Starting a business is not easy, and scaling it is even harder. But the strongest fuel is a personal connection to what you’re doing. Identify a problem that you truly feel has to be solved.
Jump — and jump totally! It doesn’t work to just “dip” your toe in the water. You might want to keep your day job until you get your business off the ground, but it won’t work that way. You cannot do this “on the side.”
As part of my series about the “5 Things You Need To Know To Create A Highly Successful E-Commerce Business”, I had the pleasure of interviewing Henrik Müller-Hansen, CEO & Founder of Gelato.
Henrik launched Optimalprint in 2007. As the company grew so did the idea of improving the profitability and efficiency within the printing industry, which laid the groundwork for the founding of Gelato, and the consequent tools which made it possible for other companies to fulfil evermore challenging customer demands. Prior to that he was CEO of Tele2 Norway, growing the company from 1.5 billion NOK to 3.2 billion. Henrik has an M.Sc.E Major in Managerial Economics from the Stockholm School of Economics.
Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?What was the “Aha Moment” that led to the idea for your current company? Can you share that story with us?
In my previous role as CEO of a 400 million dollars Telecom named Tele2 Norway, I learned that it’s possible to build a successful global company without owning any physical assets or infrastructure. By utilizing software and technology one can effectively connect the owner of infrastructure with the end-customers.
I also learned that staying close to the trends outside of your immediate environment is really important as an entrepreneur, although it might be easier and more comfortable to not try to connect to the more stressful, fast-paced and competitive outside world with its many amazing ideas, people and companies.
After resigning as the CEO of Tele2 Norway I bought a ton of business magazines and flew to Portugal to read them all. I came across an article about an industry I thought was dying which, to my surprise, was exploding — growing 10B dollars per year. That industry was digital printing.
I didn’t know anything about the print industry, but I saw the potential. The main opportunity? Big print runs of static content were growing into smaller and smaller print runs of personalized content. Static content was going personal. Centralized production operations that shipped to the rest of the world were going to lose out to the rise in local, eco-friendly production.
I knew how to build tech teams and travel like the Nomad people (who don’t own assets either) and so the Gelato journey began.
Can you tell us a story about the hard times that you faced when you first started your journey? Did you ever consider giving up? Where did you get the drive to continue even though things were so hard?
I often compare building a company with climbing Mount Everest or performing a similarly difficult journey. You need to be 110% passionate about the goal and see that vision clearly in your head when the temperature drops to minus 50°C and you are tired, hungry and dehydrated. At the same time, you dream about that peak and the beautiful view from the summit. That, to me, is the best way of describing the building of a company — it is filled with polar-opposites, beautiful and painful at the same time.
One of the most difficult times for me personally was right in the beginning when I had sold everything that we as a family owned in order to fund the beginning of this journey. Every morning I woke up looking at two bank accounts — first our own personal account and then the company’s. Realizing that you have just a few weeks before you have absolutely no money left is an incredibly difficult thing to face.
At the time I was guided by Guy Kawasaki’s advice to get your product shipped. What he means is that when you build a company from scratch, you need to get the products out to the market. You cannot simply sit and perfect them in your office. The product needs to be shipped and touched by your customers. You need to quickly generate revenue and — perhaps more importantly — get your customers’ feedback.
Finding the way forward — from an idea to the first dollar earned from a real customer paying for your product — was the most challenging time for me.
I never once thought about giving up. Perhaps, because giving up would have meant that everything I invested, including all of my family’s savings, would be gone. Giving up has never in my life been an option. Another reason I have never given up is because I firmly believe that connecting all these production hubs that stand idle across our planet makes a lot of sense. It is such a “no brainer” because producing locally — instead of centrally and then shipping all across the world — is smarter, faster, and greener. Who doesn’t want that?
So, how are things going today? How did your grit and resilience lead to your eventual success?
First of all, I don’t really agree that it is about my grit and my resilience. Sure, it has been a component along the journey but not the reason for our success. I think the main reason for our success is a very clear and meaningful purpose and mission. That, in turn, has attracted some amazing individuals. When you combine a lot of great people from all over the world who are united by the belief in a single vision, you get a team that is capable of so much more than the individual. For me it’s the team, the whole rather than the sum of the parts, that is the main reason for our success.
Today, our original idea has never been more relevant and important. The belief that businesses need to be hyper-global is shifting increasingly towards another belief: that business should be local. The pandemic has further emphasized the importance of localizing production as well as distribution. Borders have been closed, and value chains disrupted and destroyed. In parallel to this, new business opportunities have emerged thanks to technology and platforms like Shopify, Etsy, Amazon Web services, Stripe and, of course, Gelato.
