Why do IT start-ups fail? Does it take more than technology?

Transcription

Thomas Sinnwell: Welcome Mr Ladendorf! You have been with us before. I am pleased that we are talking today in a second round on a different topic. I have a second interlocutor on board, that is Pritu Detemple. And together we want to explore the question of why technology start-ups in the IT sector in Germany often go wrong. Before we get started, perhaps for everyone's benefit, would you briefly introduce yourselves.

Michael Ladendorf: Thank you again, I had a lot of fun last time philosophising a bit about Amazon or why it wouldn't work so well here. Michael Ladendorf (is my name), I used to work for two DAX companies for a while, Fresenius AG and Deutsche Telekom. I was responsible for or allowed to promote various topics there, including sales and business model topics. I have been self-employed for 14 years, investing in companies. But I always say casually, I don't have any money. So that's why I have to invest my know-how and experience first and then help these companies to develop further, to scale. And what is also very important to me is that maybe today we will also find out what they can do right in terms of technology transformation into the market economy and thus into commercial models.

Thomas Sinnwell: Thank you! Pritu, please be so kind and introduce yourself.

Pritu Detemple: With pleasure! My name is Pritu Detemple, I am the Managing Director of GO FOR SALES Sales Development. We are setting up sales units. Everyone always asks: What are sales units? A sales unit is a small department. So, instead of building the big battleships in sales, we prefer to rely on agile speedboats. And they are much more efficient in today's market and also, perhaps we'll come back to this, explicitly in the IT environment.

Thomas Sinnwell: Great! I am now the technician here in the round. I'd like to start with a thesis that you like to put forward, which is that sales in the USA are much better than here.

Pritu Detemple: It depends. Early distribution is better in the USA. If we look at IT companies, for example, maybe I can ask a question: How many employees do you think need to be in the company for the first sales employee to join?

Michael Ladendorf: Beyond 20, from my experience.

Pritu Detemple: If it's going well, ten employees, then the eleventh one comes, is the sales person, but sometimes 20plus. Yes, that's exactly it. And do you think what is that in the USA?

Michael Ladendorf: Sales people are there right from the start.

Pritu Detemple: Yes, exactly!

Michael Ladendorf: That's my perception.

Pritu Detemple: Exactly! So the co-founder is usually the salesperson. You have a technician and then you have someone who has to deal with the business sales. That means a two-pack, one does the technology ...

Thomas Sinnwell: Do you think that is the primary reason why technology start-ups work better in the US?

Pritu Detemple: Yes, because this agile concept, which is actually anchored in IT companies as far as development is concerned, these quick iterations, also getting feedback quickly, works. We know things like Scrum, for example, where a lot of coordination takes place and feedback is also obtained again and again in short cycles, which is also needed in the market. You have to find out quickly: Is the market ready for my product? Germans, of course, are always stereotypes, but if you can build up a stereotype like that: Germans always try to develop the perfect product and then go to the market. Then one is astonished: Oh, there are not such sales figures, there are no sales for it at all. I don't have a market for it. And then it is of course much more difficult to iteratively rework such a finished product than to let the customer participate in it directly.

Michael Ladendorf: For me, it's more like two or three additional things, besides the sales issue. In the start-up scene, the teams are structured much more heterogeneously. That means not only IT people or technicians of some kind, but also marketing people, sales people, and in many places even human resources people, I have seen, especially in Silicon Valley. But what I think is the decisive point in the US is, firstly, the money issue - as we also discussed last time. And the second thing is that in the US they are aiming for 40%, 50% solutions, technologically. We still think the thing has to work properly before we get it to the man or the company in B2B. And they are much more situational, much more opportunistic, and they test things beforehand and try things out, also with the financial power they have, instead of developing further and waiting until something happens or until something is marketable.

Thomas Sinnwell: But now I would like to mention another aspect. The USA is a huge regional market. If I set up as a German company, then I first have Germany. If I want to do really good business in Austria or Switzerland, it helps immensely to have a local presence there. That makes it much easier. Opening up the rest of Europe is a completely new challenge, it's not a single market.

Michael Ladendorf: In my opinion, one should not underestimate the German market so much. With my investments, for example, I very much go the corporate route - they are not always just large corporations. To go via groups that are active worldwide. If, for example, I win a Deutsche Telekom or a Daimler for a product in my investment portfolio, then I am automatically really active in the triad, let's just say, that is, in Asia, in the USA and in Europe. Of course, if I try to do business locally with French groups or Anglo-Saxon groups, then I have to be local. But I have had very good experiences with the way - especially in high technologies - to internationalise via German or European groups. Because once you have convinced the German units, it is much, much easier to convince the international units.

 Thomas Sinnwell: I think those were two important points that were addressed:

a) Approaching corporate groups, because I can of course open up quite a large area via the corporate group.

b) The aspect of approaching clients at a very early stage. And that is also a path we have taken. That simply ensured that the product was inevitably very marketable. And the question was already settled: What does the market want? Is the market there? And from my point of view, that is also a very, very important point that can cause the failure of companies in the IT sector.

Pritu Detemple: Yes. I think what is important is what you just said, that you don't want to be alone in solving the problem. I think we really have a big difference there. So many are in their quiet chamber and have an idea: I have an idea, great.

Thomas Sinnwell: That's also a typical technician thing. You get excited about a technology and then you can spend years on it.

Pritu Detemple: Losing.

Thomas Sinnwell: And then comes the question: Who needs it? You have to turn it around.

Pritu Detemple: Mhm (affirmative). Yes, exactly! And then to have a strong partner at the beginning. You don't need to have so many partners, but at least one partner where you know there's a so-called traction force, someone is interested. That's a strong thesis: if one person is interested, the probability that someone else will be interested is higher. And I can then also use the partner as a drawing card, as a reference to build up similar customers. I think that's what we're missing here, that you think you're a bit alone here. But that also has to do with the fact that the investments - you can perhaps just say something about this, Mr. Ladendorf - are very low as far as IT companies are concerned. And also the topic of internationalisation, which we just mentioned: Of course, American companies have a direct international focus because they are invested in a completely different way. If I have to manage my, I don't know, six-figure investments here at the beginning, I'm just regional for the time being. Then I don't want to take the risk of building it up too big. It's probably right to do it that way, but you also lose time. While you might have been able to approach a larger company internationally, you tend to go, I'll say it disrespectfully, to the small regional companies, which of course have fewer customers and send less of a signal to the market. Or how do you see it?

