The future of work from a leader’s perspective: An interview with CAKE.com’s CEO Nenad Milanovic
In recent years, the pandemic has surely changed the way we work and forced many businesses to go fully remote, ready or not. CAKE.com is one such company — one of the ready ones.
How has remote work affected different industries? Is the pandemic to blame for tech layoffs? (Spoiler alert — it’s not!) What are the biggest challenges in the tech industry today? And what does the future of work look like?
These are some of the questions we discuss with Nenad Milanovic, CEO at CAKE.com — a product-based SaaS company that has doubled its growth in the last few years.
Nenad also shares his tips for would-be entrepreneurs, reflects on his entrepreneurial journey, and reveals the secrets behind CAKE.com’s success as well as the plans for its future.
Read on for Nenad’s insights into the current workscape, his predictions for the future of work, and more.
Why CAKE.com continued to thrive throughout and after the pandemic
CAKE.com — formerly known as COING — is a product-based software company that offers solutions to modern business teams. More precisely, 3 products:
- Clockify — the world’s most popular time tracking and productivity software used by millions,
- Pumble — a powerful Slack alternative helping remote and hybrid teams communicate with ease, and
- Plaky — a project and task management platform that makes it easy to keep track of your project progress and access all the relevant task information in one place.
During the pandemic, when many businesses struggled to make ends meet, CAKE.com’s products experienced a surge in demand.
We asked Nenad to clarify how and why that happened.
During the pandemic, your products’ growth has skyrocketed. Why do you think that is the case? Did the growth surprise you, or was it a product of careful planning and scaling?
No, it definitely wasn’t the product of some planning or scaling. It was absolutely a coincidence that we were positioned in such a way that gave us a boost. Because, in essence, due to the transformation requiring many teams to start working from home, many had to forcefully implement changes in their workflows, and that’s simply what happened to us too.
And, we could have easily ended up on the other end of that situation, where we would have had major problems. For example, if we were in the travel industry — or any other industry that was affected by the pandemic — we would have ended up the same.
So, basically, we were lucky, and there was no planning there. When the entire world switched to remote work, there was simply an increase in demand for the kind of tools we offer, which are essentially business suite tools.
When the pandemic started to die down, the tech sector experienced a kind of a crash after a period of growth, which resulted in mass layoffs. Why do you think that’s the case?
That crash has nothing to do with the pandemic. More precisely, there are only some indirect connections.
When the pandemic took hold, central banks started doing something called quantitative easing. In other words, they enabled low-cost access to capital, the interest rates were very low, and there was a sharp increase in money supply, which the US Federal Reserve and other central banks then used to improve market liquidity through various channels. They did that to stimulate the economy so that it could survive the big blow caused by COVID-19.
The current wave of layoffs and the general happenings in the tech sector have little to do with the decrease in demand for pandemic-specific tools. The biggest problem is that most companies operated with a cash deficit, and they were highly dependent on external capital — be it from investors or banks. In any case, the external capital basically compensated for the cash burn they were experiencing.
Now that the cost of capital has increased and interest rates are a lot higher, the investors who usually invest in risky assets such as tech startups can achieve a great return on assets that are drastically less risky — such as government bonds or savings.
So, if you’re a capital allocator, and you manage some money for your clients, currently, it’s a no-brainer that you should pull out your money from risky assets such as tech startups and redirect that money into fixed-income assets that pay well and yield a pretty good return — even compared to the annualized return in venture capital, for example.
All of this has led to a shortage of liquidity in our sector, which is the reason why companies are cutting costs and firing people. Due to the liquidity crisis, there’s a decrease in demand, which is why the companies in our sector are faced with 2 problems: one is the shortage of liquidity in the industry, and the other is the fact that it’s much harder to get operating capital. These 2 factors are what has led to the layoffs.
How has CAKE.com managed to escape that fate and even continue to expand and become a unicorn company?
The reason we’re different and why the current situation hasn’t affected us is the fact that, since the company was founded, we’ve never operated on external capital. Also, any increase in expenses we’ve experienced has been sustainable and financed from our own cash flow.
Basically, we’ve always been cash flow-positive, and we’ve never had problems with obtaining capital since we don’t need any external financing.
Remote work, productivity, and other pandemic-induced challenges
CAKE.com was not a remote company from the get-go. Like many others, it went remote-first after the pandemic hit.
We wanted to hear Nenad’s view on how the pandemic-induced remote work has affected both his company and companies at large, what have been the major challenges, and whether some challenges still remain.
CAKE.com became remote-first at the beginning of the pandemic, like many other companies across the globe. What connections would you draw between remote work, productivity, and the global situation brought on by the pandemic?
