How do you catch interest in your startup from the big tech pioneers, such as Apple? We are again revealing some of the secret sauce to founder success in our new episode of The Big Exit Show!
In just impressive two years, Jochem Wijnands founded the magazine-app PRSS together with Michel Elings and sold the company to Apple – while receiving competing offers from investors and strategic buyers. With previous experience from the entrepreneurial scene, Jochem share with us his key takeaways from both failures and successes on this road:
Keep your priorities straight when hiring: take your time to do the actual work and create an amazing product, before you end up with a commercial bunch of people with too little work on their plate. In fundraising, not only focus on telling your own story – but also asking questions to the investor. Dear to be open about things that are not so great, and ask what the investor think about this.
Tune in to learn how Jochem tackled “dancing with the elephants”, how he negotiated alone with Apple and why the majority of his team got married after the exit.
In this podcast series Peak’s very own co-founder and managing partner Johan van Mil, and podcast-host Remy Gieling talk to successful European tech entrepreneurs about the exit of their company.
You can find the episode at your favorite podcast platform, linked below. And, if you are really interested listening to the big exit of specific founders – reach out to us so we can invite them for a next episode!
You can find the transcribed version of the episode below:
Jochem: One of the greatest disappointments was, and that's also an advice for other people, before you know it, you're just an employee. You got a manager and she tries to manage you, and then you can do this but you can't do that. And there's these yearly conversations or monthly when they talk about your–
Remy: Yeah, performance reviews.
Jochem: –your functioning that was really a disappointment. I should have sat, “Look, I’m coming but I want to have a direct access to one or two persons.” I’m not here for a career or something but a lot of people are, of course, even at Apple.
Remy: Starting your company, well, that's easy. Selling your company, that's a different story. In the Big Exit Show by Peak, we'll have to curb no secrecy of selling ambitious scales by top two successful founders who have been in this roller coaster. My name is Remy Gieling.
Johan: And I'm Johan van Mil.
Remy: And in this episode, we talk to Jochem Wijnands. Jochem sold his company, PRSS in 2014 to no other than Apple. He stayed [00:01:00] on for a while to work on Apple News before starting a new venture in 2015 called TRVL, which he has been working on ever since. We will learn his lessons about making an exit to a technology giant. Jochem, it's so good to have you with us today. All your company names are four letters–
Remy: –and without any vowels. [laughs]
Remy: How come?
Jochem: For no reason, seriously. First, we wanted a domain name that was short, preferably, four letters. And we started a TRVL magazine. And like the Dutch always, they don't have a lot of imagination. So the big square is called the big square and the big church is called the big church. So we just decided to go to travel, and then we saw that TRVL is still available. Having said that, it took us over a year to actually acquire the domain name.
Jochem: Yeah, because it was 150,000 euros at first. And then we got it for 10,000 euros.
Remy: Oh, wow!
Jochem: [Unintelligible 00:02:00].
Jochem: But it took–
Remy: Wow, that's a good deal.
Jochem: It's an amazing deal.
Johan: You're a negotiation master?
Jochem: I wish.
Johan: You still got the domain name [crosstalk 00:02:12].
Jochem: Actually, there's a– maybe I shouldn't say this, but there's somebody bidding on the name with huge amounts. It's incredible.
Remy: Yeah, I can imagine, right? It's a great name. Hey, Jochem, what's the heroic story of PRSS?
Jochem: Ha! We wanted to make the world a better place.
Remy: In what respect?
Jochem: Well, yeah, so just for the listeners, we started publishing a magazine for iPad when iPad came out. And the magazine business, obviously, was in decline already for decades. And we thought that iPad was an amazing piece of hardware for the consumption of magazine content. So we kind of immediately understood that this could be great for the future of magazine publishing.
Remy: I still remember today that I brought my [00:03:00] iPad from San Francisco to Amsterdam. And I downloaded the TRVL.
Remy: And I was blown away by the TRVL magazines at the time. It’s a really– you know?
Jochem: Yeah, yeah, so what was it that you saw that you liked so much?
Remy: I immediately saw the impact of a traditional magazine, which is very standard, which is not very inspiring, and also not interactive with a new magazine brought by you at that time.
Remy: And I recall that I was, I think, in the market for travel or something. So I downloaded one of the episodes– I don't recall which country, but I remember that there was a video — I think it was probably tied on the show. And that was a video about sailing probably because I love to sail. And as a video, I could click and the sailing boat went on through the magazine. It felt so inspiring to me. So I fully recognized it at the moment.
Jochem: It still, I think, amazing for photography–
Jochem: –and video and all the interactive stuff. And obviously, the magazine on paper feels so outdated.
Remy: I canceled all my subscriptions ever since, so–
Remy: It would help, yeah. I don't–
Johan: Even WIRED?
Remy: Even WIRED.
Johan: Oh, man.
Jochem: Yeah, yeah, yeah, yeah.
Remy: Sorry, sorry, I may–
Johan: I still [unintelligible 00:04:06] very happy when WIRED. It's physically in my–
Jochem: I understand that. But you're– how old are you?
Jochem: Yeah, there you go. Well, that's still quite young actually, but there's obviously a generation that has never seen a magazine.
Remy: True. Yeah, that's true. But I do read the newspaper, guys, actually. But magazines, I canceled all. And so there was a heroic story, indeed, of PRSS.
Remy: And now, what's the real story of PRSS?
Jochem: Ah, well, there's some heroism still in there but I guess if you look at the magazines today, I don't think that there's a future for them, not on iPad, or not on mobile, not on paper. So it's really a pity, I think, that 150 years of magazine publishing has kind of come to an end with some exceptions, of course.
Johan: And you mentioned that to a guy who was the chief editor of a very known business magazine, Sprout [00:05:00] in the Netherlands, right? Remy, what's your response to it?
