June 18, 2024 • 24 mins
In today's episode, I interviewed Stefan Bader, a two-time founder and the current CEO of Cello—a SaaS scale-up pioneering the way B2B companies incentivize referrals.
Stefan shares the pain points he encountered as Chief Revenue Officer at Shore, a company akin to Square but focused on European markets. His growth team faced challenges in implementing a user referral program. The lack of suitable third-party solutions led Stefan to a pivotal realization: there was a significant business opportunity in creating a B2B referral system. Thus Cello was born, aimed at enabling users to refer software to others and share in the revenue generated.
In this episode, Stefan delves into the key components of a successful B2B referral program, explaining how Cello addresses them. He talks about different types of referral programs, from user and affiliate referrals to influencer and value-added referrals. Stefan emphasizes the importance of native integration into the user journey and setting the right incentives to drive successful referrals.
Stefan also discusses the psychological aspects behind referrals, revealing how user psychology plays a crucial role in influencing customer behaviour. His insights into leveraging intrinsic, extrinsic, and social incentives offer a fascinating glimpse into the science behind Cello's early success.
Moreover, Stefan touches upon the concept of advocacy and how Cello fosters it among its users. By amplifying positive experiences and leveraging user psychology, Cello helps companies accelerate word-of-mouth growth at a fraction of the cost of traditional customer acquisition channels.
As Cello continues to grow, Stefan shares his vision of creating a go-to-market operating system for digital products, expanding beyond user referrals to include various growth loops. He also discusses the challenges and benefits of being a remote-first company, highlighting their approach to maintaining communication, collaboration, and culture in a dispersed team.
Stefan reveals why his second hire at Cello was a VP of People, a move that goes against conventional wisdom. He explains how this decision has helped build a strong team culture and attract high performers from the very beginning.
Stefan's journey is filled with valuable lessons for any entrepreneur. From the importance of shipping fast and treating fundraising like a sales process to making impactful people decisions and constantly adapting to change, his experiences offer a wealth of knowledge.
One of the most intriguing aspects of Stefan's story is the concept of the "reality distortion field," a term famously associated with Steve Jobs. Stefan explains how this ability to make people believe in your vision, even when it seems crazy, is crucial for sales, fundraising, and overall success.
Join us in this compelling episode as Stefan Bader takes us through his entrepreneurial journey, the creation of Cello, and his vision for the future. Whether you're an aspiring entrepreneur or a seasoned professional, Stefan's insights are sure to inspire and inform.
For more Cello insights head over to https://cello.so/ & for advice on hiring senior talent for B2B software ventures check out https://alpinasearch.com/
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
So I'm delighted to welcome Stefan Bader to the podcast today.
Stefan's a two-times founder, currently CEO at Cello, a SaaS scale-up whose
solution enables B2B companies to incentivize referrals.
So, Stefan, welcome to the Startups at Scale at Gameplan. Hi,
(00:24):
Gary. Thanks. Great for having me here.
Great to have you on board. just to kick things off what
are some of the pain points that you observed in your
previous role when you were the cro at shore and
how did those experiences influence the
the creation of cello yeah it
definitely led me to founding cello so i after selling my my first business
(00:47):
that i founded in the automotive space or co-founded in the automotive space
i joined shore.com which is basically like a square or block known in the us
but focused on european markets and back then with,
my growth team growth and partnerships team we wanted to
introduce user referrals to to help
(01:08):
us acquire more customers at scale at lower
customer acquisition costs because it was
also mentioned by many users during during my
time there that they would actually like to you know help us find more customers
because they have pretty dense networks of of other people being interested
in the in the software and yeah we wanted to also like letting them participate
(01:32):
in the success we would get from them on the additional revenue and the idea
was pretty simple just to.
Do what has been done in the b2c world many years very successfully before launching
a I prefer a friend program, but focus on B2B.
And the idea was to let users participate in the revenue they would bring to
(01:54):
us by referring our software to other interested folks out there.
But it turned out that no vendor out there did actually exactly what we're trying
to do and to look for. It was impossible to build it ourselves.
So our CFO back at the time put directly a
stop to it when we came up with the idea to build it ourselves ourselves because
(02:14):
we didn't find a third-party product on the
market and that whole journey led me to
the conclusion that either just might be me or us having this this pain point
or there might be a pretty big business opportunity for other companies out
there as well because user referrals in b2b hasn't really been solved by any
(02:35):
software window out there and this is actually what shadow has become now,
So what do you feel are the key components of a successful B2B referral program
and how does Cello address these?
