Music:
Speaker1: Hello and welcome, everybody. This is Joe from StartupRate.io,
Speaker1: your startup podcast and YouTube blog from Germany, Austria and Switzerland.
Speaker1: And today I do have Martin here with me. Hey, how are you doing?
Speaker0: Hi, great to be here.
Speaker1: Totally my pleasure. I usually give a little introduction about the guests that I do have here.
Speaker1: And we may tell our audience up front, you are not per se an entrepreneur,
Speaker1: but you're working on the investment side.
Speaker1: You are with Visionaries VCs. You're based in Berlin.
Speaker1: And you have been the former growth lead at tier during a hyper growth phase.
Speaker1: I think you have one or two stories to tell from this time.
Speaker1: You also have been a competitive athlete.
Speaker1: I'm sure we'll also talk about that. Plus, you specialize in BASAS,
Speaker1: AI, cybersecurity, and deep tech, where you're exactly at the right place here at StartupRate.io.
Speaker1: You have a strong belief in operational experience and radical accountability
Speaker1: in VC. We'll talk about that, I think.
Speaker1: And you lead investments that solve real-world industrial problems via applied AI.
Speaker1: I also got some names here of investments, not you personally did,
Speaker1: but visionaries, including Lovable,
Speaker1: the Unicorn Personio,
Speaker1: Miro, Pigment, Tacto, Apron, Choco, Pivot, and Central.
Speaker1: And of course, we link down here in the show notes interview with Central.
Speaker1: So that was already a lot. Take a deep breath.
Speaker1: So let's talk a little bit about your journey and your vision.
Speaker1: How did your time at Tear for everybody that that's one of the e-scooter companies,
Speaker1: the hyper growth e-scooter companies during its hyper growth phase influence
Speaker1: your approach as an investor?
Speaker0: Yeah, that's a great question, Jörn.
Speaker0: And just for background, I was with Tear pretty much from its pre-seed stage until Series B,
Speaker0: which meant that within a very short period of time, within one year,
Speaker0: we went from zero to 400 people, reached 100 million annual revenues and similar
Speaker0: number on the funding side,
Speaker0: which I always refer to as a little bit of a positively chaotic scaling journey,
Speaker0: because there was a lot of positive elements and there was also a lot of chaos.
Speaker0: And one thing that was definitely very, very clear in that short period of very intense time is that.
Speaker0: The people you work with really, really define of what you can achieve.
Speaker0: And exceptional talent will find a way to own the outcome and really build something
Speaker0: that will move the needle in some context.
Speaker0: And this is one really interesting conversation we always have with founders
Speaker0: that are building very early stage teams, especially investing in pre-seed and
Speaker0: seed, is that who you should hire and how do you know that person actually performs well?
Speaker0: Did you hire the right person for the right role?
Speaker0: Yes or not? And if somebody is underperforming, is it because they are not doing
Speaker0: the right responsibilities or not in charge of the right responsibilities or
Speaker0: whether ultimately it's just not a fit for the company?
Speaker0: And one key learning that really, really shapes the way that we are trying to
Speaker0: work together with founders is this perspective of how we look at talent and
Speaker0: ultimately how you can hire the type of people who you can use as Swiss Army
Speaker0: Knives in very different situations.
Speaker1: And just to be clear, those people, Swiss Army Knives, they don't necessarily
Speaker1: need to come from just a handful of really big Berlin-based startups or a handful
Speaker1: of consultancies, right?
Speaker0: Absolutely not. these type of people can come from pretty much any types of backgrounds.
Speaker0: Very often, in the majority of the cases,
Speaker0: they have at least some level of unconventionality in their life story,
Speaker0: which doesn't mean that they went to some Ivy League schools,
Speaker0: but very often they might end up coding in their parents' basement at the age
Speaker0: of 12 and just cannot stop reading books about building things.
Speaker0: And I think that's something that just comes up again and again.
Speaker0: Uh with these people um.
Speaker1: You i assume you had quite a lot of fun at here but what motivated you to to
Speaker1: to be to become really from an operator turned into a vc um
Speaker1: did you think at the beginning it was more relaxed job and how did you end up at visionaries club
Speaker0: Yeah it was not a very conscious decision at all when i was with tier i had
Speaker0: a friend who was running entrepreneur first batch in berlin and we went into
Speaker0: a couple of conversations.
Speaker0: And we were talking about when i personally thrive the most and i also realized
Speaker0: in that conversation, which I didn't know about myself, is that I thrived the most.
Speaker0: The more I look outside of my regular day-to-day environment, so to say.
Speaker0: And I think there are different types of people here. I definitely fall into
Speaker0: the camp of really thriving in the environments where I get new impulses,
Speaker0: not just from a topic perspective, but also individuals' perspective.
Speaker0: And then this friend of mine told me, hey, I actually have two friends who are
Speaker0: actually founders, former founders, and they are launching a fund.
Speaker0: And it sounds like that since they are building this venture fund from scratch
Speaker0: and you get to spend your entire day speaking to people who are thinking how
Speaker0: the future should look like in a different way, changed by technology,
Speaker0: sounds like a very good intersection of your operator DNA, building something
Speaker0: actually as in a venture fund.
Speaker0: So being kind of like an entrepreneur in VC and also being able to have this
Speaker0: very outward-looking way of working.
Speaker0: And I pretty much just took that introduction, not expecting too much.
Speaker0: And I think a lot of things resonated with me.
Speaker0: And the things that came together, the different DNAs of Visionaries Club, made me very excited.
Speaker0: And that's where I have been in the last six years.
Speaker1: Um you often speak about radical
Speaker1: accountability what does this mean when you work with founders for example let's
Speaker1: let's think um i'm one of your investments and currently it's not going well
Speaker1: what what would you expect in terms of radical accountability um
Speaker0: Radical accountability is a pretty broad term, I would say, and definitely don't
Speaker0: only use it in the relationship of VC to founder, but also the other way around.
