How young outsiders changed the shipping industry by finding product-market fit again and again | Laura Behrens Wu (Shippo)

Todd Jackson: Laura, welcome to the show. Thank you so much for joining us.

Laura Behrens Wu: Thanks for having me. I'm excited to be here. 

Todd Jackson: And so Laura, I know that Shippo's origin story, you know, wasn't exactly a linear process. So could you take us back to that time in your life when you first decided to start a company?

Laura Behrens Wu: Yeah. So let's see. It starts with, so I'm not originally from like the Bay Area or even from the US. I, uh, was born and raised in Germany. And then, um, I was working for a startup actually in Switzerland, like right out of college. And at that point in time, like I've not really, I've never been to San Francisco before.

I wanted to experience kind of the startup ecosystem here. And, um, all I knew about SF was just what you could read on, on TechCrunch and the media. So I had, I had pretty high expectations. I, um, started applying on like AngelList for, for different jobs and, um, got like a summer internship through, uh, a friend who was in YC. So I, I got a referral, I got some interviews, um, within like. or the YC network and um, through that got a summer job in, in San Francisco, moved here. And I mean, it was a really like magical moment for me because in, in Germany, like kind of straight out of college jobs are pretty hierarchical. Like you Start at the bottom of the totem pole, you don't get like any serious or real responsibilities. And that startup was maybe 20 people, it was a fintech company, and it was a very different work environment, like the kind of environment where an intern can come in and like experiment with things and pitch ideas directly to the CEO. And they were like, getting ready to fundraise. So we had a very clear revenue target and everyone was all hands on deck to to hit that target.

And I just, I just loved that. I really loved working in that environment. And I think my takeaway from that was like, I do not want to go back to Germany. I don't want to be an entry level person in a German company. And at that point in time, I like started brainstorming just What could I do in San Francisco?

Like, could I start my own company? and I got together with my now co founder, um, Simon, who, like, happened to be, like, fundraising for a different startup at that point in time in San Francisco. That startup wasn't going anywhere. 

Todd Jackson: What year was this by the way? 

Laura Behrens Wu: That was I want to say like 2013. Yeah, that was rough. That was 2013. So we, it wasn't going anywhere. And we decided to just start building something together. kind of at the beginning, we like. whole lot of brainstorming couldn't really figure out what we should be building. And I think that the main like kind of issue at that point in time was that we didn't have any groundbreaking ideas. And we just like decided at some point that, okay, like we're just going to get started. We need to start building something. And the easiest thing to start building is kind of, uh, in, in the e commerce space. So our, our idea then was we have this vision of far fetched, but for independent designers.

Let's build like an online marketplace where we showcase independent designers. we thought it was like a good enough idea to at least start building. And from, from that idea, we like, The first iteration was even more basic, like a marketplace is really hard to kickstart. So we said we're just going to buy a few items and like sell them ourselves, like pretend as if this was a marketplace. So we started a Shopify store. then that got us into shipping for the first. time. Like we had to stand in line at the post office. We had a few orders come in, not too, not too many. Um, but we did, like, we did experience kind of shipping as a problem firsthand, including how to get the items kind of from the emerging designers to us, and then how to ship them outbound again to, to our customers and how to, how to work with inventory. So, um, shipping, was kind of really The least fun part of that experience. And, um, it involved standing in line, like figuring out like post office hours. It involves like trying to get advice, like how to ship the cheapest. and yeah, there was just no good resource for, for getting advice and no like technology interface that we thought was kind of up to par with the other e commerce technologies we were using.

And like, specifically we were using our e commerce stack was like. Kind of the usual one, Stripe and Shopify, like, two super easy, like, SMB friendly, um, interfaces. And then... Yeah, we we couldn't find that for shipping and that's how that's how the the ship idea was born.

Todd Jackson: So at what point were you like, Hey, this e-commerce idea that we're doing is okay. But we think that the shipping idea could be way bigger. Like, what was the thought process behind, I mean, it was a pivot, right? So what was the thought process behind the pivot?

Laura Behrens Wu: kind of the moment was I remember the founder I, I, I used to work for, um, at the, the fintech company beforehand, his thing was always like, build like something that's a, that's a painkiller, not a vitamin. And he set that a lot, um, in kind of the, the day to day context. Um, and that really stuck with me and resonated with me. So when we were building that online store, I mean, we had a few orders coming in, But when we realized that shipping was difficult to do, it just seemed like a clear painkiller.

Like, shipping is hard. Every single e-commerce merchant needs to ship, and if it's hard for us, it must be hard for other people as well. there was no real, like, Aha moment at one point in time, it was just really like it was gradual, like we ran into that problem. And then at some point, I remember a conversation with my co founder, where we where we realized, like, this could be bigger than what we were initially building.

And this could be this could be our idea. And he was saying to me that, well, he's not sure if he really wants to work on like, a Logistics problem for the next 10 years of his life, and he he wasn't like as passionate about logistics just yet. And, um, to be fair, like, neither one of us came up from the logistics background.

So we were learning, um, as we as we were building, and like kind of we agreed on. Let's let's start building. Let's start getting some customers. And then once we have customers, if we develop that passion we'll go all in. If we don't, then that's that's totally fine as well. It was really kind of a, a step at a time And I think it, it started taking off as we started getting customers, as we started getting really like happy customers, responding. Like we, we were doing customer support ourselves, like we're talking to the customers. And that got us extremely passionate, like, just like being able to talk to the customers and realize we're solving a real pain point here. 

Todd Jackson: So maybe going back a few months before that, like before you really had anything, I know, you know, some founders start by building. Some founders start by doing tons of customer discovery and just talking to customers, you know, a bunch of them before they write any code. Which of those kind of two paths did you guys choose to

pursue? 

