Tim:
Hi everyone and welcome to our second episode of the CX Coffee Chat. I’m your host, Tim Kirchner, Global Business Director at Concentrix. And today we’re here with Linnar Schwarz COO at Candis. Linnar, welcome and super thank you for joining us. Could you please introduce yourself to our audience? Yeah.
Linnar:
Hi, Tim. My name is Linnar. I’m the COO of Candis. We are a Berlin-based company. We do software for financial process automation, invoice approval, all that kind of fun stuff. I’m 31 years old, also living in Berlin for eight years now, originally from Hamburg. Yeah.
Tim:
Okay. Can you share us a little bit? Can you share with us your journey that led you to the position of COO at Candis? Because you are with the company for quite some time and it’s probably been quite a journey.
Linnar:
Yeah, definitely. I mean, I’ve been here now for almost eight years in startup years, that’s 50. I don’t know. It is. Yeah. So I knew one of the founders from a previous company, actually. So he called me one day and they said, hey, we got a little bit of funding and if I wanted to join. And so I initially joined, I think on paper, my title was head of Business Development, which can mean anything.
Tim:
Person in charge of everything.
Linnar:
Exactly. So I joined basically at the start and my first tasks involved the code-calling and setting up like the data infrastructure. So I originally come more from like a business intelligence side, but yeah, at the start, everybody was just doing everything. And then, yeah, we were growing quite well. So that was nice. And I guess then just over time, I or it became or conflict, it fell into place, as you say, right? So we had, you know, one, one of the founders was focused on like the investor relations, fundraising, right, which takes up like a lot of time. Then we had another one focusing on sales and then I was perfect there for the day-to-day business, right? I like problems or solving problems rather. And yeah, and then I mean, nowadays, so one of the founders left the company, so we still have one who’s doing all of the investor relations and then I’m there for like the day-to-day business.
Okay, so basically the typical story of being one of the first employees and now in a founder close position or founder-like.
Tim:
Yeah, exactly. I mean, the founders did something like I really that’s, you know, I think you have to be really crazy to be a founder. But yeah, being one of the first employees definitely like if it goes well, it definitely has a lot of perks because it feels also like my baby, even though I’m not a founder.
Tim:
With this Coffee Chat format, we are speaking globally to customer experience leaders and operational leaders. And before we dive into the topic for today, what are your primary responsibilities as a COO of Candis and how do they contribute to your overall mission of providing innovative financial management solutions to your customers?
Linnar:
Yeah. So, I mean, we don’t have a lot of, or like operations for us as a software company is mostly revenue, right? This is so growth is my key, my key responsibility. And I mean, I don’t do sales myself, obviously, right? But so it’s, it’s about providing the context and ensuring that all the revenue teams can work well, right? So from marketing, outbound sales, inbound sales, customer success. Yeah. So basically doing anything that they need or that the teams need to operate in, right? That includes strategy, that includes making decisions when they need to be made. And also one thing that we do at Candis is that, so for us, management is still super hands-on. So I have my own projects as well that I do myself. And that is true for everybody here, right? So for example, one thing, we talked about before was, I don’t know, I talk with customers every, maybe not every week, but every second week. That is also Christian, our CEO, he does several customer calls each week. And then ideas come from that, right? So we have a custom advisory board, which is, we can talk about that later. But yeah, that’s just something that we do like end-to-end, right? So we try to also be involved in our own like little projects.
Tim:
Yeah, let’s do that. I mean, just jump the script. I mean, last year I had the opportunity to meet Christian, the co-founder that is still left. And what left a lasting impression on me was his approach to like challenge kind of conventional ways and the commitment to building your company with a very unique perspective. I really had, after this like 50 minutes coffee we had in Amsterdam, I really had the impression, okay, this guy wants to do something different here. And just this morning,
I read a post from him on LinkedIn that you guys are building a customer advisory board and tell us about that. That’s super fascinating. What is the customer advisory board for?
Linnar:
Yeah, so to be 100 % honest, we stole that idea, right? We stole that idea. And we thought, hey, this is great. So, ultimately, we have a very clear, like ideal customer profile. So, you know, we have customers of all different, you know, shapes and sizes, but there’s one specific profile that we want to develop the product for. And we do a lot of research. We have two full-time researchers on staff, on our payroll. And so we want to make sure that we develop the product and everything we do for this specific target customer segment. So then, you know, through these calls that Christian then did with customers, he got to know a lot of our customers that fall into this target segment and actually turned out that they were also very invested in Candis. So they had a lot of opinions, right? There are a lot of things to say and they were quite happy as well. And so then the idea arose to say, hey, great, let’s take 10 of our customers, of our largest customers that fall into this target segment and let’s meet up with them once a quarter as we do with our investor board, we present them our product strategy, we present them things that we’re thinking about from a product point of view that we would like to venture into. And then we challenge this with them. And they are there for us one hour each month to give us their opinion and serve, you know, when we want to do research, when we need beta testers for features, so all sorts of things. And, you know, for them, they have a direct line to the founder and CEO.
