Upcoaching the competition in the SaaS world

Embark on a captivating journey as we delve into an interview with David Henzel, an accomplished entrepreneur and advocate for personal growth. Our guest has shared profound insights into the strategies that have led him to success and his unwavering philosophy on living a truly fulfilling life. Brace yourself for an exploration of the power that lies in the “Love over fear” approach, and uncover the invaluable habits and practices that can not only empower you to be a successful SaaS entrepreneur but lead a purpose-driven life.

David’s Bio

David is an accomplished entrepreneur and leader who has been building in the SaaS and eCommerce space for over 20 years and has multiple exits, including MaxCDN. Currently, he’s a founder and CEO of many product and service companies at the same time, including upcoach, taskdrive, LTVplus, Shortlist, and Managing Happiness. Thanks to the vast expertise, he has become a prominent figure in the fields of personal growth and business transformation. With his unwavering dedication to promoting love-based decision-making, David has emerged as a respected mentor and speaker, empowering individuals and organizations to unlock their true potential and thrive in today's dynamic landscape.

Questions

‍Nat: Could you give our audience a brief introduction about yourself, your company, and the people you serve?

‍David: I have a portfolio of many different companies I'm involved with, but I'll focus on just a few. These include SaaS companies and even some on-premise ventures, which I believe are making a comeback. Additionally, there are a few outsourcing companies that specialize in customer support, marketing, SEO, sales-related services, lead research, and outbound initiatives. However, my main focus lies with upcoach and my passion projects—Managing Happiness and Love Not Fear.

These projects are not solely profit-driven but rather have a strong focus on making a positive impact. Originally from Germany, I've been an entrepreneur for a significant portion of my life. I've never held a job, as I've always had an aversion to working for someone else. I attended 14 different schools and was often expelled, proving that I don't quite gel well with authority.

I decided to sell my eCommerce company to secure an investor visa in the United States after witnessing the thriving tech scene there because Germany, particularly the area where I lived, lacked such opportunities at the time.

Later, when my wife was diagnosed with breast cancer, it served as a wake-up call. I began questioning whether I was truly living up to my potential and decided to pursue aspirations that would have a more meaningful impact. This was also one of the reasons I sold MaxCDN—I wanted to embark on a different path. As a result, my focus has shifted towards impact-driven businesses.

‍Nat: It's truly impressive how you manage such a diverse range of businesses. Could you share some insights into how you handle leading multiple companies simultaneously?

‍David: I think of myself as an organizational development geek, and one book that has had a profound impact on my approach is "Traction: Get a Grip on Your Business" by Gino Wickman. I highly recommend it to our audience. The book introduces the Entrepreneurial Operating System (EOS), which provides a framework for establishing a clear vision, mission, and values, and cultivating a positive company culture. It also covers essential aspects like effective meeting strategies, setting 90-day goals, identifying key priorities (referred to as "rocks"), and accomplishing significant objectives within your organization. Implementing this system has been incredibly beneficial for my previous ventures.

To effectively manage multiple businesses, I rely on having exceptional business partners or general managers who take care of the day-to-day operations of each company. I enjoy getting involved in the initial stages, guiding them to a point where they can thrive independently. Once they reach that stage, I take more of a coaching and strategic partnership role, providing support from the background. This approach allows me to leverage my expertise while empowering capable individuals to lead businesses.

Another crucial aspect is surrounding myself with exceptional people. I have a filter in place that guides my decision-making process—it's based on the principle that how you do one thing is how you do everything. For example, if someone is sloppy in their personal life, it's likely to translate into their professional endeavors. If they lack punctuality in one setting, it's probable that they will show the same behavior elsewhere.

Similarly, the way someone treats others, such as waiters or their spouse. If they mistreat those around them, they will likely demonstrate the same attitude toward their employees. This filter mechanism helps me weed out individuals who may not align with my values or fit well within my businesses.

Furthermore, this approach is a result of my own experiences. I've encountered situations where business partners stole from the company, which has taught me a valuable lesson. As an expert who has made numerous mistakes in a specific domain and has learned from each one, I can confidently say that it becomes easier over time.

