Roland Dürre
Sunday August 31st, 2014

Start-up (6) – Founders Need Goals?

Columbus had a goal. And some modern knowledge. He decided to assume the earth was a ball. Consequently, he reasoned that there must be a way to India sailing west on water. That would definitely have been a huge advantage, because it would have saved all ships the unpleasant and time-consuming way around Africa.

🙂 Well, as we all know, the Suez Canal did not yet exist at the time.

But then he discovered America and – in accordance with his idea – called the people he found Indians.

🙂 However, the Panama Canal did not exist either, which means that the way to India via the new America would have been even longer.

Basically, we can say that Columbus was way off his mark …

And yet he became a famous man. Some say he changed the world. This is not what I believe: I am sure another sailor would have had the same idea a few years later, which would then have led to the discovery of the new continent. But perhaps such a different sailor would have realized a little earlier that his assumption was wrong and then the Indians would not be called Indians.

It must be the goal of an enterprise to develop business. But then, this is a rather weak goal. After all, it is more like something that goes without saying. To me, this sounds a lot like “every human being should have the goal of getting enough to eat!”.

I think you should take a closer look at the word “goal”, instead of determining your goals too easily. You will find a polemic article about this topic in my entrepreneur’s diary (Unternehmertagebuch eine Polemik ). It is about “strong” and “healthy” goals. Also, you have to differentiate between the term “goal” and other terms, such as “intention” or “success”.

For instance, if I define as my “goal” to work until 8 p.m. instead of 6 p.m. in order to catch up on all the work that has accumulated, then this is not a goal. It is a (perhaps laudable) intention.

And especially in businesses, I keep discovering goals such as “next year, we want to increase our turnover by one million Euros”. As I see it, these are intentions, rather than goals. And there is a huge difference, even linguistically, between “intending to do something” and “setting a goal”. Perhaps this note will make you a little more sober with respect to (often very rhetorically) expressed goals.

”We want to be a success!” – might well sound nice as a goal. But, naturally, this, too, is not a goal. And I do not mean because it is so banal. Instead, you want to remember that “success” is a very individual thing. Consequently, the first thing you have to clarify is what exactly your own and very individual success criteria are. And why they are so important for you. And how you can come to a mutual agreement in your team. Then you could formulate as your goal – both individually and as a team – that none of the formulated success criteria must be neglected and that you wish to finally live up to the criteria as a team by, maybe, 80 %.

Now I will write about the profane goals. A much-loved goal often formulated by business leaders is: “We want to become the leaders of the market (if possible world-wide)”. Or. “We will manage to come up with a USP (unique selling preposition)”. Because we assume that said USP will carry us through the market on wings.

Except that now the market is constantly changing at high speed. And how am I supposed to create a static USP that can be of long duration in a highly dynamic system? How is anybody supposed to describe a goal and set criteria along which to define one’s destination if the coordinates of the market are constantly fluctuating? And besides, my product and enterprise should always take this permanent change as a mark of orientation. If you see it under this light, goals can easily turn against yourself and become a massive liability.

”Healthy goals” will inevitably always be “flexible goals”. But how to explain this to an old-fashioned manager whose only definition of reality is facts, plans and numeric input?

Please do not misunderstand:


I am actually very much in favour of such extreme goals as “becoming the market leader” or “developing a USP”. Except that both the markets and the USB-s are very dynamic. Consequently, the right and constructive goals must constantly change with the surroundings. We arrive at the so-called “moving targets”.

This means that a goal can only look constructive if the goal – along with the assumptions the goal is based on – are constantly under scrutiny and permanently adapted to the never-ending changes in our world. To me, it seems extremely difficult to get a grip on these challenges with instruments and tools. You will easily end up in the situation of the poor hare of the fairy tale: “The Hare and the Hedgehog”.

Perhaps it is time to again remember “entrepreneurial intuition”? I am sure this is also a dangerous path, but perhaps it is no worse than the alternatives.
And you should always keep in mind that, even if you reach your goal exactly like planned, this is still far from a guarantee for your success. The results you achieved through reaching your goal will probably not be as optimal as they looked when you first defined the goal. Consequently, reaching your goal will have far less value than you had initially assumed.

The worst case is that reaching your goals actually is detrimental or even fatal. Because your surroundings have changed completely. There are many examples for enterprises where the great goal was achieved and shortly afterwards they had to liquidate. You only have to think hard!

Let me finish this article, too, with one of my very attackable comparisons:
”Entrepreneurial Life” is something you can understand like a Sailing Trip (Segeltörn). Together with many others, you steer a ship. It crosses in the winds, survives many calamities and eventually reaches the harbour, regardless of all the challenges. A true entrepreneur should be very careful not to fall victim to “thinking in terms of the Titanic” and then end like the Titanic.

RMD
(Translated by EG)

Roland Dürre
Wednesday August 27th, 2014

Start-up (5) – Coincidence as a Founder

As a third type of foundations, after the “pragmatic” and “mass-produced” ones, you could name the “founding through coincidence” or at least “with the assistance of some coincidence”. Just like, if you have a detective story, the culprit is often found by “superintendent coincidence”, the founding of a company is also often fathered by a coincidence, or at least it determines success or failure.

For instance a chemist discovers a new paste with particularly much power and develops a very special glue based on it. An innkeeper fills one of his barrels with something that should go elsewhere and you get a new drink. A computer scientist creates a new app in order to make his own life easier. He shows it to his pals and they say: “Wow, we also want this”. Another computer scientist develops some software to better communicate with his friends about girls. …

What would have become of Microsoft if IBM had not been sent by coincidence?
🙂 small and soft?

