Some company founders talk about the brilliance of their business idea. But not Zendesk CEO and co-founder Mikkel Svane.
"Our concept was ... very mundane," Svane told Investor's Business Daily. "We took something that we thought was over engineered and too complex ... and made it simple and fast."
Seemingly simple inventions that make life easier spark revolutionary business change, says Svane, 48. And finding such inventions is Zendesk's guiding principle through its 12-year history. "We tried to hide the complexity of (products) from our users. Empowering people to do things better and more easily can be transformational," he said.
What is Zendesk's seemingly simple invention? The San Francisco-based company sells software that companies use to manage customer-service call centers and websites. It offers service and support in over 30 languages to businesses worldwide across a multitude of industries, with more than 145,000 paid customer accounts.
Zendesk's financials prove Svane's strategy is working. Zendesk is on pace to earn $37 million this year, excluding one-time items, up 62% from 2018. And revenue is set to hit $814 million, 36% higher than in 2018. The company has matched or beat consensus earnings estimates the past 19 quarters. And the stock? It's up more than 450% since its first-day of trading in May 2014, topping the 68% gain by the S&P 500 during that time.
So how did Svane take Zendesk from its humble beginnings in Copenhagen, Denmark, to Silicon Valley success?
Zendesk CEO: Take The Long View
At the startup stage, Svane and two other Zendesk founders burned the midnight oil in cramped quarters for years. Each had needs — related to money, family and career — that pulled them in different directions at various times. Navigating those early rocky years without sinking under pressure is essential for startups.
"Founder dynamics is one of the most complicated things when you build a company," Svane said. "I think you can look at every single company with multiple founders, and they all struggle with it. Everybody has their quirks and everybody has to find their role. Everybody has different things that motivate them and different needs to be able to function."
Svane says he often hears about these challenges when he talks to young founders.
"They feel that one person is not working hard enough or that person is just here on vacation," he said. "You can't dwell on that. It's really important in the early phase that you give each other room. Everybody understands that it's not a competition and everybody at some point will have their opportunity to shine."
Hire Wisely
In his book, "Startup Land," Svane explains Zendesk's unconventional hiring strategy. First, he says, the company looks for "athletes."
"I think of athletes as generalists vs. specialists," he said. "We like people who really show interest and are curious ... They are constantly asking: How can I also do this? Can I also be good at this? They have this curiosity and they want to try everything. People who have many skill sets and can master many disciplines. We also need people who realize that just because they know one thing they don't know everything."
He looks for frequent travelers as potential employees. They've explored, moved around and are typically good at figuring things out. Women, mothers, in particular, are also great workers because they are used to multitasking. People who are OK with swearing also get his nod. Why? "People who get ruffled by bad language will probably have trouble rolling with all of the other less than perfectly pristine moments," Svane wrote in his book.
Diversity, too, is important to Svane. Tech companies can become a "posse of young white men in jeans and hoodies," he wrote. "A diverse workforce enables the company to make sure no predominant group sets the tone. Instead, the company finds its own common tone."
Believe In Your Team
Analysts who follow the company say Svane's leadership style is crucial to its success. Patrick Walravens with JMP Securities, says Svane hires the best people he can find and let's them do their job.
"He does not like to manage ... he likes to lead," Walravens said. "He doesn't like running meetings ... he doesn't like telling people how to do their jobs. (And) he wants to hire people who are better than he is, he wants to give them a little bit of direction, and then let them go."
Steve Koenig of Wedbush Securities agrees Svane's focus is on providing guidance and avoiding micromanaging.
"His leadership style involves planting really great people around him," Koenig said. "He orchestrates the vision; the team around him carries out the execution. His style is loose and free form; (the management team) provides the button-down execution."
Zendesk CEO: Create A Culture Of Empathy
As intense as working at Zendesk can be, Svane is acutely aware of the flip side of his success. He doesn't need to look far to keep him grounded, he says. Outside the doors of Zendesk's offices in San Francisco's Tenderloin district lies a world vastly different from the often charmed existence of its employees.
"In Silicon Valley we can get very much into ourselves," Svane said. "What we do can get very important. And we often forget about things that are right outside our doors. I think being here has changed the tone of the company."
Looking outside, "We realize that there is a different world. It's not just about smart software and fancy water and massages and joggers. There are people with real problems with real issues that have nowhere to go in this neighborhood. And I think it brings a sense of humility in the conversation and openness and patience and trying to understand things."
Lead By Example
Svane leads by doing. "Paying lip service to diversity and inclusion initiatives perpetuates a cycle of discrimination," Svane wrote in an article for Entrepreneur Magazine in May 2018. "To develop a truly inclusive and compassionate company culture, change has to happen from the top down, with the C-suite leading the charge."
Svane was writing about the time several years ago when he took his daughters on a tour of the South with the San Francisco Gay Men's Chorus. They performed in cities where typically marginalized people would have had a hard time expressing their stories. Svane says the experience taught him a few things about the power of empathy and how Zendesk can have a positive impact in communities.
"In every city we land, my employees and I commit to being good neighbors and embracing the community with empathy and compassion," he wrote. "We commit to connection. We commit to becoming a part of the fabric of the places we are a part of."
Svane says creating a culture of empathy is not only good for individual growth but also good business. It motivates him to stay focused on maintaining the trust he's worked hard to build among customers.
"I think (empathy is) good for the longevity of the business; that we understand that this is a journey and ... realize everything we have is something that can easily be taken away too," he said. "That humility gives us what it takes to get up every morning, get to work and work retain the trust and business of our customers."
Zendesk CEO: Take Failure Seriously
Intense awareness can come across as fear of failure. And Svane is almost counterculture in Silicon Valley when it comes to his views on failure. He makes a clear distinction between making mistakes and failing. Sure, mistakes can be learning experiences, and you should not be afraid to make mistakes. But failure is a different story, he says.
"Truly failing is really hard," Svane said. "You have to disappoint your employees ... you have to disappoint all your customers. (And) you have to disappoint your investors. You have to disappoint your family, your friends, everyone around you. Starting all over is incredibly hard."
True failure is not something Svane commends or celebrates. "It's not something we should take lightly," he said.
Svane's Keys
- Co-founder and CEO of Zendesk, which sells software that companies use to manage customer-service call centers and websites.
- Overcame: Humble beginnings and conflicting demands while launching the company challenged Svane and his fellow co-founders.
- Lesson: The best business ideas and products are simple. Don't over complicate your business or career.
- "I think (empathy is) good for the longevity of the business; that we understand that this is a journey and ... realize everything we have is something that can easily be taken away too."
