"Don't give up. Success is not only about big ideas, but above all about perseverance and determination."
He already had a well-known startup once. But he misjudged its business potential. The second time, he was more careful. He wanted to be somewhere where he wouldn't be an occasional help to clients. He wanted his product to become an everyday tool for his clients. He wanted them to be able to imagine their lives without it.
At the same time, he is building his start-up in a rather unconventional way. He's in no hurry. He cares about quality. He doesn't just release anything into the world. Even if startup lore forces him to. He says he only has one more chance. He lets his people live and believes in not penalizing the good for being good.
That's how Ladislav Hrbáček, founder and CEO of the startup Laedhub.co. What did we discuss together?
🔸 How to define the first version of a product well?
🔸 When to step away from your own plans to customer requirements?
🔸 What does it offer to new job candidates?
🔸 How does he monitor the team's performance?
🔸 What was behind the decision not to bring an investor into the company?
LADISLAV HRBÁČEK | HOW TO DEVELOP A PRODUCT AND FIND THE RIGHT PEOPLE (INTERVIEW TRANSCRIPT)
Martin Hurych
Hello. I'm Martin Hurych and this is another Ignition. Today's episode will be about a successful startup and we'll go over areas like product development, roadmap priorities, hiring people and maybe have a little fun about whether or not to seek an investor. I will discuss all these topics with Lada Hrbáček from Leadhub, of which Lada is the CEO and co-founder. Hi.
Ladislav Hrbáček
Hey, thanks for inviting me.
Who was the last person he praised and for what?
Martin Hurych
We always start here with a question like this to set the atmosphere and break the ice. I've now tried a slightly different one on a couple of forums than the standard one I give here, so I'll try it out on you. Who have you praised in the last week, for what, and what was his or her reaction?
Ladislav Hrbáček
I got back from vacation on Sunday, so I haven't done much since Monday. But when I bring up the subject, I typically have the problem that we have great people on the team and they do all the work great, but I don't talk about it as much. But then when I think something could be done a little better, I talk about it, but it's about half a percent of the situations. So I should be very careful not to do more
he was talking about the rest of the work, which is being done well. Because when I talk about the half a percent, it looks to those people like they're not doing it well, and that's the thing I want to work on.
How did Leadhub come about and what does it do?
Martin Hurych
People in Leadhub, you will be praised more. So come and tell me briefly about your journey to Leadhub, what led you to it and what you do.
Ladislav Hrbáček
The very beginning is kind of classic, I'm studying at CTU, I had some work in an advertising agency, digital marketing, so I freelanced some development. At that time I was reading Neil Patel on Twitter, so I somehow discovered the existence of the SaaS business and it seemed like a good thing, especially in the B2B sector. I was developing various applications within that ad agency, at the time it was Facebook bookmarks, contests, and it seemed like it was terribly expensive to develop and yet you could make a product out of it. It would be some kind of editor that anyone in that agency can operate and do the contest without just paying 100k somewhere for some development. In May 2012, or even a bit earlier, there was a call for StartupYard, which is an accelerator, so I applied with a friend from CTU and we were accepted. They gave us a condition to accept a co- founder, so with Petr Messner and Michal Kvasnicka we founded Tabfoundry. We kind of launched that in January 2013, we did pretty well, we targeted the global market right away, we even got written about in Social Media Examiner and we were at these conferences. So we got like 35k users through that pretty decent freemium in that time, but as a SaaS it wasn't quite good. Because people were doing these campaigns more as a complementary part of the marketing mix. They were only doing them for Black Friday, for example, and it wasn't a SaaS that someone was going to start paying for. I call it the leaky pot, we were pouring it in, but it was flowing through a big hole at the bottom. So even though we were doing pretty well, even the Darth Vader actor, Dave Prowse, for example, whose team was using it to sell Star Wars merch, it wasn't doing well business-wise. So we thought about what we could do to build some functional SaaS. The main idea was to go to the core of that MarTech, we wanted to stay there. Since we weren't really good at that, I was working at Spices by Antonin, doing e-commerce marketing there and doing some mailing. But I missed having a tool there where you could easily collect people's behavior. What they do on the e- shop, what they have in their cart, or what they bought, and then based on that, maybe do a segment of people who bought from a certain category, or automatically send them some retention emails. By working together on the e-shop as well, it pretty much led us to do the tool ourselves. So, that was the main direction we took to get there and it really works that way. The people who are using these CRM tools to communicate with their customers, for us it's primarily the shops, they're working with it every week I'm sure at least once, some of them every day. They're handling email campaigns, SMS campaigns, ad retention campaigns on Sklik and on Google Ads. So that's what we've come to this way.
