[ Interview ] Testlio Co-Founder Kristel Kruustük on Creating an Enterprise Marketplace for Software Testing

A few weeks back, I spoke to Kristel Kruustük for The Lean B2B Podcast. We talked about entrepreneurship, focus, resilience, business models, and quality assurance (QA) testing.

You can watch the full interview below, or access it on iTunes, Google, or Spotify.

Interview Transcript

Etienne Garbugli: My guest today is Kristel Kruustük. Kristel is the Chief Testing Officer and co-founder of Testlio, a global QA testing platform with more than 10,000 freelance testers serving clients like Microsoft, American Express, CBS, and the NBA. Prior to co-founding Testlio, Kristel studied software development and was a QA tester in London and Estonia, where she is from.

Kristel, welcome to the podcast.

Kristel Kruustük: Thank you, Étienne, thank you so much for having me today.

Etienne Garbugli: It’s good to have you here. As I mentioned, you studied programming in Estonia. You also worked in testing in Estonia in London before Testlio. So, what attracted you initially to quality assurance testing?

Kristel Kruustük: Well, the story with a lot of testers is that a lot of testers get into testing by accident because it’s not something that you get taught in school. So, what happened to me back in 2008 when I graduated high school was that I didn’t know what I wanted to do with my life. Eventually, because of my sister’s influence, I went to study IT and I went to study programming. And during my second year in college, I wanted to have a job but I didn’t have much experience with programming.

A lot of my college buddies were telling me, “Hey, Kristel, testing is an easy thing to do. So why not start as a tester? So, I found myself in a company that developed different web applications for the biggest travel companies in Estonia. I started testing the products. And then eventually, my interest in testing grew and I moved on to a bigger company in Estonia, where I stayed for another year until I graduated college in Estonia. And that’s where I realized that I want to build a career in software testing, and I want to become the best at it.

Etienne Garbugli: So, your goal was to become the best tester that you could be. How did you go about improving and expanding your skillset in the early days of your career?

Kristel Kruustük: One of my mindsets since the beginning was that we only get better when we practice. So, after I graduated the university in Estonia, I told my then-boyfriend, now husband, and now also my co-founder, Marko, “Let’s move away from Estonia and let’s experience life in a different world.” And my sister has always been a huge inspiration for me because she was able to also build an international career for herself coming from a little tiny town in Estonia. So, she kept pushing me to be more in life and experience life more in different countries and levels, and so on.

Anyways, my husband and I moved to San Francisco, where we stayed for two weeks because we didn’t like it. Then eventually, we decided to move to London because we had both been there and it was quite close to Estonia as well. We thought that we could travel back home and meet our friends and family. That didn’t happen, but more of that later.

We went to live in London. In London, I found a full-time job again. And I was just so passionate about software testing that I started looking for additional opportunities to improve my skills. And one way to do that was to obviously meet with other experts and other industry leaders. Then I also knew that practice makes it perfect.

For example, I built a website for myself and I also put a paper ad on a co working space in London. And it said, “I hunt for bugs in your software,” and I actually got a customer—a startup that just got some funding. And it was a really exciting project to work on next to my full-time job because I also got a full-time job in London.

That was the first time where the gig economy started taking off and there were a couple of platforms for software testers that connected these testers globally with different companies that needed testing. And to me, I fell in love with the idea of these testing platforms immediately because I saw such a huge opportunity. First of all, learning from a global network of other testers, getting to test different projects, seeing what types of issues they report, or just seeing how they organize and structure their work. And I became quite active on different code testing platforms. And eventually, I was just super frustrated and I had to start Testlio.

Etienne Garbugli: So, you were doing software testing in your work, you were doing software testing as well as projects on the side.

Kristel Kruustük: Because back then, it was just me and I didn’t have any other commitments. Now I have kids, life has changed quite a bit. But back then, I was all in, “How can I become better?” And now I believe that we have become better because we have this global network of testers today at Testlio.

Etienne Garbugli: Let’s talk about that. When was the first time that you started thinking, “Oh, maybe there’s an opportunity here or maybe there’s something that could be done better in terms of these testing communities.”?

