Mikkel Svane: Zendesk And The Art Of Fund Raising

Mikkel Svane, a scheduled speaker at DLD 2015, is Co-founder and CEO of Zendesk, which has developed a popular SaaS-based customer service platform. The company went public on the New York Stock Exchange last May and has a current market cap of $1.77 billion. Zendesk, which was founded in 2007 in a loft apartment in Denmark by Svane and two other Danes, switched its headquarters to Silicon Valley a short time later.

Svane: I think it is an advantage that we are European

Svane wrote a book about his rags-to-riches Volvo-to-Tesla experience called StartupLand: How Three Guys Risked Everything to Turn an Idea into a Global Business, which is being published by Wiley Press this month.

Why did you leave Europe to move to Silicon Valley?

We would have never have taken the company to the scale it is today — there is not that tradition of building big companies in Copenhagen. Of course there are exceptions but is not a thing you see every day of the week like you do in the Valley. I compare the Valley to the Wild West where everything is possible. There is a beautiful willingness to start over and take down everything and built something new again. In Europe we have too much legacy, too much tradition, too much entrenched thinking about ‘this is how we do things,’ too many exclusive clubs and networks to navigate. There is much more open democratized access to everything here in the Valley and that is fantastic for an entrepreneur.

What was Zendesk’s fund-raising experience like in Europe as opposed to the Valley?

There is no doubt that when we tried to raise money in Europe we had a very hard time doing that. It is true that six, seven years ago the start-up climate in Europe was very, very different than it is now. There was no valuable outcome of any conversations we had with VCs and we got a little bit angry about that.

In the U.S. we had a totally different experience pitching, not that it was easy for three guys from Denmark with funny accents and no network. We were fortunate that Charles River took a first bet on us. We did not have a very good pitch. But the investors we talked to spent time trying out our product and realized we had something. It was also helpful that we got a lot of start-ups in San Francisco to use our product so VCs could call somebody who actually used the product. If you don’t have a network then you need to show some kind of traction here and have some actual validation of your product.

How did you manage growing from zero to over 800 employees?

Of course we sometimes hired wrong people and had to replace them but we were very lucky and able to build a really good team of people that had scaled before. This ride has been completely crazy and I probably don’t have enough distance to know what works and what didn’t work.

What has been the key to the success of your international expansion?

I think it is an advantage that we are European and have a lot of international people working in the office. Our engineering team is spread across five countries. And we hired local marketers and managers in other countries because we always recognized that every market is unique. We also realized that you have to put the right people into place on the headquarters side — people who can give [foreign hires] room and guidance to do their own thing while understanding the needs of the headquarters. Today 43% of our business is outside the U.S.

If you had to do it over again what would you do differently?

We made plenty of mistakes, we are human, and things were not always easy. But I am very proud of what we have accomplished and I would not change a thing. We had to make those mistakes to become the company we are today.

An IPO is not an end, it is a beginning. Where does Zendesk go from here?

It is a new start and a new opportunity. We have had an amazing journey serving lots of small business around the world. What has happened is that we have started to deal with large enterprises and government institutions. That is a new challenge for the company and we are very excited about that. Twenty-three percent of our business clients now have hundreds of seats and that takes the company in a new direction.



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