Tim Schumacher. Sedo’s Exited Founder on Work-Life Balance

0:00There are some people who go back right into building. And for some, it's great because, I mean, some of the best founders I know, they're actually builders. They're builders who build stuff from zero to one. Their best use of talent is really keep building things and then selling them. And I know some people who are super successful at that. And that's a skill I have deep respect because it's not my skill. My skill is really seeing something that is there and making it bigger. Tim Schumacher is the exited founder and former CEO of CEDO, one of the world's largest domain marketplaces, which he led for over a decade before stepping down 13 years ago.

0:36What sets Tim apart is how he mastered the elusive work-life balance while still building his company, something most entrepreneurs only dream of. This balance helped him avoid the emotional rollercoaster that so many of us face after a successful exit. In this episode, Tim shares his thoughts on keeping life super normal, the bootstrapper mindset, being a scaler versus a zero-to-one founder, and finding new purpose in tackling climate change.

1:12Hello, Tim. So good to have you in my studio today. Thanks for having me. Fantastic. So why don't we go back to the moment 13 years ago when you just exited CEDO.com? I want to know how you felt. So interesting question. And I guess for me that it wasn't that one time, although the 13 days, 13 years ago, you hit it right. That was the time when I exited CEDO and I stopped being the CEO and I went out. So that was an exit in terms of, okay, before my life was focused on one company. And then after a little bit of a transition time, my life was, I had a lot of time, but it was purely a time thing 13 years ago.

1:58My actual exit was many years before. It was kind of came in stages. And I think that that's differing, differentiating us a little bit from many usual founder exits. We did one exit where we sold a portion, then another portion, then we took the rest public through an existing shell. And so it was kind of a staged exit. But yeah, probably. And so that part was it was very gradual, but definitely the exit of me as a CEO and founder is kind of leaving my baby. That was 13 years ago. and that in retrospect was the bigger change in life than making an exit and getting some money in return for some shares you sold we sold which is obviously a very virtual thing uh still life changing but more in the long run but yeah i i still remember that when i left as a ceo i suddenly had a lot of free time uh we went on a holiday in new zealand for a few weeks um um and suddenly the days were empty um and in a good way though because uh being bored in a in a positive sense i never had a time in my life where i was so open for starting new things and doing new things um without any pressure without any team without anything and i think that's um that was by so it was a feeling since you asked me was a feeling of on the one side anxiety uh what's next on the other side also relief because I've done CEDA for a very long time and I've been really trying to work towards that time when I actually could turn over to my successor as the CEO.

3:41But yeah, then also quite a bit of boredom was the feeling, which then I started to fill with other things. Yeah, I guess those three things were the main feelings. All right. So you felt bored. And how did you go about that? I had started even before that I had started some angel investments. And I got more involved into them. And I started to do more of them, because I really enjoyed that part. I enjoyed talking to new founders. I started, I enjoyed, yeah, growing, growing companies. I've always enjoyed that. And one of the businesses which I then happened to actually spend the majority of my time, or two businesses over the next couple of years, were one, I had done the angel investment before, was the company behind Adblock Plus, now world's leading ad blocker.

4:40The company name is IO, but most people know it by the name of Adblock. And I got quite involved during that time into taking that company, which was a fledgling little startup with just a few employees and helping my co-founder to grow that. And the other business was, and that investment came during that time after I left CEDO, which was the green search engine Ecosia.org. it's a green search engine that plants trees works like Google but then it takes the money to plant trees so it's essentially a philanthropic effort but with the means of technology and back then I actually I got involved there and helped them to scale over the coming years so yeah I fairly quickly went into those two other businesses one which is these days is my largest philanthropic effort.

5:39The other one is the biggest company, which I have. One regret I hear a lot from people who exited long ago is that when they look back, they often say, oh, I should have taken more time to just rest and heal. It's one of the things, for example, that famously Steve Jobs also said. He wished he spent more time healing before he jumped into next after he was ousted out of Apple. And I'm curious how it was for you. Do you feel you rested and healed whatever needed to be healed after 10 years at CEDAW? I didn't feel the need to be healed or anything. I wasn't, I think for one, I think it's if you're ousted or the company goes bankrupt or something, I'm sure that's a very different situation.