Laura Behrens Wu: we were building and like this This means that we had like a few different iterations of our product, like we were building stuff that we then had to discard again, like the first version of our product was again, we're coming from a almost like a very like small SMB experience. So we thought like, a good analogy would be something like Expedia. Where you can like search a website and you get all different shipping results and then you pick one and you buy one. So we, like the first iteration was a website like that. And then we, we realized that actually like a lot of our SMB customers, they ship many orders a month, not just one or two. And if you ship many orders, uh, like on a daily basis, then you don't want to click through this interface one by one. So that was our, our first, like. You know, we built this. We started talking to customers and then got this feedback. And then, um, we realized that, you know, Stripe has like the Stripe model of API first, it could work for our industry as well. So we, we like pivoted to that approach and that was like. it is the approach that we're taking now, but there were a few bumps along the way it were like when we started talking to customers, then the realization was that like shipping is such a mission critical infrastructure component that if you are a company that knows how to integrate an API, you really don't want to integrate an API that is like. Unproven and unused by, by anyone else. So, um, the next iteration was kind of combining the two, um, where we built a dashboard on top of the API and, um, connected that to, uh, the Shopify app store at that point in time, it just launched. And, um, that was what, what got us to first traction. And like right now, Shippo is both like an API first company, but also has an interface, like a, a dashboard on top that small SMBs can use if they don't know how to use an API. 

Todd Jackson: So how did you get your very first customers?

Laura Behrens Wu: the very 1st customers were through shopify. Um, the shopify app store. I think it was really a moment in time. situation where we were at the right place at the right time. Like shopify was starting to take off. They just launched your app store. There are not a lot of shipping. Competitors on that app store. And by talking to customers, we realized that like a lot of the customers we were talking to were Shopify customers already. And they wanted an easy way for, for, um, them to be able to ship their orders that they got like through Shopify. So we built this, we built this app. they have a review system on the Shopify app store and, um, by getting like one or two customers there, we got a good amount of like reviews and then word of mouth. And that's, that's how it started taking off. 

Todd Jackson: And what, what were kind of the options back then? If I was an e commerce Shopify merchant, what, what were my current options for how to solve this shipping problem?

Laura Behrens Wu: Yeah. I think the options were like, number one, you can just physically go to the post office. You can stand in line or it's, it's not just a post office. You can do UPS and FedEx as well. Um, so that was like option number one, just like. doing this in an offline way. The second option is like the different shipping providers, they do have online interfaces. So you can like try using their online interfaces as well. And then, um, we do, we have like an incumbent competitor, like at that point in time they were called stamps. com. Um, now they're, they're called Octane. So that was the, the third option. And I, I think to, to take a step back, like the problem that we're really solving is that like, our customers are, are SMBs and they, they're like primarily online merchants who are best at running an online store, but they're not like best in class in shipping. Um, however, they're competing with like retail giants such as Amazon who have set consumer expectations to be like. Sky sky high around free and fast shipping. So, um, there's a mismatch in like, what, uh, an online merchant can deliver versus what the consumer expectations are. And we're building that technology to make sure that our customers can connect to all different shipping providers.

They can, like, deliver on, like The best, best in class shipping, and then they can do tracking returns, insurance, like everything on a single platform. And we really, we started in the SMB segment, but now have gone up market into mid market. And we power a whole lot of platforms and marketplaces as well that then work and work with SMBs in turn. 

Todd Jackson: You mentioned the Shopify marketplace app store and how that was kind of a new thing at that time. Do you think that was really a critical part of the market timing that you got right? Could Shippo have worked a couple years earlier or a couple years later, or do you think you got the timing exactly right?

Laura Behrens Wu: I think we got the timing right. Um, and it's, it's because of a bunch of things coming together like Shopify for sure. Making it extremely easy for SMBs to start selling on the internet. Like I think I, I do think that was a, a, a moment in time, situation. Shippo is, or was ne is necessary because more people are selling online these days. And, um, people who are selling online are not just kind of the, the. Professional retailers, but anyone is selling on Etsy on Shopify, like the barriers of entry of, um, being an, an, an online merchants are lowered. So, um, yes, I think that that for sure played a big role. The Shopify app store was great timing for us. And I think if I look at some of our initial revenue charts, they are like. Our earliest revenue all came from the Shopify app store. I think we would have found a way to make it work maybe through another platform or another app store, but, um, all of these factors did really contribute to like our early success. 

Todd Jackson: So one of the things that I've heard you talk about is, uh, this idea of kind of being an outsider to the shipping industry, which was sort of an insider's industry. Um, and that's affected the way that you've thought about things. And, and really, I think contributed to your success. What do you, you know, how do you think about that?

Laura Behrens Wu: Yeah, it's, it's very, it's an interesting question because like I, I hear people talk about like founder market fit, and we for sure had no founder market fit. Like my, my co-founder Simon and I were coming at it from like a complete outsider's perspective. Um, we were doing e-commerce for the first time and then like shipping for the first time and then realized that the way shipping is being done right now is not merchant friendly.

So that was, that was, like our kind of our wedge into, into the industry. it's been mostly advantageous for us. I think that the shipping industry is such an industry with a whole lot of history and a very like, yeah, like, shipping has been going on for such a long time.

So when you come at it from like an outsider's perspective, you're able to think out like outside of the box, like you're able to think about how it should be for an SMB merchant to be the most successful, and not how it, how it's always been. So I'll be a little bit more specific here, like when we started like one of the earlier barriers for an SMB merchant was that when you, when you start shipping or when you want to ship in order to qualify for any kinds of volume discounts, you need to sign up for a FedEx account or USPS account, and then you need to start building up volume.

And that just takes some time. Like our thought was anyone like as soon as you sign up for Shippo, you should be able to start shipping right away. Like, it's just such a bummer. If you need to go sign up for a UPS account and then come back to ship. Oh, like, that makes no sense. It was really hard to get the shipping providers excited about that. But by now, like all the different shipping providers, like you can start shipping right away when you sign up on Shippo. And it's been a, it's been a huge BD effort. Just this year we got our, like, we got FedEx to agree to this kind of account structure.

