I recently got a call out of the blue from Gruenderszene, a subsidiary of Business Insider. They asked me rather personal questions. In the end, this turned out to be a nice story.
Please read the original version in German here.
I recently got a call out of the blue from Gruenderszene, a subsidiary of Business Insider. They asked me rather personal questions. In the end, this turned out to be a nice story.
Please read the original version in German here.
With Putins war in the Ukraine, it is vital to defend ourselves.
My heart is with the victims every day. I sit firmly on the side of the invaded people in Ukraine. The images in my mind are children in shelled buildings and of of charred bodies of 18 year old conscripts in Russian tanks. Both are not shown.
But let us not forget that this is an information war as much as a real one. Putin is using psychological operations, PSYOPS. And the target of these psychological operations are not just the Ukrainians, but the entire Western world.
If you’re reading this, you are probably part of the information elite: We know how to mine twitter for sources. We have learned to digest research papers. Now we are rapidly becoming experts in Russian military technology and psyops. We are adaptable. Many of us work in the IT sector and rapidly changing environments. Most of us know what an exponential function looks like, because we have experienced them.
I consider myself as a part of this elite. I have run content for the largest media website in Germany. As an engineer I know how to dive deep into technical details. Like many of my peers in startups and in venture capital, I have been trained for more than 25 years to digest information and take quick decisions under uncertainty. For more than a decade I have been mentoring founders and CEOs and know that we often feel alike. Because we are as a group so good and quick at digesting information, we now face new challenges for our mental health. We are definitely the first generation of humans to be hit with so much new information in real time. And we still have the same emotional setup as all other mammals, with our stress hormones flooding our bodies.
Let’s start this piece on Putin’s war with our emotions during COVID, because you will recognize most of them.
COVID lost its sting a couple of months ago with the less lethal Omicron variant, vaccines in the west, cumulative immunity in less fortunate countries. On February 24, 2022, Vladimir Putin ended the COVID pandemic. At least with respect to our attention.
Now let’s look at Putin’s War
So how do we do our emotions that I describe above stack up now?
1. Feeling powerless or having lack fo agency. During the first days of Putins invasion, it was hard living in Germany where the government only had promised helmets. Predictably, I ranted on twitter, shared the latest news and analysis. My attitude changed dramatically , when Olaf Scholz and the other members of government gave their speech on February 28 which turned the entire policy in Germany by 180 degrees.
I believe this feeling of lack of agency is currently subdued, as many of our wildest dreams about what we would like to do, like exclude them from SWIFT, take Oligarch’s yachts, are coming true.
But as this is pyschological warfare, Putin knows exactly how to make us feel powerless. He wants us to feel paralaysed. So he will produce precicely the images that he needs to produce. Shelled buildings, dead children. If you know that you are the target and you know that the desired emotion is feeling powerless, then you are less vulnerably to that. At least that works for me.
2. Fear. Putin has played the nuclear card forever. There is plenty of good analysis: Take it seriously, but remember it is much more valuable as a threat. In the same way, Putin knows of the Western fear of nuclear fallout. This is why he is attacking nuclear power plants. Most of our fear here is irrational. The effects of Chernobyl were much less than our collective fear. Putin knows exactly where he wants you to be emotionally. Fear not. Because he wants you to fear.
3. Being too fast. The information elite is not suffering from too much information. We are digging in. Last month we digested COVID research papers, now we have immersed ourselves in the delicacies of Russian warfare. We have ingested why the tires in the Russian tanks don’t work, including which brand of tires was purchased from China.
Contrary to COVID, the gap in time between the elite and the governments has vanished. It may have reversed. The US government in particular seems to have been very accurate in their warnings about the next steps in Russia. Germany surprised us positively, as did Turkey with their blocking of the Bosporus. Maybe things have reversed here in comparison. Governments seem to be doing ok.