Remy: Yeah. Well, you talked to the guy who killed all the physical publications, so I can, yeah, fortunately fully agree with it. My take on it, it's a very cool but very expensive hobby to make print publications. It's so expensive and there are so few people willing to pay for it these days. The ad market, which was used to run these publications is completely gone.
Johan: So– yeah. Well, maybe we could talk about this later but in my opinion, if you have these digital magazines. You just forget they're there. If you don't open the app every single day, you just forget about them and you don't look at it.
Jochem: I think the print is dead, the magazine experience is dead. On paper, it's very hard to make a business. Electronically, it's impossible to make a business.
Jochem: So what you get is aggregator apps that have [00:06:00] bits and pieces of information like some photos but it's not the magazine experience.
Remy: And the magazine experience was basically all serendipity, right? It's like you're opening up something, you don't know what's it on the next page. Yeah, that's so exciting because you don't know what you're looking for, and you get this great content.
Remy: The beginning. So, Jochem, the iPad came out. And then?
Jochem: Well, we got very excited. We saw something that for the first time could, maybe, bring the magazine experience to the internet, to mobile. So we decided that we wanted to start a TRVL magazine on iPad.
Remy: What was the biggest problem you were trying to solve back then?
Jochem: I think at that point, I just saw the opportunity. And it's maybe hard for people to understand but 10 years ago, when iPad, it was I think one of the last times that Apple brought something amazing, something new. Apple Watch, I think, [00:07:00] was also a bit new but not really a big surprise. So everybody at that time in the startup world was gathering thoughts, and teams and ideas to do something with it. So we didn't see it like a problem. I think that iPad was solving the problem and we were just seeing the opportunity.
Remy: Yeah, that was with the TRVL magazine but with Prss, you were trying to create a whole new ecosystem basically.
Jochem: Yeah. So what happened is the magazine did very well. We got 2 million app installs very quickly, 5-star rating, Everything went very well. Just the software that we were using was legacy software based on InDesign, and PDF, and what have you. And so 9 out of 10 things that we wanted to do, we couldn't do it. And that's when we decided to build our own publishing software. What did you do to make that–? What were the steps that you took at that time?
Jochem: Well, the decision that we would focus on the software, I think, was the biggest one. [00:08:00] And then everything falls in place. You just start hiring a team. We literally sat down and wrote down everything that we wanted in the software from scratch. So we had a list of 100 things or so that we wanted in there. And then we started building it.
Remy: What was the first year like?
Jochem: Well, the very first year for me was kind of tough because I had a partner but he was still in a job. So I invested my own money in the company. Even though he was very excited and we spent a lot of evenings together, I wasn't sure if he was going to join in the end at all. So it felt like very uncertain. But then when we had some success and the first money came in, so the first investors came in, he got the courage to start working full time.
Remy: And you mentioned, too, you just hired some team of developers. It sounds like you've done that a number of times before. I know you've done it a number of times afterwards, right?
Remy: But those days, you were a photographer right? That was your background. And of course, you–
Jochem: Yeah. I did study [00:09:00] business in Erasmus University [unintelligible 00:09:02]. I do have some formal education and I worked at Philips Electronics as a project manager but I then quit my job because the corporate life didn't really suit me. And I started traveling, and writing, and photographing. I started working for National Geographic and Nikon. And so I did achieve all my objectives and life was wonderful just traveling eight months a year.
Remy: Making pictures.
Jochem: Making photos, yeah. But I've always been keen to find adventure. I met my wife, we started a family, and I was looking for a different type of adventure. And it just made the jump when iPad came out.
Remy: You had both the travel app back then–
Remy: –which was the magazine, and the software, Prss. How did you spend your time between the two ventures?
Jochem: We had an editor who's doing TRVL, the magazine. [00:10:00] And we used it as a sandbox for Prss. So most of our time was spent on the software.
Remy: Yeah. So you're mostly focusing on Prss then?
Jochem: That's where the money went. And at some point, we had a team of 18 people and only two people were working on the magazine.
Remy: What kind of people did you first hire?
Jochem: A designer and just developers, front-end, back-end. Actually, our first hire was the CTO.
Remy: What was it like for you? Because you had some experience working in these big corporates. You traveled around quite a bit but what was like managing people all of a sudden?
Jochem: I don't feel I ever managed anybody.
Remy: Can you explain it?
Jochem: I don't feel like I'm a manager, so I didn't feel like I needed to manage them. We were just in it together. And then obviously, you need to make plans and execute them. But I also felt like everybody was so motivated. It's not like I was waiting for them to come in and then telling them to that they were laid off or they needed to work harder or– I don't know. That just wasn't [00:11:00] the case.
Remy: Were there any bad hires?
Jochem: [laughs] Yes, we did hire a few people in our first year. And then within a month, we let them go. Yeah, that happened. Both of them, girls, by the way. But I'm just thinking about it because I've never had this question before. And to be honest, my team, when we were in America and they were talking Dutch among themselves, then I said, "If any here understands what you're saying, you're going to be fired."
Jochem: There's this thing, I don't know if it's Dutch words, if it's just our team but they were kind of–
Remy: Joking, you mean?
Jochem: Yeah, joking.
Remy: Yeah, jokes, yeah.
Jochem: And I think that's typically Dutch, quite sexist also.
Remy: Yeah, yeah. Yeah. Yeah. Hey, and hiring is really hard, especially if you haven't hired a lot of people before. Of course, you had some with Philips, and also from your education, et cetera, but what did you look for at that time when you were hiring people, especially in Prss and TRVL at that time?
Jochem: Well, I think the hiring, at first, was quite– I wouldn't call it easy but because we knew people that worked at companies who knew people, we just went through our network. And we were working on something very exciting, so it was easier. And then we got a few people straight out of school.
