Heini Zachariassen: Vivino Founder AMA

This AMA is also available in video format.

Caya: Our guest for today is an amazing guest. We have Heinini Zachariassen, founder of Vivino. If you have been living under a rock: Vivino is a fantastic wine app. Over 30 million users. It started as a wine-discovery app and them moved into an e-commerce platform.  Heinini started his own YouTube channel called Raw Startup. Heinini serves as Board member and Chief Evangelist after he stepped down as CEO of Vivino. Heinini, welcome to our session.

Heini: Thank you very much and thank you for having me on. Thank you for that very nice introduction.

Caya:  I'd love to ask you, Heinini, how's life after being CEO when you have this amazing company still running and you no longer see day to day operations?

Heini: You know life is amazing really. It's really quite a difficult shift to do that because you're completely immersed in something for, in my case, eight years of living and dying for this company, doing that which was really really hard. But I think it was the right decision. The company was turning into a company where operations were increasingly important. And for me, that was not the core of my core and there were definitely people out there are much better than me. So we wanted to do that shift as soon as we found someone who was amazing.

Caya: Of all those things that you do now, how did you end up with a YouTube channel?

Heini: That's a good question. Really what happened is I know a lot of founders, I have good friends that are founders, and they said to me "Hey you got to be careful when you step down there's gonna be a bit of a hole that needs to be filled up". Sure enough, when that happened I felt like "oh wow something's missing here". I couldn't follow the numbers religiously anymore because if I follow the numbers I'm going to tell people what to do. And I was not supposed to tell people what to do. So I have to back off all those things. And then I said, "OK I've got to fill it up with something and find something that you like or else you'll end on a board of some really really boring company". So that's why I started this.

Caya: Funny story: I found Heinini because he started ranking second for one of our main keywords on YouTube. I was like "Who is this guy?", and then here you are being our guest.

Heini: So second it's not a spot I want to be in. So we're still working on that obviously.

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Caya: All right. So, our idea here at FounderHub of is to help founders who are starting Heini businesses, who have Heini Pitch Deck and maybe they're not ready to raise money. This is a question I'm dying to ask you: How was your first round of funding for Vivino? So just to give everybody some context: Heini is from Denmark. Vivino at the very beginning was not a paid app. So everything that I talk about trying to raise money with revenue probably they didn't have it. So how do you manage to get your first round of funding?

Heini: Small correction so I'm actually from a small island called The Pharaoh Islands which is in the middle of North Atlantic. Fifty thousand people in the middle of nowhere. They'll be flying to New York pretty soon. So you have to go. But we started out in around 2010 and we obviously we didn't have enough. But I am a second timer. I've started a company before. My co-founder and I said: "Hey OK. We want to do this." I wouldn't say we had an easy time but we had some people that had a little bit of money that trusted us. They said to us "OK. We believe in you guys. We think you can build this". So the first money came in. We started building something and felt we could do it. That's the first rule here is: you've got to build something. Investors don't invest in ideas. You have to have more than that. Whatever that building is. It doesn't have to be big but you got to show something, you've got to show some progress all the time. So our first money was from one of our friends. It was one of two co-founders of Skype, Yanis Friis, based in London. So I flew over to him and said: "we have this idea we'd love to try this." He put some money and from there it's really just about building an amazing product and try to get some traction.  

Caya: What was your vision for Vivino? I understood that the product eventually evolved into e-commerce but that was not the original concept. How developed was this business model at the very beginning?

Heini: My vision with this was: if you walk into a supermarket and see this wall of wine you need to be able to know if this is a good wine or if this a bad wine. We were 100% focused on solving that problem, which was a problem for me because I did not know anything about wine when we started. So I'm more of a tech software guy and we wanted to build this product for me, meaning people that are casual wine drinkers, not experts. All the focus was on that. On the commercial side was pretty easy to sell. We said: "hey, we'll have millions of people using this app. You'll be sitting at a restaurant, you'll get a bottle of wine and then you buy six bottles." That story just worked really well always. Even though it took us several years before we started building

Caya: Vivino has 35 million customers today. How do you grow from zero to the first million?