And obviously they can influence how we decide and how we prioritize a product. So yeah, that’s the idea. From a customer experience standpoint, this is obviously fascinating because you are building something that can then translate to your broader ICP audience. I’m just saying that those 10 customers basically have the same needs, the same desires as your broader audience.
Tim:
You probably discussed a lot internally. Where do you see challenges here? Or something you might have to watch closely.
Linnar:
With regards to the boards?
Tim:
With regards to the board and this limitation on 10 customers.
Linnar:
Yeah. I mean, yeah, obviously nothing is perfect. So overall, when it comes to research and also for us, having different customers obviously means that you have a lot of different opinions. And so you need to be very clear of about who you want to develop the product for and who really is your target customer. Because you have a lot of people who come and they buy and they have feature requests, but they are not like who you want. Like obviously, you know, if they want to become a customer, that’s great, but you know, they are not the ones we want to, you know, serve and we want to optimize our product, our processes for in the future. So obviously whenever you single out a certain group of people, you know, you have the risk that you, yeah, you have opinionated like research. That’s a big risk.
At the same time, I mean, they’re not the only decision criteria that we have, right? So, this is a very, very big and very important indicator, but then we also have, you know, sales demos, we have, you know, key account management where we talk with all of our customers once a quarter at least. And so all of this research, we also gather to, yeah, I guess somehow manage that risk of having a very opinionated input from this board.
At the same time, we do want to be opinionated. So we picked those members very carefully because they fall exactly into this customer profile that we want to serve.
Tim:
Okay, interesting. So as someone who is dealing with customer experience for a living, something that especially fast-growing companies tend to oversee is that customer experience obviously starts internally with operations, with building culture, with building processes. So…
The fintech industry, I mean, it’s especially in our ecosystem in Berlin, Germany, this is probably the most diverse sector we are having. So how do you approach change management within your company, within the operations of Candis to ensure, I don’t know, smooth transition, minimize disruption and always having a focus on your people, but also the greater goal of the company?
Tim:
Yeah. So I think there are probably a lot of companies who are better at change. We do, I mean, sure we have like disruptions. Yeah. Like if you work at Candis, like change is just, it’s there all the time. I guess what we do well, or what helped us a lot is trying to limit the amount of change that we’re actually tackling. So, so what I mean by that is we really spend a lot of time thinking whether this is actually a problem. So, you know, there are a lot of things that could be better, especially in operations, right? It’s like messy all the time. So, but a lot of times, you know, something that you’re doing very well or something that is a strength of you, there’s collateral damage, right? And that’s something that is then a problem on the other end. And so what we do from a management point of view, we really spend time to ask ourselves, okay, do we really need to tackle this right now?
Is this really a big problem right now or can we ignore it? So, we actually, we do ignore a lot of stuff to limit the amount of change that we then actually need to do so that we can then focus on those core initiatives. And we also really try to focus on the core value creation process, right? So always, we almost only solve things that touch the customer directly.
So we deal with a lot of stuff, like as long as it’s behind the scenes, it’s not as important, right? But the moment it hits the customer, that’s, you know, then it becomes a much higher priority problem. But yeah, and other than that, it’s just over-communication. So just repeating, repeating your decision. Decisions are, I guess, the most important piece of change, right? Over-communicating decisions over and over again, writing it down, our CEO, like Christian, he writes a letter once a month, which is also interesting. It’s an interesting medium, right? It’s different than having a company All-Hands because it’s something like written, like you can choose your words quite carefully. That also worked quite well. So people read those letters and somehow remember what’s in them. So instead of a monthly All-Hands meeting, everybody gets like a letter from Christian? We have both.
Tim:
Interesting.
Good idea. I mean, one thing that certainly happened because you were talking about what happens behind the scenes. One thing that happened behind the scenes is that we heard in a podcast of yours, that you decided to move incentive schemes in your teams in the past. So could you tell us a little bit about not only the decision-making process behind this, but also what factors influence this decision and what other results you are seeing?
Linnar:
Yeah. Yeah. So this is my favorite topic.
