Speaker 1: 0:00

Ever tried opening an umbrella in a rainstorm, then you'll get why Sense Storm Umbrellas became a hit. So next up, we have a chat with Philip Hess, who is the co-founder of Sense and the first ever winner of the Philips Innovation Award. In this episode, we'll cover how an innovative storm umbrella took the world by storm. We'll talk about Rockefeller habits as a framework for growth and how to become a market leader with no more than 10 employees.

Speaker 1: 0:27

My name is Lars Kramer and you're listening to Start to Scale, the podcast where we explore the scale of journeys of remarkable founders. This is a special edition to celebrate the 20th anniversary of the Philips Innovation Award, so let's talk about Philip. He co-founded Sense in 2005 with two fellow students and together they created the original Storm umbrella that, pun intended took the world by storm. Later on, philip joined a sleep startup, somnox, and he coached Scalab founders to implement the Rockefeller habits. With his latest venture, rotterdam Factoring, he is on a mission to become the largest factoring company in the Netherlands, with no more than 10 people on staff. Welcome, philip, it's great to have you here. Thank you, thanks for having me. Cool, we're recording this on the ninth floor of an old Shell building in Rotterdam. Have you been here before?

Speaker 2: 1:12

I've been here before when it was actually Shell. Oh, so that was a while ago. That was a while ago.

Speaker 1: 1:16

Okay, that shows a bit. Philip, you've created both products for stormy weather and sleepless nights. If you had to pick one unexpected life problem to solve next, what would it be? Ooh, this is your first question. Come on man.

Speaker 2: 1:37

Well, I remember, in the early stages of Sense, we were joking around for like new, uh, innovative consumer products and, uh, one thing that came to mind was, um, what's it called? A? Um, fire alarm with the snooze button nice, so you know when your house catches fire and you're sleeping, you can still push the snooze button nice.

Speaker 1: 2:02

Did you get a patent for that? Not yet, okay, okay. So anybody's listening. Get the paint. It's nice to have this conversation. Thanks to fia for connecting us, to deep dive into your story, your entrepreneurial journey, with the highs and the lows. But before we go into that story, let's start with four statements that you can answer with true or false. Number Number one Storm umbrella is an official word in the Dutch dictionary. Thanks to us. True, rotterdam needs Delft more than the other way around.

Speaker 2: 2:36

True, definitely true. Nice, all the Delfties listening.

Speaker 1: 2:42

A business with a strong product can dominate a market even with a small team and limited resources.

Speaker 2: 2:49

Yes.

Speaker 1: 2:50

And the final one I turned gray before I turned 40. Partly true.

Speaker 2: 2:56

Partly true. Okay, okay, okay.

Speaker 3: 2:58

So we joked a bit about our gray hairs before.

Speaker 1: 3:02

What time did you get gray?

Speaker 2: 3:05

I was talking about this with my wife the other day and I told her that before I met her I didn't have any gray hair, and now I do have gray hair. We've been together for 11 years, so you know it's probably a coincidence.

Speaker 1: 3:15

Okay, okay, let's hope the wife's not listening here. Anyway, let's first dive into the story of Sense, because I think that's the story that many people know. Um, that you created, right, um, I have one, and since one, nearly every major design award worldwide was named one of the best inventions of the year by time magazine. So those are, you know, big achievements. Maybe take us back to that time. How did you end up coming up with the idea of creating a storm umbrella?

Speaker 2: 3:41

yeah, well, it actually started, uh, with a master thesis thesis of one of my co-founders. All three of us studied industrial design engineering in Delft and on the side, I also studied business administration in Rotterdam. So I really like this combination of Delft and Rotterdam. But yeah, he had one week with three broken umbrellas. That was right at the time when he had to pick a subject for his master thesis. And then he was like you know what? You know people, we can go to the moon and back, but there's no decent umbrella in this world yet. So I'm going to develop the ultimate umbrella, and I remember that he told me that.

Speaker 2: 4:18

And back at that on that day I was basically just laughing at him. I was like, man, you know, like a master's thesis that's probably going to take you around nine months and you're not going to waste nine months of your life working on an umbrella, you know, Come on. Well, I'm actually looking back. I'm glad he did. But so when he started his master's thesis, I was also quite interested in it from a more commercial point of view, because I was already studying business administration on the side. So I was interested in hey, what can we do with this and how can you best market this? So at one point we started writing a business plan, and not really with the idea to start a business. But you know, there came a moment in time where you know he'd finished his graduation, we finished the business plan and then was like okay, guys, what are we going to do?

Speaker 2: 5:13

all right we're gonna start a company and we had no idea what we're getting into and looking back, I think that's a that's a good thing, but uh why is it a good thing?

Speaker 1: 5:23

because you don't know what you're signing up for exactly.

Speaker 2: 5:25

Yeah, yeah I think you're. You're too um, what's that called? Unexperienced to really understand that the journey that you're embarking on, yeah and uh too inexperienced to really see all the hurdles that will come at you, and uh, we just went for it and uh, I think it was only three years later that I actually realized oh you know, this also could have gone wrong, right like I, I there was not a moment in time that I thought about that scenario right, you're just going for it.