6:31In my case, after 10 years, I was like, okay, it's time for someone else to do the next 10 years for this company. So it was a very conscious choice. I still stayed on the board. It was a very peaceful transition. I left the company in good hands. And I think I always had a fairly healthy work-life balance. I mean, I hear from a lot of founders who work like 80, 90 hours. I was never that way. I always try to work very productive in my 40, 50 hours I work, but to not work. more than that. And so I didn't have that need to really, yeah, have a complete rest or something. How old were you? Well, that was, I was what, 30, 32, 33.

7:16And at that time you had a six-year-old boy? No, he was three. Yeah. Did you feel that you wanted to do something completely other than business at any point, like focus on parenting or go travel the world? Or it was clear for you that you just wanted to have more time for your angel investments? Traveling the world is definitely something I love to do and I'm still doing quite a bit. I've always liked to combine it with business though. So do some sort of business, do a few extra days or with a family, take some time, do remote, but I didn't feel the need to be like, okay, I'm going to be traveling the world for two years now.

8:00That urge I didn't have. Also, I mean, kids keep you somewhat grounded in a way. They like to see their friends to go to kindergarten or school or whatever. Definitely that makes a founder, whether exited or not, a lot more immobile than someone who is maybe in the 20s, has no family. And so, yeah, for better or worse, I think that that's, that was kind of the life. And then, no, I wanted to do, and that's probably been the driving force then over the last 13 years, I wanted to take my skills, which is building companies, but also some more specific skills like software, online marketing, those sorts of things to, to use it for something more purposeful, which is why I really for the last over 10 years now been carving myself out a niche a lot at the intersection of software and climate tech.

8:57I'm really passionate about climate tech. I think, you know, the way our economy is run, burning fossil fuels, plastic waste, all of those things, we're just over utilizing the planet. I think we're setting ourselves up for a massive disaster in the coming 20, 30, 40, 50 years. And so I'm very, very passionate about this topic and I'm trying and Ecosia was the first step, but there are others to come. It was the thing where I said, okay, I want to use my skills and actually devote them in a meaningful way to something that really motivates me. So help me understand the evolution of your motivations.

9:38So climate change now motivates you a lot, but it probably is not why you started CEDA. I know you started coding at 15, so I assume there is an element of just interest and love for coding. Right. But what was your original motivation to start the company and how that changed through the exit, through your sequels and angel investing until today and brought you to this place where you are so passionate about climate change? yeah that's a great question so as as a teenager definitely i i like i like coding and i started quite early with that um uh and and then i just wanted to build a company that was my primary motivation yeah cedo obviously had no climate angle had no no larger purpose so to say um it was a good digital marketplace for domains but uh i wouldn't say there were there was deeper meaning in life to it.

10:37And I just wanted to succeed as any startup founder. I was always passionate about the climate in a way that I was raised in Freiburg, which is a very green, smaller eco-city in Germany. It's one of the most eco-friendly cities in Europe. A lot of solar already at the end of the 90s, biking, public transportation, recycling, the usual things. and I think that was always my worldview we got to live within our planetary boundaries basically for the time I was running a startup those values were still there but they were not at the forefront of my life and I think that definitely has changed after the exit because of course the exit also frees one from the primary means of needing to make money right now and then yeah I was able to do that so yeah that's kind of what changed after the exit.

11:38So the exit gave you this luxury of time financial freedom to actually focus on things like that. That's true. Or did you at any point decide consciously I want to stop doing business and focus on something else? No I never did and to the day I still run for-profit businesses so I I split my time between the climate world and the pure software world. I think being an entrepreneur at heart, I also just like building companies, no matter kind of what they do. Sure, they shouldn't be doing, I guess, something very bad to the world or something. But a software company is first and foremost neutral.

12:23It's neither good nor bad. And I think I still also, for example, I enjoy building SaaS Group as one of the companies. And I enjoy building a remote company with a lot of people from all over the world who also very often live in different places. A very fluid system of also free thinkers, very autonomous. So building a great company with a great operating model, I also find very fulfilling. And I think we're also in a positive way touching people's life. I'm also, by the way, dealing with a lot of exited founders because we're buying companies, small companies. Usually enterprise value is about$5 million on average.

