What can you expect in the last interview from Techstars
Techstars co-founder David Brown: "The team is all about passion"
David, Techstars has two programs in Berlin: one with Metro and one of its own. Why?
David Brown: We find it very helpful to have several programs in one city because it allows us to better involve the community with mentors and investors. If a program lasts three months, then you have to wait nine months for the next program. So it's great to have two programs: the Metro program with Olaf Koch and then the City program. Both complement each other well. The Metro program focuses on the hotels, restaurants and catering sectors. The Berlin program is open to all types of companies. Slightly more than half of all our programs are like the Metro program, ie vertically specialized. Nine correspond to what we call the horizontal program or the city program.
The City Program is open to everyone. How many wanted to take part?
David Brown: We don't really check the applications for each program because companies sometimes apply more than once at the same time. We get 15,000 applications from companies each year and we accept around ten per program. We have 22 programs, so 220 out of 15,000 are accepted. Thus the acceptance rate is lower than at Harvard.
How do you choose the companies?
David Brown: It sounds like a joke, but our six criteria are: “Team, team, team, market, progress, idea.” The people in the team mean so much. That is why these are the first three criteria. Behind this is the theory that great people with a mediocre idea can change the idea, but mediocre people with a great idea cannot substitute themselves. And that's why we prefer fantastic people to fantastic ideas. That would explain “team, team, team”. The "market" is about how big something can be. Can you only sell five of these or can that scale really big. "Progress" shows how your company is doing. It doesn't matter where you are when you come to us. Maybe you're just getting started with just a website and nothing else. But if after five years that's still all you have, then that's not good. If you're just getting started, a website, a minimum viable product, a few customers, or some revenue will do. Compare your status after three or six months and you will see your progress. The "idea" comes last.
"We'd rather have fantastic people than fantastic ideas"
If you get more than 15,000 applications a year, surely many startups meet these six criteria. What makes your eyes shine in the end?
David Brown: The team is all about passion. It's not something you can measure, but you can feel it. Sometimes we find entrepreneurs who have problems in their lives that they really want to solve. And you see them working on it day and night. This is not a job, this is passion. When you see someone like that, you want to choose them. The opposite of this is when an entrepreneur does something because he wants to manage his time himself or because he wants to be Mark Zuckerberg and want to make a lot of money. That's not what it takes to run a startup.
Who makes the decision to join the program, you in the USA or the local team?
David Brown: The local team. We're hiring very accomplished managing directors in each location. Jens Lepinsiki heads the Metro program, Rob Jonson heads the Berlin program. The leaders are usually experienced entrepreneurs who have already founded startups or who have already been investors. We trust them to choose and then it is their decision to put together a team to help them. It could be someone from the US or another leader or mentor or investor they know. And they form what we call a selection committee to advise the managing director. But in the end it is his decision.
Does that mean that the character of the individual startups and programs is very different?
David Brown: Yes, they take on the character of managing director. Some believe strongly in technology, so you have technology companies that are in the program. Or an MD believes in SaaS or Bitcoin. If we replace a managing director in the following year, the program changes too.
What is the character of Berlin?
David Brown: That's a good question. I don't know if I have a good answer to that. Jens previously managed the Berlin program and is now responsible for the Metro program. Rob previously did Metro and is now in charge of Berlin.
What is Rob?
David Brown: Rob is a very smart, very dedicated startup guy. He is very passionate. He's not German, but in my opinion he has a lot of German characteristics.
That would be?
David Brown: Precision. His process of making a selection is very careful. And I would expect the companies he selects for the program to match that.
The Berlin program is entering its second round. Can you give a conclusion about the first round?
David Brown: I think the first program was a great success. Sometimes it can be difficult to start a new program in a new city. The Berlin program came before the Metro program. And if you start something, especially as an American company, you may not yet have a brand with recognition value, or a pool of mentors, your investors have not yet seen your demo day. So the first program can be a bit harder. But with the second program everyone understands.
What difference do you see between the startup scene in New York and Berlin?
David Brown: Our impression is that there are a lot of startups in Europe and also in the United States that want to move to Berlin. Berlin is a great city that you can afford, there is a good startup culture and a good ecosystem. If you are not from Berlin, attending an accelerator is a good way to go. In New York I would say our program is much more established. We now have six or seven different city programs there, plus we have a Barclays program, an AdTech and an IoT program. In total we will probably come across 15 different ones. The mentors and investors there know exactly what to expect. And New York is home to many financial services, large corporations, and media companies. There are a lot of companies from all over the world that would like to be part of the New York program. There is no doubt that a disproportionately large proportion of the 15,000 applicants want to New York.
Berlin and New York are in competition with Silicon Valley. Could both of them have better chances together? Berlin politicians would like to build a bridge to New York and be stronger together.
