As our farewell dinner came to an end, each student on the Tunisia Global Immersion Program shared their main lesson learned from a week spent learning about the business environment in North Africa. A few common themes surfaced throughout our discussion of Tunisian history, culture, and business, including:
Entrepreneurship: many of our students were impressed by the dedication that Tunisians show towards fostering a welcoming environment to aspiring entrepreneurs. Established businesses like BIAT go beyond paying lip service to the importance of entrepreneurship, which they’ve proved through the creation of both an incubator and accelerator program in Tunis.
Tunisian Pride: Tunisians are true patriots! From meeting with aspiring political leaders to dining in our teammates homes, each of our experiences underlined how proud Tunisians are of their country’s diversity and rich history.
Optimism: While economic conditions have been challenging following the revolution, Tunisians remain optimistic about the future. Upcoming parliamentary and presidential elections in 2019 represent an important inflection point in Tunisia’s history. Over 200 political parties have formed since 2011 and underline the enthusiasm with which Tunisians approach political participation. No political system is perfect, but the growth of civic participation and support for small and medium-sized enterprises shows that the country is moving towards a strong foundation for the future.
Growth Potential across Africa: While Tunisia’s economy has historically focused on Europe, almost all of our speakers emphasized the enormous potential for growth across Africa. Technology solutions that transcend physical borders have the opportunity to reach huge populations of individuals who had been previously separated from the latest innovations. Many Tunisian businesses are aware of Africa’s previously untapped potential as a consumer market and intend to take advantage of their geographic location to serve this market in the future.
Katie Tsantes (’19) is an MBA Candidate at Columbia Business School
We finished our week with the conclusion of Open Start Up Tunisia. Throughout the week we learned more about our Tunisian counterparts and had the opportunity to have a traditional Tunisian dinner in their homes. Friday’s pitch competition allowed each team to showcase the work they’ve done over the past months, building out their business model, honing presentation skills, and obtaining sales to initial customers. Each venture impressed the judges with their commitment to social and economic goals, as well as demonstrations of their ventures’ prototypes.
With this 3rd generation of Open Startup Tunisia competition, key partners ranging from the Columbia Global Center in Tunis to the U.S. Embassy have enabled the organization to connect aspiring entrepreneurs with the right resources to launch their venture. Congratulations to team Tun Up, who won the competition with their venture to create the next generation of essential oil from harissa pepper seeds. While these seeds are typically wasted during the production of harissa, the oil they can create surpassed the beneficial properties of argan oil in lab tests.
Our company visits from the past few days have provided a window into the wide array of sectors and individuals working towards Tunisia’s future. Our class had the opportunity to visit Instadeep’s offices in downtown Tunis, where we learned about applications for artificial intelligence in Tunisian businesses. Instadeep provides a range of services through reinforcement learning and deep learning algorithms to enable companies to maximize the value of their own data. By working hand in hand with local businesses, Instadeep provides holistic services for its clients, from data cleansing to advanced AI models. Instadeep actively seeks to reduce the Brain Drain of young Tunisian students to Europe and Canada through their recruiting strategy in Tunis. While they have offices in the United Kingdom and France, they remain committed to growing their business inside of Tunisia.
We also were fortunate enough to meet with Olfa Terras-Rambourg of the Rambourg Foundation. Mrs. Terras-Rambourg’s team has conducted an unprecedented survey of over 11,000 Tunisians to determine top priority issues for the country leading into 2019 elections. As a potential presidential hopeful, Mrs. Terras-Rambourg has learned firsthand from Tunisians about their concerns, most notably:
Inflation: the Tunisian economy has struggled following the departure of Ben Ali and inflation currently stands between 7-8%, making the cost of living unsustainable for most Tunisians
Corruption: endemic within the Tunisian system is corruption that has become so prevalent some citizens refer to it as “another tax required to do business in Tunisia”
Security: with uncertainty across the border in both Libya and Algeria, many Tunisians remain concerned about their own safety and security. Terrorist incidents following the revolution have limited tourism and foreign investment, which will be top priority to resolve for any incoming administration
Health Care: many of Tunisia’s best medical professionals have left the country following the revolution. Students must be encouraged to remain in North Africa in order to build a sustainable health care system in the future
While these challenges may seem daunting, Mrs. Terras-Rambourg remains hopeful about the future. She seeks to create a grassroots movement that will create a better future for all Tunisians, where citizens can achieve peace and economic prosperity.