Yeah, there are a few points to that. We actually have written quite some interesting
(02:57):
content on this together, for example, with Kyle Poyer from OpenView.
And if you have a closer look at referrals, you will find that there are four
different referral programs. There is user referrals.
So, you know, classic users of your product can refer the software to someone
else. There's affiliate referrals.
So affiliates doing the same thing by, for example, creating content and placing
(03:20):
affiliate links. There is influencer referrals.
So people, you know, with a larger audience on social media,
posting something about products there and leveraging their audience to acquire customers.
And then there's VAR, so value-added referrals or referral programs,
which could be something like, for example, a consultant.
(03:42):
So someone that has already a business relationship with another company and
then referring in a product that helps basically to provide the services or that goes hand in hand.
At the very beginning, and this is probably the most innovative part of what
we're doing, we focus on user referrals for B2B, which is a completely new field
where Trello is the only solution out there.
(04:03):
And there are seven steps to a successful user referral program for B2B companies.
And it's very similar to B2C as well. So first of all, it's really about finding
out before investing into it, finding out, is there a referral program fit or
referral program product fit?
(04:23):
Not every product out there is tailored or is made to also have a successful referral program.
We have built some content around this where you can easily assess that.
If you have a great fit, right, then it really goes into setting this up the right way.
So it's not just about deciding to do it, but really about the right execution.
(04:46):
So the program should be natively integrated into your complete user journey.
It's not a marketing campaign, right? It's not something you set up one time.
You have a one-time effect and then you basically forget
about it it is something that lives within your product and
that compounds every single day so the right
user journey integration is is very key users
(05:08):
should be able to access the program very easily and natively you should also
be able to hook it to what we call moments of delights so for example when someone
gives a positive nps right there should be a hook asking them also for a real
referral to someone in their network world and similar, similar hooks.
The third point is about incentives and rewards.
(05:31):
And this is really what makes incentivized user referrals key.
So setting the right incentives, you will see a 100x difference in those referral programs.
And this comes really down to the success of the programs we see with customers
we have, and we help them to iterate on the right incentives and also discounts for the receiving part.
(05:57):
There are three different ways of incentivizing people.
So there are intrinsic incentives, there are extrinsic incentives and social incentives.
At the moment, we're tapping mostly into extrinsic incentives,
so monetary payouts for referrers successfully bringing our customers new business.
But we will also expand that to intrinsic and social incentives over time.
(06:23):
The fourth point is about sharing experience. So everything should be as easy
and as frictionless as possible.
This is like with any other loop or funnel.
The more friction you take out of the process, the better results you will have.
So that's a little bit of an optimization game here.
You should also be able to help your users or the referrers to identify the
(06:47):
right context in their network, provide the right assets or wording,
you know, to share it, make it just really easy to amplify that.
So it sounds like you've got a background that's sort of combining psychology with technology.
Is that something in your background? Or is this psychology a new area that
you've had to learn since you founded Cello?
(07:09):
Yeah, great question. So I was actually very interested in use of psychology and UX.
Also, in my previous founder lives where it wasn't really that helpful,
like in this case here at Shavlo, but I was learning a lot more about it in the past few months.
So, interestingly, we take 95% of the decisions daily unconsciously.
(07:33):
And you can also use as a business those triggers basically to steer user and customer behavior.
And therefore, we're definitely leveraging user psychology to get users to help
our customers the right way.
And your website and some of the articles you've posted online references both
(07:57):
user referrals and advocacy.
So walk me through the advocacy side of things. How are you getting,
how are you fostering advocacy amongst the users?
Yeah. The best products we see performing with user and affiliate referral programs
(08:17):
are actually really good products where you could also see pretty high NPS.
So what we're doing with incentivized referrals is really amplifying that already existing notion.
So tapping into, again, user psychology, leveraging incentives basically to
amplify an action that would anyway happen, but like at lower scale.
(08:40):
And therefore we can, you know, help to spin the wheel of water mouth much,
much faster by doing that.
And it's much cheaper than any other acquisition channel in general.
So it's, you know, about 20 to 15% of the average customer acquisition costs of like other channels.
That's why it just makes sense to invest in an organic channel that already
(09:03):
exists more and really double down on that.
And as you seem to be creating a brand new product category,
how are the likes of Gartner and Forrester looking at what you're doing?
Do they view it as an actual segment or product category or is that something
you're going to have to work on over the next few quarters?
(09:27):
Yeah, we're probably still too small to create right now our own category.
And we're pretty much the only ones in that new category we have in mind.
Therefore, for Gardner, we're definitely too small.