Speaker0: And this is something that we also, most importantly, encourage founders that
Speaker0: we back use within their own environment, so to say.
Speaker0: Radical accountability is a little bit of a stolen term, I would say,
Speaker0: from radical transparency from Ray Dalio, switching the word out,
Speaker0: transparency into accountability.
Speaker0: But it's very simply put, radical accountability means that especially in environments
Speaker0: where there is a lot of change and just as I told you earlier, there is a lot of chaos.
Speaker0: The one thing that you can only go back to and always can go back to is owning output.
Speaker0: And that's really what radical accountability means, because everybody has ideas,
Speaker0: everybody has comments about how things should be done.
Speaker0: But what really differentiates the top 0.01% of startups from the rest is that
Speaker0: this sense of radical accountability is pretty much soaked into the culture
Speaker0: of how people think and get stuff done.
Speaker0: And this is something that pretty much everybody is accountable,
Speaker0: both on a positive and rather consequential negative side, when things are either
Speaker0: executed very properly or not executed properly.
Speaker1: We're now going a little bit into market insights and your investment thesis.
Speaker1: And we may tell our audience because I do believe most of our audience are founders
Speaker1: and they somehow have an idea they had heard Visionish Club before but we should
Speaker1: tell them that you're around the data that I found around 600 million years
Speaker1: assets under management.
Speaker1: Your last fund was, I believe in 2022, 400 million.
Speaker0: That's correct. Yes.
Speaker1: And so you're one of the bigger VCs and therefore, um
Speaker1: is of interest to me. But some of the things that first stood out is that you
Speaker1: guys have a very unique base with limited partners.
Speaker1: For everybody who's not familiar with the term, it's basically the institutions,
Speaker1: the people who give you the money to invest them as VC, legacy industrialists,
Speaker1: and modern digital entrepreneurs.
Speaker1: How does that shape your portfolio strategy? Because It sounds like you have
Speaker1: two magnetic poles and they always pull you in different directions.
Speaker0: Yes. I'm happy to give you a little bit of background because I do think that
Speaker0: this will help also scope the conversation a little bit.
Speaker0: I just want to tell you and the listeners a little bit about the origin of Visionaries Club.
Speaker0: So we have been around for some six years. And one very important theme that
Speaker0: we have all across the investment team is that everybody is a former operator or founder.
Speaker0: Pretty much really everybody in the investment team. And this is something that
Speaker0: we really wanted to incorporate into the very DNA of how we set up the fund ultimately.
Speaker0: And back then when we set up the first fund generation, one very important decision
Speaker0: we made was, as you said, that we only raise capital from entrepreneurs that we know well.
Speaker0: And if you look at who these entrepreneurs are, as you mentioned,
Speaker0: it's two very different group of individuals, but it's always the private people
Speaker0: behind these companies.
Speaker0: But on the one hand, we have a collection of some 30 Unicorn founders.
Speaker0: If you look at, for example, Andre from Miro or Daniel from UiPath from Eastern
Speaker0: Europe, Ilka from Supercell or Miki from both from the Nordics.
Speaker0: If you look at Fintech, for example, Peter from Adrian, Guillaume from Checkout.com,
Speaker0: but also a lot of Dach entrepreneurs such as Get Your Guide,
Speaker0: Flixbus, HelloFresh, AutoEyes.
Speaker0: Who build these very successful hyperscaling tech companies.
Speaker0: And as you mentioned on the completely other side, we have this collection of
Speaker0: family business entrepreneurs who are a little bit less conventional entrepreneurs
Speaker0: because they didn't start these companies themselves, right?
Speaker0: They inherited these multi-decade old family businesses from the what we call
Speaker0: old economy or industrial economy that have been operating pretty much offline
Speaker0: for a couple of decades, very often in manufacturing, logistics,
Speaker0: distribution, wholesale.
Speaker0: And what's really interesting about them and about Europe specifically,
Speaker0: is that 80% of the European economy is owned by family businesses.
Speaker0: So when we were thinking about bringing this entrepreneurial DNA into how we build the fund,
Speaker0: we felt that if we look into the next decade and we look at the intersection
Speaker0: of what we have to work with in the European economy and what technology can
Speaker0: bring and unlock, this is really the intersection that we are looking into.
Speaker0: This is very digital first entrepreneurs and this is very non-digital entrepreneurs
Speaker0: who are incredibly important of how we think about the economy.
Speaker0: So this is how we really bring this group of people together.
Speaker0: And over the last couple of years, we scaled this one to some 600 million.
Speaker0: And ultimately, if I really want to sum it up in one sentence,
Speaker0: the single biggest leverage that we bring into the relationship we have with
Speaker0: our founders that we back is that we,
Speaker0: bring in these people and really connect the founders that we back with the
Speaker0: right people at the right time across all this network.
Speaker0: This can be about potential customer introductions. This can be about integration
Speaker0: partners, hiring go to market.
Speaker0: But based on our experience, instead of coming in with a high-level VC advice,
Speaker0: we just take a step back and really execute on those introductions that are
Speaker0: strategically important.
Speaker1: I also do have a theory, maybe you also have an opinion on that.
Speaker1: I'm now doing startup interviews with the project in Germany that I did before
Speaker1: since, let's say, 13 years.
Speaker1: And over time, I've seen a lot of
Speaker1: entrepreneurs maturing, getting bigger businesses and so on and so forth.
Speaker1: And when they're running the company for long enough, there is barely a difference
Speaker1: between those people and the more traditional entrepreneurs,
Speaker1: how they view their life, how they view the company and their outlook on the
Speaker1: company. Would you agree to that?
Speaker0: I would say it's really interesting, especially if you contrast industrial entrepreneurs
Speaker0: with really, really large corporates.
