the most common, the most logical, some would say, way of trying to value a business is by a multiple of its ARI, a multiple of its revenue. That’s how even the more mature public SaaS businesses tend to get valued until they move towards more of a profit based model, which we think they’ll get to at some stage. But it’s another rule that I think you can break if you’re careful. I don’t think your revenue and your revenue growth is the only way to value a business. There’s other ways when you start to look at the team and the tech and the size of the vision and everything else. What do you think about that?

Christian Lanng: What Jos is trying to say in a polite way is, we had almost no revenues the first four years after he invested and we were okay with that. We were building out a global network, we were connecting companies all over the world and we had just found out people were signing up to Tradeshift and using it for all sort of things. And we were just sitting there with Google translate trying to figure out what are people using Tradeshift for in Malaysia and elsewhere. And we were very happy with that network growth and we used that network growth as a poll metric.

Christian Lanng: I think there’s two things that ultimately matter when you’re thinking about valuation. It’s optionality meaning what are your options to convert whatever scale you have to massive revenue in the future. That’s the first one. And the second one is time. The longer you exist in a market, you tend to win. Just by time. In the beginning when we started there was 30 competitors in our space. 20 of them are dead just because of time. We didn’t do anything, it just happened. They also died because we raised a lot of money and they couldn’t raise the same kind of money. So, in a way, also just capital erasing burn. Even if you don’t spend it on marketing, even if you don’t out compete people, kills everybody else in your market. Especially if they’re legacy players, because they don’t have access to the same resources.

Christian Lanng: I think optionality is for me part of the most important thing when I think about strategy and how we talk about it. So, our network always had the optionality to be turned into money, right. So, it was an asset you can convert to capital to money. But, of course, we did four years later because we started selling SaaS products on top of the network. And in less than four years we probably scaled that faster than any SaaS company right now have done. So, no revenue for four years, getting very antsy investors and then we could flip that asset that we built to very fast growth revenue base, right?

Jos White: Yeah. I think that pretty much from the beginning, you had this huge vision, right? And the visions was almost the be a Facebook for businesses. As you believed that businesses were connected, then great things would happen. It would be easier to manage transactions and invoicing and there’s all kinds of additional services that you could sell into that. And I think for us, the power of that vision combined with engaged users and transactions maybe as a proxy for revenue, always got us really, really excited and prepared to keep investing more into the business, but how do you… I guess it’s partly having a powerful vision but you probably need some kind of proxy for revenue if revenue’s not coming through at the same time, but was that just something that you thought about from day one or was that just because you were so convinced by the vision?

Christian Lanng: It’s incredibly hard to pick the right metrics when you’re creating a new category. I mean even going back to 10 years, there was nobody that had decided that ARR was the right thing to measure for a SaaS company. Yeah, sure we looked at that, but we looked at a lot other things, right. Today, ARR recurring revenue is like God, that’s what everybody talks about every single investor you’ll ever meet, they’ll ask you what’s your monthly recurring, what your annual recurring, what you generate, all of these things.

Christian Lanng: But it’s the same for the network. How do you value your network? Is it engaged users? Is it dollar moved? Is it geographical coverage. We tried quite a few things and then we finally ended up on dollars moved. And actually, in our company, that’s widely beyond the value right now is Uber. And Uber broke almost pretty much every rule in the book. By the way, in their journey and they… in the S1 they wrote that our total market is every miles human’s move. What we’re looking to do with Uber is to create a mobility platform for human movement and monetize that. That’s why we’re doing scooters, that’s why we’re doing logistics, that’s why we’re doing food delivery services, right?

Christian Lanng: So, you get a lot of power when you pick your metrics. Look, the VCs, they would like you to ARR, MRR, rule of forty, all of those things because that makes it very simple to compare for them. But it might not be in your interest. You’re putting yourself into the box with everybody else. Of course, you got to know those things but you’re going to say, “Well, actually we’re like a SaaS company, we have these metrics but we also have a network that has all of that value.” So, for every single fundraiser, we told people, “Here’s our SaaS business. Here’s this growth rate and you can calculate what that’s worth. But on top of that we have a network that’s trading five more billion dollars of global trade. We haven’t monetized it yet, but what do you think it’s worth? And if you think we can monetize that even a little bit, why don’t you buy a coupon on that and say pay 20% for the value of that. And that’s way to give you more room in the valuation side.”