We're building out, you know, the vision of Cello goes way beyond user referrals.
If we want to quickly touch on Vision, the vision of Cello is a go-to-market
(09:54):
operating system for digital products, whereas user referrals is just like the
first growth loop we have productized.
In the future, there will be many more growth loops like user referrals and
affiliate referrals on this platform.
And the idea is to provide an infrastructure platform that companies or products
can just plug in and steer and amplify their go-to-market via this platform.
(10:20):
This category needs to be defined and built out for sure.
Got it. Now, you're a remote-first company, and this is an approach that became
extremely popular, well, a prerequisite, really, during the pandemic.
But many companies have begun to struggle with internal communication,
collaboration, culture building, et cetera.
(10:43):
So they've now reverted to hybrid arrangements, or they've even pushed their
employees to return full-time to their offices. So how have you at Cello made
remote first work so well for you and your team?
I would say, luckily, we started off as a remote first or hybrid company,
(11:04):
so I would say it's much easier to start that way instead of starting with an
office culture and then changing that culture towards a hybrid or remote first company.
And I'm pretty lucky that starting at the time where remote just became,
for many startups, the norm.
(11:26):
We do have the vision of not completely going all-in remote.
So the vision is to build out a hub structure.
So we have, for example, five people based in Munich. We're meeting twice a
week, actually in different co-working spaces. We're still too small to have an office.
So it just, in our opinion, doesn't make sense at this size.
(11:48):
And we start also to see more and more people in other cities.
For example, in London, we have now three people.
They also meet up every week or every other week.
And the vision of the company we want to build is to have more hubs in the most
important tech hubs in Europe or across the world, maybe North America and Europe.
(12:12):
And that makes it also, that combines basically
the benefits of a remote first culture with
the possibility to actually meet people in person and to
make real human connections to make
remote or hybrid culture work however it's absolutely necessary to still meet
in person so we started for example at the very beginning of the company started
(12:33):
off with four times a all all company meeting at like one location typically
at a location where someone of the company was based.
So we met in Munich where we headquartered, but also in Barcelona, in Prague, in Poland.
We will go soon to Estonia, for example, where a few people of us are based.
(12:54):
And this really helps to foster and build culture.
Without those in-person meetings, typically we do it for five days, two, three times a.
That wouldn't be possible. So this is like an absolute important ingredient
in even building a remote-first culture, in my opinion.
(13:15):
Yeah, agreed. And when we last spoke, you mentioned that your second hire at
Cello was a VP of people. That really intrigued me.
So most B2B SaaS ventures would build a team of at least 20 to 30 people before
they recruited a VP or head of people, head of HR, or whatever term they might use.
(13:37):
So what was the thinking behind that very early hire? Yeah.
So when we say we put people first, I would say we really mean it.
And we put money where our mouth is.
The idea was to have someone very early on in the company that focuses on,
you know, the right, for example, hiring process that focuses on developing
(14:00):
people and like building, you know, the organizational and processional structure
around the people function.
And not just start when the company is already, as you said,
like 20, 30, 40 people big.
Because that might be a time when you didn't achieve to get just,
you know, high performer in the company.
And this is actually what we found is what high performers are looking for.
(14:23):
Or like, you know, people that are really amazing.
They look for working together with amazing people and assume that that quality dilutes.
It becomes more difficult to exactly find those people. That's why we took a
decision to get Philip, our head of people on board as high number two,
goes against any textbook I've ever seen.
(14:45):
But I can tell out of our experience, for us, it worked quite well.
I would always do it the same way.
Maybe an addition to that is, so Philip is,
we call him like a Swiss army knife inside the company so he's also owning other
parts of the of the company not just people he for example has a background
(15:07):
in marketing he is owning most parts of our of our marketing efforts,
and that makes it also really work right this is where your if
you hire like a head of people and you stop hiring you you
know this person should also help out in other other areas
for example right now we're rather flat until our upcoming
series a beginning of next year and there
(15:29):
wouldn't be enough work for a head of people during that
time obviously but as he's amazing in other parts
it you know really works well okay so
you got a man a man for all seasons running people and marketing and whatever
whatever else might come along that's good to hear yeah what have been some
(15:49):
of the most significant lessons you've learned as co-founder of cello in the
context of scaling a B2B SaaS venture.
Yeah, the first one is shipping fast, I would say.
So we shipped the first version of the product and launched it together with
the first customer after nine months where I really felt embarrassed about the
(16:12):
first version. But this is actually according to the textbook.
