Steven Kramer On Selling His First Business For $1.5 Billion And Now Raising $70 Million To Reinvent The Digital Workplace

Steven Kramer is the co-founder and CEO of WorkJam which is a frontline digital workplace that unleashes the full potential of non-desk workforces. The company has raised $70 million from investors like Lerer Hippeau, Founder Collective, Inovia Capital, Blumberg Capital, Fonds de solidarite FTQ, Harmony Partners, Novel TMT Ventures, and Claridge to name a few. Prior to this, he cofounded iCongo which merged with hybris and sold to SAP for $1.5 billion. 

In this episode you will learn:

• Being wary of the rose-colored glasses
• The dangers of trying to be everything to everyone
• How to be an SOB (Son of a Boss) and manage to start a company with family members
• How to embrace culture

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About Steven Kramer:

Steven Kramer is a technology entrepreneur with over 20 years of executive leadership experience in founding and scaling companies developing disruptive, enterprise-class technologies.

In 1999, Steven Kramer co-founded iCongo, a leading global software provider for omni-channel retail and B2B commerce solutions, which merged with hybris Software in 2011 and became the largest independent provider of e-commerce solutions with 27 offices worldwide, 1000+ employees and more than 600 customers.

Steven Kramer was part of the Executive Management team and Board Member at hybris. hybris Software was purchased by SAP in 2013. While working with companies on their omni-channel strategies,

Steven Kramer identified a gap between traditional workforce management systems and how companies actually hire, schedule and manage their frontline employees. With this in mind, Steven Kramer co-founded WorkJam.

Connect with Steven Kramer:

• Linkedin
• Crunchbase
• Twitter

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FULL TRANSCRIPTION OF THE INTERVIEW:

Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. I’m very excited about the entrepreneur that we have today. Our guest definitely is going to teach us a thing or two about doing the full cycle as an entrepreneur. He’s from Canada, and without further ado, I’d like to welcome our guest, Steven Kramer. Welcome to the show.

Steven Kramer: Thank you very much, Alejandro. It’s great to be here.

Alejandro: Originally born and raised in Montreal, Canada. How was life growing up there?

Steven Kramer: Life was great growing up in Montreal, particularly being in a bilingual province in Canada. I think it gave a very interesting perspective in growing up and learning two languages, speaking Franglais, a mix of English and French every day, and having a learning that had a very big focus on the culture and the multi-cultural aspects of the world. It sets a lot of people up for viewing the world in a little bit of a different way. It was great living and growing up in Montreal, Canada, and I was happy to stay in Montreal. Particularly, at a point when I graduated University, a lot of my friends were moving out to the states and into other areas. 

Alejandro: Yeah, and I know that also, you had the entrepreneurial deeply rooted in the family because your father is also an entrepreneur. How do you think that influenced the choices that you’ve made and how you’ve also turned out to be an entrepreneur?

Steven Kramer: Yeah. My father started his first software company in 1968. They were still using punch cards back there, and he ran that company for 30 years. So, certainly, growing up, being in an entrepreneurial software environment was something that I think helped define me. My father taught me some great values around hard work and dedication, but certainly, the weekend trips to the office and having exposure to computers early on in my life inspired me to want to follow in his footsteps, and I fell in love with technology. It became a big part of everything that I wanted to do coming out of University.

Alejandro: You went to McGill University, and you studied commerce there.

Steven Kramer: I did. I studied information technology, as well as accounting. My father is an accountant by trade. He’s a CA or a CPA in the U.S. So, growing up, my brother and I were always supposed to follow in the similar footsteps: study accounting, go do an MBA. My brother, who is in finance, has gone down that path. For me, what’s interesting is I started working at my father’s company fulltime after I graduated from University. Then we ended up having the opportunity to start our first company together in 1999. He told me, “We’re going to start this company.” He had just sold his previous company. “We’ll start this company, but you have to go do your MBA.” Sure enough, I ended up getting accepted to an MBA. I was young. I was 22 years old at the time. I got accepted to Oxford, and we started to have a lot of fun being entrepreneurs together and growing a business, and ultimately, he admitted that I had earned my own MBA in the organization after deferring a couple of years, and we kept at it. It was a company called iCongo that was a leading e-commerce platform provider.