What would have become of google? The founders had written a “crawler” in order to download interesting internet pages overnight and store them, because at the time, “www” was short for “wait, wait, wait“. However, nobody was interested in this new function, because, after all, “surfing” is a dynamic process. 
Consequently, the two guys thought about what they could do with their “crawler”. And then they used it to build a fantastic search engine which, thanks to its simple “page rank”, can even weigh and structure the pages. 
People (including Wolf and me) liked this – except that the Google founders did not earn any money with it, either. Which is why we all asked how long the nice google will live.

And then the google people came up with the idea to offer “adverts” on their search engine. As far as I know, the two founders had never intended to do that. But in times of crisis, the “ultima ratio” sometimes forces you to actually try something you were not going to try. And then the turnover through marketing adverts grew in dinensions they had never dreamed of and lo and behold: they became a real success.

What would have happened if I had never met Wolf Geldmacher? Would I have started early retirement as a frustrated Siemens employee five years ago?

As I see it, a successful founding always has three sources:

  • The pragmatic behaviour with the clear business goal.
  • Once in a while special measures in order to promote business.
  • And coincidence, which, when all is said and done, will decide whether you are a success, both on a small and huge scale.

And coincidence, which, when all is said and done, will decide whether you are a success, both on a small and huge scale.

🙂 Consequently, every founder also needs a little luck. And you can certainly enter endless dispute about whether fortune really favours the brave.

RMD
(Translated by EG)

InterFace_Icon_30Jahre_01-94At InterFace AG, 2014 is dedicated to Galileo Galilei.

The three IF Forum presentations all have the motto:
“Cosmos, Humans and The Turn of an Era”.
We will invite Galilei Galileo to “visit us in the present”.

In the first IF Forum, on February, 27th, Jörg Schindler told us about the “Third Turn of an Era”.  On July, 17th, we welcomed Dr. Stefan Gillessen as our guest. He talked about the cosmos with “Big, Bigger, Sharpest”, where we also heard how he and his colleagues do research in this field. Incidentally, many of the presentations are available on the InterFace AG youtube channel.

On October, 23rd, we will have Thomas De Padova with us. His topic is

ThomasdePadova“The Secret of the World”.

Four hundred years ago, two totally different scientists cross the borders of the then known world. Galileo Galilei takes a good look through his telescope in Venice and discovers the Jupiter moons.

He publishes his spectacular findings in »Der Sternenbote«. In Prague, Johannes Kepler cannot stop reading about Galilei’s observations until the end of the small book, because the observations therein fit perfectly with his theory of planetary laws. An exchange of letters between Kepler and Galilei about the new cosmos develops. This is an exciting expedition of human intellectual ideas – and simultaneously it is the Turn Towards Modern Times.


Thomas de Padova
 (* 1965 in Neuwied on the river Rhine) is a German scientific publicist.

De Padova studied physics and astronomy in Bonn and Bologna. Between 1997 and 2005, he was a scientific writer for the “Tagesspiegel”. After 2005, he started working as a freelance scientific author. De Padova lives in Berlin and has been a member of the “Kuratorium of the Magnus-Haus of the Germany Physicists Association” and a member of the program the Program Committee of Urania since 2006. In January and February 2014, he was the “Journalist in Residence” at the Berlin Max-Planck-Institute for Science History. [Text: from Wikipedia]

Thomas De Padova is also the author of the science book of the year “The Secret of the World – Kepler, Galilei and How the Heavens were Measured”, which was selected best science book in the category natural sciences/technology by 20,000 readers in 2010.

The presentation will be on Thursday, October, 23rd, 2014 at 6.30 p.m. – we will welcome guests from 6 p.m. in the seminar zone of our Unterhaching InterFace AG building.

As usual, you can register by sending an E-Mail. As always, we already look forward to exciting discussions and nice conversation!

RMD
(Translated by EG)

Detlev Six
Sunday August 24th, 2014

Strategy is not a Glance in the Rear-View-Mirror.

They might end up in the wrong hands – our weapons.

In fact, it is fairly certain.

The weapons the Western Countries gave Gaddafi are now used for destruction all over the Near East.


With the weapons from the West in Afghanistan, the Taliban shoot today.

The IS drives steel-plated US weapons.

And now we are supposed to provide the Peschmerga with weapons, and even the PKK, which, after all, is still graded a terrorist association in Germany? Because there is a slim hope that perhaps worse from the IS could be avoided by this?
 
Remember the sentence by Kierkegaard:
We can only understand life in retrospect, yet we have to live it the other way around.
A strategic decision always includes looking into the future, which means speculation and risk.

Speculation:

The Kurdish part of Iraq is the one in the region most similar to the West (except Israel). It is possible that an (Iraqi) Kurdistan might develop into a country with halfway Western values (pluralism, democracy, market economy). The hope is based on a lasting connection between the Peschmerga and the PKK with the expectation of stability in the new country. It is accepted that the country of Iraq will disintegrate. It will be split into three parts: Kurdistan, a Shiite state and a Sunnite state. The IS is beaten, the weapons remain in Kurdistan.

The Risk:

The worst scenario would be a total victory of the IS and as a consequence, an Iraq-Syrian caliphate. That would be the most intolerant country under the sun. All the weapons would fall into the hands of the IS.

The most acceptable loss: – after failing in the fight, the PKK will disappear in the Kurdish mountains or in Syria, taking along Western weapons.

You can think of endless alternative between those two extremes.

So far about the visible act of armament decisions.

For us (author’s note: I am talking to the members of the community “Strategic Morals”), the main focus of interest lies in what strategic morals the individual players follow in order to get the weapons deal and (in the case of the IS) in order to get a foothold in the counter movement?

The Kurdish North-Iraqi tell the West:

We are your best hope when it comes to your values.