But prepare for this war to go on for a long time. You may want to tune out of the details at some point to prevent yourself going mad with too much information. As this information is carefully curated by both sides, be aware that you need to protect yourself. You are a target in an information war.
4. Dealing with Uncertainty. When friends ask me how this will play out, I am reasonably comfortable in telling them: Here are likely scenarios, but I don’t know. None of the experts could predict that the invasion would go so slowly. I am comfortable with the fact that I don’t know. People in tech bubble can work with uncertainty, sometimes it helps giving time and attention to others who can’t.
5. Apathy. This will certainly come. If the war rages on for a long time as many people fear, then we will become accustomed to ever more graphic details of atrocities. We will again feel this will go on forever. Like COVID. But it won’t.
6. Acceptance. The cold war was a normality. While this war is much worse and we have an obligation to do what we can to end it. We must live with a threats and carry on with our lives. As much I will engage in helping individuals from Ukraine and from Russia, I will also get on with my life. I refuse to be held hostage emotionally by the dictator.
What is Stephan up to?
– Mentoring startups through Creative Destruction Lab
– Product strategy and organisational structure for larger startups.
– Researching sustainable aviation.
Spending more time in Europe these days, my Q1 2020 was dedicated to help Gunnar Froh, the founder of Wunder Mobility to refine the organisational stucture of his startup. Wunder has recently closed a $ 60 million round. I worked first as a coach and then in a very hands on to streamline the organisation. We were able to streamline the business. The Wunder leadership team bolted on a new acquisition and could focus their growth on the most promising areas.
COVID obviously disrupted my life along with everyone elses. I feel we were lucky to have a relatively mild lock down in Germany. Most of my mentoring is remote anyway so that continues unchanged.
In my own venture portfolio, COVID has not slowed things down. At least two of the 15 founders I have currently the pleasure of working with completed funding rounds in Q2, and several companies, including Wunder mentionend above, seem stronger now than before.
I am a mentor at the Creative Destruction Lab in Toronto since 2016. At the CDL, I will focus on Oxford, where I am a mentor in the AI and health stream. Recently, I joined CDL in Paris in the climate stream.
I realised how much I enjoy the operator role and high pressure situations. Organisational change, restructurings and particularly pivots have been my life blood over the past 20 years. I intend to do more of this.
If you take this blog as an account over the past couple of years, you see a strong interest in the environment (I cofounded Avocadostore.de, Germany’s eco marketplace), technology (I started out as a mechanical engineer with a thesis on fuel cells), and also in aviation.
If you add all these things up, you won’t be surprised to learn that I am currently putting a lot of research into sustainable aviation.
I hope to be able to shift this research project into something real soon.
(I am writing this from a cottage in Quebec with 5% battery left, so no perfect formatting…)
FLIO is in process to be sold to SOS Travel SPA in Italy.
If you are a user of FLIO, this means that you get to continue to use FLIO, the most used airport app in the world. FLIO has now more users than ever before and nobody else in the space comes even close.
For me as founder, this is the first business in my career where I have lost money, as have our investors. As I spend most of my time these days mentoring startup founders and investing in early stage deep tech and AI startups, I would like to share a couple of learnings.
The opportunity. “The golden hour on the sixth continent”
This was an article in The Economist which prompted me to to move into the airport space. Passengers are confused and stressed at airport, at the same time, the “trinity” of airports, retailers and travel brands make a lot of money with them. And they are all very far from being digital. And the industry is huge, global and seems forever growing.The business logic was to build something that is useful enough for passengers to find mass adoption, then charge the industry for advertising on it.
Most of my VC friends passed on FLIO. The ones who I respect most now gave me one reason: A oligopoly in supply is not a good bases for a marketplace.
I was not held back. There are more than 300 commercially relevant airport in the world. So we got started at the very end of 2014.