Katie Tsantes (’19) is an MBA Candidate at Columbia Business School
Today our class visited two agricultural businesses located south of Tunis. Al Jazira Olive Oil led us through a tour of their manufacturing facility and taught us about the production and distribution process of olive oil both within and outside of Tunisia. 1 ton of olives typically yields 200 liters of oil and Al Jazira creates mostly extra virgin olive oil varieties. They utilize Chaibi olives and maximize their production during the growing season, which lasts from October to January, by utilizing a modern processing facility. The company participates in many international tasting competitions and trade shows each year as part of its strategy to continue to identify international distributors.
Next we visited the factory of Sun Antipasti, an agri-food company that produces and distributes tomato paste, harissa, and thin pastry sheets. These pastry sheets, called bricks, are becoming increasingly popular around the world and we were treated to samples of the final products following our visit. Sun Antipasti exports its products to international markets – check out their website to find their products near you! Both Al Jazira olive oil and Sun Antipasti have immense potential for international expansion and are taking advantage of favorable export regulations to grow their presence.
We then visited ruins of the ancient Roman city of Uthina, which was only recently discovered and 80% of which is believed to still be underground. Throughout the tour we enjoyed scenic views of the ancient town, including the old aqueduct, underground hammams, and a stunning amphitheater. The Amphitheater once seated 16,000 spectators for views of Many of the town’s original mosaics are now displayed in the Bardo museum in Tunis. While much of the original structures across Uthina have been restored, nothing new has been added to the town and much of the original beauty remains.
Katie Tsantes (’19) is an MBA Candidate at Columbia Business School
Tunisia has often graced headlines in the past few years for its foundational role in the Arab Spring and subsequent path towards political and economic stability. Beyond the headlines, what makes the business environment in Tunisia unique? Our course so far has focused on learning about the nuances of entrepreneurship in Tunisia. We’ve had the opportunity to learn about the unique conditions facing new ventures in emerging markets from guest speakers including Columbia University Professor Safwan Masri and Columbia Business School Professor Marco Viola.
We also had the opportunity to work with Tunisian graduate students who are participating in Open Startup Tunisia, a startup competition in partnership with Columbia Engineering and Business School that supports Tunisian youth eager to open up to the world. Six finalist teams in this competition have been paired with teams of Columbia Business School students to further build out their proposed business models. In working together to develop financial models and refine our Business Model Canvas, our class has received a window into market opportunities and consumer demands in North Africa.
This class has pushed us to challenge what we think we know about entrepreneurship and apply our knowledge to an ever-evolving business landscape in an emerging market. While we’ve learned to build financial models and fine-tune our Business Model Canvas in other courses, what happens when a key part of your device hardware is held up at customs? What about when an innovative idea may have social implications that could be controversial with local populations? How can these proposed ventures think about building a business model that can scale both within and beyond Tunisian borders?
The finalist teams are listed below – check out the YouTube links to hear more about their ventures. Our time in Tunisia will be spent both continuing our work with these Tunisian entrepreneurs, as well as site visits to expand our understanding of doing business in the region. The trip promises to teach us more about topics ranging from artificial intelligence to consumer goods and introduce us to CBS alumni along the way!
Stay tuned for updates from our trip and from the Open Startup Tunisia pitch on Friday, January 18th!
Dr. Wolfgang Bernhard ‘88 is a proud man. He’s fit, maybe 5′ 11″ tall, his sharp chiseled facial features and touch of grey hair complement a finely tailored navy suit with a silver pocket square. When he speaks, he is assertive and charismatic, a commanding voice easily fills a room of 30 MBA students. Most importantly, Dr. Wolfgang Bernhard is a “car guy”.
Bernhard was the former Chief Executive Officer of Mercedes-AMG GmbH and would later hold various positions, including being a member of the board of management of Daimler AG, before retiring in 2017. Bernhard embodies the classic German ethos of discipline, hard work, first-one-in-last-one-out, and the “no bullshit, do-it-yourself” mentality. As an executive, he was not afraid to get his hands dirty by often taking monthly shifts on the Mercedes manufacturing line. “Know your business,” he tells us with a serious look, but slight smile. He continues to talk about German-engineering excellence and how hyper focus on attention to quality and improvement is unmatched. As he speaks to us, he is calm and composed…that is, until the topic of Tesla comes up.
“You need to be really good at manufacturing…they’re not. They’re just an IT company…that moved into auto…and they talk about the hell of manufacturing…that’s what it is! That’s what it takes to get the job done! And for them it’s hell and for us it’s art! For hundreds of years we have been honing that art!” he states with just the slightest hint of red in his face. The subtext of his words are more powerful than the literal criticism. This wasn’t just about Tesla versus Mercedes, massive disruption in the auto industry, or even Elon Musk’s hubris…it was about something much deeper…the German identity.