Speaker 1: 6:00

And then an interesting combination three people with a background in industrial engineering and then one who's gone out of business. So to that point of rotterdam and delft. You said rotterdamers need delft more than the other way around so so do you see it like that as well in your? In that setup you need that industrial engineering component to actually create the product itself, but then without business, yeah well, it was actually funny.

Speaker 2: 6:22

When I was studying both in delft and rotterdam, I noticed that people in delft, they have a lot of good ideas but they didn't really know how to commercialize it. And on the other way around, in rotterdam, there were a lot of people that wanted to commercialize ideas, but they didn't have any ideas, you know.

Speaker 1: 6:37

So getting those two together, I think that was a very smart move right so, and you did this, but I think 20 years later now, it's still a challenge. I think we're getting better at it. There's a Founder Co-Founder event, I think. It's run by ES Delft, so they bring in Rotterdam founders etc. But still it's 10 kilometers in between, but it feels like it's the other side of the world. What do you think are the biggest differences between students coming from Delft versus the ones from Rotterdam? And then, more importantly, you know what effort should they make to get together?

Speaker 2: 7:11

Well, I think it's crucial to realize the added value of the other person. I think you know I may be a bit too harsh on this now, but I think a lot of people in Delft see the people in Rotterdam lacking substance, while people in Rotterdam just think, okay, in Delft there's only nerds. And once you really understand the added value where another person can really complete you or add something that you don't have, then you can make big steps together.

Speaker 2: 7:45

But that also requires everybody to basically uh, lower down their egos yeah and uh, yeah, and, and really, like I said, see the added value, yeah, and then you can create great things together yeah, okay, and start doing it together.

Speaker 1: 7:59

Yeah, maybe have a beer or another drink together, get to know each other. Um, maybe, to continue a little bit on the sense story, um, can you walk us through some of the highs, because you were going very international. You sold in 50 countries. You had massive media attention back in the days. Yeah, um, you quickly sold 10 000. So how did that success feel? And and what has been your biggest learning moment in that journey?

Speaker 2: 8:23

yeah, yeah, good question. So, um, when we had our market introduction before that, we had no idea how many umbrellas to manufacture, right? So we figured, okay, well, 10,000 units, that should be enough, and we'd really prepared our launch. So I actually contacted a lot of different media outlets to get media attention and so when we launched we got like a huge amount of media attention. It also helped that on that day it actually rained.

Speaker 1: 8:56

This you cannot schedule.

Speaker 2: 8:57

No, no, no, true, you got to be lucky a little bit, I agree to that, but so we prepared everything and then, um, what was good about it is that everybody's familiar with the problem of umbrellas going inside out, you know so. And in addition, um, what? What also helped us is that we, as like three cute students, uh, develop this thing, so, uh. So a lot of media outlets wanted us to be successful. So they really, yeah, like everybody picked it up and, uh, we offered the media free umbrellas if they were going to test it, and uh, video that and uh, and air it on tv. So this first like week and a half, it's just crazy like how many, how many media attention we got, like not only in the netherlands but also outside of the netherlands.

Speaker 2: 9:49

So this first batch of 10 000 units sold out after nine days nine days, so so when that happened, actually we were like oh yeah, and, and like one second later we were like, oh shit, you know, because, uh, we didn't have any stock anymore and we couldn't deliver anymore, so, uh, so then, um, what then happened? Like I think a few days later, like the first, uh warranty issues appeared oh all right yeah umbrellas that that broke down in the storm and, uh, because everybody was testing it, of course to the the max.

Speaker 2: 10:24

And the funny thing is, before we had this first batch of 10,000 units made friends of ours, more experienced entrepreneurs already warned us you shouldn't manufacture a first batch of 10,000 units. What if they contain teething problems?

Speaker 1: 10:40

In Dutch kinder Wow teething problems kinderziektes. Yeah, yeah yeah, kinderziektes.

Speaker 2: 10:52

Um, so what if they contain teething problems? And we were like, nah, that won't happen to us. You know that only happens to like bad designers, and we really thought this through and we tested it extensively, so that's definitely not going to happen. Well, yeah eventually like uh, I think like 85% of that first batch of 10,000 units was crappy.

Speaker 1: 11:13

Eight Wow 85%.

Speaker 3: 11:15

Yeah, yeah, yeah.

Speaker 2: 11:15

So we got all those umbrellas back and then we're like, oh shit, okay. So then we sent Gerwin one of the founders, the engineer who came up with the idea. We sent him to China because that's where we did our production.

Speaker 1: 11:28

Yeah.

Speaker 2: 11:29

And he could only come back after he solved the problem.

Speaker 1: 11:32

Okay, wow, so he was there for a few months. Send you a co-founder to China, only to come back. Yeah, yeah, yeah.