Jochem: So I felt like we were growing at a regular rate. Not very fast but fast enough.
Remy: Yeah. But still, you mentioned, right? You're not a real manager.
Remy: You're giving a lot of freedom to people. You don't check if they're on time, et cetera. And hiring young people sometimes needs also some guidance, et cetera. How did you manage that in running your company?
Jochem: Well, I said before I didn't. [laughter] I didn't manage it. I think also because there wasn't a need to manage it. I think when the need arises, then maybe you have to step up.
Jochem: But we were just excited about what we were doing in the beginning. We won a few prizes so we were magazine of the year, [00:13:00] app of the year, Dutch startup of the year.
Jochem: So I don't believe in prizes and awards but it fuels some feeling like you're on top of it.
Johan: We agree. Yeah.
Remy: So just to be clear, the current company is also called TRVL–
Remy: –but it does a whole different thing than the magazine back then, which was called TRVL.
Jochem: They're very different. Yes. Yes.
Remy: What did you do differently at Prss than at your current venture, TRVL?
Jochem: Well, I think with Prss, it all went more naturally.
Remy: Because you have momentum maybe?
Jochem: Yes. I think I made a few mistakes with my company that I could have avoided but when you come back and you've had this amazing ride, I felt very bullish.
Jochem: But I also felt like I’ve been doing this once. Now, I’ve learned a lot of things and I want to apply these lessons to my next venture.
Remy: Of course.
Jochem: I think I went too fast. So if I look at my company [00:14:00] now, looking back on how things went, I think I should have slowed down a little bit in the beginning. I started hiring people way too quickly. And I do believe I can hire very well but if the timing is wrong, you just, at some point, see people sitting there and they don't know what to do. So the mistake I made just to be clear is that I think I made two mistakes. First, I didn't start hiring developers but I had a company who was doing that for me, so it's like outplacement.
Jochem: And I started hiring more commercial people like in customer service, but at some point, the product itself needed more time. So those people were sitting there but they didn't have a lot to do.
Remy: Like no, they couldn't sell anything nor couldn't help any clients?
Jochem: No, not really, no.
Remy: No. [laughs] You see that a lot, right? When second-time entrepreneurs and third-time entrepreneurs start a new company, right?
Johan: But we mentioned once it looks like having a marriage, right? If your first wife or husband has a certain [00:15:00] attitude or certain way, then the second one is completely the opposite, and probably you're going to divorce even faster because you found the wrong path. And then your third partner is the right one. I feel a little bit that you say the same, right?
Jochem: Johan, I feel like you're telling us a very personal story.
Johan: Yeah, I want to share things, of course.
Jochem: No, but I think there's some truth in it.
Johan: Yeah. Yeah, right? Yeah.
Remy: The growth phase.
Johan: When did you first notice you started to gain some traction with Prss?
Jochem: Well, actually, it happened with TRVL. So as I said, we had a lot of download app installs very positive feedback. And then Apple invited us to their WWDC, to their presentation in June.
Johan: The Worldwide Developer Conference?
Jochem: Yes. And because they were going to feature us on stage as one of their hero apps.
Johan: So you're flown down to Cupertino?
Jochem: Well, I think we paid our own tickets but yes.
Jochem: We did, yeah but–
Johan: They're cheapskates. [laughs]
Jochem: Yes. [00:16:00] Well, they made up for it later.
Jochem: But the entrance tickets, obviously, were free. Yes.
Remy: What was it like to be there at that time because I think that's massive, right?
Johan: It was still with Jobs, was it?
Johan: He was gone?
Jochem: Absolutely not, no. He died a year before. Well, it's very impressive. What happened is my co-founder, he stepped on the stage after the show and talked to Eddy Cue. And he said, "We built software that you forgot to make."
Johan: Just after their announcement.
Jochem: Just after the announcement. And obviously, because we were in their show, we would not know buddies at that time. So they said, "Well, why don't you come and give us a demo in August? So June, August, we were like, "Yes, of course," but we knew it was going to be very, very hard. So we actually lost half a year on our roadmap because we stopped everything. We [00:17:00] started building a demo. We weren't ready for that yet. And the demo was just good enough to show.
Remy: You didn't have a demo but at that time, you did have publishers using your platform?
Jochem: No, no, no, no. That only happened at the very, very end.
Remy: Okay. Okay.
Jochem: Yes, because we first built software for our own magazine. And then we turned it into a platform–
Remy: Yes, okay.
Jochem: –that people could also use.
Jochem: And they saw our magazine on the software.
Jochem: And we said, "This is what you, guys, need." And then they said, "Well, why don't you come to Cupertino?"
Jochem: And then we went to Cupertino.
Remy: You showed the demo?
Jochem: We showed it but it was so funny because we were there in the room, we were supposed to meet two people but there were 12–
Jochem: –which is very American.
Remy: So you thought it's the wrong room but it's–?
Jochem: Well, no. And then there was this huge screen, a Panasonic screen, filling the whole room. And we were showing the demo on the screen but it took them 40 minutes to get it to work.
Remy: It's Apple, right?
Johan: Oh, that great. So it was Apple.
Jochem: And there were some names in the room, the top, say, 100 Apple employees. I don't know how you called it but just this lap of [00:18:00] hundred. I was like making calculations how much money was being wasted here on–
Remy: On the 40 minutes?
Jochem: Yeah. Yeah. But it went well. And then they said, "Well, let's talk some more when you are a little bit–"
Remy: You were in business?
Jochem: Yeah, well, a little bit further but it just took us a very, very long time to build it.
Johan: So you mentioned, right? Then the show was– after that, your colleague approached this guy that you spent six months building the demo. Then you flew to Cupertino with that room with the Panasonic television. And then he said, "Wait. You have to come back again"?