Jos White: Talking of Uber, which is a good case study of a rule breaker. And I guess one rule we that we assume that we’re going to follow is to actually follow the law. I think Uber repeatedly broke the law and if they hadn’t, they wouldn’t have created the company that they created. They went to markets that they didn’t have the legal rights to go into. They didn’t have the regulatory environment or set up, and they did it and sort of pleaded for forgiveness. I think that’s… I’m not encouraging everybody to break the law necessarily but that’s sometimes the attitude you have to have as a founder, as an entrepreneur, is if you’re going to create an outlier, you need to be doing things that other people aren’t prepared to do. And whether it’s breaking regulation or breaking the law, you know they repeatedly did that, and that’s was a part of their success, how they actually go immersed into key markets and how they got their first mover advantage. It is an interesting case study.

Christian Lanng: Yeah and I think that goes back to one of the rules… we’ll talk about it in a second, but Uber was able to break the adverse of don’t break the law, like don’t. Really don’t. I didn’t say that but if you’re doing it, make sure you have your customers with you. Because Uber was able to break the law because they essentially brought riots into towns when they got shut down. Like in Washington D.C. the politicians they cut Uber out. And everybody who was somebody, who worked in government they’re like, “No. We can’t fucking do this because we’re using Uber for everything.”

Christian Lanng: There was such a powerful fan base and I think one of the rules that Uber broke, you can’t break, is that due to all of the spectacle with their culture, how they were treating women, all of that stuff, then they lost their customer and fan base. They lost that power and what we actually saw was they started getting curbed regulatory because the users didn’t want to get in front of Uber brand and say, “Hey, we’ll fight for you.” But I think you see the same thing for Airbnb. You see the same thing for Airbnb, it’s clearly there is a huge albatross on regulation.

Christian Lanng: I come from Europe, right? And just never forget that most of the regulations that exists has been created by the incumbents you’re trying to disrupt. I mean loss around tax regulation has been created by tax unions and tax incumbents. And there’s absolutely no interest for them in leaving their position. You’ve got to disrupt if you really… if they say you got to play by the rules, you already lost. Find another bet or decide to break those rules.

Christian Lanng: Same for Airbnb right? Followed exactly the same formula because what hotels, renters, all the people, landlords, they didn’t have a whole lot of interest in letting Airbnb play and say, “Oh, that’s fine. We’ll for sure fit that with the regulatory model.” Why should they?

Jos White: And I think your point about Uber and a rule that you can’t break… just looking at their culture, clearly it was a toxic culture. People didn’t enjoy turning up to work, people who didn’t believe in what they were doing anymore. That then rippled out into the market. Suddenly as a consumer we had choice between Uber and other mobility as a service brands or offers and… I think that, we’ll never know because that’s still a big successful company but it feels like that was massively damaging to them.

Jos White: And so there’s pros and cons of taking that kind of muscular approach that they took. Maybe you can take that approach but you need to bring everyone along with you in terms of the people that work for you, the customers, the partners and everything. But culture is really hard to build and it’s very easy to lose. It’s cliche but they really lost it right. And I think it’s still a tarnished brand now. So, I think that is definitely a… for me, I think you said the same thing Christian but that’s a rule that you can’t break, is you need to understand what you stand for, right?

Christian Lanng: Yeah. Look, Uber was the bad boy brand of tech. They did bad boy things, they broke the rules, they partied, they drank tequila in the office, they did all sorts of bad stuff, right? But the competitors feared them. They were known to be the most vicious competitor you can have in the world. And I think, one, they did all of this stuff and they lost some of their people and all of these stories started getting out, but I think in a way you’ve got to decide there where do you want to play, right? Because do people believe that Uber can turn around and be a good guy? Is that storyline acceptable?

Christian Lanng: It’s okay to be a bad boy. I mean look at Jeff Bezos. Everybody is scared of him. And then he’s certainly not trying to be a good guy, right. He’s just saying, “Yeah, I’m the biggest, baddest monopolist there is in the world. Come at me if you dare.” So I think you really got to stick to who you are and people don’t believe the story. In a way, I think Uber would have done better if they said, “Oh, yeah, we do have some aggressive culture and we do have some bad apples but we will remain to have an aggressive culture. We’ll try to see out some of the bad apples.” Rather than suddenly becoming the good guys and having Arianna Huffington on the board and talking about sleep and wellness. I just don’t get that from the Uber brand.

