🎧 Explore the Journey of Vamp on The Big Exit Show!
This time, we're featuring Olaf Molenveld, the CTO & Co-Founder of Vamp, who has over 20yrs of experience in the IT industry, and sold his scaleup to one of the world's most popular CI/CD platforms – CircleCI. In this episode, you'll learn about:
- When to pivot your initial business idea
- How serendipity works, even when exiting a company
- What to do when you found a dream partnership for your company
As always – hosted by Peak’s very own co-founder and managing partner Johan van Mil and podcast host Remy Gieling🕺🏻🕺🏼
You can find the episode on your favorite podcast platform, linked below. And, if you are really interested in listening to the big exit of specific founders – reach out to us so we can invite them for the next episode!
You can find the transcribed version of the episode below:
Olaf: I believe if you don't have that product-market fit yet, you need to stay very lean, lean, lean. You can do things with super small teams. Actually, if you build your team too big, too fast, it's overhead, it's overhead, and you're burning money, which is not the right moment.
VO: Starting a company is easy. Selling your company, that's a different story. In The Big Exit Show by Peak, we lift the curtain of secrecy around selling businesses by speaking to ambitious and successful founders, who have been on this roller coaster before. Our hosts, venture capital investor, Johan van Mil, and business journalist, Remy Gieling.
Remy: Well, Johan, a very interesting episode we have for our listeners.
Remy: A very technical founder.
Remy: Which I love, by the way.
Johan: Yeah. Yeah. And especially– which I love, because he invented the technology which was really not known in the market at that time. And I think a lot of founders know the problem that they have a very advanced technology. But it's really hard to convince, not only clients, but also [00:01:00] your staff, but also investors about, let's say, the proof of this technology.
Remy: Yeah. You know it for yourself because they came to you years and years ago. You were like, “I have no idea what they're talking about.”
Johan: I had no clue. And it happens very often with me.
Remy: We still don't have a clue now. That's not true. He sold this company to very big Silicon Valley giants. They valued it over $1.7 billion in the latest round CircleCI, also a very technical product. What do you think is most interesting for listeners in this episode?
Johan: I think that the founder in this case also knew the company that he was selling to, and he met them at a Trade Fair a few years ago. And he already knew them. And when they reached out, he already had a, let's say, direct line with a guy high within that organization. So it was, I'd say, easier on that end to do the seal, right? And I think that if you are a founder, and they want to sell your company, it's always hard to find the right contact person, but also the right buyer. And I think this one proves it again that as a founder, you should always stay in close contact with potential [00:02:00] buyers to see what the opportunity is there.
Remy: Well and your team made a very interesting valuation of the deal.
Remy: So it's an exciting episode. Indeed, it is– let's take a listen.
Johan: So Olaf, welcome to the show.
Olaf: Thank you.
Johan: What's the heroic story behind Vamp?
Olaf: Okay, the heroic story is that we started seven years ago, what a great idea, build an amazing team, and then got acquired by one of the Silicon Valley unicorns. What a story.
Johan: And now, I mean we met I think five or six years ago.
Johan: What is the real story behind Vamp?
Olaf: The real story is somewhat alike, but the struggle was real. And the struggle is always real. I think one of the ideas that we had and have, we're still very cutting edge. And so it was like an uphill battle to kind of sell the idea to companies that actually [00:03:00] want to pay for it, besides the companies that have an innovation department and said, “Okay, let's spend some money and see how it turns out.” Really getting the traction in the organizations that have a certain skill, that's tricky because it's something new. And somebody has to start with it. So I think there was the real struggle that we had.
Olaf: Of course, you always have the same things with runway, burn rate, people in your team that don't fit, people leaving, the war for Talons in Amsterdam. But I don't think that's really different from other startups.
Johan: No, because I recall indeed from the first meeting, which what we had, is indeed I think six years ago, right? I recall you sitting in an office, need a new mark —
Johan: –about containers, sniffer technology, et cetera. Perhaps, it's good for the listeners to explain a little bit what Vamp [00:04:00] did.
Johan: Still doing, sorry.
Olaf: Yeah. So we basically automate releases. And it was very much built around the idea of container technology, which was started with Docker. Where's Docker now? It's still alive. but I think it went through a few interesting stages. But Docker came along with container technology, and I was compared with– it's a zip file for services or SaaS applications. And it's very easy to spin them up and scale them. And then the next thing is that inside these containers are typically microservices, which was also the thing, that happened seven, eight years ago.
And what's interesting is that this allows you to scale very dynamically, but also to iterate very quickly. And if you can iterate very quickly, it becomes a challenge when to scale based on what. If we release a new version, how do you make sure that this new version of this microservice [00:05:00] doesn't affect another microservice? And basically, Vamp is about managing this entire process, which we call continuous delivery.
Johan: Yeah. Yeah, so if I look at the website, it says Vamp is a Cloud-Native AIOps platform that provides self-service release and cost optimization capabilities. But if you're at a party with friends and family, who asked what do you do, how would you explain it in layman terms?
Olaf: Yeah, that's an interesting thing because I did an interview once. I think it was for a television show or an internet television show. And I think there were two rows of duct tape on the table or two cups. And I basically showed it like, “Okay, this is version one or A. This is version B of your service. And then first, all traffic goes here. And then you want 10% of your visitors go here. Maybe German visitors because they have uncertain behavior. And then you can compare, if the performance is right. And then you shift traffic basically over little by little."