Jochem: Of course. Yes. But there was one thing that I forgot to say is when he was on stage, Eddy Cue was giving his email address, which is [email protected].
Johan: Mm-hmm. Wow!
Jochem: But he didn't really hear it right. So he said, "What was it again?" And so Eddy Cue said, "It's cue…" And then he said, "Oh, [expletive] cue, '[expletive] cue,'" but that sounds like " "[Expletive] you."
Jochem: "[Expletive] you."
Johan: You were standing there also [00:19:00] together with him?
Jochem: No, no, I wasn't there on the stage.
Johan: No– are you in–?
Jochem: No, no, but he told me later that he got really red in the face.
Johan: That’s really funny, right?
Remy: This was at old Apple Campus, right? At 1 Infinite Road?
Johan: The new one wasn't built yet, I guess.
Jochem: Infinite Loop.
Remy: 1 Infinite Loop?
Johan: Yeah. True.
Jochem: Yeah. It was being built when we were there. Actually, I could see it from where I was working.
Remy: What was your biggest challenge in creating this demo for the Apple guys?
Jochem: Just to get it done. Just to get it done in time.
Remy: Because your ambitions were big then? What kind of features did you really want to build?
Jochem: It's simple. If you have an iOS and you want a native software that communicates directly to iOS without any in-betweens.
Remy: Yeah. And back then, there wasn't many documentation, no SDKs?
Jochem: There wasn't anything? No. No. Well, there was obviously the Xcode.
Jochem: Everything that you needed to kind of develop– so we had our own fund, our own metrics, graphics. We had [00:20:00] our own format and we did put in there also ways to make money. So it's like the whole– it was very, very complete. A compression, we had our own compression method to compress photos and videos. And so everything could be better. And we took it and we try to make it better.
Remy: Six months isn't a long time then?
Jochem: So what happened is because we wanted to show them the demo, it's a unique opportunity, we forgot about the road map and started doing this. And now, we needed to go back and kind of fix things, and then it took us a long time. It took us– actually, at some point, we were at Apple and somebody said to us, "Why did it take you, guys, so long? We almost gave up on you." So I think already then, they had an idea of, "Wait a minute, these guys maybe, at some point, we need them."
Remy: How were you funded in this phase?
Jochem: Well, I first bootstrapped it, first year, and then actually, a friend of mine. So it's a very typical story. Did seed fund it with 100,000 or 110,000 or so.
Jochem: Then we reached out to some angel investors, and they started funding it. I did spend a lot of time trying to raise money from the Johans of this world.
Johan: I think [unintelligible 00:21:12].
Jochem: No, that's what you keep saying. No, and it was very hard. I couldn't convince anybody. I’m sure I made many, many mistakes. When you move to America, you need to fill out papers. And one of the questions is, how many times did you visit the US in the last so many years? I got to 25.
Jochem: So I’ve been in the US 25 times before moving there.
Jochem: It's unbelievable.
Remy: What is the tip that you can give to founders raising funding? Because you mentioned you spend a lot of time on this. It was really hard to raise funding.
Remy: What are the suggestions that you can give them?
Jochem: Ask a lot of questions, I think. I think what I’ve done is just sit there and start telling my story, and then talk for like 30 minutes, [00:22:00] and not even kind of– and acknowledging the person in the room.
Jochem: I think that's been my mistake, mostly.
Jochem: So I would say instead of shooting your slides and getting all nervous about whether you can tell everything that you have to say, just go sit there, maybe ask, "What is important for you, guys?"
Remy: I do see that a lot, especially founders just having the pitch without asking at the beginning of the meeting, "Who are you? [Where are 00:22:24] your funds? What is your strategy? How far are you in the fund? Wat are you looking for?"
Remy: And especially also, at the end of the meeting, right?
Remy: How do you see this plan matching your–? What's your timeline? What's your decision process? How do you see–? Et cetera, right?
Remy: I see a lot of pitches telling without asking. So really–
Jochem: And I’ve been– only lately, I am kind of understanding how wrong that is.
Jochem: And I think also just mentioned everything that's not so great. It's almost like saying, "Look guys, there are a few things that are maybe not ready. Do you think that's a problem?"
Jochem: Just ask it. And if it's a problem, [00:23:00] maybe, how can we deal with it? Or–
Jochem: –can we walk around it? Or–
Remy: Yeah. I fully agree, especially, we spend to speak a lot of times talking with founders. And openness and transparency in things, which are not right, I think is key for a healthy relationship.
Jochem: Well, I’ve been making all those mistakes. [laughs]
Remy: But next venture, you won't, right?
Johan: The third and also this–
Jochem: Yeah, yeah, I’ll make new mistakes.
Remy: The exit phase.
Johan: Jochem, you sold the company within two years. That's rather quick. Why did you do that?
Jochem: Oh, why we did it? Well, I felt like we were dancing with elephants. Right? It was very likely that this kind of situation was going to be dealt with by either Google or Apple. And we did look at trying to be [00:24:00] independent and have an independent future. We had tens of thousands of publishers on the waitlist to join the platform. We launched with The Next Web in New York. We had a few big American publishers, German publishers, that we launched with. So it was all looking very good, yet if Apple comes along– and you're already like little Apple, so everybody was like Apple fanboy. And if apple then comes along and you get an opportunity to put your ideas on a billion devices around the world, it's something that we could never do on our own to have this much impact on the publishing world.
Remy: How did they approach you, that they were maybe interested in acquiring you?
Jochem: Well, I think it happened first at WWDC where we got a foot between the door. Then we had actually quite a number of this type of meetings. Sometimes, we would call them saying, "We're around. Shall we come by and talk?" Often, we didn't even [00:25:00] have plans to come to the states.