Here is a rough chronology how we evolved FLIO:
Phase 1. 2015 FREE WIFI AT AIRPORTS
In its first incarnation in 2015 we built a hack to log people into the varying free wifi without having to fill the often stupid questions airports asked before they let you in. This worked often. But we could not get past the Boingo portals, which are most used in the US. Worse: whenever we successfully logged a user into the Wifi, passengers complained that the Wifi was slow and buggy. we could never fix poor airport Wifi, and they were very poor in 2014.
So while our customer acquisition was flying, we did not have a great product then. Many people are surprised when we tell them today that Flio is not about airports wifi anymore.
Phase 2. 2016-2017 FIND WHAT YOU WANT AND GET A DISCOUNT
In a pivot, we worked with some of the largest food & beverage companies to provide discounts, maps and directories. The logic was that very often you don’t find what you want, and both airports and retailers have no way to personalise and experience. We we were thrilled to have very positive feedback from some of the largest duty free retailers (did you know that the largest airport retailer has more than 40% market share globally?).
We had lots of discussions, and also sold some advertising campaigns to top brands. Yes, airports are the most expensive environment to advertise in, so why not extend this into our app.
There were several problems in this phase:
We were not that exciting for passengers (discounts?), and while we had a good liquidity in our market place in some pockets like the UK, we were far from having a global footprint.
While our cost to acquire customers was super low, they just did not stay. Our user numbers did not develop as fast as we need them to grow in order to justify continued interest from advertisers.
Most importantly, even though some of the very largest retailers scheduled meeting after meeting with us, it took us too long to realise: Retailers were not prepared to pay us any money. They did like to work with us to show to the airports how digital they were. But retailers did not need us in 2017. The way the industry works is: Retailers bid long term contracts with airports. Nearly all of the profits go to the airport, hence the profit margin of a well run airport is very high. The profit margin of even the best run retailers is extremely small. While we were always able to generate some extra margin, we did not move the needle for them, at least not in 2017.
If you are a founder of a startup depending on industry buy in, always ask yourself if they take a meeting to look good internally or if they genuinely need you.
Phase 3: 2018: The best flight tracker
In order to overcome FLIOs problem with not enough repeat users, we built a very very good flight tracker. You connect your calendar to FLIO and FLIO updates you on late departures, gate changes etc. We worked with generally available data sources, large airports and airlines directly, and were able to build a really good flight tracker which fixed the problem of repeat usage. That increased our usage dramatically, but pushed us away from our original USP.
Phase 4: 2019: Predicting what happens at the airport.
Based on my work as a mentor in the Creative Destruction Lab in Toronto, I finally had the realisation that we had to offer true innovation for passengers to be truly useful. To put it bluntly, we realised that the industry would never pay us and we had to make passengers love us.
We built two, I believe amazing products:
Both are super useful, and nobody else offers these tools to passengers. Also both were technically not possible even 12 months earlier as phone accuracy was not enough and the databases were not available to use for the second problem.
In Phase 4, this year, I was truly excited in the potential of FLIO again. We finally had discussions with VCs again despite being on the market for so long. We spoke to strategic investors which looked promising.
As you can guess by now, these four iterations meant that we lost too much time. We were never able to raise a lot of money for FLIO, our investor from Phase 2 lost patience with us through Phase 3 and had no interest in Phase 4.
In June, it became clear that we would not get fresh money quickly. We had taken too long and were stuck with a capable that did not look great for new money coming in.
So now, FLIO GmbH, the German subsidiary which actually runs operations, as well as the assets from FLIO Ltd, a UK company have been sold on to SOS Travel who already have a model to make consumers pay. The parent company, FLIO Ltd UK has been put into administration as the lead investor, who gave the latest investor as a loan, did elect not to convert this investment loan into equity.
Most staff of FLIO have long found other opportunities. If you read through the above you can guess that we’ve found and kept excellent developers who were able to excel at any new challenge once we finally gave them to them. As for the sales people: Anyone who has worked selling something successful that was always „too early“ must have been stellar. Our content team and business analysts are amazing. So I am hugely grateful too anyone who had devoted their energy to making airports less confusing and less stressful.