13:11AMR is usually$1 to$5 million. And most of those founders have bootstrapped those companies. So then it is actually a life-changing exit. It is one, if you're somewhat frugal, you can retire. So now I'm very often on the other side. I deal with founders who go into this. And it's also interesting because some I see are very, for them, the exit is a huge change in their life and others just carry on. So I see also both worlds. And so, but back to your question, I really enjoy running company and I'm running this company and I enjoy that or the ad blocking company, although there I'm only at the board, but I'm really enjoying running good companies, software companies as well, in addition to financing climate founders and bringing that part forward.

14:02And I think that's the part which is hard to, it would be hard to let go for me given that I really enjoy doing what I do. You wrote this fantastic article on bootstrapper mindset, which I can very much relate to because all my companies were bootstrapped. Cool. And sometimes I feel, oh, did I choose to do things the hard way by doing that? But I'd love you to talk a little bit about your view on bootstrapper mindset. What do you mean by that? And whether it's a good thing for a founder to keep that after they exited their company for their next repeat businesses? Yeah, no, I agree that you read that.

14:44And great that your businesses were also bootstrapper businesses. And what I mean by that is really that the absence of money, and I think you can transform some of those thinking into on the personal level, on an exit or pre-exit versus post-exit world, is that I see a lot of bootstrap companies. I also see a lot of VC-backed companies. And what I really admire about the bootstrap companies is their frugality, their focus on customer satisfaction, their focus of just building a great product, their focus on maximum efficiency, not just hiring someone, but actually very often then solving the problem at the root cause.

15:25and we have at SAS group we've bought some amazing businesses we've bought two businesses now were both in both times the founder was running the business alone and made two million in revenue with obviously a huge profit margin just purely alone by super efficient processes and to me that's the opposite of a lot of VC-backed companies, which also might make 2 million, but they burn 5 million. And very often, they don't grow that much more, but they just add a lot of layers. And I think that thinking is, I think, a very healthy thinking. It's a minimalist thinking, which I think is also what the world needs.

16:11It's kind of the less is more mantra. I think it's also quite healthy for people to just not start to amass stuff and buy stuff because same as what companies do they get a lot of money from vcs they start hiring people without thinking and so i have deep respect for for for bootstrap founders if they can do it and that's the big catch is an if because i think there are a lot of businesses so so um to end that praise for bootstrap founders maybe a little bit there are a lot of businesses which you where you need vc for like if you have for example hardware heavy stuff, which we have in climate tech quite a bit, you know, you're building certain factories, certain processes.

16:49It's not SaaS where you can start things bootstrapped. VC plays a super crucial role in bringing the ecosystem in a lot of areas forward. I think the mistake we're just making is spoiling areas, especially in software, which are really well run and which have this great bootstrapper mindset with too much cheap money or we used to. I think that was really, I think that article I wrote in 2020, 21, which was probably the worst time in terms of a lot of free, cheap money. And that's when I think it also, just like a lot of money can make people unhappy after an exit, which I'm sure you know through your interviews, you know a lot more than I do.

17:32And I'm sure you're seeing that quite a bit. A lot of money can also make companies unhappy and unproductive. And so that's kind of keeping a healthy balance. I think that's one of the hardest things. I think another problem is that incentives of VCs and founders are not necessarily aligned. In fact, they usually are not. But you're now playing the role of the VC. How are you ensuring that your companies you invest in have the bootstrap man's mindset? How do you reconcile it with a natural desire of a venture capitalist that the company grows as fast and as big as possible? That's a great question.

18:12And it's a hard fight because within our VC fund, I am the software bootstrapper by heart. And so I know quite a bit about how to build a company and usually kind of the voice of reason when it comes to keep your burn down. How do you increase efficiency? That's really what I tend to be good at companies. while I also know that you need to think big, you need to have a great vision, you need to have multiple funding routes for some of the bigger companies. And so I think me and my co-founders, we also in a way act as balancing factors there. They're more from the VC world and they understand, for example, the VC metrics quite well and they would push for kind of thinking bigger, which is also a super important skill, one which I sometimes lack as a bootstrapper.

