An Interview With Chad Silverstein
Choose your co-founder and your first employees wisely. My strategy has been to look for extra competencies that I lack personally while paying attention to establishing a company culture that we all support. I have learned from past errors, realizing that one can only expect individuals to value or support elements they comprehend and have the capacity to execute.
In the world of business and within every industry, there are forward-thinking leaders who go against the status quo and find success. Their courage to take risks, embrace innovation, and inspire collaboration separates them from the competition. Until 2002, Apple’s famous slogan was “Think Different”. This attitude likely helped them become one of the most successful organizations in history. This interview series aims to showcase visionary leaders and their “status quo-breaking” approach to doing business. As part of this series, I had the pleasure of interviewing Toms Panders.
Toms Panders is the CEO and co-founder of Setupad. Before embarking on his entrepreneurial journey, Toms had extensive industry experience and saw the inefficiencies that led publishers to leave money on the table. Tom’s long-term commitment has always been supporting access to education and quality journalism, which is why he saw an opportunity to develop a product that would deliver the maximum value to the publishers so they could keep their content accessible for all.
Thank you so much for doing this with us! Our readers would love to get to know you a bit better. Can you tell us your “Origin Story”? Can you tell us the story of how you grew up?
I am an individual who spent my childhood years under the occupation of the USSR and had the unique experience of witnessing Latvia’s regaining independence in 1991. As a teenager, I had the opportunity to transition into a democratic society and witness the emergence of capitalism. That’s when I developed an interest in brands and started following their advertising campaigns. I had been financially independent since the age of 16, which allowed me to access and appreciate the diversity of Western goods. I also gained an understanding of how a free-market economy works.
While in high school, I developed the habit of visiting a school’s computer room before my classes. That was the first time I gained access to the Internet. Initially, my Internet usage was primarily related to streaming music and reading the blogs of my favorite rock bands.
During my time as a student, I worked night shifts at the local newspaper distribution center, where I was placing advertising leaflets in newspapers. This hands-on experience allowed me to physically place ads into the stacks of newspapers before they got distributed to post boxes.
At the time, these experiences may not have appeared to form a cohesive pattern, but in hindsight, they have significantly influenced my career trajectory and also shaped the person I have become today.
Can you give us a glimpse into your journey into this industry and share a story about one of the most significant challenges you faced when you first started out? How did you end up resolving that challenge?
When I founded Setupad, I had vast industry experience and managed to secure deals with a few key partners whose services I was going to be reselling.
I was visiting European events to increase my chances of establishing key business partnerships. For testing my startup idea, I spent a lot of my personal time outside of office hours.
Tests came out successful, and I started to look for an investor. I couldn’t find an investor that would also provide a client portfolio for my product. So, I decided to bootstrap the operations at my own full risk. The lack of money for product building and operations was the most significant challenge. I had to do everything myself and live modestly out of my savings. That was uncomfortable after having a well-paid management position and a big team at my disposal.
Nevertheless, I was able to start my service business despite having no client-facing system. The key advantage of this business was that the product could be manually assembled for each customer. I’m very grateful to the first-mover customers from the Baltics who believed in my services despite the lack of a client-facing system. Thanks to them, Setupad could start earning a profit, and this money was reinvested into product building. Setupad was lucky to be in such a niche opportunity for entering the market as a bootstrapped company. A couple of years later that wouldn’t have been possible without huge investments into the product IT.
Who has been the most significant influence in your business journey, and what is the most significant lesson or insight you have learned from them?
My previous work experience and brilliant colleagues. I learned how business development in Europe is done and gained huge knowledge about online advertising, adtech tools, and website research.
Studies at Stockholm’s KTH Royal Institute of Technology were good training on entrepreneurship and innovation. It introduced me to startup concepts, perspectives, and terminology. Most importantly, it gave me the courage to pursue my entrepreneurial endeavor.
Setupad Co-Founder Povilas Goberis has had a personal impact on me and the Setupad business. His exceptional abilities, knowledge, and irrepressible curiosity are unmatched.