It’s hard to tell. There’s not enough data. Although it looks like a lot of time has passed since the pandemic started, it’s actually not enough to draw precise conclusions.
In the beginning years of the pandemic, there were many different pandemic-related challenges around the world and different policies regarding personal liberties, freedom of movement, and similar. There were different levels of regulations, which spanned from the more conservative to the more liberal ones — and, currently, a larger part of the planet is in a more liberal stage regarding these regulations.
At the beginning of the pandemic, when there was a total lockdown and personal liberties were highly restricted, there wasn’t much fun to do, and we observed that our productivity levels grew dramatically. This was because people simply had nothing better to do. They had to sit at home, and work was probably a way to pass time, so they focused on it — and their productivity grew.
When governments started easing restrictions on movement, we noticed a slight dip in productivity — since people could freely do other things apart from work, they were no longer only focused on work.
I believe that we’re currently at the late stages of this experiment, and the data set for the following 6 months will show the real productivity levels in remote work, what remote work looks like in normal circumstances, as well as the overall effects of that kind of work.
Are there any remaining remote work challenges companies will need to solve?
A lot of how companies can and will tackle remote work challenges depends on the quality of management. Quality management that focuses on output-based metrics won’t experience any problems.
On the other hand, management that focuses on facetime metrics — in the sense of micromanagement and tracking attendance — such companies will face many challenges, and they probably won’t be thrilled with their productivity levels overall.
Unfortunately, companies that hire a lot of beginners might face bigger problems. This is probably not applicable to all companies — but it applies to those that provide professional consulting services, for example.
Beginners need a lot of mentorship, and mentoring is much more difficult in remote work settings. So, companies whose business models rely on hiring a lot of juniors to achieve financial results might face problems — since there are still no appropriate technologies and methodologies that allow for effective training in remote work conditions.
Anyone who’s seasoned in their work, has a great output in general, and knows what they’re doing will remain productive in a remote setting. But their knowledge can’t simply rub off on their junior coworkers since they’re not interacting in person.
Also, I think the biggest loss companies will experience in remote work is a loss of creativity, as you can’t really control the creative process too much. After all, you can’t effectively schedule creative sessions — since a lot of creativity happens when we don’t even think about it. So, some things are permanently lost with the remote work model.
The future of work from the leadership perspective
Leaders are usually more far-seeing than the rest of us.
So, next, we wanted to gauge Nenad’s perspective on what the future of work will look like and how his leadership role has already changed and developed through remote work conditions.
The future of work is changing. The very definitions of work and the workplace are changing, as well as employer and employee expectations. How do you, from the leadership position, see the future of work? What trends do you think will matter in the near future? You’ve touched on some of them.
We’ll assume that there will be no dramatic advancements in communications technology, video conferencing, virtual reality, augmented reality, and similar, in the next 10, 20, or 30 years.
I believe that the majority of work organizations won’t be able to go fully remote. They will be either office-based or hybrid — and the work mode and location will depend on the needs of individual teams and many other circumstances.
Also, I think it’s a false premise to assume you’ll be able to achieve maximum efficiency through remote work no matter your line of work or your team structure and organization — that’s simply impossible.
So, there will be variations in the way we work. It’s impossible to come to a uniform conclusion since it all depends on individual business circumstances, teams, and even individual employees.
All in all, I don’t predict any huge changes for now. I can reconsider this reflection when there’s a bigger breakthrough in the field of telecommunication technologies.
What skills and traits have you had to develop as a leader as CAKE.com grew under the difficulties brought about by the pandemic?
I don’t really think I gained any new skills or traits in these circumstances. I’m a millennial, and millennials were already very well set up to use computers and software for virtually anything.
At CAKE.com, we’ve effortlessly adopted all the technologies that allowed us not to be severely impacted by the pandemic and the remote work mode — although we’d all worked from the office pre-pandemic, we were already using all the technologies required to swiftly transition to remote work.
On the other hand, a bunch of companies hadn’t used any project management or issue-tracking tools pre-pandemic, and they experienced major issues. Or they’d previously relied only on live meetings, phone calls, and in-person communication to manage their workload — such companies had a huge problem when the pandemic started.
And has your leadership role changed in any way since you went remote?
During the pandemic, I turned to transformational leadership, which proved the most effective for me. This is a leadership style focused on carefully considering future events and actively involving your people in the company’s vision and mission.
So, consequently, some things I worked on developing during the pandemic include:
- A people-centric approach to leadership, with an emphasis on empathy and understanding,
- More effective decision-making, and
- All-around communication — there’s always room for improvement in that department.