Speaker 2: 11:38

And then, but still, we continued to get media attention and a lot of orders came in, but we couldn't deliver. So then we decided that we were going to sell these gift vouchers for a free umbrella, and that actually allowed us to continue to sell umbrellas like 50-year-old umbrellas and people were simply willing to wait three, four months to get their new umbrella. And that was crazy. That was never done in our industry, because we launched in November and then Christmas season was coming up which is, like, sales-wise, a good period for our type of product.

Speaker 2: 12:13

So that's how we managed that, but that was a roller coaster of emotions.

Speaker 1: 12:18

But that's such a smart tactic, selling vouchers, I mean yeah selling vouchers for something because you can still sell. Yeah, you can hand them in later.

Speaker 2: 12:27

Yeah, otherwise we wouldn't have survived it, right?

Speaker 1: 12:30

Because it continued our cash flow yeah and we really needed that at that point in time makes sense. How were you funded back then?

Speaker 2: 12:37

we had two, uh, informal investors and, uh, actually, with one of them, I'm still I'm still in touch, okay and um, and they added a lot, of, a lot of value. So, uh, again, if you're looking at the, the dimensions of a team, like, one of them had a lot of experience when it comes to manufacturing products in China, okay, so that helped us a lot on that part. And the other one was super experienced when it comes to marketing and marketing products. So that combination was perfect for us.

Speaker 1: 13:07

Nice.

Speaker 2: 13:08

Yeah, that's great, and I also sort of like have this rule of thumb that when you're looking for investors, you should actually be wanting to pay the investor 500 euros per hour because he adds so much value. If you're not willing to pay your investor that type of money, then he probably doesn't add more value than just money. That's a very interesting insight.

Speaker 1: 13:30

So I hear people thinking now about their investors like wait, am I willing to pay this person 500?

Speaker 1: 13:35

euros per hour and it makes a lot of sense, um, having the right. It's, it's a partnership, right. It's not just bringing the money, no, it's actually bringing in much more than just the money and I think, uh, fortunately, a lot of founders see that now more and more so that they don't go for, you know, the highest valuation, but actually the, the founder that bring the investor, that brings in the right knowledge network with the money because that'll really accelerate your business.

Speaker 1: 13:58

Yeah and the fact that you're still in touch with them, uh, to date. Yeah, it's a, it's a good sign somebody is there for the long run. Um, we're going to go into the next part of your face before we go there, maybe. Uh, since this, this is a philips innovation award special uh podcast. Um, I'm also curious. This is 20 years ago. Um, do you remember what it's like to participate in a competition like philips innovation award 20 years ago, the first edition?

Speaker 2: 14:26

yeah, it was cool. Uh, I noticed is that the organization was already quite solid and I was surprised by that, because it was organized by a lot of students, by a lot of young people, so I was surprised at that and they really had good budgets, good speakers, good jury, so, yeah, that's what I remember and in a way, it also validated our product, uh, obviously, uh, by saying, okay, you know, philips innovation award, uh approved, yeah, uh. So that it helped us in multiple ways nice, nice.

Speaker 1: 15:01

Um, I think there's some questions from the phillips team. Uh, coming in later for the question section so uh um, let's move forward a little bit. In around 2017, I think. You left sense. Then you joined somnox, the sleep robot company. Uh, actually was one of our podcast guests before. Uh, what led you to this switch going from sense to somnox?

Speaker 2: 15:22

um, well, I'd already uh, I had a back in those days, um, my role at sense diminished, so we were in a phase where we basically hired professional management to run the business through the next phase. So I had more time, basically, and I remember a friend of mine, also an entrepreneur, contacted me saying you know, what these guys at Sumnogs. They're really great guys and they're working on something special.

Speaker 2: 15:53

This could be something for you then I was like my first reaction was like, nah, you know, I've already been through this phase as an entrepreneur. It's not interesting for me, yeah, uh. And then, like three days later, another uh, friend of mine, also entrepreneur, said the same thing and I was like, okay, okay, I got to talk to these guys. And I think a few days later, julian, one of the co-founders, approached me and I'm always driven by challenges in my entrepreneurship and I really saw the challenge in this business, you know, because it's a super unique, special product that really solves sleep in a different way that's ever been done, and I think I had some relevant experience from the innovative consumer product space. And then I was like, okay, I like the guys, it's a great challenge, let's go, let's go and then what was your biggest learning in that organization?

Speaker 1: 16:55

because you've learned some lessons, I think, in sense, and then you go in to apply that into a new organization. What's the biggest thing you learned in Subnox?

Speaker 2: 17:04

well what I liked and this may sound like a really grandfather type of thing, but those guys were like 15 years younger than me and they were really like the brilliant minds from the University of Technology, and so I learned a lot in that field, where every problem seems to have a solution. That's like some online tool, especially Julian one of the founders. He's great at that so I learned a lot of practical things, uh on that part. So that was. It was really a cool experience to run a business with uh, with an sort of like a next generation you know yeah and that was.

