Zendesk and the art of maintaining a digital hit

Mikkel Svane says Dublin was the natural choice for establishing a European headquarters

The quote about LSD is overblown, Mikkel Svane assures me. He isn’t surprised that this was brought up, although he does appear a bit sheepish.

He made the remark during a town hall meeting a few years ago addressing his staff. Zendesk, the consumer software business he co-founded and still leads, was on its way to going public. It was an exciting time for the company and for Mr Svane personally.

In Startupland, his book about building the firm from a three-man operation in Denmark to a Silicon Valley darling, Mr Svane acknowledged how he had to change tack as the business expanded. “In one instance I described how we had quickly built the first version of our billing system that supported the company for many years,” he wrote. “In my excitement I said something like, ‘It was built in a four-day, LSD-induced stupor!’.”

“It was more like figurative speaking,” Mr Svane, 47, is quick to say when this is brought up. “You don’t code and do drugs, it’s not a good combination. It was more a way of illustrating when you put yourself in hard deadlines and you have to figure out a way of getting it done. It becomes a little crazy. Not LSD crazy, but a little crazy. If people perceive this as me encouraging people to take LSD, that’s probably not a good idea.”

Perception, and in particular how Mr Svane is perceived by his staff, comes up frequently in our conversation after the entrepreneur touched down in Dublin to mark the official opening of Zendesk’s new office here. The company’s software is used to automate a business’s interactions with its customers. For example, one of its tools is chat support software that enables firms to talk with visitors on their websites in real time.

Although Zendesk has had its European headquarters in the Irish capital for years, its move to a new office on the banks of the Grand Canal is a statement of intent. While not exactly a household name here, the organisation employs about 300 people in Dublin, and plans to hire 200 more staff by 2020.

With more than 2,000 workers, Zendesk long ago reached a size where it became impossible for Mr Svane to know everyone in the business, a shift that he has had to adjust to. “Sometimes you forget how big the company has become and how people think about you. You still think it’s like the good old days but if I reached out to an employee in our company today and asked ‘Could you do this for me?’, people would start jumping out of their chairs!

“I have to think about that but I’m relatively comfortable about it. I don’t try to be perceived differently than I am. I’m not building a version of myself in public and then have a different me [in private]. I try to be authentic, whatever I’m doing.”

It’s an easy statement to believe. Mr Svane is affable, giving the impression that no topic is off limits and often casually moving into slightly tangential monologues. After talking about the LSD quote, he starts reminiscing.

“[You think] of all the foolish stuff we’ve done. Like the very first Christmas party we had . . .” His voice trails off, but his face creases with laughter. “Then you grow up, and that’s just a natural evolution. It’s a bit like when you think about your college days. It was fun. But you can’t go back to that. There comes a point in your life where you don’t just sit down and eat a pizza without thinking about the consequences. It’s the same thing with the company. Our journey as founders and our journey as people has evolved alongside the company.”

It has been some journey. Mr Svane, alongside Morten Primdahl and Alexander Aghassipour, founded Zendesk just over ten years ago. They were in their thirties and Mr Svane regarded it as his last chance to break free of a standard business job after closing his previous tech company, Caput, after the dotcom crash.

It was created in Copenhagen but Mr Svane quickly realised that he would have to move the business to Silicon Valley. He was unable to raise cash in Europe to expand the firm as the continent plunged into recession. “We launched in October 2007 and moved in the summer of 2009,” he says. “All the capital was in the US, there was nothing here. Nothing. And there was no tradition of it either. We pitched as well both in Germany and the UK, but the timing was terrible. We could raise money in the US; it was impossible in Europe.”

With access to cash, Zendesk grew quickly. “Pre-IPO we raised up to $100 million, then we raised $100 million in the IPO and later on we did a secondary transaction where we raised another $100 million,” Mr Svane says. “Once you’re in the public markets, access to capital is easier.”

The flotation in 2014 was a success, with Zendesk’s shares rising by 44 per cent on the day of its debut on the New York Stock Exchange. The company quickly gained “unicorn” status — a tech company valued at more than $1 billion — and its value has since risen to nearly $6 billion after generating steady revenue growth, although it is still recording operating losses.

Zendesk is now firmly based in San Francisco. Despite a fleeting suggestion from a colleague that he could spend a week a month in each of the company’s biggest offices (“I would never be home”), so is Mr Svane.

While money was a big part of moving to the US, at least as important was the nation’s attitude towards entrepreneurs and its history of immigration. “[In the US] there was also that tradition for doing it, thinking big. Sitting in Europe, three guys with a computer, [people would wonder] what the f*** are you doing? Are you searching porn, or what’s going on? Whereas three guys in Silicon Valley, it was like ‘OK, maybe you’re building the next big thing here’. The mentality is just so different.

“Moving was easy. Whether the US wants it or not, it is a country of immigrants. When I lived in San Francisco it was rare to meet someone actually born in San Francisco. That’s the DNA of the country. It’s a whole culture and system set up for people coming there.”

Mr Svane says that Ireland’s culture was also a draw to Zendesk when it was looking to set up its European base.

“There is a familiarity with Dublin, or with Ireland, that is very comfortable for Americans, and there is just a great tradition for American companies to set up shop here,” he says. “You have the tradition, you have the experience, there’s already a community, there’s other tech companies, there’s a similarity in culture and language. These things become easy because of that.”

Zendesk has grown quickly since setting up in Dublin with a handful of workers in 2012, with Mr Svane pointing out that its office is now about the same size as the entire company when it went public. While the company carries out many of its back-office functions here, such as law and sales, it also has a large research operation with more than 100 development staff.

“Europe is almost a third of our business. We think of ourselves as an international business, and Dublin is a big part of our international identity. We do all our mobile development in Ireland, and our voice technologies here too,” Mr Svane says.

Mr Svane says that he wants the business to expand even faster both in Ireland and internationally. On a personal level, while he still gets a bit misty-eyed talking about the old days and the rough and tumble of start-up life, he doesn’t give off the impression of someone who minds too much if he has to think twice before eating a pizza.

Source: https://www.thetimes.co.uk/article/zendesk-and-the-art-of-maintaining-a-digital-hit-855ltchkw