Starting from Nothing – The Foundation Podcast

Guest Name Interview – Christian Vanek

Introduction: Welcome to Starting from Nothing – The Foundation Podcast, the place where incredible entrepreneur show you how they built their business entirely from scratch, before they knew what the heck they were doing.

Now, here’s your host, Andy Drish.

Andy: Welcome everyone to another episode of Starting from Nothing, the Foundation podcast, Andy Drish here. Today, I’ve got my friend Christian Vanek on the phone with me or on Skype with me, I should say. I’m really stoked about today.

Christian is one of the co-founders of SurveyGizmo which started in 2006. Is that right Christian?

Christian: That’s correct. Yup.

Andy: About 2006. You’re going to hear a wild story today of Christian who was just telling me that when he started this company he was $120,000 in debt to the IRS, had no money to really get started, and now you guys have 65 employees. Two years ago they were ranked the 13th fastest growing software company in the United States by Inc. Magazine. And he’s really taken the company completely bootstrap from scratch to a multi, multimillion dollar company.

I always find it fascinating, like, the different stages of business that you progress through and how, like, going -- The first hundred grand is so hard and then you hit the first million and so on and so forth, and how the game continues to change.

Christian, I think your background is in development, right?

Christian: Yeah. I was originally the software developer that wrote the first version of SurveyGizmo.

Andy: Perfect.

Christian: As a demo of the first version of SurveyGizmo before it actually existed.

Andy: Dude, I’m stoked to have you on today.

Just so you guys know, I made this commitment in April to only doing interviews that I’m actually really, really excited about doing. The reason I’m excited about this one -- So Christian, I met Bill Flagg a month, two months ago ish. Probably two months ago.

Christian: Two months, yeah.

Andy: Bill’s an adviser and mentor at Techstars. He’s bought into a handful of companies -- Christian’s been one of them -- for a small equity piece and then he advises them and he let me sit in through one of their little mastermind meetings and stuff which is where we got to meet. It’s so refreshing to talk with people who built multi, multimillion dollar companies from scratch, starting from nothing, and to bringing on the show.

So I’m stoked to have you on today, Christian. Thanks for coming, man.

Christian: No, thanks for going.

The thing about Bill Flagg was he actually is a true partner. So, in every sense of the word, he understands operations and everything like that. We weren’t looking for money, we were looking for someone that knew marketing better than we did and that is certainly Bill.

Andy: Oh, beautiful. I didn’t know that. That’s awesome.

Christian: One of the things he helps out at Techstars with or did originally.

Andy: Really?

Christian: Yup.

Andy: He’s amazing. I only got to hang out with him a couple of times so I’m looking forward to doing more of that with you guys this summer. So they’re all here in Boulder, by the way, which is a great spot. We’re trying to recruit more people too. So, if anyone wants to move to Boulder, shoot me an email and let me know. (Laughs)

Okay, dude, so take me back. Let’s start at 20 years old. How did you end up $120,000 in debt to the IRS and what made you think that you could start a company if you have -- Shouldn’t you go get a job if you have that much debt to pay off?

Christian: Oh, I had a job. I quit.

Andy: (Laughs)

Christian: So, yeah. After high school, I did a program called City Year in Boston which is an urban peace corp. It’s part of the AmeriCorps program now. I tried college and I absolutely hated it so I got a temp job.

So, this is between 18 and 20. I worked my way up in that organization. I became one of their software developers and then probably irritated them a great deal by simply quitting and becoming a consultant for them instead. They’re a great company and over Massachusetts actually.

Yeah. Thinking that I knew everything at 20 which, I think, most 20-year olds do, I decided to start a business and build an awesome piece of marketing automation software called -- God, what was it called? Market Blazer.

Andy: Nice.

Christian: Which has now been re-registered by someone else.

Yeah, I made the classic mistake that every developer does: I was building the software for me. So I didn’t bother going out and finding customers. I didn’t ask them what they wanted. I knew because I was 20 and therefore I had a god-like understanding of the world and what my customers would want.

And so I just started racking up, paying for Microsoft servers, and all of these expensive pieces of equipment. I did have income for my consulting with my old client but not enough to run a company and pay for all these expensive stuff, and basically not try to sell my software. So, in the end, I had to shut everything down. I haven’t had enough money to pay my taxes two years in a row which oddly adds up.

Andy: (Laughs)

Christian: One thing I’ll say about the IRS is actually they’re not forgiving but they’ll work with you.