How to define the first version of a product well?
Martin Hurych
So you have a product, and that's important to say because a lot of my clients dream about a product and you already have it. Let's tell people who are just starting to squint for a product how you've approached a few things. I see two key things actually, one is what to go out into the world with that already gives value, but it wasn't overkill for me and I was able to start making money relatively quickly. The other one is once I'm out there with it, there's a bunch of requests that come in about what else and how to prioritize them. Those two things I would
he wanted to talk to me. How did you, for example, approach the very beginning when you were wondering what you were going to do? How did you define what is already good enough for you, what you won't be ashamed of and will go out into the world with?
Ladislav Hrbáček
We had a bit of a problem with that and that's why it took us quite a long time. The product itself is very broad and there are many times bigger teams in the world developing it than we were, or are now. Sometimes it's overkill for us, we're aware of it, we're trying to work on it, but quite often it takes us a long time to just release it and be happy with it. I like the Shape Up method from 37signals for example, they limit that cycle to 6 weeks to release something. But we haven't been able to get that to us, because we find the features take so long to run and then they're so good that we don't quite want to release like these startup tutorials. It takes us a while and then we think that's the best we've been able to do, but theoretically it seems to be a mistake. For example, we have SMS campaigns and whoever wants to use them can. In every SMS there is an unsubscribe link, so what annoyed me the most about SMS, it probably annoys everybody, we have solved that. You can put personalization in there through the asterisk, no need to type *|vocative and now worry if people will get a vocative or if they'll get their name. But we still haven't released it completely wide, because we've found that half of the people have the wrong numbers in the CRM, they're missing preferences, so we're still finishing that. But then we'd like to say that these are the best SMS campaigns that anybody has, that they're the best to work with. So I don't know if I can answer your question that way because we probably overkill it and maybe it wasn't the best at certain times.
Martin Hurych
Going back to the very beginning, how did you decide what you were going to go out with that you weren't going to be ashamed of? How did you figure out what's really interesting to the client and when is it more your plaything?
Ladislav Hrbáček
We didn't do much research. It just seemed pretty clear to us that it should be that way, that at the time the tools didn't really look like that, but it was clear that when I own an e-commerce store, I only want to target email to a certain segment. We wanted it to be easy to do and we wanted it to work automatically, that I can install it and I can use it like a regular person, I don't have to be a specialist. We had, of course, come up with a huge set of these different kinds of segmentations. The definition of an MVP was, if we come to an e-shopper and show them this, so that they get excited and want it and they abandon their existing mailing tool and stop sending everything to one list once a week. It took us a long time to do that, so we gave ourselves a time frame at the beginning, but it took a long time to develop, longer than we expected. I think we were also inflating the product a little bit, but that's the question. Plus, then we started to run out of funding and we had to look further down the road to see if we needed to get investment.
When to step away from your own plans to customer requirements?
Martin Hurych
We'll get to that. We haven't mentioned that you have a branch. You said that the core product is for e-commerce solutions for e-commerce stores, however, historically, you've made a relatively long bounce to real estate. I'm not really interested in discussing that here, I'm more interested in what makes you step away from your planned roadmap and what the customer has a chance and under what conditions to get priority into what you want to develop. Lots of people have different approaches to this, but mostly it's that if you pay enough, we'll put everything on hold and develop for you. What's it like for you?