For me, this means finally freeing up valuable time and being able to focus on working with deep tech which does excite me massively. One of the startups I work with can help people get the best treatment for cancer. One can help aircraft engines save fuel. One will help monitor global methane emissions. Lots to do.
As a mentor to startups after 6 successful startups and now one partial failure, I am more sensitive to the following topics:
The tech industry – which I am a part of – is full of contradictions: The same people who think that we can live forever or fly to Mars, shrug their shoulders when you confront them with the subject of global warming.
I’ve always been concerned about the environment. As an engineer the waste of resources and our trash culture was always painful to observe. I did my bit like co-founding avocadostore.de which is a marketplace for eco-friendly goods.
Over the past 15 years it became increasingly clear that wasting resources is much less of a problem than global warming.
In a typical boiling-frog-scenario, we were all content with green washing, some trash separation, believing that our next car would use less gas, and a general feeling that technology, exemplified by LEDs and solar energy will eventually solve our problems.
The approach so far is not enough. We will have to change.
I am so delighted that the kids of Fridays for future were the first to wake up. They can’t do it by themselves. We all are in this together. I am convinced that we can succeed in this massive challenge for humanity.
In a similar way as previous generations had to win two world wars for civilization to continue, I believe we will win our war on climate change.
It will not be enough to change our individual behavior, as industry and business try to convince us. We as voters will need to influence our political environment of all parties that we need new guard rails for business and industry. A new playing field.
Being able to anticipate shifts in attitudes and behaviors has fueled my entrepreneurial trajectory.
I see such a shift now, and I will be part of it.
As Warren Buffett has become mainstream, it is now easy to confuse the forest and the trees of the headlines. I made my first trip to the annual meeting of Berkshire Hathaway in 2008 and have been to the event seven times in total. Going back to Omaha is not so much about learning something new, but to be reminded of the important bits that I forget in between. Buffett and Munger consider themselves business pickers not stock pickers. They offer wonderful food for thought for entrepreneurs.
The best Interviews and speeches:
The essence of Charlie Munger and Warren Buffett in writing:
Many of the books about Buffett and Munger obscure more than they reveal: As both are very good communicators, it is always a good idea to read the source:
Some of the blogs that I enjoy most:
One of my favorite bits of experience sharing with entrepreneurs is: “It’s a marathon, not a sprint”.And when I coach other founders, I keep telling them that it takes a long time to build a great business. Gareth Williams, the CEO of Skyscanner just reminded me of this in his interview, when he said that Skyscanner’s first month’s revenue was GBP 46 after 2 years. The fact that you have to focus for a very long time to become successful, is much harder to accept for my own companies.
Flio has now been live for more than two years, and we’ve been working on Flio for three years. I’m glad to say that our monthly revenues are very healthy, but nevertheless, it feels like there is still so much work to do until Flio becomes as relevant as I think it deserves. So when Flio becomes visible like here in Amsterdam Schiphol airport, we’re obiously very proud as a team. As a passenger, you can find official Schiphol content on Flio and tons of great deals.
Should you take advice from a guy who draws cartoons for a living? Generally not. Scott Adams, who does the Dilbert comics, is the exception to this rule. His book ‘How to Fail at Almost Everything and Still Win Big’ is one of the best books about life and happiness that I’ve read recently. It has triggered this piece. (EDIT 2017: Since I posted this, Scott Adams has correctly predicted Trump winning the elections, however, he then turned into an unabashed self-righteous Trump-supporter and continues to explain the worst US president in history. I keep this post as a document, nothing is wrong with the book recommendation)
As entrepreneurs, most of us are goal achieving machines. At least those entrepreneurs who are successful. A lot of my close entrepreneurial friends are fantastic in achieving their goals. In our organizations, it is much easier for people to work together if there is a common goal.