Andy: Really? What do you mean?

Christian: Well, provided you agree, you owe them the money and you’re not going to try whittling out of it or saying that this is not a commitment that you made, they’re willing to work with you. I paid every dime back plus the penalties.

Andy: But they gave you space to do it over more time?

Christian: Well, yeah. I mean they’re charging interest but yes.

So, yeah. I mean that’s basically how I did it. I made the tragic mistake of not understanding something key to business. There is no business without customers and you are not the customer and that was the mistake.

The software was great, actually. I wish I had it today, I wish I had entered into the market back then with Market Blazer as -- terrible name.

Andy: (Laughs)

Christian: Entered into the market and was competing against Marketo and Eloqua and all of these guys but, yup.

Andy: So, Market Blazer ended then what did you do?

Christian: Oh, let’s say. I lost my apartment, lost my car temporarily, and I lived with a friend for about two years. And then I got a job at Boston University in their Business Affairs department.

Andy: Doing what?

Christian: Giving MBTA passes to students.

Andy: Is that the bus system?

Christian: Yeah, subway system. So my job was to stand at the window and give them.

Wrote a couple of cool pieces of software there so, you know. You put me in anywhere and I’m going to try to optimize it. Rather than having FileMaker printouts that you had to flip through and find, you know, 30,000 student’s names, they just learn -- we created a badge swipe system. And they could swipe their badge and we just give them whatever the FileMaker Pro system spat up. So we went having to have, what, four windows open to just having one.

Andy: Nice.

Christian: Yeah. Got a job there.

Andy: How old were you?

Christian: So that was probably until I was 23; 22, 23. My old friends from that first company that I worked at then start hooking me up with consulting gigs. So they came back and on the side I started consulting. Eventually I was making so much more money consulting that I quit the BU job.

Andy: Nice. And just writing code for the most part on different projects?

Christian: At this point, I really understood how valuable the customer is. So, whatever the customer wanted me to do, I did it.

Andy: Nice. That’s a great lesson to learn early on.

Christian: Oh, yeah. SurveyGizmo would not exist without that lesson.

Andy: So how did you end up with the idea for SurveyGizmo? Did you try any businesses in between or it went from consulting to this idea came?

Christian: I had created a piece of software, another one that my customers had asked for, called CoReg Complete which co-registration -- ever sign up for a newsletter and on the thank you page is a whole bunch of other’s newsletters for you to sign up for.

Andy: Yeah.

Christian: It’s kind of skeazy.

Andy: (Laughs)

Christian: This was a trade system. So what it would actually do is people with various newsletters, rather than paying each other for subscriptions, the system would automatically create equitable trades. So, if I was getting more subscribers from one of my publishing partners then they were, their ad would start getting rotated higher on my sign up page until we had made -- we were equal. And many of these people were competitors against each other so equal trade was really important.

So that was one piece of software and in the end -- It really didn’t have a huge growth model so I sold it to another company just after we created SurveyGizmo.

Andy: Just after you created SurveyGizmo. So, did you build CoReg?

Christian: I did, yup. And my customers were entirely happy that it disappeared. It really did disappear in the end.

Andy: Yeah?

Christian: Oh yeah. But that was also a good lesson is when you sell the product that you’ve created, you have to let it go because more than likely it will not exist without its creator.

Andy: How old were you?

Christian: Twenty-four? Twenty-five? How old am I now?

Andy: Damn!

Christian: Twenty-six.

Andy: Can I ask what it sold for?

Christian: I don’t actually remember. It was only a couple of thousand dollars really. Oh, that’s right. Basically in cash, nothing. It was a revenue share if they were to make it successful, which they didn’t.

Andy: Got it.

Christian: So, I got nothing from it.

Andy: Damn! So 26, you’ve been doing consulting, got rid of your first business. In the meantime, found the idea for SuveyGizmo. Where did that come from?

Christian: One of my consulting customers.

One of my jobs for a company named MarketingSherpa actually was to program surveys and research that they did and I was doing that in cold fusion. And it was a bit monotonous.

So it was actually their idea. Their idea was “If you write this piece of survey software and we’ll put you in touch with a whole bunch of people that can tell you everything that you need to know about it” because I was not an expert. Just do whatever they say. I had really gotten into that hot habit so that was perfect. Then what they would end up doing is they would use the software for free and they would just promote it. So they would become my first evangelist.