Ladislav Hrbáček
It wasn't quite like that. We certainly didn't want to take a commission for someone and develop something for someone. What happened to us was that the roadmap that we set out to launch an MVP, a minimum product that those customers would want to buy and use, we more or less missed. We had pretty lousy salaries, and so we either had to find an investor with some lousy valuation, because if there's no customers, there's no product, that valuation is liquidating, or go the other way. We knew partners in Denmark from that first business, Tabfoundry, who were reselling the tool locally. So we went to show them an early version of that Leadhub and they were excited about it and said they were planning to do something similar, but for real estate. It looked like we would be able to develop it in maybe 3 to 6 months, we turned them down for custom development, but we did a joint venture so it was a joint project. So that's breaking another startup dictum, laser-sharp focus, which we didn't have, but it still worked. We developed a tool where brokers run pretty sophisticated ads themselves on multiple ad networks, Adform, Facebook, Google, and generate their own creative there. That means that it generates banners for them at home as well and it works quite well in Denmark. It also helped us because we had revenue from it and that's when it helped us bridge the gap for a while because they offered to cooperate in some way partly financially.
Martin Hurych
So when does a customer request get into your pipeline, your own ideas, what else needs to happen with Leadhub?
Ladislav Hrbáček
Leadhub is for e-shops, that's where we deal with it most often. There are several factors that influence what we put into development next. For me personally, it's the influx from the support people. Once in a while we do reports on what is the most repeated thing, what also annoys people and what they physically demand for a particular feature, so that's the first input. That's hugely important because when we get that right, those people are completely happy to stop writing to that support, which makes the support a lot happier. Even though we have thousands of shops, there's maybe two or three people physically there and it's totally fine. So it's a big priority for us to keep people happy and it's a win-win because they're happy and we drop the amount of support requests. Then, of course, we have a product vision of where we want to take the product. This is determined by some kind of our future, where we want to be and also what is happening in the market. Now the big blow has come with artificial intelligence, so it's clear that all the other tools are going to address that. So we need to prioritise that as well. I think the main answer is mainly the clients' word, but of course it also affects the fact that we have several micro-teams within that team and the features that we want to put into development may be in the queue of some team that doesn't have time. So sometimes we will prioritize something with less importance because the team that can work on it just has the time, but it wouldn't be efficient for them to start doing something else that maybe they're not the fastest at.
Martin Hurych
Does that mean that if I'm a big e-shop and I have a special request, I won't get into your roadmap?
Ladislav Hrbáček
It would have to be an e-shop like Alza or something like that, and there would have to be a condition that they use it, but we're not even trying to do that.
Martin Hurych
Purely based on requirements and statistics, the most requested requirement therefore goes into development.
Ladislav Hrbáček
Yes, or if it's smaller things, which is also very often the case, if we can get something done in a day or three, we do it for individual clients when we know it's in line with our direction. That happens about twice a month that we develop something strictly for one person, but we know it's something broader that will definitely pay off in the future. So we try to accommodate that as well, but they're not big projects.
Martin Hurych
What did the now closed Tabfoundry teach you in terms of product?
Ladislav Hrbáček
Tabfoundry made us believe that it was possible, that we hadn't monetised it, but within a year or two we managed to get people to actually start using it. So it gave us the primary feeling that it could be done, we just had the wrong product in the wrong place for that MarTech. So all we had to do was do it again, but get more to the core of it so that those people really needed it, so that it solved some real problem for them.
Martin Hurych
How many of you are in the company?
Ladislav Hrbáček
There'll be about 18 of us now.
What does it offer to new job candidates?
Martin Hurych
Companies of your size usually have a problem or a challenge in recruiting people to their team, because there are relatively many such companies in the Czech Republic and the younger generation today chooses according to many parameters. What do you offer to keep the team long- term and maybe even develop it?