The PKK tells the Peschmerga and the West:

In the end, the blood of the brothers will always win.

The IS tells their comrades-in-arms and their financial supporters (Qatar):
We are the only ones who can end the supremacy of the West.

The remaining Iraq (Shiites/moderate Sunnites) tell the USA:

Do you want all your sacrifices to have been for nothing?

My prognosis:

The West will provide all the weapons, Kurdistan will be founded and then dominated by the PKK.

SIX
(Translated by EG)

This article was published in the google+ community “Strategische Moral”.

Roland Dürre
Saturday August 23rd, 2014

Start-up (4) – The Mass-Produced Enterprise.

In installment four of my start-up series, I will, after having introduced the “pragmatic foundations”, now describe the second category: “Mass-Produced Enterprises”. Because wherever someone talks “the founding of an enterprise”, he usually means the “mass-produced” foundation process.

For your information: at some time in the 1990, some banks and enterprise counsellors found out that you can easily make a lot of money if you specialize on the establishment of enterprise by young founders. It was no problem at all to quickly get the full support of politics (new jobs) and economy (new business). Patterns from the USA that looked successful were enthusiastically embraced. The country needs new and young firms. Without the slightest scruples, managers and bankers who were no longer wanted, along with would-be counsellors, declared themselves business angels. Politics gave money and many big concerns contributed with other donations, often with the camouflaged goal of winning the ”war of talents“.

Business plan contests were created and monetary prizes were offered. At the universities, activities for promoting and speeding up foundations, such as “UnternehmerTUM” at Munich Technical University (TUM) were established. The university curricula were extended to include founders’ courses, once in a while they even went so far as to offer counselling and coaching seminars. The Free State of Bavaria, especially under Herrn Stoiber, gave more financial subsidies than ever and initiated more activities and infra structures, such as BICCnet.

All of a sudden, entrepreneurship had become chic. On big partiers, the “young entrepreneurs”, wearing their new business suits, met, consuming small sandwiches and beer and listening to great presentations. Nice video recordings propagated a new young generation of founders. And they all wanted to establish a new enterprise, only waiting for the great business idea to present itself …

Regardless of all the effort, the success of all these great events is minimal. Suddenly, the “pragmatic establishment of an enterprise” I introduced in instalment one no longer plays a role in public – regardless of the fact that it still works quite well. At least in our sector, I know quite a few small enterprises that were started successfully and very pragmatically during the last 20 years without the founders ever having attended a business plan contest or a founders’ lecture. Statistics tell their own story – but apparently nobody in the “founding scene” is interested.

Well, so far my criticism. Basically, the “mass-produced enterprise” is all about considerably speeding up the development of an enterprise. For instance because you wish to quickly fill the gap of a technological niche you identified or because you want to take quick advantage of a chance on the market. Usually, you need a lot of money for this kind of thing, because, after all, you want to develop the enterprise very quickly and very professionally. As a general rule, the founder does not have this kind of money.

Consequently, he needs someone to give him the money, for instance as “venture capital”.

Before you know what hit you, such enterprises will start making the interests of the money lenders, rather than those of the entrepreneurs – as would be normal for a “pragmatic founding” -, their top priority. As a general rule, your “pragmatic founder” will plan for his entire life. Handing the firm on to the next generation is actually quite common, too. Usually, the “exit” is not planned.

With the “mass-produced enterprise”, the shareholders plan the timely sale or the entry into the stock market (IPO), of course including a very high profit. With every round of financing, the share of the founders backed by their own capital decreases. Simultaneously, the influence of the money lenders will increase. The remaining motivation for the founders and often also for the employees is the remaining shares of the enterprise, or formerly also often the share option.

I know several persons who actually became quite rich in this way. Companies like IXOS or Norcom are only two examples. At one time, they were right at the top, the founders had made good money – and then the spiral went downwards. These are precisely the few lucky cases the Venture Capital enterprises thrive on.

During this process, most of the investments will be lost. Others will reach their goal without serious damage being inflicted. I know several such cases: here in Unterhaching, we had sub-let some office space to the Xignal AG. Their strength was the capacity to develop extremely fast. Regardless, the financing negotiations seemed to get harder and harder. One day, however, they managed to sell – to the National Semiconductors. After this company was also sold, Xignal was liquidated.

I also know some smaller success stories of synthetically created enterprises: a friend of mine actually managed to find two attractive technological gaps while establishing one company. He certainly made a lot of profit with his options.

Yet the “mass-produced enterprise” reminds me in a disastrous way of a functional and Taylorist way of thinking – which today is outdated. They want to determine success up front, define precise goals and then construct the means towards those goals with instruments of the classic business world. The missing capital is supposed to be supplied by Venture Capital enterprises or federal funding programs.

And basically, this is exactly what the product developers of the big enterprises, too, do. Except that the enthusiasm, creativity and lack of experience of the young founders is supposed to manage what even the enterprises cannot do, regardless of all their many advantages such as money, employees, knowledge of the market, brand, sales and marketing. …
Incidentally, the entire business model of Venture Capital enterprises is one I would seriously question. Doesn’t it sound a little like the lottery, with the motto: let us buy lots of lottery tickets, break the jackpot and then buy many more lottery tickets? Except what to do if you never break the jackpot? …

There might be another reason why “mass-production” does not work in Europe. As often, everybody was full of admiration for what they did in the USA. The reason was that everybody said how hard it is to get capital for foundations in Europe (an assumption that might well be questionable).

And thus, the US of A became our big model in this sector, as well. You just (blindly) imitate what they show you. Nobody ever tries to find out if the US system would fit Europe. The success of young American enterprises, such as Amazon, Apple, Dell, Ebay, Facebook, Google, Microsoft, Oracle, Tesla and many more is too glamorous. Compared to the European “Old Bulls”, such as (still) Siemens, these enterprises are extremely young.

