Yesterday, Wunderlist announced its acquisition by Microsoft. As a founding investor and co-creator of the first product version, I wanted to share my personal Wunderlist story and how I met the founder Christian Reber and his team. I hope my post will inspire other founders and investors to take risks, and support teams during challenging times. Startups are incredibly hard, and it’s an inspiring story how Christian turned a simple idea into a phenomenally successful global company. It was also remarkable to experience his personal journey - he has grown from a design- and technology-driven founder to a strong leader and strategic thinker. I’ve always been a supporter and enjoyed working on the product with him, but like in every company, there were periods which were incredibly tough to deal with.
To all founders who read this: I hope this story encourages you to stay confident and energized to keep building, shipping and find your way to success!
# Why I could invest in Wunderlist
I’m founding startups since 1992 and have made many mistakes along the way. For many years none of my products or ideas have been successful enough to finance a bigger team or being interesting enough to be acquired by a big corporation. But I never gave up and finally did build a photo-service platform (ip.labs) that actually worked. Marc Sieberger, Alex Koch, Georg Sommershof and I managed to build a successful business which reached over 100 million consumers in over 50 countries. After selling the company in 2008 to Fujifilm, Marc and I decided to invest a portion of the money we’ve made into a small investment fund called e42 (our investment firm). We wanted to support design & technology-driven founders with our experience and seed financing.
# How I met Christian
A few months after we sold ip.labs, Marc and I met Christian at a local meetup in Berlin, he was running his own agency at that time. We connected on Xing (the german LinkedIn founded by Lars Hinrichs) and a couple of weeks later I saw his post:
“Who wants to join me to build the next generation project management software?”
I was very curious. I disliked all existing products in the market and I had built a project management tool for our company. Hence, I was very familiar with the industry and potential competitors. So I decided to call Christian and see what he was working on.
Christian showed me early designs of a project management software with the working title: Lunchbox. The product was web-based, beautifully designed and solved many of the existing problems with other products. Christian wanted to make a basic version available for free, but customers had to pay for advanced features (an App Store for Project Management in a way). I really liked the design, the love for details and the new approach. But more importantly, Christian and I very were similar characters, except that he’s a lot younger than me :)
He loves design, understands technology, and builds companies the same way I do – progressive and product-driven. He has basically been a developer since he was in school. I remember him talking about Assembler, Basic, Delphi and a lot of PHP Frameworks (which were pretty popular back then). We really clicked, it was fascinating and fun.
Christian and his team came up with the idea to call the company 6Wunderkinder, and its products Wunderkit and Wunderlist. In the beginning I was very sceptical: Why 6 (what if the team grows), why a german word? But he convinced us and he was absolutely right: it worked internationally, it was a great fundament for our product names Wunderkit and Wunderlist and people loved the personal touch. Today I really like the name and brand. Learning: Trust and follow the instinct of the founder.
# First external funding
While launching the first version of Wunderlist, I started talking to a friend of mine, Alex Frankenberg. He’s the Managing Director of the Hightech Foundersfund (based in Bonn), and they usually invest € 500.000 for a 15% stake. It’s a convertible note, with milestones. Not the ideal deal structure, but good for a fast-growing and unpredictable startup. After a few weeks of discussion the investment, and pitching Wunderkit as the next-generation productivity platform, we closed the deal. (http://techcrunch.com/2010/12/21/6wunderkinder-raises-e500000-to-build-slick-productivity-tool-called-wunderkit/). the company was growing so fast, they only took around € 300k of the € 500k, because they could find better deals.