David Brown: We don't really believe in a competition. Different entrepreneurs want to live in different places. Some want to live in Silicon Valley. I didn't want that my whole life. I started my businesses, including tech stars, in Boulder, Colorado in a city of 100,000 people. Techstars is trying to help communities that are not in Silicon Valley but have a strong network. It's not about becoming like Silicon Valley, there are many negative things associated with it. You don't have to go to San Francisco with abnormally high rents and abnormally high salaries to build a successful company. You can do that wherever you want to live - whether in Boulder, Berlin, New York or anywhere else. I don't think building a bridge to compete better is the right approach. I think one should learn from other municipalities in Europe and around the world and see what they have done to make startups stronger. It's a good approach to becoming something that isn't Silicon Valley. We are not against Silicon Valley, we are just different for everywhere!
"We are not against Silicon Valley, we are just different for everywhere!"
Are you looking for other partners in Berlin besides the metro?
David Brown: Yes. We have around eight to ten company inquiries a week from Germany, Europe, Asia, the Middle East, South America and Africa. But we only select a few.
What are the criteria?
David Brown: There are three. First, a good ecosystem. Are there startups, mentors, investors there? For example, if you go to a city where there are no tech stars yet and you ask an entrepreneur: “What is happening in your city?” And he says: “Oh, there is a meet-up here and we have a startup -Weekend there and you should meet them and the people "- then we go. If he says: “I'm all alone here, I work in my apartment” - then not. That is the criterion. It is important for us to work with good and motivated corporate partners. With metro it's great. The CEO is committed. It's not a marketing or HR initiative, Metro wants to create a transformative change in their company and industry. The third criterion is vertical. The question is whether we can find sufficiently good companies in a segment like the catering sector at Metro or fintech at Barclays.
"For us it is important to work with good and motivated corporate partners."
Which cities are you going to next?
David Brown: I can't talk about plans.
Will there be more programs this year?
David Brown: There will definitely be more Techstars Accelerators in Europe this year.
Also in Germany?
David Brown: I don't know for sure whether Germany will be there.
Is there such a thing as a “tech stars culture”?
David Brown: We are ready to give. That is the culture or value that is probably most likely to be seen from the outside. This means that we do not expect anything in return in our relationships with founders and partners. We're happy to help. Which of course does not mean that we do not hope for anything in return later. But this is a great way to live your life and develop your business. That's one thing. Founder-first is another core value. For us, everything revolves around the founder. You won't find anyone in our programs who gets into trouble for making a decision as long as it was right for the founder. When we make decisions, we first think of the founders, even if we have to forego investments that we would otherwise have received.
"For us, everything revolves around the founder."
When you look back on ten years of tech stars: What has changed over the years?
David Brown: We were just an accelerator in the beginning and now there are the startup programs and the venture funds. In addition, we have become a network, which we weren't in the beginning. Let's take the FounderCon: Our annual meeting brings together around 1000 Techstar founders in the USA. This year the event took place in Europe for the first time, understandably a little more modest with fewer participants. And this network, which connects founders with CEOs, CTOs and other founders, is becoming more and more valuable. In the past, the founders were through after three months and their network consisted of a maximum of the nine other startups in the program. Over the years, more and more companies have completed the programs and the importance of the network has grown with it.
What are the next steps?
David Brown: Our vision is to help entrepreneurs on their way from inspiration to IPO. What does inspiration mean? Maybe you work at IBM and you are not happy. So go to a startup weekend, check in on Friday night and create a startup. On Monday morning you are so excited that you quit your job and work full-time for your startup. There are great stories. That's the inspiration. Then comes the accelerator phase when you are a little more mature, then comes the venture capital phase when you need money to grow. There are many activities with which we help companies to grow on their way to an exit or IPO. One of the next steps is to make more of it! The founders are connected to us. We are investors and we have shares. We have a vested interest in being successful with them.
Does that mean that you are also involved in later phases of the company?
David Brown: Exactly. Some of the companies that have gone through the accelerator now have 300, 500 employees and are facing the same problems as they would with two or three people.
And then you give tuition?
David Brown: Don Loeb works for us as Vice President of Corporate Development. He lives in Silicon Valley. And his job is to build relationships with Facebook, Google and the other companies in the Valley. If, for example, a startup wants a license deal or an investment or takeover is involved, then we make sure that there are ways to get your foot in the door. Sometimes an email is enough to bring the right people together. This is an example of how we can help companies later.
Which technology trends do you find exciting?
David Brown: Artificial intelligence or the bot revolution, for example. A lot of companies are looking into natural language processing right now, for example to order an Uber car or do other things without having to click. Amazon's Voice Recognition is a very interesting demonstration of this technology, which is very complicated but very interesting for users.
The interview was conducted by Corinna Visser.
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