Speaker0: One thing that we made a very conscious decision on taking on these industrial
Speaker0: entrepreneurs and how I would say they think about actually digital entrepreneurs
Speaker0: is that since they own a very significant portion of the company and they are
Speaker0: also in a very active strategic role,
Speaker0: they can take decisions much faster and they can take risk with a much higher level.
Speaker0: Again this is not a guarantee that they will suddenly all adopt highest you
Speaker0: know the most advanced software and end-to-end agentic ai automation tomorrow
Speaker0: but at least you can get an answer from them very very fast whether this is
Speaker0: the right timing for them to speak to a certain software company or not i.
Speaker1: See um we're not talking tvc and i would be interested maybe except for ai Hi,
Speaker1: what sectors are you most bullish on right now, especially in early stage investing?
Speaker0: Yes, this is a really good question. I would say that given our very DNA and
Speaker0: kind of history, over the last couple of years, we built a relatively lean team.
Speaker0: So in total, we are six people in the investment team. And that means that for
Speaker0: us specifically, it doesn't make sense to split up the team by sector, right?
Speaker0: So even though we have certain interest areas, for example, I personally look
Speaker0: into a lot of topics on the, let's say, more technical side when it comes to
Speaker0: data, infrastructure, architecture, AI, cybersecurity.
Speaker0: These are all areas to love to look into.
Speaker0: We are incredibly focused on founders and pretty much picture them within the
Speaker0: bigger realm of what we find exciting, right?
Speaker0: So if you look at the way that we work usually and work together with founders,
Speaker0: we spend, I would say, 80 to 90% of our time on the ground in ecosystems because
Speaker0: Europe is incredibly fragmented and you have absolutely no idea which ecosystem
Speaker0: will produce the next really exceptional entrepreneur. You pretty much have to be there.
Speaker0: Really try to find these founders, sit down with them and really understand.
Speaker0: Why the timing of what they want to build fits into the broader market.
Speaker0: And this can be in very different industries.
Speaker0: For example, I personally have been looking into and working with a lot of founders
Speaker0: in procurement, but also back teams in cybersecurity.
Speaker0: Security, it can be about engineering, it can be about pretty much pure data,
Speaker0: it can be about really, I would say we are very sector agnostic from that perspective.
Speaker1: And which ones are the most interesting right now?
Speaker1: Sectors yeah you can also speak
Speaker1: from personal perspective because i do understand from from uh such broad company
Speaker1: it's always difficult to speak like about this or that but your personal experience
Speaker1: in your area of responsibility is totally fine um it's it's
Speaker0: It's a really interesting question because we are now at
Speaker0: a very interesting shift between cloud
Speaker0: software 1.0 versus the next type
Speaker0: of let's say software you can still call it software and i know you didn't necessarily
Speaker0: want to get an ai answer but i would say one very clear shift that we are seeing
Speaker0: at the moment is that traditional software as a service will very likely cease
Speaker0: to exist in its current form in a very short period of time.
Speaker0: And almost these models around services and software is emerging.
Speaker0: Because if you look at, especially, for example, the industrial economy.
Speaker0: One very interesting theme that we have been looking into, and maybe one thing
Speaker0: to pinpoint very concretely, is how we are thinking about the automation of
Speaker0: back office work, right?
Speaker0: And this traditionally, for example, in software has been very much tied to sectors.
Speaker0: So for example, you had to think about a very specific procurement software
Speaker0: as a service that had, I don't know, an underlying database,
Speaker0: some type of a user interface, maybe integration with legacy systems.
Speaker0: And then you try to pretty much
Speaker0: take these companies and then target these companies and roll them out.
Speaker0: Now, what we are seeing is that if you look at some of the back office work,
Speaker0: Let it be, let's say, insurance, procurement, sales, quoting, construction.
Speaker0: You have these massive back offices where people are just sitting in front of
Speaker0: their computer and have been doing the same repetitive tasks they have been
Speaker0: trained to do for pretty much 10, 20 years.
Speaker0: And in my view, this is going to be exactly the absolute first type of use case
Speaker0: where full level of automation will be achieved within a very,
Speaker0: very short period of time.
Speaker0: So we absolutely don't see any scenario where these tasks won't be 100% automated
Speaker0: within a couple of years of time.
Speaker0: And this is especially relevant because this is exactly the type of talent also
Speaker0: in our economy that is retiring fast and there is no supply of it.
Speaker0: Because you have to be somewhat educated in order to execute on this task,
Speaker0: but it's actually not something that needs incredibly sophisticated,
Speaker0: you know, qualification that cannot be taught in certain areas.
Speaker1: Why do you believe Europe is positioned to lead in the application layer of AI globally?
Speaker0: The reason for that is that Europe is in a very special position.
Speaker0: If you look at the talent in Europe, it's very clear, speaking to entrepreneurs
Speaker0: from a global scale, speaking to investors from a global level,
Speaker0: that Europe has absolutely zero talent problem.
Speaker0: This is something that is sometimes a massive misconception.
Speaker0: Europe has incredible engineers, incredible entrepreneurs. it's a very fragmented
Speaker0: ecosystem, but from a very fundamental perspective, I think this is just one
Speaker0: thing that is, I think, very important to get right.
Speaker0: When it comes to the application layer of AI.
Speaker0: And especially if you look at the European economy and getting back to,
Speaker0: for example, how many of these industrial companies, well, for what it's worth,
Speaker0: you know, non-industrial companies necessarily, have been working with traditional
Speaker0: software like SAP and others.
Speaker0: You know, some of these existing software stacks have been around for 30 years, right?
Speaker0: And there is an absolute clear reason for that. And the
Speaker0: clear reason for that is that their lock-in is so
Speaker0: incredibly high that challengers over
Speaker0: the course of the last couple of decades absolutely failed to remove them because
Speaker0: they are so ingrained and so customized to the local environment that it was
Speaker0: just pretty much impossible to create a strong enough incentive for these customers
Speaker0: to put effort into removing them and adopt a new solution.