Gelato empowers entrepreneurs and business owners to reach customers worldwide with their products overnight. In Q4 2020 we are generating roughly 40M dollars in revenue with a positive cash flow of USD 4 million.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘takeaways’ you learned from that?
Striving for perfection is not what is going to make you win this game, speed is. So yes — we have made lots of mistakes, and we continue to make them. Obviously, some are more avoidable than others, and much more amusing to look back on now that 14 years have passed. The time we produced our first calendars for example it had 56 weeks in the year rather than 52. I was contacted by many angry customers including one that had booked a trip to Spain on dates and weeks that didn’t actually exist! As you can imagine, that ended up costing us quite a lot more than just refunding the cost of the calendar.
What do you think makes your company stand out? Can you share a story?
I like to think that we have a strong and positive company culture powered by a diverse team that is deeply dedicated to our vision. We have a team of people from some of the best companies in the world such as Amazon, Skype, Ebay, Bain & Company, and Microsoft. They come from more than 30 countries around the world.
Our team also looks beyond the next paycheck. We see the opportunity to actually make a difference in the lives of our customers, and on our planet. We believe in our vision and can explain why we exist. Or to come back to the Mount Everest analogy — climbing is our passion. It is not only the view from the summit that we are searching for, but to participate on this journey.
One of the most energizing stories since I founded this company is from the Māori tribe in New Zealand. In 2020, I was approached by a spokesperson for the Māori community. If I am allowed to generalize there are many people within the Māori population who live in rural communities and too often face challenges in terms of educational support and unemployment. A group of excellent entrepreneurs and creators within the Māori community eyed ecommerce and print on demand as an opportunity to start their own business. They imagined a world where they could share their creativity with anyone while still living in their homelands.
Our team worked with them and helped them get started. Now they can share their creativity with up to 5 billion potential customers through local production in 30 countries by using Shopify on the front end, and Gelato as the supplier of the products. When you take a step back and are reminded of the impact Gelato can make, it is remarkable.
Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?
You do not need to own in order to deliver. In today’s world, new technology and software solutions allow you to access services and fixed assets instantly all across the planet. In many industries, especially the print industry, there is a long history that speaks a different language to the language of tech and software that is currently reshaping our world.
If you want to thrive in today’s print industry my advice is to focus on your customers rather than the print machines and fixed assets you own. Today, you can serve customers all across the planet with products that you do not own, but can easily access through print on demand platforms like Gelato. There are other print on demand platforms available, so I’m not trying to sell Gelato — I’m trying to help companies and entrepreneurs in this industry to thrive.
The digital print market is exploding. So, this notion about the zero sum game — for someone to win while all the others have to lose — is no longer relevant.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
Well, this might sound a bit cheesy, but it’s how I genuinely feel. Without the support and intelligence from my wife I would never be here today. In the beginning and throughout this journey she has sacrificed a lot.
I remember during the first two years of our journey we would go to the supermarket and see which foods were on sale. Based upon the cheapest food available on a particular day determined what we would eat for dinner that night. This went on for, at least, a couple of years until one day, when she bought a café au lait, I accused her of being financially irresponsible. Now what you have to understand is, at the time, she was the Marketing Director for one of Norway’s largest consumer goods companies. She literally provided for our family for more than two years. Also, to this day, she not only pulls a heavy weight for our family of five, she continues to give me and other people within Gelato great guidance and thoughtful mentorship.
Ok thank you for all that. Now let’s shift to the main focus of this interview. The Pandemic has changed many aspects of all of our lives. One of them is the fact that so many of us have gotten used to shopping almost exclusively online. Can you share a few examples of different ideas that eCommerce businesses are implementing to adapt to the new realities created by the Pandemic?
The pandemic is rapidly directing our behavior more towards online channels — a shift that is likely to remain after the pandemic has passed. While many companies are challenged by surviving in the short-term, the crisis also presents opportunities. Being from Sweden, but living in Norway, I will use Spotify and how they changed their offering during the pandemic as an example. Then, of course, considering how important Shopify is for us, I will use an example of how they empowered local farmers to become internet entrepreneurs.
Spotify disproportionately relied on free users who listened to music and “paid” by listening to advertisements. Even before the pandemic, this model showed signs of maturity, but its limitations did not become readily apparent until the pandemic hit, and advertisers cut their budgets. Spotify responded in a really cool way by starting to offer original content in the form of podcasts. The platform saw artists and users upload more than 150,000 podcasts in just one month. Spotify signed exclusive podcast deals with celebrities and started to curate playlists.
