In 2006, in an airy loft in Copenhagen, Mikkel Svane, Alexander Aghassipour, and Morten Primdahl built a software platform to help companies deal with customer service requests. As social networks like Facebook empowered the voices of angry users, companies needed a tool to resolve complaints faster than they could be posted online. Zendesk was born, a scrappy little startup created to assuage the dissatisfied.
Zendesk attracted its first customers by word of mouth, and dozens of startups, including Twitter, used its subscription software. Investors such as Benchmark Capital and Charles River Ventures got on board in 2009. The founders moved to California, and by 2012 they had raised another $86 million. Zendesk ultimately gained a $1 billion valuation after going public in 2014. Today, it has 1,600 employees and 12 global offices. Now at a $2.1 billion market cap, Zendesk has continued to expand sales since its IPO. We asked Svane, the CEO, about the experience of bringing a foreign-born startup to the Big Board.
How do three guys from Scandinavia end up on Wall Street?
We were a startup in Copenhagen, and becoming a public company was mind-blowing. Everything changed. I had never taken a company public before. I did not know what I was doing; I had to learn everything. Throughout all of this, we went from being three guys in Denmark to being founders who understand how bankers work, how the New York Stock Exchange works, how great companies around the world work. We learned that the world's largest companies are just people trying to do a good job and make their customers happy.
Investors were hardly hungry for tech stocks in 2014. Why go public then?
We started thinking about going public in 2012, but we didn't ring the bell until May 2014. There was a lot of doubt about the value of tech companies. It was alarming when investors told us it wasn't the right time to invest. It seemed like no one wanted to buy tech stocks. There was turmoil in the market, and a lot of companies were postponing their IPOs.
Given that environment, what drove you forward?
Investors are people who want to believe and want to fall in love with new products and exciting companies. If you stick to your guns and focus less on your valuation and more on having a great company of great people making great products that serve great customers, it's easy to show that you are offering a great opportunity. When people appreciate that, they will buy in.
So how did the IPO turn out? Was it everything you expected?
The day of, you're nervous. But once you're up there, you realize it's a big show. The market starts without you; the bell is fake. But the deal is the natural evolution of the company and is very real. All your employees and investors have been putting in work, and it's about building value, not to cash out but to create a connection between their work and the company's value. We have 1,600 employees. The changes we've gone through are less about being a public or a private company and more about size. Once you grow to a couple hundred employees, you realize things need to change.
How has going public changed you as a leader?
One of the biggest differences for me is that as the CEO of a public company, I have to think about what I am going to say. It's a lot like when I became a father. I have four kids, and I need to take care and make sure I teach them the right things and say the right things, be a leader and model good behavior, be broad with my perspectives and respect other viewpoints. Running a public company is a major responsibility, and I learned that I cannot run with my gut and say whatever I want.
There's a sentiment that the American dream is dead. But you seem to have accomplished it.
Coming from a small country like Denmark, we feel like we've tapped into the American dream. We started with something small and we kept building it, and now it's this big, beautiful, amazing thing. There is a lot of inequality all over the world, but I do not think the American dream has been threatened. But a lot of the amazing things happening today benefit only a small number of people.
That's the complaint in San Francisco, where Zendesk is located. How does that change the way you operate?
We have to do a lot better at making sure the progress, the growth, will benefit everybody. We are making social responsibility part of our DNA. We need to use our position, strength, and resources to make a positive impact on the world around us. Our office in San Francisco is in the Tenderloin district, and it has a lot of issues--homelessness, people in despair. We cannot build our software in an ivory tower. We have to get out there and understand our community and make a difference. It can be small, like spending our money in the neighborhood's small grocery stores and cafés and helping local organizations through the Zendesk Neighbor Foundation. We need to be part of the solution, as we are part of the problem. We try to do that with all of our offices: be good neighbors, be part of the community. These are the types of things we think about now as a public company.