“There is no point in a business plan at the outset”
Bramwell Kaltenrieder has been involved with many start-ups. Today he is Professor of Digital Business, Innovation and Entrepreneurship at BFH and the co-founder of Powdience, a company which provides a platform for data-based personas.
Mr Kaltenrieder, what fascinates you about setting up new companies?
Yes, why would anyone keep putting themselves through all that stress? (laughs.) There are different types of professional people. I am one of those who enjoys building new things. I find it exciting to identify new opportunities, create innovative solutions for them and then be at the very forefront of developments in some areas. It lets you play a part in shaping the business world and create jobs.
Coming up with an idea is one thing, but market viability is another. How tough it is to get through this reality check?
It is definitely a huge challenge. Fortunately, being part of a team means you can always draw on the experience of colleagues. And by engaging in dialogue with the market at an early stage, you soon become aware if you have created something for which there is no appetite. Entering the market at just the right point – not too early or late – is an art. Achieving market viability through an iterative process takes time, money and staying power.
It is often BFH students who implement new ideas and found companies. As a professor, do you have an advantage in this respect?
Having business experience is clearly advantageous. A good network of contacts is really useful too. Being an old hand makes it easier to find partners who can raise the profile of the idea and help find your first customers. That way you only have to answer to investors later on. But the students have advantages too: they are fresher and more open-minded. They are also sometimes better at judging the mood of the moment.
How did you come to set up Powdience?
Quite honestly, completely by chance. I founded the digital agency orange8 some time ago with Mike Schwede, my partner at Powdience. We ran into each other again in Biel around two years ago and we discovered that we had been exploring the same areas. In the fields of communication, innovation, entrepreneurship and software development, you frequently encounter what are known as personas. These are detailed descriptions of fictitious persons who represent customer groups. They are a popular tool for promoting customer centricity at medium-sized and large companies. But they are often very superficial and lack a solid foundation. We both could not understand why people are still working with hypothetical personas today – and not data-based ones. Because that way there is a great risk that the new advertising campaign or product might elicit no response at all from the target group. So we wondered: how can we massively improve the relevance of personas?
So the business idea was there right away. What about actually implementing it?
By this point, Mike Schwede had already developed a prototype that could be used to compare personas with Facebook data. And I had launched a project on data-based personas with students. We were both convinced of the idea’s relevance. An increasing amount of data about customers is available today thanks to CRM, Google Analytics, newsletters and many other tools. So why not use this data to create personas for companies? It seemed a logical step to us.
What role did BFH play here?
The collaboration with BFH was very important: we were able to advertise our project as a bachelor’s thesis. Two students applied and made tremendous progress in developing the idea in tandem with Powdience. They conducted and analysed customer surveys and produced solution concepts with the team. These findings were fed directly into the development of the Powdience platform. It was a win-win situation: the students were delighted to get a unique opportunity to work on a real start-up project, and Powdience was able to benefit enormously from their work. All companies actually have the opportunity to advertise topics for semester projects and bachelor theses at BFH. BFH creates genuine added value for the economy through this kind of collaboration. A key part of a successful collaboration is to provide consistent support for the project: the students are highly motivated and already possess a lot of skills, but they obviously require some help with actually applying them in practice. BFH also provides start-ups with premises at the Spin-Off Park on very attractive terms.
You’re still looking for investors. Most start-ups have to find funding. Do you have any particular advice?
Where possible, the founding team funds the first steps, including market validation, without third-party funding. This allows entrepreneurs to focus on the new solution and the customers right from the outset and means gruelling discussions about things like business plans do not need to be held too early on. Having an initial solution and evidence of demand for it makes discussions with potential investors much easier. The ideal scenario is working with investors who will actively support the start-up. They are well connected in similar fields, can open important doors, increase your visibility and most importantly boost your credibility. The element of trust is vital on the start-up scene. A good investor brings more than just money.
You are now an expert on start-ups. What mistakes should be avoided?
It is very important to understand that there is no point in producing a business plan right at the outset. You should not let yourself be pressured into it. Being able to present validated interviews, market data or responses to initial prototypes is much more important. You should not fixate on planning but instead adopt an iterative approach and discard ideas which seemed logical to begin with as you go along. You should never assume you know what makes a particular market tick, particularly when you are experienced. You should not place blind faith in the experiences and opinions of other people either, but instead produce your own data, findings and conclusions by being inquisitive. Another key point is not to start thinking about making big money when you set up your start-up. If your main goal is generating revenue and becoming rich, it rarely pans out that way. Being successful in business is only achieved by producing a solution that stands out, offers concrete benefit and is well marketed. Another danger for start-ups is narcissism: a realistic and self-critical approach right from the off will reap rewards. The idea might be great, but perhaps the market is simply too small. It is a fact that nine out of ten start-ups fail. As appealing as setting up a company might be, if you have an idea, you should test it out and decide against pursuing it if need be. As the saying goes: better a horrible end than never-ending horror.