Michael Ladendorf: Well, yes, that can be a point, but you have to see that we are moving here, my investment portfolio for example, in high technology, except for one company. But all the other investments are high-tech. That means that from the idea, when I think of our companies, from the idea to having a platform that is scalable to different sectors, to different technologies, we are talking about five to six years until that is realised, until we also have a competitive differentiation. That really means that there are no more white spots in the application compared to the competition. And that's why I think it's right to say that in Germany, with these high-tech topics, you go step by step with milestones. That's what we did, we went through several rounds of financing with milestones to really show that it works, that it doesn't work in any form. Or I have to shoot loops in some form, which then try to take a different path, which is then more successful. That is, I think, the right way. That's why that's not the problem for me. The problem is that when you are in the growth phase and you have shown that you can really place the whole topic via pilot customers and other structures and differentiate yourself from the competition, you don't have the money to really grow. And that is our big stumbling block in Germany, the whole issue of growth financing. Whether it's through investors or bank financing, start-up financing, growth financing, that's our big obstacle. Finding money for high-tech at the beginning is not the problem in Germany. The problem is scaling up. Having the financial means to scale.

Thomas Sinnwell: I agree with you, but I would now narrow it down to the idea of a classic start-up. There are quite a lot of companies that are finding new ones, which is another issue. They actually fall off the grid and it's quite difficult.

Michael Ladendorf: When I think about our situation back then, it was difficult to convince people of this crazy idea we had, it was difficult to convince people.

Thomas Sinnwell: Yes, especially in such a classic banking environment ...

Michael Ladendorf: ... there was no understanding at all.

Thomas Sinnwell: ... you don't get any understanding either.

Michael Ladendorf: Yes, yes, exactly! If they go to Basel 120 or how much that is now, I don't know how many Basel things we already have, ...

Thomas Sinnwell: I think three.

Michael Ladendorf: ... if you judge it by that, it doesn't work at all. Full stop.

Pritu Detemple: What you just said, Mr. Ladendorf, I also find so interesting in the form: There are four phases in the pure start-up theory of how an IT company should be built up and how it should be conceived from the outset. An author, Howard Love, in "Start-up J Curve", the book's name, sums this up. He sees four phases. One is the idea phase. The idea phase is the phase where he says most people have an idea. So everyone has an idea at some point. There are lots of them. Only the implementation is the difficult part. And that is the release. So I have an idea and I have to bring it to the market as quickly as possible. It can be, for all I care, made of cardboard or a pure idea in the form that I only express it verbally. But I have to find a buyer for it. That is the so-called release phase, or second phase. When I have this traction from the market and have people or the first strong partner who says, yes, I think that's good, I'd like to support you, then I enter this model phase. That is, only then do I start to make a really nice product out of it. There's another quote from Hoffman, the founder of LinkedIn, who said: If I'm not really, really ashamed of my prototype, then I've already founded too late. So I have to have a feeling that, hey, I can't actually go to market with this, but I should. When I then ...

Thomas Sinnwell: Okay, then I've done everything right.

Pritu Detemple: If I then have a buyer at that moment or find a partner, then I can make it beautiful. And that is the third phase, the model phase. And he calls these three phases the Valley of Death. That's where most start-ups die. Very few manage to get through it. The fourth phase, however, and here we come to the scale phase, the scaling phase, is actually easy. Because you have already proven that the product works. That's what I found interesting, what you said, Mr Ladendorf, that most German companies have the obstacles here or most investors have the obstacles here. Because it's actually already been proven that the product could work and all you have to do now is make it big. But there are obstacles here now, if I understood you correctly.

Michael Ladendorf: Yes, exactly! That's how it was, or that's how it is. And that's the main problem here in Germany, too, that the big decision-makers for all these investments always say: we don't go into this financing, banks don't in any form anyway, because it's not possible according to Basel or whatever and there's also the fear of failing in this growth phase. I was amazed, for example, when an owner of a large corporation in Germany, a large medium-sized company, told me: I prefer to invest in seed financing, the amounts are smaller and I do invest a lot in it, but the amounts are smaller and I can spread the risk better, I can make the cluster risk a little smaller and spread it. And that, I think, is the wrong way. If I had more money, I would always finance growth companies, because you already know what is possible, what can be realised and how it can be scaled in some way.

Thomas Sinnwell: But doesn't that also have something to do with the mindset of investors here in Germany, that B2C models are preferred? Well, at least in the past they were preferred. It's easy to understand, it works much faster, I don't have these five to seven years that I actually need to have a really good basic technology that is then marketable.

Michael Ladendorf: Yes, definitely! Of course, if you go into the market with a lot of money, for example, advertising, because you have an app or because you have a business model, a B2C business model, and you use advertising to practically push the number of customers and the number of users, you naturally have much faster leverage than if you go into high technology, like our company, which takes seven years to create a basic structure of a technological nature.

Thomas Sinnwell: The question then arises: What is a way forward for the technology companies if they then want to scale up further? How is that seen in the round? The classic family offices often drop out.

Michael Ladendorf: They drop out. I have had very good experiences with an exit of three investments. In the 14 years that I have been self-employed, I have had very good experience of building up a relationship with industrial clients at a very early stage, so that they can see how the company works. And for me, that is always the ideal partner for the future, also as an investor, be it through partial takeovers, financing or perhaps even taking over the whole topic in some form and integrating it and scaling it up, is really to find the industrial partners very early on. Developing the customer to the investor is the best way, because the investor knows best whether I can do something with it or not. As you know, I am very opportunistic anyway. That means I never have an exit plan. When I go into a company, I don't know how long I'll stay there. And if you ask me about the three companies, I would have said I would stay in there for a long time anyway. But then customers and business partners came along and said: We want to get much more involved. Can you support us there? I think that's the best way to find an investor.

Pritu Detemple: Exactly! That's exactly where we are, that you actually need a partner if you have a technology company. So the technology company must not only consist of technicians, I would say. Just now, you had also invested in consistec, Mr Ladendorf, how did you go about it? What was your first impression of consistec? Why did you choose them as a potential candidate in the first place?

Michael Ladendorf: There was something special, I'll come to that in a moment, but in general, how do I approach the topic? My experience is that many people don't even have the competition in mind. They don't know how many business cases I see when I ask the founders: And who is the competition? We don't have any. Then for me, for example, the discussion is total (unv. #00:16:16.8#). I liked that very much here. In the first discussions, Mr. Sinnwell and his brother described in great detail how Anglo-Saxon-heavy this competition is and how that then works. I then go the way, after looking at the team, and that has to be 100% compatible with me, I say inverted commas, "compatible". That means we have to have a similar value system, the spoken word has to be valid, it has to be represented in some way that measures are also implemented and not just discussed further. And that happened very quickly in our case, and I think it's also very good in my other participations. And then it's about developing the technology further, but finding pilot customers very quickly. With a pilot customer, and for pure technology we did that first, we found pilot customers for work monitoring with whom we developed it. They then got it cheaper and were able to replace their systems. And of course we then sharpened the product to meet the needs of the market and the industry. And then it is of course much, much easier to place this product with other customers after it has been realised. That is the path we have essentially taken. That's also the basic path I'm taking. In addition to the technological hints I give that you need this, it has to be scalable, it has to be an open architecture, these are the topics that really sharpen the product when you further develop product segments via pilot customer structures. We have done that consistently.