Ladislav Hrbáček
It's true that we've had a lot of trouble recruiting people. This manifested itself in the way that in the beginning we hired practically all the people we knew, but it wasn't through advertisements. It's only recently that we've been able to get cool people we didn't know who came through the advert. We also had a big problem with what to offer them because there are big companies promising great conditions, beautiful offices, working on something global, so it's a challenge for us. In that respect, we have changed offices, for example, because we always kind of didn't care, even though we were already quite a few. We had a nice place in Karlín, but it wasn't nice at all, so then we said we'll improve it to make it better for those people. What I think works for us, and what we've probably recruited these people for, is freedom. We don't have time reporting, it's more or less just daily stand-ups, we write down in a bullet list who did what that day, but nobody's keeping a close eye on anybody. It works, we manage to hire people who don't try to cheat, plus it would be visible because the finished work wouldn't be behind them. So we don't need any timesheets and people work from wherever they want. If someone comes in, we're obviously more together, but if they then want to go away for a quarter of a year somewhere and they're participating in our stand-ups, responding and obviously working, it doesn't matter to us. We definitely prioritize when that person is with us here in Prague, but otherwise we don't care. Now we're getting better financially and we're communicating with those people our vision of what's next, which is quite attractive.
How does he monitor the team's performance?
Martin Hurych
If you don't have timesheets, how do you check the performance of those individual people?
Ladislav Hrbáček
We don't have timesheets, but if any developers are listening, they know that if you use Git or any versioning system, you can see when you commit. We have this not-entirely-enforced rule that it should be pushed every day. The changes that the person makes should show up on the repository. But mostly it's visible on the output, because if the person didn't have an output, we'd see it right away. Someone is so good that they finish those things faster and shouldn't be punished for it, but at the same time we're already wondering, because there are more of us, if it's too free. So we're wondering if we shouldn't do it better.
What was behind the decision not to bring an investor into the company?
Martin Hurych
You've decided not to have an investor. That's still, even though there have been some people around, a relative exception. A lot of people dream of picking up an investor, pumping up the company, selling it, getting rich and going to the Bahamas. Now, of course, I'm oversimplifying things, so I apologize to everyone. What was behind the decision to develop it yourself with your own money?
Ladislav Hrbáček
There are two major factors. We started Leadhub with practically 5 people and we have fairly equal shares. I questioned in hindsight if that was wrong, but it was great for us because if we didn't have virtually equal shares, I would have been dumped a long time ago. So it helped us tremendously that we were all in the same boat. Plus, if we had taken the investment at the beginning, the investor would have taken tens of percent, we wouldn't have gotten much money, and that would have demotivated us. The second reason, which persists even now and I'm sure people with similar experience will agree, is that if a larger investor comes in who has already worked it out, then they have reporting requirements. They're sewing into it, there's a loss of freedom, suddenly the funders become indirectly subordinate to the fund, they're haunted by something and they have leverage over them. We don't like that at all. I am certainly not saying that we will never take the investment, we may need it, but if we didn't need it, we would be happy not to have it. So I don't consider investment to be a great glory, but on the other hand I understand it because when an investor comes into a company that has a great history behind it, it proves that the company is really valuable.
How to reach 10% of the global market?
Martin Hurych
I read in the preparation that you have a secret dream to have 10% of the global market in your segment. Everybody must have a big dream, I like it a lot. How does one achieve such a dream without outside investment?
Ladislav Hrbáček
When we talk about it now, I find it absurd, but when you look at stories like WeWork, you can see that if people have the right attitude, they can turn offices into Unicorns. It's quite eye-opening if anyone has seen WeCrashed, however I might say maybe units of percent rather than the 10 percent. How to achieve that I can't quite reveal because that's something that would take the wind out of our own sails a little bit, but we certainly won't be able to do it the same way it's done now.
That market is already taken by players like MailChimp, Klaviyo, ActiveCampaign, so that market is already divided, it's already a given. You could say there's buying going on, MailChimp was bought with a lot of money, so we're not gonna beat it by playing the same game. We're gonna need to do some hacking, and that's about it.
Martin Hurych
Now I was wondering, when you were talking about MailChimp, do you have an exit strategy or do you see yourself retiring from the company?
