Zipwhip CEO & Co-Founder: John Lauer

Summary

John was raised in the suburbs of Detroit, MI and grew up with six other siblings. He had a sustained curiosity for the technology around electronics, which was heavily influenced by his father. At just 13-years-old he began trying out different ways of making money including writing a book, landscaping, and deejaying. At just 21-years-old, John started a business that helps businesses build websites. He managed to acquire a $6M contract from Ford Motor Company and also acquire other notable customers such as General Motors. He was awarded the Michigan Young Entrepreneur of the Year by the Michigan Governor: John Engler. After several business ventures, John started Zipwhip in 2007: A Seattle-based cloud texting provider that helps businesses communicate with their customers via text messaging.  Since Zipwhip’s birth, John has raised over $90M, currently has over 300 employees, and the company is experiencing outstanding growth.

Podcast Transcript

Note:  There may be errors to this transcript (some funny, some confusing - we used an automated transcription software!)

00:00:00 John Lauer: One correction I do want to make. I did not actually get my degree from the University of Michigan. I had one semester to go, and I did it on purpose. I did it on purpose because I fully committed to being an entrepreneur the rest of my life. I knew that by being an entrepreneur I would never need a resume. Therefore, I didn’t actually need the final degree on it. But I did it purposefully to inflict upon myself that weight the rest of my career.

00:00:31 Male Voice 1: So in a way you cut resources of retreat.

00:00:29 John Lauer: You got it. I cut resources of retreat. I’m going to actually use that. Yeah.

[music]

00:00:19 Ash Faraj: Hey! Welcome to the ExecuTalks Podcast. It’s the show that gives you insight to the personal stories of today’s top executives.  In this episode, you will hear from John Lauer, current CEO and Co-founder of Zipwhip, a company that helps businesses use texting to communicate with their customers. John has successfully raised over $90 million, has over 300 employees, and the company is experiencing outstanding growth.

[music]

00:01:18 Ash Faraj: From a young age, John had an intense fascination with science and a curiosity of learning how electronics worked. When he turned 13 years old, his burning desire to start a business began to emerge and mix with his curiosity of learning how electronics work. John was born in Stow, Ohio, and was raised near Detroit, Michigan. However, he didn’t grow up in a very typical household.

00:01:45 John Lauer: I was one of seven kids. When we would go on a bike ride with the family, people thought there was a bike race. [laughter] Yeah. There is a race? What’s going on? But I have four older sisters, and then I have two younger brothers. I was the middle child, so I was ignored. But I was the oldest boy, so I was sort of maybe looked up to. You know, so it’s kind of an interesting juxtaposition of those different things. But I think when you grow up in a house with seven kids, your parents can’t give you that much attention because there’s only so much to go around. So I think you get to actually do a lot of your own exploration and lots of inspiration. My dad had all sorts of electronics in the house, and he was always trying to bring in the latest technology that he’d maybe borrow from the office. I was always the tinker and sticking stuff in the electronic outlets and touching the wires together and they’d explode. I’d get in big trouble, but that didn’t stop me. I burned myself once doing that. But, you guys, I learned what electricity was through the process. This is the learning experiences in life. My dad was a research scientist in the rubber tire industry and so he had patents. He had all sorts of books. I still remember when he’s like, “Son, you should read this book,” and it was about Einstein’s theory of relativity and I was in the fifth grade. I’m like, “Okay. Tell me a little bit.” And then he started explaining, “If you travel in a rocket ship and you come back 10 years later, everybody on earth is 30 years older and you’re only 10 years older.” He’s like blowing my mind. I just remember, “Okay, there’s this whole fascinating world of science out there. I’m in love. I just want to learn more and more and more.”

[music]

00:03:40 Ash Faraj: I remember when I was 13. All I could think about was getting home from school to play video games or thinking of ways to prank my friends. For John at 13, he was already trying different ways of making money. Some failed, some worked.