Heini: That's a great great question because that is really hard. For us, it was all about the product. We were extremely focused on a specific use case and we think we found out what the key to that use case was. So we realized quickly that we had to ignore everything else except for the data. Meaning: is this wine good or is this bad. I want some information. Even though you don't have an amazing product, if you're the best product in the field people are really quite forgiving. Our product in the early days was really not very good but it was people's liked what we were trying to do. Then slowly keep staying ahead of the field. And then there is a chance you'll get growth and you don't get thousands of installs every day in the beginning. So today we get 20000 new users every single day organically, not paid. But back then you start by getting 30 users a day. Then you get 60 and then you get 150 and you just keep growing and trying to improve the product slightly every single week. That's how we did it.

Caya: I remember back in 2011 when I was starting my first company. There were all these wine discovery products actually. Vivino at that one was just one of the many products trying to grasp that field. How do people find you now?

Heini: When we launched it there were an estimated 600 wine apps in the App Store. There was always a reason for that because wine is a 300-billion-dollar industry. It's much bigger than you think. It's much bigger than music and books and all those things but nobody had really conquered it. It made sense that a lot of people went for it. So, how do people find us now? We know this really well and it's actually pretty simple. It's all flying. It's people drinking together and 75% of our users come through word of mouth. So I'm sitting at a table showing people this amazing product and boom! We've got a new user. That happens 20000 times a day. I am very thankful for it.

Caya: In this fantastic story where you became the best product among 600 companies trying to do the same thing, when did you have to figure out a business model you needed to scale?

Heini: If you look at the A-round, it was pretty clear that we were going to be somebody in the way that we got product-market fit. We got decent traction and we were going to end up on top at least amongst the top two or three. That was pretty clear when we did the A-round. When you get to the B round you want to show that you've tested your product and it looks like it works. You do not have to have it at scale. So when we launched our B-round we had a very limited business model going. We had some. But at that time it was clear that we're probably the winner in the space. So now we own the space from a user point of view and we show a little bit of a corner of a business model. When you get to the C round you definitely have to show that there is a real Business Model there.

Caya: I think traction is what gets you to the next round. You proved that your product concept is working. What does traction mean for a series A and what distraction mean for a series B?

Heini: I think traction for a Series A means a clear product-market fit. It means that your growth is remarkable and you'll see it on the numbers. What happened to us was that in 2012 we improved our product radically. We had a simple hybrid of an app before that. And then we launched a fully native app in April of 2012 and we started improving that over the next three months. And the numbers just shot. It was clear that we now had a product-market fit. People like the product they like the use case and are going to use it. So that's one thing. The second thing there is: where are you on periods of the competition? If it looks like you're clearly distancing yourself from the competition or at least doing better, then that's a good position to be in the A-round. At the B-round you have to show some kind of traction. If for instance, you just take a couple of countries or one country show some kind of Business Model there, then you just say:  "we just need to multiply this by 30 as we launch in other countries."

Caya: I'm assuming that you live in San Francisco now. But when do you decide to move from your own country to the US?

Heini: We're based in Copenhagen Denmark. When we raised the A-round, I think it was pretty clear to us we were still in a competitive situation and with a lot of consumer products you've got to win the US market. So our philosophy was: if we win the US market there's a very good chance that we'll win the world. So I moved to the US just after we raised our A round. We put up communication marketing all those things on the ground here in San Francisco. That happened in 2013. Product engineering still in Copenhagen, Denmark and everything else is basically over here.

Caya: You've been at this with this company for eight years now and one of the biggest questions that we get asked on the community is about co-founders. How do you find a co-founder and how do you keep that relationship safe? I've always said that the co-founders' relationship is like a marriage without the sex because you deal with very tough decisions.

It's like a marriage and it can be even harder to divorce, right? So I've been pretty fortunate there. My co-founder ties with based in Copenhagen has been we worked together for 19 years. We'll have an anniversary soon. And so did somebody before we were also working together and when we came along. We found each other through random connections and we just match each other really well. In some ways thinking the same way in other ways being very different. So he is even more "product" I'm more "business" or we overlap each other and challenge each other on all those things. I can't stress how important it is.  