Speaker 1: 17:43

That was awesome yeah learning something from the next generation yeah tools but that made me, made me sound very old. Yeah, yeah, well, okay, you're a bit younger than I am, so and I still feel very young. Um, and I think also around that time in was it 2018 sense itself proved not to be so storm resistant, or at least that's how the press wrote about it and went bankrupt.

Speaker 1: 18:08

Can you maybe because this is also an important lesson for other entrepreneurs what was the root cause of that happening? And, in hindsight, is there anything you should do differently or you would have done differently?

Speaker 2: 18:19

Yeah, well, yeah, good question. I think there's a lot of different views on what happened. Like I just mentioned that, we entered a new growth phase and we hired professional managers to basically run that business.

Speaker 1: 18:35

Yeah.

Speaker 2: 18:37

And that didn't really go as planned. Okay, so I feel that they took too much risk and they did not really have an entrepreneurial background and a few things about that. Like, I think, if you want to want somebody else to run your company, I think it's crucial that they have entrepreneurial background, instead of being a manager at a large corporation, because that's totally different. You know, uh, you want to have that entrepreneurial experience, and another thing, uh, that is that that I that's still difficult to grasp is, you know, when you have somebody else run your company, they're going to do it in a different way than you would do it, and that can be difficult. So I think that the main pitfall there is to say, hey, these guys are doing it in a different way, that's not what I planned for and I'm going to fire them and do it myself again. But you know that that's a pitfall. And still, as a shareholder, it's quite difficult when to make the decision like, okay, this is not going to work and I still don't have an answer to that.

Speaker 2: 19:46

So that might be something. I'm curious what listeners would say about that. But yeah, I think that's a different dynamics from when you decide to have your company run by somebody else or other people, yeah, so there's an interesting lesson in there.

Speaker 1: 20:04

One find people who have entrepreneurial backgrounds. But then secondly, if you disagree with how they do, figure out how you're going to respond to it. But now, with in hindsight, is there anything you would have done differently which you have stepped in?

Speaker 2: 20:18

and yeah, which is the pitfall? Yeah I would probably take over sooner again. Yeah, we don't know what would have happened then.

Speaker 1: 20:25

No, of course so let's for the story, assume it would have been a great success then yeah exactly.

Speaker 2: 20:31

Thanks, man, I needed that. You're very welcome.

Speaker 1: 20:35

Hey, it's interesting. So after Somnox, you started advising other companies with the Rockefeller Habits, which I think is a really interesting concept by Vern Harnish and, by the way, vern Harnish is on the Board of Recommendation of UpRotterdam so he's been with us and he's advised us on how do you build a Scalab ecosystem. So for Scalab founders Really grateful for that he wrote the book Scaling Up. Maybe for the people that don't know Rockefeller habits, can you maybe describe in layman's terms what it is and what they do?

Speaker 2: 21:07

Yeah, the Rockefeller habits or the Scaling Up methodology is basically a growth methodology. You could see it as a operating system you know, just like you have for your phone, but then like an operating system for fast-growing companies, and it does a lot of things. But the main takeaways are that you'll get way more focus, structure, discipline, which you need to continue the high growth of your company but still remain in control. So what we usually do or what I used to do with the company.

Speaker 2: 21:46

So I think I've guided roughly 80, 85 skill apps with revenues between $ million to 300 million. And that was also a very useful experience for myself.

Speaker 3: 21:57

Yeah, nice you get to see. Yeah, I learned something myself, so that's really cool?

Speaker 2: 22:00

Yeah, exactly, and so when we work with such companies, we usually start with a few months. That's focused on strategy and really defining where do you want to be long-term, so, 10 years from now? And once you know that, you can basically start planning backwards and also decide where you want to be in three years, where you want to be in one year and then where you want to be in three months. So that's more like the strategy part. And then, uh, the next phase is more focused about, uh, like, execution. So you know, so we define these long-term goals and you know how are we going to ensure that we're going to be working on those long-term goals On a daily basis, while knowing that you know every day you have to put out fires and you know there's urgent stuff that basically prevent you from working on those long term goals.

Speaker 2: 22:58

So that's execution, and the last part is more about people. So if we've defined our long term goals, if we know how to execute them and how we're going to work on them every day, you know what type of people do we need for that and what are basically the rules of engagement. Know what type of people do we need for that and what are basically the rules of engagement for those type of people yeah, okay strategy making sure the execution work and then organizing the people yeah, part of it um, and there's 10 rules, right, or at least in the book there's 10, yeah, yeah, is there one habit that you think stands out?

Speaker 1: 23:30

um no no, they're all equally important wow maybe the maybe the most interesting one, the one that's, if you talk to these uh 80 companies, that they uh.

Speaker 2: 23:45

Well, I like the one that says um, I like the employee. Feedback is crucial and should be as well documented as your financial statements.

Speaker 1: 23:58

Oh, that's an interesting insight. How do you learn from your employees? Yeah, exactly, oh, that's really nice.