The second example is from Shopify — an important “go to market” channel for Gelato API. The COVID crisis led to broken supply chains (just think back to the many photos of empty supermarket shelves), which presented small farmers around the world with a unique business opportunity.
Motivated by experiencing their sales to restaurants and other local stores plummet during lockdown, small-scale farmers instead decided to focus on the needs of the homebound consumer. Now, all of a sudden, they needed to become internet entrepreneurs in order to meet a new kind of demand. Where did they go to do this? They flocked to Shopify. This explains why Shopify has seen an ecommerce boom among small scale farmers operating at distances of less than 15 miles between seller and buyer. A local farmer turning into an internet entrepreneur — I think that is a really cool pivot!
Amazon, and even Walmart are going to exert pressure on all of retail for the foreseeable future. New Direct-To-Consumer companies based in China are emerging that offer prices that are much cheaper than US and European brands. What would you advise retail companies and eCommerce companies, for them to be successful in the face of such strong competition?
I actually think that the shifts we are seeing around the world do not necessarily play to the advantage of big global companies. What used to be the preferred “hyper global” alternative might very well (and quickly) instead become a love for what is local.
As in the previous example of local farmers turning into overnight internet entrepreneurs, I believe that the consumers’ preferences might be driven by much more than scale and price. We have seen many cases where goods and services travel halfway around the globe and never arrive. We have big environmental challenges ahead of us where self-sufficient and local production becomes a strong competitive advantage.
Let’s place that in the context of Shopify and Gelato. What is the combination of Shopify and Gelato really about? A person can literally become a global ecommerce player connected to a global production and distribution engine overnight. These tools, and the power of these tools, are unprecedented in human history. Only creativity sets the boundaries for what is possible to do if you stay curious and embrace new opportunities provided by software on global platforms.
What are the most common mistakes you have seen CEOs & founders make when they start an eCommerce business? What can be done to avoid those errors?
I believe that too many entrepreneurs try to get it right from the start. Ecommerce is about speed, so you might as well speed up and start to ship.
Secondly, I think that the internet on your computer provides a beautiful, but equally dangerous, filter between you and the customers. Pick up the phone, start a chat, be human, and engage with your customers in real life.
Thirdly, since security is only spoken about when something goes wrong — which is rare for many small companies as they are often spared by hackers — you invest too little time and resources in proactively preventing security from becoming a topic. Don’t. Security is of increasing importance.
In your experience, which aspect of running an eCommerce brand tends to be most underestimated? Can you explain or give an example?
When you engage with customers online, the velocity of change in consumer demand and competitor offerings cannot be compared to anything that the world of business has experienced before. Your offering and pricing become instantly obsolete. There are two main challenges I believe ecommerce brands underestimate: a) collecting the right data and b) letting that data guide you to the right decisions.
Can you share a few examples of tools or software that you think can dramatically empower emerging eCommerce brands to be more effective and more successful?
First of all, software (per definition) can be infinitely distributed with zero marginal cost. In other words, the distribution power coupled with the velocity of new software tools makes any recommendation of mine outdated before this article is published.
However, the most important recommendation I can give in terms of software is to find a framework that helps you prioritize and focus. Since focusing is about saying ‘no,’ you need software to power that framework — a software that makes sharing your focus easy within your team.
To guide our operations and priorities we use a framework called OKRs — Objectives and Key Results. It was originally developed by the late Andy Grove and refined by John Doerr. Deploy OKRs and find the software to support each and every team member.
As you know, “conversion” means to convert a visit into a sale. In your experience what are the best strategies an eCommerce business should use to increase conversion rates?
First of all, I do not believe there is a universal formula for increasing conversion rates. However, if you compound and find an average I think there are some common features:
1. A strong value proposition — search results provide instant transparency compared to competition. At least in my experience, you must relate to price leadership or master brand uniqueness.
2. Quick loading time with easy navigation — new visitors to your site will give you an average of a few seconds before they make up their mind to stay or exit.
3. Today, I would start with mobile and focus on desktop after.
4. Consistent trust signals — there are probably many companies delivering a similar product to yours so you need to radiate trust.
5. Remove emotions and embrace data.
Of course, the main way to increase conversion rates is to create a trusted and beloved brand. Can you share a few ways that an eCommerce business can earn a reputation as a trusted and beloved brand?