Thomas Sinnwell: Definitely! And from my point of view, this is also a very decisive point to prevent the failure of technology start-ups in the IT sector, to work very early on with a partner who has to fulfil two criteria. It must a) be big enough and known in the sector so that it can be used as a meaningful reference. And that what you take with you there in terms of requirements is also representative of the sector and not a very special box, that is a very decisive point. And it must not be too big either. And it can still be a group if there are individual areas with which one can work very closely, but it must be possible to work together at eye level. And that was a very decisive point in our history. Mr. Ladendorf really detected the partner who fulfilled these two criteria and opened the door. And I think, from my point of view, that is even more important than the question of capital, to get hold of such a company as quickly as possible.

Pritu Detemple: Yes, so the keyword is smart money, if money is involved, it is more important that the know-how is also involved. And we also see this with start-ups that we accompany, for example, who are looking for investors. They are usually always looking for money. But the money, first of all, doesn't bring anything, it has no intelligence. The network that an investor brings with him, the partner, the connections that can take place, I think that is much more valuable than pure capital. Because capital goes away quickly, but experience stays. And that, I think, is the more important part of it.

Thomas Sinnwell: Yes, capital must also be returned. Nobody gives it away. Or you give away shares, that is of course also an alternative. That can also be very dangerous if I only do it in three or four rounds. I once had an idea, I'm still in the business, but actually other people decide. And that is important. And I think it is a legitimate approach to consider: What can I do with my competence in order to earn money myself and at the same time put my ideas into practice? And then, as you already mentioned, you can of course also build up a mix of financing. That may be more complicated in parts, but of course it has a huge charm. When the whole thing gets going, you have a nice, lean structure and you are quite well positioned for the future.

Michael Ladendorf: Unfortunately, my experience is that, especially when you see companies like High-Tech Gründerfonds and so on, which do a lot of large financing, take large rounds of investors with them or bring investors with them, an owner or founder no longer has a significant stake in the company. And it is important to me in my investment portfolio that the founders and the key players in the company continue to have a large share in this company, in the share capital of this company. Because when it really comes to an exit or integration into another company later on, the success is of course much better measured than if you then perhaps have an employee's salary and only have a small share. For me, it's also decisive for the war, which is why I always have it written into my contracts in the first two years that the founders have to stay with me, otherwise I'll leave again. Because for me that is decisive for the war. The one who has the idea, the one who has proven to me that he can implement it consistently and sustainably, has to stay in the company, otherwise it doesn't make sense. And that's why I have a lot of understanding in the three exits I've made, up until now the companies, the buyers, have always insisted that the founders remain in the company for at least three to four more years in order to really develop the company further, to integrate it. And I think that's a very important way to go.

Pritu Detemple: Mhm (affirmative). Yes. I think that's a very important point, because especially in the sector where sales, which I said at the beginning, is also a bit lacking, the founder is the best salesperson.

Michael Ladendorf: Yes.

Pritu Detemple: Because he carries the fire with him. So the one who can also awaken the passion. And people always like to try to map this passion through external people or partners.

Michael Ladendorf: That doesn't work.

Thomas Sinnwell: It doesn't work. No.

Pritu Detemple: It simply doesn't work. The typical German, to stay with the stereotype, looks directly for a reseller, a partner.

Michael Ladendorf: It doesn't work at all.

Pritu Detemple: And they have - I don't know how many - other solutions in their portfolio, some of which may even be competing solutions. And it's about commission. It's not about the sense of the product or what provides the better added value for the customer. And I think that is a very popular trap.

Thomas Sinnwell: We just talked about how important it is to win such a company as a partner for a group or a larger medium-sized company. And no external sales department can do that. Because the fire really has to come across, the competence really has to come across. This can only be achieved by the founders if they have the mindset and are prepared not to put their own technology in the foreground, but to focus on the application. What is the benefit for the customers? And these are questions that technicians often ask themselves too late. That would be my second tip at this point, what you have to pay attention to if you don't want to fail.

Michael Ladendorf: I can only support what you say. We have also had very good experiences with the whole issue, in that we have found partners, cooperation partners, who then receive our products. Because sales representatives, I agree with you, sell this tomorrow and that later, depending on where the commission is. We have to work very hard, and that is also our success with consistec and with my other participations, to find sales partners very quickly in terms of sales technology, who also differentiate themselves with our product. That is the big advantage. Because they see that they don't have it in their portfolio themselves, but with us they can also differentiate themselves. And that is the best sales lever you can do, in my opinion.

Thomas Sinnwell: Yes, definitely! The difficulty is that you have to enable the partner in a meaningful way. You can't neglect that. But once you've done that, of course, it's a great story.

Pritu Detemple: What I also see in terms of sales is that if you manage to be considered in tenders or to get into tenders, especially international tenders, we Germans are incredibly good. Because all of a sudden the technicians, all of the expertise, suddenly gain weight. If I may put it a little casually: If you look at the USA, the sales people who are on the road there, they are perhaps a little pushy in terms of sales methods, but they are very strong in this contacting, introducing, creating presentation appointments, creating demonstration appointments. Even if they are not technically that strong, they are very fast or they are good at creating this entry or generating attention. We are incredibly good at explaining the product, because we have a great competitive advantage over American companies in that we can suddenly explain it well, so that the sales people know what they are talking about. And if we manage to get into tenders, to get into comparisons, where technicians of the customer company really look at the solution, we are very, very good.

Thomas Sinnwell: But now I would like to do a roll backwards, because we are also talking about the failure of IT companies and what we should perhaps do to prevent that from happening: The team is important. Mr. Ladendorf, you already mentioned it, perhaps now also with a strong focus on the founders, but I would take it even further. You need a team where I have all the competences. We also have nerds, but I wouldn't put them in a role where they have to explain things to the customers. Because it's just too far a way. But you also have to find people who enjoy it. I think a basic requirement is that people don't have the feeling that I'm working somewhere, but that this is my shop, we together, this is my piece of code, I'm responsible for that, for the functionality.

Pritu Detemple: So code, C O D E?

Thomas Sinnwell: Yes, yes exactly! Exactly the code I mean. And we have such gems. They are excellent computer scientists, but they are very happy when a new functionality is presented to the customer. Because they made it. And the client asked for it, they built it, and they show it. Now it's ready. And then the customer reaction, that's great and that fuels that.

Pritu Detemple: Absolutely! I think the most demotivating thing ever is when someone creates, creates, is the creator of something, and then the CEO comes and shows: Here! I made this. This is my company. Like that. This feeling, too, that I am part of it, that I am allowed to go on stage and show what we can do in the form. And I think that's also part of it - that's how I got to know you, Thomas - that the managing director can and must take a step back. And not this pure ego. I believe that an IT managing director must not insist on his ego and on his presence on stage, but he must also be prepared to let the team, the spotlight and the light shine on them.

