How a French Founder Sold to Adobe for $600M (On a $6M Budget) | Stephan Dietrich (Neolane, Adobe)

0:11Hi, everyone.

0:12Matt Oxley:Welcome to another episode of the Scaling Stateside podcast. I'm David Rose, the CEO at U.S. Expansion Partners. Along with my co-host and co-founder, Matt Oxley, we're on a mission to help founders from Europe better understand the U.S. expansion process, identify pitfalls and best practices to hopefully set them up for a successful entry into the U.S. market. And as part of that mission, we are having conversations here on the Scaling Stateside podcast with both founders who have already successfully expanded to the U.S. market from Europe and also VCs who are funding U.S. expansion for their portfolio companies.

0:49Matt Oxley:And today, we're very pleased to have somebody with a foot in both worlds. So we have someone who has successfully already launched several companies into the U.S. market and now sits on the venture capital side. So I would like to welcome Stefan Dietrich with LeadEdge Capital to the Scaling Stateside podcast. Stefan, please introduce yourself and tell us where in the world you are today. Hey, thanks, David. Thanks, Matt, for having me today. I'm Stefan Dietrich, and I'm based in Boston right now. And the funny accent you can hear is a little bit of German, French by passport and education, and then 19 years in the Boston area.

1:29Matt Oxley:Great. And one of the things we always like to know with our guest, Stefan, is take us all the way back to the start of your entrepreneurial roots. Tell us about your very first paying job. Yeah, so I'm a serial entrepreneur and we'll go into that in the world of tech and specifically software. But that's not where I started at all. Actually, my first paying job was, you know, summer hustle with my uncle. Believe it or not, his name was Zink and his job was roofer. And so he was, of course, manipulating zinc. That's what you put on the roofs with the tiles. And it was my first paying job to help him over the summer, get the tiles up there, do the roofing and making sure that everything is like, you know, tight.

2:12That's how I started at age like 15, 16 in the summers. I was already passionate about tech back then, and specifically like electronics. But during the day, to pay for my hobbies, I was doing a lot of RC modeling. I was pretty crazy about the little RC models. I had to pay this stuff, and it's very expensive. So I would be a roofer during the day.

2:37Matt Oxley:Hard work. Yeah, I love that. It's so interesting. Everybody has their hustle story. and roofing, I can imagine, is one of the most hardest jobs you can actually do, especially in the French summers, I imagine. It's brutal. It's brutal because sometimes you carry these tiles all the way up there in the old buildings and it was in Strasbourg along the German border and it's just beautiful, beautiful houses. You see these wooden beams like houses and it's accepted they're super old and so there's no elevator. so you have to carry the thing on your shoulders. I think it developed my resilience for sure and my uncle wasn't one of the easiest guys to work for but I learned a lot from here and resilience is clearly something that I took away from that experience.

3:26And it's clearly something that every entrepreneur needs and successful ones have like yourself. I wondered if we could just kind of dive into that period because we're coming to the success stories of the companies that you founded, Neolane, Qubisoft, I think there's a couple of others in there as well. But I'm really interested in that, going from a roofer to being a tech entrepreneur. Can you unpack that chapter for us? Yeah, of course. Of course, they're the, so very bad at school, pretty bad at school, because my parents didn't know what to do with me. That's why they were like, oh, if he becomes a roofer, at least he's going to have a job, because you always need that.

4:07And that was before AI and before Amazon. So I guess these jobs are coming back to the... No, so I was passionate about electronics. I don't know why. And that's why I was doing a lot of RC modeling because you have all these controls and remote controls and electronics that you have to communicate with so that you can have control over these little models, cars and planes and gliders. And so electronics was really my thing from age 11, 12. and then progressively you know I did like a trade school believe it or not the trade school my parents put me in a trade school because I was like this guy he's not you know my son he's not like doing well in school we're going to put him in some sort of a trade school and from there one of my professors said no way he needs to do something else and so I managed somehow to get my degree high school degree and did really well there And with that, I got into like a preparatory school that's called preparatory schools in France for these like grandes écoles, which are the best, best schools.