So it's really, it's literally taken us like 8 to 9 years with certain shipping providers to get them comfortable with that and, um, to, to be like, to bring that SMB or merchant friendly mindset to, to shipping providers.

Todd Jackson: What was the very first one of those that you got to work? Like, you were basically coming at it as, Hey, this, this user experience is lame. If they can't, if they sign up for Shippo, and then they have to go elsewhere to create an account. But that's also like a hard thing to do as a startup to go start, you know, approaching these big shipping companies.

So like, what was the first thing that you did there?

Laura Behrens Wu: Okay. Um, I think this is fine to share. The first thing we did was we, we hacked it a little. Uh, we worked with a, with a third party aggregator that, um, had the, like, had a special, like, a different kind of contract that allowed us to, to do this. So we first worked with, with an aggregator, and then as we, got enough volume, we, we started approaching the shipping providers directly and got our own contracts and got the shipping providers comfortable with it.

Um, but yes, I think our, our first, like, iteration of this was that we, we hacked it. We, um, found someone who had a pretty good shipping agreement and were able to, to use theirs.

Todd Jackson: That's great. And like, I'm trying to generalize this a little bit into the like, what are the pros and cons of like, sort of the lack of founder market fit and having fresh eyes to this industry, because maybe the person who's been in this industry forever, like, wouldn't, they would just accept that, like, that's how shipping worked.

They wouldn't have gone that route. Um, do you have kind of general thoughts on like, what is good founder market fit versus where is it actually better to not have founder market fit?

Laura Behrens Wu: This is a hard question., there are some problems where, like, for example, if you're building like a, a hard tech startup, like you actually, you, you need the expertise in order to, to be credible, to know what you're talking about and, and to be able to, to build that product.

 For us, it was the kind of situation where coming at it from the perspective of the customer was a unique advantage. But yeah, I, I think it, it depends on like, I'm now I'm, I'm spit balling, but in an SMB business, like, it's high velocity and there's like, a lot of customer touch points and you're able to iterate and test fast.

So it feels like for this SMB business, it, it, it worked very well. But I feel like if you're selling to, or your first customer is an enterprise customer, and maybe you're selling something that's like, a little harder to, that's more of a hard tech product. you might require deeper expertise there.

Todd Jackson: That makes sense. I want to go back, Laura, to the, you know, we like to talk a lot about the kind of the path to product market fit. And you mentioned, um, V1 of Shippo was like this UI based product where you could ship one thing at a time. And then you added the API and then you added like the API plus the UI, you know, the dashboard UI.

Can you sort of take us through those iterations and the feedback that you were getting from customers and just like the insights that you unlocked along the way to guide you to what the right product was?

Laura Behrens Wu: For us, a lot of it was about kind of just. Iterating and testing and speed to market. We like realized shipping was a problem for us. So, um, we started talking to a few other e-commerce store owners to just learn how they're shipping and see if, if they have any best practices, any insights to share.

And that was really coming from the perspective of, we wanted to ship better ourselves. And then through those conversations, we realized that other people were having similar challenges. So from there, we kind of looked at how have other people solved this, and Expedia came to mind as an idea of like, oh, shipping and like, flying should be pretty similar.

And all you want to do is compare different rates. And then you want to buy labels on like, labels from different shipping providers on the same website without having to go somewhere else. That was our, our first prototype. And we, we took it to a few SMBs and actually got people to buy shipping labels. But we didn't get any continuous usage, mostly because it was too time consuming, like, every day to click through that interface.

Um, but I, I think kind of, to your point, like, an important part for us was that we were talking to customers ourselves. Like at that point in time, it's just me and Simon working with customers directly. And like the two of us would take those phone calls. We would like respond to customer requests ourselves.

Like we'd be very upfront about we're an SMB. Like we're just like you, we're also an SMB. We're trying to build something. And like, we weren't pretending that we were a big company full of like, I don't know, customer support people or product people we're just super upfront and direct. And I, I feel like that really made a difference in those conversations because people were willing to give us their time. And then, um, the same people like we built that relationship with, they're then also willing to like, leave reviews on, on Shopify, on the, on the app store when it came to that time. And yes, so I, I think it was like, it was those kinds of, like, direct conversations, phone calls. And it is something where, like, I think it's quite uncomfortable to talk to a stranger on the phone and, um, to kind of know that your product is suboptimal at this point in time and, like, you're a little embarrassed about it. but it was, yeah, that was kind of a fear that we had to overcome.

And we still have some of those early customers using, using Shippo. I get support tickets like directly to my email every now and then from these customers.

Todd Jackson: And when things were tough in those days, and you know, you, you make this product, people use it once and then they don't stick around. What kept you going? Like, why didn't you just give up?

Laura Behrens Wu: We were pretty sure that we were on to something and we thought we were on to something, because the customers we were talking to said this provided some kind of value, but not enough value. So we, we didn't get customer feedback that was along the lines of like, this sucks, don't ever, like, talk to me again. But the feedback was encouraging. It was encouraging feedback. Like, yep, seems like you're on the right track, but like, these kinds of things are not going that well, or this is not feasible. And it kept us going. Um, so yes, I think, I think just encouraging customer conversations, um, kept us going.

Plus, like, we really wanted to figure this out. Like, there was some kind of just honestly, some kind of, like, personal desperation around, we, like, we want to stay in San Francisco. We like it here so much. We don't want to go back to Europe. We want to stay here. We want to make something work. Um, so, yes, I think it was a combination of these two.

Also, like, I am more like more so than my co founder, just like eternally optimistic. So I think there's a lot of just like personality and optimism going in there as well.

Todd Jackson: So let's flip it around then. Was there a moment, you know, in those first couple of years when you were actually like, whoa, this is actually starting to work. Like this, this is a good idea. And where you sort of gain that internal confidence.