Alejandro: We’ll talk about iCongo more in detail because the outcome is pretty spectacular. First, the book from Noam Wasserman, The Founder’s Dilemmas, what he goes into are some of the difficulties that you find when you’re working with a family member because sometimes, it’s very difficult to say the things that you want to say because you don’t want to hurt each other’s feelings. How was it for you guys to be with each other and be able to give honest feedback to each other and be able to move forward?

Steven Kramer: I think that it was probably very challenging, I remember, in the first year. Then we found our rhythm. My father has always been a great mentor to myself and to my other partners. We found a very good rhythm of being able to separate work from family life. Certainly, there were times where we spent too much time speaking about business at the dinner table. But my mother and my wife would pull us back, and we always found a good way to have arguments, to compromise, and ultimately, it comes down to respect. My father has been a serial entrepreneur, very respectful, and I certainly respected his point of view throughout my career and still today. That helps a lot in managing some of the emotions that come from mixing family with business. Granted, I have some friends where it hasn’t worked out. Mixing family with business can be toxic sometimes, but it works for us. We used to joke around that he says I was an SOB, son of a boss. Later in life, I became his boss, too, and he was cool with that as well. I think that his attitude toward me and respecting me, a different point of view, and the view of a younger generation was very important to him as well.

Alejandro: How did you guys divide the responsibilities when you went at it with iCongo?

Steven Kramer: At the beginning, I was on the technical and product design side. Then I moved into sales. My father always did a good job at making sure that he was including myself and the rest of the management team. We were a young management team in all of the key areas, so that we were getting trained. It was very inclusive. As a result, a lot of what he taught us continues to be core to our values today. My father has been a great negotiator. He taught us a lot about negotiation and on general management and operations. But he gave us a lot of room, and he gave us a great opportunity throughout the journey to learn from him. That certainly played a big factor in why it worked. It was less of a top-down approach, and it was more of a collaboration.

Alejandro: From a negotiation perspective, what was the biggest lesson that he taught you?

Steven Kramer: There are great strategies that he had around focusing on value. Richter, his first company, was an enterprise software company selling to large organizations. iCongo was in the same boat. His biggest lesson is that if you can prove the value, you can stick to your guns. The ROI that comes with your applications that you built are critical. How you build the application to be able to get to a payback quickly for a large organization and reduce their cost is very important. It was very interesting because it was an e-commerce company that went through the bubble and started selling into a market where, in the early days, people didn’t believe in e-commerce. So, we focused a lot on different aspects of e-commerce, less around revenue augmentation, which is a difficult one to sometimes prove, particularly in something new like e-commerce in 2003 and 2004, and more around cost savings around digital automation of processes and so forth. I think that was a very big key to our success. It comes full circle now, as we’re looking at a recession coming up. Cost-cutting enterprise software solutions are really important. It’s not just revenue augmentation. Those are some of the things that off the top of my head remain ingrained and very true today as it was 20 years ago when we started that organization.

Alejandro: Got it, and with iCongo, you guys grew it nicely into one of the leaders in the space. Then, all of a sudden, more toward 2011, there is a merger that happened with Hybris. Walk us through what happened there.