Speaker0: Now, the opportunity for Europe right now, where pretty much this ingrainedness
Speaker0: is the highest, I would say,
Speaker0: is that with the shift in technology when it comes to mapping,
Speaker0: let's say, integration endpoints, when it comes to using new technologies around
Speaker0: AI to facilitate data migration, data schema mapping,
Speaker0: mapping out workflows, and pretty much ultimately automating these workflows
Speaker0: is something that was not unlocked before.
Speaker0: And from an application layer perspective, this is what we have context on.
Speaker0: And I think the key word here is contextuality. And this is something that Europe has.
Speaker0: The technology is there. We can use it pretty much from a foundation model perspective,
Speaker0: which we don't have to be a winner in.
Speaker0: And ultimately, this is exactly where the opportunity is, because you can match
Speaker0: this level of contextuality and generate a new generation of challenges that
Speaker0: can ultimately remove this absolute high locking of incumbents that have been
Speaker0: dominating the industry for many, many years.
Speaker1: As personally, I've been working in more SAP projects than I would like to admit here.
Speaker1: I can totally see that.
Speaker1: But when I now think about the logic that we used there back in the days
Speaker1: and the teams you've been talking about doing their administrative stuff,
Speaker1: which would be quite a picture book example of being replaced by AI agents.
Speaker1: I get to think that you would not only need to re-envision the software,
Speaker1: but you'll also need to re-envision at least in part the companies because there'll
Speaker1: be a lot more of automation, especially in administrative duties.
Speaker0: Yes, 100%. And I do not think that this is going to be a zero to one shift, right?
Speaker0: If you look at, for example, a very clear example of the migration push of SAP
Speaker0: on-prem to SAP HANA that SAP is pushing massively,
Speaker0: some of these companies actually spend a very, very significant amount of euros
Speaker0: and very significant amount of time, meaning years.
Speaker0: To go from the concept of understanding what the existing on-prem setup looks
Speaker0: like from the perspective of what's standard SRP code, what's customer SRP code,
Speaker0: how, for example, the business logics look like,
Speaker0: all of these things, hire a bunch of consultants, kind of try to map out exactly
Speaker0: how this should look like in the cloud.
Speaker0: It doesn't just work in a way that you buy a virtual machine and you just push
Speaker0: it there within a week, but you actually have to go through this entire process
Speaker0: And then pretty much you try to move the application.
Speaker0: Now, from my perspective, technologies that can, on the one hand,
Speaker0: speed up this type of process, as well as think about how these workflows can
Speaker0: be fully automated from, let's say, an agentic perspective, will need to emerge in parallel.
Speaker0: Because you cannot just throw an agent pretty much at an on-prem SAP instance,
Speaker0: right? I think it's very, very clear.
Speaker0: So you will need very different approaches. And ultimately, what will unlock
Speaker0: the most value will have the most grip on the market, as we have seen also in the past.
Speaker0: There is no absolute clear cut answer what type of approaches will win.
Speaker0: But ultimately, I think it needs to be,
Speaker0: game of parallel approaches, to be honest.
Speaker1: And what you've been talking about is on-premise, basically more or less very simplified.
Speaker1: You had a very big data center.
Speaker1: You're running SAP there just for your company. And now it's moved on HANA into the cloud.
Speaker1: Very, very much simplified. And that was already a big project.
Speaker1: But the more I think about using AI agents in such a tool,
Speaker1: I always get the idea that the most successful companies or the most successful
Speaker1: software in the future may not be the fastest AI agent,
Speaker1: but I do get the one who makes it the easiest to administrate those agents, control them,
Speaker1: give them duty and keep them in check.
Speaker1: Because if you do, what I have in mind are those huge Excel sheets where you track stuff.
Speaker1: And then at one point, you don't realize that this agent is doing A,
Speaker1: this agent is doing P, and they're basically just giving each other work.
Speaker1: So there is a new way how you need to think about a company getting back to
Speaker1: the idea of rethinking the company.
Speaker1: But we've been a little bit intertwined already into AI.
Speaker1: So I was wondering, we're talking to your VC, what is your framework to identify
Speaker1: AI startups with like a real differentiation and they don't necessarily have just buzz?
Speaker0: Yes, that's a really good question. So I'm especially speaking from the perspective
Speaker0: of a pre-seed seed investor, which is a little bit of a cheat card sometimes
Speaker0: because you can always give the answer that the founder has to be exceptional.
Speaker0: Which in itself, on the one hand, can be a really good answer.
Speaker0: On the other hand, I completely agree that if you look at many of the verticals
Speaker0: you see right now in agentic AI,
Speaker0: you do see an absolute red ocean of parallel approaches, let's say when it comes
Speaker0: to the number of AI legal tech companies or the number of companies that are
Speaker0: trying to build your AI SDR and so many of these different approaches.
Speaker0: From our perspective, the two things we...
Speaker0: Pre-seed, ultimately, and early-stage investing, in a really simple,
Speaker0: simply put way, is a really, truly excellent founder building in an incredibly exciting market.
Speaker0: And the incredibly exciting market is pretty much a given, in many cases,
Speaker0: when you are looking at the opportunity of the technology and what you can see
Speaker0: in many of these use cases.
Speaker0: Now, ultimately, the exceptionality of the founder is something that we pay exceptional,
Speaker0: like really, really big attention to, because that's where you can identify
Speaker0: somebody who will be able to navigate the, let's say, the level of uncertainty
Speaker0: that you will need to navigate in this space.
Speaker0: And if you look at just the simple acceleration of the last two to three years
Speaker0: when it comes to what capabilities, for example, AI can do, this is one topic
Speaker0: we have been discussing with the founder,
Speaker0: is that, for example, if you look at some of the, let's say.