Remy: Of course.
Jochem: I would just say like we're in the neighborhood, and they go, "Oh, why don't you–?"
Remy: Book a flight and go there?
Jochem: And then we book a flight and go there.
Jochem: So that definitely happened on at least two occasions but they wanted to wait for the launch. We could feel that they wanted to see the software tested in the market before building their application on top of it.
Jochem: So we launched in October 2013. And very quickly after that, some investors wanted to start investing, and– then Apple came up–
Johan: And it was very easy to probably to raise money in that time, right?
Jochem: Actually, yep.
Jochem: I think so. We weren't interested anymore at that moment but other companies also came in and started bidding.
Remy: Who made the first step? Because in those processes, especially if you work together with them on a more, I wouldn't say strategic level, but also sharing insight, et cetera, it's always very relevant who makes the first step to buy or to offer his or her company, right?
Jochem: Oh, they told us, [00:26:00] "What would you say if we would buy you, guys?"
Johan: Okay. How fast did they ask that to you?
Jochem: That's when the acquisition process started. So six months later, we were acquired.
Johan: And when did they ask that to you, if they–
Jochem: That was in November.
Johan: Okay. So weeks–
Remy: So just after you were live, right?
Jochem: Yeah. We signed in April.
Johan: Yeah. Okay, okay.
Jochem: But we had other companies that were saying the same thing to us.
Jochem: Different buyers also being interested at that time also?
Remy: Did you tell them–? Do you tell Apple, "Well–"?
Jochem: No, I didn't say. No.
Remy: No. Because– So two schools, right? Either you tell, "I’ve a number of interests. Are you also interested?" Right?
Jochem: The thing is we were just looking at our team and our investors but the best scenario would be Apple. There were other companies but we weren't sure if our team would move to the US to work for that other company.
Jochem: And we knew pretty sure that they wanted to work at Apple.
Remy: You were at 15 people still?
Remy: So selling to Apple and providing your team [00:27:00] with a nice place to stay was more important for you than making the exit and making the money?
Jochem: Yeah. Let's put it this way. Obviously, we didn't really want to accept at that point because we just launched a platform that was really working well and we had a business. It wasn't proven yet but I think we could have made some money there. And then Apple came along together with other companies. And I think Apple was the only company that we wanted to sell to because it was only iOS that we built.
Jochem: One other company, by the way—I can say this now because I don't have a DNA anymore—was Flipboard.
Remy: Okay. Oh, yeah.
Remy: So Apple makes a call to you, guys. Was it by phone? Or did they you in person?
Jochem: No, we were there.
Remy: You were there. Did they ask you the question?
Remy: So what do you do? Do you give a poker face? Do you high-five your co-founder?
Jochem: We said, "Yes, we would be interested–
Jochem: –to look at that." And then they said, "Well, let's talk about it again after the holidays because it was like Christmas, [00:28:00] and so on, and so on.
Jochem: And then I said, "Well, we happen to be around some mid-December. So why don't we just have a meeting and see if we can make the next step?" But we didn't plan that trip so we just made it up. So we went there but it was I think a very good thing but also from our point of view, we were signing on new customers every day.
Jochem: So we didn't really want to say no to those people–
Jochem: –like a few weeks later.
Jochem: And that's I think why that was a good idea.
Remy: So you walk out of the Apple Campus with–
Remy: –a semi offer from Apple in your back pocket. And then what do you do? You look at each other, you say, "Holy crap!"
Johan: Yeah, what do you do that night also? How do you–?
Jochem: I don't remember what we did. I think there were a lot of those moments but I don't remember exactly what we did when we– but we were pretty excited.
Remy: Yeah, probably. And how did you deal at that time with the other interested buyers? Did you keep them away? Did you keep them informed? How did you loop them in that process? Because it's always [00:29:00] very tricky, and of course, you had a preferred partner, right? Or you just ignored them?
Jochem: I think it just went away–
Jochem: to be honest.
Remy: You just fully focused on Apple also on your mind [crosstalk 00:29:11]?
Jochem: Yeah, it went away. There wasn't any money on it. There wasn't any bidding going on or there weren't any term sheets.
Jochem: It's just the guys we– you know, "You have interesting technology. Do you want to give a demo? We're thinking about acquiring you. Are you interested?
Jochem: Yeah, we can always talk.
Jochem: So that was the reaction.
Johan: What were the fundamental assets that Apple was buying? Was it the people? Was it the staff? Was it the clients? Was it the access to this technology, or–?
Johan: What were they buying?
Jochem: I think a little bit of both, of all. And at that point, we didn't really know but when I worked at Apple, almost every week, somebody asked, "Hey, we're looking for a company that can handle video," or "that can handle newsletters," or "that maybe [00:30:00] we can acquire." At some point, Apple started buying companies. So we were like at the early stage before they didn't buy anything.
Johan: No, no.
Remy: So you were one of the first they bought, right?
Jochem: Yeah, at a very early stage but that kind of– I think it became a new policy. And I also know why because a new guy called Adrian Perica, he came from– he's a very interesting person, very nice person but he's very close to Tim Cook. And he started kind of acquiring companies or just giving them mandate to acquire companies. Long story short, technology should work; a team that's willing to come and kind of start the team to build this new application. They did ask us for the client lists with all the email addresses, and the names, and the phone numbers. So I’m sure they've made good use of that when they launched Apple News. So I think a little bit of all the things.
Remy: And during that process with Apple when you were having talks with them and wanted to close the deal with them, did you get any help from your current investors, or lawyers, or corporate bankers, or [00:31:00] whatever?
Jochem: No. No.
Remy: Okay. And if I may ask what's the reason for not, because I mean you didn't have a lot of experience in selling the company?
