Music. Folks find more news streams events and interviews at www.startuprad.io remember sharing is caring. Music. Hello and welcome everybody this is joe from startuprad.io your startup podcast and you de Bloch from Germany today. No surprise, working in another interesting entrepreneur. Hey, Ertan, how are you doing? I'm all right. Thank you. Thanks for the invite.
Totally my pleasure. You have a very long and interesting story to tell, including but not limited to growing a company, staying with a company for quite some time, calling off an IPO, and then selling the company. So we'll get through all of that, and I do have a lot of questions for you. But first, again, welcome very much to my show. Could you share a little bit of your journey from your early career to founding your company WeClub? What did you do?
Because I was actually looking at your LinkedIn profile, and actually, it looks like your whole life started with WeClub. Yeah, that's good. Yeah, of course. Let me maybe start in the beginning when everything started for me. It was basically when I was a little child and started to really have high interest in software development and work with computers. So typical nerd, I would say, and I loved always to develop software. Later on, of course, you had a lot of milestones in your life.
For me, there were a couple of special projects, what we can maybe talk about a little bit later. But generally, I started studying, but stopped. stopped then after some while. I founded already my own software company and was in the middle of founding my own company and pushing things forward. So I'm a typical guy who for the whole life did nothing else than software development and technologies. That's basically what Ayrton is doing.
And when you said you always love to develop software, were you one of those guys with 15, 16, that sold websites in the then pretty new internet to companies. No, not webpages or something, but software was always my passion. And I started with nine years to have the first testings. Let's call it like doing some tests. But I started quite early and I always just focused on software. And it's really a passion for me. And I love to solve problems with software solutions. That's what I'm doing.
And out of curiosity, what did you start to study? Was it philosophy? No. No, no. That would be interesting. I mean, software is my passion. So that's why also software and technology was what I started studying. And how did you get onto the idea of WeClub? I mean, it's a cloud EOP platform. That means it's basically a software with which you can manage a whole company or part of it depending on how you deploy it.
I do believe it's not on top of mind of 20-year-olds when they're saying, oh, I want to do something with software. Can you take us along the journey? How did you end up with the idea of WeClap? Oh, yeah, that was a long story. in a long way, but everything started with a couple of milestone projects. One of the milestone projects was that I work for a company in Frankfurt in Germany, and they have started to introduce a CRM system, and the whole project did fail.
And I was so shocked about this project that I decided to develop my own CRM system, and I started to develop it as an open source solution. That was one of the key projects and I could really feel how successful a open source oriented project can be and learned a lot in that phase. That was one of the key projects I would say leading me finally to WeClab. And then the other one was that I. Developed a merchandise management system for one of a wholesale company in Germany.
And I could see how important these kind of systems, what we typically call ERP systems or what these ERP systems really can do for these companies. And the third, what I would mention is that when the new browser technologies came up and we had these new possibilities, I saw a demo running in the browser where somebody developed a complete operating system within the browser. That was a moment where I saw the potential for this future.
And all that together then came to the fact that you also have to find, of course, someone who can finance those kind of projects. And I luckily had a financial investor next to me who also loved the idea to build a completely new cloud ERP platform from scratch. And so that was the starting point in 2008, when we decided to found vClub and start building a cloud ERP platform.
Would you say the point where somebody showed a software that was running on servers that you could access from a browser, that was the onset of SaaS software service? Yes, that was definitely a changing moment that things can be consumed in the browser instead of installing native software somewhere. That was definitely a very important point in time for the whole industry to rethink how software is being developed and how software is being deployed and provided to end customers.
So I see basically your software, you could use it as a CRM, Customer Relationship Management. You put all the data, all the interactions in there. You have your P for teams, consulting agencies, IT consulting, and so on and so forth for services. And you have an ERP that actually tracks physical goods, for example, e-commerce, and so on and so forth. Can you take us a little bit through, you said you first had a CRM. Then you were tracking goods for ERP.
How did it all together and when did it form WeClub? Basically, the founding idea was that we deliver or provide software that helps you to run your business as a smaller company. And we don't want to focus on a specific sector. That's why we have made the whole platform quite standardized and allow to support your core business processes.
And in the beginning, the idea was that we do all what typical small and medium-sized companies do have and their challenges and softest challenges help them to support their processes with a good software. And during the further years and then later, we started to also add more functionality. Finally, the idea was when you look to my logo in my background, that is the new logo prepared for the IPO, what we have planned for two years ago.