Bob Dylan famously writes, “Come gather ’round people wherever you roam and admit that the waters around you have grown…you better start swimmin’ or you’ll sink like a stone, for the times they are a-changin.” While not as profoundly German as Nena’s 99 Luftballoons, Dylan’s quote encapsulates the point of contention at the heart of the German cultural and business identity as we approach the end of a decade. Dr. Wolfgang Bernhard’s career represents what has made the German auto industry so successful in the past, a commitment to excellence through laser-focus on the singular objective of car quality. But in a rapidly changing automotive and technology landscape, does putting on blinders stifle unique opportunities for innovation?
This is, of course, the opinion of Dr. Volker Bilgram, of HYVE – The innovation company, and Dominik Böhler, of the Technical University of Munich. In both presentations, the term “car guys” was used to describe the old school German state-of-being defined by risk aversion, over-engineering, and bureaucracy. This mentality was in straight opposition to the new wave of German startups that espouse bold innovation, human centered design, and flat decentralized work culture.
Founders of Proglove Paul Günther (product engineer) and Thomas Kirchner (CEO) embody this new wave of German startup culture. Kirchner is a former IDEO employee and with Günther, a former BMW employee, created a smart glove for industries. The glove was created through rapid prototyping and iterations incorporating continuous feedback from manufacturing workers. Contrary to the culture espoused by Wolfgang at Mercedes, the culture at Proglove empowers workers to choose when they start their days and provides access to unlimited vacation. But the auto industry isn’t the only sector German disruptors are attacking.
A short flight to Berlin, brought us to a fintech start up called Number 26 (N26). N26 is a mobile bank that offers millennial friendly features such as cash from any ATM without fees, instant account management and security, and real-time notifications. A week after CBS visited N26, the company closed a $160M round of funding which is one of largest European fintech investments ever and clearly causally linked to our visit. N26’s success comes as a revelation as traditional European lenders, such as Deutsche Bank AG, continue to struggle posting its 3rd annual loss in a row.
*Quick meta note that Deutsche Bank decided to cancel our company visit on the day of, which is also causally linked to their string of failures.
I’m losing my train of thought trying to balance a clear theme of lessons learned in Germany while also trying to sum up the company visits for the week. In the meanwhile…here are some more cool pictures to help illustrate the trip:
Ok, I’m back! So just to recap, we have this cultural shift in mentality from the big German business players represented by Wolfgang Bernhard, formerly of Mercedes, to the new wave of scrappy startups mostly based out of Berlin’s silicon allee. But a question remains in this risk averse German culture, where does the financial capital come from to fuel the German disruptors?
Our journey in Berlin, took us to Earlybird Venture Capital, a venture capital investor focused on European technology companies. The fund was established in 1997 and has over EUR 850 million under management. While the firm officially funds companies at all stages, they did emphasize that demonstrable traction, such as revenue, is significantly more important to them when compared to their Silicon Valley VC counterparts. We were especially pleased, however, to see that in a male dominated VC world, the two rising stars at Earlybird presenting to us were young women. It is VCs like Earlybird who are enabling the German startup scene to flourish.
It is safe to conclude that the success of traditional and new German businesses will be integral to the countries’ global position moving forward. While we got our healthy dose of what is “new and sexy” in terms of German startups – it would be foolish to throw the baby out with the bath water in terms of the culture that has made Germany so successful in the past – the hyper-focus on perfection. The future of innovation has unlimited potential in Germany, whether it will be the “car guys” or the disruptors (or a combination of both) who lead this future, is still being determined.
Sticker Price – 8000 Euros
My WTP – $250 R/E Ration – .4 (Reality/Expectations)
Innovation Score – 77 (out of 100) Practicality Rating – 1.2 (out of 5)
American Version – Peloton
The ICAROS is a VR enabled flying workout machine developed by HYVE. Featured in my previous post, the ICAROS creates a rush of adrenaline and high expectations upon first glance. The design looks as though a one-person-seesaw procreated with an iPhone to create a sexy monster of a workout machine. In reality, however, it’s a good workout that engages the core and stretches the lower back, but the VR is lackluster with low resolution video and simple game play (fly through rings) mechanics. I experienced a little of the VR spins/dizziness, but I think it is something I would get used to if I used everyday. Overall, the ICAROS is a bit of a hype beast that would likely collect dust in your home and best belongs in an equinox or other overpriced gym.