Thomas Sinnwell: The idea came up again in our conversation, because we attach a lot of importance to winning over people who have the ambition to do something special. And people have to see for themselves: Yes, this is my contribution to the company. That has to be seen, that has to be shown to the outside. And that is not the classic wage earner.

Michael Ladendorf: What is very important is to motivate people to do this or to find the right people to drive the technology forward.

Thomas Sinnwell: Yes.

Michael Ladendorf: And the topic of technology is also a big differentiator for me. That means I invest in it where I think the technology is the differentiator as well. In addition to the topic, of course, founders, personnel, employees, colleagues in some form or another, who advance the topic more strongly, more quickly. But at the end of the day, the technology is important. And that's why I'm also investing, I've been investing more in security issues lately, because I see a great opportunity for the future there. Especially for us.

Thomas Sinnwell: Yes. Perhaps it's also a very good point to simply take a look: What are these big IT topics that are coming up now? From my point of view, I think you just mentioned the topic of IT security. And a second big topic is, of course, cloud technology.

Michael Ladendorf: The pandemic has shown us a bit about security. Not only did we have a gigantic digital training course over the last year and a half, so that even old people like me now know how to do a video conference, but the issue of how vulnerable we are in some form has also become obvious. What really motivated me at the time, what impressed me technologically about the concept that the Sinnwell brothers developed, was that they said that it wasn't the firewall at the beginning that technologically said it was lagging behind, it was always lagging behind. It is not the security, but when I recognise the - I always call it - gaps in the fence in some form via network monitoring, via monitoring of the networks and all seven layers. That I then recognise where the weak points are so that I can take preventive action.

Thomas Sinnwell: Yes. I would also like to look at this topic separately again, but now that you have said it, I just remembered a third very big topic, digitalisation. I think the Corona pandemic has definitely shown that we are still lagging behind, especially in the public sector. I think digital education, online schooling, was also very, very painful in parts. Some schools have done an excellent job, others have been a disaster, even today. And there is a real need to catch up. But also in the companies, of course.

Pritu Detemple: That is a very important point, so one topic of early sales is education. Education, also to open up the context, why is a technology important. Especially when you are in this high-tech area, it is so high-tech that the context is often missing, it is not clear why I need it. The issue is also security. Security usually sells badly because nothing has happened yet. Only when something happens, does it happen, and then the preventive technology that should have been bought is actually obsolete. That is why it is always relatively difficult to sell security. But now, with the pandemic, we have created a context, also for high-tech topics, also for security topics. I think that is a very, very important point for education. Because if I as a distributor want to try to educate, I cannot educate every single person. Of course I can call each individual and tell each individual something, but it is much better if a certain context is already somehow there through simply general topics. That is, I think the topic of digitalisation in particular has now been sensitised. We know where the weak points are, which is perhaps the only positive thing that the pandemic has brought with it, that we simply have an awareness there now and can now also build on it in terms of sales.

Thomas Sinnwell: Yes, absolutely right!

Pritu Detemple: Okay, well, I think we are at the end of the discussion. It was a very lively and, above all, sometimes a bit controversial discussion, very good. But what are the three or four reasons that you really have to consider as an IT company if you have to start up? First of all, perhaps the question for you, Thomas: From a technical or entrepreneurial point of view, what is important in order to prevent an IT company from failing?

Thomas Sinnwell: Good! I mean, IT companies are broad, I'm narrowing it down now, if the focus is on a technology, i.e. a technology-oriented start-up. And it's important to realise that it takes years to develop a technology like this. And then of course I have a financing issue, I have to think about it. And it doesn't help much to engage in wishful thinking and say, oh, the technology will be ready in three years. No, that won't work. Second point: I need a partner in the SME or corporate environment who helps me to develop my product in line with the market and to whom I can refer afterwards in order to be able to address the second big one. I think that is also a very important point. Thirdly: I need a mixed team, or perhaps, that can now also concentrate on a few people, but I simply have different tasks. Technology is important. If I'm a deep-tech company, technology is the deciding factor in the end. But that alone doesn't help. I need people who can explain the whole thing and who can transport it in order to win that first partner, but also to inspire customers.

Michael Ladendorf: I can fully endorse that. But in addition, you absolutely, absolutely have to verify, besides the idea you have, what does the competitor look like? Because that's a big stumbling block, which I see with a lot of technical companies, even technical solutions, who then think they don't need to judge. Because these white spots that you then have in relation to a competitive situation, especially in tenders, especially in the decisions of large companies, are the final straw, which then does not lead to success. The second thing is, and you have demonstrated this excellently with your brother, to have stamina. Because there are enough frustrations, it's a gigantic wave movement, and you have to have self-confidence and really have an extremely high - or I think you say - high frustration threshold before you reach it. You have to get up again every day and even if there was a failure, you have to realise that. And that's what I miss in many people, and it's very, very important to have these two soft factors in addition to the hard factors.

Pritu Detemple: Great! I would like to add to that what you also mentioned, Mr. Ladendorf, once competitors, that is, the real market companions. There is another market competitor, which is actually also very massive, that is the change. Especially when you are in the high-tech sector, you always have to change. And that is also the task of sales, that you have something, a status, everyone is somehow satisfied, because people work with things they know. And I think one of the biggest challenges is to make a change happen. To be clear about it and to test it out as quickly as possible - yes, you already mentioned it. Get on the market as quickly as possible, don't pitch the family members. That doesn't help, they are always very happy, they think, oh, you've done a great job, boy and girl, that's a nice idea you have. Instead, go out to the market, ask those who are really critical and can also give good criticism, and build on that, and not in the privacy of your own home.

Michael Ladendorf: Absolutely right!

Thomas Sinnwell: Thank you very much!

Michael Ladendorf: Thank you very much!

Thomas Sinnwell: I think we have compiled the most important points that can ensure that you don't fail as a technology founder in the IT sector. I had a lot of fun talking to you. Thank you very much, Mr Ladendorf!

Michael Ladendorf: Thank you very much!

Thomas Sinnwell: Thank you very much, Pritu!

Pritu Detemple: Thank you!

Thomas Sinnwell: And then until the next episode. Bye!

Pritu Detemple: See you!

Michael Ladendorf: Bye!

So that's it from us again. We hope it was entertaining for you and that you were able to take away something on the topic. As always, we have further links to the current episode for you in the show notes and ... if you want more, we would of course be happy if you subscribed to us.

By the way: On our YouTube Channel you can find a lot more information and videos about our podcast topics. Just click on it. In our next episode on 4 November, we have prepared another trend topic from the IT sector for you. We'll be talking about cloud computing. What is a cloud, how do I use a cloud and what are the advantages and disadvantages of the cloud? Curious? Then just tune in. We look forward to seeing you.