And if you take a close look at all those enterprises I just mentioned, you will discover that all these firms actually were not “mass produced” during their first years of existence. Instead, the history of their founding was always rather exciting and strongly influenced by pragmatism and coincidences.

However, the situation in Europe differs hugely from that in the USA. The many languages and the strong regionalization in Europe necessitate a founding culture that is totally different from what the alleged success pattern dictates. As I see it, the “regionalization” is actually an aspect that might also be a huge entrepreneurial chance. As an example, I would like to cite Sina Trinkwalder and her @manomama, and recommend her great book “You Have to Create your Own Miracles” as a nice appeal for regionalization.

And, of course, even after more than two decades of intense trying and Business Plan Contests, there is not a single German Start-Up which could hold a torch to Google & Co. Zalando, too, is just the copy of an American pattern created by modern alchemists who claim to have found the formula for making gold out of iron. However, such formulas will always attract people who give you money, thus permitting you to start new projects.

But why don’t you take a more critical look at the results (turnover, results, value of the enterprise) and look at how much money has already gone down the drain? And then let us remember all the bankruptcies after the turn of the millennium: it gives you an increasing suspicion that the system will not work.

Let me finish with an example that clarifies why founding an enterprise along the lines of mass production is difficult. It is the story of Dr. Frankenstein. He wants to create a human being and manages to create a monster.

After all, an enterprise is, above all, a social system. As such, it has more similarities with a biological being than with a machine you can control and determine. A machine that gets input and delivers output, thus making the shareholders rich.

RMD
(Translated by EG)

Roland Dürre
Wednesday August 20th, 2014

Start-up (3) – The Pragmatic Way Toward Foundation

Let me try to categorize start-up situations of enterprises in a model-like way.

You get three “types of foundations”:

  • The pragmatic establishment of an enterprise.
  • An enterprise being constructed in mass-production.
  • The foundation with the help of “entrepreneurial coincidence”.

In this article, I will only write about the first of these types (pragmatic). Instalments 4 (mass-production) and 5 (coincidence) will follow later.
More often than not, the first step towards the pragmatic foundation of an enterprise is the move from a job as a regular employee to free-lancing. I know only very few persons who, in our sector, start as free-lancers directly after having finished their university education. Most of them already worked as regular employees, because turning free-lance successfully usually calls for a certain degree of technological and other competence, as well as a good reputation at least in one field of expertise.

Incidentally, the situation for free-lancers on the market gets harder and harder due to the legal restrictions, as well. This is truly a pity, because it also makes the pragmatic path via this interim step harder to follow. It is high time for our legislation to come up with a sensible freelance model on top of the regular employee model. But I am afraid we are not going to live to see this happening. Besides, it is not really what this article is about.

As I see it, the “pragmatic” foundation of an enterprise is the normal case. It also seems to be the most successful. There are numerous examples where, for instance, roofers, coachbuilders, cooks, carpenters, toolmakers…, became self-employed in exactly this way through very logical steps.

If such craftsmen turn self-employed and establish their own company, this is mostly done totally without making a huge fuss about it. They need neither much ado about the foundation, nor innovative “super ideas”. Now you might counter: “we understand this, but this can only be done in the service sector”.

Well: not true! There are many examples of craftsman’s companies where the start was with absolutely innovative product ideas – and then they became a huge success. Especially in the sectors Bikes and Outdoor, I discovered quite a few success stories during the last few years.

The married couple Rohloff started with very innovative bike chains – and later built the legendary Rohloff gearshift, the SON (Schmidt original dynamo hub), the Ortlieb bags and many more innovative products originated with very pragmatic foundations.
My carpenter from Southern Bavaria, too, who started out with his own carpentry as a totally “normal service provider”, simply made his own dog-house a long time ago. He liked it so much that he advertised it on the internet. It became the one of his products with the biggest marge. He can produce it “in between” in moderate numbers.

I know a roofer who founded a small, very normal roofing company. His son extended it to become an enterprise in the second generation. It became the world-wide market leader for special buildings with particularly demanding roof constructions, such as sky-scrapers, mosques, theatres, etc.

And you can believe me that I could come up with an endlessly long list of more examples. In fact, it comes as a surprise (or maybe not) that so few craftsmen ever apply to participate in the business plan contests. After all, for those craftsmen it seems to be a logical conclusion to establish their own firms. Rooted in their competence and know-how, based on a calculation of incoming and outgoing money that is short and easy to understand, without a complex business plan, let alone having to participate in a contest. Of course, once in a while, when – later on – they develop expensive products, they also take advantage of federal promotion programs.

As I see it, the development of software, the establishment and the running of a firm with IT infra-structure and managing IF projects, is also “only” craftsmanship. Actually, “software development as craftsmanship” is now an accepted technical term.

Consequently, most of the enterprise foundations in the IT sector are craftsmen’s and thus very pragmatic foundations. As a general rule, they always write good success stories for several years.

I need to warn you against the “ultimate solution idea” as it is often presented to me during business plan contests. Some of those who present them are really lunatics. I actually feel more pity for them than anything else.

More often than not, the “great idea” is actually not at all singularly innovative. And too often, you will read a telling sentence like this one in the business plans:

“We will probably need most of the required capital for sales and marketing. We assume that we will have to come up with a sum somewhere in the seven-digit range up front”.

