How to keep up with the pace of innovation: commercetools’ co-founder Dirk Hörig

Robin Haak: So great to chat with you, Dirk! Let's go back to last year when Commercetools became a Centaur. Can you tell us a bit about that moment? What was it like for you to reach that level with your company?

Dirk Hörig: Yeah, honestly, it was special—maybe more special than some might think. But it's kind of like watching your kids growing up, when you see them every day the changes seem gradual. But when you haven’t seen them in a while, you're surprised by how big they've become. When you're in the middle of it, working day-to-day, hitting $100 million ARR is just another milestone. Once you're at $80-90 million ARR, it becomes likely that you'll hit $100 million and beyond. So, while the business keeps growing, we’re not constantly celebrating those numbers. We check them regularly, of course, but more so to ensure we’re hitting our KPIs. We’ve now surpassed $100 million, and it’s rewarding to look back and see how far we’ve come as we charge towards our next milestone.

A lot of our culture at commercetools, from day one, has been about, “What do we need to do next? What’s coming up?” versus, “Hey, what have we already achieved?” That doesn’t mean we don’t reflect on what we can improve, but we look back to make our gameplay better for what’s coming, rather than just pausing or stalling.

Have you taken a moment to reflect on how far you’ve come?

Running a company like commercetools is not like a project that has an end. For example, when you build a house, at some point, it’s done, and you can look at it. Maybe some people constantly renovate their houses, but usually, once it’s built, it’s done. A company or a business, though, is more organic. It never stops, it keeps moving forward. And of course, we’re proud of it. But it’s less about a specific number and more about where the business is today and all the people working here, the customers, and the partners around it.

Of course. Let’s take it back to 2006 and the founding of commercetools. What led you to decide that you wanted the technology to be “headless” or “API-first”?

We actually created the company in 2006, but the work we’re doing now really started in 2010.

The decision to become a headless solution was based on our experience in the 10 years before. We had experience with commerce platforms and products, and we were implementing and supporting customers. After almost a decade of doing that for big companies like Red Bull, Burton Snowboards, Puma, and many others, we kept running into the same problems.

The first issue was scalability—the digital business was growing, they had traffic peaks during shopping seasons, and uptime and availability became big challenges. Maintaining the site took up a lot of IT budget that could have been used for innovation, but instead, it was spent on what you might call boring stuff, just keeping things running.

Could you tell me a bit more about how the rise of cloud technology shaped your direction at commercetools?

Sure. So, that was one of the things that pushed us towards the cloud. As cloud technologies matured, we reached a pivotal moment in the industry. Before public clouds like AWS, there wasn’t much you could do. But suddenly, everything started becoming standardized, and we wondered, “Could we build products differently?” Then, there was another major shift with the rise of mobile internet, especially after the iPhone came out. So, cloud plus mobile created this massive shift, and we believed it was enough to change the industry significantly.

How did you pivot to make your technology work on all of these fronts?

Well, it meant the market could change significantly —both in how software is built (that's the cloud part) and in what consumers expect (that’s the mobile part). This shift also related to the commerce solutions we were offering. We believed it was an opportunity to build a new kind of commerce platform from scratch. We had already been market leaders before, and we knew the capabilities and the challenges. It’s like comparing cars: first, it was horses, then gasoline, now it’s electric. Sometimes you get these shifts, and we were in the right place at the right time.

We identified that mobile plus cloud would require brands and retailers to look at digital commerce differently. They needed software that could help them take advantage of these new opportunities. That led to the idea of commercetools. It was early—2010—but we didn’t move too early, because we saw many copycats in the following years. If we hadn’t been first, someone else would have shaped the market. Maybe we were one or two years early, but it’s always better to be early than too late.

How did your previous experience help shape commercetools?

Before commercetools, when I was working at Xoanon – an e-commerce agency – we weren’t exactly in the driver’s seat, but we were close enough to see what wasn’t working. We learned from both the mistakes and the successes of the market leaders. They were passionate about building a really good product, and we took those 10 years of learning and put it into the new company.

And how have you managed to keep up with the pace of innovation? Things must be moving so fast now—companies like Amazon are constantly uploading new updates every second. How do you push yourselves?

It’s a two-sided thing, right? On one hand, we give all our teams and customers the ability to be fast. For example, John Lewis—one of our customers and one of the UK’s largest retailers—could only make two changes to their website a year before commercetools. Now, they’re making between 5,000 and 10,000 changes a year. It sounds crazy, but all these small iterations and adaptations are what make a company, and even individuals, resilient.

It can feel overwhelming when you have to make a big change—whether it’s in business or somewhere else. But if you’re making small adjustments every day, you adapt to change gradually. Sometimes those small changes combine into a bigger shift, but you don’t feel it as much.

