With a few million in the account and Devdutt on our board, we slowly began to set up shop in Boston. Alex and Morten weren't terribly excited about settling in Boston. Alex stressed that he would rather go to New York. Squabbles ensued.
“Don't worry; in six months' time we'll be off to somewhere else,” I told them.
And I believed that.
I had talked with Mie about the concept of a move to the United States, at least in theory, and now that it was a reality, she was on board immediately. She had traveled extensively and was very much up for the adventure. I had shared my American dream with her when we originally met. Back then, I didn't know how much I could predict our future. I knew I was very inspired by San Francisco and Silicon Valley, and I somehow felt a tie to the United States. My dad grew up in Bronxville, New York, during World War II, where my grandfather represented the interests of Greenland, which came under U.S. protection after the Nazis invaded Denmark.
Somewhat unconsciously, I've always traced the footsteps of my family that came before me. My grandfather was the first man to travel around the world on a motorcycle, back in 1912, and I've always kept a photo hanging in my kitchen of him and his friend and travel partner, Svend Heiberg, arriving in New York City on their Harley Davidson (without the sidecar; that fell off in Turkey after they were chased by highwaymen and crashed in a cactus field).
The first time I went to New York I visited all the places where my dad had grown up and my grandfather had worked. When a lottery drafted me into the military in the late eighties, I served in Greenland and had an opportunity to not only see the house where my dad was born in Nuuk but also visit some of the places he had visited when he did his service in the North Atlantic. Today we have small pieces of furniture and pictures that I know have followed my grandfather and father on their many journeys across the Atlantic—in some cases closely followed by Nazi submarines—and I wonder how much of that journey has formed my own yearning for traveling and adventure. Though my adventure is so different; today there's a direct SAS flight between San Francisco and Copenhagen, which makes traveling much easier and more convenient. And it definitely beats having your entire family sitting ready in life vests on the deck of the ship, just waiting for a torpedo to hit.
So when I finally asked Mie about moving to America for real, she simply replied, “Yeah, let's do it. We'll figure it out.”
But that's not to say that the move would be easy. Mie, who is deaf, didn't read lips in English. She had a son from a prior relationship, and moving him far away from his father would be complicated. He was then almost seven, and we had two daughters, ages three and two. None of the kids spoke English. And we would be leaving a pretty good setup: we had a great apartment in central Copenhagen with both a great school and daycare around the corner. Now we would be starting from scratch. I don't think I really shared this with Mie, but I was terrified about moving our budding family and afraid of all the unknowns to which I would subject them. Living an entrepreneurial life doesn't necessarily always match your desire for your children to grow up in a safe cocoon.
We didn't return to Jamaica Plain, but instead set up our new office in Boston's Leather District, squeezed in between Chinatown and the Financial District. It was one of the only parts of the very groomed Boston that we felt had the gritty and chaotic city vibe that we liked.
The company was thriving in its new environment. Zendesk got more and more popular by the day. And we were not keeping up with the demand. We started to hire people in Boston, and we soon created a different kind of family. Rick Rigoli—a marvelous mashup of the lead in television's Columbo and Robert De Niro—came on initially just as a contractor, to help us establish the business in the United States. As he said, we “needed a lot of help.” Rick was a former colleague of Devdutt's and was serendipitously between jobs when CRV invested.
There was so much to do, and Rick was a giant help—we couldn't have done any of it without him. Basically, as soon as we got Rick signed on I handed him my checkbook as well as a manila folder with receipts, invoices, and bank statements in Danish. Rick had to translate them. He did all of the accounting and payroll on cloud-based systems, even though that wasn't the obvious mainstream choice yet. He was bent on setting up QuickBooks Online and building everything in a proper, beautifully simple way. That was a lot of work, but just a small part of what Rick did. We had to get a grip on a big-picture strategy as well. We needed to determine the revenue model and the metrics behind it and decide on the right growth plans. Rick talked to investors, auditors, and lawyers about things I knew nothing about, and he started to take a big burden off of my shoulders.
The software was a relatively simple help desk ticket tracking system, and people were buying it using credit cards. It was so easy to do. You didn't need permissions from higher-ups to buy it, and you didn't have to wait months to get it. Rick, who came from the world of traditional enterprise software, had never seen this volume of transactions. There were thousands of sales and transactions every month, whereas he was used to being able to count the number of deals on one hand with old-school enterprise software. The charges were all small amounts, and Rick had to make sure they would show up in the bank account and properly on our P&L. (He did.)
We had to hire people to help with customer support locally. The first of these was Matthew Latkiewicz, a young hipster who was working as a web designer and blogging about wine in his free time. Matthew had previously owned a café, but he'd never had a real corporate job before, and he didn't have much of a tech background. (He had majored in philosophy at a liberal arts school in western Massachusetts.) He found us on a job board, and we wanted to interview him because—well, because he applied.