Laura Behrens Wu: Yeah. Um, a few, a few different moments here that come to my mind. We had this chart and we also showed that in our first pitch deck about, like, signups coming through Shopify and those were only signups like signups in general, plus the shipping labels bought through Shippo.

And it was the classic hockey stick chart, like, really the classic chart and I mean, the numbers were small in comparison to where we are right now. But that chart, I mean, seeing that was incredible and it, it, it felt amazing. So that was, um, I think that chart, we're looking at it just obsessively and, um, at least to us at that time, it showed us that we were, we were onto something and this was working. And then, um, we did get into, like, an accelerator at, at some point, like, we were rejected by YC, and then got into 500 Startups and it, that started feeling real. 

Like starting to use the name of the company Shippo and other people were using the name as well. And you know how when you're just the two of you talking about this, it sounds like it's all made up and not real, but suddenly you have other people using the name and it's, it's starting to feel real.

Todd Jackson: You mentioned something interesting around, you know, you went to these small business owners and you're like, Hey, I'm a small business owner too like, I'm the founder, you're talking directly to the founder. And that what I heard from that was that it sort of created a little bit of like goodwill and community and people rooting for you.

 How important do you think that is? And is that something that you think founders really need in those early days?

Laura Behrens Wu: I think it again, it depends on the audience and, depends on the style that you prefer. So we were, we're talking to SMB owners, uh, SMB store owners at that moment in time. So I think for the SMB audience, we like, it, just being one of them and, and showing that we were one of them was, was key. And it was very important again.

I think if you're selling to an enterprise company, you might want to like, make yourself bigger than you actually are. So it depends on the audience, but I think for the SMB audience, like one of the upsides is that you are able to talk to the store owner directly or the business owner directly. And then like kind of communicating that we're talking business owner to business owner. 

 We are just like you trying to build a business where we're trying to do the same thing here. And you're, you're not, we're not sending you to, I don't know, a sales person or a customer support person. I think that was, that was crucial. And to your question about like, how important is it to a startup founder?

I do think like being super close to your early customers is very important for a startup founder. I think it's energizing. I think it's it's energizing. It's uh motivating. I think for an SMB product at least like you want to get usage as, as quickly as possible and just like watch people using your product and learn from that.

Todd Jackson: I can tell that you're extremely customer driven. It's, and this is the thing that gives you energy and that gives you kind of momentum. What are, when you think a little bit about, um, some of the things that founders tend to do right in thinking about customers and some of the things that founders tend to do wrong when it comes to listening to customers, what, what comes to mind for you?

Laura Behrens Wu: So I think that the hard part is that when you talk to a customer, or when you talk to 10 customers, you're probably going to be getting, like, 9 different opinions. And then figuring out, like, what is it that that actually matters. Um, and I think that the flip side of being extremely customer centric and the feedback that I'm getting from my team today is that we can't make it right for every single customer.

Like some customers are just going to be unhappy and that is, that is okay. Like it'd be very distracting if we try to make every single customer happy. And that was, that was a good learning for me. Um, and is, is something that I'm continuously working on. Like when I get like a customer complaint I want to make sure that I'm not distracting the entire team, by just passing that complaint along unfiltered. yeah, I think being extremely customer centric has a lot of upsides, but it has the downside of, like, if you, if you listen to every single customer, you're not going to be able to follow your own road map.

You're just going to be dragged into all kinds of different directions and yeah, there are a ton of edge cases. There are a ton of edge cases. So you need to understand just what is something that every customer is experiencing versus like, this particular customer has a strange kind of setup that just, you know, is suboptimal and not the right way to go about things.

Todd Jackson: Do you think that most founders tend to not talk to customers enough or talk to customers too much and kind of over rotate on, on what they say?

Laura Behrens Wu: I think it's, it's probably the, the, the former that they don't talk to customers enough. But yes, once you start talking to customers, I think it's, it's important to keep in mind that you can't make it right for every single customer. And some customers are going to be unhappy.

Todd Jackson: What do you, why do you think that is with most founders? And like, why is it so easily different for you?

Laura Behrens Wu: mean, putting yourself out there talking to a stranger is a hard thing. It's just, I mean, I think outbound sales customer support is incredibly hard because you, you might get rejected. You might get complaints. Just like, how do you, how do you deal with that? 

I mean, it's much safer to just write a bunch of documents, have other people do this for you. It's much more comfortable. Um, why is it easy for me?

I think it's one of those things where

I've gotten rejected a lot. So I've been, I've been, I'm fine with that by now. Um, yeah, I think I'm, I'm not like scared of rejection anymore at this point. Yeah I don't think there is any, any winning formula. I think like for a customer, for a founder who wants to get into this, like, I just say like, do you, like put a number, put a goal down, like you want to talk to 10 customers a day or 10 customers a week, and then just do that.

And once you start getting into the habit, you'll, you'll get into the habit and it'll become more comfortable over time, but I don't think it's something that like people are, are born with unless you're extremely extroverted, which I'm not.

Todd Jackson: Okay. I want to talk about sort of like the, uh, we've talked about the early years and now kind of want to talk about the middle years and the progress that you guys were making and maybe also how it aligned with how you thought about fundraising along the way. Like, it sounds like you raised your seed round kind of right at the end of 500 startups.

Um, when did you raise your, your series A or your series B and sort of like, how was the business kind of growing along with that?

Laura Behrens Wu: So we raised our seed round... yes, right at the end of 500 startups. And I should say that, like, just back to the topic of rejection. Like, I have a spreadsheet and we talked to a whole lot of, like, investors for that to try and to come together I think there was a steep learning curve for me as well about like, what kinds of investors to talk to and like learning about different like stages for different investors.

But, yes, in total, I talked to 125 investors for that round of financing. And ended up, ended up raising from 11. And, um, the, the situation at that time was, I think people were, like, investors were not that aware of shipping as a problem. It was not a very, like, hot topic just yet, logistics. And I think when, when it became hot, it was through kind of more of those on on demand logistics solutions, such as ship.

