How did the idea of creating Woodpecker come about?
Matt Tarczyński, CEO and founder, Woodpecker.co: The road to building the company was long and led through several other, more or less successful, businesses and Woodpecker was actually created to solve our own problem. But let’s start from the beginning. Throughout my early professional career, I was shunning working for someone else and never wanted to join any corporation. Instead, I had a huge intrinsic motivation to create something of my own. I started my adventure with building businesses relatively early – already in the second year of university I was offering entrepreneurs help in obtaining EU subsidies. In those years, hardly anyone was able to approach this topic professionally. Interest in the company’s offer was considerable, we wrote many applications and so my adventure with building a company turned out to be… a spectacular financial disaster.
What went wrong?
We had problems with liquidity because we did not accept advance payments from customers. Then I learnt the first of many business lessons – I understood the importance of cash flow. After some time, I founded an interactive agency and then Chop-Chop, a software house which I was building for about four years and which ultimately, before it was taken over by an industry investor, had about 50-60 employees. Already during the work on Chop-Chop I knew that at some point I would like to create my own product and operate under my own brand. However, running a company that is focused both on service and product is difficult, as it’s impossible to engage one hundred percent in both. Therefore, after the takeover of Chop-Chop it was time to face the question – what to do next?
So that’s when you came up with the idea for Woodpecker?
With the idea to build a business in the SaaS, yes. I was inspired by the successes of Basecamp, Pipedrive and LiveChat. So, I spoke to Maciek Cieśla, my cousin, who is now a board member and co-owner of Woodpecker.co, and I suggested that we build something together. The result of our brainstorming was the idea of creating an app for personal trainers in the United States. The idea was crazy because we were not fitness professionals, much less trainers from the USA. Until then, we had known the United States only from our Work&Travel trips.
So why the decision to immediately target customers in such a competitive and little-known market?
MT: If we change our mindset and attitude and have the right product and competences, we can enter the global market at the beginning of the company’s operation. Chop-Chop was a case in point – during its development my partner and I decided not to limit ourselves only to the Polish market and immediately started selling to the whole world. In that case, this strategy turned out to be a successful one. After four years, we were implementing about 150 projects a month, the number of interested customers was constantly growing and the company was profitable. What would be the point of taking a step back when building another company?
So how did you fare on the adventure in the world of fitness?
MT: When building the app we adopted the so-called customer development approach, focusing on fast work with customers. We created a database of personal trainers, which consisted of about 50,000 records – potential beta testers of our product. I remember the first message I sent then. It was addressed to Mike from New York, who wrote me back probably after 5 minutes and that’s how it started. However, it’s obvious that manually sending e-mails to such a huge number of recipients is very time-consuming. At some point, Maciej stated that he had an idea how to automate this work. This is how the first simple code was created, the great-grandfather of today’s Woodpecker, which allowed you to automatically send emails, check who replied, or send reminders. Suddenly, it turned out that in this way we were saving a dozen or even several dozen hours a week.
And so what’s behind the complete change of your product?
MT: Unfortunately, after a year and a half of work, we realised that the business is unprofitable. I remember very well the moment when I announced it at the meeting of our 4-person team and the anxiety that accompanied me at that time. I said: “Look, what we’ve been doing for the last few months is just not going to work. However, I have an idea of how to smoothly pivot from the fitness industry to the Sales Automation sector.” Everyone agreed to it immediately, because my concept made sense – business development with potential customers was a very time-consuming challenge for many other companies. At that time, there were already entities with a similar profile on the market, so the idea had been validated, but the market was not saturated yet and with the right USP there was still room for a new player. It was December 2014. We decided to improve the previously written code and came up with the name Woodpecker. We were aiming to build the product in a month but, as it turned out, all the work took us 9 months. In the meantime, we partnered with the Tar Heel Capital Pathfinder (“THCP”) team, who believed in our idea and invested in Woodpecker in a pre-seed round.
In other words, it’s the seventh year of the cooperation with THCP?
