25 Feb Neal Oddens | Failing Fast to Grow Your Business
You’re an ecommerce startup. You don’t have much capital. How do you get the expert help you need to grow?
Neal Oddens, founder and CEO of one of the fastest growing ecommerce companies in the Netherlands, reveals a way to get specialist help without having to pay them money you don’t have.
Neal also talks about two of the biggest mistakes he made in the early days (which many entrepreneurs make) and how he was able to come out of it with a stronger company.
Listen in to find out…
- 4 keys to growing ecommerce businesses (including one many people forget)
- The jobs freelancers shouldn’t do
- A clause you must include in contracts for every business partner
- The unexpected role of conversion optimization in ecommerce
- And more
Mentioned in This Episode: BandenConcurrent.nl
Joris Bryon: Hey, this is Joris of the eCommerce Excellence Podcast and today I’m really excited to talk to Neal Oddens. Neal is the founder and CEO of BandenConcurrent.nl. I know that for our English-speaking listeners that may sound like a strange name, but BandenConcurrent, it’s a Dutch online store that sells car tires. The word means something like tire competitor. Neal is a true entrepreneur, and I’m sure this is going to be a very interesting conversation. After all, in 2016, BandenConcurrent, they won an award for being the fastest growing eCommerce in The Netherlands and in 2015, they were the fourth fastest growing eCommerce in The Netherlands.
For those who are not really familiar with the eCommerce landscape in The Netherlands, well, they’re pretty advanced. I think probably in Europe, Netherlands is the most advanced when it comes to eCommerce, so winning those awards really means something. I’m sure we’ll learn a thing or two about growing an online store. Neal, welcome to the eCommerce Excellence Podcast. I’m really happy to have you here.
Neal Oddens: Yeah, thank you, Joris. The pleasure is actually mine. Thank you very much.
Joris Bryon: All right. Well, just to start out, I’d love for you to tell everybody a little bit about your background. Where did you come from in your career, how you got started in eCommerce, and how did you get to this point, basically?
Neal Oddens: Sure, yeah. Basically, I’ve been an entrepreneur since I was 16, basically, so I really started out very young, selling all kinds of things, hardware, large quantities of hardware I bought from government institutions and sold them to Eastern Europe and Africa. Then, two years or three years later, when I was about 18, 19, I joined my brother who founded a e-recruitment software company. We were just with three guys back then in a garage, and we grew that to an international company with five offices and I think 200 customers in just five or six years. It was a really great time, and I learned a lot already at a very young age in terms of business development, growth, etc. So yeah, basically after six, seven years I decided to start a new company which was BandenConcurrent.
Joris Bryon: Right. You said you sold hardware to Eastern Europe and Africa. How did that work? Was that online, was it eBay based, or how did it go?
Neal Oddens: It was just picking up the phone and calling these companies and organizations and then calling the potential buyers and ask them if they were interested in it. It was a very fun time, actually, because internet was really still very young, and I just did it over the phone, traded in it, and when I arrived people were just really surprised because they just saw a very young guy who didn’t have his driver’s license. I had to go with a friend who was just three years older, who did have his driver’s license, who’s still, by the way, working in my company right now so it’s really great.
But yeah, so basically, that’s how I did it. Of course, the people were then asking, these government organizations, like, “Gosh, what’s happening with our data? Are you sure it’s secure?” And I said, “Yeah, sure. No problem, it’s all fine.” We were working on that, but of course as young as I was I really didn’t have a clue on how to make sure that the data was safe, basically. But it was a very interesting period, definitely.
Joris Bryon: Yeah, I can imagine. How does a 16-year-old come up with that idea?
Neal Oddens: Gosh, I cannot even remember. I have four older brothers, and I think one of them was telling me that in his company they had a lot of laptops and desktops that were not in use anymore, and so I thought, “Wow, why not just try to buy them for basically zero and just sell them off?” It was very interesting. Computers I bought for five euros a piece and I sold them for 20, 25, 30 euros, just being the middle man. So it was really cool.
