 Congratulations for making it here at 10.30 AM if you have as much gin in your blood as I do. Well done, congrats to us all. So it sifted, one of the things when we ask people what would you like us to write more about, people always say failure. And failure's quite hard to get people to talk about, but luckily for you today, we have two gentlemen who've decided, you know, offered to be very honest about some failures they've had and how they kind of cope with that and why actually we should be talking about this more. So, David, you're up first. Can you tell us about a time when you just failed? It just didn't work out and then we're gonna get into that bit more. Sure, I think failure is something that you experience or have to experience every day. But my biggest failure was when I started Sender, it was a university project. And after graduating, I thought I had the best business plan, the best presentation, and it just had to move to Berlin to execute the plan. It took me one and a half years to realize that the first business model was not working. We didn't have a single customer. And the reason why we failed is because we didn't do our homework properly. We assumed that product market fit was there and we just kept pushing, pushing, pushing and eventually realized that we failed. So what were you doing originally? So, Sender today is a digital freight forwarder, so a trucking company. We, our first business model, Sender 1.0, went to do off the same day parcel delivery and used buses for the long distance and then the last mile in the city to offer competing product to Amazon and Zalando same day delivery. And that didn't work. There was no one to pay the extra money. Operation, it was a nightmare. And, but in theory, it was great, but... Okay, so how... I mean, if you really didn't have any customers, that seems like a pretty obvious sign from the market. Like, no one really wants this thing. But how, like, how long did you try it for before you were like, no, no, this is actually just a total failure? You know, how much do you kind of need to persevere or just call it quits? A lot. So it took us one and a half years to realize because we just thought, okay, we're almost about to sign a big customer. Didn't work out. And then we were running out of money. My first co-founder said, okay, I'm leaving, I'm leaving Sender five minutes after we signed a term sheet from an angel investor for a big check. And it was really a turning point for us, sort of for me because I thought, okay, that's it. I don't want to take over the responsibility. I don't want to reinvent the business model. And then I spoke to my father, who is a little bit my mentor, and he said, you know, David, you have to try one last thing before you give up and before you file for insolvency. It was called that angel investor, explaining that you still want to do this. And if he gives you the money, keep going. Otherwise, you learn how to file for bankruptcy. Luckily, I tried that and it worked out. And then, yeah, with the new co-founder team and the new business model, we then restarted Sender. So how did that conversation go with that angel investor? Because there'll be people in the audience who are going to need to pivot. Like, how do you, and then like, let's come to you, but how do you present that to an investor? How are they not just like, no, sorry, that you had your chance and, no. I think, especially angel investors, invest in the founder. So I think the most important thing back then was that I was honest. And I called him up, he said, no, I invest in the team, one is leaving. I came all the way to Berlin and two days later, me saying that it's not working. And I called him again and said, can I meet you face to face? He said, if you wanna come, come see me. So I flew to him and then we had a very open conversation about what was working, what was not working. And I think we built a trust relationship in that situation. And this is what then he said, okay, you know what, you're fighting for it, go for it. Like what about you? You must have seen companies go through pivots before, which I guess lots of people consider a failure. What do you wanna know at that point? What does a founder need to tell you to make you trust that they're gonna turn the ship around and they're worth kind of continuing to back? Yeah, I think it's gonna work backwards a little bit to a point that David made about having a relationship, a trusted relationship that's built because you have to build that in anticipation that you're going to have some tough moments and tough points of discussion. And if a failure does happen, like one of my portfolio companies was actually doing exceptionally well and is still doing exceptionally well, at that point, got hacked. And some of the private customer information was exposed on the internet. And I got the phone call from the founder with, and it's a phone call that you don't wanna get because it could be a company ending event if you are hacked and bad things happened. But then I had built enough trust in the team and the founders and the founding team had been enough trust where they said, okay, this is what happened and this is what we're planning to do in the next 24 hours. Then we'll have an update after that and then we will kind of regroup every day to make sure we kind of get through it. So all the trust that you earn together to get you to that point then helps you work on the problem together as opposed to saying, okay, how could this have been prevented? Then doing all things that are kind of counterproductive to handling the situation at hand. So I think a big first step before you get to a point of failure is to make sure you have that trusted relationships around you with your