I am by all accounts good at achieving goals. Get a great university degree, become an entrepreneur; study abroad, buy first apartment, build a company, get funded, sell company, raise a family, to do only things that have a meaning – whatever I set out to do I’ve achieved- with the exception of achieving some ideal weight.
If goals are so great, then what is wrong with goals?
After each goal I achieved, I fell into a hole until I would find a new goal that I could go and achieve. Worse: During all that time, few people would have called me content. In order to be good at achieving goals I probably needed to not be happy with the status quo. In my experience that you can generalize this:
Most overachievers pay a high price for their achievements – they are never happy for a long term.
Over time I did improve. In the past couple of years I changed. I started to define a great day as a day when I spend time with my wife, my kids and do some great exercise. A good day is also defined by having meaningful intellectual exchange with people I respect. So a good day really doesn’t have anything to do with achieving more, or having more.
What does this have to do with Scott Adams’ book? Adams provides many more examples and a framework of goals versus systems:
“Goal-oriented people exist in a state of continuous presuccess failure at best, and permanent failure at worst if things never work out. Systems people succeed every time they apply their systems, in a sense that they did what they intended to do. The goals people are fighting the feeling of discouragement at each turn. The systems people are feeling good at every time they apply their system.”
In personal life, going back to dieting: losing 20 pounds is a goal that is usually always doomed, while focusing to change your habits for a different diet is a system that will last.
As a serial entrepreneur, I have evolved my system of identifying a market niche which fullfils a genuine user need, using an intact reputation to get the best possible people on board, acquire capital without over promising and executing fast. But I don’t have a goal of “x million in y years”. And I am certainly more happy for it.
In investing, I trained for years to identify companies that have evolved a great system. A company an idiot can run, to paraphrase Warren Buffet. Buffet has built one of the best systems himself with building a company that automatically increases earnings over time. Regus plc has built a system to constantly increase their office space without taking on the risk involved. In Germany, Rocket Internet is a system that can churn out companies at a bigger scale than anyone else.
Speaking of Buffet: As I attended Berkshire’s annual shareholder meeting for the 5th time this year, I realised something in the way Warren Buffet spoke about a recent acquisition in Germany and potential future acquisitions.
I had foolishly assumed that there was some kind of big plan for what he does. But: There is no big plan: They made decisions to acquire companies within less than a day. Buffet just happens to have a system of capital allocation and a certain pattern for companies that fit into BRK. And he communicates which companies might fit, wanting to become the preferred buyer for certain sellers. – A system without goals.
“If you do something every day, it’s a system.
If you’re waiting to achieve it someday in the future, it’s a goal.”
To close with one of my favourite Zen quotes:
“Before enlightenment: Chop wood, carry water.
After enlightenment: Chop Wood, carry water.”
Too many people have asked me over the past couple of weeks: “What are you working on right now”. Time for some communication – and a rebrand.
Over the past year I have worked with several startups that I advised or invested in. I’ve learned that I am most efficient when I can leverage my own preferences and my own experience into the future.
So far, I’ve done “local” quite successfully with Qype. I’ve done marketplaces with 9flats (large) and Avocadostore (small). Before that I did a lot of media, ranging from the small GEO.de to the extremely large Bild.de. I’ve advised or worked for companies in Fintech, in eCommerce, in Pharmaceuticals (DocMorris). I’ve had a lot of exposure to the travel scene with travelchannel, lastminute.com and again 9flats.
And I’ve always shied away from gaming, gambling and payday loans. I only want to do meaningful stuff. This has worked really well for me during the past 10 years.
In summary here is the common ground in
Enter Density Ventures. I think there is a common ground between local, marketplaces, smart cities. I enjoy discussing strategy with my friends at yell.ru (a Russian Qype, funded by Kinnevik), or expansion with wundercar as well as micro location with BeaconInside. It all seems to work well together. Here is a link to the Density Ventures website and my current portfolio.