Steven Kramer: In 2010, we had bootstrapped the company for ten years. We were a very profitable organization. We were rated, at the time, top-five globally by the independent research firms like Forrester and Gartner. We ended up bringing on our first private equity partner. That was a way for my father to take some chips off the table, start to take it easy. For us, as a management team to start accelerating into a space that was really still at its infancy stage at that point. What was interesting is, a couple of months after that investment by a private equity firm—the private equity firm that we chose was a company out of Palo Alto called Huntsman Gay. One of the bankers that we were working with introduced us to Hybris, and I ended up meeting Carson, who was the founder of Hybris in early 2011. It was very interesting. They were a European competitor. The two of us were really the only two smaller organizations that were competing successfully against the large software companies like IBM, Oracle, SAP, and Microsoft. Even the history of the organizations, starting in B2B, and moving into retail, the journey that we were on was very similar. We hit it off, and we felt as though putting the two organizations would give us an unfair advantage in the industry by being the largest independent software provider in our space and being agnostic to all the back-office systems that a lot of the other solutions were very deeply connected with. We ended up very quickly, deciding to merge the two organizations together. iCongo became Hybris. We were leveraging a lot of their partner ecosystem that they had built, and that was probably the best decision that we made. Together, we just exploded in growth over the next two years and became rated the #1 enterprise software platform for e-commerce in the world. We were still at a point where we felt as though our story was just beginning. E-commerce was progressing well. B2B commerce was still starting to take off, and we were on the path to do an IPO and ultimately ended up selling to SAP for around 1.5 billion dollars in the middle of 2013.

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Alejandro: That’s amazing. On the merger that we were discussing, how challenging was the integration?

Steven Kramer: It was interesting. A German company merging with a Canadian company is not always very easy. There are different cultures, different development philosophies. We had somewhat different models, as well. We were doing all of our own implementations. Hybris was exclusively working with partners. So, there were some fundamental differences in the businesses and in the cultures that ended up being obstacles. The interesting thing is that Carson, and I, and Ariel, the CEO, identified those challenges. We decided to do an interesting HR experiment that paid off, which is during the diligence process, we came up with a plan. The deal was supposed to close in August, and we said, “You know what? Let’s do something a bit different and try to cut down the integration process. Let’s fly everybody from North America to Munich for Octoberfest, the end of September, have people stay together, have people party at night, work together during the day. We’ll spend a week as a company altogether and get people to really know each other. We didn’t tell a lot of people about it. We just did it. Then, on the last day, we sent a photo of the company to the board and said, “Here’s your new company fully consolidated together.” That experiment worked out so well because it removed a lot of the cultural differences that can sometimes happen by email or by phone. It put a face to people, and I think that it probably cut three to four months off the integration of the two organizations. And it leveled people and removed a lot of the risk that a lot of the employees may have perceived, as well, with the merger. So, it was a little unconventional, but to be honest, it worked so well we did it for the next two years, up until the point that we’re in 1,000 individuals, and we were flying people in from all over the world. But getting the company together for a couple of days and working together proved to be probably the best thing that we’ve done.

Alejandro: That’s amazing, and it seems that you guys were blowing things up in a very, very positive way. I’m wondering, why did you guys make the decision to go forward with an acquisition from SAP?

Steven Kramer: We were on the path toward an IPO, and we really wanted our independence. That was one of the things that we felt an IPO can provide us. We felt as though we were still in chapter one of a very successful story, and that was an interesting way to accelerate and to remain independent. SAP ultimately came to the table and had a lot of interest in the organization and did promise us independence. They would have no impact on our employees. There wouldn’t be any layoffs. They would provide us with the resources and the flexibility to continue to grow the business in the way that we wanted to. They really did hold true to their word on that, so we felt as though it was a great exit for our shareholders and a great opportunity for our employees. It de-risked the business as well, and we felt as though we can have a major impact on SAP. We were an aggressive management team, and we said, “If we’re going to do this acquisition, let’s do a reverse takeover of SAP.” Ultimately, we did end up taking over the CRM business, which was probably around a billion-dollar business at the time and growing. We ended up taking on a lot more responsibility and also getting quicker to our vision of seamless customer experiences by integrating some of the tools that SAP had.

Alejandro: Got it. Then, you stayed there for a little bit, and then—once an entrepreneur, you’re always an entrepreneur, and another opportunity comes knocking. What happened there?

