Jeff had a quick Skype chat with me from his office in Silicon Valley. Next time he’s in Denmark we’re doing a follow up video interview. (June 2009)

“There are huge challenges to being based in Denmark. I am a big believer in the Israeli model where you build an R&D competence in the home market but target the company at the US market.  Their model is based on the headquarters being in the US with an American CEO, VP Sales, VP Marketing and the R&D organisation being the subsidiary.”

-Jeff Snider 

Alex Farcet: How did you end up in Denmark in the first place?

Jeff Snider: Exchange program from my college – took dk 20+ years to “exchange me back”

What were you studying?

First linguistics/philology, later computer science.  Finished both degrees at Copenhagen University (KU). Later studied business at IMD in Switzerland.

Why did you stay?

Some people say it was the beer, some people say it was the blondes.  Married my wife 22 yrs ago – we moved to Silicon Valley with our 2 kids (5 and 8 yrs old at the time) in Jan ‘98. 

Danish wife?

Nordjysk

How long did it take you learn Danish?

6 months of diligent bar hopping + intensive course at Copenhagen University + 2 newspapers a day.

To get to a level where you could work in Danish?  That’s incredibly fast!

I was highly conversational after 6 months but not a great writer at that point.  I took a couple of years at university to get to write decently, longer to get to write well.  Biggest challenge was Danes seeing me as an opportunity to improve their English!  Had to lay down the law and refuse to speak english for around 4 months in the beginning.

Well I used that ‘reason’ for a long time as well – and it’s true, you have to insist to speak Danish!

Unfortunately a couple of months passed with me understanding at best every second word – my friends persevered.

Did you start working with startups right away or did you have a corporate run first?

Corporate first – when i finished my comp sci degree i started working for NCR Udviklings Center (develoment center) in Copenhagen. The “to be” place for “dataloger” at the time (1984). 5 yrs later I worked for apple computer – as one of the first employees in a newly started Danish organisation. At Apple I was the local 3rd party evangelist and that got me interested in startups.  I worked there for 5 years.  I did first startup a few years later

Had you worked in the States before that and was there any culture shock work-wise?

I was young when i came to dk – 19. I had parked cars in the states

What was Apple like then?

Still very entrepreneurial – especially the Danish organisation because we were starting from scratch taking over a sub 1% market share.  Got to around 14% in a few years (worked there from ‘88 – ‘93).  Apple had great margins when I started – had the first functioning MS Windows in its face when I left. A few years later it had its great downslide.  But very entrepreneurial, lots of initiative, tons of energy – probably shaped my culture more than any other company.

Did you ever meet any of the two Steves?

No.  Steve Jobs was not at the company during those yrs. Met other people who became top executives at Apple (e.g. Guerino de Luca, who was later marketing VP, then CEO of Logitech; also Donna Dubinsky, then at Claris, later Palm CEO and founder of Handspring).

Are you touch with people from the Danish team from that time? Did they go on to startups like you?

Still in touch with Kai Hammerich who is in London. Runs Russell Reynolds technology practice. Kai was a co-founder of Maconomy back around ‘90). Also close with Ole Andersen. Ole is a Danish business angel and has also started his own companies in the IT space. Still in touch with Walther Thygesen. Walther has mostly run big companies but been active on startup boards and the like (and of course Vaekstfonden).  Also, some of my other Nordic colleagues have been active in startups (Magnus Melander from Sweden).  I have also stayed in touch with folks from the apple 3rd party world to some extent.

Did you go straight from Apple to your startup?  Can you tell me about the transition?

No – went to work for Cray Communications (formerly Dataco – Michael Mathiesens’ old company).  It was a global role with a lot of US interface and I wanted to expand beyond the Nordic horizons.  It later got sold to Intel.

When did the startup happen?  What did was the product?