This is when I ask myself why the would-be entrepreneurs did not come up with a product or service that the market actually needs? Also: is the magic formula “sales and marketing” really the solution? And how exactly will it look?
The majority of contestants in business plan contests are IT based business ideas (“we will write an app”) and projects in the pharmaceutical sector (“we will create a miracle medicine against this or that illness”). Or else some people want to start big instead of trying out small. Which would be the pragmatic approach. And if an idea gets positive feedback on the market, a realistic financing would also be more likely. A financing where you do not sell your enterprise before you actually have it.

In one business contest where I was among the jurors, a “pragmatic founder” of an IT enterprise was presenting. He was an expert for Androids and Unix. Yet the only reason why he presented at the contest was because he had applied and registered a long time ago and found it a matter of good manners to then also attend. He was an Android expert and simply sold his know-how. As a basis, he had made his own Android Built. At the time of presentation, his enterprise already had more than 50 employees in various countries. The majority of his customers were Asian high-tech enterprises looking for Android and Unix based solutions for their hardware of the “internet of objects”.

Craftsmen or “pragmatic founders” are a rarity in the “big foundation business”. Perhaps they have no time to participate in a business contest? Or maybe they do not see any positive effect in it? It is quite remarkable that those entrepreneurs who were a success in the last 30, 20, 10, 5 or even 2 years never wrote a big business plan. Nor did they ever participate in a contest. Still (or maybe this is why) they were a success.

So my advice for young founders is to be very pragmatic. Do not write a huge business plan. Instead, use your common sense, courage and joy to establish your business and trust in a reasonable cost calculation. Be courageous and have no fear.

And do not participate in contests. It is better to use the time you would spend there and find friends and partners. If, however, this phase is already behind you and you have, for instance, already guaranteed a certain income for a certain span of time, then I would advise you to quickly turn towards the business on the pragmatic path.

In my next article, you will read about how I feel about “foundations as mass-production”.

RMD
(Translated by EG)

Roland Dürre
Monday August 18th, 2014

Start-up (2) – Our Own Foundation (1983)

Since early in the 1980ies, I had been eager to become self-employed. One of the reasons was that (as many founders I know today, too), I wanted to have a word and some responsibility in an enterprise and thus enjoy my work more. Another reason (and, surprisingly enough, not many of the founders I know today share this sentiment) was that I actually wanted to earn more money.

Consequently, I looked for the “ideal partner” (rather than the “ideal business idea”, because, even then, I thought there is no such thing). But it was not easy to even find the “ideal partner”. Luckily, though, I found Wolf Geldmacher after a little more than one year. He brought great entrepreneurial strength and was just as “down to earth” as I was.

With Wolf as my partner, it did not take long to establish the “InterFace Connection Gesellschaft für Datenfernverarbeitung und Entwicklung von Software mbH“, which was the predecessor of InterFace AG. Our fields of interest were IT and Unix. We wanted to build a successful product with the “new” Unix. We assumed that services are hard to scale. Even before 1983 (the founding was in 1984), we feared that Body-Leasing might not be a business with a long life-span. Besides, even in those early days, it seemed to us that the Body Leasing Business is situated somewhere in the legal grey zone. This was one of the reasons why we wanted to actually create a real product.

Said product was the office-compatible Unix writing system HIT. In retrospect, the entire affair was a totally crazy enterprise. Surprisingly, though, it worked. I fact, to this day I cannot entirely understand how this happened.
It only took as a few years to become the most successful Unix text system in Europe by far. It felt like a dream!

Looking back, I can identify persons and important requirements or events without which it would never have worked. Basically, we were moving at the right time and had lots of luck, because everything just fell into place.

The Duo „Wolf & Roland“

Even in the early 1980ies, we believed in “agile, lean and open“. We were in favour of self-organization and self-determination, We communicated our ideas and our expectations and then our teams were allowed to work as they saw fit. It was all done with a huge sense of belonging together.

For software development, we invented and practiced a private method you would, today, call SCRUM. Wolf was the “SCRUM-Master“ (and more than that, too). He was responsible for the technology and the people. He led the colleagues towards delivering quality and made it clear to them that they had to live quality – primarily for their own sake. And I was something like the “product owner”, the leader on the business side.

Anton Böck

In 1960, my parents sent me to the business-centred Higher Middle School “Jakob Fugger” in Augsburg. Later, it was re-named Grammar School, before 1960, it had been called business school. Stenography and typing had been compulsory until 1960, later they were taught on a voluntary basis. My father forced me to learn both, because he considered both competences as indispensable when it came to the real fight in professional life.

Anton Böck was my teacher. I was doing quite excellent in stenography. Whenever I was forced to do some learning at home, I spent hours drawing stenographic symbols. For me, this was just like calligraphy, simply beautiful. I hated the typewriter. Herr Böck was a strict teacher and he rather liked me because of my stenography. Consequently, he forced me to practice on the typewriter. As a result, I dreamed what characteristics a “nice” and “lovely” typewriter should have as early as by the age of 16.

Well, it might sound ridiculous, but I am quite sure that, without this early experience with generating text, the InterFace Connection would not have become a product enterprise.

Hans Strack-Zimmermann

Hans was my mentor and the man who made UNIX big, both in Europe and at Siemens (where it was called Sinix). I was convinced that all he said was correct and he believed in our team. Well, this facilitated matters a lot.

However, our success proves that we were correct.

Dr. Peter Schnupp

Peter was an IT pioneer of the second generation (for me, the generation Zuse was the first generation and I was part of the third). As an entrepreneur (he founded Softlab), IT expert, column author in the “Computer-Woche” and also due to other activities, we was well-known and had an excellent reputation as an expert.
Peter managed to convince the strategic decider in a big public office organization that the future will be based on IT and UNIX – and that there is a great local product.

Without this stroke of luck, the project CLOU/HIT would never have become a success.