I called each and every person that I got in contact with, I asked them what they loved about platforms that they’ve used in the past, what they would really love to see, and how much money they were willing to pay. From that, I created the first version of SurveyGizmo and we joke, it was the first mockup-ish of SurveyGizmo was created in [unclear 00:11:14]. I demoed it at the end of a very, very long weekend to one of the customers and they ended that demo with, “Great. We have a survey to run. Can we use it?”

Andy: And they didn’t care -- It sounds like it was pretty shitily mocked up.

Christian: You would not have recognized it. Very quickly said, “Well, how about I program the survey in it for you for the first round?” So I did a lot of concierge work in the first couple of customers.

Andy: Yup. But they didn’t care.

Christian: Nope.

Andy: Why not?

Christian: Because they knew I was building exactly what they asked for, I have their trust, and I was willing to put every -- I think they understood in particular saying as I had working relationships with some of these guys in the past. I would do whatever was necessary to make sure that they came out looking great in their survey.

Andy: The design and stuff was probably like pretty -- was it sloppily designed? Not sloppy but just like it’s quick, right? You’re not a designer by trade and so …

Christian: Apparently, I didn’t give myself enough credit for that but no, it wasn’t particular -- It was very rough.

Andy: Yeah.

Christian: I wouldn’t call it usable. Plus, I was designing a piece of software that would look and feel more like a programming toolkit than a piece of marketing software.

Andy: Totally.

So I guess I’m curious what -- because what happens with so many people, I think, is they get stuck wanting everything to be pretty and perfect on the first time. And I’m curious that your customers, even though it wasn’t pretty, it wasn’t perfect, they’re like “Let’s run a survey and see what happens.”

Christian: Yup.

Andy: I’m curious why.

Christian: I think it was actually a book [unclear 00:13:07] guys who sort of created a new Maslow’s pyramid of needs for software. And the bottom need is does it work.

Andy: Oh. What is this called?

Christian: The book that it is in is called Designing for Emotion I believe. It basically says that the highest pillar of that is pleasure. So, is the software pleasurable to use? But really, at the very bottom, you know, does it work? And then is it reliable? Then you start moving up this change. I’m probably paraphrasing it very poorly.

Andy: Oh yeah.

Christian: But the bottom line is if your software does what it is supposed to do, you can find a group of early adapters provided they know that you are willing to change your software based on their feedback, who are willing to give you that feedback and trust its use. Provided whatever they’re producing looks pretty good.

So we’re business software. Business software in general doesn’t look that great in the backend. We certainly change that with our new version but even that was a culture shock for people.

Andy: This is awesome. This is so, so awesome because there are so many people in the Foundation right now that are pretty much in this space where they’ve got their first champion users and it’s just a really exciting time, right? Because there’s so much uncertainty and so much movement and you’re constantly getting feedback of what’s working and what’s not. But I see a lot of people when they’re trying to get started, this is what trips people up as they think it has to be perfect and they don’t give themselves the permission to just make it okay. Just make it functional and not make it beautiful at the beginning.

Christian: Right. I would say that if you are thinking that you’re going to sell your product based on its looks, then you probably didn’t talk to enough customers to figure out what they want to begin with and you’re sort of compensating.

We don’t worry about launching things that are absolutely perfect. I mean we have a lot of data that flows through our system now so we have to make sure that it is functional and that people’s data is secure with us and that they trust us. We were not usability experts at the beginning.

Andy: So you got the first version and you built it in a weekend and they said, “Let’s run a test.” What happened when you ran the first survey?

Christian: Well, the interface was a little bit of smoke and mirrors. So, for the first demo, not all the buttons actually work. So, as I was programming that first survey in, I actually had to make sure that the bare minimum work for my customer. But that was really good because it told me what that bare minimum really was. Also, because my reputation was on the line, I made sure that nothing could go wrong. I had backups upon backups upon backups.

So, we ran the survey and the first survey worked. The data came in. It worked pretty darn well.

Andy: What do your customers say after -- like what happens after you get the results and they’re happy?

Christian: The nice thing about my customers is they were customers that do this sort of thing on a regular basis. So the conversation at that point was, “Alright, what do I

need to do to be able to do this myself in the future?” Because the whole idea was not me programming surveys even in a software tool that I wrote. I didn’t want to have to do that anymore. I really just wanted to have to charge a small monthly fee. And obviously not from these core customers because they were going to get to use it for free forever.

Andy: Mm-hmm.