The startup happened in late ‘96.  I joined David Wittenkamp (previously Nokia) and Samir Lehaff (previously Scanview) to do what initially was a computer telephony (“CTI”) product. I knew Samir from the Apple 3rd party community. Scanview was one of the leading Apple 3rd parties back in the DTP days. I wrote the first business plan but of course things changed and the product evolved as an IP telephony product (IP telephony barely existed when we were starting out).  The product ended up being an IP telephony appliance that would replace the PBX in small and medium sized businesses.

My cousin was working for Lehman at the time. I remember he hooked me up with their telecommunications analyst who was one of the gurus in the field.  He told us that the business plan was flawed and that voice would never be able to run on an IP packet based network. but then disrupting the experts and an industry is most of the fun in doing startups …

You were 3 co-founders?  How was it funded?

We were 4 co-founders. the 4th was Jesper Strøe, who like David and myself, still lives here in the valley.  We were angel funded but had some pretty big angels. we raised all in around $7 million and sold it for just under $50 million.

How old were you then?  You had a couple of blue chip names on your CV so what drove you to take the risk?

I was early 40s but there was an energy around it that i just didn’t get from the corporate stuff.  I am also allergic to corporate politics, and that has grown through the years. A startup is like a sports bike where you feel every bump in the road. iI was a big risk but i just had a feeling we would make it work. Knowing what I know today, I would have done some things differently, but I got an education that you just don’t find in books.

What was as your role and how did you divide things between the four of you?

I was VP of Marketing and Business Development.  David was VP Sales initially and later CFO (he had an earlier financial background). Jesper did fundraising and took care of our investors (unusual in a startup but we did raise a fairly large amount of private capital and he had an investment banking background that was extremely useful).

You said you had (large) angel investors?  7mio. USD is indeed a lot for angels, were they Danes?

Danish, American and British.

So there’s an exit at 50mio USD and I suppose you got your fair share of that.  What comes next?  Did you take a break?

No break. We were acquired by Ericsson and our incentives as executives and founders were tied to a retention deal.  I worked about 2 1/2 yrs for Ericsson as part of the deal.

You got sucked back into a large corporation, what was that like?

As you might imagine going from a 30 person company to a 100K+ person company was quite a cultural transformation. I can’t say I changed Ericsson …

Back to the startup times, were there any challenges to being based in Denmark?  Did you face any resistance from large US customers for example?

There are huge challenges to being based in Denmark. I am a big believer in the Israeli model where you build an R&D competence in the home market but target the company at the US market.  Their model is based on the headquarters being in the US with an American CEO, VP Sales, VP Marketing and the R&D organisation being the subsidiary.  This works and they have proved it.  It is also a fully accepted model over here.  Now Taiwanese, Indian and Chinese companies are doing it as well.  It is also fully compatible with the us venture model.  You get great engineers at home and yet you are in the biggest market from the get go.

Better funding opportunities, better valuation, more entrepreneur friendly, much greater market access and last but not least better exit opportunities at better valuation down the road.

One of the things we did right at Touchwave was to have a guy in the US early (all the way back in ‘96 – way before we had a product).  Also the company was set up as a US Inc. that owned a Danish A/S.  You don’t want to move Engineering to the US though. Denmark has great engineers and it makes sense to leverage that fact.  As a Danish startup I would think of Denmark as my R&D center and my test market (not my “domestic market”).  Denmark is too small to be a domestic market for a high tech startup with a disruptive technology and a global scope.

But there is upside and downside to this model and it involves certainly a significant amount of personal risk.

What do you mean by personal risk?

Most Danish families rely on 2 incomes. Your network is in Denmark, your family is in Denmark, etc. All of a sudden you are coming to the US where your fate is tied to a startup.  Your family’s income is 100% tied to your income (your spouse will not be able to work here for visa reasons); your spouse will have to give up his/her career. your health care is tied to your startup (healthcare here is company based), etc., etc.  For most Danes (or europeans for that matter) this is not something they are used to. Statistically most startups fail, and failure is not very well tolerated in Europe whereas here it is just par for the course – startups come with high risk/high reward.

