14 Minutes of SaaS

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14 Minutes of SaaS

Listen to 14 Minutes of SaaS  Spotify Apple podcasts / Google Podcasts / TuneIn Stitcher

E77 – Sean Percival, CMO at Whereby, Ex 500 Startups. 2 of 5. Small & VC Free is Beautiful.

Episode 77 of 14 Minutes of SaaS is the second instalment of a 5-part mini-series. Stephen Cummins chats with Sean Percival, CMO at Whereby, formerly of 500 Startups and Myspace. Sean also touches on his 1st job when he joined Myspace. It was to get rid of its iconic co-founder Tom Anderson – better known as ‘Tom from Myspace’ who would automatically be assigned as your 1st friend when you signed up for Myspace. This move wasn’t popular with everyone. Myspace was big data dumb according to Sean and that’s why they lost to Facebook. Post Myspace, He describes his 1st experience as a CEO & Co-founder of Wittlebee. He loves working for small startups, and would be very slow to enter a VC driven rocket-ship again. He feels lifestyle v potential unicorn is just a matter of choice. One isn’t fundamentally better than the other.
Stephen Cummins

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Transcript

                                                                                    Stephen Cummins

Would you ever go back to being a CEO? Would you ever want to do that again?

                                                                                  Sean Percival

I think I would, but maybe more on my own terms? Less on my VC’s terms. Yeah. And that that’s what I realise. And even at my current job Whereby like … I like that we don’t have any investors. I like that I have one CEO and we just interface and we solve problems. We have a board and so forth too, but yeah like…
That Wittlebee was a great business. We made 1M dollars in like six or seven months in sales … grew fast … and then a year into it, we were making almost 3M dollars in annual revenue. Already. Recurring revenue. And so it was going really… really good, but the VCs were just like … ‘Go! Go! Go!’ and I’m like, ‘Oh wait a minute. My inventory is breaking. My supply chain is not like ironed out. Like we’re growing too fast.’ And they’re like ‘Perfect. Keep doing that. And here’s a little bit more money!’ And like just kept pushing and pushing. So that would have been an amazing .. maybe more of a lifestyle business. Yeah. And there’s nothing wrong with having a lifestyle business. You don’t have to go build the next unicorn. Like I’ve had lifestyle businesses – if you have these businesses and it’s making some money for you… you enjoy doing it, great!

                                                                                    Stephen Cummins

Episode 77 of 14 Minutes of SaaS is the second instalment of a 5-part mini-series. I’m Stephen Cummins chatting with Sean Percival, CMO at Whereby, formerly of 500 Startups and Myspace. Myspace was big data dumb according to Sean and that’s why they lost to Facebook.

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 ScaleUps.
                                                                                  Sean Percival

As a funny side story … the first thing I had to do actually when I came in there was I had to get rid of Tom. You remember Tom? He was your first friend. And Tom was on his way out. And, you know, he’d had a good run. And he was going out but, I had to get rid of Tom. And that’s a very weird thing to do, because he’s like a person but also a mythical God in some way. And, you know, the photo of Tom is loaded over a billion times every single day on the site.

                                                                         Stephen Cummins

Wow!

                                                                        Sean Percival

You know, it’s like that’s how much that face looking over his shoulder, kind of seeing you … a billion times every single day.

                                                                   Stephen Cummins

But they needed to move on.

Sean Percival

We had to move on. We didn’t want a face to be that … I mean, no other site really had the face of a person, an employee [he was actually a founder too]. Yeah, it’s dangerous when you build your brand around an employee, you know. They leave. Things change as well.

            Stephen Cummins

You’re very, very vulnerable.                                     

Sean Percival

That was the first thing. And it was a lot of like just trying to like stitch things up and really understand.

