Transcript: E104 – Georg Petschnigg – 4 of 6 – Dancing with Big Tech
Georg Petschnigg: WeTransfer has an advertising based business model and a subscription based business model. And the strength of that is that you can offer, you know, for example … you can use the file sharing products on WeTransfer for free, but it is actually profitable for WeTransfer because of the advertising. There’s incredibly gorgeous ads on WeTransfer. There are works of art in the background. And so, some of the world’s leading creative brands like, you know, the… the LVMHs the Guccis, the St. Laurents, SquareSpace, Apple … are all advertising on WeTransfer, because they want to be part of the great creative audience that is on WeTransfer. Usually a storage or file sending like, you know, is a loss leader for companies .. .but it’s actually a profitable offering because of the advertising for WeTransfer. There aren’t many companies in the world that can actually do that; offer functionality for free and also has a subscription.
Stephen Cummins: Welcome to 14 minutes of SaaS! The show where you can listen to the stories and opinions of founders of the world’s most remarkable SaaS scale-ups!
Stephen Cummins: Episode 104 of 14 Minutes of SaaS is the 4th is a 6 part series with Georg Petschnigg recorded at the Web Summit in Lisbon. We hear why WeTransfer can dance with the big tech monoliths like Google, Apple, and Microsoft. And we also get a history lesson in the maritime origins of the stock exchange, which originated out of Amsterdam
Stephen Cummins: I think I skipped something because when you created Paste, it was for a collaboration. And I think the thing I missed listening to you … is that actually the bit where you’re talking about team to team collaboration is partly to do with WeTransfer. You were already looking at collaboration with Paste, but where you want, at an enterprise level or a larger level, a more complex level, more connections … that’s part of where WeTransfer takes you.
Georg Petschnigg: It’s yeah, I mean, it’s like having a larger audience, right. I mean, at some point, I’d rather just talk straight up like, you know, business. The business reality is like, you know, you need to deliver vehicles to get your product out. And especially if you’re building a SaaS product, or a team collaboration product.
Stephen Cummins: It’s the channel.
Georg Petschnigg: It’s the channel. It’s incredibly important, right? Because especially, like, you know, building a single tool that, you know, one person buys like Paper or Pencil. It’s easy to build up a direct to consumer type relationship. You know, the purchasing decision is pretty straightforward; “I like it” or “I don’t.” You buy it. Done. For a SaaS product, a team collaboration product … it is actually a much more considered … it’s an investment purchase for that team, right? So you need a different type of channel, you know. A lot of the mechanisms when you look at the app store, actually … these are individual purchased channels. You can’t actually sell to a team inside of the app store, right? The way this entire thing with iTunes ID’s is setup. It’s actually … you can’t sell team products, right? So, you do need a direct consumer or customer relationship there, right?
And so, you know, WeTransfer has a lot of that. So, there is a huge channel. And for us, like with Paste in particular, the idea is like what Paste does for teams … is that it becomes like their visual heartbeat. It is essentially where a company can see all the work that happens. We took sort of a cue off, you know, the presentation tool … the Keynotes … the Slides, right … But really elevated the role of the storyboard. You’re always, instead of being focused on the slide, we really keep the story as a whole in focus. The reason is if everyone is doing this while creating, it means that they have a great summary, a visual summary of the work that they’re doing. And at that point, you can actually then make sure that the entire team can see that.
So, one of the radical things in Paste is that, you know, by default, like those presentation decks are shared with the entire company, right? So, you know, if you go to like WeTransfer and go onto Paste, you’ll see all the sales decks, you’ll see everything … unless of course they’re private and confidential. You’ll see all the sales deck, you’ll see all the product development, you’ll see what’s coming through the marketing department. Like, I mean, it’s incredibly visual and vibrant, and exciting place and Paste. And, you know, like, the vision there really is that we want to make this like a bright, well lit, pleasant, like, studio where you can be inspired by the ideas of your colleagues, right? We want to get to a place where your favorite moment, you know, of work is in the morning … where you get to, like, essentially see sort of a summary of all the great ideas, and all the great projects that your team’s been working on. You can visually actually see that.
Stephen Cummins: That’s amazing.
Georg Petschnigg: So that’s the journey that we’re on with Paste, right? And that’s been part of that larger narrative, you know, of the movement of ideas.