Thomas Sinnwell: Welcome Mr Ladendorf! You have been with us before. I am pleased that we are talking today in a second round on a different topic. I have a second interlocutor on board, that is Pritu Detemple. And together we want to explore the question of why technology start-ups in the IT sector in Germany often go wrong. Before we get started, perhaps for everyone's benefit, would you briefly introduce yourselves.

Michael Ladendorf: Thank you again, I had a lot of fun last time philosophising a bit about Amazon or why it wouldn't work so well here. Michael Ladendorf (is my name), I used to work for two DAX companies for a while, Fresenius AG and Deutsche Telekom. I was responsible for or allowed to promote various topics there, including sales and business model topics. I have been self-employed for 14 years, investing in companies. But I always say casually, I don't have any money. So that's why I have to invest my know-how and experience first and then help these companies to develop further, to scale. And what is also very important to me is that maybe today we will also find out what they can do right in terms of technology transformation into the market economy and thus into commercial models.

Thomas Sinnwell: Thank you! Pritu, please be so kind and introduce yourself.

Pritu Detemple: With pleasure! My name is Pritu Detemple, I am the Managing Director of GO FOR SALES Sales Development. We are setting up sales units. Everyone always asks: What are sales units? A sales unit is a small department. So, instead of building the big battleships in sales, we prefer to rely on agile speedboats. And they are much more efficient in today's market and also, perhaps we'll come back to this, explicitly in the IT environment.

Thomas Sinnwell: Great! I am now the technician here in the round. I'd like to start with a thesis that you like to put forward, which is that sales in the USA are much better than here.

Pritu Detemple: It depends. Early distribution is better in the USA. If we look at IT companies, for example, maybe I can ask a question: How many employees do you think need to be in the company for the first sales employee to join?

Michael Ladendorf: Beyond 20, from my experience.

Pritu Detemple: If it's going well, ten employees, then the eleventh one comes, is the sales person, but sometimes 20plus. Yes, that's exactly it. And do you think what is that in the USA?

Michael Ladendorf: Sales people are there right from the start.

Pritu Detemple: Yes, exactly!

Michael Ladendorf: That's my perception.

Pritu Detemple: Exactly! So the co-founder is usually the salesperson. You have a technician and then you have someone who has to deal with the business sales. That means a two-pack, one does the technology ...

Thomas Sinnwell: Do you think that is the primary reason why technology start-ups work better in the US?

Pritu Detemple: Yes, because this agile concept, which is actually anchored in IT companies as far as development is concerned, these quick iterations, also getting feedback quickly, works. We know things like Scrum, for example, where a lot of coordination takes place and feedback is also obtained again and again in short cycles, which is also needed in the market. You have to find out quickly: Is the market ready for my product? Germans, of course, are always stereotypes, but if you can build up a stereotype like that: Germans always try to develop the perfect product and then go to the market. Then one is astonished: Oh, there are not such sales figures, there are no sales for it at all. I don't have a market for it. And then it is of course much more difficult to iteratively rework such a finished product than to let the customer participate in it directly.

Michael Ladendorf: For me, it's more like two or three additional things, besides the sales issue. In the start-up scene, the teams are structured much more heterogeneously. That means not only IT people or technicians of some kind, but also marketing people, sales people, and in many places even human resources people, I have seen, especially in Silicon Valley. But what I think is the decisive point in the US is, firstly, the money issue - as we also discussed last time. And the second thing is that in the US they are aiming for 40%, 50% solutions, technologically. We still think the thing has to work properly before we get it to the man or the company in B2B. And they are much more situational, much more opportunistic, and they test things beforehand and try things out, also with the financial power they have, instead of developing further and waiting until something happens or until something is marketable.

Thomas Sinnwell: But now I would like to mention another aspect. The USA is a huge regional market. If I set up as a German company, then I first have Germany. If I want to do really good business in Austria or Switzerland, it helps immensely to have a local presence there. That makes it much easier. Opening up the rest of Europe is a completely new challenge, it's not a single market.

Michael Ladendorf: In my opinion, one should not underestimate the German market so much. With my investments, for example, I very much go the corporate route - they are not always just large corporations. To go via groups that are active worldwide. If, for example, I win a Deutsche Telekom or a Daimler for a product in my investment portfolio, then I am automatically really active in the triad, let's just say, that is, in Asia, in the USA and in Europe. Of course, if I try to do business locally with French groups or Anglo-Saxon groups, then I have to be local. But I have had very good experiences with the way - especially in high technologies - to internationalise via German or European groups. Because once you have convinced the German units, it is much, much easier to convince the international units.

 Thomas Sinnwell: I think those were two important points that were addressed:

a) Approaching corporate groups, because I can of course open up quite a large area via the corporate group.

b) The aspect of approaching clients at a very early stage. And that is also a path we have taken. That simply ensured that the product was inevitably very marketable. And the question was already settled: What does the market want? Is the market there? And from my point of view, that is also a very, very important point that can cause the failure of companies in the IT sector.

Pritu Detemple: Yes. I think what is important is what you just said, that you don't want to be alone in solving the problem. I think we really have a big difference there. So many are in their quiet chamber and have an idea: I have an idea, great.

Thomas Sinnwell: That's also a typical technician thing. You get excited about a technology and then you can spend years on it.

Pritu Detemple: Losing.

Thomas Sinnwell: And then comes the question: Who needs it? You have to turn it around.

Pritu Detemple: Mhm (affirmative). Yes, exactly! And then to have a strong partner at the beginning. You don't need to have so many partners, but at least one partner where you know there's a so-called traction force, someone is interested. That's a strong thesis: if one person is interested, the probability that someone else will be interested is higher. And I can then also use the partner as a drawing card, as a reference to build up similar customers. I think that's what we're missing here, that you think you're a bit alone here. But that also has to do with the fact that the investments - you can perhaps just say something about this, Mr. Ladendorf - are very low as far as IT companies are concerned. And also the topic of internationalisation, which we just mentioned: Of course, American companies have a direct international focus because they are invested in a completely different way. If I have to manage my, I don't know, six-figure investments here at the beginning, I'm just regional for the time being. Then I don't want to take the risk of building it up too big. It's probably right to do it that way, but you also lose time. While you might have been able to approach a larger company internationally, you tend to go, I'll say it disrespectfully, to the small regional companies, which of course have fewer customers and send less of a signal to the market. Or how do you see it?