We had a very, I would say, common setup. Yeah. So we had a business development reps who were taking leads from marketing, booking demos with them. We had account executives and they had a part of their salary was a base salary and part was individual commissions, right? Based on the deal size, they would get, you know, a certain commission. Yeah. So that was the basic setup that we had. And we had a lot of problems with this.
So number one, we had a lot of demos that were just not qualified, right? So the account executives were telling the business development reps, hey, why did you book this demo? They are clearly not a fit. Then we had the success team complaining about sales because customers were being onboarded who were not, they were being promised features that we don’t have. There was really clear unqualification criteria that were ignored and they still went on our platform. And then obviously this was a horrible customer experience end-to-end. And also resulted in us really, it was a real problem. When we looked at our growth rates, they were not going up into the right, but rather stagnating. And so we tried a lot of different stuff. Yeah, we tried you know, sitting down together with the teams and emphasizing how important it is to, you know, like close the right customers, et cetera. But then one idea came up and it was, okay, like why are the sales reps closing these customers? Well, because we’re paying them to close the customers. And so then we had two options. Number one, we change our incentive scheme again to somehow try to incorporate that, right? So let’s say, I don’t know, there’s a test period and we only pay out the commissions when the testing period is over, like these kinds of things, or we go the other way and just remove it altogether. And so we did that. So what we did was let’s say a sales rep was earning, I know, let’s say 70,000 euros, 50,000 fixed and 20,000 as a commission. We just paid them 70,000 euros fixed. And we did that for all of our sales reps. We did that for all business development reps.
And now we actually, so everybody in the company gets paid a fixed salary and we all get a small bonus if we reach our revenue targets. So, you know, it’s small, right? This is not like 40 % of your base salary, right? Like it’s a small bonus, but the developer gets it as customer success rep gets it, BDR gets it because, you know, like it’s, we are all, people always make it about sales, I think growth, right? But they are just, they’re like doing the last mile.
Right. It’s like from the, from the hub to the, to your letterbox. Um, but if you talk about customer success, right? Like if there’s a churn that’s revenue, we need to add again, right? Like, uh, if we talk about a referral, if we talk about, uh, expansion, right? All of these kinds of things, if we develop a new feature that then unlocks, you know, more people switching to a higher plan, right? So like revenue is like a whole across the company, um, goal. Um, yeah. So we removed incentives. Okay.
Tim:
Um, question here.
Yeah. Do you see any… I mean, I would assume for now, motivation, performance, it’s either stable or even improved because it sounds like a great system that you can implement in a scale-up environment. Do you see, I’m just looking forward, looking at your business plan, and do you see or foresee any scalability issues? I mean, war of talent is still there, right? You need to step up your game. Do you think, especially when you want to hire talent moving forward and build your sales organization, that this model will not be scalable or would you just say, huh, but this is our culture, live with it?
Linnar:
So I think from a motivational standpoint, this definitely had a very big impact. Also on the sales people, right? Because this commission thing, it’s like a, it’s a sign of mistrust, right? It’s like, okay, you do need the carrot in front of you because otherwise you’re not doing the job at sales, right? So definitely had a very big positive impact, not just in sales. We are in a situation that so I don’t know, we double our revenues each year, but we don’t double our headcount. We can do this growth while growing headcount by 15%, maybe 20%. So this is a luxury. We can because this is obviously one, this would be a scalability issue. So incentives help you steer a certain type of behavior for a large group of people. We have the luxury that we don’t need to hire that much. So this for us, we have the luxury to only have great employees and we can take time hiring and finding the right people because we don’t have to hire so much a company that scales primarily through increasing headcount doesn’t have that luxury. So there obviously you take maybe a bigger risk for us and our business model. I don’t foresee any scalability issues and we’ve been doing this for three years. We were a very different company when we started this. And yeah, until this day, I have not regretted it or nobody has regretted it ever. And it had measurable impact, right? Like this is, so this is not something, like a nice thing that we do also, right? Like we have to make money, right? But it’s like, it really, we went from like a stagnating growth rate to really accelerating growth, right? On all ends, right? And like across the whole funnel. So whether you look at, when it’s about customer experience, right? And also we were talking about this before. The third of our pipeline comes from referrals, like classic mouth-to-mouth, because… we have a great customer experience that we can provide because suddenly salespeople can collaborate on deals because suddenly, you know, like success is involved also in the sales process. We close only the right amount of or the right profile of customers. So there’s like across the whole, we were talking about like, or like when you talk about cross team collaboration, it’s suddenly like somehow magically it works, right? So you have people across different teams working together because they have one joint goal, which is, you know, how much revenue we have at the end of the quarter.