You know, there is a saying, if you're not embarrassed by the first version
of your product, you launched too late. Nice.
And we really lived by that because that helps you then to iterate much faster
based on real customer feedback and data points.
(16:33):
At the beginning, we didn't have a product with all surface area as you would imagine.
We basically had a very first end-to-end functioning sort of product,
but it was good enough for the first customer to try it out because they were
excited about the upside and not so much concerned about the potential downside of it.
(16:56):
So that's probably the first one. So fundraising is obviously always an interesting
and also important topic.
And my learning here is that you need to treat fundraising like a sales process.
Right. It's basically expected that you get 95 percent no's in such a process.
You shouldn't be backed down by that.
(17:18):
You should actually expect that and embrace it. you should have a very well
prepared process so you know most of the time should be actually in the preparation
phase because what you want to have is like a very tight and short process,
not not saying that we all did that right but just talking about the learnings.
(17:39):
And if you if you combine all that yeah then it's obviously about like you selling,
Ideally, you can create something like a reality distortion field,
which my co-founder actually calls that a few times, to really make people follow
your vision and actually believe what you're saying, even though it sounds a
(18:01):
little bit crazy, because nobody has ever built it before.
I think those are the most important ingredients for a successful fundraising process.
Well, people decisions are the most impactful ones, is maybe a third one.
And that cuts in both ways, right?
They're the most expensive ones if it goes wrong. And they're the most amazing
(18:22):
ones and the most impactful ones if you get that right. So hiring out of your
network, especially in the early days, is absolutely crucial.
But at some point, that doesn't work anymore.
You might not have enough engineers in your direct network that want to start
(18:42):
an early stage company and are crazy enough to do that.
But yeah, spending a lot of time and defining the process and really living
it. and also taking hard decisions if someone doesn't work out because you also
got to protect the team in a way.
And then the fourth one is, and fourth and last one is, is maybe that a company
(19:04):
actually changes every, you know, depending on how fast you grow,
but like every six to nine months.
So you need to be prepared that you constantly need to change your organization,
that you need to change your processes, that you need to basically grow up with
the amount of customers, the amount of revenue, the amount of people inside your organization,
and you constantly need to adapt.
(19:26):
That is number four and my last number.
Tell me about the reality distortion field. I was intrigued by that comment.
Can you just expand on that a little bit more?
Yeah, I think Steve Jobs is very famous of being world-class in that.
So the theory is basically that whatever you believe, you can make people believe
(19:53):
the same thing, even though it's completely crazy.
And that is a trait that is important for sales, for fundraising,
for customer support, for any human interaction, for PR and so on.
And as founders go on journeys and typically do something no one else has done
(20:14):
before or not many, and therefore the power of convincing is super important, right?
Because you've got to make people follow you on your journey.
And if it's not a risky and not a crazy journey, the outcomes are also capped.
So especially in VC, in venture-backed companies, the more crazy something is,
(20:40):
probably the higher the potential returns are.
And founders should actually aim for something big. Otherwise,
they have problems in other areas, actually raising funds.
Yeah, this is what I believe is an important trade, both in sales and fundraising.
And I think Steve Wozniak called out Steve Jobs exactly with that,
(21:02):
the reality distortion field.
Yeah, and you mentioned Steve Jobs. I imagine he might make this list,
but who have been the biggest influences on your journey as a software entrepreneur and CEO?
So I consume a lot of content because also like,
you know, growth is not really being taught in
in school or at university the first
(21:26):
book that got me into into sass
and in my last position as a ceo at shaw was
actually michael bursch i think you had
him also on on your podcast yeah he's been on twice actually oh okay cool cool
yeah big fan the book uh is a recommendation it's called acceleration the acceleration
formula so that That was actually my step into SaaS and into a revenue position.
(21:54):
And then all the content Reforge is producing with all its authors has been a big impact.
So from Brian Belfort, Andrew Chan, Elena Werner, Wes Bush, the founder and author of ProductLed.
There's also another book recommendation here.
But then probably the biggest influence, and it's not public, had my son.
(22:19):
So when my son got born two and a half years ago, this is where I took like
a month off of my previous job.
And, you know, in that month, I actually had a little bit of time to zoom out.
And, you know, when my wife and my son went to bed in the evenings,
I, you know, the first two days, I just watched Netflix.
So that day I got bored. So I, you know, was opening my laptop and like,
(22:40):
just, you know, pulled, pulled together some slides, something I had in mind,
which, you know, we, we, with my team back at Shaw, we were struggling with and one led to the other.