Um, so that was, I think, roughly at the same time when we were raising our, our A and B, like, that was, that was kind of what's top of mind for, for investors. So, yes, we, we talked to a whole lot of them and like, through that refined our pitch and how to talk about the business. And when we started getting traction, like, when we started getting a few investors that were actually in, like, it turned out to be really fast. But getting to those, like, first 1 or 2 anchor investors, that was the hard part. And then for our series A and our series B, um, like, I, I met one investor during our seed round, Albert Wenger from Union Square Ventures wouldn't invest at that point in time, but we really like hit it off and he's also from Germany and we like just decided to stay in touch. 

And I think it was more of a one sided decision. I decided to stay in touch with

Albert and Albert, Albert every now and then responded to my emails.

So yes I kept him updated as we were, as we were, like, progressing, and then they, they ended up doing our, our series A. And it was then like. Somewhat similar for our series B, like, we met an investor during the A who then did the B.

Todd Jackson: What was it that, because you, you were staying in touch with Albert for a while, when was it that like, okay, you're ready, I'm, I'm ready to do the series A and Shippo?

Laura Behrens Wu: I think that had to be driven by us, to be honest, like, we were, we were saying, like, we're fundraising now and creating a bit of a forcing function there that we're fundraising. We're starting to talk to other people. Other people are going to be interested too. And then that, that was the forcing function for Albert to start looking at it more seriously. But yes, I think in terms of fundraising, it needs to be like it needs to be driven by the founder in the sense that you need to create like that typical like FOMO situation where you can tell investors that other people are going to be making a decision like in the next week or so to force that decision making because otherwise like investors can keep taking like they can keep wanting to see data points and and updates over a long amount of time.

Todd Jackson: Was Shippo's growth curve kind of consistent that entire time and fundraising just happened like at, you know, some arbitrary point on that growth curve, or was it like. You hit a certain milestone, you know, you got X dollars in revenue, you got Y number of customers, or was it just sort of like the curve was this curve and you just chose to fundraise at the moment that worked?

Laura Behrens Wu: So for our series A, um, let's see, we, I think a big moment for us that we started was that we started getting customers using our API directly. So, like, remember that the story was, we had like an API first business, but a web app on top of the API, and then a lot of SMBs using that and then, like, we started getting adoption for our API product . 

And through that, like again, accelerated our growth because an API customer tends to be a larger customer than, than a web app customer. So that, that started adding to, to just accelerated growth. Um, the, the funny story with our series A is that we geared up for fundraising. We're almost like almost, almost ready.

And then one of our largest customers churned. We got them back, we got them back, but that really like just delayed our, our fundraising timeline. We got them back. We got some good learnings about account management because yeah, we, we had this interesting situation where for the first time ever, someone was using or customers were using our API.

Those were much larger customers. And we didn't know about account management just yet because our previous customers were all SMBs. So, um, yes, we learned a valuable lesson about account management. Got this customer back this customer is still a Shippo customer today and then got our, got our series A raised.

Todd Jackson: Awesome. So, Laura, you've mentioned that, you know, um, Shippo's core product has evolved quite a bit over 10 years. And I think it's interesting because like most founders have a, have a hard enough time just finding product market fit once. But it's a real feat to be able to find product market fit a second time or a third time. So when did you sort of start to think, hey, we have product market fit, but we need to either expand the market that we're selling to or expand the number of products that we're building. When, when was that kind of moment in the journey?

Laura Behrens Wu: Yeah, so I, I love your, I think this, this podcast is meant to be about like product market fit, right? And I love the question because people think you find product market fit once and then you're good. And I think in, in our experience it's been, you find product market fit within one customer segment or for one product and you need to continuously be finding product market fit either for new products that you launch or for new customer segments that you're entering into.

So our, our first product market fit was like really narrow. For like an SMB audience using Shopify. And that was like super narrow. It gave us a really awesome, um, like hockey stick chart. And then like, we had to continuously find product market fit for like the next customer segment for the next products that we're launching.

And I think right now, um, just to, to, to share what we currently have and then what we're working on is like, our SMB product, through different app stores is still a kind of a really nice revenue generating engine for, for Shippo. And we can talk about the horizons framework in a bit. But that's kind of our horizon 1 product.

And then, in addition to our SMB product, that's like, that was initially just about shipping. We, we tagged on like shipping insurance and tracking and just a bunch of shipping adjacent products. Then we expanded into, we're always meant to be an API first business, so then we expanded into how do we, how do we make this API work. And the, the amazing part here was that the first objection we got, like, from customers about using the API was that, well, no one else is using the API, but through the, the dashboard, like, that was built on top of the API, we started having volume coming through that. And we're able to say actually like this API is already like powering shipping for this amount of labels. And um, then we, we started getting some API customers. Our first API customers were, um, or like the API customers that we're serving now are like mid market customers and we're continuously pushing up market and we're like in the middle of doing a 2024 planning exercise to go further and further up market where we're like seeking product market fit for the first time and like really again learn interviewing like mid market customers learning from them and seeing uh what features we need to add to be like more compelling in that segment.

And then we also power platforms and marketplaces that work with SMBs. And I think that was, that was really, or I think that's really cool because those S- like we're able to go to these platforms and marketplaces to say that we know the SMB audience, we already have product market fit there. And now we're going to help you build shipping for that audience that we know so well.

And, um, yeah, those kinds of SMB platforms and marketplaces, they're like Etsy and Shopify in Europe, and Depop, Mercari, like a lot of them that, um, that, that use us for, for shipping in the background. But it worked like we, we got product market fit there because they have the same customer segment that we already have product market fit in.

Todd Jackson: So how do you think about this as a founder doing this at a bigger scale? Because it's so different when it's just you and Simon, you know, you can go talk to a bunch of customers. You're like, Hey, we're just the two founders, right? It's almost like the hunt for product market fit at that stage is so natural.