Johan: This is also typically the– one thing that I remember from our conversation is indeed that you could say 10% of the traffic of, for example, the mobile users get this instance to be served. The other 90% consider that. And if it works, then you can completely shift to 90%. So it's funny that you're still–
Olaf: And this is also the challenging part because if you're a front-end developer, for example, you're like, “What? This is something I can do with A, B testing tools like experimentation.” But this was all on the server side, in the containers and the microservices' backend. And typically, eight years ago and maybe even still, back-end engineers are not really customer-facing in their mindset. So they're like, “What experiment? I just add some code or fix it or improve it. And then I push it through the pipeline. And then it's thrown over the wall, but do I care?” So that's like you need to explain why it's important for teams to work together back end, middleware, [00:07:00] front end, and to compare and to understand if the performance is right.
Johan: And how did you come up with this idea to start Vamp?
Olaf: Just like all great ideas, experience, so you basically experience it yourself. And I think one of the things that a lot of entrepreneurs have, and at least I have, as an engineer and a nerd, I see a technology, and I see another technology, I think like, “If you can combine these two things, then we can actually create something that's super useful.”
And I still remember Tim, my co-founder, at that time. He started playing around with these Docker containers at zero-dot-something version. And then he showed me Marathon and Mesos, which was a scaling platform for these containers. And I was like, “Okay, so you can spin them up very quickly. And can you also do something with the traffic?” And he was like, “Why are you asking.” [laughter] Like, "Yeah, because if I can have [00:08:00] version one and version two, and maybe I want to compare things. And he's like, “Yeah, but this is a simple load balancer. I just changed the configuration on the fly.” And I'm like, “Okay, but that's interesting.” And he's like, “Why?” He’s like, “It's e-commerce? Everybody wants this, like different front-ends for different surface versions. You can think of thousands of solutions or interesting scenarios." So this is how it started. It was basically new technology coming around, new challenges popping up with the microservices. And then thinking like, “Okay.”
Johan: So you built an MVP pretty quickly I guess.
Johan: But how did you explain it to potential customers?
Olaf: Yeah, we started as Magnetic, which was an e-commerce platform. There was the initial idea, and the Vamp product was the engine behind it. So the Vamp product allows you to dynamically scale when the traffic increased and started in A-B testing different things. But the idea was that we want to compete with ATG [00:09:00] or Hybris or Intershop, those kinds of e-commerce platforms. And the interesting thing is that Vamp at some point became interesting for exactly those e-commerce platforms because they said, “Yeah, we need to do something with microservices and containers.” So we basically invented the headless service-based e-commerce platform. There was the idea. Of course, we couldn't pull it off with three people. [laughs]
Remy: At what point did you decide, “Well, let's ditch the e-commerce platform, and let's focus fully on the backend technology”?
Olaf: Yeah, we then startup boot camp. So we startup boot camp accelerator. And we did a lot of pitches with banks, and financials, and all kinds of organizations. And they were not really interested in the e-commerce platform, but they were super interested in the Vamp engine. They were like, “Okay, this thing, can we also use it for our Oracle databases or a Java application?” And [00:10:00] we're like, “If you containerize it, that might work.” So then we did the pivot thing. [laughter] The pivot thing. Yeah, yeah, hey.
Remy: Was it a hard decision?
Olaf: No, it made sense for me because it's like you focus on the real problem at some point.
Johan: So your first investor, if I understand correctly, was to start a bootcamp, right? An accelerator based in–?
Olaf: No, we had a seed investor, which is Hermen Heinen and Henley from [Minomine 00:10:30] and Enrise.
Olaf: They started with seed.
Olaf: Or basically they said like, “You guys are smart people. And it's a good idea if you can pull it off. I think it's an interesting thing." And then started– bootcamp came along. And we became part of the accelerator, yeah.
Johan: Okay. And then you fully switched to Vamp, made, let's say, the container product. Your core products, I think, also changed, at that moment, your name, if I have to–
Olaf: Yeah, Magnetic basically became Vamp because we needed to explain for at least a [00:11:00] year, what is Vamp, what is magnetic.
Johan: I can't imagine, right? I personally think it's always really confusing if you have, let's say, a company and a product name. I think–
Johan: –big advice to founders is choose one right, and then perhaps choose rebranding. But if you have two names, then I think it's really not helping your story.
Olaf: In the end, we ditched the Magnetic thing, yeah.
Johan: So from the switch on, how did you get clients? Because you sell very technical products on a user level, whereby there's all kinds of stakeholders also involved in the company. How did you sell it? How did you get–?
Olaf: Tons of meetups. So we basically spoke at tons of meetups. I still remember, they were actually at the same meetup with Sid from GitLab, where he was showing off his first iteration of GitLab. And we were showing our technology. So that's an entry, of course. Just do the dirty work.
Olaf: Standing on beer crates and then with five people sometimes. [00:12:00] And also just networking. I mean we had good networks, but it's like reaching out. Don’t be afraid. Just kick in the door. And I think, yeah, found our sales.
Olaf: You need to kind of explain.
Johan: What was your first major client that you were really proud of?
Olaf: I think we started doing things for Rainbow Bank and ING and the Spanish Bank. It’s Santander or something else, which was really cool. I mean they were doing very big financial stuff. And so that was cool like, “Oh, we're actually kind of sitting here and–”
Johan: And were they open to work with such a small startup at the time?