At that point Zendesk had nine people, if we truly counted every single body; Matthew thought this was an impressive number. He showed up formally dressed for what he must have anticipated to be a formal interview—he probably wore a tie clip or some other hipster-at-work ensemble.
His perception of us was deflated when he met with Alex in an otherwise empty work/live space, which we called our office, and they had what was less of an interview and more of an unprofessional chat. When Alex offered Matthew something to drink, Alex discovered that we had only Vitaminwater in the fridge and was horrified. He went on a rant about how “everything in America is made of sugar!”
Matthew stayed in the meeting even though Alex also told him that he wasn't right for the web role. When Alex suggested he meet Michael Hansen, who was looking to hire people in customer support, Matthew agreed to stick around.
“I need a job; sure, I'll talk to him,” said Matthew.
Alex must have seen something special in Matthew, and Michael had his own unique way of sizing up potential hires—some of them rather unconventional.
When it came to talking salary, we were all pretty clueless. Michael asked Matthew how much he wanted to make. Matthew was currently making $42,000. What did he want from Zendesk?
“Anywhere from $50,000 to $60,000,” he said.
We gave Matthew an offer letter for $60,000 to be a customer support advocate, which meant he would engage with trial customers and help customers onboard. Matthew was thrilled.
“This is amazing. I love this company. This Internet thing is so awesome! The tech world is so cool,” he said.
And we were thrilled too. Though he never would have fit the kind of “check the box” list we probably should have had, he was exactly what we needed. He was a hard worker and a creative thinker, and he reflected our voice and brand. We have found that the first few hires are the most important ones you will ever make. They may not all stick around, but those who do not only will set the initial path for the company but will also help establish the initial voice and style of the company. They will become the platform for the company culture.
All employees in Zendesk are granted employee options. This was not something that we as founders knew a lot about before moving to the United States, but we quickly embraced it, and we were proud to invite all employees to take part in the upside of the company's future. Your annual option pool is relatively constant year over year, but each year, as your hiring increases, you have to distribute those options to more and more people. Getting into a startup early can therefore be a very good idea. And it makes sense to get your early employees well invested in the company's future. It aligns your destinies.
We were selling a customer support service, so clearly we had to be pretty good at customer support ourselves or no one would want what we were selling.
Everyone worked hard to “touch” every customer and create a truly frictionless and intuitive online experience. We created rules about when in a trial customer's lifecycle we would be in contact with them and how we would interact. We called every company that signed up for a new trial and asked how they were doing. We prided ourselves on being casual, not trying to sell, but trying to build a relationship. We experimented with the format and structure of these interactions all the time. And we still do.
We were really committed. Michael Hansen gave his personal phone number to at least ten thousand trial customers. Matthew proactively called customers and potential customers—before there was a problem—to ask how they were doing. Thomas Pedersen did three thousand support tickets in his first year with Zendesk. He responded over the weekend and during weird hours. But he was convinced this was the right path: “Response time corresponds with conversion rates.”
There was no sales team and no marketing team, so this was the approach we took to do those jobs. It wasn't as if we had a manual; we used the resources we had, and we learned a lot of unconventional best practices that we still use today.
We circulated a press release about the Series A with CRV in the spring of 2009, and things went bananas. All of a sudden, Zendesk was super hot. We started to get new Silicon Valley customers. We weren't even looking for more capital, but VCs starting calling us, wanting to invest in the company, and hoping to preempt the next round.
It was a huge shift for us, to be chased. Of course, our sudden popularity wasn't exclusively due to anything new that we had done. It was somewhat reflective of the crazy flock mentality that sometimes also characterizes Silicon Valley. However, it definitely helped that we had built up quite a portfolio of customers in San Francisco and Silicon Valley. That increased our exposure to VCs as they heard our name from their portfolio companies. Whatever the reasons, it was certainly more fun to be on this new side of the equation.
Amazing firms showed interest in us. Several top Silicon Valley firms wanted to meet with us, and three flew to Copenhagen over a period of ten days, to meet us on our home turf. Benchmark—which invested in OpenTable, Yelp, and Twitter, and many more—knew us from some of their portfolio companies. But Christoph Janz had, at an earlier point, also introduced us to Benchmark's newest partner, Matt Cohler, and without our really realizing it, the partnership had been following our progress closely.
One fine spring day Matt Cohler, who looked all of eighteen, flew to Copenhagen to meet us. Alex was in Boston in those days, so I didn't want to take Matt to the loft; instead, I rode my bicycle to Matt's hotel to meet with him there.