I started to talk to, to other folks, other founders I knew from,
from before and like other people in growth and just asked if,
you know, if they feel the same way, if they have this, have the same problem.
(23:03):
Them and would actually if i would be
building something like this if they would actually buy it and yeah
the overall feedback was was so positive that i just
quit my job a month later even without having a
co-founder without you know having having a clear path basically to following
my next company but i was i'm a little bit like a hundred percent person so
(23:24):
i didn't want to continue my old job and like you know work aside building my
next thing so i yeah i was cutting ties there had I had an amazing time,
but I was just so excited about that month,
you know, taking that month off and like getting my thoughts on paper.
So probably kudos to my son who doesn't even know about that.
(23:46):
Well, when you're listed as one of the biggest companies on NASDAQ and you're
a global market category leader, hopefully you'll be able to play back this podcast to your son.
And yeah you'll know that you know that he was a major influence on the journey what's his name,
(24:07):
leon leega leon leon sorry well shout out to leon and if this is may 2034 maybe he'll be,
listening back to this with with interest and
curiosity stefan it's been fascinating having
you on the show thanks for walking me through your your
(24:28):
journey and your vision for the future I wish you
and the whole team at Cello hugely successful rest of 24 and well coming years
as well thanks a lot for having me it was actually quite fun so yeah great show
thanks and have a good day glad glad your new microphone held out.
So I'm delighted to welcome Stefan Bader to the podcast today.
Stefan's a two-times founder, currently CEO at Cello, a SaaS scale-up whose
solution enables B2B companies to incentivize referrals.
So, Stefan, welcome to the Startups at Scale at Gameplan. Hi,
(00:24):
Gary. Thanks. Great for having me here.
Great to have you on board. just to kick things off what
are some of the pain points that you observed in your
previous role when you were the cro at shore and
how did those experiences influence the
the creation of cello yeah it
definitely led me to founding cello so i after selling my my first business
(00:47):
that i founded in the automotive space or co-founded in the automotive space
i joined shore.com which is basically like a square or block known in the us
but focused on european markets and back then with,
my growth team growth and partnerships team we wanted to
introduce user referrals to to help
(01:08):
us acquire more customers at scale at lower
customer acquisition costs because it was
also mentioned by many users during during my
time there that they would actually like to you know help us find more customers
because they have pretty dense networks of of other people being interested
in the in the software and yeah we wanted to also like letting them participate
(01:32):
in the success we would get from them on the additional revenue and the idea
was pretty simple just to.
Do what has been done in the b2c world many years very successfully before launching
a I prefer a friend program, but focus on B2B.
And the idea was to let users participate in the revenue they would bring to
(01:54):
us by referring our software to other interested folks out there.
But it turned out that no vendor out there did actually exactly what we're trying
to do and to look for. It was impossible to build it ourselves.
So our CFO back at the time put directly a
stop to it when we came up with the idea to build it ourselves ourselves because
(02:14):
we didn't find a third-party product on the
market and that whole journey led me to
the conclusion that either just might be me or us having this this pain point
or there might be a pretty big business opportunity for other companies out
there as well because user referrals in b2b hasn't really been solved by any
(02:35):
software window out there and this is actually what shadow has become now,
So what do you feel are the key components of a successful B2B referral program
and how does Cello address these?
Yeah, there are a few points to that. We actually have written quite some interesting
(02:57):
content on this together, for example, with Kyle Poyer from OpenView.
And if you have a closer look at referrals, you will find that there are four
different referral programs. There is user referrals.
So, you know, classic users of your product can refer the software to someone
else. There's affiliate referrals.
So affiliates doing the same thing by, for example, creating content and placing
(03:20):
affiliate links. There is influencer referrals.
So people, you know, with a larger audience on social media,
posting something about products there and leveraging their audience to acquire customers.
And then there's VAR, so value-added referrals or referral programs,
which could be something like, for example, a consultant.
(03:42):
So someone that has already a business relationship with another company and
then referring in a product that helps basically to provide the services or that goes hand in hand.
At the very beginning, and this is probably the most innovative part of what
we're doing, we focus on user referrals for B2B, which is a completely new field
where Trello is the only solution out there.
(04:03):
And there are seven steps to a successful user referral program for B2B companies.
And it's very similar to B2C as well. So first of all, it's really about finding
out before investing into it, finding out, is there a referral program fit or
referral program product fit?
(04:23):
Not every product out there is tailored or is made to also have a successful referral program.
We have built some content around this where you can easily assess that.
If you have a great fit, right, then it really goes into setting this up the right way.
So it's not just about deciding to do it, but really about the right execution.