       Stephen Cummins

Did doing that cause some tensions internally? Like you actually being the one that was saying ‘Look! We need to change!’ and you actually going in and making that happen … Were there a few people that never forgave you for that?                                                   

Sean Percival

Absolutely. Yeah, yeah. There were a lot of people that weren’t very happy. And the thing is I came in with Mike Jones who became the CEO of Myspace. And I had worked with him. I had executive buy-in. So I could make tough decisions and do things, but yeah .. a lot of people were annoyed because I’m the new guy. I wasn’t a founder. I wasn’t there from day one. Yeah. So their view is like ‘you don’t understand the history’. And my view is more like ‘I’m not worried about the past. I’m worried about surviving the future … and sure … being sustainable and starting to grow again.’ So, yeah, I had to make a lot of decisions. But it was tough. I mean, I remember the first meeting I had with the marketing group. I’ve never been in a more depressed meeting. Just everyone was so defeated.

Still a bigger site than Facebook, still had more traffic. Still had everything, but it’s just … I don’t know – they knew things are happening. They saw people getting laid off. And so a lot of it was just motivation and empowering my employees to do good stuff. I still do that today.

Stephen Cummins

They… they were still in a place where they could turn that ship around and could have done something amazing. You know, it’s not a zero-sum game at the end of the day. And they weren’t fundamentally a bit different to Facebook. Yeah, I mean there was music streaming, and there they were kinda cool.

Sean Percival

Customisable!

Stephen Cummins

There where people doing different stuff than Facebook – and it’s almost … you’re almost describing something where you’ve got this… this Castle … full of jewels … but the people living in the castle are blind or half blind. They just don’t know what they’ve got!                   

Sean Percival

Or they were kicking the rocks out. They were kicking out the doors. You know, the one analogy is kind of like … if you sell a home or if your home gets foreclosed and you’re mad about it, you just kind of pour concrete down the bathtub .. just to be a jerk. You know. There was some of that going on. So you’re right. If it was a startup, we would have rolled up our sleeves and said ‘Let’s do this! Yes, let’s figure it out!’ But it was a large corporation and the people were incentivised as if they were corporate executives. Coz they were executives.

Stephen Cummins

So they were too comfortable. A lot of them were already made for life or close to it.

Sean Percival

And then there was what’s in it for me, you know. And then the passion for like, you know, what they had .. and like you said … uncovering those gems or dusting those gems off and making something great. It wasn’t there. The energy was sucked out.

Stephen Cummins

I suppose it’s easy now to look back and look at the value of the data they had. And go ‘Uh … how could they not see that?’…  but I suppose if we look back to … if you go back to those days people, people would have thought Linkedin would become a bigger play than Facebook for example.

Sean Percival

Yep!

Stephen Cummins

I don’t think … I don’t think humans fully understood … some did of course … but most humans didn’t really understand the power of personal data like and what that could turn into in the future.

Sean Percival

I think it’s very true. I think so. Remember Facebook was for colleges … like wealthy white college kids. Maybe it’s a large niche … but still, it’s a niche. And that was always our view. It’s like ‘No, why would you want to be there? It’s too utilitarian! It’s so boring. You can’t customize. So, our view … and that was just very poor. ‘No we’re always going to be very creative and making their own sites.’ But in the end users wanted more structured data. And Facebook was happy to structure the data because that’s more useful and more powerful for them. More ways to segment – and interests and targets, and all this other stuff that eventually became the financial machine in the business. So for them … yeah, I mean, they were smart. It also looks a lot like the tortoise and the hare. And yeah, we were moving crazy… crazy fast. They moved a lot slower. They went public. I don’t think they were profitable. You know. They didn’t have the exponential growth. But they knew. I don’t know.

Stephen Cummins

I think they quickly understood that the users were the product.

Sean Percival

Yeah

                                                            Stephen Cummins

Very quickly. But I mean in fairness your direct competition was a very unusual entity. It executed incredibly well. Wasn’t exactly a normal opponent in this space. From my own world when I was, you know, an early employee in Salesforce, I can remember seeing Siebel and wondering ‘Why don’t they build the cloud version?’ But of course, they had these huge contracts. They decided to stick their head in the sand and rather than canabalise some of their own business – which is sometimes something you have to go through at some point for a lot of companies and a lot of industries. And then turn themselves into this incredible dominant cloud company. Instead of doing that, instead of embracing SaaS, they put their head in the sand and thought they could keep doing what they were doing. And of course very quickly the demise came. But also it’s hard to be the first one and then completely change yourself as the thing matures.

