What does the VC way mean — Maja Schaefer, Zowie

Today we publish my interview with Maja Schaefer, Co-Founder and CEO of Zowie.

Zowie is an AI-powered customer service automation tool for enterprise clients, incl. L’Oreal, InPost, Aviva, Avon, and Brainly. It helps fast-growing companies grow even faster by removing customer service bottlenecks. In 24 hours they automate 30% of customer service inquiries and up to 90% in a few weeks. The company was founded by Maja Schaefer and Matt Ciolek. In September 2020 Zowie raised a $600k+ seed round backed by Inovo Venture Partners and business angels. And it’s just the beginning of the road!

I sat down with Maja to discuss:

✅ how to transition from a service company to building your own product?

✅ how does a VC fund impact the business?

✅ and what are the most difficult aspects of fundraising?

You can also find this episode on: YouTube, Spotify, Apple Podcasts, Google Podcasts, Spreaker.

Hi Maja, thanks for accepting my invitation.

Hi Michał, glad I can be here today.

We first met around a year and a half ago. For a few months you ran the business all by yourself. Then we, Inovo, became one of the shareholders of Zowie as part of the funding round that happened in July. If you could tell us a little bit about what your company is and how it came to be, just to give a little context.

Zowie automates customer service in fast growing companies. We help mainly e-commerce companies, startups and B2C companies to automate their chat conversations thus relieving the burden of customer service and allowing them to grow faster.

Our story began several years ago when my partner, Maciek, and I ran a software house. We worked with startups as well as with larger corporations where we implemented innovative projects. One of our clients was InPost. And at InPost we had been working closely with the Customer Service Department where we noticed one of the biggest problems of this organization when it comes to scaling. It was customer service. Mainly before the Christmas peak, which is when customers order the most packages. It’s not a secret that InPost had problems writing back to customers on time, and all of us probably experienced this if we used InPost and had a problem. And then we started thinking about how we could help this organization as a software house, a service company that provides them with IT solutions. We had heard a bit about automation, about chatbots and how they can automate and optimize customer service. We thought this was our moment. This is the moment to shine and we can prove ourselves. So what did we do? We set up a meeting with Rafał Brzoska. It was a little crazy because we were actually kids, at that point, right out of college. We pitched this idea that we would like to take on the challenge of relieving the load on their email channel from repetitive questions and we sold that solution at the first meeting, so we actually had two weeks to create an MVP that would turn out to be Zowie in the future. It was right before that holiday rush. It worked. We automated about 50% of their customer services queries. It was a big success both for us and, of course, for InPost. Incredible savings of both time and money.

Then, we started wondering what the problem was. When you think about it, there are millions of companies like InPost. Millions of rapidly growing organizations for which one of the main bottlenecks is customer service. And we came to the conclusion that the problem as to why automation is not yet common is because it’s difficult to acquire. The design process to implement automation takes about six months. While committing to this kind of project, the company doesn’t really have a guarantee of success and doesn’t know what results to expect. Mostly it’s about 10% chat automation. Additionally, maintenance of such a project later involves having extra employees, who have to deal with this. This is simply difficult to implement.

And then, we decided that Zowie would be the solution that could be implemented in 24 hours and it would allow companies to start automation from day one, achieving results literally on the same day in the same week reaching up to 30%, 40%, and finally 90% automation.

I’d like to go into more depth on a few topics, but first I’d like to start with you. How do you react to a situation where people ask what it’s like to be a woman and a founder? And that notion of a female founder that has attracted a lot of interest lately?