And then with Shippo now, you've got a, you've got a bunch of employees, you've got all these things that are working already. How do you do brand new things at the scale that you're at?

Laura Behrens Wu: So a framework that I've really enjoyed here, is the, the horizon framework. And the, the high level explanation of that framework is that you've got a horizon 1 product that is working and it works really well. It's the core part of your business, probably the majority of your revenue and it's all about optimizing.

It's about making it work better. Like really building this revenue engine there, but you don't want to take too much like of a risk there. Like it's a, it's a mature product. And I think then you have your horizon 2 and horizon 3 products that are forward looking and you're making a forward looking investment.

You don't have product market fit in those products- in those areas just yet. And like horizon 2 is kind of you have a good hunch that there's something there and it'll, it'll work. Horizon 3 is, these are like insane things and like, you're just dabbling. You have no idea whether or not that could be some, a business line in the future.

And I think the, the mistake that a lot of founders make is that when they get excited about Horizon 2 and 3, because those are exciting forward looking things, like they get distracted from Horizon 1. And they, like the, the organization, yeah, it just gets, gets distracted, foot off the gas on Horizon 1 and you start getting deflated there.

But in order to be able to enter Horizon 2 and 3, you need to have Horizon 1 work really well and drive a whole lot of revenue. So like, that, that framework also suggests that like the majority of your, your team members should be working on Horizon 1 products. And then you have like, let's say 70% doing Horizon 1.

Like 20% doing Horizon 2 and then 10% playing around with Horizon 3. But I think, yeah, it's just so important to, to not, like, just focus on the big shiny stuff in the future and forget about what is actually generating revenue today.

Todd Jackson: The 70/20/10 framework, like that's, you know, way back in the day when I was at Google, we used to talk about that. Do you do that pretty strictly? Like, is it, is it roughly 70% of, of the folks at Shippo are working on the core thing? And then it's 20/10 for the others? 

Laura Behrens Wu: We try to do it really strictly. And I, I say that because I think we've gotten distracted in the past. Like, we've made those mistakes where I got excited about a new thing in the future. And then suddenly everyone thinks they should be paying attention to that. And um, when, yeah, so I think from a founder perspective, it's totally fine for the founder to be thinking more about Horizon 2 and 3 and to be paying more attention to that.

But the rest of the organization should be split up this way where the majority of the organization takes care of Horizon 1 because that's where revenue comes from today. And then it's just a really key to make sure that the team members who are working on Horizon 1 feel like they're doing something really important for the company and not that they're working on I don't know, like an overlooked part of the business.

So yes, I think when, when we talk at all hands or we, when we like just give shout outs in the company, really trying to make sure that we're not just calling out the big shiny things, but that are, that are forward looking, but we're like, talking about our revenue engine and like making that work and, and really like praising that part of the business.

Todd Jackson: That's really interesting and tricky, it sounds like, because it sounds like you, Laura, like you don't necessarily spend 70/20/10. Like maybe you're, I don't know, what percentage do you think about Horizon 1 and 2, or is it Horizon 2 and 3 versus 1?

Laura Behrens Wu: I think it's probably more like 50/50. So I am spending, for example, yeah, I'm for sure spending more time thinking about horizon 2 and 3 compared to what the organization is doing. And I think it's important because we're, we're seeking product market fit in those areas right now. So for example, I've been sending some like outbound sales emails myself this last week. When I go to conferences, I kind of, I pitch kind of the forward looking ideas to, to future customers and, and get feedback there. So, yes, I'm, I'm spending more time on the forward looking stuff myself, but I'm just careful to, to make sure that the organization is not following that lead.

Todd Jackson: It's really interesting because that, the temptation is, hey, if this is where Laura is spending her time, like, shouldn't we all be spending our time here? Is there, is there anything that you do like on your, on your direct team to sort of sort of sort of make that distinction clear how do you map the people on your team to these different horizons?

Laura Behrens Wu: There is no clear, there's no clear mapping because the people who report into me are functional leaders right now. And I think there, there is a question of would you like, you know, have a different work structure, but we have functional leaders. And then within those functional like teams, like marketing, for example, or, or like R&D is actually much easier within R&D.

Then we have people working on kind of our core business, the SMB product, the web app. And now we have, we have teams who are like experimenting with, with forward looking products. Like for example, we're building an optimization, a shipping optimization product, a billing and reconciliation product.

Those are more of the forward looking things. And then like in kind of the crazy bucket where we have a, like an AI product that someone's like playing with but yes so, so I think in R& D, it's like, it's pretty easy to, to like have boundaries between the core business and like forward looking investments And then it's a little harder to do on the other teams.

Todd Jackson: Like, what are the signals that a founder sees? Where they say, Hey, it's time to think about horizon two, or it's time to think about horizon three. Like when were those, was it a natural kind of thing for you or, or how did that come about?

Laura Behrens Wu: Okay, um, if you think about Apple, for example, like maybe like one of their earlier products, the, the, what's it called? Like the iPod, like that iPod product that was selling like crazy. And then at some point they started investing in, I don't know, the iPhone and like products that we have now. So what I'm trying to say, like, every organization has that moment of, like, the horizon one product is, like, still driving a whole lot of revenue, but you feel like you need future horizons in order to, to keep that growth going. And ideally you start investing in horizon two and three when horizon one is still growing very well.

I think when horizon one is like starting to flatten, it's a little too late. Yeah it's a little, like you should still do it, but it's a little too late to be, to be optimal. That's all to say, like, I think you should always be looking at what are forward looking products to invest in, but then there's a risk of being, too forward looking, and, and getting yourself distracted on what actually works today. Uh, but, yes, I think for, for founders, as soon as you found product market fit with your existing product, I would start thinking about, like, how do we scale this up? And then while we scale this up, what are some other things we can build that are, that are more forward looking? And it does not need to be an entire pivot or like an entire new customer segment, an entirely new product that you're building.