Kristel Kruustük: The idea of Testlio was born out of my frustration because of the experience I had as a software tester in these different testing platforms. As I mentioned earlier, at first, I just loved the idea that, as a tester, I could sign up to this website, get connected with these global companies, I can find bugs. How awesome is that? But after a couple of months, I was just frustrated because I felt I wasn’t valued.

First of all, the main reason for me was that all of the testers were paid per issue, which meant that testers were not really incentivized to dig deep into the product and figure out what the real issues are. Everybody had their low-hanging fruits and they never had this motivation to stay on the product for longer and figure out what the real frustration for the end customer was. And between the testers because of the pay-per-bug model, the testers didn’t want to work together. It was a competition. But to me, quality is everybody’s responsibility. And the teams should be able to collaborate in order to deliver the best results.

That’s where I felt that I had this problem. And when I started talking with my friends who were also testers, they confirmed with me that, “Yes, I felt the same way. I didn’t feel valued and I felt like this is just a competition.” And it’s not healthy for the quality of the product or for the team. And that’s where I signed up to a hackathon. And the reason why I knew about hackathons was because Estonia is like a country of startups. I had participated in one hackathon or two hackathons back in Estonia. And to me, it seemed like a great opportunity to present my idea and build a prototype within a very short amount of time and get feedback. Just a very lean approach.

Etienne Garbugli: So, at this point, you had the sense that creating a platform could make sense. What convinced you and your husband, your co-founder, that there would be an opportunity there for another platform?

Kristel Kruustük: What convinced us that there was room for another platform?

Etienne Garbugli: Or convinced you to take the plunge in this portion?

Kristel Kruustük: First of all, I was supposed to go to the hackathon alone because my husband was building another startup at the same time. He had been an entrepreneur for the past 10 years. But then eventually, he saw all of that passion that I had, and he was like, “Okay, I’m going to join you.”

So, we signed up to this hackathon called AngelHack, and AngelHack London had like 300 people signed up. And out of 64 ideas, we were selected as one of the winners. And that gave us the confidence that we can pursue this further. Eventually, we won the global hackathon series in San Francisco and got $25,000 as an investment. And that gave us the confidence that we should pursue this full time because we got so much positive feedback, first of all, from the testers that I was in contact with, the testers that I had built relationships with. And also, we started getting interest from customers.

Our first customer was actually a customer of our competitor and they loved the idea of Testlio, which was to provide great quality testers. And that’s all that mattered to them.

Etienne Garbugli: So, what convinced them initially to make the move from a competitor to Testlio? What were the elements that convinced them that this was the platform for them?

Kristel Kruustük: If I remember correctly, they had already ended their relationship with this competitor, but they were looking to hire a full-time, in-house QA to take care of the testing of these products. It was a mobile agency so they were building apps for PBC and Coca-Cola. So, it was huge. Then we got introduced to them through a mentor that we met during the AngelHack finals.

As you start, as you are an intrapreneur, you need to connect with as much people as possible to get things off the ground. And then basically, we just pitched our idea of Testlio because the company saw the benefit of, “Hey, I can use these burstable teams almost. Before the release, I can get more testers to test my app on different locations and different devices.” And it just creates so much more value for the companies that want to deliver excellent quality. It just made sense for them, instead of hiring an internal QA and worrying about if they can get that full coverage and if they can deliver all of their products in time.

Today, we really work like partners with the companies that we work with. We are partners for internal QA teams, where we offer this burstable kind of service during the releases as well. So, you can get a team of testers in different locations, different devices, speaking different languages, in the times that you need them the most.

Etienne Garbugli: So, the relationship is even closer than it was initially. That’s great. So, you had a lot of momentum at that point. You had won the competition, you had your first customer, you had a little bit of money. How did you guys make sure that you were building the right product and the right platform behind this? How did you get to that point where you were able to iterate and get to the right platform?

Kristel Kruustük: For us, it was always about listening to the customer. And the customer for us was, first of all, the tester because they were the ones testing on the platform that we had built for the testers. And then also on the other side, we had the customers. The customers had the needs. Either they wanted to have faster releases or faster release cycles; they had their needs. So, we just were listening to their needs and basically built Testlio based on that.

In the early days, we didn’t have this crazy demand immediately where we had like 100 companies signing up or anything. We had the opportunity to work with a small amount of customers, really listen to them, and build the product based on their requirements and based on these conditions.