So the point I am making is this is just as much a personal and family decision as a business decision. I have seen lots of people come over here on H1 visas scrambling for work when their startup folded. I try to paint a realistic picture for people and at the end of the day everyone needs to make his/her own decision.  There is huge opportunity but as the Danes say “the trees don’t grow up into heaven”.

Given the description you’ve just made, do you think the Danes are suited for startups?

I have certainly met Danes who are, and Danes who aren’t.

Was the US Inc. set up was that for tax purposes?  Could your Danish partners, who lived in DK, own shares?

No not for tax purposes. you simply cannot get us investment in a non-us entity. in fact, in almost all cases you need to incorporate as a delaware company to get US venture investment (and that was our intention).  Also, you will have a difficult time recruiting top people in the us with a european stock option structure/warrants structure.  The reason for that is that the US distinguishes in a significant way between preferred (investor) shares and common (founder and employee) shares. I won’t go into the details here but this is highly beneficial/incentivizing for employees over here.

That’s a good transition to Next Stage but I want to ask what happened after Ericsson?

I took over as CEO of another startup in August 2001.  We were going to raise money and then a few weeks later 9/11 happened.  We had to bootstrap the company for a couple of years and ultimately the founding team and i changed the business fundamentally and succeeded in raising money from some of the top venture firms in the valley.  This is where I really learned how to raise (professional) venture money and that has been a foundation for my activities today in Next Stage.

What was the company and were you US based?

Adomo, Inc.  Yes, Silicon Valley based (Cupertino).  Company is still in Cupertino today.

Were you able to exit from that startup as well?

Still working on that   I am not actively involved today though

What was the genesis for your current company, Next Stage?

It is hard to do a successful startup.  For european companies there are additional challenges. after 10 yrs and 2 startups – and experience on both sides of the atlantic – I felt that i had really learned a lot of things that could reduce the risk and shorten the learning curve for other companies substantially.

I started working with Innovation Center Denmark Silicon Valley – Marianne Poulsen – as an advisor and was getting involved with companies from over there and some of the challenges they faced. Today I am working with nordic companies.  I am starting to work with the Benelux as well, and I still do work for us companies sometimes (especially helping them with venture funding).

How does a company best approach you?

Companies are welcome to send me an email with a so-called “elevator pitch” and maybe a one page summary with a bit more detail.  I work with companies selectively because I need to believe we have a strong chance of success working together.  This might depend on the business, the investors, the team, the stage, etc.  But a brief description as above is a good way to get the ball rolling.  Every company should have a great, compelling one-page summary of what they do. This is really useful with investors, partners, customers, etc. (the versions are slightly different depending on who it’s for of course).

Any particular sectors?

I work with ICT and clean tech – I do not work with life sciences because I am not ‘literate’ in that area.  In general I am looking for good ideas that are really disruptive.  We try to determine early who else is out there.  I have seen a number of companies sell in the Danish home market because they are maybe alone in that market, but there might be 3 or 4 other startups ahead of them over here.  That is one of the first things we work on figuring out.

I generally look at need (is the problem compelling); approach (are they unique/differentiated in their approach – is it defensible); are there compelling benefits? and who else is out there doing something similar? These are the key things.  

And of course needs it to be scalable.  There are lots of good businesses that will never be venture fundable because they don’t scale.

What kind of deal do you make with startups?

The ideal deal is to function as a kind of virtual founder – combined cash and equity – just like a real founder. The level depends on my degree of involvement e.g. 20% of my time, 40% of my time, or more, etc.  However I will often start just doing some hourly advisory work until we get to a deeper understanding of their opportunities in the US market.  This qualifies them relative to the market, allows them to get to know me better and vice versa.

Any hot Danish startups you’re working with right now?

Yes (and one Finnish one).

Jeff, many thanks for your time.