5:15And actually, I did really, really well there and passionate about like technology, electricity, electronics. It was the early days of computer science, very early days of computers. I have the very, very first computer that came out back then, ZX Sinclair, ZX80, 81. So I started to play around with this, so doing programming very adjacent to electronics because you needed to load electronic cards in there and you upgrade the memory and things like that. So progressively got into computer science while in preparatory school. And there in preparatory school, I did so well. Like a late blossomer, sometimes we call them.

5:58I managed to get in one of the best engineering schools in France called École Centrale Paris, which is like an MIT in the US. And there I met some extraordinary people. And I was all of a sudden, into the top of the top of the education from a technology standpoint. And I liked it all. I was just absorbing it. And I met my co-founders there to start our first company in school. And we decided to do an entrepreneurship major in the school. But the entrepreneurship major didn't exist. So we went to see the dean of the school and said, hey, why don't we create an entrepreneurship major? And this is how it could look like.

6:38And we would be the first, you know, promotion, the first like class. And so we were three students in that major that year. And the deal was like, hey, here's a project we have. We wanted to create an electronic circuit board to replace, you know, the oscilloscopes. say, hey, the computer is now powerful enough that you can read actually signals. Because my thing was electronics. And my friends that I met was electronics as well. Plus another one was really into like computer science. And hey, if we combine the electronics, we can actually measure the signals and replace these oscilloscopes called Hameg or whatever that are like bulky and everything with a combination of an electronic card plus software.

7:26And to do like signal processing, it would allow us to do a lot of stuff. So that's how the whole idea started. So we did like the entrepreneurship major in that general engineering school. So it had like a heavy computer science side, but a heavy electronics side, which was my roots originally. So yeah, so that's how you meet great co-founders. Like-minded, like-hearted, passionate engineers, in school while you're like have a lot of time on your hands and instead of partying we would like building circuit boards you know we would be assembling circuit board the school gave us like some sort of a uh an area in a lab so that we had um a place and i was like immediately among the three you have to decide you know who does what and someone has to sell and frankly i i did like the selling.

8:24I discovered selling and, you know, the storytelling, the selling, positioning the value of what you do, how it's innovative, et cetera. So among the three, I guess I was the least good coder and technician. And I was pretty passionate quickly about like, how can we take that product to market? You know, how can I do like Quark Express, like the data sheet about the product, how can I position the product with pictures, creating all the sales kits, sales materials, etc., and then putting it in the hands of our prospect customers. We didn't sell much in the engineering school. We sold a few of them, including to the school who was very supportive.

9:07They were like, okay, we can try this. But that's how everything started. So you meet people there, you have your first experiences, and then that kept carrying us. And then we worked together, I guess, like 25 years, and we built like three businesses together, the three of us. So those co-founders that you met, they stayed with you for 25 years? Yes. And those are the same co-founders that you... So we did the first one. So we did the first one and it sold in 96 to a company called Peregrine Systems in California. A guy called Fred Luddy, who's very famous now because he started service now after that, after Peregrine Systems.

9:58Co-founders that you met, they were part of that cohort where you convinced the college, the MIT equivalent in Paris that you were at to actually put on an entrepreneurial program. And you guys have stayed together. That's phenomenal. Yeah, it was, you know, looking back, it was pretty fun. It didn't really exist. And we were like, hey, you know, we want to do this. We have that project. What do you think about it? Would you, the story was like, would you let us pick among all the classes that are taught, could you let us pick, like cherry pick, like on a Chinese menu, let us pick the items we need to bring that project to life.

10:42Of course, I picked marketing classes. I picked the computer science classes, et cetera. But I picked the classes that made the most sense. And they also let us go into other partner schools to pick a class. For example, HEC had very good, very good classes, unlike business classes. So they were very accommodating. And that's, yeah, that's the beginning of the story of like, yeah, 25 year, 25 year story. And I just want to dig into the co-founder kind of, I think, conversation a little bit, because this is, you know, with Opal, I've been with my co-founders 15 years with David. I speak to David probably more than I speak to my wife.

