How to massively scale a SaaS using partnerships and integrations with David Henzel from MaxCDN

Product Stories
How to massively scale a SaaS using partnerships and integrations with David Henzel from MaxCDN
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Summary

Partnerships and integrations can be the most powerful acquisition channel for any business. David Henzel, who exited MaxCDN a few years ago and today runs a portfolio of various businesses. The fast growth of his businesses has always relied heavily on partnerships and integrations – and today he’s sharing his strategies with us.

Episode

Victor 00:41

Welcome to Product Stories where we explore how founders build successful software products. This is a podcast about product management, development, remote work in anything else non-technical as well as technical founders need to know to launch and scale software products. Today’s guest is David Henzel, who previously founded and exited MaxCDN and is currently running a portfolio of various businesses, including a few SaaS and he will share with us how he uses partnerships and integrations to start and scale businesses. David, welcome to the show.

David 01:11

Thanks for having me, Victor.

Victor 02:20

Pleasure, as always, would you like to tell people a little bit about your background and the products that you’re currently running?

David 02:29

Sure. So I had a few businesses in Germany and I saw how much was going on in terms of startups in the United States, and it was like the early 2000s. I want to go to Silicon Valley or the West Coast of America to just participate in that because I felt a little alone in Wiesbaden, Germany. So I sold my e-commerce business, which gave me the money to get my investor visa, and I used this to invest in MaxCDN which I co-founded, which we sold five years ago, so had a really good exit, and then we moved back to Europe, my wife wants to be close to family, and now I have a portfolio of businesses. A few prototype services LTE plus we provide live chat agents and support agents for e-commerce and SaaS businesses. Then test Rafi provide lead research for if you want to do outbound sales. also works really well for partnerships since we’re talking about partnerships, shortlist, the marketing agency 50 SaaS with this like a dev shop and we have a few SaaS businesses there, and my main focus is UpCoach which is a platform for coaches to run their coaching business better. So just keep it there.

Victor 04:01

I know you always have something coming. So how do you decide to build each of these products or businesses? Do you have an overall portfolio strategy or do more find things that work for you right now?

David 04:18

A lot of things are saying this but all strategy is the kind of sticking with the e-commerce and SaaS focus in terms of customers you know, so without three-plus like global customers, e-commerce and SaaS and I guess coaches is also a focus. So it’s pretty serendipitous how it always happens, you know, I had this portfolio of businesses and then I want to coach the leadership teams of our businesses and then I needed a software to do this. I couldn’t find one so I stopped building one and now I had another business so it’s kind of like happens somewhat organically.

Now, we’re hiring a lot of people by since these podcast services, businesses, it’s people businesses. It’s finding and hiring and training people. So I’m currently building software that helps me to manage these applicants better. And, another one like, software for personality tests, that helps us to hire better people.

So it’s always scratching my own itch and building something that we internally need, and then if it turns out to be good, then we offer it to others, and I usually find somebody who can help me with this because you know, I can’t dance on all weddings, I have to stay not in the day to day of these businesses otherwise I can’t have that many. So with UpCoach, I asked a friend of mine who’s a very well-known coach in the United States, Todd Herman, who wrote the book, “The Alter Ego Effect”, pretty popular, really good book, and I told him, I came in, I built this coaching software, I’m not a real coach, by trade, and I want to show it to you, but you think I’m using I want to invest, let’s make this big together, and so this is how these things happen.

Victor 06:17

I understand. So you build something internally, which is more like a prototype internal tool is something that you use yourself, and then you want to test if that would also be useful for markets outside. So you showed that, for example, to a friend who’s in the industry in the coaching industry? Do you do any other user research or do you have a framework?

David 06:40

Oh, yeah, absolutely a friend of mine, told me a story from the president after like, a few years, like 10 years after the Vietnam War, the current US president and the highest general went to Vietnam to meet the opposing side for the first time, you know, and the general from the American jungle asked the Vietnamese general like, Hey, man, how were you able to beat us? You know, like, we had more money, we had more troops, we had more everything like, better technology, how are we able to do this? And the Vietnamese General said we know the jungle better. I’m a big habit nerd.