2. The Paradise Cleanseat Power by CWS-boco
Sticker Price – 1770.36 Euros My WTP – $2,177.54 R/E Ratio – 1.8 (Reality/Expectations) Innovation Score – 90 (out of 100) Practicality Rating – 3.6 (out of 5) American Version – Dirty Toilet Seat
There are some products in life that you never knew you needed, but after one taste of that sweet nectar, you now struggle to live life without it. Meet the Paradise Cleanseat Power by CWS-boco, a self cleaning toilet seat. CWS is a Swiss company, but boco began as a laundry service by Bernhard Burmeister in Hamburg, Germany in 1899. 109 years of cleaning craftsmanship has culminated into the eloquence of design and practicality that is the Paradise Cleanseat Power.
3. The Mark by Proglove
Sticker Price – 850 Euros (scanner) + 8.50 Euros (gloves) My WTP – $10 R/E Ratio – 1.3 (Reality/Expectations) Innovation Score – 55 (out of 100) Practicality Rating – 4.5 (out of 5) American Version – Wait…there’s manufacturing in the U.S.?
Imagine the glove that Spiderman uses to shoot web, but instead of using web to fight crime, it uses a bar code scanner to shave 3 seconds off installing a part into a BMW! The Mark by Proglove and all of Proglove’s products are named after ex boyfriends and girlfriends of the team as a way to remind everyone that sometimes you have to let a good thing go to get to something better (this is 100% true). While not the most exciting of innovations, the Mark gets the job done as manufacturers see the return on investment within 3 months of having workers switch to its part scanning solution over traditional bar code scanners.
4. Tilt Turn by Veka
Sticker Price – Call for price a.k.a. Super Expensive My WTP – $1200 (for 3 windows) R/E Ratio – 2.1 (Reality/Expectations) Innovation Score – 82 (out of 100) Practicality Rating – 4.9 (out of 5) American Version – That window that barely opens in NYC
The simple and blissful experience of using the Tilt Turn window by Zeka is unmatched by anything found in the states. The sensation one feels as your hand grasps the handle and gracefully tilts…and dare I say…turns the window, is just glorious nirvana. Well actually its more of a turn then tilt, but we’ll let that slide because it is such a great example of German engineering. I’m not the only weirdo who loves this window – check out an entire Tilt & Turn podcast by 99% Invisible. Nothing more can be said about this amazing product, well done Veka…well done!
5. Speed S +Plus Self Service Podium by Zumex
Sticker Price – 7290 Euros My WTP – It is worth mortgaging your house or selling 2 Hamilton tickets R/E Ratio – 10.0 (Reality/Expectations) Innovation Score – 100 (out of 100) Practicality Rating – 5 (out of 5) American Version – Sunny Delight (As in everything else tastes like sunny d in comparison after you try this)
Ok so we are cheating a little with this one, but that is just how much the entire Innovation Aus Deutschland class loved this thing. The Speed S +Plus Self Service Podium by Zumex is a Spanish made orange juicing machine…there I said it. But alas, we found a loophole! Siemens (As German a company as possible) makes the PLM Software Solid Edge that enables Zumex to create better products through 3D design, simulation, manufacturing, data management and more! And lets face it, there’s nothing more German than creating the thing inside the thing that builds the thing. Please watch the above video to see why we love this juicer so much!
6. Narrow Band Iot Device by IoT Venture
Sticker Price – It’s a Protype so free? My WTP – The price of a fitbit R/E Ratio – 1.0 (Reality/Expectations) Innovation Score – 77 (out of 100) Practicality Rating – 3.2 (out of 5) American Version – Find my iPhone
Did you know that 30% of all bikes in Berlin are stolen and only 5% are found? To be honest, I didn’t fact check this, but that is the claim of IoT Venture, a Berlin startup that is a member of the startup community Factory. IoT Venture uses new narrow band technology to build tracking devices that have longer battery life, better security, and deeper indoor penetration for more accurate tracking than the current solutions. The company is currently in a prototype phase, but hopes to help solve Berlins bike crisis when it launches. Although many were tempted to take the prototype as a souvenir, we were quickly informed that they would be able to track us down (which I thought would be the greatest product demo ever).
I’m willing to wager that the majority of American entrepreneurs, VCs, and startup enthusiasts have come into contact with Peter Thiel’s Zero to One: Notes on Startups, or How to Build the Future, at some point in their careers. It is required reading in Owen Davis’ Launch your Startup class and for founders, such as myself, the book is somewhat of holy text that must be close to arms reach at all time. Underlying Thiel’s lessons on building monopolies, selling products, and nihilistic consultant haterade*, however, is a deeply American ideal to innovation.
