“Car Guys” vs. The Disruptors: Germany Week in Review

 

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CBS students at BMW Welt planning next “big idea”

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.

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Dr. Wolfgang Bernhard – Photo by Daimler AG on Flickr

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.

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Paul Günther of Proglove

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:img_3117

CBS visit to Factory Berlin – A community of startups

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BMW Welt – The building is made to look like 4 cylinders of a car engine
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CBS students (who received the red sweater navy pants memo) at Spotcap 
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CBS at the Berlin Wall

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.

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Milda Jasaite and Rebecca Hu of Earlybird Venture Capital

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.

-Chris Russell

Trabi Safari and Final Thoughts

The final day in Berlin began with a late start in the afternoon. Having completed our company visits, we dedicated our remaining days to exploring the city.  A number of us went to watch a local soccer match and others went on their own to explore various museums and historical sights such as Checkpoint Charlie.

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The Trabant was once the most common car in East Germany

A small group decided to rent several east-German made communist era Trabant Cars for a tour around the city. With an ignition system resembling a motorcycle’s and an unconventional manual transmission, the Trabi was not only a vehicle of questionable safety but a moving piece of history.  While driving through the city we were educated on German history through walkie talkies provided to each car.

In the evening, to cap off our trip we all met for dinner at Spindler Klate- a waterside restaurant that turned into a night club.  After a series of toasts we had our final celebration before leaving for New York the next day.

As we boarded our respective flights back to New York, we began to reflect on the week long trip.   We were able to see German production excellence and innovation applied in different settings, we became familiar with several institutions (UnternehmerTUM) that were resulted in these products, and we learned how this commitment to excellence and process was applied to the world of startups.  Moreover, we learned how the German companies communicated their history and how they looked to the future.  Finally we were able to engage in open dialogue with very business leaders on issues ranging from corporote strategy to career paths.  While we all had different takeaways, it was clear that we all had learned a tremendous amount.

Starting in the industrial heartland of Bavaria and ending in the entrepreneurship capital in Berlin, we had lot of ground in a very short time (14 companies in 5 days).  I cant help but feel that my curiosity regarding this amazing country has only increased.  I leave Germany with memories to last a lifetime but armed with some new theories and techniques to apply to my own career.  Truly an unforgettable trip.

Diego Cuenca ’16

Chazen Germany 2016

 

Replicating Businesses Globally, Internet Retail, and a Creative Space for Entrepreneurs

We woke up early in the morning after our day in Stuttgart and boarded a direct flight to our final destination: Berlin.  The capital city boasts a population of over 3.5 million people with an economy that revolves around the high-tech and service sector.  Recently, the city has seen the emergence of a bustling entrepreneurial scene.  We went directly to two leaders in the startup space Rocket Internet and Zalando.

Rocket Internet was founded in 2007 and is now a public company that has based it’s operations on copying the business models of other established companies and replicating this in different geographies.  At the meeting we learned more about the process in which they hire founders to execute on a strategy in different countries.  They actively avoid countries where local incumbents are present or have a distinct advantage (China, USA, and increasingly India).  The roll-out of these strategies is very standardized despite each subsidiary company possessing very different markets or products.  The company attempts to marry local knowledge and agility of a startup with the precision of a large corporation.

Following our meeting with rocket we then made our way to one of their run-away success stories.  Zalando is also now public and got their start imitating US retailer Zappos.   Here we met with the SVP of Operations, David Schroder (who spent a semester at CBS), to learn about how the company plans to be Europe’s largest fashion retailer.  We learned about the challenges of growth and how they struggled with credibility issues before reaching scale.  The company now has a presence in many European countries including Germany, Austria, Switzerland, France, Belgium, the Netherlands, Italy, Spain, Poland, Sweden, Denmark, Finland, Norway and the United Kingdom.

After checking in the group went to an Alumni Mixer at Bar Le Labo – the city’s first liquid nitrogen bar – for some appetizers and drinks with Alumni, Columbia University Students, and prospective business school students.  During the night the owner Le Labo, Tobias Wittich, showed us his co-working space (Rainmaking Loft) where entrepreneurs can avail of a seat for minimal cost.  Further the loft hosts global startup programming such as Startup Bootcamp.  Current residents of the loft are involved in many different industries such as fintech, food, and transportation.

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Rainmaking Loft – A Berlin co-working space and host site of Startup Bootcamp.  The mural in the back was done over 24 hours by a visiting artist

Following this tour and reception we all enjoyed a night out in Berlin before heading back to our hotel to prepare for the last day of company visits.

Diego Cuenca ’16

Chazen Germany 2016

Bosch, Auto Production, and an evening with Wolfgang

We arrived safely in Stuttgart and made our way to the headquarters of multinational engineering giant and the world’s largest auto supplier – Bosch.  We learned more about Bosch’s global footprint, how they encourage innovation internally (seeding and allowing employees to pursue startup projects), and how they invest as venture capitalists.  Bosch stood out from many corporate VCs as they are a total separate entity from the company and actually measure their performance against other VC firms not just their own operations.  We also learned that Bosch is owned 92% by Robert Bosch’s own charitable foundation and the company remains private to this day.

Following lunch we headed over to a Mercedes Benz’s car plant in nearby Sindelfingen where they produce models such as the S-Class and E-Class cars.  While we were not allowed to take videos or photos of the assembly process or final finishing we were able to snag a few photos of the customer center and witness some G-Class testing

Once the plant tour began we saw the large scale automation taking place in the plant. Over 90% of the process is automated mostly from robots purchased from another German Technology Leader- Kuka Robotics.   Cars are taken from building via covered bridge and conveyer belt from the automated assembly stage to the more manual finishing stages (which include badge installation, custom interiors etc).  Even at the manual finishing stage, many of the processes were automated or ordered using systems and analysis many of us found familiar from operations management and our study of the Toyota Production System.   It was an eye opening experience to those of us who had never been to a factory floor let alone a world class automotive operation like this one.