Before that logo, we had another logo with a white hand on a red background and giving everything out of one hand. That was my initial idea and statement. And we have focused to develop all kinds of functions for typical small and medium customers to need. And CRM is part of it. But the whole merchandise management is also very important, what customers typically use these days.
We have to put it a little bit into perspective, because 2008 is not that far away in the past, but it's more than a decade, and SaaS has been developing quite a lot. Could you tell us a little bit why your idea there was different? Because what I had in mind back then was the companies who had an ERP system. It was usually pretty big companies.
It was usually SAP and they had their own in-house servers and everything was running there and usually it was running not that smooth because you had like a gazillion programs tucked onto it or people do exports and stuff like that to get all the data out of there. All the complexity what you're mentioning, Joe, that was also one of the reasons why we founded WeClab. We wanted to democratize the ERP systems for especially startup and young companies.
It was back these days very hard to have an ERP system. The costs were quite high. Everything was very complicated. You get typically ten.
People coming in your company with ties and they are telling you about processes and and what you should do and what you should not do it was very hard to really have good software solutions easily, usable and that's exactly what we have changed you can now register on our web page for our product and within a few seconds you have your own erp system up and running you need to then easily you can import your data and start using it. And that has changed a lot over the last decade.
And prior to cloud-based ERP platforms, we have the old generation of ERP systems, what we call ERP 2.0 generation. These kinds of systems exactly have the requirement that you need to install software on your own hardware that you really need people helping you to customize things, to set up things. All of that is passed now, and it's much more easy than ever before to set up and run your own ERP system, which is, by the way, very important for startup companies, for young companies.
Without a good software solution, you will end up in a high inefficiency in the future if you don't look at this point. And that's why we definitely suggest to start with a good solution that helps you to grow with the solution together and make sure that you're from the beginning a highly efficient company. And efficiency in that case, of course, also means profitable. You have some experience and a lot of people listening here, it now moved a little bit, but on average, they're 35 to 44.
So they're not necessary in the very young stage there. But I do believe they still would like to hear about a few of the challenges you faced when you had two different programs and wanted to make them together. I'm sure some of the great hairs I can see on your head is from this time. Can you take us through a few initial challenges you faced when you developed what we know today as we collab out of different tools?
You mean so the development side itself and the challenges coming from that area? Plus setting up a company. I do believe a few people looked at you like you were crazy, when you said, oh, all your competitors have big server forms and they run everything on premise, but you can access my tool from the browser. And I go, what? Yeah, that was indeed an interesting step and decision.
And by the way, in the first five years we have developed the whole platform and we only burned money in that time and we had no income. So it was from two perspectives very critical and not that easy that you have to invest a lot of money into such a solution. And as you're saying on the other side, you have a completely new idea and nobody can tell you whether this will be accepted later by customers when a couple of years later, you start to sell your product.
We had five years of development cycle. We have developed for five years, the whole platform and started in 2012 and 2013 was the beginning of our sales activities. And until that point, it was really hard for me to sleep because it was really hard to see whether all that will work. And when you invest a two digit million in such development of a product. The financial investor was nervous. I was nervous.
But luckily, at the first day when we started to sell our product, we could see, wow, that is something what is definitely being accepted. But the decisions we made were quite critical. And it was completely different than what was already there. So there was no experience you could rely on. But as I mentioned, all went good and everything is good so far. And we're a fast-growing company now in Germany.
I vividly remember the days you were talking about when you had years of burning money, developing, and then figuring out, oh, and how does my project now fit in the market? How is it accepted? How do I create clients?
I assume if you would start a company today, you would use... A rather different approach i do believe all the tools you have out there all the libraries you can get like all the the building blocks for final software that would now shorten quite a lot this development process would you still start with developing first software or would you rather go out as early as possible putting something together and then try if there's a market fit Yeah,
it depends on what kind of software solution you're talking about. And ERP systems are systems where customers do expect a kind of functionality. You cannot start too early. If the project is too small and you have only an MVP running, that is not good enough that people will say, well, great, I want to pay money for this. So you definitely, and that was why I have chosen from the beginning a strong financial investor who was able to go into the risk and really pay the money.
As I mentioned, it was a bigger two-digit million invest we did in the first five years. But this is also for ERP systems necessary. If you're not feature complete, people will not pay money for your solution.