19:13And I'm the one who is sometimes the voice of reason. I think at the end of the day, any good startup needs both. And you constantly balance, you have certain periods where you need one more than the other, but all great companies have elements of both. And so I think in the mix, it's fine again, but it sometimes can be almost a little battle between the worlds. One idea of yours, which I found very interesting, and I want us to talk about it, is how at some point you realized that you are better at scaling companies than starting and building something new. so I'd love to hear how you realize that you should focus on scaling and whether you still think it was the right realization for you yeah no for me it was definitely the right thing um and I think you said it very well uh there are some people who go back right into building and for some it's great because I mean some of the best founders I know they're actually builders They're builders who build stuff from zero to one.

20:22And their best use of talent is really keep building things and then selling them. And I know some people who are super successful at that. And that's a skill I have deep respect because it's not my skill. My skill is really seeing something that is there and making it bigger. And I think for me, probably the aha effect came through both Ecosia as well as Adblock is where in both cases, I'm not the inventor of the product. Um, uh, it was the inventor of someone else, but they both struggled with building a company. They were at the very early stages. One ad block was a complete hobby project. Cozy was, was very small.

20:59Um, and I could see that my biggest value add is really helping them scale, uh, but not just giving advice, but actually also getting my hands dirty. And that's what I enjoy doing. And I think that was also at the end of the day, what led me to start SAS group because there we do it in a systematic fashion because we see a lot of founders with SaaS Group who come to that one to five million mark in revenue, but that's almost like a glass ceiling for a lot of founders. It's like when a company grows beyond a family size, like five, 10 people, that's when you start actual need to start real management.

21:40And that's where a lot of founders just don't like it anymore. They don't enjoy their job. They burn out. They get stressed. We've seen founders who don't take a single day of vacation. And then they also, they go through this realization process and they're like, well, maybe someone else can take that off. And we come in and we know exactly what to do. And we bring in the right GMs, the right general managers. We bring in the right skills. And then we, and it doesn't always work. Sometimes there's also a glass ceiling in the market and the company just stays at a million revenue or something.

22:17And that's okay. But we've taken a lot of those companies then from a million to 10 million. And for us, it's really okay. That's very, quote unquote, simple execution. Still on a sweat and work, but that's what our playbook is. And that brings tremendous value. And the founders go back to starting something and are super happy. and and so it's kind of a yeah it's almost the opposite to to my own skills but yeah I guess that's the older you get the more you know what you're good at and whatnot. I'm very curious to find out how you reached that wisdom and at what point because in Sido you were there from zero to one right right and then you stayed on so you had you stay through that critical moment when lots of founders realized that they cannot scale their company so you had that whole experience from zero to all the way to i think the company was valued like 200 million when you left right So you stayed for the whole cycle.

23:24How and why did you realize that your particular skill is scaling and not zero to one? When I bought or invested into, as a majority investor, into those two businesses, into Ecosia and Adblock, and at the same time, I also dabbled with one or two ideas where they were basically concept stage, which I would have taken from really zero to one. And I probably, I didn't think about this. It was not a conscious process, but I kept gravitating to both AdLock and Ecosia, which I was so fascinated by both of them. Like Ecosia is like, okay, well, you take the most profitable thing of the internet and you do something extremely meaningful with it, namely planting trees, and you can scale it indefinitely.

24:16and you also attack a really Goliath competitor, in this case, Google, on a value base. I found this like super intriguing, this idea. And Adblock as well, like we had like 5 million users back then where you could erase the entire online advertising for these users, help them with their internet experience, also with their CO2 footprint because it's, ads are actually consuming quite a bit of the CO2 footprint. And we already had 5 million users. And it was very clear to see how we got the 5 to 50, which we did within like two years. And now we're at 500. So I think I naturally gravitated towards those.

25:01And the other ones were like, well, wait a minute, should I really sit there for two years and flush out the concept of the first website and acquire the first users? And it was not a conscious process, but it just didn't resonate with me. So it sounds like you listened to your own reactions to those two options. You were more excited about scaling something rather than starting from scratch. So if you were genuinely this zero to one person, it would probably feel the other way around. You would be bored by this idea, but very excited by the idea of starting. So we can now talk about how getting wealth affected you.

