Apr 14

The Venture Gap in Europe.

Bildschirmfoto 2014-04-03 um 10.35.28

European startup ecosystems have matured over the past three years. Most of the discussion was: which cities – London or Berlin – have most startups? Who has exits or lack thereof? My personal view: After an explosion in numbers of startups, I recently see a significant uptick in quality of startups in Europe.

I see better teams and better strategies. With companies like Criteo from France and Zalando from Germany and potentally Soundcloud, there are now the first “Billion Dollar exits” on the horizon. The best indicator of European success according to the EU is that app revenue in Apple’s app store are equally divided equally between US and Europe.

But what about the quality of venture capital firms in Europe? Turning the attention to VCs instead of startups should help entrepreneurs to separate the wheat from the chaff. It also shows that there is still a huge gap in the market for more US-style VCs in Europe.

1. Some basics about Venture Capital

(Experts in the field will want to scroll down to the next heading) 

While many companies have “venture” in their name, most are too small to be considered real venture capital firms. In my view, the minimum size to be able to have a diversified portfolio of early stage investments is 25 M US$. For a reasonable Series A size fund we look at a of 100 M US$ fund size. At my last count there were are acutally less than 10 funds in Germany who fit that criteria. To mind spring eVenture, T-Venture (corporate), Earlybird, Target Partners, Wellingon (Happy to amend if I missed someone). UK has a bit of VC history and larger fund sizes into 500 MUS$, but many of these are focused on non-inte

Jul 13

The Lost Art of Selling

I love growing companies. I love this so much, that I have done nothing else for the past 15 years, with companies like TravelChannel, DocMorris, Qype, 9flats, avocadostore.

Sustainable growth requires a very basic art:  Every business must figure out how to

  1. Acquire customers profitably and
  2. How to sell to them.

People who know how to do this well are few. Customer acquisition via SEM, SEO etc. is a well paid specialty. Still, to this day, I find way more people who do this on a superficial level than people who really know how to do it. Most of the good online marketing experts seem to be consultants.

People who master the second step, to be precise: people who know how to sell online, are extremely rare. In a functional way, there are now user experience (UX) specialists and even conversion specialists. People who know how they can make you press that “buy now” button. But this is not enough.Too few founders know how to really sell on the web

If you really know to what offer to pitch to your customers, how to present the offer, how to differentiate the offer and how to price it, then you are truly a master of your business. It is much easer to get investors if you know how to sell to your customers

If you decide to take on capital and can prove your sales mechanics to potential investors, then it will be much easier to get that capital. Investors love it when they see a formula that works. “Just add water” is what this is called. I love it too, in the rare cases where I invest.

Founders are often better selling themselves

There is this strong misconception that you have to be a good in business development to succeed. This is true for some businesses that really thrive on joint marketing deals or are service businesses, mostly business-to-business (b2b). But in my specialty: Business to Consumer (b2c), I much rather run a business with no business development, but a successful online model that acquires customers successfully.

Most founders I meet focus to much on networking with potential partners and investors, and too little on building a product that sells online.

Feb 13

What I do: Entrepreneur – Investor – Coach

Most succesful startup entrepreneurs evolve into angel investors. In theory it is simple: Investing some cash, sharing experience and their address book for a healthy return of investment.

There is one problem: In order to be a successful angel investor, you need to assign a lot of capital to this – in my view roughly 2 M Euro minimum. These days quite a number people with less capital available are prepared to make a loss in exchange for being part of the game and being listened to.
Some people with enough capital have evolved into shrewd investors with an ability to make a sufficient number of great bets to be successful. Currently I don’t consider myself an angel investor. This may change.

At the moment, I simplify my life by keeping things separate. I enjoy being an entrepreneur, an investor and a coach to other entrepreneurs. Each is a separate activity.

As an entrepreneur, I enjoy building companies: executing fast, working with great international people and sometimes changing the world a bit on the way. Since the sale of Qype to Yelp, I focus on 9flats and avocadostore. Avocadostore grew 5x in 2011, 2x in 2012 and will do 2x growth in 2013, and is profitable.

9flats is currently growing much faster. While the space is ultra competitive, we are simply blown away by the growth, currently 3x year on year (February 2013). I still invest most of my time here.

As an investor, my primary goal is not to lose money and to make my investments grow in the long run. I am quite risk averse. I don’t invest if I can’t see the return.

As a coach, I enjoy helping other entrepreneurs. This can be quite a deep dive in work and life issues. I have set 4 hours per week for coaching. While I do charge for this, I find that the satisfaction of sharing experience and helping others outweighs the financial benefit by far.