(04:46):
So the program should be natively integrated into your complete user journey.
It's not a marketing campaign, right? It's not something you set up one time.
You have a one-time effect and then you basically forget
about it it is something that lives within your product and
that compounds every single day so the right
user journey integration is is very key users
(05:08):
should be able to access the program very easily and natively you should also
be able to hook it to what we call moments of delights so for example when someone
gives a positive nps right there should be a hook asking them also for a real
referral to someone in their network world and similar, similar hooks.
The third point is about incentives and rewards.
(05:31):
And this is really what makes incentivized user referrals key.
So setting the right incentives, you will see a 100x difference in those referral programs.
And this comes really down to the success of the programs we see with customers
we have, and we help them to iterate on the right incentives and also discounts for the receiving part.
(05:57):
There are three different ways of incentivizing people.
So there are intrinsic incentives, there are extrinsic incentives and social incentives.
At the moment, we're tapping mostly into extrinsic incentives,
so monetary payouts for referrers successfully bringing our customers new business.
But we will also expand that to intrinsic and social incentives over time.
(06:23):
The fourth point is about sharing experience. So everything should be as easy
and as frictionless as possible.
This is like with any other loop or funnel.
The more friction you take out of the process, the better results you will have.
So that's a little bit of an optimization game here.
You should also be able to help your users or the referrers to identify the
(06:47):
right context in their network, provide the right assets or wording,
you know, to share it, make it just really easy to amplify that.
So it sounds like you've got a background that's sort of combining psychology with technology.
Is that something in your background? Or is this psychology a new area that
you've had to learn since you founded Cello?
(07:09):
Yeah, great question. So I was actually very interested in use of psychology and UX.
Also, in my previous founder lives where it wasn't really that helpful,
like in this case here at Shavlo, but I was learning a lot more about it in the past few months.
So, interestingly, we take 95% of the decisions daily unconsciously.
(07:33):
And you can also use as a business those triggers basically to steer user and customer behavior.
And therefore, we're definitely leveraging user psychology to get users to help
our customers the right way.
And your website and some of the articles you've posted online references both
(07:57):
user referrals and advocacy.
So walk me through the advocacy side of things. How are you getting,
how are you fostering advocacy amongst the users?
Yeah. The best products we see performing with user and affiliate referral programs
(08:17):
are actually really good products where you could also see pretty high NPS.
So what we're doing with incentivized referrals is really amplifying that already existing notion.
So tapping into, again, user psychology, leveraging incentives basically to
amplify an action that would anyway happen, but like at lower scale.
(08:40):
And therefore we can, you know, help to spin the wheel of water mouth much,
much faster by doing that.
And it's much cheaper than any other acquisition channel in general.
So it's, you know, about 20 to 15% of the average customer acquisition costs of like other channels.
That's why it just makes sense to invest in an organic channel that already
(09:03):
exists more and really double down on that.
And as you seem to be creating a brand new product category,
how are the likes of Gartner and Forrester looking at what you're doing?
Do they view it as an actual segment or product category or is that something
you're going to have to work on over the next few quarters?
(09:27):
Yeah, we're probably still too small to create right now our own category.
And we're pretty much the only ones in that new category we have in mind.
Therefore, for Gardner, we're definitely too small.
We're building out, you know, the vision of Cello goes way beyond user referrals.
If we want to quickly touch on Vision, the vision of Cello is a go-to-market
(09:54):
operating system for digital products, whereas user referrals is just like the
first growth loop we have productized.
In the future, there will be many more growth loops like user referrals and
affiliate referrals on this platform.
And the idea is to provide an infrastructure platform that companies or products
can just plug in and steer and amplify their go-to-market via this platform.
(10:20):
This category needs to be defined and built out for sure.
Got it. Now, you're a remote-first company, and this is an approach that became
extremely popular, well, a prerequisite, really, during the pandemic.
But many companies have begun to struggle with internal communication,
collaboration, culture building, et cetera.
(10:43):
So they've now reverted to hybrid arrangements, or they've even pushed their
employees to return full-time to their offices. So how have you at Cello made
remote first work so well for you and your team?
I would say, luckily, we started off as a remote first or hybrid company,
(11:04):
so I would say it's much easier to start that way instead of starting with an
office culture and then changing that culture towards a hybrid or remote first company.
And I'm pretty lucky that starting at the time where remote just became,
for many startups, the norm.
(11:26):
We do have the vision of not completely going all-in remote.
So the vision is to build out a hub structure.