11:26You know, you build really, really deep and strong relationships. and I think that's kind of part and parcel of you're building something together. There's somebody that you can, I think, moan at points of kind of the lowest, but also people to celebrate with as well. But I think part of this does come down to each co-founder knowing their lane. And how did you kind of delineate that? Because you said that you came from kind of an RC, kind of technical engineering background. That's where they met you. Did you orientate towards kind of more of the sales marketing side of it? And then did the other co-founders kind of pick their lane?

12:09Talk us through how you kind of figured that out. Yes, very, very naturally. It was very natural. And I guess that's part of the luck too, right? So I mean, success is when preparation means luck, I guess. And you have to be lucky enough to find co-founders who really are supplementing each other. And we clearly had that. I love the selling. I love marketing. I love positioning. I love design, et cetera. I discovered that along the way because it was not my original route, but I fell into it and fell in love with it. And clearly, another one of the three was clearly very deep technologically, right?

12:50A real nerd in terms of being passionate about everything that's the most innovative ways of programming, et cetera, et cetera. and my other partner I mean superpowers there's like really finance operations HR legal things like that that's very different so yeah that's when you're lucky enough to have like you know exceptional individuals and you supplement each other that's that's just like worked really well for us and at the same time we were in France in terms of like buddies you know it's very important We weren't going on vacation together. We've done many trips, professional trips with our teams together, but we wouldn't be like buddies in terms of being together all the time with our wives or our kids, etc.

13:37No, it was very professional. It's interesting because the board at Opal called the three co-founders the hipster, which is my co-founder, the hustler, that is me, and then the hacker, which is our product person. And it's like they give us these titles. But I think underpinning every single founder relationship that I've seen is a core set of values. A core set of values that you are orientated towards that you both believe in or, you know, the three, four of you all believe it. And I think it's quality standards, it's values, it's all of those things. And I think those only deepen over time because, you know, you know what the other person is going to say.

14:21You can finish each other's sentences and it becomes, dare I say, a little bit easier. Yeah, but it's not a linear story either, right? You have your ups and downs also in these dynamics. It's a complex dynamic. When important decisions have to be taken, etc., sometimes you get into some fights. So if we talk more generally speaking about how three co-founders are navigating the ups and downs of the company, I think we're doing a good job as also stepping back twice a year, we would do what we call the founders retreats. And we would go into a nice place with some nice restaurants in a nice area, pick Burgundy, pick whatever.

15:01There's so many beautiful areas in France or in the UK where you can just step back, or in the US, step back, relax, look at the business with a 30 ,000 foot view. And it'd be just the three of us plus a couple of like guests because otherwise it would turn very quickly into a fist fight. So we would have like a moderator and our chairman of the board, who we all respect that, was the CEO of the very, very first company we sold to, was really a little bit the voice of reason in the room, you know, hurting the cats and making sure that the three co-founders were coming to consensus in terms of like the strategic planning for the business for the next six to 12 months.

15:46that's how we would do it. So having these moments of introspection where you step back, you look at what you've done well, you're very open with each other and candid with each other and you're putting everything on the table and some heavy heart-to-heart is absolutely critical to just get the tension and the pressure out of these relationships because they're not easy on a day-to-day basis, but they're amazingly rewarding if you get them to work.

16:17Matt Oxley:Stefan, if you were doing this right out of college, what was your first, we'll call it, real company? So it probably was a weird transition because you just started doing this because you loved it when you were in school. At what point do you look around and go, oh, we're actually, we have a real business here. What was that moment? We do the first company and I'm quickly realizing also that I need more tools as a business, I quote unquote, the business guy. So I do an MBA. an MBA in France, some pretty elitist MBA called Collège des Ingenieurs, where they only recruit from the top, top, top, top schools, and there's only 35 people in the class.