Stephen Cummins: Taking it back a tiny bit there when you talked about channel. I love connecting thoughts up with other people I’ve talked with and whurley [William Hurley], who I interviewed on this from Texas. He’s an inventor, as well as an entrepreneur, and he was an IBM master inventor. And, of course, IBM produces more patents than any company in the world every year for the last 22 years. An incredible entity in historic context. It’s that had some struggles really moving into the SaaS era let’s say. But, you know, he realised when we first made that leap into being an entrepreneur that actually … because he thought he was amazing to have had 16 inventions … but he realized that he could pretty much invent anything and they could throw it into the IBM channel, and they’d sell a certain quantity. And then he realized that ‘Woah! iIt’s very, very different when you haven’t got that ready made [channel] … So, I know … your reasons for connecting up with WeTransfer are quite deep … and their cultural … and there’s the why … you match up very well. But equally, there is that whole ‘”Yeah, we now have a bigger audience”.
Georg Petschnigg: There’s the channel. And the other piece, the third component here, is actually also the business model. It’s super unique.
WeTransfer has an advertising based business model, and a subscription based business model. And the strength of that is that you can offer, you know, for example … you can use the file sharing products on WeTransfer for free, but it is actually profitable for WeTransfer. Because of the advertising. There’s incredibly gorgeous ads on WeTransfer. There are works of art in the background. And so, some of the world’s leading creative brands like, you know, the… the LVMHs the Guccis, the St. Laurents, SquareSpace, Apple … are advertising on WeTransfer, because they want to be part of the great creative audience that is on WeTransfer. Right so it’s a really interesting thing … usually a storage or file sending like, you know, is a loss leader for companies. But it’s actually a profitable offering because of the advertising for WeTransfer.
There aren’t many companies in the world that can actually do that; offer functionality for free and also has a subscription.
Stephen Cummins: That’s amazing. Maybe we need new term for it..
Georg Petschnigg: Yeah, it…
Stephen Cummins: Maybe a freemium with a PH.
Georg Petschnigg: Or it’s… or it’s…Negative cost of acquisition.
Stephen Cummins: That’s more complex.
Georg Petschnigg: So, and then there the subscription service, right? And subscription business that, but that’s about the other half of the business. That is then more of a recurring revenue, a subscription type
Stephen Cummins: SaaS based thing.
Georg Petschnigg: Right.
Stephen Cummins: And, you know, roughly how does that divide up? And which one is … which one is growing? And which one is …?
Georg Petschnigg: They’re both growing? They’re both pretty equally strong at this moment in time. The important thing here is that from… from my perspective, like again going back to sort of that third component … There aren’t many companies in the world that can actually do that. Offer functionality for free and also has a subscription.
Stephen Cummins: Maybe one other that can do well.
Georg Petschnigg: Yes. Which is Google.
Stephen Cummins: Yeah. Okay.
Georg Petschnigg: Right. But we have a very different relationship to people’s data.
Stephen Cummins: Do you think Google have their beady eye on you? How do you, how do you feel …?
Georg Petschnigg: On WeTransfer? Like, I don’t know. I have no idea.
Stephen Cummins: I guess that happens at some point, maybe, who knows? But that’s not your concern… you’re not worried about it.
Georg Petschnigg: It’s… I mean… Google is just … it’s a juggernaut, right?
Stephen Cummins: It’s distracted anyway. You need to be huge too before they really start.
Georg Petschnigg: Yeah … it’s I mean … Google does like 250 billion dollars in revenue, right? When like … when you compare that to … I think Apple is somewhere at 350, right? But Apple sells hardware, right? Yeah, Google does all of this like through software.
Stephen Cummins: It’s incredible.
Georg Petschnigg: Just … like it is truly incredible, right? That amount. So, in many ways, you know, this is going back to like … you know … those questions of focus and what is your working on? Like if there is a beast that generates 250 billion dollars…. It’s you know … that’s a monster! Who knows where that beast really is going, right? And it takes you for the ride at some point. And, you know, I don’t know how Google makes decisions. I mean …
Stephen Cummins: But even, by the way you answer, it means it’s not really on the table for you guys. You’re more focused on what you’re doing …
Georg Petschnigg: Yeah, and making essentially, you know …
Stephen Cummins: It feels like you’re the only player in the field.
Georg Petschnigg: I would put it this … in a landscape where big technology companies and their platforms are so dominant … and are so powerful. Having a business that has a hybrid business model where you can counter and interact with your consumer … either with free or subscription. That’s what makes it so powerful because you’re actually … I think WeTransfer is one of the few companies that can dance with the big tech companies. But can do it authentically, because we don’t we do not depend on their distribution.
Stephen Cummins: Amazing.
Georg Petschnigg: Right? So that’s … like, the moment you enter on, you know, Apple’s territory, you’re building on borrowed land, to a certain extent.
Stephen Cummins: Sure
Georg Petschnigg: If you are dependent on search traffic; well…
Stephen Cummins: Google … AWS … you’re probably built on AWS.