Speaker0: Features that, I don't know, some of these foundation models could do,
Speaker0: for example, writing a poem or something like this that are absolutely not spectacular
Speaker0: today, almost to anyone who has been natively using these AI tools,
Speaker0: back then the amount of wow effect that you got from them was 100 times higher
Speaker0: than what you get from now.
Speaker0: So from our perspective, from a human perspective, human experience perspective,
Speaker0: what we see is that we get used to the power of the technology incredibly fast.
Speaker0: And we just forget how much progress has been made in the last two to three years.
Speaker0: And I think personally that we completely underestimate
Speaker0: how much this technology will develop in the
Speaker0: coming years and because of that there is
Speaker0: a very high level of uncertainty that a certain
Speaker0: founder needs to navigate so ultimately as a pre-seed or
Speaker0: seed investor trying to identify if you have a level of
Speaker0: tech defensibility as a startup that just developed an
Speaker0: MVP is not a
Speaker0: very valid question right so for us the focus
Speaker0: really really shifts very much to the exceptionality
Speaker0: of the founder which in itself can lie into for
Speaker0: example unique insights to a certain industry because as
Speaker0: discussed already for example in europe when you still have the challenge of
Speaker0: for example needing to sell to some customers um in person or do field sales
Speaker0: for example let's say in construction tech or industrial tech a founder that
Speaker0: is able to understand on the one hand the capabilities of AI,
Speaker0: but also understands the particularities of the industry, is the combination
Speaker0: that makes them exceptional, right?
Speaker0: And this is something that we always try to look at from a perspective point of view.
Speaker1: I see. We'll be back after a short ad break and then talk about how you do your
Speaker1: investments, how, for example, you evaluate a founder, and so on and so forth.
Speaker1: Hey, guys. Thank you for being back with us after the short ad break.
Speaker1: I'm still talking to Martin Partner at Visionaries VC, and we are talking right
Speaker1: now about how they evaluate the founders.
Speaker1: What traits do you think define a genre-defining founder in your eyes?
Speaker0: Yes, this has been an exercise we have been constantly thinking about and re-challenging ourselves on,
Speaker0: especially if you look at the really exceptional founders in Europe and how
Speaker0: serendipitously they came out of absolutely unexpected hubs, times, and setups.
Speaker0: We definitely don't think that you have a very strong ability to put together
Speaker0: a checklist and just tick boxes and give an average score.
Speaker0: And if somebody hits that average score about a certain level,
Speaker0: then you invest. If not, then not.
Speaker0: So, for us, exceptionality can come in very different forms,
Speaker0: and we have certain traits that we usually look into that can feed into certain
Speaker0: exceptionalities in founders in very different ways.
Speaker0: To give you an example, one trade that we are also looking into is a combination
Speaker0: of a founder having pretty much very much like,
Speaker0: for example, if you would look into, let's say,
Speaker0: soccer, to come up with a very concrete example.
Speaker0: What makes a good player shoot, for example, a ball in a good way? right?
Speaker0: It's a combination of timing, it's a combination of power and accuracy.
Speaker0: And these are the three characteristics and the combination that really,
Speaker0: really exceptional founders do have.
Speaker0: When it comes to timing, also interchangeably use it together with urgency or
Speaker0: kind of like proneness to action,
Speaker0: is the ability for the founder to very clearly articulate when to do what and how to prioritize what.
Speaker0: It can be about hiring, it can be about execution, it can be about when they
Speaker0: start building a certain product in a certain market.
Speaker0: Power is pure grit. It's about how hard you work and pretty much how much you
Speaker0: can commit to the company.
Speaker0: And accuracy is ultimately the ability to identify the most important problems
Speaker0: and really shortlist those on a daily basis.
Speaker0: And this is something that we always try to evaluate on a recurring basis together with founders.
Speaker0: This is one very important aspect, obviously, that just comes up again and again.
Speaker0: In certain founders. And I want to highlight this sense of urgency that with
Speaker0: some of the most successful founders, when as an investor, you are in a meeting
Speaker0: with them, you almost feel uncomfortable about wasting their time.
Speaker0: And this is something that, you know, I definitely felt at tier with Lawrence,
Speaker0: who is just a fantastic founder as well,
Speaker0: is that their sense of urgency when it comes to coming to action and their sense
Speaker0: to not waste time in instances where they absolutely don't need to is very, very high.
Speaker0: And this is something that you can, I think, really sense as an investor.
Speaker0: To give you another example, product and personal obsession is something that
Speaker0: you definitely can identify relatively accurately.
Speaker0: And it comes out in very different formats, in very different founder journeys.
Speaker0: Because if you have a fresh university team coming out of uni,
Speaker0: maybe a couple of months of internship experience, who have been constantly
Speaker0: thinking about a certain problem and, you know,
Speaker0: they were absolutely sleepless about it and now try to attack it,
Speaker0: which was the case in some of our investments like Tacto for the listeners.
Speaker0: It's a Munich-based procurement software company from some of the small and
Speaker0: medium-sized businesses in the European economy.
Speaker0: They have been obsessing over and over about how incredibly broken procurement is.
Speaker0: It originally was their DNA.
Speaker0: If you look at a seasoned entrepreneur, a seasoned operator entrepreneur who
Speaker0: have been in the industry for more than 10 years, it's going to be a very different
Speaker0: type of personal or product obsession.
Speaker0: If, for example, somebody decides after six years of being one of the most successful, let's say.
Speaker0: Companies or scale-ups, for example, companies like Klarna or Konto or Swile,
Speaker0: to give you just some examples from our portfolio, to...
Speaker0: Start from zero and start with a blank sheet of paper to start building something new.
Speaker0: They often felt something from a market timing perspective and in a once in
Speaker0: a lifetime perspective from an obsession perspective that they just have to make that step.
Speaker0: And this is something that clearly comes out when you have a very open and transparent
Speaker0: personal conversation with them.