And do you think that ability to adapt is what’s helping you keep up?

Yes. It goes back to your first question, for us, hitting $1 million was a bigger step than reaching $100 million later on, because it was just a combination of all these small steps. The pace of change today is hard for anyone to keep up with. Take large language models—there’s something new every week. It’s tough to stay on top of everything; the information and density and technological trends.

But I don’t think you have to be up-to-date on every single thing if the company has the resiliency. What’s important is that your company can adapt quickly, making small changes multiple times a day rather than one big change every six months. I think that’s how we can keep up with everything and how we stay resilient. That’s how we’ve operated since day one—staying lean, agile, and focused on innovation.

What were the first couple of years like? Were there a lot of big challenges you had to overcome?

I would say every four weeks, at least, felt like a near-death experience from a business perspective, especially in the first two years. So, we started working on the concept around 2009 and kicked it off in 2010. We launched the product in 2013, but between 2010 and 2014, there were probably more than 10 times where we thought, “This is it, we’re not going to make it next month.” We were so short on cash, trying to build the product, trying to get it out, and figuring out how to raise a bit of money and find a team. I remember one of the big stories…

The tech leader we had at the time—I'll keep it vague, not using names—was leading the core platform development. We had a deadline in April or May 2013 to finish our product. We had some funding lined up with the EIB in Berlin, using a government technology fund for high-risk projects. They contributed about a million, most of our funding for that year. But to get the funds released, we had to officially launch the product, which was scheduled for April or May 2013.

Then, one week before Christmas, mid-December 2012, I received a quick email saying, “Something happened. I can’t tell you what, but I’m leaving.” Overnight, our CTO disappeared.

Wow, that must have been a shock. How did you handle that?

Yeah, I found out later it was for personal reasons. But at the time, we were in one of the most critical phases, trying to build the product while already being short on cash and with so much else to get done by the end of the year. So here we were, just two weeks before Christmas, and suddenly, this happened. I remember it was around 11 p.m. when I got the email. I thought, “Okay, this is another test.” You have two options in those moments: you can throw in the towel, or you can just treat it as another task and work through it.

So, there are two ways one can respond to this, and I chose to see it as just another problem to solve. We pushed aside the emotions, put the situation on our list of things to fix, and worked through it. That’s the kind of roller coaster we’ve been on over the years—there’s always something like that. I remember Ben Horowitz once said in one of his books, that if your goal is to win the Olympics in sprinting, the odds don’t matter much. Whether it’s a 99% chance or a 1% chance, the task in front of you remains the same. So, we just focused on the task at hand successfully launched the product, and later got it into the market.

How have you built that kind of resilience into your team culture?

That’s an interesting question. If I could put it in a bottle and standardize it, I definitely would. But my experience is that resilience is personal—people build it in different ways. For me, I think my childhood played a role. Looking back, I had a supportive family environment, whether it was in school or with sports. I played volleyball competitively for over 15 years, starting when I was about 12 or 13. Being part of a team, and playing other sports, helped me build resilience.

In sports, there’s something called crunch time, when it’s close to the end, and the score is tied—like 15-15—and whoever gets the next two points wins. I learned to enjoy those moments. That’s what you play for, to get to that point. Sometimes you lose, which hurts, but it’s a good learning experience. It teaches you to handle tough moments and be better the next time. That’s something that’s helped me long-term.

How did you and the team build that resilience to get through tough times like that?

What people really need to build strong resilience is the self-confidence that the tools they've developed over time will help them handle most situations. Of course, there are things you can’t solve alone or areas where you don’t have the expertise, but if, for example, I were to lose my job, I’d know that I’m good enough to find another one. It’s that kind of confidence that makes people resilient.

Safety is good, resilience comes from knowing that even if there’s some risk involved, not much can harm you. So that’s one basic level of resilience—having the confidence that the tools you've developed will help you get through, whether it’s in business or personal life. And I think, as a team, once we realized we were able to work with these setbacks—whether that meant being short on cash, needing to find a critical solution quickly, or losing a key person—we started to realize it's not the end of the world, things don’t stop spinning, and we became more relaxed.

I think the secret sauce is developing that self-confidence and knowing your core tools will help you navigate tough situations. Once you have that, you can stay more resilient and relaxed when changes come your way. You need to be able to get this confidence in yourself, in your core tools that you can navigate these situations. And once you have that, then you can be much more resilient and relaxed about changes that are happening.

Speaking of changes, AI is coming into so many different areas of our lives. How are you looking ahead with commercetools? What challenges or opportunities do you see with AI?