My Projects

Even as a young software developer at Siemens AG in the mid-seventies, I had a great job. In the course of developing Transdata, I designed the “Connection Handling” and also worked on the development of “APS“ (appliers’ programming language). Connection handling has a central function in “long-distance data transfer”, as it was then called. Through APS, you could outsource processing time to local “data station computers” (operating system PDN) – which was the first time the central principle of main frames was broken.

With this “superior knowledge”, it was easy for me to get a good reputation with huge projects, which meant that, as a logical conclusion, I was transferred to the Siemens AG department: “special projects marketing”. My most important project in this department was DISPOL, a central project of the Bavarian Police which had set itself the task of making the filing cabinet (data), the typewriter (documents) and the telefax machine (communication) obsolete through the introduction of Electronic Data Processing.

I stayed with this project until I founded my own company and in the process I learned all there is to learn about the expectations of customers and the market of civil offices.

Without this history, HIT/CLOU would never have become a successful product.

Our People

For product development, we hired very young persons. In fact, they often started working for us when they were still students. And in (almost) all cases, they were exactly the right people. These persons took no time at all becoming central top performers and they instantly took high responsibility.

The Right Principles

Along with the product development, a qualified counselling team in the field of “Unix Operating Systems” grew. We sat right at the source and I learned many extremely helpful things from our operating systems partner. Consequently, we were early to use tools which at the time were not even widely known in Europe.

We applied methods (or rather, we intuitively invented them) such as the four-eyes-principle when programming, peer2peer-reviews, ”extreme programming“, developer rotation and much more. Those were methods that had not even existed in those days, yet they gave us considerable advantage when it came to developing speed, customer orientation and quality (incidentally, some of these principles are still not applied everywhere today).

Our developers are always directly in contact with the customer. For instance, all the developers did the HIT courses for the customers themselves, which means that they understand what the customer wants and needs.

All these factors have contributed hugely towards the quality of our product.

Financing

We were well aware what the real problem with our project was. Consequently, we shared the costs of the IF computers during the first phase of basic development. For the second phase of marketing, we had intended to share tasks. We were going to further develop the basic system and also attend to our expected big customer Siemens. InterFace Computer was planned to be the port for many other Unix systems and for realizing the sales for other partners.

But even in order to just develop the product, we needed considerable man power. In 1984, we solved this problem in a very simple way: Wolf Geldmacher and yours truly worked as counsellors. We took care of the product and team in the evenings and, when necessary, on Saturdays.

As counsellors, we worked for an hourly rate of 150.- DM. This was absolutely top range and we were only able to get away with it because US consultants with comparable know-how were even more expensive.

Well, let me do the calculations: a good month will bring us 200 man hours (we were very industrious). Multiplied by 150 DM, that equals 30,000 DM in a good month. With a salary of 5,000 DM, which is about 6,000 DM before taxes, that left us 18,000 for hardware, our Heidi (our assistant, who helped us from the beginning) and our students, the product developers.

Only a few months after our foundation on April, 1st, 1984, we were also able to recruit two young computer scientists who immediately worked as consultants, too. They brought in money comparable to our ratio. And from late in 1995, the product itself provided us with rapidly increasing amounts of money.

The Situation

There were more beneficial circumstances that helped us considerably.
For instance, Siemens had started a very huge project the aim of which it was to develop their own text system for BS 2000 and Unix. Regardless of the fact that this project had manpower that was several times more than our development team, on top of all Siemens project developers being full-fledged software developers (as opposed to our young team), these projects never seemed to get anywhere. Which means they actually more or less failed.

The Siemens concern, however, needed this software for their goals and therefore had to buy licences from two suppliers – one of which was us. This is how we became the supplier of the then market leader in Germany of Unix.

The technological time frame also favoured us. Firstly, Unix at the time replaced all those many different computing systems of the “medium data technology” MDT. So again, our product HIT came just at the right time.

Also, this was the time when using databases started to get a common thing to do. SQL as “query language” based on natural language was newly defined. There was even a German version of SQL!

So wasn’t it only logical to extend the 4GL CLOU (for programming text elements) which supplemented HIT by an “embedded SQL“ which would suddenly make it possible to send dynamically generated queries to a database during the running of the text-element program and then to automatically make use of the found data for producing a document? This was a true sensation, and it had come at exactly the right time.

Lots of Luck and Just a Little Bit of Misfortune

The courage shown by a big federal office in relying on a totally new technology and a very small provider was certainly something special. It was a wonderful market development in favour of Unix. There were many more courageous and, for us, beneficial decisions by customers. A great team…

We Also Had Some Problems

The hardware we needed for our developments was extremely costly. As early as 1985, we had to buy an MX500 – which at the time had a listed price of several 100,000 DM. For us, this was impossibly much money. But it was absolutely clear that we were not going to manage the necessary developing speed without the system. And then it took only two years for the machine to become outdated. Overnight, we developed on SUN and on the new fast PC-s with diverse Unix variants.
In the long run, it turned out that InterFace Computer, too, was the wrong partner. The strategic cooperation no longer worked. Consequently, we were forced to buy the rights to the product. This was a truly hard investment decision. Yet, in retrospect, it turns out that it paid off.

Other Necessary Requirements

I am sure there were other causes and lucky circumstances without which the enterprise HIT/CLOU would never have made it. Partly, we are probably talking things I no longer remember or things I was never really aware of. But without all this, at least InterFace Connection as producer of HIT/CLOU would never have existed. If you remember what I wrote, you will see that I kept telling you at every possible instance that it would never have happened without those circumstances/ coincidences. They were all necessary for the final success. And in retrospect, I am truly surprised how this courageous enterprise could actually work out.