Although we had completed our Series A with CRV, we were still wary of VCs—we had been burned before, and the lonely night I had spent waiting by the phone in that Phoenix hotel room was just a few months behind us and still fresh in my mind. Devdutt felt more like an exception. I saw him as almost a member of our team. Therefore the bar was quite high for another VC. We wanted a partner, not just an investor, and we now had a much better idea of what that looked like. It was no longer a question of our persuading the investor about the potential of Zendesk. Now it was about our feeling that the investor got it—got us. We needed to understand that they subscribed to the core concept of what we were building and could help us shape and scale it.
I didn't know exactly what to expect with this round, and I didn't know what to expect from these firms or individual VCs. Matt Cohler was such a straightforward and nice guy that not only could you talk business with him, but you could have an even better conversation with him about music or T-shirt design. And he had an impressive resume. For example, he was very involved early on in building both LinkedIn and Facebook. But all of that seemed so abstract, and I didn't really know anything about him.
However, I liked him. He was quick on his feet and sharp on our model—sharp on the opportunity and sharp on the premise. It was very clear that he wanted to invest; he just needed to get his head around the metrics of the business. And us.
So even though I initially thought it would be too cozy to have him to the loft where we worked, I wound up inviting him home for a dinner with Mie and the kids and our friends Joachim and Nikki and their kids. It was a pivotal evening, but I wasn't aware of that at the time. It just felt natural and easy to have him around. Matt sat on the sofa in the living room and watched Pippi Longstocking (in Danish) with the kids and fired off notes from his BlackBerry. It oddly felt very natural and very right.
I later asked Joachim—who's a journalist, an entrepreneur himself, and first and foremost a good friend with great instincts—for his take on Matt. He said he liked him a lot, but mentioned that they had had one very awkward moment. They were both bitching about trans-Atlantic flights, and connecting over this, until Joachim realized that Matt was complaining about the declining quality of first class service on Lufthansa. Welcome to Silicon Valley! (But I'm getting ahead of myself.)
We planned to relocate to Boston as a family right around Fourth of July, 2009, and I had searched for a little house for us to call home, but I couldn't find anything that could work. Houses in Boston meant posh brownstones in Back Bay, and there was nothing to rent under $8,000 to $10,000 a month. Finding something in our price range meant driving at least an hour out of the city, and I simply couldn't live with that. We weren't going to move around the world just for me to be stuck in traffic for two hours every day. And I couldn't do that to the family—remove them from me and from the city like that. I pivoted away from the little house ideal and rented a slightly unpolished four-thousand-square-foot loft right around the corner from the office and across the street from a Chinese supermarket. It was one giant room with direct elevator access (this became a constant point of panic when we moved in, as it of course became way too interesting to the kids for them not to consider it a fun new toy). But the place was huge; there was enough room for a playground, and I set up swings in one corner.
Rick very generously managed the assembly of our IKEA instant home furniture so it would be ready in our loft before my family arrived. He hired the guys to do it, and he got rid of all the cardboard and mess that IKEA furniture leaves. Thanks to Rick, my family could just move into a place with all of the furniture and none of the frustration. There were even dolls on the girls' beds. Rick went above and beyond for us. Beyond what you could expect from an employee; more of what a good friend might do for you. We may have been leaving Denmark, the country with the happiest people in the world, but we were meeting some of the most thoughtful and loyal people I have ever met in my life.
But this new home would be temporary. The deal with San Francisco–based Benchmark progressed, and before the end of the summer we were ready to close a Series B round of around $6 million, led by Benchmark and with participation by CRV. The terms were clean, and at this point we were more experienced and more prepared for the way the venture world worked. And more important, this time we had Rick guiding the three of us through the process.
Once again, the final negotiations happened while I was at the chicken farm. All of the paperwork was expected to go through before midnight, but it got delayed and the conversations dragged out the whole night.
I didn't sleep, but it didn't matter. The next day we drove down to the beach at the western side of the peninsula for a barbeque lunch. The weather was fantastic, we were eating Danish new potatoes directly off the grill, and the kids were running around naked playing on the shoreline.
My father-in-law asked me about what had happened the night before. I tried to explain the $6 million investment, but I couldn't make it make sense to him.
“How much again?” he asked. He was clearly excited about the big number, but also completely perplexed by the nature of the deal.
To him, it was so abstract. The world of the Internet is surreal to someone whose work is so grounded in the practical arts of keeping animals. All of his life he had gotten up at 5 a.m. and gone to bed at 11 p.m. and worked every hour in between. To him, there was a fixed correlation between how hard you worked and how much money you made. And it was very physical.
My work was so different. We worked from anywhere, on our laptops, and connected to people all over the world. There was no physical product to hold or ship, but people, smart people, just invested crazy amounts of money into it. Perhaps the only thing that made sense about it was that it didn't make a whole lot of sense.