So we have, for example, five people based in Munich. We're meeting twice a
week, actually in different co-working spaces. We're still too small to have an office.
So it just, in our opinion, doesn't make sense at this size.
(11:48):
And we start also to see more and more people in other cities.
For example, in London, we have now three people.
They also meet up every week or every other week.
And the vision of the company we want to build is to have more hubs in the most
important tech hubs in Europe or across the world, maybe North America and Europe.
(12:12):
And that makes it also, that combines basically
the benefits of a remote first culture with
the possibility to actually meet people in person and to
make real human connections to make
remote or hybrid culture work however it's absolutely necessary to still meet
in person so we started for example at the very beginning of the company started
(12:33):
off with four times a all all company meeting at like one location typically
at a location where someone of the company was based.
So we met in Munich where we headquartered, but also in Barcelona, in Prague, in Poland.
We will go soon to Estonia, for example, where a few people of us are based.
(12:54):
And this really helps to foster and build culture.
Without those in-person meetings, typically we do it for five days, two, three times a.
That wouldn't be possible. So this is like an absolute important ingredient
in even building a remote-first culture, in my opinion.
(13:15):
Yeah, agreed. And when we last spoke, you mentioned that your second hire at
Cello was a VP of people. That really intrigued me.
So most B2B SaaS ventures would build a team of at least 20 to 30 people before
they recruited a VP or head of people, head of HR, or whatever term they might use.
(13:37):
So what was the thinking behind that very early hire? Yeah.
So when we say we put people first, I would say we really mean it.
And we put money where our mouth is.
The idea was to have someone very early on in the company that focuses on,
you know, the right, for example, hiring process that focuses on developing
(14:00):
people and like building, you know, the organizational and processional structure
around the people function.
And not just start when the company is already, as you said,
like 20, 30, 40 people big.
Because that might be a time when you didn't achieve to get just,
you know, high performer in the company.
And this is actually what we found is what high performers are looking for.
(14:23):
Or like, you know, people that are really amazing.
They look for working together with amazing people and assume that that quality dilutes.
It becomes more difficult to exactly find those people. That's why we took a
decision to get Philip, our head of people on board as high number two,
goes against any textbook I've ever seen.
(14:45):
But I can tell out of our experience, for us, it worked quite well.
I would always do it the same way.
Maybe an addition to that is, so Philip is,
we call him like a Swiss army knife inside the company so he's also owning other
parts of the of the company not just people he for example has a background
(15:07):
in marketing he is owning most parts of our of our marketing efforts,
and that makes it also really work right this is where your if
you hire like a head of people and you stop hiring you you
know this person should also help out in other other areas
for example right now we're rather flat until our upcoming
series a beginning of next year and there
(15:29):
wouldn't be enough work for a head of people during that
time obviously but as he's amazing in other parts
it you know really works well okay so
you got a man a man for all seasons running people and marketing and whatever
whatever else might come along that's good to hear yeah what have been some
(15:49):
of the most significant lessons you've learned as co-founder of cello in the
context of scaling a B2B SaaS venture.
Yeah, the first one is shipping fast, I would say.
So we shipped the first version of the product and launched it together with
the first customer after nine months where I really felt embarrassed about the
(16:12):
first version. But this is actually according to the textbook.
You know, there is a saying, if you're not embarrassed by the first version
of your product, you launched too late. Nice.
And we really lived by that because that helps you then to iterate much faster
based on real customer feedback and data points.
(16:33):
At the beginning, we didn't have a product with all surface area as you would imagine.
We basically had a very first end-to-end functioning sort of product,
but it was good enough for the first customer to try it out because they were
excited about the upside and not so much concerned about the potential downside of it.
(16:56):
So that's probably the first one. So fundraising is obviously always an interesting
and also important topic.
And my learning here is that you need to treat fundraising like a sales process.
Right. It's basically expected that you get 95 percent no's in such a process.
You shouldn't be backed down by that.
(17:18):
You should actually expect that and embrace it. you should have a very well
prepared process so you know most of the time should be actually in the preparation
phase because what you want to have is like a very tight and short process,
not not saying that we all did that right but just talking about the learnings.
(17:39):
And if you if you combine all that yeah then it's obviously about like you selling,
Ideally, you can create something like a reality distortion field,
which my co-founder actually calls that a few times, to really make people follow
your vision and actually believe what you're saying, even though it sounds a
(18:01):
little bit crazy, because nobody has ever built it before.
I think those are the most important ingredients for a successful fundraising process.
Well, people decisions are the most impactful ones, is maybe a third one.
And that cuts in both ways, right?