Olaf: Yeah, but the interesting thing with banks is the R&D kind of innovation department. And they have their own budgets, so they start doing these things with startups to investigate if it's interesting technology. Interesting enough, at some point, [00:13:00] they say like, “Okay, project's successful. We continue with something else." And we were like, “Okay, when is this productionized then?” They’re like, “I don't know. That's not our department.” That was an interesting lesson.
Johan: What is the lesson on the innovation department?
Olaf: Because I don't work with them because they– oh, okay, you get– interesting. It's good money, but the focus is in the wrong area. You're kind of solving problems for the wrong people.
Johan: Yeah. You see often that they have a budget, right?
Johan: It's always, let's say, time and project constraint. So it's not a guarantee that you will go to– lead to production.
Olaf: Not at all.
Olaf: No, no. It's their job to investigate new technologies and see if it might fit. Write a report, and then —
Johan: Hey, when did you launch a product-led growth model or you made a switch to that, at a certain moment, I recall?
Olaf: Product-led growth model.
Johan: Indeed. So let a user test the product and roll it out within the organization.
Olaf: Oh, yeah. We started as an open source solution. That was the original idea.
Remy: Mm-hmm. A bit elastic.
Olaf: Yeah. Totally open-source. But the thing with open-source is that it's for free, and you need to get traction in a certain level of organizations or enterprises that are depending on your technology so they can start investing resources and money on it. And a lot of it was, "We're using it for free and it's not working, can you fix it?" And we're like, “Yeah, but it's open source. You can fix it yourself.” “No, no, no, you need to fix it.” And we're like, “Oh, okay, maybe we can sell you an SLA or something support.” “No, no, no, we don't have budget.” "Okay." So that was really tricky. So at some point, I'm quite opinionated on open source because of this experience. I think it has some great benefits. But if you're starting up something, it's like giving away drugs for free and hoping that people get addicted, but yeah, it's really tricky. [00:15:00] And to be honest, if people are wanting to pay money for something, it's also a proof that you're solving a real problem.
Olaf: You're fooling yourself a little bit. Like, “Everybody's using this.” "Yeah, because it's for free." You know?
Remy: And even the people who came for you to get technical support, they didn't want to pay at that time?
Olaf: No, so we switched away. And we went to some hybrid mode where you have open core kind of thing, where you say, “This is closed source core.” And then we have things around it or the other way around open-source core, and paid for features. And then at some point, I think that was also what's happening with elastic. People just– Amazon just copy the open-source thing and made it into a SaaS service and started asking money for it. So at some point, we made the call like, “Okay, we're going to go fully SaaS and kind of end-of-life the [00:16:00] service– server model.
Remy: What was the idea to make it open source? How did you think you–?
Olaf: To build a community, to build traction.
Remy: And what kind of revenue model were you thinking of at that time?
Olaf: Nothing. No, the idea was at some point, when there was enough traction, you could start thinking about enterprise features that you could–
Olaf: –bowl on top and ask money for. But first, the idea was to get traction in there.
Johan: What was the first notice that you were getting traction in the company? When was the first moment that you thought, “I have something here. It's really kicking off Vamp?”
Olaf: I think there was a lot of positive feedback on– first, it was like, “I'm trying to grasp what you guys are doing.” And then at some point, they were like, “Ah, this is actually really interesting.” So there was this positive feedback where people started to grasp what we were doing and what the idea was, the problem that we're solving, that from day one, I think it was really resonating with engineers. So yeah, for me, that was kind of the proof. And we started seeing downloads, and people changing code and doing things, not at the level that we would like to see because this is open source thing. But I mean I still remember, there was a picture at some point on Twitter from some Japanese people working as a Vamp in their– on their screens. And there was a community happening there, like a local Japanese community working with this, which was super cool.
Remy: You have some company names on your website as well, vamp.io, and I see Berkshire Hathaway.
Remy: The company founded by Warren Buffett and Charlie Munger, of course. What's the story behind that?
Olaf: Yeah, there's a furniture shop mart which is called the Nebraska Furniture Mart, NFM.
Remy: There's a video on YouTube where you can see Warren Buffett himself walking around this.
Olaf: Yeah, and they worked together for quite a long while. And they were using Vamp to power their e-commerce platform.
Remy: That's so interesting. Because if you look at the video, it's from a few years back. It really looks like a very old-fashioned–
Olaf: Yeah, yeah, yeah. They have like bricks-and-mortar–
Remy: Yeah, if you walk into the 1970s.
Olaf: Yeah. At some point, we couldn't even reach their website because we came from European IPs, and they were filtering for US. But yeah, they were using it to do their releases for their e-commerce platform. And I think at some point, they switched over to Kubernetes because there was also a new technology happening. Yeah, every few years, new things pop up.
VO: The growth phase.
Johan: And what kept you especially from the moment that you gain traction? You noticed that [00:19:00] in the Japanese users, there was a using community there.
Johan: You got some clients. You got some good feedback, et cetera. What kept you awake during, especially, that phase? I don't know when it started because you started the company seven years ago.
Johan: And this was roughly– when was it in time?
Olaf: I think five years or something.
Olaf: Two years in, something.
Johan: Yeah. I think the first two years, you also, let's say, straightened your story, right? Sharpened your story, especially to the– I recall. And then the growth phase came. What was your biggest struggle, especially in that phase, as an entrepreneur?
Olaf: Finding and keeping good people.
Johan: Already five years ago also?