Mie and the three kids finally moved to Boston, even though we knew we would not be there for long. We soon discovered that although the place was flush with space and now functionally furnished, it was devoid of some comforts. There was no air conditioner. Though it had been so freezing just months before, it was now unusually hot—and incredibly sticky. For two months we wore only our underwear inside the house. The kids were in nothing but diapers.
None of us got settled quickly. Erna, going on two, was walking around the loft with her bottle and making the sign for home. She wanted to go home.
Mie wasn't super excited either. She was working on her final thesis as a teacher, and her computer hard drive got corrupted. We paid specialists to recover the data, but no one could retrieve it. She spent almost the entire two months in Boston recreating all of her work.
Even though we had a tough time acclimating to Boston, we still look back at it now and consider it a good time. We became regulars at Figs and brought our pizza over to the Commons, where the kids fed the ducks and the squirrels. This was still vacation time, and the kids spent almost every single day in the Tadpole Playground and the Frog Pond.
We always knew that there was much more startup action on the West Coast—and we always saw ourselves ending up there. (Except perhaps Alex; he still hoped for New York.) With the investment from Benchmark, there was also a real reason to move to San Francisco. Peter Fenton, a general partner at Benchmark who was later called “the most productive venture capitalist”1 by Forbes and was named a “rock star” partner by TechCrunch2 just as Benchmark was investing in Zendesk, would join our board and would help us deftly navigate Silicon Valley.
During the summer, on one of our many trips to San Francisco, Rick and I met up with Peter and Devdutt at the Benchmark offices. We agreed to have a closing dinner and met at the restaurant RN74. The mood was great. And I succumbed to the first of many Jedi mind trick dinners, orchestrated by Peter's fantastic taste in Burgundy wines, which opened my mind like a book and made me forget where I stopped thinking and Peter started talking.
At this particular dinner Peter also addressed his newly minted rock star VC status. He compared anybody's career to the hours in the day: although no two lives are the same, we will all experience dawn, noon, dusk, and midnight. Peter was appreciative of the fact that success and the stardom that comes with it are something you experience temporarily. It comes and it goes. So, as with all things that will be taken away from you, there's no reason to get used to it. I was impressed with how Peter showcased an extreme humility while living a life that very few of us can relate to. And I benefited from the fact that he preferred the silent life behind the scenes, where he can influence a company, its founders, and its management. (The same year that Zendesk got awarded the Sexiest Enterprise Startup by TechCrunch,3 Peter was awarded VC of the Year.4 And in typical Peter style, he didn't show up.)
I've since had many dinners with Peter at RN74 and have come to appreciate the gentle mind games that have made me think bigger and set me up for the right long-term thinking. Peter was the one who made me believe that the tiny product coming out of Alex's loft could be the foundation for a next-generation enterprise software company, and that I could be the CEO who led that journey.
But for now, our choices and decisions were much more mundane. Where would we go? Initially, we thought about keeping two offices—we had an office, furniture, and most of all talent working in Boston. But it just didn't seem like the most sustainable option.
I was tired of traversing the country one out of every three days. I didn't want to continue flying, and I didn't want to be apart from the family anymore. Alex and Morten were pleased to get out of Boston.
The only one who wanted to stay in Boston was Rick, who was very surprised and felt betrayed that we would leave for San Francisco. We asked him to come with us, but he refused. Rick was a workaholic, but he always put his family first, and felt he couldn't move with his kids or away from his aging parents. Philosophically, he was staunchly opposed to moving from his home for a job.
Alex pulled Rick aside and asked him to stay on and work remotely. He told him we needed him. It was true, and I think Alex's more sensitive and empathetic approached meant something to Rick. He agreed to stay with Zendesk and work remotely. Matthew wasn't ready to move either, but he also agreed to work out of San Francisco for a week or two each month. I knew in time I could persuade him to make it permanent.
So, just two months after I had relocated my family thousands and thousands of miles away from home to Boston, I put all of the IKEA furniture on Craigslist and got all of us ready to go West. Left alone in Boston, and a penny-pincher by nature, Rick had an open house and dedicated a crazy amount of time to selling everything we had bought.
It was hard say goodbye, even temporarily, and it was harder to let go of some of the staff in Boston. But it was the right thing to do, and Devdutt also supported it, realizing that our ecosystem had its gravitational center in San Francisco, not in Boston.
We were doing the right thing for the company. And by this point all of us had, by necessity, become experts at embracing change. This is not necessarily something that has come naturally to us, and it can be hard to sustain the extremely open mind that's needed when building something like this.
But when you don't have a frame of reference for things you're about to do, you sometimes have to do them based on blind trust, or according to your intuition. Or, maybe more important, sometimes you have to go completely against your intuition—and you have to trust that what you see in front of you is right, even though it's terrifying and you don't know where it will lead you.