Rather than building the actual product we pitched (Wunderkit), we decided to use most of the money to amplify the success of Wunderlist. After the round was finished, Wunderlist was only available as a desktop app, so we wanted to launch mobile apps too. I called Christian and asked him: “I know we’ve promised our investor to build Wunderkit, but I think we should first build a cloud-sync for Wunderlist”. He agreed, so he started working on the sync code. We estimated four weeks, but it tooks more than two months to build the first version. It was hacky, but it worked. A simple upgradable MySQL database, a version-based PHP sync algorithm, and it was done! No smart scaling AWS infrastructure, just a simple LAMP setup, and the team launched Wunderlist on iPhone (with the new icon). Christians co-founder Robert sent out mails to all the big tech blogs and just a few hours later Lifehacker did create a video about Wunderlist and praised the design and simplicity (http://lifehacker.com/5687089/wunderlist-is-a-simple-elegant-and-free-to-do-app-that-synchronizes-across-your-machines). Quite a success for just a few weeks of work, it was great to see how fast a small but 24x7 focussed team could ship. For many weeks we worked 12-14 hours, 6 days a week and just enjoyed creation. But Christian did not only care about building stuff fast, he had a remarkable sense for quality and polished announcements.
Oh, but wait – while writing code for Wunderlist, he did work with his other co-founder Sebastian on Wunderkit. We did invest a lot of time polishing designs, because we believed we still need to build it to make the company successful (that was an expensive mistake btw). After a few months of building Wunderlist, the team finally shifted to Wunderkit and started writing code. I pitched the current Wunderlist growth and our Wunderkit vision to 2nd VC firm in Bonn: T-Venture, the investment firm of Deutsche Telekom. We closed another € 600.000 deal and the pressure increased, but we found another believer in Wunderkit – “the productivity platform”.
# Christian secures first international funding and makes a tough call
We quickly realized that the company needed more capital as Wunderkit required a much a larger development team. And Christian also wanted to continue working on Wunderlist, because of its millions of users (who haven’t received updates in a while).
The first two seed financing rounds where done with local contacts from me. I still believe both deals were good and more importantly fast, as the company was in a very early stage. But now as Wunderlist showed strong traction and Wunderkit was shaping from a vision into a prototype, Christian believed we can do better than using my local investor contacts. He was absolutely right.
Top investors already reached out to us, including Sequoia and Atomico. We decided to go with a European investor, in case things go wrong (and boy was he right). He convinced Niklas Zennström and his team at Atomico to invest another $4,2m – a remarkable success considering that we started with the idea of building project management software.
In retrospect I could have done better for our seed rounds. Thinking bigger, investing more time and trying to convince investors who have backed leading players. But we also had to build the product, build the team and we needed the money fast. I also just hadn't the right network nor the experience back then. And I did not foresee how “challenging” the cooperation with corporate investors can be.
Months later, in February 2012, Wunderkit finally launched as a full-blown project management platform that even allowed 3rd-parties to build Wunderkit Apps. I truly believe the design and architecture Christian and his team delivered was outstanding. It received a lot of attention and grew very quickly. But it didn’t work.
It was too complex. Too much interface, too many features, and an unclear product focus (btw. that’s a mistake I ironically or sadly repeated with doo- the document app). The team tried hard to optimize the product, but everyone knew we were in trouble, Wunderkit just wasn’t working.
Christian made the incredibly tough call, to refocus the team on Wunderlist. I have big respect for the way he communicated and executed this dramatic shift with his team, management and investors. The blog post received close to 1,000 comments, which reflects how challenging this decision was:
But Wunderlist showed great KPIs from the very beginning and it was the right thing to do: focus on the “smaller”, yet incredibly popular product and deliver excellence!
# Wunderlist 2
After working for many intense months on Wunderkit, and burning a few team members, Christian decided to not only refocus on Wunderlist, but to rebuild it. He knew the technology wasn’t good, it was a prototype in the end. He knew he needed time to focus and work, so he raised more capital from Earlybird in a phase where the failing of Wunderkit was already likely.
Based on the big success of the first version, the team started building native apps for Wunderlist, and rethought the whole UX and UI. They rewrote the architecture and improved sharing of lists and added a host of new features. The launch of Wunderlist 2 in December 2012 was a real hit: Apple promoted our iOS and OS X globally, Google promoted our Android App and all major productivity and startup blogs covered the new product. But this new level of growth was also a challenge for the backend infrastructure. Customers had serious problems to synchronize their lists and tasks, and the apps received bad reviews. The team delivered world class native apps for all major platforms including mobile, tablet and desktop, but Christian had a brutal new challenge: fixing a broken sync architecture. I remember how he had to replace half of his backend team over Christmas (!), and hired one of the most remarkable CTOs in the industry (and I still have no idea how he did that).