Christian: So, really at that point, it became the work of “Now I have the data so I got to build the reporting suite.” Once we have that ready, basically the next survey was ready to go.

One customer who was brave enough to actually use it, untested, as the very first which I’m not sure they knew. To be honest, I think they did. Then the next customer was more than willing to be the second guinea pig. Again, these are people that I built trust with by asking them what did you want to see in survey software. This was not my survey software as far as they were concerned, this was their survey software. They were building it. I was really just the channel for whatever they were looking for. They told me their needs, they told me their problems, and I work with them to try to find solutions.

Andy: I find that so interesting because it’s what’s happening in the Foundation right now is people are going through this and it’s such a backwards thinking from a mindset standpoint. Most people think you need to build the product and you can’t build it until you -- or you can’t sell it until you have everything in line and perfectly dialed in. But when you have this shift, when you realize that you’re just a channel and you’re allowing people to create through you, it’s a pretty -- almost liberating experience when it comes to business.

Christian: Yeah. I think that sort of -- I agree with you and I love this is what you guys are working on.

In the old days, if you think about a lot of early startups like a bakery or something like that, the truth of the matter is they didn’t start with their space, they didn’t start with their ovens, they don’t start with a thousand different recipes that no one has ever tasted before. More than likely, a lot of those bakeries started in someone’s kitchen and they sold their friends couple of loaves of bread.

So, in the old -- I’m going to say in the old days -- this still happens. But, the truth is, a lot of very successful businesses start from the customer first and they always have and they always will. You really get into Russian roulette when you’re trying to make everything perfect first and hope that you get that exact fit for your customer base.

Andy: Totally agree. Totally agree.

It’s so funny. I just find it so interesting about how -- Where do you think the mindset comes from? I feel like people get it so wrong so often, like so backwards. I don’t know if it’s business school or what but people think that everything has to be perfect. But understanding the true essence of entrepreneurship in building a business is, like, at the beginning it’s really messy and it generally starts with friends and family or people who know you, like you, and trust you. And that’s where almost all businesses are birth from.

Christian: The ones that last, yeah.

Andy: Yeah.

Christian: But I think this came from a certain amount of celebrity. So, if you look at the way that media portrays entrepreneurship now, they make it very, very sexy. This guy in a garage came up with this brilliant idea and then boom! It was done.

Andy: Yeah.

Christian: And probably this comes from entrepreneurs and our ego.

So, another way that I could tell this story, if I wanted to cover all of the details that might allow another person to be successful, is I could say, “Yeah, I was working with some people one day and I have an idea for SurveyGizmo and it turned out great,” and I could own that idea. In truth it wasn’t my idea and in truth many of these other businesses and the pivots that they took came from customers. Even if the entrepreneur or the business owner would say that it was theirs.

Andy: Mm-hmm.

Christian: And there’s nothing wrong with saying that but it is an incomplete story.

Andy: Yeah. And I think what it does is it distorts the perspective or distorts the reality for the person who hasn’t experience that yet. And then they believe that’s the way that it’s supposed to happen. You’re supposed to be smart enough to come up with the great ideas or [unclear 00:20:36] enough to sense them out or just see trends or whatever. When the truth is it’s generally just a big mess and just kind of happens.

Christian: Yeah. I mean to preserve a little bit of ego for someone that wants to be an entrepreneur, you have no pressure to come up with the big idea. All the pressure is is you need to have -- you’d be really good at solving problems. Your customers might come to you with a problem and no solution and that’s your

opportunity is you can provide a solution for them and then ask them how much they’re willing to pay.

Andy: It’s so simple when you boil it down that way.

Christian: It’s surprisingly simple. We just clutter it up.

Andy: We do.

Christian: Not to say that there’s not a lot of other things that would go into this. I mean I didn’t know the first thing about forming a new business with my first business.

Andy: Yeah.

Christian: So, I created a [C Corp 00:21:21]. Yeah, that was a waste.

Andy: What would you have done now knowing?

Christian: Just what we did with the second one is -- My consulting company was CVanek Studios. I didn’t even need to file a fictitious business name because it had my last name in it. And then when we first started SurveyGizmo, it was Vanek and McDaniel partnership. And then eventually we filed a fictitious business name and we registered an LLC and we became Widgix.

Andy: Nice. Nice, nice. You’re right, it’s like at the core essence, business is about solving problems and then everything else was just on top of like that foundational framework.

Christian: Solving problems for other people usually.

Andy: Yeah.

