Serial entrepreneur and CEO of NBT, Harald is regularly being asked to share his thoughts at events throughout the country, and this week was no different. Following an invitation to the Commerzbank conference, Harald presented his ideas on IoT entrepreneurship for the future. The following is translated from a transcript from the event...
You are a successful entrepreneur (founded five companies and participate in more than ten), however, you have also spent a part of your career in big companies. Is there, in your opinion, a difference between the entrepreneurial thinking/mindset of founders compared to owners of already established and longer existing firms?
For me an entrepreneur, in the classic sense, is the founder and owner of a company. A businessman in a long existing firm is not automatically an entrepreneur. What this means is that entrepreneurs differentiate themselves above all through a special spirit, which typically helps them to manage uncertainty and risks exceptionally well and in this way bring their young company to success. An entrepreneur is somebody who under-takes something and starts a business at his own costs and therefore also bears the win-and-lose risks often personally. I think that the dream and the will to create your own private wealth, or to create something new is what drives entrepreneurs in the digital economy. This goes hand in hand with a willingness to take risks and a pleasure to fight one’s way and compete.
You have stated in an interview, that you gathered the capital for NBT AG among others from Business Angels as well as family and friends. In your opinion, what role will those alternative financing options play in the future for SMEs?
I think that a lot of companies receive bank credits relatively unproblematically and that there is an already existing relationship with banks, so that small and medium enterprises focus mainly on financing through bank credits. One should keep in mind, that alternative financing options are more complex than classic bank credit. Especially for companies, in which only a small number of people engage with the financial questions, are such alternative financing options often negligible. For startups it is completely different as everything there revolves around growth and with it associated capital. As usually there is no or too little profit to finance the growth, the equity-based funding is the rule i.e. the investors receive a share from the company.
In your opinion, what are some qualities that young people wanting to become entrepreneurs need to have?
If I have to choose one point (along with others such as technical characteristics, motivation, adaptability and persistence) it will be readiness to take risks. But here it is important to say: companies with an average readiness to take risks exist longer on the market than those at the extreme ends of the spectrum. An average risk-taking attitude combined with emotional stability allows the founder to make hazardous decisions whilst withstanding periods of uncertainty.
"Now, we see companies losing their market and business model whilst startups are dealing better with converging markets, or are built with the intention of disrupting traditional markets"
The study has shown that experienced new entrants (executives over 40 years that are active in a company for less than 5 years) are more often driving forward innovations and business areas. What is your opinion on that result, especially in the context of a widespread stereotype of the “creative, risk-friendly and revolutionary young businessman”?
This is very interesting, I am sure that what is meant here is the linear innovation in longer existing companies. The success of an established company often comes from the experience, which the employees and managers have gathered from the markets. Actually such companies traditionally cope with innovation pretty well, but that is not the case anymore, in times of disruptive innovation. Now, we see companies losing their market and business model whilst startups are dealing better with converging markets, or are built with the intention of disrupting traditional markets. The core question is still: “Why are such companies failing during the change in disruptive markets?”. The simple answer: “Because they have something to lose.” On the contrary to a startup, an established company has achieved success that could be jeopardised.
In your opinion, what will the Internet of Things change for the classic, SME manufacturer working with machines?
The IoT’s technical challenges are decreasing, also for SMEs! The connection of physical things to the internet is one of the mega-trends for the coming years and has the potential to turn whole industries on their heads. Those who uses the chance to generate new services around these smart investment products will create huge growth opportunities. I compare the development with the early times of the internet: in the 90s there was a lot of discussion about the chances, although from a technical perspective not everything was possible yet. In 2000 the market (Nasdaq) even collapsed. Still the internet evolved further and became a clearly dominating technology. The Internet of Things will lead to similar changes and its diverse usage possibilities will force all industries to deal with it sooner or later.