Joris Bryon: Yeah, yeah. That’s a very interesting experience. From there, then you went into software and you ended up in eCommerce. How did it occur to you to start selling car tires, actually?
Neal Oddens: Yeah. Car tires is not really my passion. I definitely love cars a lot, always have been, but basically in 2010 I was thinking of doing something in eCommerce because back then it was really still very young and booming. I was thinking, “What can I possibly sell over the internet that people don’t have to see, smell, or touch?” I really didn’t think that people would buy clothing online. I was very wrong in that, but back then I thought people would not do it.
It happened, actually, in that winter … I can still remember … winter of 2010. There was a huge snowstorm here in The Netherlands. We’ve never had a snowstorm like that where for, I think, one week everything was just shut down. Airports were not functioning anymore, trains were not going anymore. So it was really an interesting time. I heard on the radio as well that all the winter tires were sold out. Then I thought, “Gosh, this is actually a really cool product to sell online.”
It actually fit the criteria as well that I had for myself. It also needed to be a product that I could sell easily online where price was still a major issue for people because I thought people would go on the internet for price. And tires, I knew from my own experience … Actually, in that same week I had to buy four new tires for my own car, and I went to a traditional garage and they charged me 1,100 euros. And then I looked on the internet and I saw that they were actually for sale for 600 euros, the exact same tires. So I was like, “Wow, 500 euros of difference. That’s tremendous, right? For the exact same product.”
So then, I saw that there was a huge gap in terms of pricing, and I thought, “I’m definitely going to try to make this work. I’m going to try to make a business out of this.” So I called a friend and I just asked him to basically put a website online with me, and in that same weekend, after two or three days of working, with a lot of pizza, we had our first website up and running. I called distributors and they said, “Sure, we can send you our stock file and just put it online.”
And it worked. After the weekend, we had something online. Of course, that’s very interesting because then you hope that some customers will come and buy from you. And of course, for the first few weeks it was very silent. But then, after some link building and some putting some links on forums and things like that, I saw the first traffic coming in and actually the first orders coming in as well. So that was also a very exciting moment, of course, to see that something that you worked on for a very short period of time was already showing some sort of first direction.
Joris Bryon: Yeah, absolutely. So that friend of yours who made the site, was that also a business partner?
Neal Oddens: No, no, no. It was just a guy that I paid 250 euros to basically build the site with me in that weekend.
Joris Bryon: Oh. Yeah, that’s not a bad deal. I know that in the beginning I mean, you were kind of boot strapping and you tried to grow the business and brought people onboard with specific skills who could help you grow in certain areas. And instead of paying them their regular fee, you gave them shares of the company. I know for a lot of people that’s a tempting way to get that kind of specialist help without really having to pay them money that you don’t have at that time.
Neal Oddens: Yeah.
Joris Bryon: Tell me about your experience, because I know it can be risky at times.
Neal Oddens: Yeah, of course. We had a combination. We first worked with freelancers a lot through platforms like Upwork. Back then, it was called Odesk. So we actually got in the news with that as well, national television, that we were working with so many freelancers and it was really working well, which was great. But certain things it’s quite hard to do with freelancers. For example, search engine optimization, you really ideally want someone who does know your business, who is really in it, and also can do the link building and the content part of it.
So I decided to have some partners on board for SEO, but also SEA, for online marketing, and even customer service. I actually asked somebody to join me, and I gave him some shares in return. The lesson that I really learned, and I’m very happy that in most times I actually did it and in some time, in actually one particular case, I didn’t actually. So most cases, I had a clause. It’s basically called a good leaver bad leaver clause, which means that if someone leaves the company earlier on they have to give a certain percentage back against the cost price of those shares.
Let’s say you just say, “Okay, if you leave the company within three years you have to give back 75% of your shares, if you leave within four years you have to give 50% back, and if you leave within five years you have to give 25% back. And if you leave before that, you need to give everything back, basically.” So you really buy commitment. That’s also why you give shares to people, is so that they actually are committed to your company. That’s the only purpose.