So I think habits determine everything in their life. Whether we’re rich or poor, happy or unhappy, successful or not, or obese on shape, it all boils down to which habits we have not. You know, when I decide I want to go into a new niche, for example, coaching, I had a habit understand the jungle. So which means I talk to a lot of coaches, and I do research and I have like this some form with a lot of questions where I first ask them, what’s the current state what kind of using in all these different areas, then I showcase them what I have, and then based on this, I get feedback on what is good about this? What’s bad about this, what else would they like to see and kind of ask them, where the watering holes where they get information about, when they want to learn about basically user research, and I usually hit this really hard to understand the jungle, and I’ve done hundreds of these interviews in the coaching space. Now, it’s also really good to build the right product, and also build up your base of advocates because you then can say, like, hey, you give this to them for free or they become referral partners. If to keep them in the loop, like, Hey, thank you very much for this feedback, you know, now we actually built this end, you can check it out here, then you fill up your advocate, and can promote whatever you’re doing.

Victor 08:48

Very interesting, and you already mentioned you don’t do — well, at least the long term implementation of this business, you don’t do that yourself, you don’t build the business in the day to day, you don’t code this out right now you don’t run the business in day to day. So in this case, is that your coach, friend, or someone else?

David 09:13

With approach right now I’m running the day-to-day as CEO. Because for two reasons. One is like I’m very passionate about this is my — it’s very in line with my personal mission to be a change agent who’s transforming the lives of individuals and organizations so they can reach their full potential. It’s my personal mission, and with the software, I have the leverage to empower lots of coaches to help even more people. So I’m passionate about this one, and so I’m more involved into this one. But usually, I always have to have a GM or business partner who’s running day-to-day equals otherwise. It’s hard to keep saying…

Victor 09:57

How do you find these people is that someone from the network so when you do this entire discovery with or do you go out and try to?

David 10:07

I always talk to a lot of people, I’m big into networking, I always want to meet a lot of people help people enrich the lives of everybody come in touch with, and then you know, always play the long game and build good deep relations, and you know, if there’s always something always happens with shortlist, I built the business with Dave Schneider who ran ninja outreach [phonetic 10:30] before, and we start the business before actually meeting in person I’ve just come in and like six months after the fact. So it’s happens somehow.

Victor 10:44

That’s awesome. So I wanted to dive into your partnerships a little bit. So, there is of course, a lot of different types of partnerships, you can set up with people, you can co-found something, you can have a joint venture between you and another company, you can cross-sell each other or integrate with each other, and I know you’ve I think all of these you’ve done before, is that right? How would you determine what’s the best for a certain idea or does it come naturally from the person that you find to work with?

David 11:16

So I think in terms of partnerships, what do I see is like partnership marketing. So you know, not necessarily how to partner up with people in the business like real, like business partners with equity share, etc. So I rather mean, like how do I partner with other companies will have the same audience that I like, and then creating a win-win situation. So I think that’s the idea of what I found is like. There are, I think, four categories.

One is technology partners, somebody with who we can do integration or where they can refer customers over. We do this a lot with LTE plus, and also test drive, and this is working really well to get the holy grail is that you’re integrated inside of their control panel that — for example, one example with MaxCDN, we did touch which is the WordPress caching plugin, and when somebody is there to make their website faster, they’re in the mindset of making the website faster, they find this caching plugin, which was the most popular one back then on Office 30, and they integrate and then they see like, oh, make your site even faster, click this button here and enable MaxCDN, and then they lose, and we create this win-win situation because the customer gets even faster sites, the plugin owner gets a referral fee, and we make money because the customer becomes a customer. Like there’s always like, the one thing with technology partners, we’re going to be well, why is potty, who only like a competitor who only works with larger or smaller customers? For example, somebody who simple example, in the agency world, somebody who does, let’s say, Facebook ads, or Google ads, and they only work with customers who spend over $50,000 a month, they still get leads, but what do you do with these leads, ideally, find the partner who can handle them and pass them off. Otherwise, it just go to waste if you can make these relationships, any affiliate style, and just pay them a kickback. That’s a viable thing.

The other ones’ agencies working with agencies that they refer you customers are almost better than agencies is individual consultants, or coaches because if you, you know, reach out to them, you talk to them, you, you know, you build this partnership in an agency, you do this usually with the agency owner, but until everybody in the agency knows about you, and trusts you, etc. It’s a long or hard process to educate everybody in there, but with the individual consultant, they have a closer relationship with the customer and then also his relationship with you. So we found that this is working, working a lot better, or faster, easier.