Can you share a story about something specific that happened early on that you would consider a failure but ended up being a blessing in disguise or ended up being one of the most valuable lessons you had to learn on your own?
I was looking for capital at the very beginning of Setupad but didn’t have a clear vision of how it would generate a return on that investment. I learned that an investment needs to be very specific and require a reliable action plan, i.e., a working business model where money is used for scaling the business.
Leading anything is hard, especially when grappling with a difficult situation where it seems that no matter what you decide, it will have a negative impact on those around you. Can you share a story about a situation you faced that required making a “hard call” or a tough decision between two paths?
Not that long ago, we had to clean up our client portfolio. Although some of our clients had been yielding favorable results, we discovered that some of them were deploying dubious methods to acquire website traffic. In light of these findings, we made the difficult decision to terminate our partnerships with these websites. We respect our advertising partners who run ads on those websites and have sent them these findings. There were some serious ramifications to our business’s bottom line that took several months to recuperate. However, we knew that our reputation was at stake and took this hit. We have upgraded to a high-class vetting procedure since then.
Let’s shift our focus to the core of this interview about ‘Successful Rule Breakers’. Why did you decide to “break the rules”? Early on, did you identify a particular problem or issue in how businesses in your industry generally operated? What specifically compelled you to address this and want to do things differently? Please share how you went about implementing those changes and the impact they had.
When programmatic advertising started to take off, there weren’t many fans, including myself. The market was inherently averse to disruption. Persuading stakeholders to recognize the potential in something when they had been accustomed to living without it demanded considerable effort.
Securing a foothold with the local media where advertiser — agency — publisher ties were so strong was near impossible. Even though advertisers had started to use programmatic advertising because of its simplicity and lower prices, it was seen as a potential revenue loss by the media. They were afraid to compromise the price structures established through direct advertiser relationships.
Media wasn’t used to yield management as we understand it today — when valuable inventory is sold at a premium, and less performing ad spaces are offered at a reduced rate. This is precisely what programmatic advertising has changed — media started to sell their advertising space at different prices based on performance, similar to how airline industries sell flight tickets.
In the ever-changing business landscape, how exactly do you decide when to adhere to industry norms versus “breaking the rules” and forging your own way? Can you share an example?
My understanding of “breaking the rules” is more about addressing the inefficiencies. And I noticed a particular space where this was obvious — international website visitor traffic.
I was sitting at my Warsaw apartment and reading Latvian news portals when I noticed something odd — they kept advertising Latvian goods I couldn’t buy in Poland. That was a huge performance drawback. In response to this inefficiency, we proposed the adoption of programmatic advertising to the websites, a method known to deliver more precisely targeted advertisements from local advertisers. Depending on the country, every website has up to tens of percent of such visitors, and websites were more open to experimenting with this international traffic. It allowed us to earn extra for websites, and we managed to get a small but significant piece of business from leading Baltic publishers.
What guidance or insight can you offer to new entrepreneurs trying to follow existing and accepted industry norms while at the same time trying to differentiate themselves in the marketplace?
In the beginning, I recommend striving for service excellence and providing clients with tangible results like resource saving, sales increase, etc. Along the way, you may notice opportunities to differentiate your offering or address the inefficiencies of competitors.
However, keep in mind that competitor research is usually a waste of time. By the time you have finished your analysis, the competition has already updated their offering. So, perform it strategically and critically.
How you differentiate must be a business model, not a product feature. You can be unique with any of the nine building blocks of the Business Model Canvas.
To make an impact, you have to champion change, get creative, and take risks. Please think back about the decisions you’ve made that have helped your business get to where it is today, and share your top 5 strategies or decisions that helped you succeed by doing things differently.
1. Before making any transformative business decision, conduct research and thoroughly test your concept. Assess whether your potential customers are interested enough to pay you. Seek an impartial perspective, recognizing that it is not essential for every individual to either wholly endorse or disparage your idea. Remember that some customers are early movers, and some are laggards that will never give you the response you expect. Once you decide to change your occupation and become an entrepreneur, dedicate all of your available time and focus to your venture.