Jos White: Yeah. I think more and more companies need to define what they’re doing or why they’re doing it beyond just making money. And I think they lost track with that. But anyway, enough about Uber. So, talking about products, again a common thought is you need to have a great product. Like VCs talk about you’ve go to invest on a product, I’m a product focused investor, I want to see a great product, a great UX, whatever is. Do you think you need to have a great product?

Christian Lanng: I think you need to have the foundation for a great product. I don’t think you necessarily need to have a great product. When we launched… when we built Tradeshift, and we did that in a period of 24 months in a very small and very smelly place, we had one thing that was stuck to the wall and it was a quote from Reid Hoffman that said, if you’re not embarrassed about your product when you launched, you launched too late. I mean we definitely, definitely did not launch too late.

Christian Lanng: The first version of Tradeshift, which was to do invoicing between companies, we forgot a small thing called a credit note. We didn’t forget, we just decided that we didn’t fall into the first release but that meant that companies were invoicing each other, they couldn’t correct those invoices if there was a mistake. So, that was certainly a very high feature request for the very first version. But I do think we obsess a little bit about product perfection. There’s a lot of design function. Design is amazing. I’m a huge believer of design, UX, all of those things, but I do think that getting it tested in the market… no matter how well you build the first version you’ve going to have 24 months of real pain with real customers to find product market fit as a minimum.

Christian Lanng: So, in a way just get started on that as early as possible and if the customers tell you that you lack a credit note while you’re already moving in the right direction. It’s like, “Yeah, we can’t use this without credit note, so fine we’ll build that. So, I would say launch early, be embarrassed, then learn quickly.”

“I would say launch early, be embarrassed, then learn quickly.”

Jos White: And I think a key part of it, particularly in the early years, is having customers that believe in the journey that you’re on. They believe in the vision and where you’re trying to get to and they also enjoy being an earlier adopter. They enjoy helping to shape the product. If you’re signing customers on a more transactional basis, at full price, they just really want everything to work, and they’re risk adverse, that’s not going to work. But it customers really believe in the journey, they’re enjoying that early adopter status and involvement, then I think that you can get away with having a disappointing product as long as they see it improving and that you need to over communicate with those customers about what you’re doing and how you’re responding to feedback and things like that.

Christian Lanng: And also there’s one more thing that’s maybe not obviously, right, is if your launch product, it might not have all of the features your customers need, but if it’s very, very polished and looking very great and looking very complete, people expect completeness. So now they’re going to be more pissed at you because there’s features lacking but if your launch is something that earliness… Jos was saying communicating very early saying, “This is early. We’re trying fast and we’ll work with you.” And sometimes not making it as polished. I mean Twitter looked like shit when that launched. There’s a new site, Glitch, I don’t know if you’ve seen it. It’s almost like anti-design social space. It’s very, very interesting. I mean Reddit, is one of the ugliest websites ever made. But the users went on the journey with them and they loved the concept, they loved the experience, and they felt they could be part of it. So it’s really about how you frame it, I think. You can launch a very disappointing product if you move extremely fast and you communicate with your customers.

Jos White: Yeah. Maybe talking about an old-world company… having a bit of a bash, but maybe Oracle are the best example of that. I mean everybody says the Oracle product basically didn’t work for about 10 years but sheer force of sales and the power of the founder, they’ve managed to get through it but… so, if you believe and then you get there in the end, you can get away with it to some extent.

Christian Lanng: I think it still mostly don’t work but yeah…

Jos White: Okay. Let’s talk about big markets. So, again, the thought is you got to be in a big market. I think some investors say, “I take a good founder in a massive market but I don’t know I’d take a great founder in smaller market. Like the market is actually more important.” I mean, obviously, I’ve got my own view on that but I’d be interested to hear what you think about that.

Christian Lanng: I prefer… obviously that’s what we did. I prefer to find a market you can saturate really, really quickly. And then from there you can go move dominate other industries. I think the massive market is amazing, right. What we do, if you’re not going to look at the biggest scale is B2B commerce. That’s a ten trillion dollar market. B2B finance is nine trillion dollar market, twenty trillion. I see all of these startups and all of these guys pitching us ideas of things they want to build and stuff, they always come with the 20 trillion dollar number but I’m almost like, “Jesus Christ, 20 trillion. That’s a lot. Can you tell me how you’re going to get the first hundred million? I just want to know about that.”