So, going back to your story though. So, you get your first couple of customers, right?

Christian: Yeah.

Andy: What’s it like after you get, say, your first 10 customers?

Christian: It’s very exciting. At that point, as soon as you have customers and you can watch them using your software -- makes it sound a little creepy but, you know, I was. I was watching them. You feel like a real business like you’ve suddenly succeeded. The way that you talk about your business to other people changes the way that you talk about your software, it starts to have a life of its own. I think, you know, after maybe 20 to 30 customers in the system, I definitely had more confidence talking about the software as an entity in and of itself.

Andy: Yeah. It becomes separate from you.

Christian: Particularly when the first of the recurring payment start coming in, you know? That first $9 charge was amazing.

Andy: Yeah, yeah. That first recurring payment and that first customer who signs up entirely on their own and goes through the process without you having to do anything.

Christian: Yup. You don’t know who they are [unclear 00:23:10].

Andy: Yeah.

Christian: If everything goes well, anyways.

Andy: (Laughs) So 20, 30 customers. What was your rate, $9 a month ish to get started?

Christian: Yeah. It was quite low. I think it was -- We’ve gone through a lot of pricing changes over the years but we started very, very low and then increased our price based on what our customers were telling us. It has always been our customers that have told us to increase our prices, not something that we decided to do on our own.

Andy: Oh, beautiful. Again, just listening to what they’re telling you.

Why do you think your customers tell you to raise your prices?

Christian: We’re not the most expensive tool out there; we’re one of the most powerful. And the reason that we don’t charge as much as other people, but we still offer all the great customer service that you get at brands that are way, way more expensive than us.

We never racked up the cost associated with running our software the same way that other companies did. We don’t have massive sales teams. We have an onboarding team which is a glorified support, dedicated support just for people that find us. So we don’t have all these cost. I mean I suppose I could be really, really profitable if I jacked up the rate but there’s no need.

I mean we operate between 20% and 30% profitability every quarter. So, usually the reason that we increase our price has traditionally been when customers have come to us from a particular segment and said “I can’t buy you because my boss thinks you’re too cheap. Can I pay more?”

Andy: That’s awesome.

Christian: We’re like “We don’t have anything else to give you. You know you don’t need to pay more, right?” But it is. It’s a perception in our culture that part of the value of something that you buy is how much it costs. I mean all the way from cars to houses.

Andy: So fascinating, dude. I always love pricing discussions going back and forth. It’s sometimes the most frustrating thing in the world to do but it can be -- It’s most enjoyable when it’s not my company. (Laughs)

Christian: (Laughs) Well, you know, we just went through anther pricing shift not too long ago and there’s always that gut fear that you’ve made a terrible choice.

Andy: Yeah, dude. Totally.

Christian: Particularly when you drop prices which we’ve done a couple of times for some of our plan levels.

The way that we look at it is we always grandfather our customers in at whatever is the most favorable price. If we’re experimenting with pricing, we’re not going to rate it -- A deal is a deal so we’re not going to raise the price on you just because we’ve raised our price for new customers going forward. But most things have settled out around the current pricing that we’ve got.

Andy: Tell me about -- When did you get your first hundred grand or so? At what point was that? How long into it.

Christian: The first hundred grand that I got to keep …

Andy: That you’ve made [unclear 00:26:12] revenue overall.

Christian: That would have been the second year of business. The first year of business, our profits were $14.

Andy: Nice, dude.

Christian: Yeah.

Andy: Big tax bills.

Christian: But $14, that was profit. So we split it halfway. I took $7. I went across the street to Trader Joe’s, got a bottle of Two-Buck Chuck and [unclear 00:26:33].

Andy: Yes.

Christian: For the $100,000 mark, that was the second year. At that point, we were definitely celebrated. I don’t remember it specifically anymore but we also had

become an employer. Scott and I, were not employees at that point, we were owners but we were not drawing any money out. We hired our first two employees that year and it was wonderful and terrifying at the same time.

Andy: Yeah.

Christian: So, yeah. From that point on, we basically doubled every year, or more than doubled, until the size that we are now.

Andy: How old were you when you’ve hired your first employee?

Christian: How old was I when I fired my first employee?

Andy: Hired. Hired not fired.

Christian: Oh, hired. [Unclear 00:27:24] question.

So, I was probably 28? Well, strictly speaking, the first SurveyGizmo, when I did my consulting company, I actually had hired two people there as well.