A new startup: FLIO. As part of Density Ventures, I am currently working with several people on a new “focus venture”, which I hope will be much bigger than Qype. I can’t say too much about it at the moment, but it will be an app that every one can use at airports, register here to see when it will be launched: Getflio.com.
Last week, my friend David Rowan called me a “one person accelerator”. But in reality, I just enjoy doing two things at the same time, being an investor – selecting and supporting future startup successes and also being a businessman or an entrepreneur. Hopefully I can continue to alternate between these roles. I certainly can confirm what Warren Buffet is claiming: Doing both makes you better at both.
P.S. What gives, what won’t be part of Density Ventures?
Media. I still love media, but I’d rather do this in a different context. I would love to see a news app that actually makes money. Or an advertising model that pays for great journalism. Media won’t be a part of Density Ventures. And eCommerce. I love eCommerce, but at the moment it seems like a game of losing money today for market share in the future, which I don’t know how to win.
I recently did a couple of speeches for founders. One was in front of 1400 people at the Bits and Pretzels event in Munich. I’ve found that one of the keynotes that gets the most attention is my take on the entrepreneurial roller coaster.
With the massive startup advice that is dished out to founders there are two misconceptions.
The first misconception is that you can build startups in days, weekends or weeks. Or that you can fail really fast and do the next thing. And sometimes that next thing is to talk about your failure. In my experience this is not a road to success, but folklore. Good things do need time, although you can sometimes abbreviate with too much money.
The second misconception is the idea that if you have the right company, there is a hockey stick to your growth, if you have just the right concept. Again: If you look behind the scenes and if you have the time to read the accounts of famous companies like twitter or facebook you find that all these people struggled at several points. Success does not look like one big hockey stick. But like many trials and errors, ups and downs. That is the roller coaster.
If you know it’s going to be a roller coaster, you are less likely to give up too early. If you know it takes a long time, you will give yourself more opportunities to iterate.
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
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.
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.
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:
This is a very short post but it contains an essential guiding principle for investors in dealing with CEOs.
At this years Annual Meeting at Berkshire Hathaway, someone asked Warren Buffett and Charlie Munger how they intend to keep their managers of Berkshire‘s subsidiaries. This and another question triggered Warren to explain that he does not do micromanagement of his firms. He said he speaks only maybe twice a year to several of the CEOs of companies Berkshire owns. „If we thought that they needed us to be successful, we would get out“ . He then went further to explain: „Charlie and I like to paint our own painting without someone else telling us to use more red or more blue. And we think that the Berkshire CEOs feel the same and want to paint their own painting“.
This attitude contradicts massively with what I sometimes observe in the behaviour of investors in startups. There is a difference, the argument goes: In startups, we often have inexperienced founders, and sometimes more experienced VCs.
Nevertheless: I strongly believe that most VCs would do well to remember the basic truth in “Painting your own picture”. Nobody becomes a startup CEO because they want to do what Investors tell them to do.
I am a regular visitor to the Berkshire Hathaway Annual Shareholder Meeting in Omaha, Nebraska. I don‘t go there because I hope that something magic rubs off, but because it is a lesson in sanity and clarity in thinking. I have now more than my fair share of Buffett or Munger quotes that I can instantly pull out of my memory and I wanted to share three of the less known ones that have helped me with my own thinking.
Arguably the most important task of an entrepreneur is to assemble a truly outstanding team. I am proud that I was able to bring many great teams together in the past. And I am grateful to work with so many outstanding people at Qype, at 9flats, and at avocadostore. I made many mistakes on the way. It is worth sharing some of my principles in hiring.
Hunt for potential, not for experience
Many people make the mistake of just looking at people‘s CV or likedin profile and look for the ones who‘ve done exactly what you need. I like people with experience. They can save you a lot of money because they don‘t need to experiment. But more important than where people have been is where they can go.