Jochem: I don't like lawyers. I don't like bankers. When I was traveling, I’ve been negotiating on these third-world markets when I was buying stuff. And I got very good at it. I’m joking, that's a whole different– but maybe, it's not even a joke. There's the same logic.
Jochem: Some point, somebody wants to buy and some other person wants to sell.
Jochem: And then there's probably some negotiation going on.
Remy: Indeed, yeah. That's true but we had another guest on this podcast who also sold this company to a very big player. And he said, "If you want to have a deal with these guys, you have these contracts, which are a few hundred pages long with all these terms. You have no idea what it all means and says, [00:32:00] and if it's a good deal or not. So how did you handle that part?"
Jochem: That was the easy part because that's where the lawyers came in.
Jochem: But that's after we settled on a deal. So a deal is between two people, or maybe a few people, but– so first, there's a price that they're willing to pay.
Remy: Of course.
Jochem: Were negotiating about the price.
Jochem: And then I negotiated the terms for my team.
Jochem: So these two steps, I took but I separated the steps–
Jochem: –because I first wanted the price.
Jochem: And they thought they were done but then, I’m like, "How about the team?"
Jochem: "Oh, what do you mean?" Do you have to pay them yourself?" "I’m like, "No, I’m not paying them. I think there should be 20% of the total for the team." So I got another 20%.
Remy: Mm-hmm. Okay, cool.
Jochem: I don't know if any of my team is listening but I hope we've done well for them
Johan: Yeah. And many of them stayed on–
Johan: –at Apple, right?
Johan: Even got married.
Jochem: It's one of the funniest things because we didn't realize this, but then we got the deal signed that we've been quite open to [00:33:00] the team about everything.
Jochem: Like, "Hey, Apple is coming and they want to acquire us. And now, we're negotiating, and now, they were going to sign the deal.
Jochem: And so they want you to come as well.” And a lot of people were very excited. There were two developers that had young children or some were just delivering, I think. I think they– I don't know exactly but I think it's nice to have your neighbors and your family around when you have young children. So I think that was their reason for not coming–
Jochem: –but those are the only people that didn't come.
Jochem: –but the others, they all had girlfriends.
Jochem: But you cannot take a girlfriend to America. If you want to live there, you need to be married. So they all got married. I think we had 11 marriages, 11. [laughter] And this felt like my biggest responsibility. I’m like, "Okay, but this is very serious. They were like 22, 23, 24-year-olds.
Jochem: I got married when I was 33. Yesterday, it was my 21st wedding anniversary.
Remy: So they all married in Vegas, or a–?
Jochem: No, in some silly town hall in the Netherlands–
Jochem: –on a Monday because it was cheaper.
Remy: Back to one thing, as you mentioned, it's a deal between the two of you, between you and Apple. Of course, you had a co-founder.
Remy: And also, you had some angels involved, right?
Remy: Also they want, of course, their money back.
Remy: How did you inform them and how did you guide them through the deal, especially you're both– your co-founder, but especially also your current investors?
Jochem: Well, I think every time we had some news, we would share it. They stayed away from the negotiations.
Jochem: We're really good.
Johan: Yeah. And they gave you– because it's always an issue that you talk on behalf of them, right?
Johan: But you also will have to move there, so you're not fully aligned always with the shareholders. Did you have some kind of mandate, or that you give some guidance, or you had to– do you need approval on that end? How did they–?
Jochem: No. None of that. I must say our investors were amazing.
Johan: Oh, that's really good. It's a big trust they put also in you, right?
Jochem: But it's also a very nice outcome. I can't say that. But let's say that if you start investing in startups, why do you [00:35:00] do it? What do you want out of it? It's like a multiplier, maybe, but it's also– you want to be able to tell great stories.
Johan: Of course.
Johan: And this is massive, right? But you know that afterwards, right? And then you know it's good.
Jochem: Afterwards, yes.
Remy: But during the process and during– I mean if you have a track record of selling a lot of companies, and that's why I think a lot of founders hire investment bankers to do that, right?
Remy: Then you have a track record where you can rely on, but in this case, you didn't have that track record at that time.
Remy: So I think it's great that they put a lot of faith in you at that time, right?
Remy: Yeah. So you stayed on for about a year at Apple before venturing on?
Remy: What was it like? Because you had worked at corporate before. You didn't really like it. Was this different?
Remy: No. [laughter]
Jochem: No. No. I thought it would be different. One of the greatest disappointments was, and that's also an advice for other people, before you know it, you're just an employee. And you got a manager that tries to manage you, and then you can do this, but you can't do that. [00:36:00] And there are these yearly conversations or monthly when they talk about–
Remy: Yeah, performance reviews.
Jochem: —your functioning. And so that was really a disappointment. And I think I made the mistake I should have sat, "Look, I’m coming but I want to have a direct access to one or two persons."
Remy: Yeah, indeed, and not following the line. Not fun to be in alignment.
Jochem: I’m not here for a career or something.
Jochem: But a lot of people are, of course.
Jochem: Even at Apple.
Remy: Now, I’ve heard that Apple is also a very formal company. So it all looks hip and happening from the outside of this.
Jochem: I think that depends a little bit on which part of Apple you work at. I don't think it was hip. But again, look, we were at software and services.
Jochem: And that's definitely, I would say, secondary. It's primary, it's a hardware company. So what Apple does with its services is it needs to be everywhere but it doesn't need to be great.
Jochem: But it's like a chess game that it's playing with Amazon, and Facebook, [00:37:00] and Google. It just needs to have a position on every little piece of the board so that when this becomes very competitive, they can hit the ground running but if they now start to become great in one place, it will draw the competition out. So that means that they start competing on services somewhere but it's not really crucial.
Jochem: So that's why they don't do it. So that's why most of their services are sub-par.
Remy: Ah, so–
Jochem: Even Apple News.