Michael Ladendorf: Well, yes, that can be a point, but you have to see that we are moving here, my investment portfolio for example, in high technology, except for one company. But all the other investments are high-tech. That means that from the idea, when I think of our companies, from the idea to having a platform that is scalable to different sectors, to different technologies, we are talking about five to six years until that is realised, until we also have a competitive differentiation. That really means that there are no more white spots in the application compared to the competition. And that's why I think it's right to say that in Germany, with these high-tech topics, you go step by step with milestones. That's what we did, we went through several rounds of financing with milestones to really show that it works, that it doesn't work in any form. Or I have to shoot loops in some form, which then try to take a different path, which is then more successful. That is, I think, the right way. That's why that's not the problem for me. The problem is that when you are in the growth phase and you have shown that you can really place the whole topic via pilot customers and other structures and differentiate yourself from the competition, you don't have the money to really grow. And that is our big stumbling block in Germany, the whole issue of growth financing. Whether it's through investors or bank financing, start-up financing, growth financing, that's our big obstacle. Finding money for high-tech at the beginning is not the problem in Germany. The problem is scaling up. Having the financial means to scale.

Thomas Sinnwell: I agree with you, but I would now narrow it down to the idea of a classic start-up. There are quite a lot of companies that are finding new ones, which is another issue. They actually fall off the grid and it's quite difficult.

Michael Ladendorf: When I think about our situation back then, it was difficult to convince people of this crazy idea we had, it was difficult to convince people.

Thomas Sinnwell: Yes, especially in such a classic banking environment ...

Michael Ladendorf: ... there was no understanding at all.

Thomas Sinnwell: ... you don't get any understanding either.

Michael Ladendorf: Yes, yes, exactly! If they go to Basel 120 or how much that is now, I don't know how many Basel things we already have, ...

Thomas Sinnwell: I think three.

Michael Ladendorf: ... if you judge it by that, it doesn't work at all. Full stop.

Pritu Detemple: What you just said, Mr. Ladendorf, I also find so interesting in the form: There are four phases in the pure start-up theory of how an IT company should be built up and how it should be conceived from the outset. An author, Howard Love, in "Start-up J Curve", the book's name, sums this up. He sees four phases. One is the idea phase. The idea phase is the phase where he says most people have an idea. So everyone has an idea at some point. There are lots of them. Only the implementation is the difficult part. And that is the release. So I have an idea and I have to bring it to the market as quickly as possible. It can be, for all I care, made of cardboard or a pure idea in the form that I only express it verbally. But I have to find a buyer for it. That is the so-called release phase, or second phase. When I have this traction from the market and have people or the first strong partner who says, yes, I think that's good, I'd like to support you, then I enter this model phase. That is, only then do I start to make a really nice product out of it. There's another quote from Hoffman, the founder of LinkedIn, who said: If I'm not really, really ashamed of my prototype, then I've already founded too late. So I have to have a feeling that, hey, I can't actually go to market with this, but I should. When I then ...

Thomas Sinnwell: Okay, then I've done everything right.

Pritu Detemple: If I then have a buyer at that moment or find a partner, then I can make it beautiful. And that is the third phase, the model phase. And he calls these three phases the Valley of Death. That's where most start-ups die. Very few manage to get through it. The fourth phase, however, and here we come to the scale phase, the scaling phase, is actually easy. Because you have already proven that the product works. That's what I found interesting, what you said, Mr Ladendorf, that most German companies have the obstacles here or most investors have the obstacles here. Because it's actually already been proven that the product could work and all you have to do now is make it big. But there are obstacles here now, if I understood you correctly.

Michael Ladendorf: Yes, exactly! That's how it was, or that's how it is. And that's the main problem here in Germany, too, that the big decision-makers for all these investments always say: we don't go into this financing, banks don't in any form anyway, because it's not possible according to Basel or whatever and there's also the fear of failing in this growth phase. I was amazed, for example, when an owner of a large corporation in Germany, a large medium-sized company, told me: I prefer to invest in seed financing, the amounts are smaller and I do invest a lot in it, but the amounts are smaller and I can spread the risk better, I can make the cluster risk a little smaller and spread it. And that, I think, is the wrong way. If I had more money, I would always finance growth companies, because you already know what is possible, what can be realised and how it can be scaled in some way.

Thomas Sinnwell: But doesn't that also have something to do with the mindset of investors here in Germany, that B2C models are preferred? Well, at least in the past they were preferred. It's easy to understand, it works much faster, I don't have these five to seven years that I actually need to have a really good basic technology that is then marketable.

Michael Ladendorf: Yes, definitely! Of course, if you go into the market with a lot of money, for example, advertising, because you have an app or because you have a business model, a B2C business model, and you use advertising to practically push the number of customers and the number of users, you naturally have much faster leverage than if you go into high technology, like our company, which takes seven years to create a basic structure of a technological nature.

Thomas Sinnwell: The question then arises: What is a way forward for the technology companies if they then want to scale up further? How is that seen in the round? The classic family offices often drop out.

Michael Ladendorf: They drop out. I have had very good experiences with an exit of three investments. In the 14 years that I have been self-employed, I have had very good experience of building up a relationship with industrial clients at a very early stage, so that they can see how the company works. And for me, that is always the ideal partner for the future, also as an investor, be it through partial takeovers, financing or perhaps even taking over the whole topic in some form and integrating it and scaling it up, is really to find the industrial partners very early on. Developing the customer to the investor is the best way, because the investor knows best whether I can do something with it or not. As you know, I am very opportunistic anyway. That means I never have an exit plan. When I go into a company, I don't know how long I'll stay there. And if you ask me about the three companies, I would have said I would stay in there for a long time anyway. But then customers and business partners came along and said: We want to get much more involved. Can you support us there? I think that's the best way to find an investor.

Pritu Detemple: Exactly! That's exactly where we are, that you actually need a partner if you have a technology company. So the technology company must not only consist of technicians, I would say. Just now, you had also invested in consistec, Mr Ladendorf, how did you go about it? What was your first impression of consistec? Why did you choose them as a potential candidate in the first place?

Michael Ladendorf: There was something special, I'll come to that in a moment, but in general, how do I approach the topic? My experience is that many people don't even have the competition in mind. They don't know how many business cases I see when I ask the founders: And who is the competition? We don't have any. Then for me, for example, the discussion is total (unv. #00:16:16.8#). I liked that very much here. In the first discussions, Mr. Sinnwell and his brother described in great detail how Anglo-Saxon-heavy this competition is and how that then works. I then go the way, after looking at the team, and that has to be 100% compatible with me, I say inverted commas, "compatible". That means we have to have a similar value system, the spoken word has to be valid, it has to be represented in some way that measures are also implemented and not just discussed further. And that happened very quickly in our case, and I think it's also very good in my other participations. And then it's about developing the technology further, but finding pilot customers very quickly. With a pilot customer, and for pure technology we did that first, we found pilot customers for work monitoring with whom we developed it. They then got it cheaper and were able to replace their systems. And of course we then sharpened the product to meet the needs of the market and the industry. And then it is of course much, much easier to place this product with other customers after it has been realised. That is the path we have essentially taken. That's also the basic path I'm taking. In addition to the technological hints I give that you need this, it has to be scalable, it has to be an open architecture, these are the topics that really sharpen the product when you further develop product segments via pilot customer structures. We have done that consistently.