Speaker1: I was wondering can you give examples of painkiller versus vitamin startups
Speaker1: and why that distinction matters
Speaker0: Yes um it's uh it's something that we uh we really like using in the context
Speaker0: of b2b software and that's the reason why i would personally be an absolutely
Speaker0: horrible consumer investor, because for me,
Speaker0: comprehending painkiller versus vitamin in that context is just very, very difficult.
Speaker0: In B2B software, it's from at least a theoretical perspective, you know,
Speaker0: It's something relatively simple to identify. From a conceptual perspective,
Speaker0: a painkiller is something that can help your customer either increase your revenues
Speaker0: or decrease costs, or will be absolutely mission critical for you to operate.
Speaker0: If you look at, for example,
Speaker0: some of the agentic AI companies that try to automate your sales team,
Speaker0: that's a very clear, you know, impact on you being able to, for example,
Speaker0: serve more customers or open your funnel up more.
Speaker0: So really try to, for example, drive your supply. If you look at,
Speaker0: for example, some of the agency AI companies that are trying to automate your
Speaker0: back office end-to-end,
Speaker0: you pretty much can replace very concretely headcounts in your back office at
Speaker0: a fraction of the cost. So that's really doing that.
Speaker0: If you look at companies like Stripe, for example, that's a very clear example
Speaker0: of a company that is just mission critical for you to operate because otherwise you don't get paid.
Speaker0: So this is pretty much how we try to think about it.
Speaker0: One very interesting thing when we are thinking about peculer versus vitamin
Speaker0: is that in reality, things work sometimes in a different way.
Speaker0: If you look at the very concrete example of process automation,
Speaker0: and I'm talking a little bit pre-AI era, there have been a huge wave of some
Speaker0: of these RPA companies that were trying to pretty much automate anything that
Speaker0: Zapier and UiPath couldn't.
Speaker0: But yet they were not successful.
Speaker0: Why is that? It's very obvious from a conceptual point of view that if you automate
Speaker0: something, then you also save money.
Speaker0: Yes, that is absolutely true. But if your customers don't want to automate those
Speaker0: things and they are not in the business of automating things,
Speaker0: it becomes often very difficult for them to convince that they need to give
Speaker0: the extra upfront investment for those cost savings.
Speaker0: And that's where we always try to match the conceptual understanding of what
Speaker0: is a painkiller with reality of what actually is a painkiller.
Speaker1: We've been talking in the introduction that you do have a background in competitive sports.
Speaker1: How does this influence your judgment in high-stakes investment decisions?
Speaker0: Competitive sports is a really...
Speaker0: Interesting environment. And there are a lot of parallels when you're thinking
Speaker0: about company building, because in competitive sports,
Speaker0: in many cases, you have to prepare for one single event that might happen once
Speaker0: a year, once every two years, or in the case of the Olympics, once every four years.
Speaker0: And you have to show up every day, sometimes every day, twice,
Speaker0: training up to 14 times a week, give your absolute best and think about how
Speaker0: you can be your better self every single day for that one single event.
Speaker0: And sometimes you have an injury that comes in that takes you back,
Speaker0: let's say, four to five months in your preparation and you cannot do anything
Speaker0: with it. But there are a lot of crisis situations.
Speaker0: And if you look at the most successful people in sports and competitive sports,
Speaker0: they are able to deal with setbacks incredibly well.
Speaker0: Keeping their cool in those events is something that is really exceptional.
Speaker0: And if you look at some of the top athletes, there's just something that comes out again and again.
Speaker0: When it comes to investing and having an honest conversation with a founder,
Speaker0: this type of pressure test also, I would say, can be very much applied.
Speaker0: And if you're having an honest conversation about the most,
Speaker0: the highest heated crisis situations that they ever had in their life and listen
Speaker0: to how they dealt with it, it's something that really shows how they deal with the situations.
Speaker0: Because these situations happen. And as a founder, you just have to solve them.
Speaker0: And this is something that we always have as a bit of an exercise.
Speaker0: And what some of our best founders absolutely managed to do incredibly well
Speaker0: is to assess the situation, understand what you can do about it,
Speaker0: what you can't do about it, and act like that.
Speaker1: Let's talk a little bit about applied AI and SaaS adoption.
Speaker1: You said AI will be the biggest driver of SaaS adoption, particularly in industrial
Speaker1: sectors. Can you a little bit expand on that?
Speaker1: Because you also said the classical SaaS, how does this fit together here?
Speaker0: So you mean the classical SaaS will cease to exist in the form that it has been existing?
Speaker1: Yes, in the form right now. And where will it go? What will be the next iteration,
Speaker1: the next form of classical SaaS?
Speaker0: This is a really interesting topic. And I think everybody is to some extent
Speaker0: still very speculative about it.
Speaker0: But what we have seen already in the last couple of months or one or two years
Speaker0: is that the ultimate application interface that people in these environments
Speaker0: are using to execute on certain workflows is completely changing.
Speaker0: If you, for example, look at very traditional software as a service,
Speaker0: as mentioned, you might have some backend database, some features that people input data in,
Speaker0: maybe the software application is processing this data, and then you have an output.
Speaker0: That's something that, given the capabilities of what's changing right now,
Speaker0: in my view, will really, really change just from the perspective that if you
Speaker0: look at how traditionally workflow has been executed,
Speaker0: especially in the case of knowledge work, 80% of knowledge work is just finding,
Speaker0: some processing and summarizing information and maybe passing it on to the next person.
Speaker0: This is something that can be done incredibly well using AI.
Speaker0: And not only it's possible right now to remove some of the intermediary steps,
Speaker0: but you can also completely rethink how the whole workflow is executed.
Speaker0: Because if you look at this whole concept from a data perspective and data processing
Speaker0: perspective, an agent or AI agent,
Speaker0: does not necessarily have to process the data the exact same way as a human
Speaker0: being would, right? Ultimately.
Speaker0: And this is something where I do think that AI as an application layer will
Speaker0: completely change the way that industrial companies work.