Christian Lanng: I think everybody knew who we were in invoicing within 24 months. And all of our competitors hated us because we just attacked… actually a very stale, very small and very boring market with viciousness of Techron, Silicone Valley, hype machine, going into an area that was not prepared for it at all. But if it’s a huge market, you better buckle up for everybody who matters to be there. You better buckle up for Amazon and Google and for everybody else to have an idea about this market too, right, so…

Jos White: Yeah. I think also, certainly as a VC, we look now… we’re really interested in vertical SaaS because I think the cloud is now so all-pervasive. More and more work, more and more businesses are moving into cloud, moving into SaaS that it makes a vertical market more attractive because if you can sell a full stack proposition into a vertical market, you can sell SaaS, plus payments, plus a true platform that plugs in third party vendors… like a vendor market place, then you’re almost selling a full vertical stanch into a specific industry and you can take a much larger percentage of the economics of a smaller market and therefore build a bigger business.

Jos White: But before payments where in the cloud, and before you could integrate through IPIs, in terms of a third party market place, that wasn’t really possible. But we’re really interested in that move into verticals. Do you think that that plays out?

Christian Lanng: No, absolutely. I think every vertical is going to be 10 billion dollar plus market in B2B, every single vertical. I mean they’re going to be narrow and obscure and you’re never going to have heard about them, but it’s going to be a 10 billion dollar market you haven’t heard about. Consumer is… when you build a B2B startup you’re allows envious of consumer startups because, “Oh my God, it must be so easy. Just build this thing and it blows up and you get 10 billion users and you get to hang with models and stuff, and it’s really cool.”

Christian Lanng: But on a B2B company it’s really hard. But the reality is B2B markets they’re very slow. They have huge inertia. It’s very hard to penetrate. But once you’re in there, you can just keep growing, keep growing, keep growing, keep growing. And while consumers pretty wild and moved very far but no way down. Not to say enough consumers on down but it’s just so much bigger and so much more penetrated. B2B is in very, very first innings of the journey. You think that market is over with Salesforce and Workday and those… No, it’s just begun. We’re 1% into the digitalization of the enterprise. And there 99% to go if not more. For me it’s… we’re taking as much as we possible can. Our biggest problem is we cannot hire enough … salespeople fast enough. It’s the problem we have. And there could be another thousand startups next to us doing the same and it would be no problem.

Jos White: I think that’s a really good point. I mean we certainly… without focus on B2B SaaS we feel really good about the market right now and I think the last 10 years has been tough when you look at the consumer market, mainly because of iOS and Android and creating those platforms so it can basically reach pretty much a global population with all the apps that were developed, all the services that were developed. That was an amazing time to be a consumer, but that is really fully saturated now, right. With consumers looking for the next big platform. Whereas in B2B, you look at… there’s so many processes and workflows that still haven’t been fully utilized by any kind of software, let alone SaaS. In terms of the overall software market, SaaS is about 20, 30% penetrated but there’s actually lots of processes and workflows, which are currently done in a more manual way, so the opportunities are vast out there, I think, for cloud based software.

Christian Lanng: Absolutely. I mean consumer to me is just mysterious. It’s something like you’re going to have a bird that can fly and you’re going to hit a wall and then you’re going to have Kim Kardashian and something’s going to like you on Instagram, or something. I really don’t know how all of that works.

Jos White: It looks like it works upwards but it also works downwards.

Christian Lanng: Absolutely, it’s completely random. I saw… what is it? One of the Kardashians that tweeted she didn’t like Snapchat anymore and then, boom, four billion dollars off the market value. Jesus Christ. The good news is… I mean it’s not really good news and nobody really doing that, but people can tweet all the bad things they want about Tradeshift, it’s still not going to leave the platform because they’ll be there for the next 20 years and hopefully we can talk about it and we can have coffee and say, “Hey, why are you mad at me?” So, I think the stickiness is just so much bigger.

Jos White: Yep. Okay. Let’s just talk about the rules you can’t break for a minute. So, we talked a little bit about culture and the importance of culture, but what are the rules… I know you’re a rule breaker so this is not going to be nearly as interesting for you, but what are the rules you think, that you do hold on to that you think are really important?