*haterade – excessive negativity in the form of a beverage
He writes, “Even the Great Depression failed to impede relentless progress in the United States, which has always been home to the world’s far-seeing definite optimists.” Thiel argues that it is bold planners (definite optimists) who truly innovate: “A startup is the largest endeavor over which you can have definite mastery…it begins by rejecting the unjust tyranny of chance. You are not a lottery ticket.”
Now I’m not one to drape myself in red, white, and blue, shouting “Amuurricaa!” at a Toby Keith concert, but something about Thiel’s words evokes a strong sense of American pride (along with a montage of Michael Bay explosions, Top Gun theme music, and Steve Jobs). Particularly, this the case when Thiel juxtaposes this depiction of American innovation with what he calls European “Indefinite pessimism.”
He writes, “Europeans just react to events as they happen, and hope things don’t get worse. The indefinite pessimist can’t know whether the inevitable decline will be fast or slow, catastrophic or gradual. All he can do is wait for it to happen, so he might as well eat, drink, and be merry in the meantime: hence Europe’s famous vacation mania.” Thiel’s depiction serves to inform the foundation of the stereotype that Europe does not innovate like its American counterpart.
With all due respect to Mr. Thiel, I believe it is time for him to take a trip back to Germany (ironically, the country where he was born).
Let’s start by highlighting our trip to the Technical University of Munich (TUM), whose MakerSpace rivals any found in the United States. TUM is the epitome of the German effort to innovate through agile practices, supplying entrepreneurs with the resources to rapidly prototype ideas and build “Minimum Viable Products.” 3D printers, laser/water jet cutters, textile and electrical facilities, and machine and woodworking shops are at fingertips of TUM students. At this point, you may be thinking tuition must be out of control at this University (especially those of you who paid 200k+ for those English BAs) and you are right…the number is astounding. A German citizen pays 0.00 Euros to attend the Technical University of Munich. Moreover, there is no application process, and all are accepted!
At this point, you may have just dropped your iPhone, so take a second to collect yourself. Let’s reiterate, “GERMANS PAY $0 TO ATTEND TUM AND HAVE ACCESS TO MILLIONS OF DOLLARS WORTH OF EQUIPMENT!!!” As our TUM guide Dominik Böhler stated, “We believe people should be able to kickstart their ideas…and we have a 100 million EUR fund to invest in entrepreneurs.” TUM students are working on a variety of innovations including creating a prototype of Elon Musk’s famous hyperloop.
Taking a bus ride from TUM to closer to the heart of Munich, we arrived at HYVE – the innovation company. HYVE is an innovation consultancy firm in the same vein as IDEO and Frog in the U.S., a.k.a. innovation as a service (IaaS?). Many are familiar with design workshop magic, but something unique about HYVE is their emphasis on crowd sourcing innovation. Dr. Volker Bilgram walked us through how HYVE used posts on forums and blogs to design an IoT package locker known as PaketButler. PaketButler is basically a virtual “doorman,” (doorperson…it’s 2018 folks), that allows a package provider to deliver goods, informs the user of the delivery via smart phone application, and securely locks the package until the user is back at home. The iterative prototyping process was continuously informed by feedback from customers online.
A short trip downstairs led us to the pinnacle of German engineering. The ICAROS. The ICAROS is a VR enabled work out machine, or as I like to call it, the Peloton for flying. Priced at an extremely reasonable 8,000 EUR (yeah, it’s primarily B2B), the ICAROS combines your fantasy of flying with your nightmare of dying in a horrible plane crash into the side of a mountain. I personally was pretty terrible at the game, but definitely felt it in my core afterwards (which was good considering all the Paulaner Salvators I have consumed).
The most fascinating aspect of the ICAROS is that it was developed internally by HYVE for HYVE. This may seem weird that a consultancy firm would use its profits to develop its own innovations (that have a high chance to go bust), but this speaks to the German sense of the pride that one has no right to advise if one cannot do it on his or her own. The ICAROS has gone on to win multiple awards and has been included in the German Accelerator – a program by the Federal Ministry of Economic Affairs and Energy (BMWi) that helps German start-ups to get to know the US market.
With our trip to Munich wrapping up, I think it’s safe to say that Germany has a lot to offer in terms of entrepreneurship and innovation. I recommend that Mr. Thiel update Zero to One to reflect this (but please don’t Gawker me! You are still right about most things…unfortunately).
Next stop is Berlin, the home of a booming startup scene! Until then, stay classy, CBS.