co-founders, with your investors, with advisors who you can then call upon when you need it. And that's, and you would do that knowing that you're gonna get to some of these tough moments. What kind of things, what kind of failures do you wish founders told you about more often or told you about earlier? Yeah, I think, yeah, there's lots of different things that can go wrong, but I think that team failure where something's not working in the team is something that all of us that are in the business of building businesses should take a little bit more seriously because it's my experience throughout whether as an investor in our portfolio companies has always been, if something's not working, more often than not with people you tend to give the benefit of the doubt and you wanna delay the decision because it's sometimes somebody that it's a hard conversation and you don't wanna have it and you wanna give the person a second chance, a third chance, et cetera. But I think in the context of a startup that everybody needs to play their position and needs to play their position with excellence and you can't have compensations going on across the team. So I do wish that the conversations between founders and investors and even the decisions that you make you make team decisions faster especially when it's not working. And is that just like C-suite people? Like what kind of level of team problem? Like David, what do you take to an investor when it comes to challenges with people? It depends on the investor. So when you go to a board and you have a group of investor facing you you better come already with a solution and not just with a problem because everyone has an opinion and you better discuss the solution rather than multiple ideas on how to solve the problem. But on the one-to-one and it's what I typically do is I have a problem with a team or whatever. There are a couple of investors that I have in the board with whom I have a very strong relationship and with whom I really start thinking about solution, explaining the problem. It's important for me to say, hey, it's out there, I shared it with you, help me find now a solution. But I don't do this with all of the investors. You have to have a strong relationship because investors have to understand the 360 perspective. If you call them up and you haven't spoken to them for a year and say, hey, this is my problem, they say, oh, something is wrong in the company, while maybe it's something that you can actually solve or that is even healthy, a problem that you have to solve to make the company even better. So what are some of the things you would go, you know, like, what's up with EC to be like, shit, need some help with this? Well, when we struggle with the C-level management challenges, every time you double the size of the organization, you have to reinvent the org chart. This means that you either have to divide certain areas of responsibilities or you even have to exchange a couple of people that have been with you for a couple of years or give them a smaller area of responsibility. There's always tough conversations and it's always leads to disruption within the team and this is one of the things that I've been discussing with a couple of investors over and over again. Hey, how would you approach this? So like, you must have seen so many companies go through this. Can you talk us through maybe a way, a leader you worked with kind of failed? Like they didn't lead the team through that stage very well and you know, what are the learnings from that? Yeah, I think it's a common pattern and many companies, in fact, David and I were just talking about in our car right over, there are team members that don't grow in their capabilities as fast as the company is growing and this is often, I would really encourage your founders to have an informal conversation with their advisors, with their board members, investors, not in a group setting, just to say, hey, you know, my sales leader, Godness from this point to this point, but I'm seeing some signs that she or he is not scaling and to have that conversation earlier. So this is a very common thing as you're talking about to say, this person was with me from the beginning. Without them, we wouldn't be here and that's the tough hardest part and then you see signs that they're not really, their organization is not progressing, they're not hiring fast enough, they're not hiring people. You know, one of my founders said, they're always looking at their leaders and challenging them always to say, hire people in your team that are better than you in a certain area. So for example, if you're responsible for hardware, hire somebody from you in your team that's better than you in a specific area, like doing, getting circuit boats done or manufacturing done. So that way you're multiplying the strength of the organization and you're growing with the organization. Is there a way to, is there a good way, like what's the best way to have that conversation? That's a really hard conversation to have, right? Like, thank you, it's been great, but now like you're basically demoted. Like, do those people always just leave? No, no, they don't leave. See, this is another thing that I would say that when you see a company with eight people and everybody has a title like EVP, SVP, then you really start to get worried. When you're young, you shouldn't over title. So it is one of the mistakes that I see very commonly made. You want to really land a hire, let's say a first salesperson and they want the title CRO. Then you have to say, okay, is this person truly a CRO of a $100 million company or are they really an individual contributor that I'm going to try to give a title in order to get them to join? And I would say don't over