Stephan Uhrenbacher about Entrepreneurship, Green Stuff, Learnings

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

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

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

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

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

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

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

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:

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

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.

1. If it ain‘t worth doing, it ain‘t worth doing well“ 
   is Charlie Mungers way of saying that it is not worth going after too small opportunities.
2.  „I am a better businessman because I‘m an investor, and I am a better investor because I‘m also a business man“ 
   has become a confirmation of my choice of profession.
3. „I‘d rather pass on a fantastic opportunity, than lose one night‘s sleep over it“
   - this one has helped me save more money than any book on investing.