Hire for attitude
People who want to join us often bring rare and much sought after technical or marketing experience to the table. But we often failed with people who had the right skill, but the wrong attitude. I‘d rather have someone less experienced who will really find out how something can be done than an expert who tells me why it can‘t be done. At 9flats, we‘re looking for people with that spark in the eye.
Hire the best for all positions
„Hire the best person you can afford“ has been my mantra for a long time. Whenever I deviated and tried to make a shortcut, I invariably failed. Most people understand the concept of getting great people when hiring really „key“ employees like a CTO. But they fall short of the excellence principle in the „non-key“ areas like office management or accounting. The difference a truly great person makes to a simply average person is striking. In all areas.
Recently I have met an increasing number of extremely successful people with poor ethics. Some on the investments side, but also some who applied for a job. The minute I spot this, I just switch off. I have lost some great potential this way, but I like to think that I gained in the long run. I won‘t give away all my tests here, but one: someone who offers to bring his coworkers to join us, will be shown the door immediately. This is purely selfish. Anyone who brings their friends to join us with them, will take them to the next shop afterwards.
The weekend test
The most important question I ask myself about every person that works directly with me is the weekend test: Would I like to spend a weekend with her or him. If that thought becomes just too stressful, boring or otherwise unpleasant, I just pass.
Pass on opportunities
I‘ve passed on many great hiring opportunities. And I will never know for sure if I have missed some great people that way. But I do know that with most of the people where it didn‘t work out in the end there was some hunch in the beginning. Something was not right. Someone was not exactly thrilled by the person. So my most important rule for hiring is: Don’t hire if something feels not right.
By the way, a link to our Entrepreneur Intern Program (unfortunately German only, will be updated)
For most of my entrepreneurial life, I was proud of being able to handle a multitude of things at the same time. And I did get a lot done. Over the past years, my multitasking has become more pronounced instead of less. Phone calls, Telcos, Blackberry, Twitter, Facebook, Skype, handling people, investors, press: All at the same time.
However, this came at a cost: During the past years I realized that friends became increasingly annoyed that I was always 10 minutes late. My kids got used to addressing me three times in order to get my attention. In the rare events when I was winding down, it took me half a day or so to relax.
Today, I‘m making a conscious effort to really focus on the one thing I am doing. As I‘ve spent more than 30 years learning to do several things at the same time, I am now slowly unlearning that behavior.
The initial results of single-tasking are amazing:
People give me positive feedback about my presence.
I am able to concentrate better on the things I love doing.
My written communication has become more powerful.
It still requires effort, but here are a couple of the things I changed:
The gym used to be the most boring place for me. My time on the cardio equipment was spent thinking about business. I tried music to get me through the time needed. Today, I focus intensely on my movements, my breathing, my pulse. As a result, the intensity of my work outs increased dramatically.
No more push messages
I pull them emails when I need them. And I try to do them in larger chunks. This was probably the hardest thing to change after an 8 year infatuation with blackberry. I find it even harter to reduce twitter and facebook. But the quality of my real life has increased as I decrease my virtual life.
Books and music
I discovered that I can‘t even enjoy music at the same time as reading. Yes I can do it, but I do neither enjoy the book or not the music. It puzzles me how people can do that. So now when I pick some music I really dive in to it. Close my eyes. Or the other way around with the ears…
No late calls
I have started to refuse taking calls after 7 pm. In the past I had investors who wanted to discuss strategy when they had time, around 11 pm. This resulted in me being preoccupied while spending time with the family. I just don‘t do that any more.
Quiet one on one meetings
Less meetings with people in my team. But longer ones. When I talk to people I try not to cover only the most urgent points, but touch on the overarching goals of their area and their ability to achieve those.
Taking time to think
My train commute between Hamburg and Berlin with its poor connectivity has taught me the beauty of spending uninterrupted time to think. I now am actively creating time to sit down, even if I‘m not on the train.
One thing has not changed though: My attention span is still very short. So if I‘m typing away in a meeting that means I‘m not focusing on that meeting, but on something else. Entirely. In general that is an indication that I feel my input is not required in that meeting and I resolve to be not in that meeting the next time.