Andy: It’s a really interesting experience when somebody else’s livelihood, not just yours but somebody else’s, is dependent on your company’s ability to generate profit.

Christian: Yeah, it’s funny. I talked about this with my mom. My mom says that before she had kids, she really was not a grown up because she had no one dependent on her. And I have to say that both as a person but also as an entrepreneur, I really was not a grown up until I had other people dependent on me and I took that really seriously.

I really only have one fear -- actually I don’t have it every day but I really only have one fear, and that fear is that one day I could not make payroll.

Andy: Yeah.

Christian: And so a lot of what you’d call risk management here is making sure that we have solid finances so that can never ever happen because that would be the worst day of my life.

Andy: Yup. Totally. We just hired a woman and she’s quitting her full-time job to come work with us and it’s a big responsibility, at some level, is how it feels.

Christian: Yeah. Not all business owners take the same level of responsibility there. I mean the way that I look at is it’s not just my employee that is my responsibility at that point, it’s their family as well. As employers -- and this is something I learned

when we, I think, turned 30 or 40 employees. Additionally, it’s not just making that payroll, it’s also are you adding to the value of their careers.

Andy: Mm-hmm.

Christian: You can keep piling up the responsibility when you get down to it. That’s a big thought for me right now. We’re 65 people. I want to make sure -- This is not a job, this is a career, and it adds to the overall value of their career throughout the rest of their lives.

Andy: Yeah. Like their growth as a human, you know. I firmly believe the experiences -- it’s almost like the experiences that you have at work or building a business create ripple effects throughout everything. And so often the stuff you struggle within one domain, you often find struggling yourself struggling within another domain as well. I think the act of building a business with a team is one of the coolest ways to discover what those things are.

Christian: Right. I mean one of the things that makes us as people different than -- not that I have anything wrong with animals or primates but we form very deep connections. One of the connections that we have with ourselves, our employees, our local economy is economy. We’re forming mini communities. While they might be tied together with the common cause of a business, that really is no different than the common cause of any other community.

Andy: Yup. Totally.

Okay, so you made your first hundred grand, hired a couple of people two years in. What was the next plateau for you? What was the next point that was like, “Oh wow, this is different”?

Christian: When we made a quarter of a million dollars, I think. That definitely happened I think midway through the next year, something like that. And then, you know, from that point on it was -- we had to reach certain -- we kept raising the bar for ourselves is a good way of looking at it. Beyond that, it was when we made a million dollars and that was incredible.

You know what’s weird is I don’t have a firm memory of it and I really [audio cuts 00:31:12]. I journal a lot now; I write down my thoughts because there’s so much going on. I have to. I wish I had done that back then. I would love -- because there is very little record of that celebration. I vaguely remember it. But I am the type of person that moves on from -- I celebrate for 30 seconds and move on to the next challenge.

Andy: Yeah, totally.

Christian: But it would be nice to actually have some record of it.

Andy: So, made a million dollars profit that year? [Unclear 00:31:34]

Christian: Was it three years in we made $1.2 million for the year. Again, it just kept going. The next year, I think, was $2.5 million, then $5 million, then $8 million. Now we’re basically six years in, seven years in, and we’re shooting to make $11 million this year.

Andy: Damn, dude. Congrats, man! I think that’s so awesome.

Christian: Yeah. It gets surreal pretty quickly.

Andy: Yeah. Yeah, it does. What changes when you get to the million dollar mark? Because you were writing all the code before, what shifts?

Christian: I’m not sure if it happened right around the million dollar mark but it certainly in there. It happened when we started building a dev team and I was no longer -- or I shouldn’t have been -- writing all the code myself. So, at that point, I was the CTO. So I was still doing a lot of the technology stuff myself. What I learned was that there’s a couple of liabilities from being able to do everything yourself and learning how to work, manage, and lead a team was definitely one of the darker moments of my career because I did not get it right the first two, three, four, five times.

Andy: What happened?

Christian: I was used to simply being able to do everything quickly myself and not communicate the end goal that I was looking for. I wouldn’t say that I -- I’m probably not perfect at it now but I’m probably better at it because my dev team now doesn’t seem to have much of a problem communicating with me.

So, I would just get frustrated. I didn’t understand that I was unconsciously competent at doing what I wanted particularly within my own code base. So, rather than -- I will just get frustrated at trying to explain it and so I would just do it, and then I would have them maintain it or I’d show them what I had done and have them add to it.