Speaker 2: 24:04

You know, to prevent that, as an entrepreneur, you're only in your ivory tower and not listening enough With your reality distortion fields, yeah, exactly.

Speaker 1: 24:13

Okay, really nice, and we'll put the link to, I think, the book of Werner Harnisch in the show notes. Maybe he'll sell an extra book that's always good for him but maybe also a link to the 10 rules. So for any entrepreneurs, I think that are thinking of getting into this, I think that list of the 10 Rockefeller habits already gives a good indication. Cool, so you spend a lot of time with other companies and then now you can apply it yourself again. I mean, you've been teaching all these entrepreneurs to build their companies and you're now building a factoring company and when we had the prep call, you said you want to be a market leader with less than 10 employees.

Speaker 2: 24:51

How does that work? Yeah, prep call, you said you want to be a market leader with less than 10 employees. How does that work? Yeah, that's again I'm. I'm driven by challenges and that's, for me, the challenge in this, uh, in this company, and um. So so I got into this industry because in my previous company at somnock, we were customer of a factoring company and I just noticed that all these players in this industry basically play the same field yeah, and factoring, so not everybody might know what factoring really is.

Speaker 1: 25:12

Yeah yeah.

Speaker 2: 25:13

So factoring is a form of financing which is particularly interesting for fast-growing companies, where your invoices are basically being pre-financed within a day. So usually, as an as an entrepreneur, you send out an invoice and you need to wait like 30 or 60 days before it's paid. Yeah, and a factoring company basically says you know what? Uh, give me that you sell that invoice to me. Yeah, I will give you the money tomorrow.

Speaker 2: 25:40

Yeah, um, and you're paying a margin on that right a bit of a premium, okay, yeah, exactly, yeah, okay and and it's in particular interesting for fast-growing companies, because, um, if you're growing your company, then basically the financing from factoring grows with you, instead of when you get a loan from a bank. And if you grow really, fast like, three weeks later you need to go back to the bank to get another one.

Speaker 1: 26:01

Yeah, you know that doesn't really work, so it's a great tactic to help you improve your cash flow yeah, exactly because you get the money in the bank.

Speaker 3: 26:07

You can go forward again, okay, yeah okay cool, so anyway, so you're building that company yeah, yeah, so, so, uh.

Speaker 2: 26:13

so I got in touch with it, uh, through, uh, through somnox, yeah, and I figured, hey, everybody's basically playing the same game in this industry and there's a lot of things that should be, yeah, could be smarter, and uh, and then, as an entrepreneur, like the ultimate thing is what you do is you start a business, you know, know, to basically prove it and validate your idea, and that's actually what happened. So I'm really excited about what we're doing, because we're really doing something different in this industry. So our proposition I don't know if it goes a bit too far, too technical for now, but we basically engage into what we call silent factoring, or undisclosed factoring, where it's for the debtor, so who receives the invoice?

Speaker 2: 26:56

it's not, uh, evident, it's not clear that the invoice has been pre-financed okay and uh and commercially that works really well so how does it work in practice?

Speaker 1: 27:04

then I let's say I sell something I send an invoice to, or I normally would sell an invoice to my customer. Let's say they purchase 10 000 umbrellas for me and I'll be waiting for their money. So normally I would send it with my logo and everything, and now you take over what happens uh, no.

Speaker 2: 27:21

So in our, in the traditional model, you're required to put like a session text on the invoice saying, hey, this invoice has been financed by a factoring company you can only pay to the factoring company. So then your debtor knows that you're pre-financing your invoices, but traditionally factoring doesn't really have a good reputation. From back in the days it used to be like the latest place you'd go to get financed.

Speaker 1: 27:45

Bit of a cowboy area.

Speaker 2: 27:46

Yeah, before filing for bankruptcy.

Speaker 1: 27:48

I'm exaggerating a bit.

Speaker 2: 27:59

But it's still in the back of the hats of a lot of like older, like like 50 plus generation. So, uh, so in our, in our model, you can simply still like, send the invoice and, uh, it does have a bank account, that's owned by us, but that is named after you, so okay so your customer doesn't realize that he's actually paying to a factoring company and that the invoice has been financed at all.

Speaker 1: 28:14

Right, so it feels like they're building the relationship with the company itself. Yeah, exactly.

Speaker 2: 28:18

And we don't do debtor management.

Speaker 1: 28:20

So, suppose your customer doesn't pay in time, that's still sort of like your problem and we're not going to contact your customer about that, but at some point you will right Because you, we can always do that, yeah, yeah, contact your customer right about that, right, but at some point you will right because you, we can always do that, yeah, you know, suppose you're my customer and you'd go bankrupt, then we would probably inform your customers about that but when everything goes well, yeah, nice business uh an important business, I think, for fast-growing companies to scale.

Speaker 1: 28:46

But and then you said you want to be market leader with only 10 employees, so why? Why not have 100 employees and grow bigger?