00:04:01 John Lauer: Growing up as a kid -- middle-class sort of neighborhood upbringing, but with lots of kids -- there was never much money to go around. So I remember at 13 years old -- and it’s not like you were given an allowance or anything. None of that existed, but at 13 -- I’m like, okay, I really want to start making some money. I want to start being able to buy stuff that I want. I started thinking, well, how do you make money as a 13-year-old? You can’t go get a job anywhere. Heck, you can’t even get transportation to get to the job. So, actually I was like I’m going to write a book. What can I write a book and then sell it? What can I write a book about, so I started writing a book about how 13-year-olds can make money.

00:04:42 Ash Faraj: Oh, wow!

00:04:41 John Lauer: It had all these like ideas and things in it. I probably got a few chapters in and just sort of like, okay, this is never going to work. Who would ever publish this book? Then as the years went by, I think I was 15, and I started a deejay business, but that was still hard for the transportation. By the time I turned 16, I finally could start doing stuff. I started deejaying. Put all my own equipment together by buying this old amplifier from a flea market that was cheap, but I knew it was an amazing amplifier. This was like a $1,000 amplifier they were selling for like $20. I’m like, what are these people doing? This thing’s incredible. And then building speakers from scratch, although my brother actually was the one that built those. Started making good money deejaying and having a lot of fun too! I remember, okay, I did the technical side, but now I’m going to do the marketing and sales side. I remember going to the school district and saying, “Hey, you guys ever need a DJ for school events?” They gave me like this whole year-long contract to DJ dances, like every other Friday at the school farm for the middle schoolers. I got like my first major contract just by knocking on the door and asking. I was pretty scared to do it. That’s intimidating. I was actually scared to go to this like headquarters of the school district and just ask them this random question. They were even like, “Why did you want to meet with us again?” It was really awkward to do the whole thing. I still even remember my friend like, “What are you doing tonight? You’re going over to the headquarters of the school district to pitch deejaying? Are you smoking crack?” [laughter] I’m like, “I’m going to go for it!”

00:06:29 Ash Faraj: Okay, so John obviously seemed to be incredibly ambitious from a young age. This ambition would only continue to grow and would carry on throughout his college career. At 21 years old, he was named the Michigan Young Entrepreneur of the Year by the governor. At the time he was studying computer science at the University of Michigan and had started a company to help build websites for businesses. He was able to win Ford and General Motors as his first customers to help build their websites, and from there he would only continue to gain more and more clients. There is just one correction about his college degree that John really wants everyone to know.

00:07:11 John Lauer: One correction I do want to make. I did not actually get my degree from the University of Michigan. I had one semester to go and I did it on purpose.

00:07:19 Ash Faraj: Really?

00:07:18 Male Voice 1: No way!

00:07:17 John Lauer: I did it on purpose because I fully committed to being an entrepreneur the rest of my life. I knew that by being an entrepreneur I would never need a resume. Therefore, I didn’t actually need the final degree on it. But I did it purposefully to inflict upon myself that weight the rest of my career.

00:07:39 Male Voice 1: So in a way you cut resources of retreat?

00:07:40 John Lauer: You got it! I cut resources of retreat. I’m going to actually use that. Yeah.

00:07:47 Male Voice 1: That’s crazy with one semester to go. You just…

00:07:49 John Lauer: Yeah, I got a lot of pressure and flak from my parents and my friends. What in the world are you doing? I’m doing the exact opposite of what’s expected.

00:08:01 Ash Faraj: Right, that’s crazy. And the first company that John actually founded was a company called Rootlevel. Rootlevel was a software company that essentially built the platform for building GM and Ford.

00:08:11 John Lauer: Yeah, GM.com and Ford.com. Part of the cool thing was doing a technology start-up in Detroit. We were like the only technology start-up in Detroit, so that was a nice competitive advantage to then win some major contracts. Think about doing your first start-up and you’re in your early twenties. Getting contracts, like a $6 million contract, from General Motors to build their website. That’s just not common.

