Week 8: Doing things, Company Culture, Strategic Investors, Paperbooks
Doing, culture, vision, purpose, strategists, books and waking up.
Hey there!
I had a good week. How about you? I woke up every morning of this week because of daylight and not because of my alarm. I celebrate the arrival of very early moments of spring.
Make things: Conversation with Lea and Ole.
Monday and Tuesday this week, I had conversations with Lea-Sophie Cramer and Ole Tillmann. One among the three of us and one on Clubhouse. We talked about how Lea grew up and turned into an entrepreneur. What I really liked about her story is how fearless and open she deals with opportunities and challenges. And how good she is in understanding how networks and digital platforms work. Check out her postings on Linkedin and Instagram.
Company Culture: Vision, Purpose, Mission, Values
At APX, we have been working on our vision, mission, and values, and we had quite some discussions on how to put them in writing. It is important to look at who you are, where you want to go, and how you are and want to be from time to time. After two years of APX, we decided it is time to reassess and resync. After the communication of our new strategy last month (wider and deeper investments in early-stage companies with tailormade support), we took a few weeks of working, making them explicit. Søren, Henric, and I will be presenting them to the team next Monday, and we expect to have a session with everyone on “how to live” this next Thursday. Most likely, I will share them here as well.
When I was teaching strategy classes at the Humbold Viadrina School of Governance in 2013 with my friend and business partner Stephan, we had a module about vision and mission, and I think it still makes sense. Below is one of the slides from the deck we used. Please note that back then, we already talked about iteration, learning, and lean cycles...
I think it is important to know your fundamental values when building your company, team, and operations. And then connect them to your Dream, Vision, and/or Purpose and then goals and operationalization.
Strategic Investors
We had a session with some founders where we discussed random topics around entrepreneurship. One of my favorite topics came up: How to work with strategic investors, and should you have them in the first place? I think this is a challenging topic: in the early days of your company, a strategic investor might theoretically be able to provide you with relevant shortcuts to grow, but there is also a genuine risk that the fact of having a strategic investor has very negative consequences for your ability to raise venture capital.
Usually, strategic investors invest in your company because they have a strategic interest in what you are doing. They either want to work with you, want to learn from you, and see something worthwhile for their present and future business activities in you. And this should lead to M&A talks between you and them. When you are too young to be acquired (because you have not proven the ultimate product-market fit or have not scaled enough), it might be tempting to accept a strategic investment. If you are considering this, in my experience, it is imperative to also think about the long term consequences:
What will your captable look like? Will the strategic investor have any strategic influence or insights into your company, strategy, and tactics?
Will this have consequences for your ability to raise capital from venture capitalists? In my experiences, future investors nearly always choose the less complex setup.
Is the strategic investor potentially the future acquirer of your company? Imagine how little fun it will be to negotiate a sale with a buyer who knows you for quite some time, who knows all info about your company, and who can influence your ability to raise financing rounds. Not the strongest negotiation position to be in.
But how can one work with strategically interesting partners? In my experience, it is not that difficult: The first thing you can do is actually work with each other. If you have a product or service they can buy: let them become your customer and grow with them. We always say: “There is no need to buy or own the restaurant only because the food is good.” After working with each other and growing your company, and getting to know each other better (this can last for months or even years) and over several financing rounds, acquisition talks might make sense. And then you are not talking about having a strategic investor but rather a strategic acquirer. It is then about negotiating a purchase price, an exit for your investors, and a good earn-out for you and the people working with you. If you do this too early in your company's life, you need to be a master of negotiation to create an earn-out deal that makes sense for both you and the acquirer.
Things I read: New books and not too much online.
This week I was into paper books and rereading. I spent some time with The 15 commitments of conscious leadership, which I discussed with some colleagues in multiple meetings and started to read Steal Like an Artist and Show your work. There was no time yet to reflect on them, so for now, I can share with you that I enjoy reading them. And I am very much looking forward to reading “The boy, the mole, the fox, and the horse.” A friend recommended the book, and with its illustrations and comic-like appearance, I am excited to read it over the weekend. This week I did not feel like reading digitally.
Next week Tuesday, Ole and I will be having a lunch conversation on Clubhouse again. I will share the link on joerg.campsite.bio, where you can find relevant Joerg links. If you like this week’s newsletter, please feel free to share it with a friend, and I am always happy to receive feedback.
Have a great week and best
Joerg