Speaker 2: 28:52

well, um, I'm, I'm really like the kpi of um labor efficiency. So the labor efficiency ratio, which is basically your revenue divided by the amount of fte, yeah and uh. What I typically see in a lot of different industry is that a market leader has a market leader's kpi of um. Uh labor efficiency ratio is way higher than, for instance, the number two. Usually it's like two or three times better. So that's where you make the uh, the difference. Uh, but that already starts with strategic choices, like you know. So in your business, you first want to decide where do I add the most value of all the my services?

Speaker 1: 29:37

Yeah.

Speaker 2: 29:38

And then you decide to focus on adding that value and have other people do the, do the other parts. Right Outsourcing, yeah, so so in our case, for instance, we don't do like this debtor management. So if your customer doesn't pay the invoice, you're going to chase your customer instead of me doing it, so a lot of my competitors they have like 10.

Speaker 3: 29:59

FTE for debtor management.

Speaker 2: 30:03

Then a lot of my competitors have they built their own platform to do this digitally. We're using an existing platform with a, with a few tweaks, right, and so I don't need 10 developers, right, so that saves me a lot of fte, and so that's. Those are more like strategic uh issues, uh, and then I think and an important one is, um, that you want to be cautious and conscious about what customers to onboard and whatnot so what I typically see is that you know companies are built by either like commercial founders or technical founders and commercial founders.

Speaker 2: 30:45

they simply have difficulties saying no to potential customers.

Speaker 1: 30:49

Opportunistic.

Speaker 2: 30:49

Yeah, exactly. So you want to sort of like grab everything you can. Well, you know, it's way better to choose your customer carefully.

Speaker 2: 30:59

Yeah, Because some customers don't really belong to your company you know, and on average, an average company has like 30% of their clients will lead to negative results Because you're either earning not enough or it takes you too much time, and I don't even want to get those on board in the first place. So we're super specific on which customers we want on board and which we don't want to onboard. So right now I only have 14 customers.

Speaker 1: 31:35

Yeah, and then you say no if there's a customer that comes and doesn't fit.

Speaker 2: 31:39

Yeah, exactly, you refer them to somebody else when it's small. Yeah, then we refer them to competitors Nice.

Speaker 1: 31:45

Yeah, I think that's a great strategy and for all the commercial people out there. In the long run, this will get you a better output and better growth yeah exactly it's typically the pitfall of commercial entrepreneurs.

Speaker 2: 31:57

And then, uh, then the pitfall of technical entrepreneurs is usually that they cannot say, uh, this cannot be done ah feature yeah, exactly.

Speaker 3: 32:05

So what do you do?

Speaker 2: 32:06

yeah yeah, yeah, you feature it. So what you what happens is that you end up with a lot of different variations of your product that are not scalable, but you spend a lot of time developing that specific product, which is unscalable. Yeah, that's a shame.

Speaker 1: 32:23

Great learnings out there for founders that are building their company now, and maybe there's now two founders listening one commercial, one technical guy that together, oh shit. We should say no to that customer. We should be focusing on the features. And then the most important lesson I think that you mentioned is on that. I call it employee productivity, or at least kind of the ratio that you mentioned, understanding how much value you can create with one employee. We had this conversation before that. The number one company in the world doing this is one that you wouldn't really recognize.

Speaker 1: 32:53

You know which one it is I don't know only fans only fans, as the highest productivity per employee because, it is a simple organization and indeed they work a lot with partners to fulfill some of their things that's hilarious on that note, we'll go to a very quick break and then we'll be back you're listening to the podcast of up rotterdam.

Speaker 3: 33:18

We help startups scale and grow their business by offering access to talent, access to international markets and access to capital. Curious how we can make the network work for you? Go to uprotterdamcom. This podcast was made possible by the city of rotterdam welcome back.

Speaker 1: 33:36

Uh, philip, we have touched on so many things rotterdam, delft, uh, you know, building 10 000 products and figuring out that they're not all right, uh, rockefeller habits, uh, growing companies, uh, productivity metrics. I think we covered, covered, many, many things. What is the one thing you do to stay sane as an entrepreneur? Do you have a weird hobby or something nobody knows?

Speaker 2: 34:00

No, actually not. No no, no. Well, I do think, in a way, my kids keep me sane. So I have three young kids and when it's like rush hour at home, like between five and eight, there's no way that I can open my laptop, and I think that's a good thing. Kids are a kind of meditation in a way, sort of yeah.

Speaker 1: 34:22

I have two. I might be a bit older now, but anyways, let's not get into that. The next topic is listeners' questions. We always ask for a few people to send in their questions, um, and it's, I think it's interesting. The first one is from eric rutten.

Speaker 2: 34:39

Uh, I think you know him right yeah, yeah, he's on my uh board of advice at rather than factoring, and he's the former ceo of the knap bank there you go.

Speaker 1: 34:48

Yeah, that's a great guy to have on your uh.

Speaker 2: 34:50

Oh, definitely yeah yeah, and he also adds a lot of value and I'm also talking to a lot of, like, institutional investors and he provides a lot of credibility with his background.

Speaker 3: 35:02

Ah, that makes sense and that helps me a lot.