Olaf: Yeah, yeah. Especially when you're small, it's very important to get the right mix of skills in your team. So that was a challenging thing because if you're small and you're in this phase, you put a lot of stress and demand on people. I mean as a founder, that's fine what you're getting into. But as a regular employee, the stress. It's not a negative [00:20:00] stress but people feel responsible. So that's important to keep people productive and happy, also to try to comfort people to paying customers like going from this, “We use it for free. We want to do a trial.”
And the third thing was to simplify because all engineers have a tendency to make something too complex, be included. So it was very open in the beginning. You could configure everything, and you could integrate with everything. And you needed consultancy to set it up for weeks. So it was way too complex. And that was really challenging because the risk that it would break or it would not work correctly was way too high, and we needed to make it more robust by cutting away features and making it simpler.
Johan: What gave you that insight? Because I see that a lot with tech founders starting their own company and making products, which are really fantastic but [00:21:00] really complex, and hard to sell but also hard to use. What gave you that, let's say, insight to make it a little bit easier to sell too?
Olaf: The nice story is that I'm a consultant myself, and I always tend to transform into the end user. So I think one of my USPs is that I can think as a user, so I was like, “This is too hard. It needs to be simpler. We need to be able to explain it in less words and less time.” On the other hand, we also had trials that basically failed because it took too long.
Johan: To implement.
Olaf: At some point, the people transferred. And yeah, with a bigger–
Johan: Took the pension.
Olaf: Not so long, it was too risky.
Olaf: I saw too much things going wrong and tricky to do this combination.
Johan: And one question to double click on the point, what you mentioned, right? [00:22:00] Because it's very, very hard to get people on board, especially in those early phases of a company which I fully can understand, right? Because then, you have the founders. And they always say, and I think it's very right, "The first founder really determines the success of the company, but especially also the culture of the company." How did you do that? What are your tips for listeners to get the right people, especially in this early phase on board?
Olaf: I don't know. I think the meetups, they really are an important part. I think it's go-to conference in a few weeks or days. What we actually did, we didn't have any tickets. Tim and I, we didn't even have the company started but we went in there with flyers. We basically like hijacked the go-to conference. And people, “Who are you, guys?” We were like, “Ah, we’re just flyering. We’re just–" And people were like, "Flyering in a tech thingy?" So yeah, it basically also getting out there and don’t be shy.
Johan: And because it's, of course, very difficult for companies to find a good technical talent, especially when you're such a hardcore IT-driven solution.
Olaf: Yeah, you need to sell it.
Johan: So how did you find the right people? Did you–? I once talked to the founder and said, “Yeah, the only way I can acquire talent is by telling them, they're going to be millionaires one day with a stock option plan.” [laughs]
Olaf: Yeah. No, no. No, we– I think most of the people that we brought in early days were basically people reaching out to us after a meetup. They were basically like, “This is super interesting. I want to work on this stuff.” We also had a very specific text-text scala akka, which is of interest to certain people because they like to work with that stack. So they reached out to us. And so again, it's selling it, pitching it, but then to the engineers.
Johan: And compensation wise, did you offer them stock options?
Olaf: Not at that time. And so there was a promise or a future option to do that, but it was way too early.
Johan: It's also hard these days, right? Those days because the version was really standardized, yeah.
Johan: And at certain point, you also raised the funding, right? You raised I think €2.5 million from Vortex and Volta, right?
Johan: Can you describe how that process went, and what you took from it?
Olaf: Yeah, of course, the entirety of an accelerator, like, started boot camp is to get a bigger funding with Vortex or Volta Ventures, that came from that process. So we're constantly pitching, pitching, pitching, pitching, getting the funding in, which is also a little bit risky because then, getting funding is almost like winning clients, which is the funding should allow you to get to clients. But yeah, we were basically pitching the product. And they understood and they–
Johan: Now, I heard this anecdote the other day. And someone said, “There's nothing fun about fundraising.” [00:25:00] [laughs]
Johan: How did you experience that?
Olaf: I like selling things from a technical perspective. So I also like to tell about the technology and what you can do with this. So I'm not a first to it. I was not nervous. Or I mean, yeah, I believe in this thing.
Remy: What was the reason that some investors–? You also talked to Johan. I don't know if you talked about investing in the company.
Olaf: Of course.
Remy: What was the reason for people to say no to the deal?
Olaf: Most of them were like, “I don't grasp this. This may be too technical or it's too early, early days. Let's see what happens.”
Johan: Yeah, indeed it was a combination of the two. It's very hard to grasp because it's indeed very technical. And I think Olaf is really good in explaining it. But if you don't have the, let's say, the tech understanding of the product, and especially you know the needs, then it's hard to step in.
Johan: And a few years later, I recall that you indeed race with Vortex and Volta. Then I think that market was also way more clear, right?
Remy: So you’re also really early in the market also.
Olaf: We [00:26:00] were very early. I mean we were pre-Kubernetes. There was no Kubernetes, which is now the big thing in this tech space. And we were kind on the start of that wave. And to be honest, I think there's three main dynamics with raising money, VC money, but maybe Johan can correct me or– I think there's geographical location because we were doing a lot top-tier Silicon Valley, also, talking. But they were like, “Yeah, you guys are in Amsterdam.”
It was like so remote. Maybe it's different now. It's different now maybe, but it's like remoteless. You cannot step into an office and smell the sweat and influence things. So that's one thing. We were kind of farther away, I think, from that section of VCs. There's like, “What's your track record? Are you ex-Google? Did you already have 10 exits,” which we didn't. And then the third is traction. It's basically, "How much paying customers do you have right now." [00:27:00] "Yeah, we don't."