[music]

00:08:50 John Lauer: I think a lot of start-up businesses are about the right timing. There’s almost always some kind of new industry forming. Some kind of new disruption had occurred, and that disruption creates opportunities for all sorts of start-ups to jump in. The Internet was just starting out. I’ve always been very nerdy, so I knew how to write websites, and HTML, and code the back-end, and databases. Those actually were kind of rare traits way back then. I think that was ’97, ’96. I was like, “I think that that’s a unique enough value proposition to start a business around.” I had no start-up capital at all. That business was a professional services business, which you can do without any start-up capital. Because all you’re really doing is you’re raising your hand saying, “I can do sort of hourly rate work for you.” But you charge a high hourly rate because it’s really skilled stuff that you’re doing, and you know there’s going to be a demand for it out there. I don’t know who the clients would be, but I figured it was enough of a combination to go do it. I ended up with some smaller clients initially, but it definitely started to work. I started to get, sort of, enough cash flow to maybe hire a person, and then two, and then three, and then was able to grow it from there. And it really did turn out to be great timing.

[music]

00:10:12 Male Voice 1: Do you remember how you got your first client? Was it word of mouth?

00:10:17 John Lauer: Absolutely, I remember how I got my first client. That was one of the hardest things. I was working a job to kind of help pay for school as I was at that tail end. They had Ford as a customer for a very narrow project for one department. I was working on the project at that company. I gave them my resignation letter. I wrote a really long, inspiring resignation letter because I didn’t want to leave on bad terms.

00:10:47 Male Voice 1: How long?

00:10:50 John Lauer: Probably three pages. It started out, “When I was a boy.” What resignation letter starts out, “When I was a boy…”? But I tried to help them understand that I’d been wanting to start a business my entire life. The time is right, right now. This is why I’m leaving, not anything that has to do with anything other than that. I think it turned out to be a pretty inspiring letter for all of them. I also then said, “But look, I don’t want to leave you hanging on this project.” I would take it on as contract work as my first job.

00:11:24 John Lauer: Just all of the aspects of starting a business are crazy complicated, while you’re still then trying to get the project complete to get the job done. It is taking on a lot. But you know, you’re young, you’re full of energy, you don’t even need to really eat that much. You just drink lots of diet coke and drink lots of coffee. Oh God, I think at the time I was only eating my Taco Bell burritos because they were like a $1.32 or something.

00:11:48 Ash Faraj: You even remember the exact… [laughter]

00:11:49 John Lauer: It was the cheapest, most filling meal you could have. Because again, no start-up capital. And I will say the most important thing was, when I was at University of Michigan, I had gotten free credit cards while on campus. Because they would hand credit cards out to you. Master Card would set up a booth in the Diag.

[music]

00:12:09 John Lauer: So I got free credit cards. The limit was maybe three grand on one, two grand on the other, and maybe like fifteen hundred on the other, and that was my start-up capital. I remember buying like the furniture for the office and a computer, maxing out those credit cards. But then being able to kind of pay them back, maybe over the next year. Pay them back as soon as you can. You’re getting 22% interest rate on those. I mean that’s horrible.

00:12:37 Male Voice 1: I’m just curious though, that was like a huge risk?

00:12:39 John Lauer: It was super scary, yeah. That was super scary. But you’re like, whatever. Let’s just go for it. Again, it’s just throwing yourself into the volcano. Just do it. Grit your teeth and dive in, because, you guys, life is short! Just go for it! What’s the worse that can happen? Declaring bankruptcy? That’s not great. But I think if you just really try to be strategic and thoughtful about it, do it! Take some risk. Life is short.

00:13:07 Male Voice 1: I’m dying to ask you this, John. I actually have two questions. The first one is, growing up did you have any insecurities or self-doubt? I guess the second one is, did you have any naysayers while you’re trying to get your business up and running?

00:13:23 John Lauer: Oh boy. I think everybody has insecurities. We’re just lowly humans made of 98% water. We’re complicated organic beasts, so we have all sorts of emotions and complexities. I think you just got to rise above it. When I look back, there’s a lot of pressure from like my family or parents or just community and friends, like, “What are you doing? You should just go get a job at Ford Motor Company and retire after 30 years. That’s never going to work what you’re doing. Like 94% of businesses fail. What are you doing?” That’s hard to overcome.