Thomas Sinnwell: Definitely! And from my point of view, this is also a very decisive point to prevent the failure of technology start-ups in the IT sector, to work very early on with a partner who has to fulfil two criteria. It must a) be big enough and known in the sector so that it can be used as a meaningful reference. And that what you take with you there in terms of requirements is also representative of the sector and not a very special box, that is a very decisive point. And it must not be too big either. And it can still be a group if there are individual areas with which one can work very closely, but it must be possible to work together at eye level. And that was a very decisive point in our history. Mr. Ladendorf really detected the partner who fulfilled these two criteria and opened the door. And I think, from my point of view, that is even more important than the question of capital, to get hold of such a company as quickly as possible.

Pritu Detemple: Yes, so the keyword is smart money, if money is involved, it is more important that the know-how is also involved. And we also see this with start-ups that we accompany, for example, who are looking for investors. They are usually always looking for money. But the money, first of all, doesn't bring anything, it has no intelligence. The network that an investor brings with him, the partner, the connections that can take place, I think that is much more valuable than pure capital. Because capital goes away quickly, but experience stays. And that, I think, is the more important part of it.

Thomas Sinnwell: Yes, capital must also be returned. Nobody gives it away. Or you give away shares, that is of course also an alternative. That can also be very dangerous if I only do it in three or four rounds. I once had an idea, I'm still in the business, but actually other people decide. And that is important. And I think it is a legitimate approach to consider: What can I do with my competence in order to earn money myself and at the same time put my ideas into practice? And then, as you already mentioned, you can of course also build up a mix of financing. That may be more complicated in parts, but of course it has a huge charm. When the whole thing gets going, you have a nice, lean structure and you are quite well positioned for the future.

Michael Ladendorf: Unfortunately, my experience is that, especially when you see companies like High-Tech Gründerfonds and so on, which do a lot of large financing, take large rounds of investors with them or bring investors with them, an owner or founder no longer has a significant stake in the company. And it is important to me in my investment portfolio that the founders and the key players in the company continue to have a large share in this company, in the share capital of this company. Because when it really comes to an exit or integration into another company later on, the success is of course much better measured than if you then perhaps have an employee's salary and only have a small share. For me, it's also decisive for the war, which is why I always have it written into my contracts in the first two years that the founders have to stay with me, otherwise I'll leave again. Because for me that is decisive for the war. The one who has the idea, the one who has proven to me that he can implement it consistently and sustainably, has to stay in the company, otherwise it doesn't make sense. And that's why I have a lot of understanding in the three exits I've made, up until now the companies, the buyers, have always insisted that the founders remain in the company for at least three to four more years in order to really develop the company further, to integrate it. And I think that's a very important way to go.

Pritu Detemple: Mhm (affirmative). Yes. I think that's a very important point, because especially in the sector where sales, which I said at the beginning, is also a bit lacking, the founder is the best salesperson.

Michael Ladendorf: Yes.

Pritu Detemple: Because he carries the fire with him. So the one who can also awaken the passion. And people always like to try to map this passion through external people or partners.

Michael Ladendorf: That doesn't work.

Thomas Sinnwell: It doesn't work. No.

Pritu Detemple: It simply doesn't work. The typical German, to stay with the stereotype, looks directly for a reseller, a partner.

Michael Ladendorf: It doesn't work at all.

Pritu Detemple: And they have - I don't know how many - other solutions in their portfolio, some of which may even be competing solutions. And it's about commission. It's not about the sense of the product or what provides the better added value for the customer. And I think that is a very popular trap.

Thomas Sinnwell: We just talked about how important it is to win such a company as a partner for a group or a larger medium-sized company. And no external sales department can do that. Because the fire really has to come across, the competence really has to come across. This can only be achieved by the founders if they have the mindset and are prepared not to put their own technology in the foreground, but to focus on the application. What is the benefit for the customers? And these are questions that technicians often ask themselves too late. That would be my second tip at this point, what you have to pay attention to if you don't want to fail.

Michael Ladendorf: I can only support what you say. We have also had very good experiences with the whole issue, in that we have found partners, cooperation partners, who then receive our products. Because sales representatives, I agree with you, sell this tomorrow and that later, depending on where the commission is. We have to work very hard, and that is also our success with consistec and with my other participations, to find sales partners very quickly in terms of sales technology, who also differentiate themselves with our product. That is the big advantage. Because they see that they don't have it in their portfolio themselves, but with us they can also differentiate themselves. And that is the best sales lever you can do, in my opinion.

Thomas Sinnwell: Yes, definitely! The difficulty is that you have to enable the partner in a meaningful way. You can't neglect that. But once you've done that, of course, it's a great story.

Pritu Detemple: What I also see in terms of sales is that if you manage to be considered in tenders or to get into tenders, especially international tenders, we Germans are incredibly good. Because all of a sudden the technicians, all of the expertise, suddenly gain weight. If I may put it a little casually: If you look at the USA, the sales people who are on the road there, they are perhaps a little pushy in terms of sales methods, but they are very strong in this contacting, introducing, creating presentation appointments, creating demonstration appointments. Even if they are not technically that strong, they are very fast or they are good at creating this entry or generating attention. We are incredibly good at explaining the product, because we have a great competitive advantage over American companies in that we can suddenly explain it well, so that the sales people know what they are talking about. And if we manage to get into tenders, to get into comparisons, where technicians of the customer company really look at the solution, we are very, very good.

Thomas Sinnwell: But now I would like to do a roll backwards, because we are also talking about the failure of IT companies and what we should perhaps do to prevent that from happening: The team is important. Mr. Ladendorf, you already mentioned it, perhaps now also with a strong focus on the founders, but I would take it even further. You need a team where I have all the competences. We also have nerds, but I wouldn't put them in a role where they have to explain things to the customers. Because it's just too far a way. But you also have to find people who enjoy it. I think a basic requirement is that people don't have the feeling that I'm working somewhere, but that this is my shop, we together, this is my piece of code, I'm responsible for that, for the functionality.

Pritu Detemple: So code, C O D E?

Thomas Sinnwell: Yes, yes exactly! Exactly the code I mean. And we have such gems. They are excellent computer scientists, but they are very happy when a new functionality is presented to the customer. Because they made it. And the client asked for it, they built it, and they show it. Now it's ready. And then the customer reaction, that's great and that fuels that.

Pritu Detemple: Absolutely! I think the most demotivating thing ever is when someone creates, creates, is the creator of something, and then the CEO comes and shows: Here! I made this. This is my company. Like that. This feeling, too, that I am part of it, that I am allowed to go on stage and show what we can do in the form. And I think that's also part of it - that's how I got to know you, Thomas - that the managing director can and must take a step back. And not this pure ego. I believe that an IT managing director must not insist on his ego and on his presence on stage, but he must also be prepared to let the team, the spotlight and the light shine on them.