16:58And that's also where I met some extraordinary people who are now CEOs of major companies. Because you take the filtering of what an MIT-like school does to you, and then you add another filter on top of it. And guess what to end up was like with like you know pretty selective individuals so um i needed these tools in my toolkits to to be stronger on the business side whether it's like legal business cases because in business business school you do a lot of case studies etc so during that time they kept going and then i went to the to the industry because i was like hey guys you're coding delivering software etc.

17:38The first business was custom software, ad hoc software, right? It's ad hoc software development. So you're a services firm and you develop ad hoc software on demand. And it's one of the business that purchased that because we were like developing their software and they were like, hey, you need to have control over that. But they didn't need me. So I went to the US and I spent time in the US because you needed to do that, you know, the military, school, the military service back then in France. And I managed to do my military service to help French companies expand into the US as a marketing analyst.

18:18So I had to do my military service. The two others also did their military service, but they did it on the technology side as a scientific in the militaries. So coding, etc. So they were coding there. One was we see it at the Energy Atomic Commission. And the other one was like also doing like some very technical like coding stuff. So you had to go through that back in these days, you know, so how to get the best. So we have that venture that we have started together. And then we split because we had to do our milancier service. So the thing like went on a little bit on the back burner, of course, because then you're going to do that anymore.

18:57But I developed my skills and my early skills in bringing a French business to the US because I was part of a bigger company. you know, a CAC 40 listed company, but that wanted to open US operations. And it was the marketing analyst, meaning the first guy on the ground there to launch a whole new business line, which was completely synergistic with what I love to do. And also gave me the appetite to bring a French company into the US. It was really my first dabbling into like, oh, how can I take that offering and bring it to market in the US? How can I find prospects? How can we find salespeople to carry that value prop and sell to customers?

19:39Matt Oxley:That's a super interesting first time because it's a lot less risky. I guess you don't have to necessarily worry about making payroll when you're doing that for a larger company or raising capital. But you get to figure out all the pieces and parts of U.S. expansion with all the pressures of running out of cash in six months. Correct. Correct. And then when I came back from that, again, the other guys came back. They were like, okay, we're going to restart coding. or going to restart doing ad hoc software, et cetera. I'm like, okay, you don't need me for now. You don't need me for now, so it's fine.

20:09I'm going to take a job in a bigger company to learn really what is a big company. And it was in the automotive space, a company called Vario, just a very big equipment manufacturer, these very strong processors, and just a sales machine. And I got a P &L because it was like very technical. It was the very beginning of the electronic control units on the cars, right? historically there was no ECUs on the car. I mean, nothing was controlled electronically. I had an old 205, a Peugeot 205. There is no ECU on a Peugeot 205. It's 32 years old. It's an antique. But then came the ECUs on cars. And I loved that.

20:48I was like, oh, wow, now there's electronics on cars. We can electronically control how the engine works with actuators and with sensors. And so they hired me. They hired me for that, to take that to market. I didn't waste big deals because you would go to Renault and negotiate a$100 million a year deal. You know, this is like big, big, big, big piece of a car. And so I did that for a couple of years just to learn, you know, the ropes of what is it to negotiate big deals? Because you negotiate with the procurement departments of automotive companies, of Toyota, Renault, Peugeot, etc. It's crazy.

21:25You can negotiate like for four hours and 50 cents because it's so critical because then they're going to buy millions and millions and it's going straight into their bottom line. So that's where I learned at the bigger scale. Also, that's where I developed my skill set in terms of negotiating big, chunky deals and learning all the ropes of negotiation. So between my business schools, where I have the best negotiation professor who was teaching us negotiation, learned a lot there. Between my experience with that big French company, chemical company that was breaking into the US, and then back into that automotive company, it's just like rounded out my skill set from a technical standpoint and from a very practical standpoint.