Olaf: I think these are the three main parameters. And maybe there's gut feeling and some risk. But if these three are kind of lowish, then it becomes hard, at that stage, to raise money.
Johan: Yeah, and also, I'm now revising the talk that we also had. But it's also needed for VCs, is indeed a very clear, let's say, plan ahead, right? I think that's also what VCs really need. And also that there's some process being run, right?
Johan: Because you like also some companies to prepare from your side as a founder to have some VCs line up and compare it to each other. But also as a VC, we also would like to see multiple companies working on more or less the same problem because that underpins also the need for the problem.
Olaf: Yeah, some proof. Yeah.
Johan: Yeah, and it was also I think given the fact that you were really early, it might be harder already to raise money.
Johan: How did that with–? So you mentioned already with started boot camp, they brought you in contact with Volta [00:28:00] at that time, how did that process–? When did you have more multiple VCs on the table or–?
Olaf: Yeah, yeah, yeah, yeah, we're talking to– I think the list was super long.
Johan: But I mean at the same moment, right?
Olaf: Oh, okay. No, no, no. I'm trying to recall. I don't think so.
Johan: What changed after you got the VC money positively and [crosstalk 00:28:23]?
Olaf: No, no, it’s — I recall, this is very positive thing because it's like a proof that, not we only but other people also believe this might become something.
Johan: And Volta is a really known tech investor in Europe, right?
Olaf: Yeah. And yeah, it's just a burden off your shoulders. I mean there's runway, so you know you can focus on what you want to produce and deliver and sell for at least a certain amount of time.
Johan: Because how did you fund it beforehand just with your own investments?
Olaf: With the seeds funding and then started boot camp and– but yeah, we did all kinds [00:29:00] of things. We were at Info [unintelligible 00:29:02], I should say.
Johan: Yeah, indeed.
Olaf: Yeah, and I still remember what happened because we were in the offices from startup boot camp. They were in the old Volta Phone building. And I think within one week, we were all being expelled there. So we had to find other office space. And Tim was like, “No, it's not going to work.” And I just called around. And then Info [unintelligible 00:29:27], “Yeah, we have a few seats left in the attic. And you can use it for free.” He was like, “I don't believe this. But yeah, it's happening.” And so we went there. It's all kinds– you just reach out, and people are willing to help out. Nobody– in my experience, people don't want you to fail. They want to help out.
Johan: They want to help out, yeah.
Olaf: If you share.
Johan: Yeah, but I think that's also one of your qualities, right? You're a very likable, charismatic person.
Olaf: Thank you. [laughs]
Johan: No, and that helps because I think if you're, let's say, [00:30:00] a real only–
Johan: The real introvert, right, not communicating, that's really hard to– also to convince people and let them help you, right? But I think that's a big quality that you have.
Remy: Yeah, or if you maybe overselling yourself all the time.
Olaf: Yeah, yeah. And of course, there's always a little bit of overselling. But that's the confidence that you need to have to– that you feel that this might work in some way. So how did we end up with–
Johan: No, especially about the funding process. So you mentioned you had enough money, you had enough runway, there was a lot of burden from your shoulders.
Johan: And you, from that moment on, could focus on what's important. What's the biggest shift that you made especially when that money came about, especially with the company?
Olaf: Bringing more people.
Olaf: Bringing more people.
Olaf: Yeah. And also start spending a little bit more on cloud resources, being a little bit more flexible. And “Okay, we can spend a little more, compute.”
Olaf: Because we're Dutch.
Olaf: And I think Dutch are very prudent with their money, can be [00:31:00] very prudent with their money.
Johan: Can be.
Olaf: So we were very tight because we knew we need to close this funding. Otherwise–
Johan: What was the runway that you had with the funding at that moment, the 2.5 million you got from–
Olaf: It's 18, 20 months, something.
Johan: 18, 20 months.
Olaf: Yeah, because I believe if you don't have that traction, product-market fit yet, you need to stay very lean, lean, lean.
Johan: Yeah, the length and the runway.
Olaf: You can do things with super small teams. Actually, if you build your team to too big, too fast, it's overheads and it’s overheads. You're burning money which is not the right moment.
Johan: And it slows down your development of your company, right?
Olaf: Definitely, yeah.
Johan: What was the idea? So you had one and a half to two years of runway then?
Johan: Did you think you were going to raise another series after that?
Olaf: Yeah. Yeah, because the technology that we're building is international enterprise scale. It's not for small– you can use it for small [00:32:00] startups, but we were really focusing on the bigger companies. And we were competing on an international landscape. So it was very clear to me at least, from day one, that this was an either you compete internationally or you're gone.
VO: The exit.
Johan: So at a certain moment, you realized, "I want to sell the company," can you describe especially on a personal level?
Johan: Because the decision that you, as a founding team, also take– what happened there [crosstalk 00:32:38]?
Olaf: Together, of course, with the investors and my co-founders.
Johan: Yeah, and you had a CEO also at a certain moment, hired, perhaps we can take a little bit step. Yeah, Nico, you hired a CEO.
Johan: At what moment did he come on board?
Olaf: I think sometime after we raised our first funding because I started out as kind of a CEO [00:33:00] role because my co-founder, Tim, super technical, he was the CTO. Then he left to start his own company, Checkley, which is actually doing really well and doing super cool stuff.
Johan: Put him on the hit list.