Speaker0: Just let's take a very, I would say, concrete look at procurement.
Speaker0: Ultimately, if you are head of procurement at some of these industrial companies.
Speaker0: Your number one job as procurement leaders
Speaker0: usually say is to keep your job because procurement
Speaker0: is a bit of a loser game right you ultimately make sure
Speaker0: that everything is procured on time at the best price and it arrives um if it
Speaker0: does that then great you're doing a great job if it doesn't then then it's not
Speaker0: so ultimately um if you look at how procurement leaders have been using software
Speaker0: for example in the past is that um They had to enter, for example,
Speaker0: their system or ERP system to look up inventory, talk to product,
Speaker0: talk to product, engineering, sales.
Speaker0: What do you need to procure? Ultimately, go up to your supplier,
Speaker0: open some type of supplier database, look at some catalogs, submit some purchase orders.
Speaker0: And it was all a little bit of a chaotic workflow from the perspective of what you needed to do.
Speaker0: But if you look at ultimately what, for example,
Speaker0: some of the AI capabilities can unlock when
Speaker0: it comes to understanding need budget analysis and what you ultimately need
Speaker0: to execute on at a given point in time and what you need to optimize for is
Speaker0: something that is very different from how you would work as an individual human
Speaker0: and how you would process this information and pass it on, if that makes sense.
Speaker1: Thank you.
Speaker1: Definitely makes sense, but it takes a while until it sinks in what this really
Speaker1: means and how it actually applies to different industries.
Speaker1: I don't claim I'm through with this thinking by getting closer and closer.
Speaker1: You are also connecting AI startups with LPs to solve real problems.
Speaker1: And how does a successful case for such a corporation look like?
Speaker0: Yes. So this is something that we talked about. And, you know,
Speaker0: when we built the fund or started building the fund,
Speaker0: we wanted to make sure that we have this unique ingredient of having the connection
Speaker0: to these limited partners of industrial family businesses who represent a very
Speaker0: significant portion of the economy.
Speaker0: Because very often, if you look at B2B software,
Speaker0: you know, AI, or call it pretty much any type of technology at the moment in
Speaker0: Europe, if you want to build a multi-billion dollar outcome as an entrepreneur,
Speaker0: it's very difficult to ignore this group of family business entrepreneurs and
Speaker0: industrials in the long term,
Speaker0: if you are selling to European companies. So our...
Speaker0: Our idea was that, you know, when we build the fund is that we can connect these
Speaker0: entrepreneurs that we back with these industrials.
Speaker0: And, you know, as mentioned, the most important thing that we bring in as Visionaries
Speaker0: Club is that whenever we invest with founders, and this often already starts
Speaker0: before investment, it can be, you know,
Speaker0: sometimes in the stage of ideation, is that we sit down together and figure
Speaker0: out who from our industrial network is actually most helpful to talk to.
Speaker0: From the perspective of the product that the founder is building and ultimately
Speaker0: get them in front of the most important stakeholder,
Speaker0: let it be a champion or an actual user of the product as soon as possible and
Speaker0: really shorten this response time that they get from these industrial companies.
Speaker0: And this is something we do think has a very fundamental unlock.
Speaker0: And in many cases, some of these industrial companies might get back,
Speaker0: hey this is incredibly relevant now we are in
Speaker0: the middle of this massive i don't know erp migration so
Speaker0: let's talk in six months sometimes they say this is
Speaker0: exactly what we have been looking for for a long time let's set
Speaker0: up a paid doc next week and sometimes it's no we will you know build this internally
Speaker0: and this is not relevant but getting this response time versus trying to call
Speaker0: it inbound some of these industrial businesses that are not on not even on linkedin
Speaker0: is something that is very contrasting.
Speaker0: In an ideal scenario, whenever we can connect these industrial businesses with
Speaker0: the founders that we are working with, we can really shorten this cycle.
Speaker0: In the most exceptional cases, founders can pretty much champion these companies
Speaker0: as well as if they were, let's say, technology companies.
Speaker0: This is where the magic of 3D exceptional founders lie.
Speaker0: We don't guarantee any paid contracts.
Speaker0: This is not the business we are in, But this kind of door opening function is what we've.
Speaker1: Past success is no indication for future performance. The usual disclaimer in
Speaker1: financial services. Yes.
Speaker1: Let us go a little bit shortly into Europe's venture capital landscape.
Speaker1: If you still have a little bit time. Yes.
Speaker1: What are the biggest challenges European founders face today and how can they overcome them?
Speaker0: The biggest challenge European founders face today is ultimately what everybody
Speaker0: says, which is fragmentation of the European ecosystem.
Speaker0: And why we think fragmentation is the biggest challenge at the moment is because
Speaker0: various different ecosystems are in very different maturity stages.
Speaker0: If you look at London, if you look at Paris, if you look at some of these ecosystems,
Speaker0: they have a history of producing some really exceptional, you know, venture outcomes.
Speaker0: And some of these venture outcomes started producing some really exceptional
Speaker0: operators who might end up, you know, starting new companies.
Speaker0: And for example, if you have a proximity of a university,
Speaker0: you might even have the chance to bring some of these entrepreneurs or operators
Speaker0: into some of these hubs that can really enable entrepreneurs not only to just
Speaker0: pull the trigger and start something new and take risk,
Speaker0: but also to be able to hire exceptional talent and start, you know,
Speaker0: selling to the local ecosystem.
Speaker0: Now, this is not the case for all ecosystems. If you look at some of,
Speaker0: you know, other cities, the ecosystem are in very different stages.
Speaker0: But ultimately, if you look at, for example, the example of Miro,
Speaker0: Andrei started it from a small town in Russia called Perm that many people didn't even hear about.