The one instance that I didn’t do it, this clause, I kind of regretted it because a person has shares in the company and he left four years ago or three years ago, and he still has a percentage although the company is already a lot further on the road and basically progressing without him. And it’s fine. It’s one of those mistakes that you make in the beginning, but if I could give someone advice around this then it would be make sure that you have everything on paper and that you have good clauses for this.
Joris Bryon: Yeah, I think that’s great advice and especially that good leaver bad leaver clause. I think it saves a lot of people a lot of headache because what you want to avoid is that it becomes an easy ride to some people that leave the company and still have some shares and you’re putting in all the work and then, at the end of the day, they get the rewards from all of your work, and maybe were committed in the beginning for a few months or a year, maybe even two. But yeah, they still get money but they don’t put in any effort anymore.
Neal Oddens: Yeah, and by the way, Joris, you just don’t know how long it will actually take to make your company successful as well. Maybe I’m going to do this with the rest of the team for the next 10 years, but the guy that was there five, six years ago already hasn’t been there for around 14 years, and still has shares. So you just want to make sure that this is well organized already from the start on, especially when you’re working with friends. It’s very important to make up the rules before you actually start the business.
Joris Bryon: Yeah, absolutely. I totally agree, and that’s a great piece of advice here. What do you believe are the keys to growing eCommerce business in today’s environment?
Neal Oddens: Well, since two or three years ago, we’ve always had three pillars that we were focusing on. The first one was traffic, the second one was conversion rate optimization, and the third one was pricing. Since two or three years, we have a fourth one and it’s customer retention. It’s a bit strange that we didn’t have that in the beginning, but in the beginning of the company we’re really focusing on growth and customer acquisition, and now that we have that we just notice that retention is very important, probably even the most important part because it can be the silent killer or the silent booster of your business. And everybody knows that acquiring a customer is more expensive than basically retaining a customer.
Those are the four criteria that we have been constantly working on. Also, today we are constantly working on them and we have several KPIs for this. That’s what I love about eCommerce as well. You can measure everything in your business. You can measure basically everything from customer retention to customer satisfaction to how many users you get in, how many links you need to place every month to have a certain amount of growth. You can estimate that. There are so many things that you can measure, so you really have your own success in hand. You can really influence your own success, and that’s what I love about eCommerce business. So-
Joris Bryon: Yeah. Oh, sorry. Go ahead.
Neal Oddens: One more thing that I wanted to add to that, I think in eCommerce you really have to score a 10 on all the aspects. That’s really hard. You can do really well in customer acquisition and conversion rates, but you can do a terrible job on customer service and then you will have bad reviews and it will not work. Or you can, let’s say, take great care of the online side and even the customer service, but just do a really bad job on your margins and on suppliers and things like that, which actually make sure that you become a financial healthy company. To be honest, that’s one of the things that I regret most that I looked at that a bit too late in the process, the margin part and the supplier part, and actually the real business side of it.
Joris Bryon: Yeah. Because it’s already in the name, tire competitors, so price is one of the main points you compete on. I know that may be an attractive proposition when you saw that, and it probably was also the case in your case because you saw how cheap tires could be online and how much you paid in the garage. But what’s your experience with the whole pricing and trying to be the cheapest one on the market?
Neal Oddens: Well, trying to be the cheapest one in the market is really good for the beginning of your business. You can you undercut the price, but it’s a very cheap way. It’s the cheapest or easiest way to basically get customers in. But I do believe that at the same time it’s not a very sustainable way. You’re in this business to make money, and being the cheapest definitely has some negative points to it. I think the biggest one, the biggest negative, or the biggest downside I would say is that who comes for price goes for price. So if you’re always the cheapest, you don’t build customer loyalty. So it’s going to be really hard to keep this up for a longer period of time.
If I could do this again, and in a way, I’m actually reinventing the company on different markets because we are also working on an international expansion, we will do this on a different name. It will be bits of twenty four, which is more focusing on service and not so much the price, again, because it’s very difficult to keep this up. I think also it’s a very stressful game. Of course, pricing is always important also in eCommerce. But doing this for the long-term I think you’re not setting yourself up for success.