Another efficiency tip is a management principle and a mindset I cultivate within my team. When someone on my team identifies a problem, they cannot simply present it to me. Any idiot can point out problems; it's not a challenging task. Instead, they must come prepared with at least two potential solutions. They should say, "This is the problem, and here are two possible ways to address it. I lean towards this solution because of XYZ reasons." This approach is influenced by the book "The One Minute Manager and the Monkey." The concept is that if you have numerous direct reports, they shouldn't bring problems and leave them in your office, metaphorically referred to as leaving monkeys in your office. They need to come with the problem (the monkey) and also leave with the problem (take the monkey back with them). Otherwise, you become overwhelmed and burdened with solving everyone's issues. So, by encouraging my team to come up with solutions, they are empowered to utilize their full capacity and take ownership of the challenges they encounter.

Just pointing out problems or mistakes without offering solutions is not productive at all. In fact, it can be counterproductive and frustrating. It doesn't engage the potential of the individual's brain. That's why we have an error log in all of my companies. Whenever something goes wrong, whether it's a customer complaint or a bug, we document it in the error log. We record details such as when it happened, who reported it, who is responsible, what occurred, which customers were affected, and whether it was a soft issue or a critical one. But most importantly, we focus on the question: "What can we do to ensure this never happens again?"

Later, during manager meetings, we review the error log together. The idea behind this practice is that nobody gets in trouble for making mistakes; it's a natural part of being human, and we even encourage it. However, if someone fails to add an issue to the error log, it is considered dishonesty and will not be tolerated in my companies.

‍Nat: As someone who has founded multiple SaaS companies, could you name the three main challenges that SaaS companies typically encounter?

‍David: Oh, there are a million and one struggles in the world of SaaS. One of them is creating something of value before effectively monetizing it. Unlike service-based companies such as marketing agencies, which can get off the ground relatively easily, SaaS ventures often require substantial investments. This is because they need to develop a product or platform that is genuinely compelling to customers. So, acquiring the necessary resources and building a valuable offering is an ongoing struggle in the SaaS space.

Another challenge is gaining trust within the target audience. To address this challenge, I've successfully formed partnerships with industry influencers or thought leaders who become the poster children in SaaS businesses. For example, with upcoach, I collaborated with Todd Herman, the author of "The Alter Ego Effect" and a renowned coach who has worked with celebrities such as Kobe Bryant.

Having such a prominent figure associated with the software instills confidence in potential users. Similarly, when MaxCDN partnered with Mashable, a leading tech magazine, and offered their CDN services in exchange for visibility on Mashable's website, it instantly elevated our credibility. So, establishing acceptance in the marketplace is a significant struggle for SaaS companies.

For the third challenge, let's focus on sales and marketing. Many entrepreneurs are drawn to build products in hot market segments without firsthand experience or expertise in that domain. However, true expertise comes from experiencing a particular business area's pain points and challenges.

It should be like scratching your own itch. And you need a deep understanding of your customers and their needs. As the saying goes, "Understanding the Jungle" is key. Just like the Vietnamese who defeated the American forces during the Vietnam War, they triumphed because they understood the terrain better.

In the context of building a SaaS company, the solution to this challenge involves creating a spreadsheet with ideas, interviewing a significant number of ideal customers in the target market, and pitching them with your MVP. You need to gain insights into their experiences and pain points because, later, you can refine your solution and better understand what matters to actual users. Collaborating with someone who is an expert in that field and can provide guidance and trust is invaluable.

‍Nat: You have multiple experiences in building SaaS (which is difficult)  and exiting your startups (which is more difficult to achieve). What’s the secret to why some founders fail to build SaaS while others make multiple exits?

‍David: There are countless reasons why SaaS companies fail, and it's challenging to pinpoint a single secret to success. Factors such as lack of product-market fit, poor marketing, entering a highly competitive market, or choosing the wrong niche can all contribute to failure. So, it's hard to make a concrete statement on this.

However, there are elements that play a significant role. Understanding the customer is crucial, as it guides the development of the right product. It's essential to have a capable team that can build and deliver a product that resonates with the target audience.

‍Creating the right company culture is also essential. A culture of love and transparency, where mistakes are acknowledged and shared openly rather than hidden, fosters an environment of growth.