Speaker0: And through this big filter he managed to build it into a successful enough
Speaker0: outcome that now is a globally leading company but if you put,
Speaker0: yourself into the shoes of something like that, the amount of challenges that
Speaker0: you need to go through and the,
Speaker0: amount of pushback that you will get that will set you back in terms of timeline
Speaker0: and how fast you can market your product is exponentially higher.
Speaker0: And the more remote the ecosystem is, the more difficult it is ultimately.
Speaker0: And this is something that is already changing, but ultimately this is the very
Speaker0: reason why we set up Visionaries Club in the way that we did.
Speaker0: That if we back, for example, a young entrepreneur out of Munich,
Speaker0: who, you know, Munich is already a pretty advanced ecosystem,
Speaker0: but if they want to connect to a wide range of entrepreneurs who either successfully
Speaker0: navigated a certain landscape in a certain industry, traditionally,
Speaker0: it has been incredibly difficult for them to get a meaningful connection with these people.
Speaker0: But via our approach, we really try to work on that and facilitate that.
Speaker1: How should European VCs adapt to stay global competitive?
Speaker1: Because I've seen in the past a few analyzers that, at least from the perspective
Speaker1: of the LPs, the European VCs have outperformed over time their American counterparts.
Speaker1: So they did have a competitive advantage.
Speaker1: How can they keep pushing it in their increasingly fractured world right now?
Speaker0: Venture capital traditionally has been and always will be driven by power law.
Speaker0: So there will be a lot of winners. And it's very difficult to give,
Speaker0: I would say, a collective formula of how European venture capital funds,
Speaker0: all of them can stay more competitive.
Speaker0: And when you say, you know, European venture capital funds,
Speaker0: it almost feels like that, you know, you would need to move the whole curve
Speaker0: in a certain way, which is somewhat tied to maker environment.
Speaker0: But what I can say is that...
Speaker0: In order for some of the European venture capital funds that can be successful
Speaker0: is completely to be on the ground.
Speaker0: Because if you look at the amount of time it takes for a certain ecosystem to
Speaker0: absolutely ignite, it can be very, very short.
Speaker0: And if you are trying to run this from behind your desktop, I think it's a very, very difficult job.
Speaker0: And I think you see this story very interestingly playing out right now in the
Speaker0: case of Stockholm, where a couple of companies, including Glovable,
Speaker0: just absolutely demonstrated how you can get onto the path of building a globally
Speaker0: leading company in a very short period of time.
Speaker0: And taking that encouragement, many, many other really exceptional talent in
Speaker0: the ecosystem had the courage to start new companies.
Speaker0: And pretty much within the matter of six months it
Speaker0: became from a really interesting ecosystem into
Speaker0: one of the leading ecosystems i would say in europe and if you're a venture
Speaker0: investor you just have to be there and see that for yourself speak to the founders
Speaker0: because they will grow they will build very successful companies very fast and
Speaker0: if you're an early stage investor and you're not there you you will miss a thousand a.
Speaker1: Very last high level question what needs
Speaker1: to change in how early stage capital supports
Speaker1: technical founders in europe because we do have
Speaker1: a lot of very good universities very good technical universities lots of stem
Speaker1: talent but i do see a lot of them struggling uh to get out not only but also
Speaker1: in terms of biotech and so on and so forth to really get the support they need And admittedly,
Speaker1: Technical University Unique and Unternehmertum are getting very good at this,
Speaker1: but they need more to change.
Speaker1: Do you have a few ideas what needs to change in order to support them better,
Speaker1: get them more opportunity to find a company right out of university?
Speaker0: Yes, absolutely. The most important challenge is bringing back exceptional execution
Speaker0: and commercial talents and connecting them with early STEM talent as soon as possible.
Speaker0: If you take the example of Hungary and Eastern Europe, where I'm from ultimately,
Speaker0: and this is a conversation I just had with a Hungarian VC founder that just got into VC.
Speaker0: I'm now 29. He's, I think, also towards that age.
Speaker0: Up until we finished our maybe second degree or master's or started working
Speaker0: in the first position, we didn't have a clue about what venture capital is or
Speaker0: what entrepreneurship truly is.
Speaker0: We heard about the concept of starting a company, but the concept of what it
Speaker0: means to take risk and pulling the trigger to build something massive was absolutely missing.
Speaker0: And this is something, for example, You absolutely see in many business universities
Speaker0: already happening in the West, in Deha, you have successful e-commerce founders
Speaker0: going back and saying, you can start this company, you can start this company.
Speaker0: And then you have students sitting there and having a conversation after the
Speaker0: lecture about, hey, actually, we should start doing this.
Speaker0: We are in a time of our life where pretty much we can take the most risks that we can.
Speaker0: And this mindset is something that is very, very difficult to bring back very early.
Speaker0: But the more early you can bring it, as soon as possible, pretty much start
Speaker0: of university, ideally, the earlier you start a spark for these type of conversations
Speaker0: and encouragement also across students.
Speaker0: So I would say for all those different ecosystems that you have in STEM,
Speaker0: you know, all across Europe, as you mentioned, you have TUM,
Speaker0: you have ETH, you have Oxbridge, you have so many of these universities.
Speaker0: The ability to connect students with those entrepreneurs that really,
Speaker0: really made it there is something that is, in my perspective, is really missing.
Speaker1: I see. Martin, thank you very much. it was a pleasure having you as a guest
Speaker1: hope to have you back and for everybody who'd like to learn more we link of
Speaker1: course your LinkedIn profile the website of Visionaries Club what's the best way to pitch
Speaker0: Just pretty much send an email martin at visionariesclub.vc.
Speaker1: I do have a game that's going on since I interviewed a few years ago Alex from
Speaker1: Frankenberg from Hitech Grunafor and I was
Speaker1: wondering if you get an email that only says the headline yo we should talk would you reply
Speaker0: The headline i would say we don't i personally don't care that much about uh
Speaker0: what's in the message is um is is a little bit more important.
Speaker1: Okay great thank you very much
Speaker0: Pleasure thank you so much for having me.
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