Jochem: Yeah. Right?
Remy: Yeah, because they bought your company at that time to transfer to Apple News, right? When did you know that was the direction they were heading? When did you learn about that? Was it during or before the transaction or was it after your–?
Jochem: Oh, I think during the transaction.
Remy: What was your view on that at that time?
Jochem: When they started talking about an app for publishers, it wasn't a surprise. We knew that they were going to build something like that. Our vision is that [00:38:00] with our software, the playing field was leveled. So every single person could start creating magazine content with our software. And that never happened. So they embraced the traditional publishers. Apple embraced traditional publishers instead of the indie publishers, and instead of emancipating, I would say, the publishing world. But think about it. If you wanted to be a publisher in the old days, you needed paper, ink, distribution, it’s very expensive to get started.
Jochem: With digital, it's very cheap and easy to get started. And I think they missed that crucial part that we thought was very important.
Johan: Yeah. How did your team respond when you told them you were leaving.
Jochem: No, I don't think that was a surprise.
Johan: They noticed you were not that happy?
Jochem: No, actually, what happened is at first, I didn't even know if I would go to Cupertino myself. I was a little bit biased. I didn't even know if my family wanted to join because I got two children [00:39:00] and a wife. And then my wife said, "Of course, we're going." So that was a big step."
Jochem: And Apple said, "There's no way that we're going to buy a company without you." So that was also for me a very important thing to know, which is also why I was so disappointed that it's like a honeymoon, and when the honeymoon is over– I don't know, I don't want to go into comparisons like Johan does [laughter] but you know what I’m saying.
Remy: When did you find out that they wanted you and not only the company?
Jochem: Somewhere just before the signing.
Remy: Of the term sheet or the contract?
Jochem: Of the contract.
Remy: Of the contract. So you already signed the term sheet. So–
Jochem: I think there was just one thing. I don't remember the term sheet. As soon as we settled on the price–
Jochem: –we got the contract.
Remy: Because normally, you would sign an LOI or term sheet, right? And then you have to–
Jochem: Yeah, maybe we signed an LOI, I don't remember.
Johan: So what are some of the lessons about selling a company to this tech giant like Apple? Do you have any advice for other founders who are really excited about the possibility to making an exit to, [00:40:00] well, recently, a Dutch company exit to Twitter, for example?
Jochem: Mm-hmm. Indeed.
Jochem: I think every situation is probably very different. I think they're big and you are small. So you got to make them understand why they need you by making personal connections with a few people that are key players.
Johan: Is it also–? Please tell me if I’m wrong but it's something I noticed in your story that it's a bit of a disappointment that you're very hot at the moment, they want to acquire you and your value gets diluted pretty quickly within the company.
Jochem: Mm-hmm. Do you mean personal or do you mean the company value? What do you mean?
Johan: The company but also personal–
Jochem: I think that's true, yeah. And you know, they bought you as a company so it's okay–
Jochem: –to a certain extent. And so we were there. There was like an empty building that they dedicated to the Apple News team and we were the first sitting there really on desks, and with nobody there. And then slowly, people keep [00:41:00] coming in until they were like 100. So yeah, that's almost literally, you could see it dilute over time.
Remy: How did it feel? How did it make you feel at that time?
Jochem: It's fine. I think for me, personally, it's hard for me to function in a big company like that. Again, I thought that would be better but I think I can maybe avoid that now, but that's how it went.
Jochem: It also took a little bit of time to understand that their plans were to just build an aggregator app. Now the good thing is that we built Apple News Format, which is just basically our legacy. And so that makes. If publishers use that, the reading experience, the whole experience is so much better but also Apple allows people still to publish RSS feeds into Apple News. And they've got a subscription model now in there. Even though all content on the internet is more or less free, they still [00:42:00] ask you to pay for 250 titles for them. And I understand that because what they want is to be king of content at some point where you walk into an Apple store to buy your iPhone. And with it– because that's the best retail model in the world. So you buy an iPhone for $600. And then for $200 more, you get a TV subscription. Even phone providers are in there. Apple News is in there. Apple Music is in there.
Johan: Sort of Amazon Prime for Apple?
Jochem: Yeah. So they're upselling. And probably at some point, you just send your old iPhone to the Apple store every year and then you get a new one.
Johan: Indeed, subscription-based.
Jochem: Including all these subscriptions.
Jochem: So they needed to have a subscription in there–
Jochem: –even though I still feel like it doesn't make a lot of sense.
Remy: Now, after a successful exit, people tend to reward themselves and their loved ones with a gift. What do you buy?
Jochem: Ah, it's funny. Yeah. [00:43:00] I went into a wine bar and I bought the most expensive wine on the menu. And it was 14 euros.
Jochem: I felt like super-rich. It was a Barolo.
Remy: Oh, very good wine.
Jochem: Well, the funny thing is the guy from the wine bar said to me, "Here's your Barola." And I’m like, "This is what it means to be rich. You end up with all this [expletive]." [laughter] They just want you to buy a very expensive wine but they don't know the wine themselves. It's like when you walk into a very fancy hotel. It can only be a disappointment because when the shower doesn't work, you get very upset but if you walk into a [expletive] hotel, the shower doesn't work-
Johan: That's normal.
Jochem: –it's normal. So I still go for the [expletive] hotels.
Jochem: To your question, I bought a Jeep Wagoneer from 1985 for 10,000 euros. [00:44:00] Yeah.
Remy: That was the gift that you gave yourself?
Johan: Very cool car.
Remy: Yeah. Yeah.
Jochem: That was my sort of, "I this car."
Remy: Yeah but it's not– I think it's not in failure, right? I think it's about getting yourself something–
Johan: But everything–
Jochem: It's a [expletive] car.
Jochem: It breaks down every five days.