Steven Kramer: I loved SAP. I really did. It was a great experience for me. The management team at SAP was phenomenal. To be honest, I was super engaged for the first year. I loved it. After the first year, as an entrepreneur, coming from a 1,200-person company to a 65,000-person company, that became different for me. I love building product. I love being with customers. I missed it. It was still very exciting to be involved in very big deals and to continue to change the way a lot of businesses were operating. I really missed that customer-facing aspect, and being in the field, and being creative, and make things happen. My last year, I started to think about what to do next. Certainly, I had a non-compete that I needed to respect as well. I started looking for new ideas. It was 2014. What was interesting was, I ended up speaking to a lot of executives, retail, and manufacturing distribution and healthcare. A lot of the discussions at the seed level in a lot of these organizations were starting to shift away from e-commerce. A lot of companies had gotten to a point where their e-commerce businesses were growing successfully. The conversation started to shift toward millennials entering into the workforce, and what happens with increases of labor? How do we protect our margins? The job market was starting to get tight. Amazon was starting to pick up, so there was a reinvention that a Lot of organizations felt as though they needed to do in order to better compete with Amazon. I started putting a lot of these pieces together, and it pointed toward how companies can automate a lot of their workforce and the experience that was happening in stores or in a restaurant or a healthcare institution. When we looked into it, particularly the workforce management space, we found that there’s been very little innovation over the last couple of decades, even around how organizations communicate and educate their workforces. Most big companies that have hourly workforces right now continue to have bulletin boards in the back of their stores or their locations where they pin up a schedule or a memo. A lot of these hourly workers don’t have email addresses. The companies don’t collect their email addresses. It’s impossible to communicate at scale with them. That spurted the inspiration of starting WorkJam, which is, “Why don’t we bring the concepts of omnichannel commerce to workforce management?” There’s a digital transformation that can increase the productivity and efficiency of organizations, while also making employees smile at the same time. That was really interesting for us. We had a lot of discussions at the time around dollars and hearts. How do you save dollars for an organization and also win the hearts of employees at the same time? It’s pretty rare. There aren’t a lot of systems that do that. We had this vision of creating what we now call a digital workplace platform that digitally automated and transformed everything from scheduling to task management to learning management communications, all into one platform to allow organizations to communicate at scale with their non-desk workforces, both in a structured and unstructured way, and we said, “Let’s go for it.”

Alejandro: That’s just the way it works. You’ve just got to jump. You definitely jumped here. What ended up being the business model for the people that are listening? How do you guys make money?

Steven Kramer: We sell our platform to large organizations, and they pay us a per user per month fee. It’s a multi-tenant SaaS platform. Or we have enterprise subscription models. Our customers include large companies like Woolworths in Australia. They have 200,000 employees. Shell Oil – half a million employees worldwide; companies like Ulta Beauty, Verizon – large organizations with quite a number of non-desk or hourly workers. Last year, we also launched a mid-market initiative where we’re targeting companies of 3,000 employees and above.

Alejandro: You were talking about Shell. Shell was your first customer, and it was quite an adventure what happened there, while managing two projects on opposite sides of the world, so tell us this story.

Steven Kramer: Yeah. Shell was our first customer. We spent two years building the platform. We had a large team building the platform. We identified early on that we want to go after large enterprise. In order to survive in large enterprise, you need to have a robust system. Big investment in the platform in the first two years and we started to commercialize. We went to our first tradeshow. It was the National Retail Federation Tradeshow in January of 2017. There was a walk up to the booth, which was Shell Oil. They found what we were doing fascinating. They had tried to build something internally with some of their other systems around communication and learning and task management and had failed. It turns out to be very complicated, particularly when you factor in compliance rules that are required and work rules and workflows. They said, “This is really interesting. We have the exact same vision as you guys. Let’s do a pilot together, and if it works out, we’ll move into a global contract.” We were jumping up and down at the time—first customer, Fortune 5 oil company. We said, “Sure. We’re going to do it.” They said, “Okay, great. The first project is going to be in Malaysia and Austria at the same time, two markets.” We were 12 people at the time, so to do our first project on opposite sides of the world, sitting in Montreal was a really big challenge. I think we spent two months working 20 hours a day, making sure that was successful, which it was, and it moved into a global agreement. Now, we’re live around the world with Shell and continue to be very successful with them.

Alejandro: That’s fantastic!