Additionally, effective marketing tailored to your strengths is crucial. Building in public can be a successful strategy for technical founders who are not marketers at heart. For example, with upcoach, we conduct Zoom calls or webinars inviting our user base to join and discuss new features or developments. We use Restream to run these sessions live on platforms like YouTube and LinkedIn, allowing current and potential clients to watch and engage in the conversation. This approach provides valuable feedback and serves as a marketing channel, wrapped into customer development and user research.

‍Nat: You emphasize the importance of personal development and implementing principles from books into practice. Can you share specific habits that have had the greatest impact on your personal growth?

‍David: I'm a personal development enthusiast, and I believe that how you do one thing is how you do everything. When you have your personal life in order, it positively influences your business life and vice versa. I see it as a triangle comprising yourself as a professional, yourself as an individual (mind, body, spirit), and your relationships. It's crucial to maintain balance in all three areas.

In my own experience, my wife and I started applying business principles to our personal life after a realization during a meeting about the roles and responsibilities I had at MaxCDN. I came home exhausted, noticed our daughter had a full diaper, and casually mentioned it. However, my wife misinterpreted my comment as a criticism of her. That's when I realized that we had never discussed our roles and responsibilities in our personal life.

In business, these aspects are usually clear, but in personal relationships, they often remain unspoken. So, we sat down and clearly defined our expectations of each other, significantly reducing friction in our relationship by about 80%. This success led us to apply other business elements to our personal lives, such as establishing core values, a family mission and vision, regular meetings, a shared calendar, and a shared to-do system. These practices, which are designed to foster success, alignment, and effective communication in business, proved to work wonders in our personal lives as well.

Inspired by this experience, I created a course called Managing Happiness, where I teach these principles to others. Even the leadership teams in my businesses went through this course because how you do one thing is how you do everything. It's crucial to define what you truly desire in life, develop a mission and vision, and establish values in the most important areas: as a family person, in relationships with peers and friends, and as a professional. Setting goals in these areas and cultivating positive habits are equally important.

I believe that habits shape our lives and influence our wealth, happiness, and health levels. This is why I enjoy doing these practices in masterminds or pods, where individuals with similar goals support and hold each other accountable. Positive peer pressure is a beautiful thing that helps you achieve personal growth.

‍Nat: Speaking about habits, can you share some of your rituals, such as morning or evening rituals, that you do every day?

‍David: I have various rituals that I've categorized into family, personal, and business aspects. Regarding my business habits, one important practice for me is planning the next day. At the end of each day, I review how the day went and plan my tasks for the following day. Similarly, I plan my week every Sunday, my quarter every quarter, and my month every month.

Another significant habit I follow is based on the concept of "Eating the Frog" from a book of the same name. It involves identifying the task I'm least likely to want to do, the one I tend to procrastinate on, and making it a priority by doing it first thing in the morning. This gives me an energy boost and prevents me from falling into the trap of avoiding important tasks.

Additionally, I strive to achieve "Inbox zero" by the end of each day, meaning that I clear my email inbox by either archiving, delegating, or completing all emails. It ensures that I stay on top of my communication and don't overlook any important tasks. It helps me stay on my A game and avoid dropping the ball. If I don't reach inbox zero for a week, it is a warning sign that I may be overwhelmed and need to lighten my workload to prevent burnout.

In terms of personal habits, one essential aspect for me is physical exercise – my rule is to sweat every day. I work out with a personal trainer at my house three times a week, starting at 6 in the morning. It's important to get the most important things done before the day begins, as it can often be unpredictable. I also go for a run three times a week on the other days. Although I aim to sweat every day, sometimes I take one day off if it doesn't fit into my schedule. These habits help me stay physically fit and provide accountability, as the presence of my trainer motivates me even on days when I don't feel like working out.

I also follow the "Maui habit" from the book "Tiny Habits," which involves starting each morning by telling myself, "Today's gonna be an awesome day." It may sound silly, but it’s an impactful practice that puts me in a positive mindset to tackle the day ahead.

Another thing I incorporate is the use of a gratitude rock. Each morning, while getting dressed and preparing my belongings, I pick up the rock and express gratitude for various aspects of my life, such as my health, family, pets, businesses, friends, and more. This exercise helps me shift my focus from the momentary problems or negatives and reminds me of the beauty in my life because, as humans, we are biologically programmed to focus on the negatives.