22:14And then I was like, I want to come back. you know, let's do CubicSoft. I want to take that business. I want to build that business, grow it out. And that's the second venture. And in this second venture, did you expand to the US at all? No. With CubicSoft? No, not yet. No, not yet. That's where we realized that the future is going to be in the US. So that was, again, like very custom software. And it's always big data in the defense. It's like a Palantir before Palantir. So we had like very sensitive contracts around big data management in a defense space. So we would be like specifically limited to the US, but we would also sell to international institutions like the IAEA, you know, the institution that controls all the nuclear activity in the world.

23:11So we would have our software deployed in Vienna in different in their headquarters, et cetera. But it was around like capturing a lot of big data worldwide through a variety of network of sensors and being able to interpret what is going on a little bit around the world for defense purposes. But it wasn't US. It was nothing with US. So that's kind of where I'd like to go next because obviously there's AGDS and there's CubicSoft and then obviously Neolane. Neolane, from what I can understand, is just all of those components coming together. At what point with Neolame, because you grew it to, from what I understand, $60 million worth of revenue that's 400 people prior to an exit to Adobe.

24:01What really made you understand and I think realize that that was an American business versus the others? From the very get-go, so the first business was acquired by a company I said earlier called Peregrine Systems in California. And we could see that enterprise software or software generally speaking, right? I'm speaking for tech here. So really like the software world, I kind of speak for any other industry or less. That the software world, a lot of the demand starts in the US. Most of the big players, all of the big players with some exceptions, business objects in France and SAP in Germany.

24:42Pretty much all of the big players back in the days were located in the U.S. So your future, whether from a capital access where the U.S. has just more capital, especially back then from a venture firm, from a venture side, or from an exit standpoint, or from a strategic partnership standpoint, that the buck stops in the U.S. pretty much. The major key stakeholders are U.S.-based. So when we have that idea, so the first company gets acquired by a US company, that's eye-opening because all of a sudden you see how it like scales, how it grows, et cetera. Then comes the time to start the third company.

25:23My buddies, my two partners are in the same building, but they're part of the acquisition. They're still standing. They're still staying with the company that acquired. And I'm CEO of CubicSoft. So the second business. And within CubicSoft, I have that idea of developing a marketing operating system. Why? Because I'm in the marketing space. I'm in sales. I'm in business dev, corporate dev, etc. So I'm in that go-to-market world. And I'm like, that go-to-market world is like, this is not automated. There's a lot of manual thing. We coordinate everything manually. We don't store our customer data property and prospects.

25:58How do we turn prospects into customers? How can we nurture prospects, etc.? And I developed a passion for what is a sales cycle from the first touch all the way to conversion, nurturing of a prospect, conversion of that prospect, upselling, cross-selling, et cetera, turning that customer into an advocate, that whole customer lifecycle. And I remember we're in the same building. My partners are with the acquirer of the first company. I'm at CEO of QGXoft. I'm like, we should start another business where it's like just focusing on the marketing operation system. Okay, because I see the major lines of business in the enterprise, they all have a go-to package.

26:45You're in manufacturing, you have SAP to drive your supply chain management, et cetera. You're in finance, you have Oracle Finance. You're in HR, you had a bunch of HR packages from IBM, et cetera. You're in every line of business, You're in sales. Oh, it was the beginning of Salesforce, right? We're talking like early 2000s. So Salesforce was like, hey, I'm going to, and Siebel System, of course, was support and sales back in the days. You remember those. So every line of business had its own package. Major software players providing solutions to drive more efficiencies in their processes, right?

27:25Because that's fundamentally how enterprise software started. I'm going to automate a number of tasks, drive more efficiency in your processes. Marketing had nothing. And marketing was like my near and dear to my heart. So I tell my partners, hey, I'm building that product. So I built the product and I sold it to a company like pretty much on paper. I said, hey, I'm going to deliver that in three months. Are you interested? They're like, hey, this is amazing. Let's deliver it. It was a campaign management solution, customer data platform and campaign management solution. So they're like, yes, if you can deliver that, we'll buy it from you.