Insights from a relayr Founder, now CEO & Founder of Next Big Thing AG
By NBT's Sr. Content Manager, Elisheva Marcus
Harald, congratulations on the recent news about relayr! In light of that, and as one of relayr’s founders, we wanted to talk more in depth about your path, where IoT entreprenurship is heading, and what you envision with your current company, Next Big Thing AG.
What forces or ideas prompted you to found relayr?
HZ: Working for Cisco Systems for 15 years of my 25 years working for American companies, and during the right years (the 90’s), deeply impacted my career. We were virtually building the Internet as we know it today, both technically and creatively, with more than 80 percent of Internet traffic on Cisco. (I’m not sure how that compares to today). After the Internet became increasingly important to us as humans, and changed nearly all aspects of our lives, it was only a matter of time before this networking would spill over from IT to OT (operations technology).
The basic idea behind our startup “iThings4U”, which we later renamed relayr, was a kind of Cisco router for the OT (now the Internet of Things) – though not in a box, rather in the cloud. Our aim was to understand and evaluate all possible proprietary languages, or protocols, of existing OT devices as well as new ones in real time.
Visionary! So, what difficulties did you face and how did you solve them?
HZ: Berlin, with its ecosystem and my history and personal network helped us tremendously. But as always, the challenge involved inspiring talent (people) and securing money for the idea. The key message here is: Never give up and always believe in your ideas! Or as Stanford Professor Bernard Roth describes in his book Achievement Habit: "Stop Wishing, Start Doing, and Take Command of Your Life“. Think less; do not "try", just "do it" and learn to focus. And last but not least, train your resilience to withstand defeat and failure "unscathed," and not be intimidated by it.
Considering this 300 Million exit is one of the biggest for IoT globally, what has changed in the investor landscape since seeking funding for relayr?
HZ: Well I don’t think it's the biggest exit in the history of IoT. Actually I recall bigger ones were Google buying Nest Labs for $3.2 billion in January 2014, and Cisco acquiring IoT service provider Jasper for $1.4 billion in February 2016.
But the Nest deal was a real game changer for relayr and me; after that everyone woke up very scared. All the doors and latches that were previously locked to us now opened a little bit easier. Many realized after the Google deal that IoT is real. Nonetheless, the money needed to build an IoT platform was not so easy to find in Germany, or Europe in general.
How has the IoT/ tech landscape changed since you founded relayr? What trends do you notice?
HZ: The size of the global Internet of Things (IoT) market from 2013 to 2019 grew from 480 billion to 1700 billion USD, almost a quadruple! With a projection to increase its value to over 2.2 trillion U.S. dollars by 2020. This is a huge market that many see.
Not only are big, well-known IT companies such as AWS, Microsoft, IBM and SAP now entering the new segment IoT, but many SMEs and startups are opening up a new segment in the market with their innovative technology. Another trend is that well-known industrial companies are increasingly concerned with the development of IoT services in order to cope with increasing digitization of their products. So the boundaries between pure industrial enterprises and technology are blurring, as companies have to score with a broader portfolio and real end-to-end solutions for their customers. This is exactly the sweet spot where NBT focuses our offerings.
What lessons do you carry into your current work as an expert in IoT entrepreneurship and Founder of NBT?
HZ: My primary concern now is to bring Germany/Europe’s digitalization into a position that corresponds better to our economy. As for the first wave of B2C platforms, we have hopelessly overslept and given that to the Americans, and even more recently to the Chinese. The markets are dominated by American and Asian Internet B2C services.
The seven most valuable companies in the world are digital platform companies from America and China. In the short and medium term, efforts are needed to safeguard Europe's position and competitiveness in the field of digital markets on an international level, while preserving our economic and social prosperity. And this is where IoT and Blockchain come into play. At NBT, we want to create the conditions for enabling digital B2B companies in Germany and Europe to achieve a competitive size internationally.
It’s worth noting that, with one exception, the world's eight most valuable companies in terms of stock market value are digital companies. They all come from the USA or China. The list is led by Apple (stock market value $1.09 trillion) and Amazon ($1.0 trillion). In seventh and eighth place sit Chinese Internet corporations Alibaba ($426 billion) and Tencent ($394 billion).
The most valuable European company in this league is the German software manufacturer SAP - with a stock market value of about 142 billion dollars. That's just enough for 57th place in the global ranking. In an international comparison, Europe is thus clearly dependent on the digital economy. According to an analysis by the Institute of German Business (IW), only five percent of the promising platforms are located in Europe.
As I've already said, this lead in the B2C segment is unachievable. So we should focus on the next wave of B2B platforms (with IoT and Blockchain), and that’s what we do at NBT.
What does this exit mean for Germany/IoT? What does this say about a potential big shift in investment in Europe?
HZ: It is interesting to see that now a fairly traditional German reinsurer takes the initiative to buy relayr and seizes the opportunities offered by IoT for its future business model, even after some the two German Software players, SAP & SAG, did some IoT takeover. For examples, the Plat.One's IoT platform through SAP, which was then integrated into the Hana Cloud platform or the IoT Platform Cumulocity was acquired by Software AG in March 2017 to expand their horizontal product range.
But that’s often true for all other corporate C-level decision-makers: Long-term IoT strategies and planning, as well as successful implementation over the next few years, requires an adjustment of their plans to changing value chains and market conditions
After all, around 40% of companies in the DACH region see themselves as "active designers" and "profiteers" of the digital transformation. But the majority of decision-makers are still struggling when it comes to the planning, technical conception and concrete implementation of IoT and Blockchain projects.
And that’s where NBT comes in!
HZ: Yes, exactly right. With our approach to company building, we create ventures that are scalable in solving problems, and where the venture design is purposefully built based around IoT entrepreneurship and - where it is conducive - blockchain implementation. We have the complete package of expertise and support within NBT and our ecosystem: operational funding, mentorship, investor contacts, and super important - a tech team that specializes in IoT hardware and Blockchain research. We build and test solutions, bringing ideas much faster to market.
Thanks, Harald! It’s a pleasure to learn from you and see the progression of your forward-thinking ideas.