Olaf: And so I transferred to CTO. And then yeah, I'm not a person that's really– the processes and financials. So Frank, from Volta was like, “Ah, we need to bring in a CEO to help you out with these things, so you can focus on the technical and product.” And Nico was I think in a meeting that we did, again, a demonstration, a demo. And he was, I think, working at Liberty Global at the time. And he totally understood the problem. He was like, “Yeah, this is super cool. I get this.” So he came. And then I think he was also in their network and–
Johan: Because at that point– and so because we also see that, that hire a CEO, [00:34:00] there's a saying with a lot of founders and especially, VCs use, if you don't hire a CEO, a CEO will grow into that function, right? That's normally what you do is select one of your teammates and let him or her grow into the job. But in this case, you hired an external CEO.
Johan: Yeah. And what was the main reason for you to do that from your end?
Olaf: Because that way, I could focus on technology and product.
Olaf: And it's technical sales, what Vamp basically needs to do and GitLab. So it's very technical sales. So you cannot [expletive] people around because they will feel it immediately. So you need to have a technical background.
Johan: You can't just hire a business developer.
Olaf: No, no. So somebody you needed to take care of the revenue streams and then all the HR staff, and then the money, and the subsidies that are out there. And Nico’s very well first in that area. So, yeah.
Johan: And in 2019, [00:35:00] you raised the funding round. In 2021, there was an announcement of the sale.
Johan: Can you describe the process how that went indeed?
Olaf: Yeah. Like I said, we did a lot of presentations, and demonstrations, and talks. And so one of the talks that we did was at Velocity, O'Reilly conference in Berlin. I think I talked for five minutes with the guy that came up to our stand. This guy was Rob Zuber, the CTO of CircleCI, which was super cool. And he was like, “I like what you guys are doing because it reminds me of a technology that I was interested in.” And this entire team, this band that then went to Slack, and they basically went off the radar. I think it was called Turbine IO or something. They did kind of like the same-ish things. So we had a nice little chat, super friendly guy. And he took the T-shirt, the Femme T-shirt home, and never hear of him again.
Two years later, I think [00:36:00] we did get at some point inbound interest from biz dev, business development, from all kinds of analytics, organizations. So there was always this talking and feeling around, this might just be an interesting match. And I'm not sure if this is the case, but my hunch was that at some point, this market became a thing. It became a market where we're first like, we're really early adapters, at some point, competing. Products start– [Helping Harness 00:36:31], for example, is a big one. And people became aware. And so we got a lot more incoming interests for, not acquisitions but more like, “Could we partner?" technological partnerships?”
Remy: So you were not being approached by corporate development but more by business development, right?
Remy: So more on the business side, okay.
Olaf: Yeah, yeah. And it started really like, “Can we do some technical integration together?” But by the questioning, you could [00:37:00] kind of feel, what is your revenue, and what kind of customer list do you have.
Olaf: You feel what's–
Johan: And when did you talk with your co-founders, with the team about the future of the company?
Olaf: So there's basically two ways. In my mind, you either grow autonomously. So that means that you need to have this certain traction and you see this product-market fit happening. And all of a sudden, it kind of explodes and you need to rocket fuel. And you can pick and choose your VCs and get the right amount of funding, which still wasn't happening because like I said, Amsterdam, small, relatively small team. And we started seeing this competing industry growing faster and faster.
So I was like, "Either we get a sizable amount of funding right now so we can grow very quickly…" But it's tricky. This window of opportunity [00:38:00] is not very big. And because of our local Amsterdam geo, it was not very evident that we could pull that off. So we talked about it but it was– I think because we're talking about a really sizable amount. Because like Harness was– all of a sudden, we're at 200, 300 people, big, and we were 15. So, yeah, how do you close that gap?
And then the other thing is to become part of a bigger ecosystem. That was also the idea from day one. We can integrate with other technologies because we're part of this CI/CD release, build, test, deploy storyline. So we might be able to integrate with a product.
Remy: Because for the people who don't know, you were acquired, of course, by CircleCI in '21, at the same time you were acquired by them, they raised 100 million at a [00:39:00] 1.7 billion valuation.
Remy: But for the non-technical people listening, what is CircleCI?
Olaf: CircleCI is basically– I think they're one of the initiators and innovators of the continuous integration space. So there's Jenkins, which is a very famous and very old integration. But if you hear developers talk about, “I broke the build. The dashboard is green or red,” that's what CircleCI does. So it automatically tests and builds your source code. And if it's green, then it pushes it through a pipeline towards some server. If it's red, it raises some kind of flag. And that's what they do.
Johan: At a certain moment, you realize, I either have to be part of some bigger company or I have to raise money?
Johan: You raised in 2019, right?
Johan: And then you had to– 18 months' runway.
Johan: So where were you in time also, in terms of runway? And what were the other options? How [00:40:00] did you take that process further?
Olaf: So we were still good, runway-wise, because we're also having some [unintelligible 00:40:05].
Johan: That subsidy for your–
Olaf: Yeah, because we're doing the AIOps thing.
Olaf: Because of a lot of machine learning in the product. So there was no stress runway wise but I had the feeling, like, if we cannot raise this amount of money with the right metrics underneath, an integration is basically the way to go. And then like I said, there was an incoming interest and then CircleCI, not Rob in this case, but his colleague from business development doing this.
Remy: So CircleCI reach out to you, the business development guy?
Remy: And that at certain moments, you felt there's interest for let's say acquiring Vamp.
Olaf: Yeah, they went really quickly.