We actively worked on creating psychological safety for our employees during the pandemic and continue to do so today.
We nurture open communication, encourage transparency, and always think about our people’s well-being. That’s how we build strong relationships based on trust.
Together, we strive toward the same goals — and loyalty, motivation, and trust are highly rewarded at our company.
In your opinion, what are the biggest challenges employers and employees in the tech sector currently face, respectively?
The biggest challenge for both the employers and employees in the tech sector is definitely more expensive capital, which will slow down the development of a lot of projects.
The problems the employers face are the same problems that will befall the employees — for example, if they have to cut costs.
This means employers will have to operate within their financial means — i.e., their investments will depend on their cash flow.
Some will have to make difficult decisions. They’ll have to fire people. As a result, they’ll have a much harder time translating their ideas into action, testing, and experimenting — since they’ll simply lack the people and resources to try out new things.
On the other hand, employees will have a harder time finding a job or switching jobs if they’re unhappy with the current one — since there will be much fewer options.
Furthermore, many will face the risk of their job disappearing or being terminated, so they’ll have a hard time finding another job.
All in all, the biggest challenges in the next 2 years will be macroeconomic in nature.
How would you define the future of work using one word or phrase?
I’d say — hybrid.
The personal journey of the company founder
Nenad’s journey as the head of CAKE.com was not an easy one. It had many ups and downs in the years preceding Clockify’s great success.
We asked Nenad to look back at the company’s humble beginnings and share with us the lessons he’s learned since then.
CAKE.com has existed since 2009 under the name COING, and it went through various business achievements, challenges, and circumstances without any external capital — completely independent. What are some business lessons you’d say were crucial for the company’s growth? And how important for success is choosing the right business model?
If we focus solely on growth, when someone wants to start a business or is considering what kind of business to venture into, I’d advise them not to focus only on what the business will do and the value it will offer — one of the crucial aspects to think about when considering starting a business should also be the distribution method.
In all this time, whenever we tried to do things that had a manual or outbound distribution approach, we always failed. In essence, that was the biggest issue — the fact that I focused on business models that weren’t aligned with the principles of product-based or product-sourced growth.
For someone else, that might not be a mistake. Instead of optimizing their product for the search engine, they might focus on optimizing it for outbound sales if this is something they’re good at or if they have great contacts in the corporate world.
So, my mistake in the past was that I didn’t align my skills and what I like to do with the business model necessary for the success of our products.
I don’t like doing outbound sales and sending unsolicited emails. And, if you don’t like or can’t do that, then you can’t make a product that relies on that model of distribution.
As a company, we are huge opponents of unsolicited outreach — and, if that’s your philosophy, you can’t have products that demand that kind of outreach.
When we started making products that didn’t require unsolicited outreach, when we focused on business models that had product-led growth and a less outbound distribution model, we finally achieved success.
Which personal traits or qualities do you think a leader in the tech industry should have that are important for the company’s growth, but also the wellbeing of its employees?
There’s no universal answer to that question. Each business is different, and everyone’s circumstances are different.
In the countries where people live hand to mouth or in poverty, they don’t really care about getting compassion or similar sentiments from their company.
On the other hand, if you run a team in an orderly society where everyone has safety and food, and their basic needs are met — those people have entirely different needs, e.g., they’d like you to send them Christmas cards, pat them on the back, and provide them with some immaterial things.
People who are deprived of basic life necessities appreciate it more if you provide them with financial stability, improve their lives, and help them get better positioned so that they can also help someone materially.
In conclusion, in developed countries, emotional solidarity is at the forefront, whereas in those less developed, it’s more about material solidarity.
The future of CAKE.com
Finally, we asked Nenad what the future has in store for CAKE.com — and got some exciting news.
What are some plans for the future of CAKE.com?
We have some exciting things in store for this year. First and foremost — we’ll be launching the CAKE.com marketplace, which will allow developers to sell their software add-on solutions for our products.
Moreover, we’ll introduce the CAKE.com account, which will act as a unified system for easier integration and access to different parts of the CAKE.com ecosystem.
In the next 2 years, we’ll also try to further develop the 3 products we have and hire as many great people as possible who’ll be able to work independently.
So, in the following years, we’ll focus on the 3 verticals we cover — i.e., communication, project management, and productivity tracking technology, through Pumble, Plaky, and Clockify.
That’s quite enough to focus on. We have a large enough roadmap that we can hire a lot of new people in the next 2 years who’ll always have something to work on — since there are many things we plan to cover.