This article was supposed to show you through my own example how unbelievably many requirements have to be fulfilled in order to become a success. Mind you, I do not at all want this to discourage you. But it certainly goes to show that it is not all that easy and that a pragmatic approach might sometimes do no harm. I believe founders can learn a lot from this story and I am quite willing to discuss it with you as a Use Case interactively and personally.

RMD
(Translated by EG)

Roland Dürre
Saturday August 16th, 2014

The Arcis-Vocalisten Will Sing: “The Bat”

FledermausIt is the unchallenged “Queen of the Operettas”, having swept away and fascinated the world-wide audience for 140 years with its inescapable esprit, passionate scenic speed and subtle humour: “The Bat” by Johann Strauß. During a frenzy of inspiration, the Vienna Waltz King managed to write down the entire music to the work in no more than 42 days. The piece was first played in 1874 and is the crown of the musical era of the operetta.

Gabriel von Eisenstein, a gentleman not known for his abstinence when it comes to all kinds of desires, has to go to jail for eight days – he has been a public nuisance and insulted a public servant. When his old friend Falke urges him to postpone his prison time in favour of a great party sponsored by Prince Orlofsky, who is famous for his hospitality, Eisenstein is not hard to persuade… Eisenstein is totally ignorant of the fact that his friend Falke – with a clever orchestration – seeks revenge for an exposure he suffered from the hands of Eisenstein several years back. We witness an ambiguous and delightfully comical game around amorous complications, social roles and clichés that quickly gains momentum…

The Wolfratshausen production is going to be an enthusiastic version of the work by Strauß – in a totally Bavarian setting: instead of the “spa near a big city”, where Strauß saw the scenes of the operetta played, we will have the Isar valley, instead of ball gowns and tuxedo, we will see Dirndl Dresses and Leather Pants… and the fascinatingly humoristic figure of the prison guard Frosch will be played by none less than Christoph “Stofferl” Well – who is a good old acquaintance not only for all fans of the famous “Biermösl Blosn”.

And our Evelyn (EG) is among the choristers!

RMD
(Translated by EG)

How to find the right kinds of people – and why recruitment is an anti-phrase!

In my last “entrepreneur’s diary” article, I recommended that you should think negatively and list all the measures with which you could best destroy your own enterprise. Of course, what I meant was not criminal activities or mercantile stupidity, but “entrepreneurial” activities.

For service providers such as InterFace, I found the following answers:

  • You want to employ the wrong kinds of people.
  • You want to introduce as many rules and processes as possible.
  • You want to see to it that the enterprise is mainly concerned about itself.

The last two items are clear. Being concerned mainly with itself will prevent you from concentrating on the business, the employees and the customers. All these many rules and processes will demotivate people and lead to being even more concerned with yourself. This is truly a danger, because every system, almost by definition, tends to be concerned with itself to a huge extend.

In this article, I want to describe how you can find the right kinds of people for your enterprise. There are a few basic rules.

  • “Hire character, train the skill!“

    
This is a very simple sentence, yet it is the one central statement. The important thing is that the candidate fits the enterprise and has potential. You will easily get all else in order.
  • Never employ anyone through head-hunters!

    
Head-hunters will almost always deliver someone who actually will not be compatible with you. You are looking for exactly those people who want to live self-responsible and who come to you because they think your enterprise is a great thing, aren’t you? Experienced entrepreneurs will also tell you that the people they got “through head-hunters” usually only stay with you for a short time. After two years, they are mostly working elsewhere. And head-hunters will cost a lot of money. You will always end up in the low 5-digit EURO range. Just imagine, for instance, how many master theses written by first-class students you could have supported for the 15,000 € a head-hunter’s support with finding a new employee would cost you.
  • Do not write job discriptions!
    They will only attract head-hunters and many unwelcome would-be employees. The more differentiated you write your job description, the worse, because then the applicants will match their curricula vitae better with what you described as wanted. Also, they will be better prepared to meet the requirements you stated. This will increase the danger that the applicant will prepare (too) well for the interview and you will fall victim to his strategy. Many non-qualified persons got their jobs in this way, later not living up to the necessary standards.
  • No advertising!

    
Even in former times, the job adverts in the big newspaper were more a matter of image than of looking for applicants. Consequently, you should never advertise anywhere. Neither in the old media, nor on the internet. The good workers will certainly not come via “Stepstone”. The only exception is the enterprise homepage. This is where you can advertise that you are looking to employ. But be concise and limit yourself to a few catch phrases. Like the short posters pinned to the gates in olden times.
  • Follow recommendations!

    The best future employees are those you already know or those recommended to you by people you really trust. Experience says the same: just do some research on how people first came to work for a “good enterprise”. You will certainly find out that it was not through head-hunters or adverts. Instead, they will have come recommended, be it by other colleagues, customers, or partners. Or else they came directly, because they saw the enterprise and liked what they saw.
  • Even if you have the smallest doubt: say “NO”!
    Follow your intuition! If your guts say “no”, then you should also say “no”. The sector is a small one, there is lots of competence around. If your enterprise is a good one, the “right” persons will come, anyway. Otherwise, it is about time that you see to it that yours becomes a “good” enterprise. You can only manage to do that if you hire exclusively the rights persons.

Conclusion:

Only let persons become part of the enterprise you enjoy being accompanied by when visiting a customer and if you can then proudly tell said customers: may I introduce to you Mrs. or Mr. “Smith/Miller/Jones/…” and I am truly glad to have him/her with us. And only hire persons you like and enjoy meeting!

RMD
(Translated by EG)

P.S.

For more articles from my entrepreneurial diary, click here: Drehscheibe!