2. Choose your co-founder and your first employees wisely. My strategy has been to look for extra competencies that I lack personally while paying attention to establishing a company culture that we all support. I have learned from past errors, realizing that one can only expect individuals to value or support elements they comprehend and have the capacity to execute.
3. It is crucial to recognize that to have a successful business, you only need one product. Resist the urge to tackle other possibilities simultaneously. If you start with several products too early, you will slow down the progress and increase your risks. Several product initiatives failed to gain traction or failed to deliver substantial outcomes within the initial seven years of Setupad’s existence. Now, we are inventing new products to stay in the same business with the product that was initially our success story.
4.Commencing with a service, rather than offering a standalone tool, can expedite business development, especially when financial resources are limited. For bootstrapped companies, it will take longer to get resources and build a tool — a platform that clients can use autonomously. In Setupad’s case, we ventured into Software as a Service (SaaS) business in our eighth year, and honestly, I don’t think the market was ready for it earlier.
5. Choosing the markets you can tackle. Instead of starting with the largest markets that are probably well saturated with similar products, begin with possibly less developed and overlooked markets. They have less or no competition. Setupad, for instance, primarily concentrated on the Baltic region during its initial years, fostering product competitiveness to bring it to the global market.
As a leader, how do you rally others to align with your vision? Also, how do you identify those who may not be fully committed or even silently sabotaging or undermining your efforts? What steps do you take to address these situations?
I think it’s important to involve people in the decision-making process and motivate them to align with the company’s overarching vision. People don’t like to follow ideas other than their own. If there are doubts, they should be addressed at the earliest opportunity. It doesn’t have to necessitate unanimous agreement, as I remain open to reconsidering my stance.
However, if the employee is failing at his own approach and doesn’t follow recommendations from superiors, they are making a mistake. So we revisit the company strategy and follow up to see if actions are being executed. Launching new ideas, products, and procedures is very hard. It requires a lot of repetition and thorough explanations. As a leader, it’s vital to exercise patience. By default, people reject changes, so they need extra motivation.
Imagine we’re sitting down together two years from now, looking back at your company’s last 24 months. What specific accomplishments would have to happen for you to be happy with your progress?
We are currently shifting our business from a managed service to a Software as a Service (SaaS) platform that customers can manage themselves. We only have 20% of such customers yet. There has been a lot of work in each team to make this happen, and we are about to launch a new product version. I will be happy about the progress if yearly profits double, reaching eight million, and 80% of clients would be using our SaaS services.
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)
I have been greatly involved in the children and youth NGOs before starting my career in advertising. I would love to return and help kids learn, understand, and practice democratic values while improving their free time activities. I firmly believe that nurturing the next generation and enriching our society through education represents the highest form of benevolence.
How can our readers continue to follow you or your company online?
Toms Panders (CEO):
LinkedIn: https://www.linkedin.com/in/tomspanders/
Setupad (Company):
Homepage: https://setupad.com/
LinkedIn: https://www.linkedin.com/company/setupad/mycompany/
Instagram: https://www.instagram.com/setupad_official/
Twitter: https://twitter.com/Setupad_Team
Thank you so much for sharing all of these insights. We wish you continued success and good health!
About the Interviewer: Chad Silverstein is an accomplished entrepreneur and visionary leader. He started his first company, Choice Recovery, Inc., while attending Ohio State University and grew it to become an industry outlier before selling the business after 25 successful years. With the launch of his second venture, [re]start, a career development platform, Chad aimed to help people find meaningful career opportunities. Under his leadership, his team was recognized as a “Top Workplace” award winner for over a decade, twice being ranked the #1 small and medium-sized business to work for in Central Ohio. Chad sold [re]start in 2023, enabling him to focus on building an online community of high-performing leaders and continuing to make a positive impact in people’s lives.