I really don’t like it because I never see myself that way. I mean I don’t think about it. I started wondering quite recently as I also feel this mission to promote creating, building your own business among women; because I believe there are far too few of us, which statistics confirm. But I, personally, never had that problem of, let’s say, breaking through, since I studied computer science and before that I took STEM based secondary school classes, where I was consistently one of just a few girls in my social group. When I started studying computer science, I studied for five years, there were only eight women in my class of 130 people (if I remember correctly). But this is changing and now it’s supposedly fifty-fifty. So the shift has already started which I’m very happy about. But because of my experiences, I don’t really have that problem on a daily basis that this world of startups, world of business is a man’s world. But recently, I’ve thought about how I could support women to actually start thinking about their own businesses and to not be afraid of it. The startup business nowadays is mostly technology and it seems to me that the main problem, or rather the main challenge standing before me, before all of us that promote startups, work at startups, and create startups is promoting entrepreneurship at its source, so at high schools or among male and female college students. Showing that it’s a fun road, that there’s nothing to fear, and that it’s a great challenge. So that’s how I look at it. What is it like being a female founder? I don’t know, because I have no point of comparison; maybe it’s like being a male founder. For me, it is absolutely not a hindrance in any way. I don’t feel it.

Do you think it’s a pro or a con that you’re one of a few female founders of these top startups, at least when it comes to Poland?

I think both. There are pros and cons, as with everything. The upside, for sure, is that it gets attention. So, in this first moment there is an element of surprise, which is terribly sad that it’s a surprise. “Oh wow, a female founder”. It shouldn’t be like this. This is absolutely our problem as a society. But it plays, undoubtedly, in my favor. Right after, appear some kind of doubts like “a female founder, what does that even mean? That she’s emotional, which means she can’t think with numbers? How is she going to pull off the business that’s got 100,000 in revenue, a million, can she reach ten or a hundred million in revenue?”. That’s where the uphill climb begins. This is where the cons outweigh the pros. But I like challenges, so I really enjoy it because I just like to beat them and it’s fun. But, of course, it makes the whole situation more difficult.

CodeHeroes is one of probably hundreds if not thousands of software houses that operate in Poland. And you came to this point, as you mentioned, while working with InPost. That’s when you created your product. This is something that is a dream or an idea for a lot of software houses. How do you go from a service company to a product company?

In retrospect, of course, it is easy to say that “it’s fantastic, there’s nothing better than switching to your own product”. But of course, there were ups and downs along the way. The first is the fact that we had started working on our own product. We actually spent a year or two before we started seriously working on Zowie. So, between that stage when we developed the MVP for InPost and when we started actually selling Zowie as a product to more customers. Because there’s always something in a service company. Always the customer who just comes in and has their project is more important than your project because you have a team to maintain so you have to pay them. This product doesn’t make money yet, so it is constantly being put on the back burner and it’s hard to deal with. But as I said, I always knew that I wanted to build a product company and it was always my goal. And starting a software house I knew, or at least that’s what I wanted it to be, the path to building my own product, looking at how business functions, where are the tier one problems. So it was obvious to me that at some point I have to cut myself off and put all my eggs in one basket. And that’s exactly what happened. At a certain point, I said, enough is enough. I’m 100% in on Chatbotize, which is now Zowie and I’m cutting myself off from the software house. So, I drew a thick line and said “from today I am not dealing with the software house”. And it was an absolutely fantastic decision and a necessary decision if a service company is thinking about developing its own product. At least one of the co-founders must deal with the subject 100% of the time. It’s worse when there is only one founder. One person who runs the company. But I had the comfort of being able to do it.

And what are the advantages of a product company? In the end, one doesn’t have to worry about tomorrow because if they’re selling a product on a Software as a Service model like we do with Zowie, we have a predictable income. We know how much will come in to us next month. There are ups and downs, clients don’t pay but it’s not as common as in a service company. So there’s this comfort. For me, it was an amazing change — the moment when we were able to cover all the costs of work for the Zowie team from the money that our clients paid us, it was an incredible relief to me. Because while having a service company, I never really knew if in two months I’d have enough money to pay people. That has certainly changed, and that is a very cool thing.

In general, I think it’s pretty amazing that, de facto, financing development from what your service activities were generating you were able to get to the point where the product was a break-even business and that happened within a year of starting it. Despite that, after that year you started sending emails. I remember you sending a beautiful email that “it’s time”. In the meantime you made the decision about focusing on one application, specifically customer service. What happened after that year when you’ve already reached a break-even point, meaning you could basically develop this product a little bit more, make some good money out of it…

…buy a car and a flat…

…buy an apartment and a car then still have enough for a ham and cheese roll, but you decided that you’re going on the so-called VC path that we’ll get into a little more later.