# Chad Fowler
Hiring Chad was a stroke of genius by Christian. I really don’t know how he convinced a high-profile US CTO to join a small startup in Berlin with backend challenges, but his pitch must have been very convincing. When Chad arrived, the team was at a breaking point. Chad was extremely friendly and always calm, which was in the beginning challenging for us as investors: We needed a rock-solid backend NOW. But of course Chad was right to take the time to analyse, think, architect and then execute. I have nothing but deep respect for his analytical and architectural skills. Today Wunderlist is one of the very few products in the world with close to zero sync issues and real-time speed. Christian and Chad were a magical combination. Christian was the passionate and aggressive company-builder with a strong sense for business and design, and Chad was the careful technological executor and new spiritual leader for the engineering team.
# Sequoia Capital, Sir Michael Moritz and Wunderlist 3
Chad Fowler wasn’t the only magical moment in the company history. A year after launching Wunderlist 2 (2013), Christian decided to fly out to the US, and raise another round to build Wunderlist. He only talked to a handful of investors, only the ones he liked – but he really wanted Sequoia (who were interested since 2011). He talked to a few firms in New York and San Francisco, and some were interested, but some weren’t. He reserved Sequoia for the very last meeting, to make sure he has the right answers to the most challenging questions. He met Sir Michael Moritz, and closed the deal within three days.
That investment was not only outstanding for my standards, but also Sequoias first investment in a German company. It was a remarkable signal for the company, but an even stronger signal for the growing Berlin startup scene.
6Wunderkinder has grown from a dream of 6 friends who wanted to build a great product into a serious company delivering the world’s leading task management app. During this transformation Christian had not only to adopt the product but also build a management team that could cope with the growth. Besides Chad he hired Steffen Kiedel as his CFO, Benedikt Lehnert as his Chief Design Officer, and very recently he added Rebecca Escreet as VP Marketing (but she’s with the company since more than 3 years). It was always a great pleasure to work with Chad, Steffen, Ben and Rebecca and reflecting it retroperspective, Christian hired and promoted the right people at the right time to build an outstanding leadership team.
# The Exit
Christian’s dream always was to build a massive company that lasts. He hired his leadership team not only based on skills, but also based on long-term commitment. He talked about hiring thousands of engineers, building multiple products – and a universe of Wunder-products. So why did he (and the investors) agree to an offer from Microsoft?
Let me put it this way: because it’s a mind-blowing opportunity. Wunderlist will be a part of Microsoft, which is transforming into the leading, platform independent productivity hub. If you think about it, it could become the global layer for reminders and tasks for Windows and Office. Wunderlist will last, and will get even stronger (and much much faster than it could have been without this deal). I remember him saying “Frank, my heart says no, but my brain says yes.”. In my view, this is beyond incredible. A german startup, with little entrepreneurial experience when they started, was able to start, struggle, survive and succeed. Many individuals became very wealthy, and will most likely reinvest a good part of their wealth into the Berlin ecosystem. The product will last for a very long time, and maybe even forever. I could imagine this wasn’t the last company Christian and his team were starting, so it’s a wonderful opportunity for everyone to slow down, recover and start from scratch – without making the same mistakes again.
A small comment for our german community: start celebrating! Be happy, this is epic. Microsoft is now based in Berlin, with an incredible engineering team. It’s now easier than ever to build a software company in Berlin, and you have an outstanding partner and possible exit opportunity right in front of you. And for the ones who think the price was too low, think twice. The team still owned more than 30% of the company, so it’s a massive success for everyone who worked so hard incredibly hard over the last years. And in case you want to start your own company, maybe a “Wunderkind” will now invest in your idea! I think this is one hell of an achievement.
I’m very thankful that Wunderlist found a new home where it will thrive; but I’ll miss to work with the 6Wunderkinder team on a product I use daily.