Feb 13

Basics for Organizing a Startup

A couple of days ago I was keynote speaker at an EO Accelerator meeting. I was sharing my experience as an entrepreneur in building fast growing companies. While preparing my talk I realized how the basic principles for building an organization are very similar to those helping a six year old child cleaning up her room two weeks before.

When I helped my daughter to clean up her room, I tried to teach her principles. The principles we worked on are:

1. Less stuff
My daughter and I drove through piles of finished drawings, broken toys and she decided for every single item whether she wants to keep it or not. With this, we reduced the complexity of organizing stuff later.

2. Every thing has its place
We used amazon cardboard boxes and she labelled the, carefully. One for “stickers”, one for “small stuff”, one for “nature things”… you get it. All of a sudden, her chaos started to make sense to her.

3. Small tasks
When I ask my daughter to clean her room, the tasks seems insurmountable to her. But starting with: “let’s do the area under your desk now” is something she can easily achieve and be proud of.

4. Do everything only once
We tried to clean up one drawer first, and only when that was finished move on to the next corner. Arguably, we did not get very far here. Too big was the temptation to just look at an item in one corner of the room and arbitrarily play with something else, and then go back.

Here is how I apply these same principles  to organize a business, whether a small start up or a large organization:

1. Less Stuff Even at the earliest stages, startups do too much. Focus on your core service. You don’t have to maintain a great blog if you provide a terrific ecommerce experience. You don’t need to sponsor that conference, heck you don’t even have to speak at conferences. Stripping away activities that are not core is the best way to help your organization to focus on that core. I find this most fun of restructuring work.

2. Everything has its place Your org chart is perfect when every new task like “talk to a new customer”, “be responsible for the product launch” has one clear and logical owner. If you leave room for interpretation who will do a new task, then your boxes are not well defined. If some areas drown in work while others have time to do side projects then the card board boxes of your organization need resizing. Do that test with all new stuff that you come across. It really is worth fine tuning. Labeling the boxes means to give people good general understanding of everyone’s job with distributing the org chart and keeping it up to date.

3. Small and measurable tasks. This is probably the most obvious rule. Nevertheless we see many IT projects fail because they are invariably too big and complex. Rule of thumb: cut the “six week projects” into “one week sprints”. While the six week project won’t be finished after three months, you will probably find that you only need three “one week projects” in the end.

4. Do everything only once. One of my biggest frustrations in my companies: Projects are being started, discussed, delayed, restarted again and again. My lesson as someone who is often guilty of changing his mind: If something is in process of being done then let people finish it. Try to reach decisions quickly and then end the decision making process. This is hard with constantly changing information, but necessary. Do everything once is a rule which will make your product team smile.

There are tons of books for organising companies. I find that if you stick to these simple principles, you can’t go very wrong.

May 12

How to take a startup across borders

This text is a slightly longer version of my contribution to the May 2012 edition of WIRED UK 

Taking companies across borders is incredibly rewarding and also sometimes very challenging. Here a brief summary of some lessons learned. There is no right or wrong for all businesses. For some models you need to build a local salesforce, sometimes you can get away with just having a great central Search Engine Marketing team. Sometimes you need to do both.

Most companies chose to have product central at HQ and sales regionalized in other markets.This is tried and tested and works well if your product is „one size fits all“ like a facebook or Google. The limits to this system of a stong HQ and relatively weak satellites start to show if local tastes and preferences differ too much, or if the sales process has to be adapted massively.

I have seen many satellite offices where people did feel marginalized and unhappy because they had no influence on product direction or felt that top management did not understand their regional needs.
Some recipes to reduce international friction:


  1. Get local the local staff to work from the central office.
    If you are in an attractive location like London or Berlin, you can get the people from other countries into your HQ. We have done this for 9flats in Berlin. Currently we have 14 different nationalities working at 9flats. We have French, Italian and Spanish people who moved to Berlin to do local marketing in their home markets. Hence if something is not right for Italy, people will go up to the development guys and tell them until they fix it.
  2.  Hire key people from other countries.
    At Qype we had an English  CTO, French COO, and today we have even a British CEO for Qype, a company headquartered in Hamburg. At 9flats, our CTO is Mexican and our head of sales is from Russia. I like the culture this creates and it has worked very well for us.
  3.  Check you assumptions.
    People might say similar things but their different cultural context will associate totally different meanings. „Consider it done“ means something totally different in different cultures. I was often surprised, that our spanish colleagues often had a more germanic approach to work than the Germans. And language is more stressful than most people admit: I found that people do get tired more quickly if they have to run meetings in English.