Joris Bryon: Yeah. I agree. Price is an attractive proposition in the beginning, but after a while it gets difficult and it puts so much pressure on anything you do and when you want to spend on marketing you have to be super strict and you cannot afford to lose a penny. I mean, it has to be spot on and your customer lifetime value has to be really good in order to make up for any money you spend on marketing. It puts a lot of pressure on the business and anything that you do.
Neal Oddens: Sure. Also to add to that, Joris, I think you really have to wonder or ask yourself, “What does one satisfied customer actually really cost me?” Let’s say your margins are so low that you cannot actually serve your customers in a way that they expect it from you. You’re going to be out of business in a very short period of time, because you will have bad reviews within a few weeks or months, and it will be really hard to basically work on your reputation. Your reputation, it’s the most important thing you have online. So if I may give our listeners one piece of advice, that would be really wonder, or ask yourself, “What does an actual satisfied …” or not even satisfied. Satisfied is like-
Joris Bryon: Delighted.
Neal Oddens: … minimum term. Exactly. What does it actually really cost to have delighted and very happy customers, raving fans as they call it sometimes, raving fans?
Joris Bryon: Yeah. I like that idea because it puts a lot of what we do in digital marketing in a different daylight because we typically look at stuff like CPA. How much do you pay per acquisition? But it should actually be something like a CPDA, like a customer per delighted acquisition, if that-
Neal Oddens: I like it.
Joris Bryon: … would be measurable. Yeah, that would be a great metric and a great KPI to run your business on. I mean, customers, they are more and more demanding and what was something to differentiate yourself on a few years ago now is a minimum requirement to do business. And I like that idea of what does a satisfied customer cost you. I think that’s a very healthy way to look at it because, after all, it is about your customers. You try to help out people. What is the biggest mistake you think you made over the years?
Neal Oddens: Well, there are lots of them. I mean, I make big mistakes every week or every month. In America they say fail fast. It’s one of the startup lines that you hear a lot. I do like that, in a sense. It’s better to fail and fail fast than to just do nothing at all or basically see a bit too late where you should’ve actually changed.
I think one of my bigger mistakes is that I think that I should have focused more on customer satisfaction earlier on in the company and less on the pricing part. Because then you… I mean, of course, tires you’re not buying them every day. So customer satisfaction doesn’t really … I mean, you won’t see this directly in your numbers because if, let’s say we would deliver or give a bad service then we probably see that this customer doesn’t come back anymore in three years because people just buy tires every three years, let’s say.
But I do believe that people remember things, especially on the internet. They will just write about you, as we all know. So it is very important to focus on customer service and make that a top priority because at the end of the day, they are paying your salary. They are paying your rent. Customers are paying your people, and it’s really the customer that you all do it for. That’s one thing.
I think another thing that I would’ve done a bit differently as well is in the beginning we’ve really focused a lot on working with interns because they’re, of course, very cheap. It’s very interesting in that sense to have interns. You pay them 200, 300 euros a month. The ratio was always like we have one employee for three interns, so if we had five fixed employees then we had 15 interns. In the beginning it’s great to do it like that, but I think we shifted a bit too late in that. Now we have a ratio of one-on-one. We have one intern for one employee. That’s a lot better because we just see that that gets us more quality, more consistency in our business in terms of the procedures that we have and the knowledge as well that we have we kind of retain it more into our company. That would be my advice as well to startups. Those are the things that I think we could’ve done differently.
Joris Bryon: Yeah, I mean, I’d say great advice and we can all learn from the mistakes other people made. That’s why I like that question. Neal, this has been great and we could probably go on for another few hours, but we’re running out of time and I want to make sure that people know how they can find you and learn more about you. What’s the best place for people to connect with you?
Neal Oddens: Yeah, just connect with me on LinkedIn, Neal Oddens, N-E-A-L, dash Oddens, O-D-D-E-N-S, so Neal Oddens. Connect with me on LinkedIn. If you have any questions, feel free to reach out to me and I’ll definitely try to get back to you as soon as possible.
Joris Bryon: Awesome. Thank you so much for being here, Neal. It’s been really great. Thanks.
Neal Oddens: Thank you, Joris, and take care. Thank you.