Speaker 2: 35:04

And he's also very much involved in the company. Like I think I have contact, I'm in contact with him like twice, three times a week oh, okay, that's awesome actually, and his question is also around that.

Speaker 1: 35:17

So, um, he says you have surrounded yourself with a number of trusted advisors, but how do you know when to follow your own course and when to take the advice of your advisors? And what is decisive? Decisive in making that choice?

Speaker 2: 35:33

oh, that's a great question, yeah, so I think the, the trick here is to listen really carefully, uh, to what your advisors are telling you, um, also understand their background. So basically understand, like, uh, the, the, the glasses or the lens through uh, where through they see the world, and uh, and at the same time, also allowing yourself to feel, to, to, to follow your own feelings and your own gut, uh, but continue to be open for feedback. So it is a great question. I think. In general, I can be stubborn or, I would put it, convinced of my own opinion, but if somebody has great arguments then I'll definitely listen to that, but always make the conscious decision yourself.

Speaker 1: 36:35

But one thing you mentioned there is the lens through which people look, and that's, I think, why it's interesting to have different types of advisors on your board, right, because they would have a different lens.

Speaker 2: 36:43

Yeah, yeah, so, for instance, with Eric sometimes I feel like okay, I understand why you're saying this, because your background is a bank. You had a lot of people in your team. I'm with a small team. I deliberately choose to do it differently. Right or hey, I kind of feel that you're under, maybe underestimating, the operational impact of what you're saying now.

Speaker 1: 37:04

Okay yeah. Now I feel we need to do this in a different way, but at least it makes you think, because it's these insights, and then you know, even if it's an advice you don't take, you take it with you or at least that's my experience with advisors. Yeah, and it's some where it's in the back of your head and then later on it comes back again.

Speaker 2: 37:21

Yeah well, what I, what he also learned me or taught me, is that, uh, if you want to sort of like, I think for an entrepreneur, you're always like selling your company. I'm not, yeah, I company, I'm not meaning like selling shares, but in a way you sell your company to potential customers to potential funders.

Speaker 2: 37:41

So, in a way, you're always selling. But what he taught me is that there's different ways of selling it, because to a customer, you're selling it different than to an investor. Yeah, and then there's also a difference between equity investors. To a customer, you're selling it different than from an investor. And then there's also a difference between equity investors or debt investors, where in a debt investor, you want to focus more on the robustness of the company, while equity investors are more in it for the long run and want to see this hockey curve in your projections.

Speaker 2: 38:09

Yeah exactly, so that's what he taught me.

Speaker 1: 38:13

Well, that's great to have somebody from a big bank on your advisory board.

Speaker 3: 38:16

Thanks.

Speaker 1: 38:16

Eric, for your quick response and for asking this question. The next question is from Lieke Huizinga, and Lieke is at the team, the media communication team of the Philips Innovation Awards 2025. So watch that name, Lieke Huizinga. Her question is how did winning the first Philippe Finnegan Innovation Award influence your career and success of your product? Were any doors opened that would have otherwise remained closed?

Speaker 2: 38:42

That is a good question. Well, what I said earlier in a way, it validated our idea, our company, so that really helped us. Um, I do have to admit, though, that in that period of time, we won so many awards and I'm not trying to brag here that it's really difficult to pinpoint. Okay, what, uh, did the phillips innovation? Award specifically mean to us in that period it was just a crazy, crazy period where, in like two and a half years, we won every major design award in the world and looking back like yeah, it's, it's incredible, yeah, and then many doors open.

Speaker 1: 39:21

Um, maybe that's also a strategy right to to sign up for multiple awards. I can say, uh, I'm a bit biased but I'm involved in in several startup awards. Um, and I think when Lieke asked this question, I do see that the network of partners around the Philips Innovation Award is strong. So it depends a little bit on the type of business that you have, but I think that is what I've seen, both with the mentors coming in with the sponsors coming in, bringing in the right introductions. So I'd highly recommend Lieke. Thank you for that question. I hope to see you very soon again. The next question is from Govert Visser. I think you also know him really well.

Speaker 2: 39:56

Yeah, he was one of the first investors in my first company. So he's known me for almost 20 years, a long time.

Speaker 1: 40:03

First he sends his warm regards and then he says my question for Filip, who I hold in very high regard, would be what advice would you give your younger self just starting out with his first business? What would you want him to know?

Speaker 2: 40:18

Oh, that's a good question and, yeah, it doesn't surprise me that he's saying this. So I think one is pick your business model carefully, and a second one would be don't try to reinvent the wheel. And what I mean by that, by that last one, is don't try to reinvent the wheel. I think every entrepreneur thinks that he has a very special company, but then again, every company goes through the same phases of growth and in every phase every company or any entrepreneur runs into the same issues and every issue has already been solved.

Speaker 1: 41:00

Yeah.