25:40I know in your case, it didn't happen at once, but I'm mostly curious about how it affected your motivation in life and why you continue doing what you're doing, even though I assume you could also stop doing business. It's a little bit like, again, comparing to a company. I'm always advocating for not giving too much money at once, but giving it kind of while you grow. you need to learn to spend money and companies and people are no different companies are also run by people at the end of the day so generally I would describe how I approach this I live a fairly frugal life I bike to work I don't have any luxurious hobbies sure things grow over time and it's obviously not average but still I think I've always tried to be super low key and very down to earth which is probably also a bit of the German heritage on the negative side I think what people say in Germany about founders and wealth is that it's unlike in the US where I've lived for a couple years, for three years

27:04it's somewhat inappropriate to show things too offensively and to celebrate wealth and it's and sure there are people who are different but it's overall compared there's definitely things are always a little bit more tuned down for better or worse we also celebrate entrepreneurial cultures less which of course leads to lower founder rates, lower success rates there. So I think it has a flip side, but I would say on the side of how people then live their lives, maybe sometimes it's healthy. But I guess at the end of the day, we're all within the culture we grew up. And I think that the German heritage is part of that.

27:46But overall, I think that I would argue that that has helped me because I still live a super normal life. There was not much shock for you because first of all, wealth came in stages. And second, culturally, you were prepared to not be affected too much. And I also reinvested a lot. So I keep the liquid part to a small portion. And I've invested most of my money is again invested in companies, invested in some philanthropic efforts like Ecosia. I'm also these days doing a bit more pure philanthropy and also climate, quite a bit climate protection. And so it's really something that I made very conscious effort to put my money also back into the circle, but for building companies.

28:48and sure that's on the one side it's chasing quote unquote chasing more money but it's not the money that motivates me I think as most founders it's actually the wanting to win in a way and wanting to be proving that you can actually build cool stuff with the money, build cool stuff out of nothing I think that's I would argue that that's what's driving the motivation of most founders including me and so it felt kind of natural to just invest that back. So it's a combination of competitiveness. Love for what you're doing. Loving the game. Loving doing it. Let's talk about how you dealt with a change in your identity.

29:34So you were the CEO of one of the largest marketplaces for domain names in the world. Then you stepped down. Was it a problem at any point for you that you no longer were the CEO and the co-founder of a well-known brand? There were a couple of people I knew who were friends and some are still friends and others I lost track over the years. But there were also a lot of other people where it's like, yeah, it's okay. They were business partners and nothing more and I'm not in touch anymore, so it's okay. but it was I wouldn't say it was a big identity maybe it would have been if I would have done nothing else after that but I think I fairly quickly went into for example the ad block business so I had a kind of a I had a role and to me it's a lot about some of my co-founders they tell us like the party the party question like if at a party someone asks what do you do they struggle with that or some struggle with that because they're not doing anything and that I never had that because I went kind of fairly seamlessly from one thing to the next one but I can see how identity plays a role if you don't have that okay so about parenting a family how these things were affected by you no longer working full-time that part we can probably skip quickly because I don't think they were affected at least not in the short run.

31:09Given that I lead a fairly normal life, it was always quite stable over the years. Kids go to school. Sure, maybe the house is a little bigger than the average, but it's also not outrageous. It's not a villa or something, again, very low-key. I don't think it was materially affected in any way.

31:38And yeah, also it came to stages and also the work. I think I always, that was very important for me. I always tried to maintain a really healthy work-life balance, but even when I was still working at CEDAW. So yes, I traveled there weeks where I traveled a bit, but on the other side, I mean, most people do if they're in a business world or also if they're employed and it was never outrageous or something. I interviewed another German a few weeks ago, Tony Kula. I don't know if you know him. And he was another person who told me, no, I had such a beautiful work-life balance even before they exit.

32:14So everything was fine. I'm very curious about that. How did you guys, or you in particular, manage building such a super successful company, CEDO, while working, as you said, 50 hours a week? I don't know. I mean, at the end of the day, the secret is always also good delegation. And I think, you know, you can delegate equally well in 40 hours and you can do in 60 or 80 hours or something.

32:43Also, work has diminishing returns. I mean, sometimes now I have stretches of work, like in the summer, for example, when we travel the US, I work very little, maybe two hours on average a day. I got all the major stuff done.