I’d say more opportunities. I think AI represents a huge opportunity and another big shift. How big it will be, we’ll see in hindsight, but it’s on the scale of the internet, cloud, and mobile. Before, everyone had computers in their offices, then smartphones, tablets, and smaller laptops came in, and everything changed. I believe AI will become as natural as the internet or mobile.

Right now, it feels strange because suddenly we have computers being creative and doing things we thought only humans could do. But I see AI as an accelerator—like the discovery of penicillin. Suddenly, once deadly diseases could be treated. Doctors could have said, “Penicillin will take away our jobs,” but instead, it allowed medicine to advance even further. It’s the same with AI.

Of course, technology can be used for good or bad. In the '80s and '90s, social media and the internet made it easier to connect with people, but also easier to fake things. AI will add another layer to that. But in our industry, AI has the potential to help us do things much faster.

How do you see AI fitting into the commercetools platform?

Well, for example, AI can generate images, but sometimes there are little errors. That’s okay depending on the use case. But with us running high-sensitivity, scalable business software, those errors could mean lost revenue, which affects tens of thousands of jobs. So, everything needs to work, but humans make errors too.

For me, it’s about integrating AI into the process so everyone becomes more efficient and gets more done. I’m a big fan of the idea of AI assistants like Tony Stark’s J.A.R.V.I.S in the Marvel movies.

Like your own personal J.A.R.V.I.S?

Exactly! But in Marvel, only Tony Stark has one. We’re heading into a world where everyone will have their own, which will look very different. Of course, there are risks, but I’m not a fan of the idea of the Metaverse where we’re all sitting in basements with headsets. That reminds me too much of dystopian cyberpunk movies from the ’80s.

So you’re more into the idea of an assistant in the real world?

Right, smart computer assistants that help us get things done. There will be downsides, of course, but I think in the long run, the advantages will outweigh the disadvantages—just like advancements in medicine.

Another big trend coming up in e-commerce for the next couple of years is personalization i.e. as a shopper, you’ll have things suggested to you, and even see completely personalized sites based on what you're interested in. What role does AI play in this?

On personalization, I would say shoppers have always wanted that. The demand has always been there. We love to ask, “What would you recommend for me?” Even in the offline world. For example, if you go to your favorite fruit store and they say, “Hey, I have this new papaya—it tastes completely different, and I know you’ll like it,” that’s a cool shopping experience. I think that’s what digital is trying to copy. AI is not the first attempt at achieving that personalized experience, but it could be the one to finally make every shopper’s experience truly tailored—not just the Amazon kind, but something where the whole look, feel, and experience is designed to match your preferences.

And how do you think privacy and data security factor into that?

I think what’s still important is that people have the option to opt-out. Just like in the fruit store example, you might say, “Hey, this papaya is great, but let me walk around a bit and see what else you have.” That opt-out is crucial, both for privacy and for giving people control. The key question is how your data is being used—not just that it’s being used. If you opt-in and say, “I want things personalized based on my browsing and buying behavior,” that’s fine. But if your data is misused in another context—like you were at the grocery store, and suddenly you’re getting recommendations for unrelated products you didn’t opt in for—that’s a problem.

That’s why regulation is super important. However, I’m not sure if the European regulators are going about it the right way, or if it’s effective because most of the tools we’re using come from outside the EU. So, just building fences around data usage isn’t the solution either, because then all this technology will develop without our involvement.

What are your goals with commercetools today?

We’re one of the biggest e-commerce vendors out there, but we only have about two to three percent market share. Getting to 10% market share in Europe and the US is a top priority. We already had some business in Australia and New Zealand, so we didn’t want to distract ourselves with too many other things. That’s been one of our successful strategies - each year, we look at a few top initiatives or side bets. If they work out, great; if not, we move on. But 90% of our focus is always on our core business.

As co-founder and CEO at commercetools, how do you find balance in your life?

My family. At home, it makes no difference what I’m doing for work. It helps put things into perspective. We have active kids who love sports and are pretty adventurous, so that’s a big part of it. We travel and do a lot together. I also have friends outside of business who do completely different things—so not everyone I know is an entrepreneur. Playing sports with them, no matter what it is, also helps. It’s all about balance.

It sounds like family and friends play a big part in keeping things grounded for you. How has that balance evolved over the years, especially when you were just starting?

In the early days, it was different. I’d always take a few days to go surfing or golfing with friends. Yes, I’d bring my phone and laptop, and I’d always be working. But now we have people to cover those things at the company, so I don’t have to be as on top of everything anymore.

Back then, if I had to work on a document for two hours while on a trip, my friends would apologize, but I’d say, “Why? I’m sitting here in the sun, I can work for two hours and then join you guys afterward.” Doing things like that helped me keep perspective and reminded me that there’s more to life than just work.

Thank you so much for all of your insights.

No, thank you. Thanks for the interview!