Victor 13:59

So yeah, I understand. So when you want to promote these types of relationships, then you look into technology work and integrate, or partnerships where you get cross-sell, or affiliate getting a pay an affiliate fee for someone who’s more or less complimentary, or a competitor but can’t take on a certain customer. What is important when looking and evaluating partners, potential partners, what is a red flag for you? Or what should that person or company certainly have to be good?

David 14:36

Serving the same audience of course, it has to be solid business No. But quick money, everything has to be solid. It has to be a win-win situation where the customer wins, we win and the partner wins’ sale so just has to be clean and you’re focusing on the long game, and then I was like, just with partnerships as partners or partners in general, I like the philosophy of like how you do one thing is how do everything and dislike always a good judge of like, if they’re shady in this area, they’ll also screw with you, and also just kind of like, yeah, this is like always my gauge how people operate? In the small things? This is also how we do things, how to everything.

Victor 15:28

And what’s your process around finding and reaching out to people? Do you have a very specific template? Where do you go very individual one-on-one approached with very high risk?

David 15:41

Always research with it’s a MaxCDN example, because this was the one that scaled up the largest we had — we were with — what’s it called? Commission Junction, CJ.com And a lot of other networks that have affiliates, we get 1000s and 1000s, and 1000s of affiliates. But the ones who did 98% of the sales were the ones that I hand-selected and handpicked because I know it’s really win-win situation, and they actually have volume. So, with finding the right affiliates, or partners, you definitely have to do some research and put some brains into this to figure out what’s the right partner for you?

Victor 16:23

Do you then also nurture them after the fact like keeping a relationship with the best one?

David 16:32

This is how you build life partner, business partner, and affiliate relationships? Of course, you take good care of them, you do co-marketing, you send them swag, after COVID. You meet them in person at conferences, you throw dinners together, where you invite both invite customers. Yeah, of course, I take good care of people.

Victor 17:03

That seems like a very natural thing. But I think a lot of people simply create an affiliate code generator in somewhere in the settings of their SaaS and hope for millions to come their way. I assume that’s a slightly different philosophy.

David 17:23

Have your customers refer other customers in new like the Dropbox app, for example, or if you invite either your friends, you have more storage? So I’m like this; this can work. But this is not the partnership I’m talking about, I’m also focusing more on the B2B aspect versus like B2C? So, yeah, that’s usually I’ve never had the opportunity to, to, to build it, and they come you have to do something for it.

Victor 18:02

That makes perfect sense, and also in terms of building with integration marketing. Do you offer to do as much of the heavy lifting of the building as possible to entice that…?

David 18:14

It depends. You have to be strategic with this, because for example, with Maxi and we had a lot of integrations into like, all sorts of things, and we opted into, excuse me, we opted into having partners building them because maintaining them can be a large headache. Sorry, and we also want to utilize the partners’ network, cuz like the partner, usually, I’d say this partner builds, has some apps for Woo Commerce in on the net, we pay them to build integration, and then often, we get their traffic as well. So I think one, in retrospect, one thing we should have done is build our own WordPress integration, because it was just such a large market. So this would have been a better step to run our own. But hindsight is 2020. Yeah, kind of like be strategic about which one you build yourself and which one you will partner with.

Victor 19:13

That makes sense, and the last topic I wanted to dive into is remote work because I know that you are fully remote. So you yourself, I’m importing trade right now. Nice. Well, this is certainly about 20 degrees warmer than here, and I know that your entire team is distributed as well. How many people work across your portfolio?

David 19:38

My goal is to get to 10,000 people. I read this book called “Conscious Capitalism” and the idea is that the old way of doing businesses you have to increase shareholder value. You have to make the owner of the company more money but the conscious ways you have to take care of all stakeholders like, employees, partners, customers, suppliers, the planet everything, and if you do this, then this is actually the best way of impacting the world, and so, you know, this is like, after read this book, say, Okay, I want to get back into business, and I want to have a business with 10,000 employees where give people a great place to work pay them good money and have a good culture where remote work also important. So, for example, in the Philippines, we have a lot of people in the Philippines, people commute, like three and a half hours to work, and it’s not like, in your comfy car listening to a podcast, it’s like not the most pleasant [phonetic 20:50] environment. Yeah, give giving people this is like, one of my drivers. So we are growing but we are not there where I want to be

Victor 21:04

Since you touched on this what for you, is this good and exciting working environment that these values, what is that for you?

