Building an Enterprise Startup in Germany

An Interview with Dr. Michael Keppler, Business Angel and Co-Founder of ICON Supply Chain Management

While attending the mentoring circle at CyberForum Karlsruhe, I had the pleasure to meet Dr. Michael Keppler. He is a mentor, business angel, co-founder and former CEO of ICON Supply Chain Management, Karlsruhe.

Dr. Michael Keppler

Dr. Michael Keppler

Together with a friend from the University of Karlsruhe, Dr. Keppler started ICON in 1992 and developed the company to become technology leader in the supply chain planning and collaboration domain.

Dr. Keppler and his co-founder managed the company through the key transitions that characterize a high-tech enterprise business: from the startup stage with a lot of custom project work, to a scalable products business, and finally, to the exit, selling ICON to E2open in July 2013.

His experience is invaluable to startup founders. So thanks to Michael for sitting down with me and sharing some of his lessons learned, as well as his take on Southern Germany as a location for tech startups.

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Vesting of Founders’ Shares – Basic Concepts

© Juli jk5854 / flickr, CC BY-NC-ND 2.0

© Juli jk5854 / flickr, CC BY-NC-ND 2.0

In my last blog post, I presented some ideas for determining the split of a startup’s shares among the founders. Another question that should be addressed in this context is the vesting scheme for founders’ equity: basically, what happens when a founder leaves the company earlier than expected?

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How to Split Shares among Founders of a Startup

© Stéphanie Kilgast / flickr, 2009

A German startup I’m working with is preparing for its initial incorporation. In this context, the topic of how to allocate shares between founders came up. In Germany, startup teams often default to allocating shares equally between founders. However, that is not always fair and may lead to resentment in later stages. In this article, I’ll share some ideas that are used by tech startups in the US.

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Internet Find: How to Make (Board) Meetings Suck Less

I came across this recent article on the “The Review”, the online magazine of First Round Capital: “The Secret to Making Board Meetings Suck Less

Drawing primarily on the experience of Jeff Bonforte, a serial entrepreneur who sold his last startup to Yahoo, the article is full of practical tips how a CEO can turn a board meeting into a working session that is productive for everyone – instead of a trial-like situation where everyone gets to shoot the CEO.

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Internet Find: Do Things that Don’t Scale by Paul Graham

Back in July, Paul Graham – founder of famous accelerator Y Combinator – blogged about how startups get started, by (initially) doing things that don’t scale.

That’s a theme that I’ve seen popping up quite a lot in the last few months, for example at the Product Management Festival in September, the presentation from Thomas Arend from AirBnB advocated that approach as well.

Paul Graham provides several examples how successful startups in their early stages recruited and retained users through quite laborious, manual efforts that clearly wouldn’t scale to accommodate a larger user base:

“… if the market exists you can usually start by recruiting users manually and then gradually switch to less manual methods.”

Not Only for B2C Startups Selling Through the Internet

While Paul’s examples are mostly from B2C startups that serve customers through the web channel, I see the same happening with B2B sales efforts of startups that I’m coaching: here as well, initial customer acquisition is often quite manual, with the founders personally recruiting one business customer after the other.

This way, the founders learn not only a lot about B2B sales processes – which is something that founders fresh from university usually have no prior experience with.

This is also a great way of learning even more about the market their business customers serve, which helps them to further sharpen the value proposition of their product.

Moving to a Digital Business Model – Opportunities and Challenges

Caution HOT! Digital Business Models

© Pitopia, Wolfgang Demmel, 2010

At the first Product Management Festival that took place in Zurich last month, I had the opportunity to speak about a topic that has been fascinating me for a long time: how cost structures for digital products are fundamentally different from those for physical products – and the implications this has for business models, and even company culture:

“On one hand, digital business models present unique opportunities: they enable new pricing and revenue models, such as Freemium, and they can generate profit margins that are simply impossible with traditional models.

On the flip side, digital business models present unique challenges, for example the need for extreme speed and agility, cultural challenges, and a higher risk due to a tendency to promote “winner-take-all” market structures.

In conclusion: even if your company’s heritage is in the world of traditional (physical) business models, with “software eating the world”, there may be attractive digital business opportunities available to you. However, do not underestimate the amount of change that this switch demands from your organization.”

The slide deck is available here (PDF) – it highlights how the unique properties of digital business models are tied back to their cost structure, which is characterized by low variable cost and therefore, low marginal cost.

Special thanks go to Dirk Haun: Dirk is the author of “Presenting for Geeks” and he kindly helped me turn the initial draft into my first slide deck in the visual presentation style, following the rule of “one idea per slide”.

The PDF (extended slide deck)  includes these core presentation slides, plus additional pages that provide part of my “voice over” from the talk and the detailed cost structure data. These additional pages (obviously) do not follow the visual presentation style.

Internet Find: Peter Levine On How SaaS is Shaking Up the Enterprise IT Market

The latest blog post from Peter Levine is part one of his SaaS manifesto. Here, he discusses the market impact of what he calls the “departmentalization of IT”: business departments increasingly procuring SaaS solutions on their own, bypassing the IT department and the CIO.

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This Fall Is All About Software Product Management

Keywords - Certified Software Product Manager (CSPM)

Product management, in particular product management for software-based offerings, is attracting more attention recently.

Evidence: several specialized events this fall that provide software product managers with opportunities for experience sharing and upgrading their skills. Events include the ProductCamp Berlin,  Product Management Festival in Zurich, and several Certified Software Product Manager trainings – including the training I offer in Stuttgart in November.

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Lean Startup – Entering the Enterprise?

On August 3rd, the first LeanCamp Stuttgart took place. I’d like to say a big thank you to the organizing team, especially Daniel Bartel and to the event location: Coworking0711, the one and only co-working space in Stuttgart.

It was a great event, hugely inspiring – and very intense. All of that I had expected, actually hoped for.

But what quite surprised me was the number of corporate participants at the event.

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Internet Find: The Hardware Revolution is Upon Us And Why It Matters

This week, I came across a great article on the True Ventures blog about hardware-focused startups – why we see more and more of them these days, why True Ventures loves to invest in them, and what founders of hardware startups need to do differently.

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