And then I also remember that our business model changed quite a bit during this first year of being in business. First of all, we started with this project-based service where you had smaller startups that wanted to test their app on like iPhone 10. Well, back then, it was iPhone 4. They wanted to test their app for different iPhone 4s and different operating systems. But then we realized that we can’t build a sustainable business model. We have to be able to predict our revenue because we need to hire people based on that and we can just be so unpredictable?

Etienne Garbugli: Okay. So, more predictability?

Kristel Kruustük: Yes, we wanted to build more predictability. Then, thanks to a T-shirt that one of our friends was wearing in San Francisco, we landed an awesome customer. This customer, two of his companies had very successful exits and he was building another company then. And he just wanted to use Testlio. And he said, “I want to pay you a monthly subscription and that’s what I want to get for that monthly subscription.” And we built our business model around his need because he was so influential that we were like, “Okay, we should listen to this guy.”

Eventually, this company was sold to Microsoft for 150 million within one and a half years. And that’s how we got Microsoft as one of our customers.

Etienne Garbugli: So, a pretty good case study.

Kristel Kruustük: Oh, yeah. You just need to listen to your customers. But it’s interesting that, I think it was Steve Jobs who used to say that customers, oftentimes don’t know what they want. And I think at points it’s true, but there is some truth. You have to keep your ears open and listen to your customers but be aiming to build something more than they expect.

Etienne Garbugli: Well, I’m sensing that from the story. There’s a lot of great serendipity or probably luck that engineered at the center because you mention that there’s a T-shirt that–

Kristel Kruustük: Yeah. Oh, my god. These are the stories that, as a founder, you find these inexpensive ways to market or to advertise your company. I just recently shared the story on my Instagram as well. I’ve been sharing these stories for like a year now of building my company and I’m very active there.

And lately, there’s the founder of Spanx. It’s a very big company. Sara Blakely built a billion-dollar business. And in the early years, she’s constantly telling the story of how she wore the Spanx T-shirt for five years because she thought that she had to find more inexpensive ways to find customers for her product. And if somebody is already interested in what this word Spanx needs on her T-shirt, then there will be more and more of these people.

Etienne Garbugli: So, creating momentum?

Kristel Kruustük: Yeah, creating the momentum. And like now that obviously the market has changed quite a bit, I feel like there’s more money available. Back in 2013, when we just started with Testlio, nobody believed in us. Luckily, we won AngelHack. We also got into TechStars Accelerator Program, which was also very impactful for the future of Testlio. That’s where we met the future CEO of Testlio.

We’ve had Steve Semelsberger, our CEO with Testlio for the past three years. And Steve was one of the first investors at Testlio as well as he was an advisor and helped us to find our first people in the US. It’s a crazy story, but it’s super awesome.

Etienne Garbugli: Well, let’s dig into this. There are a few times in talks that you were mentioning that initially, the first couple of years were very difficult. You were dealing with rejection, there were people that were doubting the model, there was negative feedback. Having gone through the experience yourself, how would you recommend that founders approach the first few years? How can they build the same kind of resilience that you guys built?

Kristel Kruustük: It all comes down to your support network. And for me, it’s always been Marko, who is my co-founder. And obviously, now that we have a bigger team, we can just rely on each other and get support from each other during these tougher times. So, we just lean on each other and ask for help and also get that help when we need it.

But going back to the early days, I so clearly remember that I never intended to become an entrepreneur. My goal was to become the best tester in the world. I was just so passionate about the industry and seeing a huge problem that wasn’t being solved, I just had to become an entrepreneur. And when we went to TechStars. I remember we met like 90 different mentors and advisors and some loved the idea and some hated the idea. And I cried myself to sleep during these days.

And then Marko, who had been building companies for the past 10 years and never had that type of success that we already were having with Testlio was like, “It’s fine. Don’t worry, we’re doing great because we have these companies that are already believing in us and these testers that are just so excited about the Testlio concept. Let’s just keep going.” And that’s what has pushed us through all these years.

And obviously, after we raised our seed round in 2015 and also series A in 2016, we fell into this series A trap where you feel the pressure of hiring a lot of people at the same time to just meet the expectations of the investors. You want to grow as quickly as possible and you feel like there’s no other way to build the company. But then we missed out on actually looking into ourselves as founders, looking into what kind of people do we actually want to hire? What kind of values do we need to live by in this company? What’s the mission? What’s the vision?