Steven Kramer: You know, one customer leads to three others. That’s always been my rule of thumb in building businesses. After Shell, we started to take off and create some phenomenal partnerships with some of the leading companies in the world.

Alejandro: Of course, especially if you have big names. Most definitely. I know that you guys have raised quite a bit of money for this. How much money have you guys raised to date?

Steven Kramer: We’ve raised to date around 70 million dollars. We invest as a management team coming off the SAP transaction. I should mention, as well, the two people that I started WorkJam with were two people that I consider founders of iCongo, as well. We’ve been working 20 years together. This is our second go-around. We brought on our first investors probably after 24 months. So, we’ve been investing to date in every round, and we’re big believers in what we’re doing. Most recently, we closed a 50-million-dollar round at the end of March.

Alejandro: That’s interesting. You guys, yourselves, as founders of this business, have continued to invest on every single round of financing in addition to the existing stuff that you have as the founding team.

Steven Kramer: Yes. We love the opportunity, and we’re believers in it. My view on it is there’s no other company that I’m more passionate about and believe in than WorkJam. While there are other interesting opportunities of companies to invest in through funds or individually, why not invest in yourself?

Alejandro: That’s amazing. I love it. And, obviously, you guys have amazing investors. I see here, Lerer, Founder Collective, Inovia Capital. Why did you choose these investors? I’m sure they were throwing you money after doing your exit with SAP; probably word got out, and I’m sure you had people literally showing up without being announced to your office.

Steven Kramer: Yeah. Well, we brought in our first partners in 2017, Lerer Hippeau, Founder Collective, Blumberg Capital, and part of the rationale there, as well, as a Canadian company, we felt as though it was important to have some U.S. network. To be honest, up until today, the majority of our customers are outside of Canada. Canada has always been somewhat of a conservative country. Organizations tend to follow the U.S. a couple of years after. So, the majority of our customers are actually in the U.S., in Asia, and Europe. We’re just starting to focus on Canada now. Back in 2017, we felt it was really important to have a U.S. network that we can leverage. We met Lerer Hippeau and Founder Collective. My view on investors coming in is that the cultural fit is the most important thing. Even if you end up not getting the exact valuation that you want, having good people around the table that think like you and fit into the culture of the organization allows you to move faster, and you make it up on the backend. We got really lucky. We met these individuals, and they viewed the world in the same way that we did. Essentially, in that round, we allowed them to invest with us, and it’s probably been one of the best decisions that we’ve made. These individuals and these funds have been extremely supportive. They understand that it’s not easy what we do. There are always bumps in the road. The road to success is never a straight line. It’s a very curvy line with a lot of obstacles in it. Most recently, as well, when we brought on Inovia Capital as our most recent investor and partner, it was a similar thing. They view the world in a very similar way. Life is too short to work with people that you don’t love. Sometimes, these relationships, probably most of the time, are harder to get out of than a marriage, so you’ve got to pick your investors right. And not think short-term either.

Alejandro: Absolutely. You were talking about cultural fit, so for an outsider, how would you describe the culture of WorkJam?

Steven Kramer: We are a very inclusive organization, very transparent. Respect and inclusiveness are one of our core values. We strive for excellence and quality. We like to have fun with a heavy focus on winning and growth. With that comes a good amount of accountability. Accountability is another one of our core values. These are some of the core values that we—that’s who we are. We’re very passionate about what we’re doing. We want to win, and we’re going to do it in a very respectful and inclusive way. As a result, the relationships that we have with our investors are really important because you need to be able to speak to investors and to your network about all the good and all the bad that’s happening as well so that you’re able to get through these issues. I think that’s something that my father taught me, as well, working with him early in my career is the transparency, and the group thought and strategic thinking that comes from including many people that have seen a lot of different things in their careers, as well, is really, really important to dealing with some of the obstacles that are thrown at you.

Alejandro: Absolutely. For the folks that are listening, how big is WorkJam today? How many employees, or what can you share that describes the size of the business?