Well, again, it’s a little bit of my life story. From the very beginning, from early childhood I knew that I wanted to be an entrepreneur. Then I knew that I wanted to build a product company and that I wanted to focus on Zowie. Same way I knew I wanted to build a global company. It was absolutely indisputable. That’s been my plan since my very early childhood years. It sounds funny, I know, but that’s how it actually was. Maybe my friends from school are watching this and they can confirm I was always talking about where I was going to live and what kind of life I’m going to lead. I didn’t say that I’m going to drive a Ferrari or something like that, I didn’t mean it that way. But, I’ve always thought that I’m not going to live in this tiny town of mine, I’m just going to live in, say, the States. From the point of view of a 15 year old that seems funny. But that was actually my plan and if you look at how I put this life together, basically, it’s constant execution.

So that’s what happened in this case. If you want to build a global company then statistically you have to take the VC path. Because it’s actually the only option, the most certain way to build a global business, you have to outperform your competitors who have the capital. So the moment I felt ready was when I figured out what Zowie really was and what it should be in the future and it occurred to me that with this product we can build a global company with a global reach. There is a specific problem to be solved; this problem is not yet solved. We can scale ourselves globally. Let’s do it.

It’s been nine months since we invested with a group of great angel investors. So you’re already on your third business role — first a service company, turned a product company and now a company heading the VC path. What has changed in the nine months since we came in?

Everything has changed. Absolutely everything has changed. That’s the biggest fun in building a VC backed company. The fact that every six months you actually have a different job. For a while now, I’ve had this internal rule that if you’re not embarrassed of what you did six months ago, it means something’s wrong. You should be embarrassed of yourself six months ago. It means you’re making steady progress.

And that’s the case here too. So 9 months ago, there was a completely different mindset and a completely different company. I hate to think about it. During that time we changed from a bootstrap company that sells 100% to Polish customers to — I can say, tentatively — a global company. We hire people outside of Poland and are building a highly diversified team. At the same time we are doing this remotely, which of course was caused by the current global situation, but it’s not just that. That’s basically the trend, and if we want to have global talent then we need to hire people globally. Most of all, it’s the customers. Over 80% of leads we have pouring in are from abroad and it was something absolutely unthinkable 9 months ago and something that I might have only dreamed of, but wouldn’t have predicted it would come about in such an efficient way. Despite externally showing it’s worth it and I’m confident; of course internally I was worried if we would make it. But we did. So, now it’s a very different organization.

I think, because I’m on the board at Zowie and this is one of the coolest boards that I participate in, I’m very impressed that even though you had a much lower conversion rate from leads abroad, which means every hour invested in sales abroad brought less zlotys or dollars into the account than an hour focused on sales in Poland, that you were consistently focused on global sales. Because let’s be honest — you’re recognizable in Poland, you have InPost, Aviva, L’Oreal as clients. However, the core focus was on global clients and probably one or two quarters were maybe weaker than they could have been. How did you approached this?

Exactly like the transformation from a software house to a product company basically. Oh I didn’t talk about the downside of transforming from a service company to a product company. Working for a service company it’s gotten to the point where you’ve got money for the car and the flat and it’s great. But at some point you have to cut it off and not pay yourself a salary or just pay yourself minimum wage, enough to survive. That’s a step out of your comfort zone. I say a step but it’s a huge leap out of your comfort zone. It was necessary during the transition from a service company to a product company.

We decided the same thing had to happen this time, there was no other option. It was obvious that we needed to start getting overseas clients, and that focus was important. To focus on global clients we had to let go of Poland, and because of that, we knew that revenue may be lower for some time or rather grow less. It was a conscious decision “This is a step we need to take, we won’t go a level further if we don’t do it”. We’ve been building our team from the beginning with an emphasis on overseas. This obviously wouldn’t be possible without the fantastic Sales Development team who did this, for a good few months with virtually no results. The fact that we managed to keep high morale in the team; is absolutely amazing and all thanks to a great team leader. Those were tough times. What can I say, we were working hard with the hope that it’s going to work, that we will find the secrets of how to attract foreign clients. And there came this moment when it happened and everything changed.