And so for ERP, it's a bit different. When I would start something smaller, something what is like a CRM system or project management system or any other smaller tool, I would say there you have some room to start with less functionality, win some customers, earn some money, and then continue to develop. But that was also one of the big advantages what we had, that we really could focus on this great product, develop it, finalize it, and then start selling it.
It sounds like um let let me take a few steps back uh i was starting interviewing entrepreneurs back in 2012 and that was when really the startup scene here in and around frankfurt really took off um so we started back in 2008 how were you able to find an investor there because i do believe real CVs who would accept a very long development or cash-burning phase until you can really rip the fruits of that. They have not been around at this time or at least not as big as you would need them.
Yeah, it is very important to have good contacts and good relationships to potential investors and that was the case for me. I had a good relationship to a public listed company. And that public listed company at that time, which came from a telecommunication background, they earned a lot of money over the decades before. And they were searching for a new idea, new investment potentials. And so the idea, my idea to have a cloud-based ERP platform came together with the money these guys had.
And we had a relationship before, and that's why they exactly knew what kind of person I am, how big the risk for them would be. Otherwise, that would be indeed very difficult. Having this experience now, as I could create all the last 16 years after founding the company, now it's much easier. Now I can go out and say, hey, I did it already successful once in the past and I'm here to maybe restart this again.
But these days that were indeed not easy, it was a lot of discussions, a lot of details, what we have talked about before finally both sides had an agreement and started doing things. I'll be interested. You said like 16 years you're running this company now. Are you mentoring or as a business angel investing into young startups?
Well, that's a good question. Of course, the advantage of having such a successful company is that you have access to some money, what you can invest into other companies. My focus is WeClip. I'm here to bring this company to the next level. I have also, after the IPO, what we had started back 2020 and 2021, we have then postponed in 2022 our IPO plan after the Ukraine crisis started. Unfortunately, we were one of the companies affected in that year.
Otherwise, we would be a public-listed company now. But because of the old contacts and investors I had contact to, I had then in 2022 and 2022 sold some shares to a company in the Netherlands. And from that money, of course, I could do my investments. I'm planning to do something in the future, but not now. Now I'm focusing on the business here at WeClip, but what I'm quite frequently doing is to help others to have the right decisions, to make sure that they cover everything that is important.
And I'm here to help. That's what I'm saying. And I really love to share my knowledge and help others to have a great running business, especially that we here in Europe have really good software companies. It's quite important for me. And because a little bit of my background to why I'm asking this here is I'm sure you learned a lot in those 16 years.
I'm most curious because a lot of the people out there are around that stage where they make like 1 million to 10 million annual recurring revenue. Taking WeClap from burning money to something like two-digit revenues, I've found some numbers where you were around 10, 15 million years annual revenue. What did you learn? What are the key points we could tell somebody to do that in order to get a really scalable company?
What are like a few important highlights you would tell somebody like in a mentoring session? What did you learn how to scale up a tech company? Well, focusing on your product and your customer, that's the most important message, I would say. What I see quite often with other entrepreneurs is that they, after some time, lose their focus on their business. Your product is key. If you have a great product, you only need little marketing and sales activities.
But if you don't focus on your product, then you have always a lot of challenges in these areas and you have to put a lot of money. And what we have successfully have done in the past is that we focused on parallel to the software development, for instance, to being visible with Google. As we have a digital product, we need to position ourselves when you search at Google for such solutions and make sure that you have your lead pipeline, your funnel under control.
Make sure that you have a good plan, how you want to introduce you to generate leads and how you can really have a strong funnel to win a lot of paying customers. And all of that is much easier when you have a great focus on your product. So product customers, I would say, is very important. You should not have any fear about that something goes wrong.
That's also often something that is for young entrepreneurs not easy as they have a lot of fear and they step back and slow down and don't push really their product forward. If you start, make sure that you finish the job. And that would be one of the key messages I would give to young entrepreneurs. I know what you mean. For example, I meet entrepreneurs who are successful early on, and then they say, ah, we need to take a step back and do this or do that.
We had a successful sales push, and your main recommendation would be just keep pushing. Yeah, definitely. Keep pushing belief to what you had initial ideas when you started doing it. On the other side, if you see that something major is changing from what you have planned initially, also don't have any fear to change things. That's what I love is the US guys, by the way. If they see that they can do it better by changing something, they start doing it.