Christian Lanng: I think the very first rule… and I think we talk about this list. There’s only one rule that actually matters, and that is you cannot run out of monies. Don’t run out of money. If you have a SaaS company, you’re collecting subscriptions and you have a net positive dollar retention, just hang on. You will survive and survival alone will probably give you most of the market. And so I think just don’t run out of money, that’s rule number one and …

Jos White: Just on that, because you are a phenomenal fundraiser, having raised God knows how much, but for most people here who are at an earlier stage, have you got some tips in terms of how you ensure that you don’t run out of money, or how you become a really good fundraiser?

Christian Lanng: You need… I mean I would say, just go meet a thousand people that say no. People really, really underestimate how many funds they need to meet on an average basis, such as… I would say, go meet as many as possible. Stay away… I’m sorry you have beautiful audience… right now I’m not going to say anything bad about it. Spend your time in personal relationship, don’t go on the States and compete in front of a group of VCs. If you’re not talking to the principles, don’t waste your time… I mean honestly. I should never say this but the associates, they’re never going to make a decision and most partners will hate whatever they come with, because that’s how it works. So, get to the principals. And much rather get to the principles of a few funds there than try to get to a bunch of associates with a lot of funds. I’m sorry if you’re an associate, just get to be a partner as far as possible because where it’s at.

Christian Lanng: But I think on the fundraising side, right, yeah, be bold. I mean ask for twice what you think you need and double the valuation… at least you grab people’s attention, I think. We got your attention, right. So, yeah, that’s it. I think on the things that you can’t break either. You can do a lot of crazy shit and you can break a lot of rules if you have big people. But it’s very, very hard if you don’t have a team that’s not mentally agile and willing to jump and move fast. Also, if you don’t have growth… and remember you decide the metric. But if you don’t have growth in whatever metric you decide, that’s also when you’re going to hit a hard roadblock. You’re going to find one investor. If you say your metric is growth in X, and I don’t care how obscure it is, but if you stick to it, and you go meet a hundred investors, you’re going to find one that believe together with you, that actually this is the metric that matter.

Jos White: I think growth certainly from a VC perspective, growth drives everything. It doesn’t have to be growth in your revenues like you say, you can have a core metric, which is a proxy for revenues, but you’ve got to be growing fast on that chosen metric. And I think if you are, then you’re going to get investors excited in some way.

Christian Lanng: And maybe also… I mean this is fairly controversial, rules that can’t break, right. The words B2B and bootstrapping they don’t match. If you’re doing bootstrapping in B2B you’re dead. Because, again, remember the scale, are we going for hundred billion dollar companies, if your growth curve is not on this ramp, in the B2B space, you’re going to drown. Your first sales guy is going to cost you $500K a year plus there’s SDRs, the marketing people. And you need hundreds of those eventually. So, everybody who’s telling you to bootstrap, be very, very careful about it if you’re in B2Bs and I don’t how consumer works, so it’s something about a bird, and Kim Kardashian and then you’re good, but that’s probably another …

Jos White: I think on the great people side, what we see with some companies in our portfolio, is this desire to hold on to the founding team and the early employees and we’re a family, everyone understands the culture. It’s almost like we want to promote from within. And that works to a point, but all our research shows that the best startups, they hire, certainly Series A elements, they start to really hire for experience. And you can blend that with founders and with the right attitude from people coming through the company but you really need to bring people in who have done it before and not be too concerned about, are they going to be earning more than I am? They’re going to be wearing a suit and that’s a bit scary and they’re not going to fit in with the culture. You need to hire well but you need to bring in experience and you need to bring in experience early to complement some of the other great talent that you have on the team. Do you think that’s right?

Christian Lanng: No, absolutely. And I think… look, we’ve had a good team, of course supplemented during the years and we have a very global team. One of the reasons we went to San Francisco is it has… in Europe I often get the question, why did you go to the U.S? Why did you got to San Francisco? It’s so expensive. Our engineers are as good as the San Francisco engineers. All of that is true, but in San Francisco you have four generations of leadership that has done software IPOs. You don’t have in Europe yet. We’re building it but those people will make a real difference when you’re in the growth stage of your company.

Jos White: Okay. Well, I think the red light is flashing. So, Christian, thank you very much. Thanks everyone.

Christian Lanng: Thank you Jos. Thank you.

Jos White: Thank you.

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