Sean Percival

And remember …  technology was shifting. During the beginning of social media there was no iPhone. Yeah, they didn’t exist. And so it’s like you had like all these shifts happening at the same time.

                                                            Stephen Cummins

The best phone services in the world … in 2000 we’ll say … were in Japan. Yeah. I mean you had, you know, 3 G deployed right throughout … to a lesser extent Korea, and the things they were doing on phones, the services they had … were miles beyond anything in the west. So it was another world at that point. The US for example, wasn’t really doing anything in that mobile space. They we’re doing everything in the internet space … in the desktops and stuff. But yeah, the iPhone changed everything.

Sean Percival

Yeah. But now this is what’s fascinating. Where like before it took 100 years for an industry to shift, now it’s about 10 years. Yeah, and like Japan’s a great example … where … look at Blade Runner for example –they’re all speaking Japanese in there because the view in the eighties was that we will literally all be speaking Japanese in 20 or 30 years, because of their technological progress. And they lost that all you know … so it’s like fortunes change really, really quickly. It’s not this large cycle of 100 years. Now. It’s 10 years. And maybe this will become 5 years, and then it will be 2 years, you know. It’s coming up to it … just how fast technology is moving. It’s quite fun.

Stephen Cummins

And, you know, it’s amazing you reference Blade Runner because for me, it’s… it’s the most atmospheric movie. The original one. And the second was pretty atmospheric too. But the most atmospheric movie I’ve ever seen. And I’ve experienced that landing in Shinjuku. Because I worked there. And my first night in Japan, I just walked around for hours during the night.

Sean Percival

Just eyes glazed! Yeah …

Stephen Cummins

Oh, I couldn’t believe it. What they did was they took that and augmented it. I can’t believe I’m mentioning this for a second time, but I interviewed somebody yesterday … I mentioned Solaris … I saw Solaris just a couple of nights ago – a 1972 Russian science fiction movie. Incredibly they predict the self-driving cars. So, this guy is in a self-driving car. And he’s like … he’s been interviewed and he’s using an appear.in [Whereby] type video connection in the car. And where did they film the driving? In early 70s Japan. Because it was the closest thing to a futuristic environment that we had – with highways and tall buildings. It was the closest thing we had to feeling like the future. So it’s amazing that that paradigm was used back then. I’ve a feeling you have an interest in Japan, but I’m gonna ask you about that a bit later. You went on after that incredible experience – kind of ups and downs – to work for a company called Science –  which probably get you exposed to kinda looking at several startups and stuff like that – but I think from memory you were an entrepreneur in residence. And then you founded your own company. For the first time you’re a CEO of Wittlebee.  That was really a very different type of company. How did that go? And, you know, what was the good and bad you took out of that?

Sean Percival

Yeah. I shifted completely because Myspace experience, while that was interesting, and I learned a lot. I told myself I’ll never work in a large organization again. I’m a startup guy and I gotta get back to that. And I’m sick of trying to move millions of people around within some kind of like framework. I wanted to actually ship real product. So an eCommerce company. And I know you have two kids. And I do as well too. And essentially what happened is, yeah, I had my daughter, and that changes your view on a lot of things in life as the entrepreneur. I also said, ‘Wow, it’s very expensive to have a kid. I’m going to be buying a lot of clothes for this kid. That’s a great business. And I just sort of went on a pain point. And I think the best entrepreneurs are solving a pain point in their personal life. Something they do in business. A process they don’t like. I hated going to the mall. It was a nightmare going with your kids to them. They don’t want to try on things.

                                                            Stephen Cummins

Or they want to mess with everything.