And if they fail, they stand up and try it another time. And that's something, especially in Germany, we can give to the young entrepreneurs to not have too much fear about that something could go wrong. There's always something going wrong. And in the last 16 years of VCLAP history, there was a lot that was not perfect. There were a lot of mistakes that we did, but that was no reason for me to stop believing to my initial idea and believing in my vision.
And that's why we are still here and we are very successful. And it shows that it can work quite well. When you said, don't stop believing, journey started in my head. The song from Journey. No, not got to sing. Otherwise, I'll scare away all the people here. Going a little bit back into the early stages, I find from my audience, from every piece of my experience, that early on, a company grows with good employees from your network.
But there is a very big break when you start hiring people who are not in your network anymore, when you need to go out and need to search for people. How did you handle the phase? And is there like some advice you can give to people who are at this stage or approaching that stage? Company culture. That's my answer. You need a very healthy company culture.
If you have a healthy company culture, then people coming to you to joining your company will be part of a culture and having a culture is the important key thing what you need to focus on.
Most companies, when they have a successful idea, will grow quite fast and you will quite early have the situation that people are coming in who are not in your network and your culture is what will help to make sure that even when they're not from out of your network, that these people believe to your vision, believe to what you're doing, and that they have fun pushing things forward.
And that was one of the great things we did here at RecLab, to make sure that from the beginning we have a very healthy culture. We'll have a very short break for our ad clients and be back with you pretty soon. Thank you for staying with us. I'm here with Etan, the founder of WeClap, and we keep pushing our interview. Before the ad break, you were talking about maintaining company culture. In the start, I assume you were there sitting around with a handful of people.
How did you decide what is a company culture and how did you keep it alive to scale to several million annual recurring revenue? How can you achieve that? Because that is something I do believe that's a make or break decision in the long term for a company.
Yeah and having it written down somewhere is very helpful it doesn't help if somebody comes in and you tell the new joiners something about the culture it must be written down somewhere and it must be something what you have to also support by your own when you join a such company and what I told everyone every new joiners is that you're part of the of this culture the positive culture what we have and make sure that you positively contribute to it and
sometimes Joe also of course you have this situation that somebody don't understand what it means and is completely doing something difficult or different, and you need to maybe stop working with people also. But most of the people joined with WeClub did understand how important such a culture is and contributed also to make it, to bring it to the next level. And that's the way I would say how it works. So write it down, make it transparent to everyone, and just live it day by day.
I was once in a larger company part of a workshop where core values have been decided. So basically, people sat together and were discussing around a few abstract ideas. How would you say you could really, develop this culture? How can you figure out what is your culture except being awesome? Did you have external help there or was it something that grew organically? No, it grew organically. We were all young people, right?
And young people together, they We love to work hard and party hard and out of that based understanding for all of us, we started to grow it from there and add a little bit more here and a little bit more there. So there were no one external who helped us to define a good culture. I would say this is not natural enough. That's something what I would definitely try to avoid. I don't think that in such a stage that as a young company, someone external can help you to define your own culture.
You must live what you want to see in your company. And that was maybe something that was my advantage, that I'm a very positive guy. I love to work really hard, but also love to have parties and nice moments together. And all that is natural, I would say, instead of something that comes from outside and tries to help you. I don't think that this will work. And for everybody, company culture is not having a few beanbags in the office and a few nerve guns.
That's not company culture. There may be tools for company culture. Let us go a little bit onto the last part of the interview, the part I'm mostly interested because you guys were preparing an IPO. And you called it off. For example, one of the reasons was the Ukraine crisis. But first, let us go a little bit through this process. How did you, because a lot of people here in the audience is somebody who may be thinking of taking their company public.
So what would be of interest is how did you approach this? How did you set up the tours and so on and so forth? And how did you make the gut-turning decision not to go through with the IPO? Yeah. So generally, the Ukraine crisis was the only reason why we are not a public listed company. Otherwise, we would do it. By the way, you can do it at any time, but it's the value what you get for your company. What gives you some ideas whether you should do it or should do it later or even stop doing it.
Everything started with the fact that we have a very special situation in the ERP market. We have a lot of, by the way, in Germany at that time, around 500 old ERP vendors and these old systems, they have no future. People want to have ERP systems in the cloud. And when you have a lot of older companies there, Inorganic growth is one of your strategy, what you will look at. And when you want to acquire other companies, you need a lot of money.