Olaf: Basically. Yeah, so it was first like, “Can we do some integration? We have marketplace. And it's interesting what you people are doing.” He’s like, “I actually spoke to your colleague.”
Johan: The one I took the T-shirt, right?
Olaf: Yeah, he was like, “Oh, really.” So the next call was basically with the two of them. And he's like Rob’s the CTO. So I can see when the CTO jumps on the call–
Johan: It might be important.
Olaf: –there might be some interest. And so we had really nice chats. There was a lot of mutual interests. And basically, it was super relaxed and very nice to have to chat. And I think even in the third call already, there was like, “Are you guys interested in maybe getting acquired?” So they went really fast.
Johan: And how do you respond then? Yeah.
Olaf: Like I always do, I said, “Of course, within the right conditions.”
Johan: Cool, okay.
Olaf: Yeah. But of course, that's the case. But for me, it was quite obvious that if we couldn't raise that sizable amount, this was very interesting opportunity to become part of a fast-growing unicorn [00:42:00] that was actually– is in our space because we're kind of to the right, if you look to it, of what CircleCI does.
Olaf: So we kind of broadened the feature set.
Johan: Yeah. And so at that moment, he asked. And then you confirmed that we are open for that against the right terms.
Johan: How do you then bring it, take it forward also to your investors? How did you approach it from there?
Olaf: Yeah, of course, you kind of evaluate all the options. Are there other interesting parties, et cetera, and interested parties? What could be the valuation? What could be the amounts that we're talking about? How serious is this?
Johan: Who did you go to for advice on that?
Olaf: Yeah, we know the market. I mean this is our business.
Johan: But with valuation wise, did the current investors offer that?
Olaf: Yeah, the investors, they helped out. I mean Nico has quite some business [00:43:00] skills and Excel magic.
Olaf: So we could think of what would be a realistic.
Johan: And you had all the other parties which were also potential acquires. You already knew them, and they knew you, et cetera. Were you also–?
Olaf: Yeah, we reached out. When it became more serious, when you start to become exclusive, before this exclusivity, we reached out and said, “Okay, we're talking to an organization. They are really interested. We might become– kind of exclusive talks. So if you want to continue, if you're actually really interested, this might be the moment to–
Olaf: –kind of–"
Johan: Did you get response on that?
Olaf: Yeah, like, “No, it's too early” or “I need to talk to this or this person." And it's quite obvious at that time like, “Okay, this is not going to happen on that time window.”
Johan: No, that's also, I think, one of the learnings, right, for other founders, is that you should always– because you can reach out in that process. And then you have a very short timeline to talk. [00:44:00] But I think for founders, it's always key to stay in contact with potential buyers, right? So if the moment's there, that they already know you, and you can move fast, right?
Johan: That’s– yeah.
Olaf: But you need to be on the right level.
Olaf: Because that's the big problem. Because they need to internally —
Johan: Yes. Yeah.
Olaf: –negotiate and– yeah.
Johan: Who had the first offer?
Olaf: I don't know anymore. Not really. I think they came with an offer but I'm not sure.
Johan: And to reach out, did you do that all yourself or did somebody of the team do that, or your investors or somebody higher?
Olaf: No, there was me, but that was because there was this personal kind of relationship. And I was responsible for the technical partnerships. So it came typically through me, of course. I involved Nico.
Johan: Yeah, and you probably contacted the tech development also on that end so that they could circle it up in organization?
Olaf: Yeah, yeah, yeah, yeah. Quite fast, people from their side, [00:45:00] technical people. And from our side, we started doing all these assessments and–
Remy: How did you all the–? You did negations yourself?
Olaf: With the team.
Johan: Which team?
Olaf: So with the people from the VCs, with my co-founders, and–
Johan: But you were still in lockdown, I guess.
Olaf: Yeah. It was all virtual. [laughter] It was all in Zoom. Yeah.
Remy: Yeah. What was it like?
Olaf: Yeah, I think it was okay. It was okay. I mean it might be different if you're face to face in a room. I mean it was good. It went very smoothly.
Johan: But I imagine, you sitting at home–
Olaf: Yeah, yeah.
Remy: –somewhere in the attic.
Olaf: Yeah, I was sitting in the attic. And then the children were kind of raising hell, playing Lego. And I was like, “Dinner is ready." "How long will this take?| And I was like, “Yeah, let me finish this, wrap this up.” But I mean, yeah, it was in the midst of corona. So everybody was kind of trying [00:46:00] to–
Johan: To make it work.
Olaf: Yeah, but it was funny because it was– it is very good that you have a reality check there. Because at some point, it becomes a little bit unrealistic almost, the numbers that are floating by the number of people like legal people working on it from their side, from our side, I was like, “What? How many people are we involving?” And then it's good to kind of stay grounded and have kids running around.
Johan: Playing Lego with your kids at home?
Olaf: Yeah, yeah, because it becomes really strange at some point–
Olaf: –if you're not used to it.
Johan: And what was the timeline from the moment that you said, “We're open to get at the right terms to the exclusivity,” and when there was let's say a final offer on the table? Sorry.
Olaf: Yeah, a few months.
Johan: A few months between.
Olaf: Yeah, yeah.
Johan: Yeah, okay.
Olaf: –because I'm not sure if– most American companies– but we have a financial year that starts in March or it's in February.
Olaf: So it was kind of like, “Let's see if we can close the deal before that timeline.”
Johan: Yeah, [00:47:00] it's also learning that we hear from a lot of founders, right? Think about the bookkeeping year or the fiscal year, the company is using, especially the buyer, the acquirer.