They're the most expensive ones if it goes wrong. And they're the most amazing
(18:22):
ones and the most impactful ones if you get that right. So hiring out of your
network, especially in the early days, is absolutely crucial.
But at some point, that doesn't work anymore.
You might not have enough engineers in your direct network that want to start
(18:42):
an early stage company and are crazy enough to do that.
But yeah, spending a lot of time and defining the process and really living
it. and also taking hard decisions if someone doesn't work out because you also
got to protect the team in a way.
And then the fourth one is, and fourth and last one is, is maybe that a company
(19:04):
actually changes every, you know, depending on how fast you grow,
but like every six to nine months.
So you need to be prepared that you constantly need to change your organization,
that you need to change your processes, that you need to basically grow up with
the amount of customers, the amount of revenue, the amount of people inside your organization,
and you constantly need to adapt.
(19:26):
That is number four and my last number.
Tell me about the reality distortion field. I was intrigued by that comment.
Can you just expand on that a little bit more?
Yeah, I think Steve Jobs is very famous of being world-class in that.
So the theory is basically that whatever you believe, you can make people believe
(19:53):
the same thing, even though it's completely crazy.
And that is a trait that is important for sales, for fundraising,
for customer support, for any human interaction, for PR and so on.
And as founders go on journeys and typically do something no one else has done
(20:14):
before or not many, and therefore the power of convincing is super important, right?
Because you've got to make people follow you on your journey.
And if it's not a risky and not a crazy journey, the outcomes are also capped.
So especially in VC, in venture-backed companies, the more crazy something is,
(20:40):
probably the higher the potential returns are.
And founders should actually aim for something big. Otherwise,
they have problems in other areas, actually raising funds.
Yeah, this is what I believe is an important trade, both in sales and fundraising.
And I think Steve Wozniak called out Steve Jobs exactly with that,
(21:02):
the reality distortion field.
Yeah, and you mentioned Steve Jobs. I imagine he might make this list,
but who have been the biggest influences on your journey as a software entrepreneur and CEO?
So I consume a lot of content because also like,
you know, growth is not really being taught in
in school or at university the first
(21:26):
book that got me into into sass
and in my last position as a ceo at shaw was
actually michael bursch i think you had
him also on on your podcast yeah he's been on twice actually oh okay cool cool
yeah big fan the book uh is a recommendation it's called acceleration the acceleration
formula so that That was actually my step into SaaS and into a revenue position.
(21:54):
And then all the content Reforge is producing with all its authors has been a big impact.
So from Brian Belfort, Andrew Chan, Elena Werner, Wes Bush, the founder and author of ProductLed.
There's also another book recommendation here.
But then probably the biggest influence, and it's not public, had my son.
(22:19):
So when my son got born two and a half years ago, this is where I took like
a month off of my previous job.
And, you know, in that month, I actually had a little bit of time to zoom out.
And, you know, when my wife and my son went to bed in the evenings,
I, you know, the first two days, I just watched Netflix.
So that day I got bored. So I, you know, was opening my laptop and like,
(22:40):
just, you know, pulled, pulled together some slides, something I had in mind,
which, you know, we, we, with my team back at Shaw, we were struggling with and one led to the other.
I started to talk to, to other folks, other founders I knew from,
from before and like other people in growth and just asked if,
you know, if they feel the same way, if they have this, have the same problem.
(23:03):
Them and would actually if i would be
building something like this if they would actually buy it and yeah
the overall feedback was was so positive that i just
quit my job a month later even without having a
co-founder without you know having having a clear path basically to following
my next company but i was i'm a little bit like a hundred percent person so
(23:24):
i didn't want to continue my old job and like you know work aside building my
next thing so i yeah i was cutting ties there had I had an amazing time,
but I was just so excited about that month,
you know, taking that month off and like getting my thoughts on paper.
So probably kudos to my son who doesn't even know about that.
(23:46):
Well, when you're listed as one of the biggest companies on NASDAQ and you're
a global market category leader, hopefully you'll be able to play back this podcast to your son.
And yeah you'll know that you know that he was a major influence on the journey what's his name,
(24:07):
leon leega leon leon sorry well shout out to leon and if this is may 2034 maybe he'll be,
listening back to this with with interest and
curiosity stefan it's been fascinating having
you on the show thanks for walking me through your your
(24:28):
journey and your vision for the future I wish you
and the whole team at Cello hugely successful rest of 24 and well coming years
as well thanks a lot for having me it was actually quite fun so yeah great show
thanks and have a good day glad glad your new microphone held out.
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