Sean Percival

Or they want to pull stuff down. And I’ll also tell the story about the one time I did .. a kid actually threw up in front of me. And I was like, okay, I think I’m done with this experience. So what I thought about as the entrepreneur and this kind of automation geek was like ‘Well, why don’t we just automate your kids wardrobe … and every month you get a little bit of clothes .. and then as the seasons change, the clothes change. And it’s tailored and personalized and all this good stuff. But you never have to go shopping again, just supplementing your wardrobe the entire year. And that’s what I started with. I started with the idea and I did kind of bootstrap ways of getting started and getting my first 10 to 100 customers. And yeah, we raised venture capital for the first time. I had done other startups. I’d been been part of startups. But I went on to raise about 3M USD – which at the time was a huge seed round. Seed rounds are about half a million dollars. If that. And now it’s like, yeah, it’s a normal thing. But back then that was a very… very large round. Great investors like Google Ventures and a few others as well. And tried to build a large eCommerce manufacturing company. But still digital …like literally still digital in the sense that that’s how I acquired users, but I wanted to be more real. I wanted to have the more tactile feeling of a real product that I can hand to someone – and ship to them. It was a good experience that I’ve lots of stories about – it shot up like a rocket ship, and it blew up as well too. So I’m happy to talk about any of that as well.

Stephen Cummins

Would you ever go back to being a CEO? Would you ever want to do that again?

 

                                                Sean Percival

I think I would, but maybe more on my own terms? Less on my VC’s terms. Yeah. And that that’s what I realise. And even at my current job Whereby like … I like that we don’t have any investors. I like that I have one CEO and we just interface and we solve problems. We have a board and so forth too, but yeah like…  That Wittlebee was a great business. We made 1M dollars in like six or seven months in sales … grew fast … and then a year into it, we were making almost 3M dollars in annual revenue. Already. Recurring revenue. And so it was going really… really good, but the VCs were just like … ‘Go! Go! Go!’ and I’m like, ‘Oh wait a minute. My inventory is breaking. My supply chain is not like ironed out. Like we’re growing too fast.’ And they’re like ‘Perfect. Keep doing that. And here’s a little bit more money!’ And like just kept pushing and pushing. So that would have been an amazing .. maybe more of a lifestyle business. Yeah. And there’s nothing wrong with having a lifestyle business. You don’t have to go build the next unicorn. Like I’ve had lifestyle businesses – if you have these businesses and it’s making some money for you… you enjoy doing it, great! Nothing wrong with that in the world as well.

Stephen Cummins

Absolutely. And the world has to have a lot of businesses like that. There’s only so much space for …

Sean Percival

That’s most businesses, at least in the Nordics …. most businesses are like … less than five people. They are tiny little organizations as well. So, I don’t know. It grew too fast. It’s like Icarus, it flew too close to the Sun. Right? It’s a great idea … that idea has been copied 100 times, but I haven’t seen anyone scale it massively. But, yeah, I wrote a lot about it and it failed. And there were challenges and I went through founder depression and all this awful stuff. And I wrote a lot about it .. which at the time was not really happening, because remember founders have this façade of everything’s great. Yeah, I’m crushing it!

Stephen Cummins

Being invulnerable. But I still wouldn’t call that a failure in the sense that you achieve more learning. And also you actually got it up to a certain level. It just seems like perhaps if you’d had a better VC … maybe that’s controversial thing. Maybe they’re friends. I don’t know.

Sean Percival

Some are not friends anymore. My VCs like …  half of them were amazing and a half were awful. Okay. And we don’t talk anymore we unfollowed each other on Twitter and all this. But it’s like half of them are great. But that’s how it is you know, I had 12 investors. It’s like yeah … not all of them are going to be great.

                                                                                        Sean Percival

                                                                                    Stephen Cummins

In the next instalment, episode 3 of this 5 part series Sean describes how his “American Marketing Bravado” was a good fit for Oslo and Whereby, given that the Nordics does not really have a strong marketing mindset and he contrasts the pros and cons of the Nordics versus the united states from a business and work perspective.

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. This episode was brought to you by me, Stephen Cummins. If you enjoy the podcast, please don’t forget to share it with your network, subscribe to the series and give the show a rating.

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