Speaking of things that have changed. How does it feel to lose control?

The loss of control is fantastic. I know that this is a common theme raised by founders who are thinking of moving to the VC path from bootstrapping. It seems to them that it is a loss of control over the company. But I would say that absolutely from this side I don’t feel a loss control of the company, just because we are VC-backed and investors ask me to do something. This may be a bit of a surprise to founders that when it comes to the VC path there’s no one telling you what to do. Sometimes you might even expect someone to tell you what to do but it’s absolutely not happening. Someone can give you a tip based on their experience and what they did, but no one will make the decision for you. In that sense, there is no loss of control.

The loss of control means that the company is growing fast. Rafał Brzoska, our first client, reinforces this message that “if you have everything under control then basically you’re going too slow”. And that’s exactly what happens in fast-growing companies. This feeling of loss of control is due to the company going faster than you’re capable of grasping. You constantly have fires that you have to put out and choose wisely which fire currently requires your attention. It’s great fun, that is. Maybe I’m abnormal. Probably, a little, but that’s where I get the greatest joy. This company is growing so well. And again when I look back on the last 6 months and I think to myself “wow, we’ve made progress”. And the coolest feeling is when things happen out of your control and they happen in the right way. It’s the stage that I’m in right now. I’m observing that various departments start to operate autonomously and are managing and things are happening without my approval and it is going well and it’s really… It’s an amazing feeling. I recommend it to everyone. So, this kind of loss of control exists. Probably not everyone is ready for it. Not everyone will find it enjoyable. As I keep saying — the VC path isn’t for everyone. You have to be a little abnormal. You have to have the drive to push, to build something really big, because that’s the goal of taking money from a VC. Michał, I think you can confirm, that’s something that was missing 10 years ago in the market. Founders didn’t know that the VC path is a path of rapid growth and that you need to push for results. Your goal is to build a global company that makes tens and hundreds of millions of dollars. Withdrawing from it is obviously not welcome because an investor has invested in you to come out of that investment successful. So it seems to me that a few years ago there was a lack of such awareness. It’s also the VCs fault — communication about expectations should be more open. But I think we’re on the right track. This conversation now and any other action you, as INOVO, take is meant to create that awareness that the VC path is not for everyone. The VC path involves this and that. But if someone wants to jump on this ship, it’s a great adventure.

There is a problem with understanding because often entrepreneurs think that if a VC fund comes in and the company grows threefold, it’s a super success. You guys grew about three times since we came in depending on which point in time we take. And that is more or less the expectation of the VC that within a year of the investment the company will have grown 3, 5, or even more times. And you didn’t formally lose control. You guys still have the majority share of the company and basically you could do just about anything. Whereas somewhere out there in front of you there’s another round and in another 18 months yet another. This is what the VC path requires. If you want to, in five years, grow from a million zlotys to a hundred million zlotys of revenue, you just have to grow very aggressively to raise funding. Dollars come in another year. When we started talking, it was somewhere around, I think, a million zlotys even a little bit over.

Let’s dive in to another topic now. Funds are talking a lot about their added value, smart money and if we go through the websites, everyone is basically, building the company for the entrepreneur. Could you give a specific example of one advisor who works with a specific business function and what, thanks to this collaboration, you have started doing differently or stopped doing?

