Too many people neglect to realize exactly how the importance of relationships plays out in a startup. And not just business relationships—personal relationships play a major role in the success of your company, too. I’ve written on Zendesk for ERE Media and for Relode, but not about Zendesk as a startup. Their CEO, Mikkel Svane, says that the key to their startup success was a focus on creating healthy relationships all around. From Svane and his book Startupland, here’s what I’ve learned about why relationships are clutch for a startup’s success, and six key relationships for entrepreneurs to focus on.
Why healthy relationships matter
In his 2015 book, Startupland, Svane states, “It’s all about relationships.” And this is what he wants everyone to take away from Zendesk’s startup story. Kind of like a “temperature,” a “relationship” is neutral until you define it as good or bad, healthy or unhealthy. While it seems like common sense—that relationships matter—Svane’s words carry profound implications for startups. For example, relationships are vital for keeping early customers loyal, leading to sales and long-term ROI. If you don’t maintain your critical initial anchor group, as Gabriel Weinberg and Justin Mares describe in Traction, you may have a hard time when the rubber meets the road.
For Zendesk, a focus on relationships, not money, saved them from ruin early on. When their then-5,000 customers were irate over a subscription pricing rate increase, prompting a TechCrunch headline, “Zendesk raises prices, pisses off customers,” Svane publicly apologized instead of sticking to his decision. The price hike was a good decision for the company, but he realized that it was how they went about it that upset customers more than the actual change. So Svane decided that the relationship was more important than anything else (and yes, the decision fell on him as CEO at the end of the day). Zendesk ended up grandfathering in existing customers, allowing them to pay the previous rate, which was a great move.
Apparently, Martin Buber’s famous I and Thou philosophy applies to the world of startups, too.
Svane writes, “In some ways the customer relationship is just like any other relationship. You have to consistently put in effort and not rely on the past. The moment you take anything for granted and stop investing in the relationship is the moment you start messing things up.”
"In some ways the customer relationship is just like any other relationship. You have to consistently put in effort and not rely on the past. The moment you take anything for granted and stop investing in the relationship is the moment you start messing things up." - Mikkel Svane
Zendesk now has 119,000+ customers, eight years after the pricing incident, so you could say they bounced back a little bit.
The 6 relationships you don’t want to mess up
Svane’s maxim—“It’s all about relationships”—is intensely practical for any business, especially new enterprises, and here’s how on six different levels:
The business-to-community relationship. As Zendesk grew, they made company decisions that impacted their community. For example, they don’t offer free lunches in-house so that employees can spend their lunch money in the local economy and literally serve the community.
The business-to-customer relationship. At least in the early days, Zendesk tried to make a personal touch with every customer. In fact, one of their customer service advocates called me as I was writing this! I’d just signed up to give Zendesk a try, and without knowing that I was writing about them, they called me as a potential customer. I liked it; more importantly, I remembered and valued it as a potential customer.
The CEO-to-staff relationship. After a large growth spurt, Svane embraced that you can’t be close to everyone on your team even if, as CEO, you want to be. This may be counterintuitive, but setting boundaries is also a healthy way to relate. If there’s any question, tell your staff what level of relationship you will have with them (and why) so they don’t make assumptions about why you’re avoiding them.
The VC-to-founder relationship. Svane and his co-founders avoided a huge mistake with a VC by going with their gut and admitting that some relationships just don’t work out (as I learned my first three weeks at Relode).
The founder-to-co-founder relationship(s). Svane and his co-founders spent a lot of time together as co-founders early in their story, annoying habits and all. They embraced one another’s quirks. Had they not done so, Zendesk might not be here today.
The founder-to-spouse relationship. Work often needs to stay at work. Share as much or as little of the details and stress as makes for a healthy marriage. Launching late, for example, is always worth saving your marriage for. It might go without saying, but…
Of course, all this is easier said than done. According to Svane, business relationships must be cultivated and nurtured—not “managed.” He writes:
“Unfortunately, in business, as in life, relationships cannot be managed. And while a business-customer relationship is not the same as a personal one, all relationships are personal on some level. When people buy a product, they are buying the product of a group of people; when they email the organization, it is a person who responds; and when they decide whether to return to an organization again, they are individuals making a decision. Focus on the individual.”
My simple takeaway from Startupland is that relationships are everything in entrepreneurship. While this can be taken for granted, it can also, when understood for all its implications, change your business operations from bottom to top, beginning to end.
Editor’s note: This post was adapted from a piece that originally ran on Relode.
Chad Harrington is currently the Chief Storyteller at Harrington Interactive Media, formerly the Creative Content Director at Relode, which offers a healthier approach to healthcare recruitment. Learn more at relode.com or follow on Facebook and Instagram.