Historically, brands have slowly risen and fallen in prominence, but now we operate under completely different conditions. If you are an entrepreneur reading this, these changes are likely playing to your advantage. Today, every brand is less durable. Consumer habits have digitized, and new business models can quickly blindside traditional brands.
To build Gelato’s online brand and business I think about 4 dimensions — the so-called “MACE” framework:
1. Mastery — Give customers non-transferrable rewards for using your products and engaging with your content. Gelato publicly displays our largest customers.
2. Accessibility — Give easy access, i.e. no hurdles, to get started. You can activate Gelato’s API service without paying anything. It is a “pay-as-you-go” model with no commitments.
3. Cadence — Constantly create news and content around your brand. Gelato constantly releases new features and products which are made public in newsletters and forums.
4. Ensnarement — Make your brand as sticky as possible by building in switching costs and creating network effects. Gelato is so unique because of our global network that once you have started with local production and delivery it becomes very difficult to switch.
One of the main benefits of shopping online is the ability to read reviews. Consumers love it! While good reviews are of course positive for a brand, poor reviews can be very damaging. In your experience what are a few things a brand should do to properly and effectively respond to poor reviews? How about other unfair things said online about a brand?
First of all, it is important to understand that for any company that grows big, it will inevitably face not only a lot of competition, but a lot of different customers too. The first thing you need to do is learn how to quickly differentiate serious and valuable feedback from overly emotional and irrational feedback.
When you build your product — and start shipping it — as I urged ecommerce CEOs and founders earlier — you will make mistakes. Your products will not always be delivered with great quality. In those cases, quickly identify the problem and fix it! These negative reviews can teach you a lot and help you win market share and customer loyalty faster and more efficiently.
When it comes to exaggerated or unsubstantiated negative reviews, people’s original perceptions of your company don’t tend to change. In fact, these kinds of reviews can generate empathy towards your company, like feeling empathy when witnessing an imbalance in justice. This creates a paradox whereby “unfair” negative reviews lead inadvertently to positive outcomes, including more positive reviews, for your company.
Of course, dealing with negative reviews doesn’t require the same approach for every company. That said, at Gelato we try to embrace the people providing the criticism and feedback and always respond in a very genuine and transparent way. If you want to make it even more difficult for a person to provide a negative review that lacks evidence or substance, you can respond by being even more personal in your service by allocating a team member or employee to address their concerns. Most people react with more empathy and sensitivity when they can relate directly to the person behind an email or review.
Ok super. Here is the main question of our interview. Based on your experience and success, what are the five most important things one should know in order to create a very successful e-commerce business? Please share a story or an example for each.
1. Starting a business is not easy, and scaling it is even harder. But the strongest fuel is a personal connection to what you’re doing. Identify a problem that you truly feel has to be solved.
2. Don’t travel alone! No matter how much you trust your team, you can never be completely honest about your fears, nor fully share the burden of responsibility when things get difficult. Remember that better outcomes are driven through healthy debate.
3. Determine how you will improve peoples’ lives. Consumers have more power and choice than ever before, and they’re going to choose and stick with the companies who are clearly on their side. How will you make their lives easier, more pleasant and more meaningful?
4. Jump — and jump totally! It doesn’t work to just “dip” your toe in the water. You might want to keep your day job until you get your business off the ground, but it won’t work that way. You cannot do this “on the side.”
5. Do not take yourself too seriously. You will make plenty of mistakes so do not try to avoid them — seek them and make sure you learn from them!
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
First of all, you always need total clarity of purpose for any successful movement. For example, Gandhi’s allies questioned his idea to make the salt tax a primary focus because they favored a plan for more comprehensive change. However, for Gandhi it was clear that a single issue, even a small one, could unify the nation and break British Raj’s monopoly on power.
Secondly, I think you should start small to grow big and make an impact. We usually notice successful movements after they have begun to attract large crowds and hold massive demonstrations, but those are effects, not causes, of successful mobilization. It is when small groups connect — which has become exponentially easier in the digital age — that they gain their power.
Finally, rely on engagement and not rhetoric. You can write all the scathing tweets and heartfelt Facebook posts you want, but the truth is that rhetoric rarely persuades. The way to change minds is through face-to-face engagement.
In 2020, it’s never been more important to surround yourself with creativity and artistic influences — aspects of life that are among those hit hardest by the pandemic. I would engage with the world’s community of artists and empower them with access to every software tool available to mankind in 2021. My movement would be about helping people to share their creativity with other people around the world — dismantling national borders and physical distances. We need art and creativity more than ever.
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This was very inspiring. Thank you so much for the time you spent with this!