David 21:13

It’s a lot of things, we have core values in the business and we really hammer them into people. So also talking about remote work. First of all, when somebody signs a contract with us, they have to initial next to each two core values, the last are our core values and have to initial next to each core value that and then assign it to– I know I have to live up to these core values, otherwise I can be fired because [inaudible 21:40] and then we have an onboarding with everybody who joined in the last month and we talk about our mission vision values, and we tell stories to each core values so people can relate and really getting this into people’s minds, and that’s like a key thing and then also really living up to those and giving also the employees the power to challenge the leadership teams with the core values, if we don’t live up to discover the central pieces to create a good culture in the business and the remote as well.

Victor 22:19

How do you– because you certainly seem to have a lot of tricks and hacks from experience also. How do you do the accountability part and the project management part and remotely?

David 22:38

We use the EOS the Entrepreneur Operating System from the book called “Traction”, to get a grip on your business, I highly recommend everybody who doesn’t want early in their life, like my beard. To read this book, it’s just like makes business so much easier when everything’s just you know, the proper processes in place, and we use this framework then in an app coach, we actually use UpCoach to run the businesses because in there you can do one part of us is you have to level 10 meetings and it’s like a specific meeting agenda that you can also do within the meeting the agenda below with an approach and knowledge works really well it’s not part of us we have an airlock I’m we fuck up. Like it can be anything like any mistake that happens, we add it to the error log, and then we in the matter of medium meetings, we talk through these things, figuring out which process can be tweaked to make sure that this doesn’t happen again, and you know, it’s like nobody gets in trouble for making an error like if you do the same error 10 times in a row then we got to have a talk, but otherwise, we celebrate failures you know, it’s totally cool to mess up because we can learn from an equal we can improve we can just like make the machine better [inaudible 24:09] that will not get in trouble for this but you get massive trouble if you don’t edit it the [inaudible 24:17] from the opportunity to make this better so we have like a self-healing machine and always getting better, getting better, getting better you know and that’s I think a key element of success.

Victor 24:31

What do you do? — Because sometimes people in remote teams may feel a bit alone or do you I mean of course not right now I guess but generally Did you meet up often is that even possible?

David 24:42

Yeah, we did local meetups, for each region people come together and meet, and also when Ukraine meetups and or with shortlist we flew the team to Turkey and where I’m in the boardroom. Like always, I love these things, it’s so cool to meet me the person when you’re not together for such a long time, and also, not paying for an office, allows you to give you the funds to Carthusian acts like this. So it would be tough to fly everybody to the same spot folks with LTE plus because people are all over the world, this would be tough about this, why we can’t do these local meetups and centers and then GQ, and I also flew over and meet with the team from time to time, and I hope we can do this again very soon. We also have something where we get together a hang out and chat. This is a lot of programs like people do work out together, like accountability buddies in terms of fitness. We have our town halls, where the department heads give updates, and then afterward. It’s open mics, everybody can come up and ask questions to get people together.

Victor 26:15

That’s interesting, and do you across your — Since, you run multiple businesses in your portfolio? Do you try to get synergies between the companies or even have departments? Like, I don’t know, accounting or something that span across of them?

David 26:33

Yeah, it’s outsourced to the friend of mine, they run all of our accounting, then we do all the recruiting centralized, because we just have a bunch of recruiters with Lg [phonetic 26:45] plus, and doesn’t make sense to do have this separately then we also do refer clients who think we can provide good value for one of the clients of the other business that will make this introduction. So yeah, this is as much as possible we use synergies in the business.

Victor 27:06

Wonderful. Thank you so much. That was super, super insightful. Where can people learn more about you, your businesses?

David 27:15

Sure, you can learn more about me if you go to Davidhenzel.com. With my personal side there, you also see all the different businesses listed. I’m moving everything to how we solve. It’s currently a podcast, howwesolve.com and masterminds: one for companies that have over 100 employees and one for partnership managers to mastermind together, and this will become the overall umbrella. So it’s easy for me to pitch what I’m doing. It’s like I do, how we solve and how like everything’s under– always talking about this laundry list of different businesses. So just find me and also, of course, on the social webs and if you reach out to me connect with me on LinkedIn, or Facebook or whatever if you mentioned that, you heard me on Victor’s podcast, and I’m happy to connect with you just send a random Connect. Please reach out to happy to chat.

Victor 28:17

Wonderful. It’s been a pleasure. Thank you for all these insights and hope to speak soon.

David 28:24

Likewise, thanks for having me.

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