What that created was, ultimately, a sense of resentment about who owned the product and what their value was to that product line. And ultimately, that’s something that, you know, I think it was five years down the line we actually had to solve.

Andy: Oh, man. I totally relate to what you’re experiencing right now. It’s like it’s the transition from being running the business where you’re doing everything to working at like a higher, like a meta level where you’re helping people do what they do best and you’re just helping get out of the way for them is how it feels.

Christian: Yeah. You have to know yourself pretty well or at least be willing to meet yourself. So, I didn’t know myself nearly as well then as I do now and part of that is understanding my limitation. So, I do move very quickly and I do like doing things myself. But I can no longer do that in my organization without causing too many ripple effects that are negative.

What you’ll see me do here is if I know that I’m going through a period of “I need to step back and let the teams do what they’ve been hired to do and they will do very, very well,” I will find a project for myself that is out of everyone’s way and I will focus on that.

Andy: Oh, cool. So that keeps you preoccupied, it allows them to do their thing best and everybody kind of wins.

Christian: You know, whatever it is, it has to be something that is interruptible because I have to be always available and I have to be paying attention.

Andy: Got it.

Christian: But mostly what I should be paying attention to is an obstacle that’s getting in their way that I can remove for them and facilitate that.

Andy: Got it.

Cool, man. Tell me more of like -- biggest lessons of transitioning from $1 million company to a $10 million company.

Christian: Biggest lessons. Oh God, there’s so many of them. Well, one of which is how to communicate effectively in general but another lesson that I had to learn is how to communicate effectively with people that are unlike me. So, I see this a lot with startups where --

The entrepreneur will hire a bunch of people that are just like them and that works for a while. But there’s also an inherent blind spot in -- some people have great skills will not think the same way as you do, they will not approach problems the same way that you do, they’ll have a different background and a different communication style than you will.

So I actually went through a transition period where two of my managers and I, we really -- they were great people, very talented, but I could not get my ideas across. So what I did was -- I actually got some coaching at that point and it was along the lines of how to communicate with people that, well, are not like you. Where you can’t draw on a common frame of reference as easily and it worked. But that was one of the lessons that I found most useful.

I also learned that -- I’m very good at estimating numbers and I can hold a lot in my head but I had to learn how to run a proper business. So, at a million dollars plus, you do need to get familiar with what a PnL is, you do need to understand cash flow and a balance sheet.

There’s actually a great book, I think it’s called Financial Management for Entrepreneurs which takes a very, like, layman’s approach to it. We usually don’t become entrepreneurs because we’re great finance people. We become entrepreneurs because we have a good head for problem solving. And many of us are embarrassed about how little we know about finance.

Andy: Truth.

Christian: We never admit it to anyone but we are. We consider ourselves financial idiots.

Andy: It’s like basically -- Up until this year, it was always look at account as taxes the end of year, you look at the bottom line you’re like, “Okay, good or bad.” It’s like green or red and that was pretty much it.

Christian: Yeah. I was also scared because I thought there were lots of different financial rules and all these lines. Actually, it’s basic arithmetic. If your finances are so complicated that they require a degree, your finances probably shouldn’t be trusted.

We have a keep-it-simple stupid rule here. We actually operate at cash basis for the most part. We keep it simple. My employees know all of the finances of the organization, they know how much payroll costs, they know what our benefits costs, they know everything. So there are more eyes on the problem than just mind.

Andy: How’s that worked out for you? Because we talked about this a little bit.

Christian: It’s probably the best thing that we have done in the last two years was going open-book finance. Just before I got on the line with you, we were having our huddle and we’re all really busy. So, it wasn’t a full huddle, we only had maybe 30 people down there. But we went over all the lines of the business. What is revenue like? What are the current problems that our customers are reporting? How do our customers feel about our software? Are we happy is a line down there that we went over.

We look at the general health every week at the same time and we made a couple of [unclear 00:39:12] decisions downstairs, you know? We were understaffed in one department that theoretically could have left customers feeling underserved so we allocated more resources to that from other teams and we’re all one giant team so it works really nicely that way.

Andy: How do you balance leading and holding the frame of, like, the vision and where you’re going and what you’re working on versus allowing group consensus to dictate direction?

Christian: So we have three C’s for decisions in this organization. We consider the first two ideal and the third one not.

So the first is consensus which doesn’t mean everyone agrees but when the decision is made, we all agree to support it. But it is. We all discussed the problem, we all nominate solutions, we vote on the solutions and we move forward with it. That is very, very democratic when we get to do that but it takes the longest. It takes a long, long time. The more people you have, the longer it will take.