Remy: But you still think about the accident, right?
Remy: Last question on this. What is the biggest suggestion that you can give to founders who are, these days, struggling to be successful and at one time, they want to sell their company, right? What's the biggest advice that you have for them?
Jochem: Well, if you struggle to be successful and you want to sell, there's still a lot of work to do. So I would say do the work first. Do the work first.
Jochem: Make sure your product is outstanding. I think that's first.
Remy: Yeah. And then once you are successful and be attractive to buyers, what would be then your biggest advice for founders?
Jochem: Call me.
Remy: Call you?
Jochem: Call me. No, it's funny. You mentioned it, I just, over the last half-year, helped the company sell to an American company. And I [00:45:00] enjoyed it a lot.
Jochem: It was very successful so I’m still open to that.
Jochem: Other than that, I would say just get me to people, be open, transparent. Don't start playing games or anything.
Remy: No. Just make connections also, right? As you mentioned.
Jochem: And make connections. And as I said, when they said, "We want to acquire you," we didn't try to show poker face.
Remy: No, no. And you did a full [unintelligible 00:45:22.5], as you mentioned yourself, right?
Remy: So it was a very natural organic process.
Jochem: And oh, another thing is, on the first bit, I was sitting in the Efteling Hotel. At three o'clock in the morning, I had a phone call. I sleep naked. So I was sitting on the bed naked. My kids were somewhere there and my wife's there. On the other end of the phone, we heard our first bid. But I had written on a piece of paper three words.
Jochem: "It's too low."
Remy: It's low?
Jochem: So I just took the piece of paper and listened to the bid. I thought, "Oh, my god." And I said, "It's too low." [laughter] [00:46:00] And then, "Sorry, you can do better."
Remy: And what happened? How did the other party [crosstalk 00:46:06]?
Jochem: "What do you mean too low? What do you mean, it's just low?" "Like it's too low."
Jochem: No, we were expecting way more. But it's a negotiation so you know that the very first thing that you're saying is giving everything away.
Jochem: So you got to make sure that this is what you're saying.
Jochem: That's my opinion and because in the end, they won't pay more than they're willing to pay.
Remy: Yeah. Yeah.
Jochem: Somewhere, there will be a line in the sand but it's never the first bid.
Remy: The valuation. And now it's the moment, Jochem, that I think it's the decisive moment for you that we asked Tessa Wanders, our investment manager of Peak, one of the members of my team, to see whether the amount that Apple has paid for Prss at that time was the right amount. So I’m giving the floor to Tessa who can tell and [00:47:00] share her analysis.
Tessa: In the spring of 2014, Apple acquired Prss for an undisclosed amount. The two founders, Jochem Wijnands and Michel Elings, and the rest of the team relocated to California. In total, about 15 Prss people joined Apple's team to support them in building a better native publishing tool. The iPad was released in 2010 and was steadily gaining popularity. The genesis of Prss came from understanding the power of their proprietary software that the founders used to self-publish their online magazines, often viewed on iPads.
In 2012, they raised a small angel round to fuel this idea of rolling their content library over in a new entity, focused purely on the software side of things. Enter Prss. Fast forward, a meager one and a half years, it's summer 2014, and the media picks up on apple's acquisition of a small Dutch startup, from Bussum, of all places. Little is known about Prss's traction at the time of acquisition. We know there were about 10,000 [00:48:00] publishers signed up for the beta lunch but that's about it. So to establish a guesstimate on the Prss's exit valuation, we had to do some digging. First of all, Michel Elings was included in the business magazine, QUOTE's Self-Made List in 2018. His net worth was estimated to be about 8 million euros. Let's just assume he didn't make any outlier investments since he left Apple in 2016.
Secondly, as the majority of Prss's employees relocated to California, apparently, nine even got married, we're thinking of this as a kind of acqui-hire. So to incentivize the team members to stay, the acquisition was probably about 50 percent cash and 50 percent stock options. Since most people, except you, Jochem, stayed at Apple for two-plus years, we're assuming there was an earn-out period of about two years. We know there was an angel investment of a few hundred thousand euros. So let's just say that those angels bought about 10 percent of the company at the time. Then those 15 employees [00:49:00] were incentivized enough to join Apple as well. So there must have been an ESOP, especially since the product didn't really have a well-established business model yet, let's say that ASOP was about 15 percent.
Finally, let's also assume you and Michel were equal owners. Using all this information, we're thinking that the valuation that Apple paid for Prss was between 20 million euros and 30 million euros. This seems about right as Apple also made a lot of ballpark acquisitions afterwards in that period between 20 and 30 million dollars. There was Swell in the US for 30 million. There was LinX from Israel for 20 million and Mapsense for about 25 million. So Jochem, tell us, are we overestimating, underestimating, or are we just about right?
Jochem: Are those the three options?
Tessa: Well, can you name it?
Jochem: I love hearing this. I’ve never had this experience before. So it's very interesting. I’m not going to comment and I know this is a disappointment. [00:50:00] And I could because our NDA is no longer valid after seven years, it expires. I think there are definitely a few good things in there and there are a few things that I’ve never even heard of in there. But all in all, I think also I have to respect the privacy of our investors and our co-founder, and my team. So I’m not going to be the person who's going to break the news on this podcast.
Remy: [laughs] Well, at least, the jeep, you could buy the jeep for 10k, so–
Jochem: And all the costs.
Remy: Ladies and gentlemen, thank you so much for listening to this episode of The Big Exit Show. We hope you enjoyed today's program. If you did, please subscribe to our show at Spotify or your favorite podcast platform. And if you have any feedback, please send us a message at [email protected]. My name is Remy Gieling.
Johan: And my name is Johan van Mil.
Remy: Thanks again for listening and we hope you join us on the next episode.