These companies are highly profitable companies. That's why, by the way, we don't see too many ERP companies on this planet being public. They're highly profitable. They typically don't need that money. But for our strategy to inorganically grow next to our organic goals, we have decided to go to the IPO. The IPO itself is a lot of work. You need a strong team supporting that process, but it's all possible and it's not that critical.
And what was quite good for us is that our investor, our previous parent company, was a public listed company. So we had all this knowledge about what you need to follow with and what you need to look at. And it was a bit easier for us. But in the end, it's a lot of documentation work, a lot of presentations, of course, and all that needs to be prepared.
I would always look at this option to go the IPO way as it's really a good way to get fresh money into your company when you have such a challenge like acquisitions with other companies. But after the preparation, I had 183 discussions with a lot of investors around the globe. And when we started to be a public company, it was two weeks before. All the party in Frankfurt was already booked. The guest list was already there. Really, everything was prepared.
And then the Ukraine crisis started and we unfortunately needed to stop the whole process. But otherwise, I would say from all what I have learned in that phase of preparation and all the discussions I had, it's definitely worth looking at this option. And it's not that of big work, I would say. It's all possible to get managed and handled. So it would be a good advice to, if there is someone out there listening, saying, hey, that could be an option for me, I would say, yes, just do it.
Usually what you have is like an investment bag that helps you with all the preparation consultants. And they basically also book this. You told me you had a three-week investor tour. Was it that you've been flying around the world within three weeks and talked to a lot of different investors at different places there? Yeah, it was during Corona. That's why it was mostly online. But yeah, that was five minutes of break.
My day was full with investor discussions the whole day and over a couple of weeks. But we had corona, that's why it was online. The last question would be for me, when you got up on the day, you would call off the IPO when you get out of bed. How do you feel that day? You know you have to make a very, very tough decision. How did you make sure it's the right decision and how did you power through? That was really a negative moment in these 16 years of WeCled for me personally.
You have focused for a very long time to successfully finish that step and you're so good prepared and everything was already there and only two weeks before you're a public estate company you have to stop everything that was really hard for me but on the other side it was a lot of things I learned in that phase and I could use the experience I have collected there, and if a door closes a new door opens and exactly that happened after we stopped
the IPO plans and we publicly announced that also to everyone that we that we will not be able to finalizes in that year, a lot of those investors I talked to came back to me saying, hey, we find you great. We find your product great. The market is great. We're here to help you. And so let's do it together. So one door was closed. Another, a lot of more doors have been opened after. So two days, it was really hard. But after the third day, I would say it became a bit okay for me again.
You said you called off the IPO, window closed a few different opens, so basically the whole company, your whole structure including the parent company at this point was sold or a little bit later? Their parent company stepped out and a new strategic investor stepped in. Okay and. You now do have a strategic investor. What are your goals for WeClap and how do you plan to achieve them? Luckily, we have a huge market and we have the perfect product for this market.
And that's why it doesn't matter what way WeClap chooses for us next. It will be a very successful story over the next decades. And the positive thing that I have now is that with the strategic investor who also comes from the software industry, we have much more support than we ever had in the past. With the financial investor, these guys give you money, but nothing else.
And now with a parent company coming from the same industry, it's much more easy to have the best decisions and go really the next step. And this is exactly what happens now. And the potential what we have here in Germany is a huge market and the old ERP systems on the market, which will be replaced over the next years gives us a lot of opportunity and we all focus on making sure that we are the best option people have on the market.
And that has the highest priority for me. Usually we have two questions when we close those interviews. One of them, are you open to talking to investors? I think that question is moot for you guys. But usually we ask the people, are you still open to talk to new talent, new employees? Yeah, we are open for any kind of ideas and entrepreneurs who would really need help for pushing things forward, who need people sharing their experience with them.
Definitely that one. And for talents, we're always open. We're a fast-going company. We always need great people in this organization. And if there is someone out there saying, hey, I have great ideas for the next kind of ERP level, we're here to listen and we're here to push things together with new talents on board, definitely.
That have been actually pretty good closing words afterwards you provide me with the career website and we'll link it down here in the show notes as well as you like the profile so everybody who would like to talk to you can reach out there atan thank you very much it was a pleasure talking to you and a very different um kind of interview because we never had a company who really called off their ipo it was a pleasure also for me thank you very much joe good day bye bye thanks bye.
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