00:14:06 Ash Faraj: If you were to go further back and give some advice to your 21-year-old self, knowing what you know now, what would you tell yourself if you could go back in time?

00:14:12 John Lauer: Be even more confident in your abilities. Yeah, be even more confident which would lead to go raise money. I think that raising money when you’re trying to manifest a vision, especially if you know you’re capable of manifesting the vision, money is oxygen to achieve a vision. People are willing to rally around you if you’re capable and if they believe in the vision too. You have to kind of open yourself up to that type of, I guess you could call it risk, but you’re really almost getting more of your community then to help elevate and manifest your vision. Early on, if you’re a little concerned or a little worried about your confidence to pull it off, you’re maybe more apt to be like, “I’m not going to take other money because if it fails, I don’t want to have to look them in the face.” Which, by the way, I think is a really good moral ethic, but if you really are capable of it go for it. Life is short. It takes years to manifest a vision, but you might as well be able to manifest it with a way bigger arsenal of weaponry at your disposal. That’s what raising capital does for you.

00:15:30 Male Voice 1: You once mentioned that the secret to success is basically waiting out; having problems take years to solve and not to get distracted by the next shiny thing?

00:15:40 John Lauer: Very early in my entrepreneurial career, I would meet other entrepreneurs because we’re drawn to each other. We run into each other at events. I saw an epidemic of people who loved to start, which is a requirement to be an entrepreneur, but then they would want to just keep starting stuff. They would never give the one idea time to manifest. You’re actually shooting yourself in the foot. I coined this phrase I started using ‘the curse of the entrepreneur’. Because it takes somebody who’s willing to start and sort of create something from nothing, but then if they keep doing that, they’re just doing themselves a disservice. It’s really sad when you see that.

00:16:22 Male Voice 1: So how do you know to keep pushing through and not move on the next thing, I guess?

00:16:29 John Lauer: It is a hard balance. It is a fine line because you might have picked what you thought was a great idea, you’re willing to commit to it, but it really isn’t a great idea. It’s never going to have a revenue model. It’s never going to have product market fit. It’s never going to scale. There are reasons why things end up being bad ideas. That’s hard. You have to know when to keep going and then when to finally throw it in. But I think that, if anything, it’s always more than a year to two to three to get an idea manifested. Give it at least three years but commit to it too! I think that’s the problem. People aren’t willing to commit. You got to commit to stuff.

00:17:07 Male Voice 1: Like fully commit yourself?

00:17:08 John Lauer: Yeah. It’s sort of back to your earlier point. Commitment is a decision, and the Latin root of the word decision is ‘cision’ which means to cut. The word decision isn’t that you’re choosing to go this way, it’s that you’re actually choosing to cut off other options.

00:17:26 Ash Faraj: Wow! That’s powerful! ‘Cision’ that’s the root word of decision.

00:17:35 John Lauer: Cutting off other options.

00:17:37 Ash Faraj: Ah, that makes sense. Wow.

00:17:41 John Lauer: Like deciding to not graduate school because you’re going to commit to having no resume your entire career.

00:17:43 Male Voice 1: That is scary as hell.

00:17:52 John Lauer: You can go always go back. You could be the old guy on campus. [laughter]

[music]

00:17:59 Ash Faraj: At this point in his life, John has started multiple successful businesses and at the time of this podcast has raised over $90 million for Zipwhip. We were really curious about his thought processes when it comes to selecting business partners, dealing with personal, emotional challenges and what he does to keep himself motivated after being so successful.

00:18:24 Male Voice 1: On the topic of finding a partner, you mentioned that it might happen naturally, or you might have to go and find them, right? What are some tips? Do you look for a partner that’s got the strengths to your weaknesses? What is it that you should focus on to find, you know what I mean?