MT: Yes. Its very beginnings were, as it often happens in my case, quite unusual. My work on the app for personal trainers coincided with me leaving Chop-Chop. When it was all done and dusted, I had money that I wanted to invest as an angel investor in the project run by RightHello’s Piotr Zaniewicz. His company was at an early stage of development but received the first rounds of financing. I needed the consent of the other investors to join. This is when I met with Arek Seńko and Radek Czyrko from THCP. Arek associated my name with the “Method 7c” e-book, in which I described my trials and tribulations that ultimately serve as a warning and lessons learnt for people who want to start their own service company. Both concluded that I could bring my know-how to Piotr’s business and also asked me what else I had been up to. That’s how they found out about Woodpecker, which we were already working on at the time, and offered investor support. Together we developed a budget, conducted business analyses, and established the company which operates to this day.
What were the beginnings of your partnership with THCP like?
MT: Certainly, the financial aspect was crucial. Building a company operating in the SaaS model is extremely capital-intensive and difficult if all you have at your disposal are your own funds. Therefore, were it not for the pre-seed investment of about PLN 1 million, I suspect that today Woodpecker would be at a different, much earlier stage of development. In addition, THCP offered us a lot of substantive support, for example at the stage of budgeting or setting KPIs it advised us to introduce monthly reporting, which helped in the ongoing assessment of where our company is at. However, what is particularly important to me, the THCP team did not impose anything on us, but rather suggested and indicated the right directions for our company. This is how we were well prepared organisationally for last year’s IPO on NewConnect. And that is why I believe that the support of a wise investor is very valuable for a company like ours.
Over the years, you’ve tried to build a variety of businesses. Where does this inner imperative to create something of your own come from?
MT: Sometimes I realise that to build a company, especially one with an appetite for continuous development, you need an element of madness. It is a very burdensome and demanding task. In my case, it had started already in school. For as long as I can remember, I have been learning primarily what I find interesting. I read a lot, I wanted to live in my own way and on my own terms. All this gave me extraordinary inner strength and a strong driver. Even when a project failed – and for the first 6 years of working on creating my own business it happened more often than not – I would constantly learn something new, all the time drawing conclusions and still trying.
And when it comes to creating Woodpecker, what was the biggest challenge?
MT: Building a company in the SaaS model gives you amazing opportunities to scale and develop your business without having to dynamically expand your team. On the other hand, just starting a business and achieving growth in that model is an art in itself. The process of acquiring the first ten paying customers is more difficult in this business than acquiring… another hundred. So, the early stages were quite bumpy, and the work methods behind Woodpecker’s development were one of a kind. At the very beginning, we adopted the lean startup and customer development approaches. As a result, even before the company was established, we started contacting the first potential customers to collect insights from. We asked why they would be interested in our solution, what it could help them with, what they find lacking in similar products, etc. We had dozens of these conversations before inviting anyone to test Woodpecker. Opening up in this way required a huge mindset change. From the outside, such a decision may have seemed irrational, as well as the fact that already at the very beginning we hired two salespeople whose job was to acquire global customers. For the first hundred clients, we even conducted free workshops on topics such as composing cold emails, although from an economic point of view it did not make sense. A strong focus on customer success, however, pays off: already in the first month of operation we acquired 38 customers. Since then, it’s simply been a part of Woodpecker’s DNA.
What does the scale of Woodpecker’s business look like at the moment and what are your plans for the future?
MT: Presently, our portfolio includes over 3500 customers from 90 countries, and Woodpecker has exceeded USD 420,000 monthly recurring revenue. For me, this is just the beginning. We are targeting an MRR of USD 800,000 because that will mean we’ve entered the category of SaaS companies that reach a USD 10 million annual run rate. This is the next level. I also still think about companies that have been an inspiration for me from the beginning, such as LiveChat or Basecamp, which have tens of thousands of customers from around the world in their portfolios. This is the goal I set for Woodpecker and we have already taken a few steps on the path to success: first of all, we have created a company with a solid foundation. We also have risen to many challenges, but I have a feeling that the real adventure is yet to start.