Johan: Because they–
Olaf: Yeah, that’s their window.
Johan: It's their window of opportunity, more or less, right?
Olaf: Yeah. I know it was kind of the deadline. We need to close it around that time. And of course, there's a lot of technical assessments because we're technical product integration. Why? So you need to get the right people in the room. But they went really fast, and they're super nice.
Johan: Now, CircleCI has about 700 plus people working for them, but they're all remote. Was that the benefit for you as a seller, that your team didn't have to move to San Francisco, for example?
Olaf: One of the demands was actually that they would want to acquire the entire team. So that was good because that helps the process immensely from our side. Because people, at some point, become a little bit nervous like, “What's going on?”
Olaf: So we went [00:48:00] open and transparent very quickly, internally, like, “Okay, we're talking and it's very serious and–" but we're going to make sure that the US team are taken care of, which in my mind, is one of the founder’s responsibility–
Olaf: –to make sure that your team is taken care of in the right way.
Johan: And when was it that you announced that internally? When was it let's say in the process or–?
Olaf: Yeah, because we started doing these technical assessments.
Olaf: I mean you need the people in the room. So I think that was within a few weeks already.
Olaf: I think we had three or four meetings. And then we already went into —
Johan: So it was even before you had, let's say, the terms–
Johan: –"on paper," et cetera.
Johan: Oh, okay.
Olaf: Technical assessment was way for terms.
Johan: And just to understand because from an investor point of view, I would say of course, I can inform my people. But if we cannot agree on a price, then my people will be informed and we will not get a deal. So I would [00:49:00] like, let's say, the pricing and the terms before we do the [Tech Deedee 00:49:03], et cetera.
Johan: What was the reason from your end to do that?
Olaf: I think because of it's a technical integration, if it doesn't fit tax tag wise, if our code would stink. You cannot put a valuation on anything. You couldn't even continue if it just doesn't work technically.
Johan: Final question about this before we go to the valuation, I guess. How did you celebrate the closing? And what did you buy for yourself as a present?
Olaf: I think here in Capital C, we did champagne and cake. And of course, we got all the goodies, the swag from CircleCI in. So that was nice with the entire team. And it's always a little tricky with the corona thing, yeah. So some people are more comfortable than others. But we did that as a group. Actually, we did also dinner a few weeks ago, also with all the VCs.
Johan: [unintelligible 00:50:00] VCs?
Olaf: Yeah. Yeah, which was a year later than–
Johan: A year later.
Olaf: –planned, but we went to the VR thing in the Amsterdam Tower.
Johan: Ah, cool, cool.
Olaf: And then we went out for dinner, which was super nice. I didn't buy a present for myself, maybe a Lego–
Remy: [laughs] For your kids.
Olaf: No, for myself
Remy: Are you Lego player also?
Olaf: No, not really but I like to build it at some point. I was like, “Okay, do something totally different."
Olaf: Like a crane, I think it was. It was like this, like technique.
Remy: You want crane?
Johan: Yeah. But no, I mean I still do what I do.
Olaf: There's nothing really changed.
Johan: Yeah, because you're still active with the company, right?
Johan: You're still also in the role. Perhaps last question from me, can you describe what's changed for you in also working with a bigger company, CircleCI, but still at the company that you founded?
Olaf: Yeah, so I'm not actively involved in the Vamp team because we became part of the bigger CircleCI organization. And we have [00:51:00] all these teams. And one of the teams is the release and deploy, which is where the Vamp people kind of ended up, most of them, and are now mixing up with other people from the CircleCI organization. But my official title is technical consultant or advisor.
So I work with Rob, the CTO. I work with Tom from Business Development. I work with product. And I'm kind of like moving around and seeing where there's opportunities, where I can add my value. And my value, like I said, is more like I can look from the user perspective and use perspective, and where does this deploy story fit in, and what we're already doing, where can we improve, and then trying to figure out how I can unblock certain things, which is, of course, a little bit tricky because you have a startup mindset, but you become part of a bigger organization. But there's always ways to unblock the–
Johan: The unblocking to make things faster.
Johan: Okay, cool. Good to hear.
VO: The valuation.
Colleague from Peak: Alrighty, let's talk about the exit valuation of Vamp to CircleCI. A quick primer, Vamp launched in 2013 in Amsterdam and raised a total of €3 million according to Crunchbase data. The last round of €2.5 million was led by Vortex Capital Partners in 2019. There were four previous smaller financing rounds during the six years leading to the last round. So we will presume that some moderate growth in sales and enterprise value was happening. Assuming that the dilution of the last round was 20%, 25% we can make an educated guess that the company was valued approximately between €10 and €12 million in May 2019. The company announced the acquisition two years later on May 2021. [00:53:00] Taking the average on the last round valuation assumption of €11 million and adding a moderate growth of EV of 500k per year will guesstimate that the exit value of Vamp was… wait for it, €12 million.
Remy: All right, Olaf is €12 million higher, lower, or the correct amount?
Olaf: I think the rationale makes sense.
Olaf: Let's keep it there.
Remy: Okay, thanks. Thanks so much.
Olaf: Thank you.
VO: Thank you so much for listening to this episode of The Big Exit Show by Peak. We hope you enjoyed today's program. If so, please subscribe to our show on Spotify or on your podcast platform of choice. If you have feedback, let us know. Send us a message to [email protected]. Thanks again for listening, and we hope you join us for the next episode. See you soon.