title at the beginning, but I do feel like when you bring in somebody that's clearly operating at a different level, the smart folks really stay because then they see, okay, hey, there's plenty of opportunity here, the company's still growing, it's healthy, it's a great sign that they're bringing somebody new. But yeah, I mean, you do see some people that there are some bruised egos and they do leave, that's for sure. You've got to be prepared for that. David, you mentioned earlier, so there's people's stuff you might go to an individual VC you trust to talk about. What kind of failures do you take to the board? And talk us through, you said you've got to come and be like, this isn't working, however, talk us through that. I take it to individuals from specific VCs. I think this personal relationship is what makes a difference. And when you talk to the board or the bigger group, it's more about the targets and the objectives you've defined at the beginning of the year and then if you fail to achieve them, this is a type of discussion you have, but it's always extremely important to come up also then an action plan. And also an explanation, why did we fail? I have this reflection. I think most of the time, and that's what I see also in our board, it's how we analyze things and how we learn from them that make the difference. If the board has the feeling that we fail to achieve something that we planned or promised and then don't understand why and don't take it seriously enough, this is when I get the most pressure and a lot of questions, a lot of homework on top of that. So what's something you take into the board recently? Well, our budget for next year is something that we took in there and we looked back at our budget from last year and of course there were a couple of dimension where we underperformed. And we had most of the discussion, interestingly in our last board meeting two weeks ago, was more about why did we fail and what did we learn from that? And less on next year, because I think the board wanted to see, okay, if you understand why this year certain dimensions of the plan didn't work out and you really understand why that happened, the plan for next year makes sense because you took that learnings into consideration and it was one dimension on unit economics that we probably didn't break down deep enough and then the entire conversation of what was focused on that and that's now the homework we took back home and have to further analyse and get back to the board. So how does that process work internally? Do you do kind of like post-mortems when things don't work out? Like who in your team says kind of, all right, that expansion or those metrics weren't quite right? What's the process to learn from it? We have two layers of management. So we start with the most senior seven, the top seven people within the company. We try to understand on a higher level why did things don't work and on that level we try to understand because they're always interconnected and try to understand what are these connections and then we go into single teams and say, okay, what metrics or what numbers did we expect, what turned out and then try to understand what the reasons are. It can be external market or also can be that our technology did not deliver the efficiency gains and the innovation that we expected and then we deep drilled down. I think the important thing in this is again the exercise, especially with the team of learning and understanding how next time you can do it better and that's why I think looking back and re-understanding why things did not work is even more important than having the best plan for next year that is over-analyzed. I would rather invest time in understanding why it didn't work out. And how do you in your organization and how have you seen organizations do this well? How do you kind of, the leaders in your team set that example and create that culture where people aren't afraid to basically talk about when stuff went wrong? Because lots of people, they're not that confident or they're not willing to be like, hey boss, I really fucked this thing up. Like how do you... It's a fine balance because on one side you have to be tough and you don't have to tolerate or you cannot tolerate if there's failure. I mean, of course you have to tolerate failure and you have to embrace it actually but you need to understand why and you have to be tough on calling it out. On the other side you want people to speak up. It's a fine balance of having people speak up and share really what they think and the other side being tough on them and challenging them. And I think it goes back to the personal relationship that you developed with this individual that go beyond that difficult conversation. If they know that they can trust you and you always encourage them to speak up also on things that really work well and other stuff then in this tougher conversation you can be tough and they still open and talk about what didn't go the way they planned. Yeah, I think the point about culture is a really important one because it's good to do lip service but you need to have some of my founders they actually tell their teams if we are not failing then we're probably not taking enough risk. And to set that tone from the founding team to say we are expecting to see some things not go according to plan because everything is going according to plan then as a startup you're not taking enough risk you're not breaking things enough to kind of really change the status quo. The other thing is that to build a team with diverse enough opinions so that you can get different points of view on the table and can look at the problem from different points of view and also ultimately you can't disagree and keep