So, for example our Marketing Department is working with the ex-CMO of TravelPerk, which is a startup enterprise SaaS which raised probably about $130 million of funding over the course of three or four years, so a strongly VC backed startup. And those are the advisers we are looking for, someone who has gone with their company from the initial point to, let’s say, $10 million in revenue. And that adviser helped us setup our whole messaging, how we talk about our product, how we communicate with customers and what is the value that customers should see at that first stage. So, what the customer is supposed to associate Zowie with within say 15 seconds of seeing the sales presentation or the website or even an email sent by our sales team. The first thing we did was toss out 80% of Zowie’s functions. This was a job that was really an undertaking of most of the departments in our company — Product and Sales and Marketing. Lead generation of course. And it was such a bold move. It was a prelude to everything; how we talk about Zowie, what exactly we’re selling. Literally, everything and it was absolutely a crucial moment. We were just talking about lead generation overseas and that moment was an introduction to further steps. I mean, really what message are we taking to these foreign clients. How do we want to stand out. And it worked. We did that over the last six months. It’s one of the things that I am absolutely most proud of.

What are the details? Is it a long-term commitment? Do you pay them? Give them shares? How often do they work with you?

It’s all very different depending on the advisor. We pay some and give shares to others. Some advisors get both. It depends very much on what stage the adviser comes in, what value they bring. We have some advisers that work with us day-to-day. For example, there’s this is one advisor that I absolutely respect and appreciate. And without him, it would be difficult to do what we’ve accomplished. In terms of time, it can be day-to-day — this is the most extreme case — mostly, it’s just a call once a week or twice a week or whenever when we need it. So if there’s an important project going on we have some sort of process to work through, like, for example, changing the entire messaging, then we have workshops, we have meetings and so much more. I think each startup has to work out cooperation with an advisor on their own terms.

What order of magnitude is it when you take on a very senior, experienced person for a quarter to help you to improve?

Again, it depends on the seniority and the particular function and things to do. It starts from a few to a dozen, maybe in extreme cases up to tens of thousands of dollars of quarterly commitment.

I understand it’s worth it.

Absolutely. I mean, there’s a lot of stories of bad advisors and each good advisor will tell you that they suffer because there is such an opinion among startupers on this subject. It’s very easy to take on an investor who will simply come in, pat you on the back and say “Well, here change the title of the e-mail”. It happens very often and I know we got lucky because we have great investors who suggested great advisors. But actually, if we had to gather domestic people from the market it would probably be more challenging and we would have more failures before we found the right advisors. I also think it’s worth mentioning that advisors are just advisors — ultimately the founder has to make decisions. Ultimately, it’s up to us to decide whether or not to accept the advice that’s given. And sometimes you have to reject it. And that’s the biggest challenge when you talk to authority figures who have already done it. But remember that, if it were easy, everyone would be doing it. The successes would be super repeatable. Second and third-time founders would always be successful. And this is not the case. So you have to keep that in mind, too, that it’s not enough to hire great advisors to get something done. Often you have to say — probably in 50% of cases or even more than that — “no, this isn’t a good idea for me”.

How did the fact that you went on the VC path affect your team?

We can finally pay them as we should. I think it’s a very important piece of the puzzle. When a company bootstraps then you’re always faced with the challenge of should I hire this marketing guy, hire that salesman and we’ll grow a little bit or will I give raises to the team. I think that’s pretty obvious. Not an obvious solution but very much a common problem facing companies that are bootstrapping. When we get on the VC path, it’s all about rapid growth but we all know that rapid growth isn’t possible when people are unhappy, when they’re unsatisfied, when they’re looking for new jobs. So a fundamental need is a fair wage, attractive in comparison to the rest of the market. Once you have that, other things come into play like other motivators, incentives; things that the company is able to offer but the wage is the basic thing and to me it was a very cool change. That moment when I could give the whole team a raise, it was very satisfying and a relief, finally.

Besides the money, has anything changed for them?

Of course, yes of course. First off, that they’re working on a really great product. We have the resources to develop this product and to invest in marketing. This is very important. It means people can develop in their field. They have the time to do it. They have the resources to do it. This is very important.

Why is it worth to work for a startup that’s VC backed? What are the pros? What are the cons?