Georg Petschnigg: We are built on that, that’s different. I mean, they’re just a service provider to WeTransfer.
Stephen Cummins: It’s in their interest that you succeed.
Georg Petschnigg: That’s right. So, you know, yes, WeTransfer is a very large AWS customer, right? So that’s sort of like when you look at sort of those big … like, we’re not in the data business like Facebook. Or in that relationship like, so we don’t have to negotiate any of those complexities – and that’s actually really, you know, refreshing, And also being in the Netherlands… that’s like a whole different… It’s a different culture …
Stephen Cummins: So talk about that because you’re by now … you’ve been back and forth to Amsterdam quite a lot. I mean I think you’re still living in New York …
Georg Petschnigg: Yep, I live in New York
Stephen Cummins: But you must be spending a couple of months a year, two or three months a year in Amsterdam? How are you finding that? … I mean to me it would be fun, but how are you finding kinds of working all of that out?
Georg Petschnigg: Yeah. Well … so there’s the New Amsterdam and the old Amsterdam, right?
Stephen Cummins: Okay.
Georg Petschnigg: New York and… and
Stephen Cummins: That’s true actually, of course. Yeah … yeah. Yeah. Until the Brits changed the name. Right.
Georg Petschnigg: I’m not sure how that all happened but it’s like the world’s first stock exchange was in Amsterdam, right? And then the New York Stock Exchange was there too. So that’s like another one of those connection points.
Stephen Cummins: So, so tell us about the worlds first stock exchange from Amsterdam?
Georg Petschnigg: Well … okay. In Amsterdam, the first like I think it was like the Dutch East Indies Trading Company
Stephen Cummins: Dutch East Indies yeah …
Georg Petschnigg: So the first shares, the first stocks actually were shares in a boat, like, you know … shipping and sending out boats was an expensive and risky endeavor, right? And, you know, so people pooled together money, bought shares in a boat, and if the boat came back, you, you’d get a cut of the haul.
Stephen Cummins: Yeah.
Georg Petschnigg: And, you know, when you think about the world of venture today and venture investing … it’s very similar to that.
Stephen Cummins: Weighted risk.
People come together and, you know, say, like “Here’s this team, we know they can sail.” What’s the boat? What’s your tech? and, you know, people will take different shares and go in on…you know, that journey. So it’s actually quite exciting to see sort of … Why is this relevant? Like, you know what we really started to just appreciate .. and enjoy about, you know the Dutch, and Amsterdam in particular. It’s a super pragmatic place. There is a business minded sense to it that actually. it led to also a very… very open and tolerant culture, right? And you’ll see that actually … particularly in WeTransfer … a lot of the topics and the causes the company embraces, you know, come from environment of acceptance and tolerance
Stephen Cummins: Absolutely.
Georg Petschnigg: And so about like 30 percent of WeTransfer’s ads, for example, go towards causes and campaigns/ It’s everything from speaking out against gun violence or advocating for gun control to …
Stephen Cummins: 30 percent? That’s amazing.
Georg Petschnigg: Yeah, It’s a huge amount,
Stephen Cummins: Wow. So, you guys felt very, very comfortable, you know, being acquired by … on many levels by WeTransfer..
Georg Petschnigg: When I was looking at some of the venture integration processes that had been power in the past like Nokia and Microsoft, Nokia and Danger, like…
Stephen Cummins: There was no heart.
Georg Petschnigg: It’s…these look very different than this acquisition here, right? Because for us, it was actually a coming together on the brand, and then a culture level first. And then everything else follows from that. It’s a very different process from, like, you know “Hey, you know, we need to like seize this one market opportunity or this particular widget that completes that widget”… And again I’m not saying that one is better than the other. It’s just that it’s a very different process. And yes, WeTransfer has shown publicly, like in so many ways, that they stand and support creativity
Stephen Cummins: Good stuff.
Stephen Cummins: In episode 105 of 14 Minutes of SaaS, the 5th in our 6 part series with Georg Petschnigg, we are reminded of the power that content. And we get a great real-life lesson in how much observing the way content is consumed, can tell us about what people really care about. And by extension how we can better understand how products can be evolved to respond to that. And we hear Georg’s take on some of the cultural differences between Amsterdammers and New Yorkers
Stephen Cummins: You’ve been listening to 14 minutes of SaaS. Thanks to Mike Quill for his creativity and problem solving skills, and to Ketsu for the music. Thanks also to Anders Getz for the transcript. This episode was brought to you by me, Stephen Cummins. If you enjoyed the podcast, please don’t forget to share it with your network, subscribe to the series, and give the show a rating.