Thomas Sinnwell: The idea came up again in our conversation, because we attach a lot of importance to winning over people who have the ambition to do something special. And people have to see for themselves: Yes, this is my contribution to the company. That has to be seen, that has to be shown to the outside. And that is not the classic wage earner.

Michael Ladendorf: What is very important is to motivate people to do this or to find the right people to drive the technology forward.

Thomas Sinnwell: Yes.

Michael Ladendorf: And the topic of technology is also a big differentiator for me. That means I invest in it where I think the technology is the differentiator as well. In addition to the topic, of course, founders, personnel, employees, colleagues in some form or another, who advance the topic more strongly, more quickly. But at the end of the day, the technology is important. And that's why I'm also investing, I've been investing more in security issues lately, because I see a great opportunity for the future there. Especially for us.

Thomas Sinnwell: Yes. Perhaps it's also a very good point to simply take a look: What are these big IT topics that are coming up now? From my point of view, I think you just mentioned the topic of IT security. And a second big topic is, of course, cloud technology.

Michael Ladendorf: The pandemic has shown us a bit about security. Not only did we have a gigantic digital training course over the last year and a half, so that even old people like me now know how to do a video conference, but the issue of how vulnerable we are in some form has also become obvious. What really motivated me at the time, what impressed me technologically about the concept that the Sinnwell brothers developed, was that they said that it wasn't the firewall at the beginning that technologically said it was lagging behind, it was always lagging behind. It is not the security, but when I recognise the - I always call it - gaps in the fence in some form via network monitoring, via monitoring of the networks and all seven layers. That I then recognise where the weak points are so that I can take preventive action.

Thomas Sinnwell: Yes. I would also like to look at this topic separately again, but now that you have said it, I just remembered a third very big topic, digitalisation. I think the Corona pandemic has definitely shown that we are still lagging behind, especially in the public sector. I think digital education, online schooling, was also very, very painful in parts. Some schools have done an excellent job, others have been a disaster, even today. And there is a real need to catch up. But also in the companies, of course.

Pritu Detemple: That is a very important point, so one topic of early sales is education. Education, also to open up the context, why is a technology important. Especially when you are in this high-tech area, it is so high-tech that the context is often missing, it is not clear why I need it. The issue is also security. Security usually sells badly because nothing has happened yet. Only when something happens, does it happen, and then the preventive technology that should have been bought is actually obsolete. That is why it is always relatively difficult to sell security. But now, with the pandemic, we have created a context, also for high-tech topics, also for security topics. I think that is a very, very important point for education. Because if I as a distributor want to try to educate, I cannot educate every single person. Of course I can call each individual and tell each individual something, but it is much better if a certain context is already somehow there through simply general topics. That is, I think the topic of digitalisation in particular has now been sensitised. We know where the weak points are, which is perhaps the only positive thing that the pandemic has brought with it, that we simply have an awareness there now and can now also build on it in terms of sales.

Thomas Sinnwell: Yes, absolutely right!

Pritu Detemple: Okay, well, I think we are at the end of the discussion. It was a very lively and, above all, sometimes a bit controversial discussion, very good. But what are the three or four reasons that you really have to consider as an IT company if you have to start up? First of all, perhaps the question for you, Thomas: From a technical or entrepreneurial point of view, what is important in order to prevent an IT company from failing?

Thomas Sinnwell: Good! I mean, IT companies are broad, I'm narrowing it down now, if the focus is on a technology, i.e. a technology-oriented start-up. And it's important to realise that it takes years to develop a technology like this. And then of course I have a financing issue, I have to think about it. And it doesn't help much to engage in wishful thinking and say, oh, the technology will be ready in three years. No, that won't work. Second point: I need a partner in the SME or corporate environment who helps me to develop my product in line with the market and to whom I can refer afterwards in order to be able to address the second big one. I think that is also a very important point. Thirdly: I need a mixed team, or perhaps, that can now also concentrate on a few people, but I simply have different tasks. Technology is important. If I'm a deep-tech company, technology is the deciding factor in the end. But that alone doesn't help. I need people who can explain the whole thing and who can transport it in order to win that first partner, but also to inspire customers.

Michael Ladendorf: I can fully endorse that. But in addition, you absolutely, absolutely have to verify, besides the idea you have, what does the competitor look like? Because that's a big stumbling block, which I see with a lot of technical companies, even technical solutions, who then think they don't need to judge. Because these white spots that you then have in relation to a competitive situation, especially in tenders, especially in the decisions of large companies, are the final straw, which then does not lead to success. The second thing is, and you have demonstrated this excellently with your brother, to have stamina. Because there are enough frustrations, it's a gigantic wave movement, and you have to have self-confidence and really have an extremely high - or I think you say - high frustration threshold before you reach it. You have to get up again every day and even if there was a failure, you have to realise that. And that's what I miss in many people, and it's very, very important to have these two soft factors in addition to the hard factors.

Pritu Detemple: Great! I would like to add to that what you also mentioned, Mr. Ladendorf, once competitors, that is, the real market companions. There is another market competitor, which is actually also very massive, that is the change. Especially when you are in the high-tech sector, you always have to change. And that is also the task of sales, that you have something, a status, everyone is somehow satisfied, because people work with things they know. And I think one of the biggest challenges is to make a change happen. To be clear about it and to test it out as quickly as possible - yes, you already mentioned it. Get on the market as quickly as possible, don't pitch the family members. That doesn't help, they are always very happy, they think, oh, you've done a great job, boy and girl, that's a nice idea you have. Instead, go out to the market, ask those who are really critical and can also give good criticism, and build on that, and not in the privacy of your own home.

Michael Ladendorf: Absolutely right!

Thomas Sinnwell: Thank you very much!

Michael Ladendorf: Thank you very much!

Thomas Sinnwell: I think we have compiled the most important points that can ensure that you don't fail as a technology founder in the IT sector. I had a lot of fun talking to you. Thank you very much, Mr Ladendorf!

Michael Ladendorf: Thank you very much!

Thomas Sinnwell: Thank you very much, Pritu!

Pritu Detemple: Thank you!

Thomas Sinnwell: And then until the next episode. Bye!

Pritu Detemple: See you!

Michael Ladendorf: Bye!

So that's it from us again. We hope it was entertaining for you and that you were able to take away something on the topic. As always, we have further links to the current episode for you in the show notes and ... if you want more, we would of course be happy if you subscribed to us.

By the way: On our YouTube Channel you can find a lot more information and videos about our podcast topics. Just click on it. In our next episode on 4 November, we have prepared another trend topic from the IT sector for you. We'll be talking about cloud computing. What is a cloud, how do I use a cloud and what are the advantages and disadvantages of the cloud? Curious? Then just tune in. We look forward to seeing you.