Speaker 2: 41:01

So I think it's good to surround yourself by entrepreneurial people that really know about these phases and that understand what are normal problems, what are abnormal problems and, uh, because you're going to run into the same shit, excuse my French- yeah, Uh that any other entrepreneurs also run into. Yeah, yeah.

Speaker 1: 41:21

And why do you find these other entrepreneurs?

Speaker 2: 41:24

Uh like by participating in, uh in like Phillips innovation award or uh, startup events, uh things like that or find investors, but really try to look for entrepreneurial experience yeah and you spend time in YesDelft as well, right?

Speaker 1: 41:38

One of those communities. So there's a couple of communities here. You might know the concept of masterminds, where you share your challenge and then you keep each other stick to that challenge for a year. There's one called TechSocials, I think that was set up between YesDelft, aca and another one oops, f42 Workspace, which really brings founders together, to that point right. Learning from each other and others have done the same or come to Upstream Festival, which is a really great festival.

Speaker 2: 42:09

I'm wearing a sweater today so that was the first one, so don't try to reinvent the wheel yeah, and the other one is pick your business model carefully because, um, I see a huge difference between, like my business model in my first two companies compared to my current business model.

Speaker 2: 42:24

Like I think, uh, building a company or building a consumer brand, that's like one of the hardest things there is, you know so I started with with sense and like the next step at somnox is even harder because the the product is so like technically complicated not only hardware but also software and, uh, you know you're running into stuff like production, keeping stock. Uh, you know, needing working capital but also building a brand, media attention, marketing budgets, especially on a consumer level.

Speaker 2: 43:00

That is tough you know, and these guys have been doing this for for for eight years, so I mean respect for that. Yeah, like you got to give it to him. And now my business model. So in those previous two companies, it was always like, okay, it's first of the month again, how in the world are we going to achieve the targets this month? Yeah, you know, yeah, so in in my current company with rather than factoring, it's a recurring revenue uh, long-term contracts with clients and a bit more predictability.

Speaker 1: 43:28

yeah, yeah, I love it, but maybe that ties into what you said at the beginning. Maybe it's good that you don't know what you're signing up for, because if the world would not have, solvenogs would not have Sense, it would be not such a nice place, right.

Speaker 1: 43:41

True, true Maybe let's keep inspiring those entrepreneurs to come up with those wild e-mail consumer ideas. But just know that the road ahead might the head might be bumpy, true, but in the end there's uh, there's a great, great result. Um, philip, it's been such a pleasure talking to you and and going through your journey. I mean, sense was obviously the starting point for a conversation, but it's really nice to hear what you've done with some logs, what you're now doing with rotten factoring and, and in between, with all the entrepreneurs, uh, with the rockefeller habits. So thank you for sharing your story here with us today. We talked about many things that will be in the show notes. So all the links that we talked about will be in the show notes. Go figure them out and find them out there. And, as always, we close off with a song that you have selected. So would you like to explain which song and why?

Speaker 2: 44:26

Yeah, so it's a Dutch song. It's called Volle Kracht by Opgeacht by uh, and what I like about the song is that it there's a lot of parallels when it comes to entrepreneurship. So, uh, you know he talks about his journey, like his lyrical journey, uh, which is uh comparable to an entrepreneurial journey, where you know he really wants to to, to go for his goal. He doesn't want to be distracted by anybody and he's like, yeah, you got to do it yourself, like nobody's going to give it to you and you got to just work your butt off. But in the end, you know success will come.

Speaker 1: 45:02

So that's why I chose this song Perfect, great fit for the entrepreneurial journey. Thank you for listening.

Speaker 6: 45:43

Until next time, keep it up, thank you. But my tears are still an announcement and I don't even give questions. A short explanation, no reaction. I spend my time with it. I'd rather sail my own raft on this wide sea, write a little. We know people watch the sun's day. Births seem to be a case of no. We do it anyway, no matter how we go, feel it in your water or see how the stars stand. Incomplete, we step on the water. A fluid. Part 2 would be too easy. I take myself with me.

Speaker 5: 46:30

We'll see you next time I'm out I take the Stay out of my water. Now come hangling. We know those pirates. We bring them to the sea Shit on the market in our own little world, just like Noah in his ark.

Speaker 6: 47:17

I take myself with me sail my own fleet On this wide sea. I take myself with me prepare my own lot I'm not going to be bored. I take myself with me sail my own fleet On this wide sea. I take myself with me prepare my my own fleet. Suddenly, by the sea.

Speaker 4: 47:38

I take myself with me, I prepare my own food, I have my own idea, no matter how late it is, trade is where it is, where it revolves, on a Batavia ship, far East Company, driven by the mist, with more water than fish inside, armed with licks. The Asseldorp hat is the place of the licksict, the place of delict. The splinter has mixed a new track. We do a little more than bullshit. The party is big With a bullseye as a goal, like Barney the Fick. Yeah, I'm with you with that wind power, 12 storms on arrival and it's storming on until tomorrow's dawn. And on the roof of my vlog, dry in a dock, I'm preparing myself for the night. The cut ears are for gog. I open my Outro Music.