00:18:42 John Lauer: You really should treat it kind of like an interview in your own head. Is this going to work out? My first start-up, I did do with my best friend. He was my best friend, and it did not work out. That was really an awful experience. When I look back now, I really had sort of the entrepreneurial desire. I think that he got excited by the whole idea too, but it wasn’t maybe really in his heart that that’s what he wanted to do. After all the brutality of doing a start-up that type of stuff can not end up super great. I think you should watch out for that. Don’t make the mistake I made because it can really wear and tear on you. Make sure that they’re really ready to do it. Challenge them too on whether they’re ready for the commitment. Tell them, look, it’s a 10-year commitment and see what they say.

00:19:33 Ash Faraj: Did you ever go through any personally challenging times emotionally and how did that affect your work and how did you overcome that?

00:19:40 John Lauer: Oh sure. Part of that is the story about doing it with my best friend. It’s still kind of sad to look back on it how hard that was. But I think like going through your relationships; the pressure that’s put on those because you’re so dedicated to what you’re doing with starting the business. It does create pressures to try and balance that out. Of course, it is still very stressful. You’re almost always in a stress situation, kind of clenching your jaw, and then you think about how that kind of pans out at home or with friends. That’s pretty hard. I saw a lot of entrepreneurs start turning to alcohol to just kind of like deal with the stress. I’m like, man, that’s not a good way to deal with it.

00:20:35 Ash Faraj: I guess I’m asking how did you overcome those challenges personally? What was your mindset? What were some things that you did to keep you on track?

00:20:45 John Lauer: I suppose what I would always come back to is, look, good stuff requires hard work. Just stay focused on it and keep doing the right thing. I think always actually trying to do the right thing was important. You almost end up going back to the morals and ethics that you’re raised with, and then you kind of just believe that that will work correctly. And so maybe there’s an element of a faith to that. I actually still totally believe in that. Just always keep making the right decision and it’s going to end up okay. I do remember waking up one day and looking at the bank account of my first start-up and how large the number was and thinking, “Oh my God, it worked. This actually worked.”

00:21:37 Male Voice 1: So John, you’ve obviously achieved a lot of success in your career and your life. I’m just curious. What is it that keeps you motivated to keep achieving more and more?

00:21:46 John Lauer: Being on my death bed and looking back on my life and wanting to make sure that I went all out. Now there’s a little bit of a darkness to that viewpoint. Your whole life you’re focused on your deathbed? Your death? That part is always to me even a little odd that that’s my viewpoint, but it is. I just want to make sure that I’m really happy with all of the decisions I made. Here’s the other thing about that, taking risk is super hard and super scary, but when you’re on you death bed, you will not care how much risk you took because you are ready to die and none of that risk will matter. Regret would just be really sad. To be looking back and thinking, “Yeah, I had this chance of this small little window on this small little planet in the big huge universe and what did I do with it?”

[music]

00:23:02 Male Voice 1: So we want to switch gears just a little bit. We want to play a quick rapid-fire game. In your opinion, what is the most important life skill?

00:23:09 John Lauer: What is the most important life skill? Oh God. What is the first thing...?  I want to say focused, but I’ve already said that so many times in this interview. Tenacity.

00:23:27 Male Voice 1: A great team and lousy strategy or a great strategy and a mediocre team?

00:23:28 John Lauer: Maybe neither because culture eats strategy for breakfast.

00:23:43 Male Voice 1: Worst business advice you’ve ever received?

00:23:44 John Lauer: Worst business advice I’ve ever received was “You shouldn’t go raise money.”

00:23:53 Ash Faraj: Somebody said to you?

00:23:54 Male Voice 1: What advice you would give 21-year-old John?

00:23:58 John Lauer: Be even more confident in your abilities.

00:24:08 Male Voice 1: Text message or call?

00:24:06 John Lauer: Text message, hello! Duh!

00:24:16 Ash Faraj: Thank you for tuning into this episode. If you enjoyed listening, please subscribe to the podcast, whether you’re on Spotify, Stitcher, or Apple Podcasts. Please leave a review so we can gather your feedback. Until next time. Take care and dream big.