It can just be like other features that you're adding to your existing product for future growth.

Todd Jackson: Okay, let's, let's move to, your team and, and kind of leadership and your leadership style. I'm curious, what did the kind of early team look like in the first few years of Shippo? And was there anything sort of about that early set of, of critical team members that, that you think is still critical and still, still what you look for in folks at the company?

Laura Behrens Wu: I think in the, in the early team, you're looking for people who are able to wear all kinds of different hats who are willing to get their hands dirty and do things themselves. And like, they're really the kinds of like, 0 to 1 people and that's a distinct personality type. You probably are not looking for someone who's been, I don't know, a VP at a different company or something like that.

But just, you know, builders, super scrappy people, um, humble and, and willing to do all kinds of work. We still have two people who were with us from day one in the company. So that's, that's really rewarding to be able to, keep some of those early folks around. but I, I do think that it is, it is a distinct personality type.

And like, at times, those people are not scalable. When you need someone to scale this up, you might be looking at a different skill set and personality compared to the person who built it. It's difficult to figure that out because you do develop relationships with, your early team members.

It's difficult to figure out like, when is the time to bring in someone else to, to scale this. And then good news though, is that typically there are other things to be built in the company. So the builder can go and like, go build something else in the company. Uh, so that is, that is the good news. Provided that that person is self aware and like, willing to move into a different role. Um, I think, an easy or like a mistake that we made early on, I think hiring people with those fancy titles, it is a mistake that I often hear from other startup founders where, like, we have people where, you know, if, if someone's been a VP at Facebook at that point in time I was like, okay, this, this should be like, you know, if they're good enough for them, must be good enough for us. And it turns out that is just a very different scale. It's a very different kind of environment to work in. And people who are happy there are probably not happy at a company of our stage.

Todd Jackson: And it sounds like maybe you learned that the hard way, you know, once or twice. Did you change, the way you interview people or kind of like the, what you select for as a result of, of those learnings?

Laura Behrens Wu: I think we are really like even now trying to figure out like what did this person do themselves? Like it's easy to talk about kind of wins in the organization. But then what did you do specifically to like get to that win? And just managing a team that got you there is probably not the right fit for for our stage still. Um, so, yes, I think that was, like, just really drilling into, like, that person's contribution, on, on projects, on, on wins, and getting, like, clear explanations there. Um, we are, like, people who work well at our company, they have a strong, like, ownership mentality, and we, like, just revamped our values a few years ago to, like yeah, in the middle of the pandemic to make them a little more catchy and, and we call it like we're looking for people who are drivers, not packages. And it's really the shipping analogy of like, you're not just along for the ride, like in the back of the shipping van, but you are the driver of the shipping van delivering packages yourself. 

Todd Jackson: That's a great one. What are the, what are the other values?

Laura Behrens Wu: Um, let's see. One of our, one of my other favorites is, uh, path to green. Like because Shippo our logo is green and path to green means that you're always like, not just looking for problems or finding problems, but you also bring along the solution. Like, it's an easy one to use in a sentence. That's kind of what we're optimizing for. Just like values that you can use in a sentence, not just a single word. So it's just like, what's the path to green here? Like, great problem, but how do we fix this? 

I mean, obviously customers, so customers for the win. Like whatever we do, we, we put our customers first. And this is a, it can be a hard one because like, do you recommend shipping options that make the most margin for us? Or do you recommend shipping options that are best for the merchant? And like customer for the win, like makes it very easy, like how to decide questions like that.

Todd Jackson: So it's clear, Laura, that, you know, your, your individual background was so important kind of in the very early days. You had come from Germany, you wanted to be in Silicon Valley, you wanted to stay in Silicon Valley, so you had to make this work. Are there things about your, your individual background today that sort of, uh, shape, um, how you, you know, think about Shippo and, and, and still impacts you in a way?

Laura Behrens Wu: The first thing that comes to my mind is that I, like, I'm a first time founder. So finding the right leaders that have done this before and leaders that I can learn from leaders that like, ideally, it can be like, mentors in addition to team members has been has been key for me. And we have a really awesome team at the company right now. like everyone on the team has kind of done a version of this at a different company before and is bringing their experience to Shippo, while being willing to do it kind of the Shippo way, sticking to our values, doing it the way, the way we do things. 

I think one thing that founders, one mistake that founders tend to make is that they hire people who are a little bit too junior. And I think more recently we've been able to like attract talent that's been, you know, been there, done that and like pretty senior talent. And it's been a complete game changer for me, like being able to trust that people do what they, what they said they do. And yeah, it's that simple. And then being able to, to teach me along the way.

Todd Jackson: Can you think of any, like, really critical hires that you made along the way and sort of, you know, what you were thinking about when you hired them? And then, wow, like that really worked out, and here's why it worked out.

Laura Behrens Wu: So I think it starts with, and I'm not even thinking about a specific person, but like when we hired our first, like, people leader, that was long overdue. And again, it was not top of mind for me. I feel like, like, it is a role that founders hire a little too late for, but when we have that person and like also the person we have in place right now is just such a game changer, someone who is able to strategize with you on on people related topics and help with kind of culture values, like employee, happy employee satisfaction and performance and just all of the things that are kind of top of mind for a founder, but kind of hard to operationalize. So that's, that's one role that I think founders tend to hire a little too late for, uh, because it seems like it's a nice to have role, like there is no pressing, like it does not contribute to growth or, or customer acquisition.

So it feels like it's, it's overlooked. Um, I think the, the person like on my mind right now is when we brought on a COO, like our current, like our current COO, Andreas, it was a huge game changer, like being able to hand off all of the go-to-market related functions to a really reliable and trustworthy person. Um, and allowing me to focus more on like kind of the, yeah, horizons, forward looking stuff like where to, where to invest on the R&D side. Culture as well, yeah, that was, I think, really big for us.