Tim:
So what you’re saying is like by erasing the very individual component, you fostered a new team spirit that cleaned your pipeline or like led into a quality increase from your leads, which ultimately led into better customer success, less churn and a higher referral rate.
Linnar:
I would even say that everybody already wanted to do that. We just prevented them from doing it by having this individual incentive scheme in place because we were incentivizing the wrong… I would be exactly the same. I never understood it. Why do I get paid only a fixed salary? But the sales people don’t. But I would do if I had to earn my bonus by doing, if you pay me to produce a thousand screws, I would produce a thousand small low quality screws. It’s just human nature, I think. So yeah.
Tim:
Yeah. I mean, as someone coming from this industry, I mean, we work with incentive schemes quite a lot. I mean, I would argue quality assessment, bonus malus schemes. There is something you can prevent on scale, but also as a scale-up you, and this is, I think the more interesting question is A, what kind of culture do I want to implement here? And B, what kind of management overhead do I also need to have and build for this kind of measurement and project? And I think what you’ve done is basically you erased something that obviously led to an outcome that you didn’t like.
And now it kind of flows freely within your team.
Linnar:
Yeah. And I think Tim, that’s a key point. Like if you don’t have a problem, then don’t change anything. Right? Like the only reason we tackled this was because we had a big problem. Right. And that comes back to change, right? Like I would hope that, you know, anybody who listens to says like, ‘oh, great, let’s, you know, eliminate commissions’, right? Like that’s, that’s not what I’m, what I’m saying. Right. It’s more like if you have a problem in your, you know, when it comes to your customer experience, when it comes to your sales process, looking at incentive schemes is something that I would highly recommend because at least for us, this was causing problems and then removing them can be a possible solution. That’s what I’m saying.
Tim:
Okay, thanks so much. I mean, also looking at the time because we want to keep this coffee short and snappy. I think I just take your last statement as an overall advice to the ecosystem and would end with a rather personal question.
I mean, in your role as COO of Candis and I’m coming back to this founder-like position you have in like accompanying the company basically from day one to now. What were the biggest challenges like personally you have to overcome since then? How did you grow as a COO?
Linnar:
Yeah, so I think the… The hardest thing is that it’s just constant pressure and it never feels like this big success. So when you look, I guess a lot of companies or a lot of people probably have this, right? Like you might look at it from the outside and you’re like, oh, and there’s all this growth and there’s this many employees and there are these kinds of investors and everything looks like a success story. But at least for us, it never felt like this ever, right? So you have just… constant hard work, everything is much harder than we thought. Things take longer than expected. But when you’re looking back over where we were six months ago or 12 months ago and then compare and then you’re like, oh, wow, we are in a much different place today, even though at no point in time it felt like this. So you never felt the progress, but you made it over time.
So this is something that for me personally, at least like helps to just have this, you know, looking back over longer periods of time and then looking at, you know, going through Slack. I did this, I was on a train ride Hamburg to Munich, which takes ages. And I just went to Slack, like reading messages from a year ago in the management channel. So, right. And then just like looking at, okay, what kind of problems we had back then, right. And like where we are today, this is something that the…makes you or makes it easier to cope with this kind of like feeling of constant pressure and why can’t it be easy, right? Yeah.
Tim:
Last question, because this is really interesting as someone who, let’s say, built or tried to build a company in the past. And I mean, my co-founders and I, we always struggled with retro-perspective and I don’t know, really identifying where we are compared to the past. How are you managing this? Are there offsites? Are there, I don’t know. So how…How do you foster a culture of we need to keep our heads down and work, work, work, develop, develop, develop, but still we have to be fucking proud of what we have achieved so far because this is, I mean, failure rate of an early-stage startup. You are way behind that, right? Or way beyond that.
Linnar:
Yeah, we are also again, they’re not that good. Like, yeah, we do offsites once a quarter. I think, yeah, we have a summer party or like a weekend for the whole company each year. And then Christian, the CEO, he has a talent for holding good speeches. That’s always quite uplifting. That’s definitely a ritual. But other than that, we’re usually still our worst critics, definitely. That’s also a problem that we have and also something that we have to get better at because obviously people see it, right? Like you need to be able to celebrate successes also for the company. That is definitely important, especially if you’re usually every other day just very critical.
Tim:
Yeah. Okay. Thank you, Linnar, for joining us today.
And thank you all for listening. This was the CX Coffee Chat episode two. We are back with episode three. I don’t actually know what our cadence will be one week, two weeks, so we’re gonna decide. So thank you so much for taking the time. It was really fun.
Linnar:
Yeah, thanks, Tim. It was a great talk. See you soon. Bye -bye.
Tim:
Bye -bye.