Caya: So you and your co-founder worked together before. What was different this time? Was it more experience? Was it a better product? Was it a better product-market fit? Why is Vivino so great and the other businesses are no longer around?

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Heini: The other one is still around, though. Just to clarify.  First of all, I'm 46 years old now. I've been doing this for a time and you really learn a lot when you do the first big one. Obviously, timing and all those things just matched really well but we'd also gotten better. We were better than 6, 7, 8 years before. I think that really matters. But generally when it comes to the success of a startup, figuring out when to deal with what to do at the right time is very underestimated. I think so. So when we look at our timing, we were just spot on on the timing. I mean if you look at what was important for us it was the app and the app store. The iPhone launched in 2007, when we got to 9, 10  people were starting to really use it at scale and we got there right there. The cameras were good enough people were online. That's exactly what we needed to do to launch this product. You're just a year or two earlier you'll spend a lot of resorts for a very very small audience. Time is just incredibly important

Heini: What's most important for us at this point is that we need to convert more people to actually buy on the marketplace. We have 35 million users on the platform and they're very actively. They look up 2 million wines every single day. But only a small part of them are still buying. So we're spending a lot of time now on training them saying to them "Hey Vivino is not only an app that you use to scan and right away you should actually buy it through Vivino too."

Caya: I'm all out of questions. I don't know if you have anything to add or if you have anything else you want to discuss now that we're both starting a YouTube channel.

Heini: I'd also noticed you, you were number one on that particular keyword. So I have to say I think just you know you've done great. I just started 10 months ago now. It's small, it's like a thousand subscribers but I'm picking it up partly on how to do it right. It's been really fun. I love getting feedback from users. I love that the people give feedback, it's incredibly positive. So I'm really humbled by that. I have a very specific style where I go in and really try in 15 minutes and really boils down as much information as I can from my experience and I think it's been a lot of fun I'm sure you've experienced the same thing. For me on the YouTube part, it's more giving back and so on. I don't have a clear commercial goal with it at this point.

Caya: Yeah. For us, it's a bit of a bit like that. As a rule,  we're very willing to share our own experience. We're semi-transparent with our numbers and we're always happy to share the big fuckups that we did with our company and so on. So I found myself being asked these questions and sharing this information. Then this content ended up being very valuable in YouTube. When you share insights that not a lot of people have and (I'm absolutely sure that you have a lot more to share than I do), that's the stuff that people really engage with especially if they can't find it anywhere else.

Heini: The thing is you can read a book, but it takes a while to get a book out and so on and I've been in the field raising money very recently. I'm still doing it. So whatever I have is fresh information I can put it right out there and I called it Raw Startup because I'm going to be straightforward and it's pretty raw: doing startups it's not easy, it's a lot of fun but it's not easy.

Caya:  We've got one more question from the audience: How did you guys garner initial traction when you first launched the Vivino app?

Heini: It's definitely a hard one. I'll say a couple of things that have changed a little bit in the early days. This is 2010 or so, you would actually get a little bit of traction organically from the App Store. I think that's really really hard now. But apart from that I just use my network. I tried to do a little bit of press and you know when you do a pretty shitty wine app early on, you're not getting interviewed by Wired just yet. So what I tried to do is just getting someone to talk about it. You know if you know a blogger, just get some people to start talking about it. Don't try and get to Wire and so on. I'll tell you a story: I had sent emails out to a few Android Media as we launched our Android versions saying "this is the first app for Android with image recognition" and then some random blogs picked it up and then we got lucky. Lifehacker was reading that blog and then suddenly it was on Lifehacker too. But my tip on the PR side of getting attention is find someone who is similar size as you are and get out to those guys. Don't try and go for Wired and those because they get a thousand emails a day and you're not going to get through that filter. So find somebody your size and level you're much more likely to get some traction.

Caya: Heinini, like I said it's been really fun to have you. I really appreciate your time. I know that you have a super busy schedule but thanks for joining us and best of luck. Not that you need it for Vivino, but best of luck with your new start of the YouTube channel. Happy to share that first and second place with you.

Heini: Thank you very much for having me on. It's been a pleasure.