There were so many things that we didn’t figure out in the early days that created a lot of unexpected challenges that I don’t think entrepreneurs that have done it multiple times will run into. But it taught us a lot. I think these tougher times really taught us that we can go through anything. And we’re always there for each other with Marko and now it’s a bigger team. We have a big ELT team.

Our entire company has 170 employees in more than 26 countries around the world. We’re fully distributed. So, it’s quite wonderful that we are fully led by the values and the vision for the company, which is we really want to fuel more human possibilities through network testing, which is the service and product that we offer.

Etienne Garbugli: That’s great. You mentioned the series A trap. Is that what you’re referring to, the fact that that kind of lost your way in terms of what you’re trying to achieve as an entrepreneur? Is that kind of what you have in mind?

Kristel Kruustük: Yeah. We were not actually clear what experience we were going to offer for the testers or what’s the experience that we’re offering for the customers. The entire market is so huge, so at first, you just need to focus and that’s all that matters. But our investor was the one who was writing about the series A trap that a lot of companies fall into. You just have these high expectations all of a sudden, and you feel like you need to hire fast in order to keep up with the growth and expectations of the investors. But eventually, you have to have some ground foundation in place if you want to build a great company that is there for decades.

For us at Testlio today, it’s all about building the best testing company in the world. And we’re not going to stop until we’ve achieved that. I’ve been in the company for nine years. I founded the company nine years ago and I am still feeling like this is just the beginning. Like within this past year, we made it very clear what types of products we offer for our customers. There was messaging that became very clear. So, we came up with the concept of like, we’re constantly battling, are we a consulting company? Are we outsourced? What kind of service are we offering for the customers?

The reason we started Testlio was because we had a lot of problems and we were fixing them. And now this is a concept called network testing. And this is a combination of the best of the best from outsourced testing, in-house testing, crowdsource testing. So, network testing is like an evolution of the software testing industry. And this is where the entire market is moving towards.

Etienne Garbugli: Well, if we talk about that, I actually went back in time and looked at some of the previous versions or the first versions of Testlio. What are some of the major milestones that helped you drive towards that vision and where you’re hoping to take the company later on?

Kristel Kruustük: Well, that’s a big question. All I can say to you is what made us make these decisions. For me, it’s always been about creating a platform for the testers where they feel valued. And that’s why the entire company started and I just wanted to become the best out there; offering the best options, best solutions for the testers. I don’t know how to actually answer that question, I’m sorry.

Etienne Garbugli: I mean, what are the key learnings, things that you’ve learned along the way about the ecosystem or the market or anything like that, that you went like, “Okay, this means that we should probably be doing this.”? Because it seems like there’s been a lot of different refinements, improvements, evolution from mobile app testing, or the first versions of the platform, all the way to network testing, and where you guys are going.

Kristel Kruustük: Yeah, I think the best way for me to explain it the simplest way is through the journeys that we have been with our customers. When we started, we were serving a lot of smaller types of customers. And then eventually, we started getting enterprise customers being interested in Testlio and that has given us focus on the types of customers that we can serve and we can serve the best because we can’t do everything at the same time. We have to be able to focus on certain areas.

So, we’ve become really big at serving B2B customers, media companies—I think soon we’ll have every media company on the planet. But it’s really finding that focus. Also, I think we were lucky that we were able to hire people that had some background in working with media customers. That’s where the road of Testlio took us. We want to solve a lot of the problems. I hope you get what I mean.

It’s really all about just focusing and listening to your customer. Especially if you’re in a market like software testing, where you have automation tools on the market, you have outsource testing companies on the market, you have in-house QAs. There are so many options and, for customers, all that matters is that they want to deliver amazing experiences for their customers. They want to make sure that their app works on every device, in any language, in every location. So how are we going to do that? And that’s where Testlio comes in and helps these customers solve these issues.

And we work in collaboration with automated testing providers and automation tools. We are integrating ourselves more into different project management tools to give more insight into how customers can really deliver that excellent quality.

Etienne Garbugli: So, it’s that focus that you’re talking about?