disagreeing you need to have this culture I think of having points of view bringing up points of potential failure but then when something doesn't go right that you are all putting your attention on kind of solving the problem and then committing to kind of saying okay we got it wrong last time but we're gonna go fix it this time. It's a culture that I think the founders have to very deliberately build to have the diversity of opinion to say that I expect things not to go 100% right that doesn't mean lack of accountability, right David? I mean you gotta say if you are going to execute then I expect to see the results so I think that part of it is right. To your earlier question about kinds of things that I've seen founders do well with boards is a recent experience that I had is I had a founder who was just amazing but after a board meeting I spoke to him and said hey it looks like your marketing is not really clicking and he had the intellectual honesty to say look I don't really know what great looks like in marketing so can you have a conversation with my VP of marketing and talk about what is not going well and maybe give him some measures on how to measure, what to report to the board to know that things are going well. So that kind of humility and tapping the resources you have around you in a good way avoids and doing it early avoids like four months later to say how our pipelines bone dry because our marketing failed. That's catastrophic, right? Like you want to catch it early. So I think those are good examples where a founder can use the board or people in the board who have seen other things as well as building a culture inside the leadership team to say include different views and if you don't get it right it's fine but let's go fix the problem together. David what failures are useful like in a company all hands? What kind of things would you share there and what kind of failures would you not? Because at some, you know people in companies is nice for a bit of honesty from the leadership but from people, you know people want to know this thing is going in the right direction as well, right? People get a bit scared if they're worried their salaries aren't going to get paid so how do you manage that? If I look how all hands have evolved over time we know a thousand people we had the 700 over the past 12 months and compared to one year ago our all hands is completely different. As I said, right now we focus more on the things that really work and call out certain major misses explaining also why so we prepare that it's not saying hey I ask a question say why did you miss this target? We have a conversation, okay we want a deep dive on this one and then you have to take it into smaller teams because one thing I realize is that in a big company not everyone has the same understanding and also the same level of interest to understand specific failures and if then the overall feeling is hey something is going really wrong and I don't understand why because I didn't take the time to understand the explanation then the entire dynamic within a big organization can go wrong so I have to admit that we focus more and more on things that really work well and call out certain things that don't but then already prepare to explain why. And you said your company grew massively, right? Over the past year and there will be lots of people here whose companies are also going to go through that like super hyper growth what really broke? What did just not work very well when that happened? The organizational structure so the last time we revised the org was when we were 250 people and we sliced and diced responsibilities and so on we just acquired Uber Freight Europe and we brought them in and we added so many people to that structure and it just didn't work our product team struggled to work with our operation team simply because the setup we gave them was not good enough there was so much friction that we created because of the organizational structure and that's why we just went through a very painful revision of the org structure where we had to change teams, responsibilities add some competence on the top and it's extremely painful to see how these type of decisions have such a big impact and I hope that's now going to be very rewarding to see that it will take some time that the new structure that fits again the size of the company that we are today will then unlock Is there anything you could have done differently there? Should you have anticipated that earlier? Not sure if I shouldn't have anticipated it earlier but I should have acted earlier I always, and I think that's a mistake I did a couple of times you always give it a little bit of time to see whether you can fix it and if I'm looking back I should have made this change six months earlier and I always tried, okay, let's try maybe this and this and let's bring in more processes, alignment, meetings to make sure, you know, have a better plan and goals and you always try I have to say it's also a learning process and so I think the new org benefited from the six months that we waited but if I could go back I definitely would also use a less evolved and perfect solution that we have right now to favour time because it takes then a few months now to implement these changes properly and we lost a little bit of time in that Lax, so this has come up quite a lot basically, right? You need to make your, you know you need to move faster when something's not going right That's right Have you kind of worked with companies who have good frameworks for that because people also don't want like a kind of impulsive leader, right? The slightest inkling something's not working and then like fire someone or stop that product thing You know, so how do you kind of