Roland Dürre
Friday August 15th, 2014

Start-up (1) – Failure

As during many summers before, I am currently camping at Porto Ageranos. The campground is situated on the Peloponnesus, on the middle finger, about 10 kilometres south of Gythio, shortly before the mild climate of Mani. From our tent, you have only 10 metres to go before you reach the ocean. The first night was truly great. And since we know the region quite well, we have been feeling really at home from the outset!

I take advantage of the time I spand at this place for relaxing, contemplation and, not least, for making plans. And, of course, I also do a lot of swimming and bike-riding, I eat well and simply spend quality time with my beloved family and friends. And, naturally, I also write some articles (for the IF Blog).
This time around, my main topic is start ups.

I know many people. With some of them, I am good friends. Among them are also quite a few young colleagues. It seems to me that I am actually doing quite well when it comes to getting along with the young generation.

A few years ago, I started getting interested in the foundation of new enterprises. For instance, I am constantly asked to sit in the jury for a business plan contest. As a mentor, I counsel persons and enterprises, sometimes intensely, sometimes sporadically. Consequently, I know a little about what is going on.
Most of the teams I know and acompany are truly great teams. They are industrious and creative and they try to lead their lives independently and to build up an enterprise, investing the utmost personal enthusiasm on many levels based on an exciting idea.

And then they fail.

Some of them fail at the very outset, others as soon as promotion programs, such as EXIST are over, or else after the first financing. More often than not, the period of suffering will continue for some time. Once in a while, they find an “emergency exit”. And only very few of them will be a success – and those mostly in a totally different way than they had originally planned.

Most of those who fail leave behind a huge amount of strength and also money. The only consolation for them is that they learned a lot, in other words: they “failed successfully”. Yet this is not much of a consolation, is it? After all, if they had taken up an alternative life line, for instance through a good job with a medium-sized company, they could probably have learned a lot more for their personal future.

As I see it, this is a gigantic waste of capital, creativity and industriousness (“waste” in the sense of Kaizen). Also, the frustration and disappointment many of the young persons concerned suffer is painful. And I often think that this frequent failure might have been avoidable in many cases.

Because the mass-failures are easily explained. Mostly, the founders work just like the expertise of a past epoch tells them to. And this pattern never really worked very well. Today, it generally does not pan out at all. How are the success patterns of yesterday supposed to work in the world of tomorrow, anyway?
And the very few exceptions – incidentally, they are all due to the accumulation of particularly lucky circumstances – only prove this rule.

Why is failure normal?

The answer is simple: for instance, big concerns, too, constantly try to throw new products onto the market. These concerns have everything you need for a new product idea: capital in masses, a well-known brand, excellent marketing, strong marketing organizations, world-wide access to the markets, great engineers and providers, and much more. And above all: they know their market, because more often than not they have been “learning” and “working towards it” for decades.

And still their new product inventions often fail. If they are lucky, as few as 10 % of such new inventions will become more or less a success on the market. Make your criteria for the definition of “success” a little stricter, and you get an even lower number.

Except how is a young team that has none of these things supposed to compete? Just with their young light-heartedness and creativity? This is nonsense!

One conclusion might be that young founders will only have a real chance on totally new markets. That would mean young founders should shirk (almost) all business ideas around existing technologies and solutions. The current development seems to justify this argument. Well, perhaps I can give a first tentative piece of advice to start-ups:

Be careful if you wish to enter into markets where others already have their standing.

To be sure, great concerns with their organization and processes are their own stumbling block when it comes to creative topics. Their success has the negative side that they will always think in old patterns. They know this and consequently look for innovation outside their own walls. The foundation of “acceleration“ departments and their looking for cooperation with start-ups is their way out of it. After all, this is also the latest idea of “UnternehmerTUM” of Munich Technical University. The same is true for the new first mayor of our state capital Munich, Mr. Reiter.

The magic word “cooperation between concerns and start-ups”, however, will not work, either. Firstly, the old enterprises intensely live the rejection from outside as in: “not invented here“. I witnessed this quite frequently and also made the experience myself in strategic cooperation with big firms – more than once. And I could also name quite a few examples where the results of XXX acceleration or XXX invest failed.

But the “old methods”, too, are only successful in few exceptional cases. Let me exemplify this with almost all “tax-saving models”. For many years now, we have witnessed this not only in sectors such as “film”, “realty”, “shipping”, or “alternative energy”. The huge losses suffered by investors in projects around railway and canal building are also good examples.

Mostly, their failure was not because they fell victim to fraud or untrustworthy businessmen. To be sure, those also happened. But mostly the reason was that the underlying business models and plans were just wrong. Regardless of the fact that they had been made by experts in a “professional” way. Experts who really knew their markets. And regardless of having been controlled critically by other experts, for instance in banking. Mind you, those banking experts were really serious, because, after all, they had a share. Here, too, I could write about very personal experiences: in one case, the Sparkasse München, which I hold in high esteem, lost a few million Euros – in my own case, we are, luckily, only talking something in the middle five-digit range.

But if even projects written by experts and validated by many other experts do not work, how can you then expect a young team of founders without any experience and knowledge of the market to steer their enterprise successfully into a non-predictable future?

Seen under this light, founding a new company is basically a hopeless or at least very courageous adventure. An adventure no sane person should by any rights let himself be drawn into.

However, I think that it is possible to improve the chance of success for a start-up from what feels like 1 : 100 to something that perhaps even comes close to 1 : 1 (success versus failure ratio)..

I know that this is a rather courageous announcement of mine. Consequently, I plan to use my two weeks on a campground at the southernmost end of the Peloponnesus on Mani for writing a few articles about “start-ups” here in my IF Blog. This is both for the start-ups I myself counsel and all others.

RMD (Translated by EG)

P.S.

I will start with my own experiences as a young entrepreneur in the next instalment. As I see it, you can already learn quite a bit from it.