Angel investors have the most sexy name in the industry. They provide startups with money when nobody else does.
Some aren’t actually angels,
but that is another story…
Many people ask me if I would like to invest in their startup.
Time for some reflections on what to look for in angel investors.
1. The most important thing you want from angels.
When people talk about angels, they often talk about subjects like
value ad, network, perspective, input and so on.
But in reality, you could get that from mentors as well.
When you pitch angels, of course you tell them how
much you value having them on board,
but in the end, don‘t kid me and don‘t kid yourself:
You want the money to start building your business.
And you don’t want to court them forever, because
your time is better spent in building your business.
So you need money.
2. The second most important thing.
Every business that I have been involved in has been a roller coaster.
Fantastic ups, threatening downs.
Key people leaving, competitors walking in,
numbers not growing as quickly as you want them to.
You want an Angel to be relaxed.
Someone who has given you their 30k from
their savings account is not relaxed.
The third thing you want
You don’t want much of their time.
Some of the best angels I have are really hard to reach,
will listen only for a limited period of time but help tremendously.
The worst angels are people with time on their hands.
Giving lots of unsolicited suggestions.
At worst: looking for a job in your company.
You want their experience.
You want them to be experienced either as angels or as entrepreneurs.
So they know when not to bother.
More importantly, they should know when and how
to give you the essential messages you would otherwise not listen to.
So they can look at the business with the outside view and give you the two or three hints that you need to go into the right direction.
So they pull some weight with you when they see something coming that you don‘t.
That they do have something to say in the rare cases when you need advice. I have received some great input from the experienced guys.
A word of caution.
Not all angels are angels. Some people are actually sharks.
You will see that in their business terms.
The people who blog or twitter constantly about themselves in the world:
For me, they have not done much. The really good angels I met are often
very restrictive with what they say in public.
The people who boast beforehand about how much they would do for us?
never heard again from them afterwards.
I like to keep all my angels for the long term:
I have always found that it pays well to keep them informed,
albeit I still don‘t do this enough.
Try not to surprise them; if there is some rough terrain ahead,
I shout early as they are along for the ride.
It is also a good idea to help them make money.
As you may have gathered,
I don‘t consider myself a great angel investor.
In fact I invest very rarely and cautiously.
I do have to earn a living and hence
I‘m not relaxed enough to trust other people with my money.
I am a master of the to do list.
I’ m quite good at getting stuff done.
Both in business and in private life.
I do even better with my long term goals:
Write them down, forget about them and
a couple of years later they are achieved.
I don’t mean this ironically.
It is a fact of my life and most people would envy
me for my ability to get stuff done.
A few of my friends are even better
at this game than me.
Entrepreneurs who are even more determined than me.
They achieve bigger goals, faster than me and
and then move on to the next one.
But recently I picked up on some strange signals that make me
want to get out of this game.I realised that while I felt
some contentment about achieving a lot,
my happiness did not increase with getting more accomplished.
One trigger was a simple statement,
picked up on twitter:
You are not your to do list.
Later, over Christmas,
I read a book with the rather blunt title “fuck it”.
It’s more refined message is, in my words:
We attach so much meaning to so many things in life,
that we become too attached. And we miss life on the way.
Leo writes about a lot of the things that
I’ve been doing for quite some time now.
Getting fit, consume less.
Our home is actually quite minimalist
and I work a lot to keep my life simple.
– Er, repeat that: I work a lot to keep my life simple.
Phew. There I said it. There must be a better way to do this.
I don’t want to work a lot to keep my life simple.
Do less. Want less. Breathe.
I have read this great book by Matt Ridley, but did not really know how to shorten it appropriately to derive the essence for a blog post.
So much for the better that I discovered this Video on TED.
I have rarely seen a more inspiring and fascinating view on human development, prosperity and how it all goes together. Enjoy.