Ladislav Hrbáček
We don't. It's true that we've been doing it for a really long time, that it's obvious even to us, but I would say that we don't sprint, we run a marathon. We have our families, it's not like we go home at 9pm, it just has to be sustainable. So then it takes a little bit longer, but we're glad for that, because I think everybody eventually recognizes that family is more important than having a super successful company.
What does Leadhub's business look like?
Martin Hurych
One other thing came to mind now as we were talking about the segments and the competition. You're making a tool to sell yourself to those e-tailers. How do you sell yourself, if the blacksmith's mare doesn't happen to go barefoot?
Ladislav Hrbáček
E-shops are B2C, so they sell to customers, we sell B2B, meaning our customers are e-shops. Our typical customer is a small, medium-sized e-shop, so there are e-shops with hundreds of millions of turnover, but at the same time there are maybe women on maternity leave, or a start-up entrepreneur making something and not paying us anything. The range is wide, which is quite interesting. We have this pyramid approach that we want my mom to be able to use it, but at the same time we have customers who go deep and can program their stuff in there, they have call centers connected to it, for example. But then we have a bit of a problem with being perceived as a simple tool, even though it is quite complex. Anyway, our marketing is content marketing. That means we write about what we do, try to help and educate on how it should be done. We write about mailing, so that's a content marketing channel that helps with SEO, we can put it on our social networks and then promote it with ads to a wider audience. We have some of our sales as well, it's a small team so far but it's working. We mainly target mailing and similar competitive words. That means explicitly choosing e-shops and reaching out, search ads, classic, that is, targeting mailing and similar competitive words.
Martin Hurych
So if I have a product that I believe is world-class, or at least unique here in Central Europe, and nobody knows about it yet, how should I go out with it?
Ladislav Hrbáček
That's a paradox of mine that I've always told myself, if I have the best product and nobody knows about it, I'll make 0Kč. But if I have a bad product and I sell it great, I'll be in the pack and that's how some tools sometimes came to me. Making the product is not the hardest part, the hardest part is selling it. Then typically the people who can't make the product but can sell it win, and then they can sell pretty much anything, so they have the upper hand in some ways.
I think the easiest or most direct way is that the product I have solves a problem for a group of people. So it's best to go after the people that they're concerned about and then when you actually solve something that they're really concerned about, they don't see you as selling them something, they see you as helping them with something. That's why content marketing works, which is de facto writing content that doesn't have a primary effort to sell, but has a primary effort to help, and typically then it can win in Google search queries. What I've also come to understand is that it's good for people who don't have a tech co-founder yet and would like a tech startup, the tremendous value is building that community before the product is even created. One finance startup, I think it was called Mint, first made a portal where they just wrote about personal finance. He built up his mailing list, his social media following, and he had such a huge community that he was helping people solve their finance problems with words that by the time he launched the product afterwards, he had already sent it out to his list of hundreds of thousands of people who were solving these things. So that to me is the best, it's real helpful and even if nothing else works, at least it helps.
Martin Hurych
How did you do it?
Ladislav Hrbáček
We couldn't do it that way. The mainstream attitude is that these people are wrapped up in the product and think that the sales will go away. So in that respect, we certainly could have done better, we could have built that community up front.
Martin Hurych
Thank you. Thank you. I keep my fingers crossed that your ambitious dream comes true at least partially and that Leadhub is heard more and more. Thanks for visiting.
Ladislav Hrbáček
Thanks so much for inviting me.
Martin Hurych
You see, today we took a peek into the kitchen of one of the many startups that are fortunately growing here and have global ambitions. If you've looked at what Lada and I have discussed here and thought about maybe your startup in particular, we've done our job well. If that's really what happened, then like, share and talk about us everywhere you can, because as I always say here at the end, otherwise the world won't know about us. Be sure to check out www.martinhurych.com/zazeh, where all the others besides this episode are. All I can do is keep my fingers crossed and wish you success, thanks.