find the right balance between being decisive, acting fast and like being really rash? Yeah, I think a crisis does quickly get things prioritised so this previous example that I was talking about where one of my companies was hacked so I think this was a good example where the team really got very quickly straight in their head what they need to do where the priorities lie, customers or team members and then to make sure they have an action plan for recovery and so I think that that's a good example when you hit that failure moment where they quickly prioritise in the head for example, almost all their customers are worried that their data was stolen so they very fact-based approach to that to say and not a rash response but to say we got to take care of customers, what does that mean? Whenever a customer calls us, we are ready like the founding team and the executive team not delegating it down to the sales team or whatever but the founding team were ready to take that call give facts about okay, what was the extent of the breach? Did your account get exposed or not? Giving them very factual answers I think and then with not forgetting the team members because then just like me as an investor was worried is this the end of the company or is it going to go on? You need to reassure the team members you are doing your best, they're also part of the solution and we will come out of it together and to communicate that constantly so that to me is a good example of how you would response when a failure happens but the rash actions I do believe that this is where if let's say you're having a conversation with the board member David and then they didn't fully understand how your business worked and you weren't hitting your numbers then the usual first response from an investor would be let's fire the VP of sales, right? Like we didn't hit our numbers obviously it's a sales problem you got to go fire the VP of sales and I think that's never a good thing to kind of go down this like triage of saying because if you don't understand why you didn't make that number and you don't take the time to really figure that out then you might just keep making the same so then two quarters later you're in the same thing again you didn't hit your numbers and you didn't fix some other problem so I do feel like as a founder unfortunately it falls on them the founding team to listen to everyone but have their own view on why things failed or and then you have to get back to the folks that are offering the handy remedies to say well actually you said this but this is what happened I'm sure this kind of resonates with you where you get advice from people like well this happened so therefore you got to do this absolutely and I think it changes also with the size of the company I think that the earlier you are the more flexible as a founder you can be in terms of what to do and the more grown up you are and the less dependent the company is also on you you have to manage expectation and consider input and thoughts and ideas in a different way so final question we've got two minutes left what should founders in this audience what things should they absolutely take to their investors and David what things should they absolutely not when it comes to failures it's a difficult one as the biggest advice I can give if you go to a bigger group of investors or investors that you don't really understand the 360 degree picture of the company explain the problem, the failure and come with solution also don't do the mistake to go too detailed in the analysis you have to understand the details investors don't always want and have to understand all the details you might confuse them and create even more chaos so it's I think you have to find the right balance you shouldn't go too deep in terms of details but I like to believe that if you have a healthy relationship with your board there's nothing you should not share with them eventually again sometimes you have to find a solution first and understand why you failed but I think that if there's anything major that the board should know you should approach them with that eventually and like stuff you want to hear more about from founders ideas you want to get more of it's not more about so definitely in a conversation with the board or with the investors always share material information something that really good or bad that happened in that company time is not your friend there share don't wait for the next board meeting to spring it on them immediately when it happens immediately make a call to the board or to the individuals and shared with them and I would I think as a founder the one advice I would give is people around the board investors always want to give you solutions but sometimes you can start the conversation that's saying I'm not really looking for an answer here's what's happening I just want you to know so that you get them off the thing that telling you what to do and to say look I'm just telling you and then I'll come back to you with a more thoughtful plan on what I'm planning to do so managing that expectation sets up a very healthy dynamic and as David was saying I know we run out of time but there's one learning I also like final learning on the share which I received from Sonali from Excel who's I think on stage next and she told me when I receive board decks that are very very long I'm always very worried yeah when the board decks are concise and precise is where I understand that the founders and the team the management team is on top of it so if you prepare an export meeting make sure you have the right level of detail because the more you get the more worried investors become amazing right now over to Sonali for more words of wisdom thank you very much thank you