The second is consultative where I say, “A decision needs to be made but I want all of your feedback.” And that one’s faster. Most of the decisions that we make, although sometimes people will feel like they were left out of the consultative part of it and that’s bad. That’s where most decisions are actually made here. And then finally is the CEO just says. So that’s the third C.

If we were the Titanic and we were heading towards an iceberg, I’m not going to get people’s opinion, I’m going to turn the ship. But in general, those decisions should be far and few between.

It’s difficult to manage sometimes because we have so many opinions and there’s so many different viewpoints. And also, people approach things with different levels of knowledge about our problem from the beginning. So, a lot of things are consultative which basically allows for a good hybrid between keeping everyone informed but also making a decision in accordance to the vision of the organization.

Andy: Yup.

Christian: In general, our consensus decisions are really about our own happens and being an employee here. So, if we decide that we were going to have a health savings plan or if we’re going to cater our lunches, things of that nature.

Andy: Dude, I really like that. I like where you have it. I like the three different levels of it. It does feel right that the majority are probably going to be in the middle where people going to give feedback, they get a few heard, but at the end of the day, it’s generally your call or whoever is in charge.

Christian: Whoever is in charge of that decision. It doesn’t always have to be me.

Andy: [unclear 00:41:54].

Christian: Yeah, the three C’s and the three V’s.

Andy: What are the V’s?

Christian: The V’s are about being happy at work. It occurred to me on the plane that you really need three things to have the formula or recipe for having this as an employee. And also, for me, as -- First one is that you feel valued. The community around you values you and you’re getting appreciated from them. Not just from your boss but from everyone.

The next is that you know how you’re adding value. So, you know that your job is important, you have no questions about what the value is that you’re adding, and you have no obstacles towards adding that value to the community.

And the last is that you’re with a group of people that share similar values. I’m not talking about political values, I’m talking about the larger picture values, the great customer service; a feeling that we are building something beyond and bigger than what we are. And that we’re going to go about and acting towards that vision with a similar set of values within the organization.

So, if you have those three V’s, it kind of works.

Andy: Wow! I dig it.

Christian: Yeah. I got to write a blog article about that one.

Andy: Yeah, that’s really, really good. Really, really good. Awesome stuff, dude. Last, just wrapping up before we go.

For the people starting out, if you’re talking to yourself all over again, what’s the one thing that you would ask yourself? Or that you would tell yourself before -- if you could go back to being 25. Most of the people in our audience are in that starting phase where they’re, like, learning to talk to customers and learning to listen to them and figuring out what that idea is.

Christian: It really is never to forget that the people that we [audio cuts 00:43:52] end users. We -- I’ll generalize -- but a lot of entrepreneurs have a great deal of ego; we’re very good problem solvers, we have ideas. That’s going to get in the way, a lot. So, the sooner you learn -- Hopefully you don’t have quite as hard knock early on as I did but then, again, I’ve heard people having a lot worse. Just realize that put your ego aside and listen to what your customers are saying. Always face them. And if you ever do get investors in your organization, be them family, friends, or outside, make sure they understand and you’re in agreement that you will be serving your end customer because without them there is no business.

Andy: Beautifully put. Beautifully put, man.

If people want to reach out to you or get in touch with you or shoot you a message or something, where can they do that at?

Christian: You can email me at christian@surveygizmo.com. I get back to emails that go there but I tend to be a little bit slow. It’s nothing personal, it’s just the sheer volume that I get.

Andy: Totally, man. Thank you for coming on today. You’re not going to get much from doing this interview. You might get a couple of customers here and there, but at the end of the day, I know you’ve got a ton of stuff on your plate and I just deeply appreciate you taking the time to make this. I think the audience is really going to love it. So thank you for coming on.

Christian: Yeah, my pleasure.

Honestly, if we can get more customer-focused businesses out there, I will be served because, hopefully, you guys might be the ones that are my vendors in the future, or the restaurant that I love going to. If you treat your customers’ right and you pay attention to them, it means I’m going to get great service.

Andy: Amen to that. (Laughs) Christian, thanks my man.

Christian: My pleasure.

Closing: Thank you for joining us. We’ve taken this interview and created a custom action guide so you know exactly what action steps to take to grow your business. Just head over to thefoundationpodcast.com to download it for free. Thanks for listening and we’ll see you next week.