Steven Kramer: We have 240 employees. Our head office continues to be in Montreal. We have offices, as well, in Cincinnati, as well as in Melbourne, Australia. We’re just opening an office now in London, and certainly, a good number of remote workers as well across the U.S., mostly in sales and marketing. Our customers are, again, large organizations, as well as mid-sized organizations, very well-known brands in retail, manufacturing distribution, and healthcare. The business has been growing on average at around 250 to 300% year over year for the past three years now.

Alejandro: Wow!

Steven Kramer: And we expect to continue to grow that way, as well, for the next several years.

Alejandro: You were talking here about the future and the next several years. Imagine, Steven, that you go to sleep tonight and imagine it’s an unbelievable snooze, and you wake up in five years, and you wake up in a world where the vision of WorkJam is fully realized. What does that world look like?

Steven Kramer: I think we’re starting. It may not even take five years, Alejandro, because the crazy thing about COVID is that it has shined a light and emphasized the problem that we set out to solve six years ago, which is that you need to have, as an organization in order to be resilient, the digital transformation of your operations is paramount. It’s survival at this point. It’s very similar to, I would say, 2010, 2011, when retailers were being forced, and they had to get into e-commerce in order to stay competitive. What’s happened with the virus, particularly over the last couple of months, is that organizations have found themselves in a position where they’re furloughing employees or they have essential workers, and they have no way to communicate effectively with the field. As a result, our business, over the last month or so, it’s crazy. We’re signing deals now in a three to four-day sales cycle versus a three to four-month sales cycle.

Alejandro: Wow!

Steven Kramer: The digital automation of tasks and communications and open-shift marketplace where you could do labor sharing within your organization, all of this is being focused on heavily, right now, by every organization. Just the thought process around business recovery—how do you get people back to work? What will a retail store look like after this virus? It’s forcing organizations to take our type of solution very seriously as top of mind. I think it will end up being faster than five years as a result of this environment right now, but I think that in five years from now, what I see is a whole different operational paradigm within organizations where there is a direct line down to the field from a communication perspective with organizations, there’s labor sharing both internally and externally within organizations, and there’s a whole different level of task management within organizations as a result of this massive growth that we’re also going to see in e-commerce and other non-physical type activities within organizations.

Alejandro: Wow. Fascinating. Steven, for the folks that are listening, there’s one question that I typically ask the guests that come on the show. You’ve had a remarkable journey as an entrepreneur! If you had the opportunity to go back in time and have a chat with your younger self, with that younger self that was thinking about going into business and launching something, what would be that one piece of business advice that you would give to yourself knowing what you know now before launching a company and why?

Steven Kramer: I think the most important thing that I try to remind myself of this sometimes, as well, because you lose track of it is not to wear the rose-colored glasses. It’s very easy to think things are just going to work and to believe in an idea so much that you don’t take into consideration some of the feedback that you’re getting or some of the research that you’ve done because you’re so passionate about a certain idea. The rose-colored glasses can be your biggest enemy as an entrepreneur. You try not to repeat some of the mistakes that you’ve made in your career, but the rose-colored glasses can make you do that. I could tell you that when we first started WorkJam, we had the rose-colored glasses on. We thought we could be everything to everybody in what we were building. We tried to do that as well at Hybris and iCongo to be a large enterprise software package as well as to go downstream. It’s very complicated. It doesn’t work. There are different needs based on the size of the organization. But that first year a WorkJam, we thought we could be everything to everybody. We had the rose-colored glasses on, and we probably wasted a good amount of time as a result of it. Once you take it off, you’re able to get real clarity on what you need to do. You need to self-identify when you have the rose-colored glasses on. I guess that would be my advice.

Alejandro: Very profound. Steven, for the folks that are listening, what is the best way for them to reach out and say hi?

Steven Kramer: I’d be happy for anybody to reach out. My email address is st***********@wo*****.com – and certainly, you can message me as well on LinkedIn.

Alejandro: Amazing. Well, Steven, thank you so much for being on the DealMakers show today.

Steven Kramer: Thank you so much for the time. I appreciate it, Alejandro. It was great speaking with you.

 

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If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at al*******@pa**************.com .

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