You can learn a lot. I’ll go back to the six months thing again, that we look six months back and we’re a little embarrassed. Employees can expect the same, that they will continually evolve. And of course, this job isn’t for everyone because here you have to keep growing with the company. You have to grow. You have to learn. One is constantly working under uncertain conditions. But what I mean by uncertainty is the fact of not knowing what’s around the corner. We must be constantly prepared for something that we don’t know yet. And this is, on one hand, fun for most people, but there are also some people who just appreciate a quiet place to work like corporations, and that’s okay. It’s important to say that working in startups, just like the VC path, isn’t for everyone. It is not for everyone but it is for those people who like dynamic development, want to learn and above all want to acquire experience in a company that has super global potential and that does things differently than others. Most importantly, it is all about doing something for the first time; especially if we’re talking about the Polish market and doing something that no one else has ever done before. I find it very, very satisfying.

It seems to me that because you have a lot of advisers and you’re doing things according to the best world standards, this is an opportunity, especially for young people, to learn how to do a certain job function at a world class level. Also, and we think it’s very cool, that people who found startups or who have worked in such fast-growing organizations have a gigantic advantage because they have seen the path, they were part of this organization, they saw how it was done and in a way, they can implement that in their own life. Because even if you’re not responsible for certain things, you see three other functions, you meet with people and you look at what these people do, see what you can gain from watching them.

Now I’d like to talk for a moment about fundraising. A year ago, more or less, you started the first round of fundraising. What mistakes did you make during that round of fundraising? What are you going to do differently in the next round?

I probably did every possible thing wrong. I didn’t have anyone by my side to help me understand this world better, to present myself better and to prepare in terms of really sourcing the round. Here is where INOVO was very helpful and turned a blind eye to certain things. You guys helped put some things together and to prepare for this round, that was great. Because that first fundraising is certainly the most challenging for everyone. We just don’t know how to go about it. So, I don’t even want to say because I probably made every possible mistake. Now, I know how you should talk to investors. How you should prepare a presentation. I mean it wasn’t the worst. I watched it recently and it wasn’t that bad. Of course I would do it differently now.

So, you aren’t embarrassed when you look at a presentation from twelve months ago?

I am embarrassed but, not to the extent that I can’t get through it. Because, sometimes, I have these things that I dig up somewhere and look at it like “no”, I can’t even look at it because I’ll get so embarrassed that I’ll die. So, in the case of the presentation, I went back to it with dignity and went through the whole thing to do a kind of a post mortem. Also, grasping the process of investment. This is something that is absolutely a great unknown for first time founders. Approaching investors. Everything.

Well then, what advice would you give yourself twelve months ago? To a person who has a business that is bootstrapping and thinking of going the VC route. How should they do it?

Do it sooner. I would probably advise myself from twelve months ago, just jump in and do it. Of course, fix those mistakes that you’re now embarrassed by. But, basically take on this challenge and don’t think about it too long. That period between our first conversation and when I got serious about the process was about six months I could have done it six months earlier. I would make the same mistakes and it probably wouldn’t change much. I’d be six months ahead. So, I would advise myself that.

I’m hoping that a few people will decide to go down this path sooner. Although, like you said it’s not a path for everyone.

Maja, thanks so much for the interview. Lots of cool thoughts. I think the people who are considering taking VC money could understand both the advantages and the disadvantages.

Thank you for being with us and thank you for reading. We recommend you subscribe to our channels on Spotify, YouTube, Apple Podcasts and follow our social media. We will have many more interesting guests who will tell us both about how venture capital and how startups work.

Thank you very much.

Thanks.

Inovo Venture Partners is a first-choice VC for ambitious founders from Poland and the CEE region. We back early-stage, post-traction startups with up to €3M of initial investment, and help them build global brands, while driving growth of the local startup ecosystem. We take great pride in being close to top founders who think big. We’re investors in: Booksy, Restaumatic, Sotrender, Infermedica, Spacelift, Tidio, AI Clearing, Zowie, Jutro Medical, Intiaro, Packhelp, Preply, Eyerim, Allset. Our second fund reached a total of €54M.

For more information visit: inovo.vc

Subscribe to our newsletter, follow us on LinkedIn or send us your pitch at pitch@inovo.vc