Throughout the day, I keep the gratitude rock in my pocket, and if I feel stressed, I touch it to bring myself back to a positive mindset. In the evening, I reflect on the day's events and acknowledge what went well. This practice prevents me from dwelling on the negative moments and helps me appreciate my progress and achievements.

Overall, these rituals contribute to my ability to navigate the roller coasters in entrepreneurship and life with ease and resilience.

Nat: What keeps you motivated? Is understanding the value of these practices enough, or does it require a lot of self-control and discipline?

David: One effective approach is to create positive peer pressure. For example, hiring a personal trainer or working out with a friend. Additionally, setting deadlines and scheduling meetings when tasks need to be completed can add pressure and ensure that you stay on track. Positive peer pressure is a powerful tool that can help you stick to the things you want to accomplish.

Another important aspect of motivation is having a strong "Why?" behind your actions. Defining your mission, vision, or purpose gives you a deeper sense of meaning and fulfillment. When you wake up in the morning, it's crucial to do the things you care about rather than simply pursuing money. By focusing on something that is close to your heart, it becomes easier to stay dedicated to your goals.

Acting out of love instead of fear is another significant factor in maintaining motivation. As a recovering introvert, I used to feel uncomfortable even leading meetings with my team or speaking with customers. However, I realized the importance of public speaking and networking for my business growth by watching my friend crushing it. I embraced the discomfort and joined Toastmasters for public speaking practice, attended networking events, and conversed with various individuals. Over time, exposure therapy helped me overcome my fear and become more confident.

However, a truly transformative moment occurred when my yoga teacher shared the concept of making decisions based on love or fear. This perspective shift changed everything for me. When presenting on a podcast or speaking in public, if I focus on my insecurities and fears of being judged, it hinders my performance. However, when I shift my mindset and think about how my words can genuinely help and benefit others, it becomes easier to connect and share.

The same applies to selling. Rather than approaching it with fear or feeling like a pushy salesperson, I focus on the genuine belief that my solution can truly assist the person I'm selling to. It's about coming from a place of love and a genuine desire to help, which completely changes the energy and approach.

By making decisions out of love, not out of fear, you will open up a world of possibilities.

Nat: You've emphasized the importance of finding purpose in life. What is your own life's purpose?

David: Discovering one's purpose is a long process. For me, the realization of wanting to have a greater impact came during a moment of "laying on my deathbed" thought exercise. I deeply pondered what I truly wanted to accomplish.

I engaged in an Ikigai exercise. Ikigai represents the intersection of different aspects of life, including what the world needs, what one is good at, and what brings you joy. By finding common ground within these areas, one can discover their Ikigai.

So, I engaged in the funeral exercise introduced in "The 7 Habits of Highly Effective People." It involves envisioning your own funeral and writing your own eulogy. You consider what you would want people to say about you when you're gone—what achievements or impact you would like to be remembered for. You can also imagine what your children, partner, or even influential figures might say about you.

Another approach is to imagine your 100th birthday, where the New York Times writes an article about your life. What would you want that article to convey? This exercise helps provide clarity. Once you have a clear vision, you can work backward and begin with the end in mind—what steps can you take to achieve that vision? I frequently think about it.

But, in one sentence, the primary purpose of my life is to promote love over fear, to help individuals understand that every decision they make can be driven by love rather than fear, and to provide tools for those going from a state of fear to a state of love.

Rapid-fire round

Nat: Do you have a personal coach yourself?

David: I like peer learning, so I’m part of many masterminds with entrepreneurs. And this is how I like to learn and grow. So, I’d say I have many coaches, but no specific one for my life.

Nat: What’s your biggest regret?

David: I don’t really have regrets.  Maybe not being able to spend my time with my mother when she passed away. Or not being empathetic enough when my wife went through cancer because of my Aphantasia condition.

But generally speaking, we all have to go through the fire, and as a friend of mine actually says: “We all go through the fire, and we have to decide if we are precious metal or wood. If we’re wood, we’ll burn down to ashes. If we’re a precious metal, we get refined through the tough things.” So, it’s all just a part of a person’s learning experience.

Nat: What is success for you?

David: Success is being in a constant state of love and enjoying your path.

Nat: If you met 10-year-old David, what would you tell him?

David: Learn, as soon as possible, to make decisions out of love and not out of fear.

Get to know David