Todd Jackson: Are there things that you look back on either when it comes to product development, scaling products, or just, you know, growing and leading a company that you feel are kind of unconventional or different from the way that you hear other founders doing it?

Laura Behrens Wu: So, a few years ago, at the beginning of the pandemic, or- no, after, like, right, right, like, when, when things are starting to slow down, like, slow down a little bit, I got to attend kind of the first conference coming out of the pandemic where Frank from Snowflake

gave a presentation. Yes, so he spoke at that conference, like hugely inspiring, uh, person and like great, great book as well. Very, like, strong minded person. 

And he, had one, like, very actionable piece of advice for, for the crowd when someone asked like, how do you stay connected in a, in an environment where people are kind of, more remote and you don't see people every single day. And his piece of advice was like, he writes an email every Sunday to the entire company, and it's not scripted, not reviewed by HR or legal.

It's just his like, his thoughts of the week. What's top of mind for him? What is he thinking about? It's completely unfiltered. Including his emotions? Like, is he happy? Is he, is he satisfied with what's going on? And like since listening, since hearing that from him and he said he's doing it until today. So like since hearing that from him, like, I thought this is something that I really want to try as well and I've been doing it every Sunday since it's like almost I think a year and a half, two years now.

And it's something that the team really is looking forward to, like I, and I'm, kind of embraced the same style, like the same direction as he was describing, like completely unfiltered when things are going well, I say them exactly as they are when things are going poorly. I like, give shout outs in those, in those, um, in those emails. Talk about how I feel about certain things. And yeah, people really appreciate them. People really, like, they feel more of a connection. And, um, I think it's been just because, yeah, we don't see each other in the office every single day. I don't get to talk to people every single day anymore. But yeah, I get, like, consistently really good feedback on that. And, like, like a handful of responses every time. So it's something that, yeah, I've just really enjoyed doing. And I look forward to writing those emails too because they help me kind of reflect on the last week and think about what's top of mind for me next week.

Todd Jackson: Do you feel like you have to be careful sometimes what you say in that email? You know, one of my partners at First Round, Josh Kopelman founder of First Round, you know, says it's the founder's job to balance transparency and hope. And, and, and you've got to sort of keep them in balance.

Because sometimes like if you're too transparent and like, oh, this was a horrible week, and I'm so negative about everything. Well, it's like, okay, now, you know, hundreds of people are reading that and they're like let down.

Laura Behrens Wu: Okay, no I mean, I don't think that works, but that's where our company value path to green comes in again. Like, I, and I'm a super optimistic person myself. So if something wasn't going well, I will say like, Hey, like, this didn't go so well last week. Like, I've been thinking about that. But then like, The path to green here, this is how I, how I look at, um, moving forward, how we can do this better, how we can prevent, uh, similar things from happening, or just like what our learnings are from this. And that's one of our other values, like ship to learn is one of our other values. We always want to learn from, from everything we do.

So yes, I think it's, it's fine to be transparent, but then like there should be a constructive takeaway from it. Um, that the team can, that the team can use and apply in, in other settings.

Todd Jackson: Okay, Laura, so this has been great. To start wrapping up, um, I want to ask you some closing questions. What is some advice that you find yourself giving out over and over again?

Laura Behrens Wu: I think given that this crowd is probably a startup audience, like I think what's worked or when I reflect on what's worked for us, it is really just you have to get started, like getting something out there in front of the customer. And your first idea might not be the idea you end up with. And that's perfectly fine.

I've seen it with a whole lot of other startups, a startup founders now, the first idea looks very different from what they end up building and scaling. So yes, I think the, the, the challenge that I've seen for, for a lot of startup founders is just overthinking kind of what you're building, what you're working on. So my main piece of advice would be to, like start building it and then like keep an open mind for how this could evolve over, over time.

Todd Jackson: And so do you find yourself giving advice on A) how do you choose an idea to get started on, but then B) like how to kind of validate that idea?

Laura Behrens Wu: Yeah, I think to the first part of how to choose an idea, I think an idea, as long as it's good enough, like it's not completely ridiculous, let's start building that and get some validation along the way. And then I, I'd say, like, in terms of getting validation, it's really about, like, listening to customers, like talking, talking to early customers, being, being hands on and like customer support and, and sales and all that stuff yourself. And then seeing what customers say and keeping an open mind that if, if they take you in a, in a different direction, like early on, it's like, it really doesn't cost too much to, to go explore it. I think it becomes more costly when you have an organization and like different people you need to manage.

But if it's just you and the co founder, like exploring something, exploring a few different things is, is like, I think the right thing to do early on.

Todd Jackson: Who are the most memorable people or mentors that you've had in your career and what did they teach you?

Laura Behrens Wu: I was lucky enough to be able to work with, uh, two really awesome startup coaches Jerry Colonna and Khalid Halim. So like two, I think one is from both of them came up through Reboot and Khalid now has his own thing. And I, I sought out a startup coach early on because I remember like, uh, a team member leaving the company and giving me the feedback that he did not think that I was acting like, you know, a typical startup founder. And I, I came to, college back then kind of thinking that like, I want to learn how to be, you know, more like Mark Zuckerberg, more like Steve Jobs, more like those people. And I think the, the big realization there was like, no, we're like going to work on how to be more like yourself. And that, that was like, I think a big game changer for me, like embracing that, you know, just my own style and not trying to be someone else at work. And , it's just been rewarding, but also much less work to be able to just be yourself at work. And then I'd say the other part, like, it's not a specific person, but being able to talk to a whole lot of startup founders here in San Francisco, and I think that's why building in San Francisco is so awesome. Yes, being able to talk to other startup founders consistently and constantly shows me that, like, my problems are not unique. I'm not like the odd one out. Everyone's gone through similar challenges and yeah, it's, it's not a bad thing what we're experiencing right now.

Todd Jackson: Thank you, Laura. This has been awesome. I really appreciate you sharing your story and the Shippo story.

Laura Behrens Wu: Thank you.