Kristel Kruustük: Yeah, it is that focus. And we all have to start from somewhere. Like, at first, we felt that we needed to do everything at the same time. We have to build automation tools, we have to do a manual QA, we have to do functional testing where we are going to focus on regression testing only. There were so many questions that we had in mind, but the end goal for the customer has always been to get great quality. So, we just had to listen to this feedback.

Etienne Garbugli: To do the right sequencing. So, part of what enabled you to do that, I assume, is that you were part of a community. You yourself had experienced some of the pains of being in the situation. What do you feel are the key advantages of having had those experiences before but also within being part of that community? What do you feel are the key advantages?

Kristel Kruustük: Well, I didn’t have too much experience as a tester. I had four years of experience working as a tester, which was quite significant. And they had that passion.

Etienne Garbugli: You had experienced the pains and done a lot of work as a QA tester before starting Testlio. What do you feel are the key advantages of having had those experiences before as a founder?

Kristel Kruustük: I think it benefited me a lot while building this company because I could really understand the mind of the tester. And for us, I think building a great experience for the tester has helped us win in the long run because we want to take the best care of the network of testers that we have. And we know that if we treat them the right way and we help them to collaborate, then the best solutions will happen on the market.

I think that’s the real benefit of me being in this industry and seeing the exact problems, what was happening, and I could really talk to the customer and understand. I get it, I understand why you were frustrated using this different protesting platform. Hey, I’ve been a tester, I’ve been in the shoes. And that made customers really trust me as well because of the experience that I had as a tester.

Etienne Garbugli: So, initial trust again. But could you have seen yourself launching a business in a field that you didn’t know as well as testing? Could you have launched another type of business?

Kristel Kruustük: I haven’t thought about it this way, to be honest. Testing is my life and I think Testlio will be my life’s work. I haven’t really thought about other ideas. But what I can say is that thanks to Testlio, I’ve been able to stand for women in technology, women in testing. And I think that’s also a big focus for me while building Testlio and it’s not just only testing-related.

Etienne Garbugli: No, that’s great. You were able to use that as a platform to be able to impact change. That’s great. How would you advise a new entrepreneur to think about business opportunities? What should she/he look for when they’re just starting out?

Kristel Kruustük: I think it’s very important for any entrepreneur to build a network and have friends around them. Because entrepreneurship is tough, it’s challenging. So, it’s important that you have support and advice from people. Like when we started with Testlio, in the early days, immediately, I reached out to the founder of Pipedrive. Pipedrive is another Estonian success story and they sold to Vista Equity two years ago.

I reached out to the founder of Pipedrive when we went to Estonia after winning AngelHack. I just knew that in order for us to become better at what we do; we need to talk to other people. So, building a network is crucial, I think, for the success of any company.

Etienne Garbugli: Maybe as a follow-up question on that, do you feel that that’s one of the big reasons why the Estonian ecosystem is so successful in terms of startups?

Kristel Kruustük: There are multiple reasons for that but I think the main reason is definitely that Estonia is so tiny that we pretty much don’t have a market here. So, from day one, when we start out as entrepreneurs, we have to think big and we have to think global and we have to go out of our comfort zone. We have to speak English as our main language if we want to succeed in the world of competition.

So, I think it comes from the fact that we have to think globally from day one. And then obviously, the Estonian startup ecosystem is very close. And a lot of companies support each other. And today, thanks to a lot of success stories, there are a lot of investors that now support each other.

We announced our funding a couple of months ago, we raised that 12 million in funding, of which a bit less than 25% went to our employees that had been with Testlio for more than three years. That’s also a great thing for the ecosystem in general. Yeah, that’s awesome.

Etienne Garbugli: That’s great. It’s good to see you use your platform to help different ventures. So maybe we can finish on that. Where can people go to learn more about Testlio, your work, and the various initiatives you’re involved in?

Kristel Kruustük: First of all, testlio.com where they can learn more about what we do, how we do it. And then you can also contact me on social media channels, either LinkedIn or Instagram. And I’m always eager to help starting entrepreneurs because I’ve been there and I just want to help people make the world a better place.

Etienne Garbugli: That’s great. Thanks for taking the time. It’s really appreciated.

Kristel Kruustük: Thank you.

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