After a quick rest stop at the hotel we then suited up and headed for the highlight of the day- an evening with Daimler Truck CEO- Wolfgang Bernhard at the executive dining facility of Mercedes Benz Headquarters.  After a short introduction to the company, a review of his current priorities, and the CBS experience – he quickly launched into open Q&A with the group.  We then sat down for dinner and the gracious CEO sat down with each individual small group table to address any questions we had.   We covered topics such as what to do post-MBA to what is the future of autonomous driving.   Truly an unforgettable experience.

With a full belly and fond memories of Stuttgart we began the process of preparing for our final stop… Berlin!

Diego Cuenca ’16

Chazen Germany 2016

Engineering and Helicopters – on the way to Stuttgart

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A sample power generation component weighing 50kg  printed as a single piece- deisgned by Dr. Kiener of Siemens

After a packed first day in Munich, the group was set to travel to Stuttgart but first a select group of students elected to travel to another famous Munich organization and the largest engineering company in Europe- Siemens.  We were met by the Venture group at Siemens, the Key expert of sustainable engineering (Dr. Christoph Kiener), as well as the management department of the company.  The company was founded in 1847 by Werner Von Siemens (the inventor of the first electric railway) and has grown into a company with over 70bn euro in annual revenue.  Today the company addresses the engineering needs of a wide variety of industries: power generation, automation, fire safety systems, and software.

Recently, Siemens has supplemented a strong academic research and development program with a collaboration with startup businesses.   The company supports business creation incubators such as TUM’s UnternehmerTUM and invests in startup businesses with technologies may be integrated into Siemen’s current solutions.

Following the Siemens visit the group set out for Stuttgart but made another stop at Airbus Helicopter (formerly Eurocopter).  Unfortunately due to strict policies the group was not allowed to take any photographs or videos.   During the tour the group was able to view the different stages of development for helicopters used for both military and civilian use.  The tour was led by former design engineers who had spent their life designing helicopters used in key military campaigns in Afghanistan and had on occasion earned their job in the company through the submission of their aircraft design.  Finally, the group was able to observe the construction of AirBus commercial airplane doors which were also being constructed at the facility.

After the tour reached it’s conclusion we headed to the nearest grocery store o stock up on food and drink before traveling to our next destination city- Stuttgart.

Diego Cuenca ’16

Chazen Germany 2016

 

CBS visits Bavaria’s Capital City

The CBS Chazen Germany tour started off with a Segway/electric bike tour through Munich. The group made its way through the city center and maxvorstadt.  During the tour they saw the Eisbach wave, various museums, TUM, and other landmarks. This was followed up by a three-course welcome dinner at Kafer Schanker.

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On Sunday, the group woke up bright and early to rent some BMW performance cars and drive out to the Neuschwantein Castle about 2 hours outside Munich. After a guided tour through the castle, the students then headed out for a tour of the BMW Welt and Museum- a multi functional customer experience exhibition facility where customers can experience the automaker’s various model lines and even take delivery of their cars.  The students learned more about BMW’s history, the company’s focus on design and the driver, as well as the architecture of the Welt itself.  The day was capped off by a visit to the Hofbrauhaus (Munich’s oldest beer hall).

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Professor Farrokhnia and Dr. Helmut Schonenberger speak to students before entering the Makerspace

The next day, began  with a morning trip to the Technical University of Munich’s Garching Campus for a visit to the UnternehmerTUM -the university’s center for innovation and entrepreneurship.  The students toured the Makerspace- a unique facility that allows the public to rapidly build and prototype.  The space features woodworking facilities, 3D printers, and textile stations. The Columbia students along with TUM Engineers then participated in a design sprint -led by Professor Farrokhnia-designing the perfect remote control in 2 hours.

 

 

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3D Printed Race Engine Mold at EOS

The group then visited EOS – a leader in 3D printing and additive manufacturing. The group learned more about the company from Head of Sales- Denis Demirtas- they sampled 3D printed items such as a titanium Formula 1 Pedal.  They then toured the company’s headquarters, and observed a range of polymer printers and metal 3D Printers before returning to Munich.

 

 

 

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Testing out the equipment at eGym

In the evening, the group visited eGYM- one of Europe’s fastest growing startups focused on the fitness hardware and software space. After a brief presentation by Chief Engineering Officer- Christian Schraml- the group tested out the gym’s tech-enabled gym equipment and enjoyed dinner while mingling with team members and investors.

Overall a great first city to visit during the trip. Now onward to Stuttgart

Diego Cuenca ’16 Germany 2016

Entrepreneurship and Innovation in Germany Trip is Underway

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Tour Leaders Misha and Manuel lead a Pre-Departure Meeting in Uris Hall

This spring, 32 students will embark on the inaugural Chazen Entrepreneurship and Innovation Trip to Germany.  The trip will be led by Professor R.A. Farrokhnia and three student organizers: Manuel Hein (a 2nd year CBS Student, Entrepreneur, and German native) , Diego Cuenca (Co-President of CEO and 2nd year student) , and Misha Ipatov (a 1st year student and entrepreneur).   The tour will begin in Munich then move on to Stuttgart and end in Berlin.   The goals of the tour are to explore the German business environment, compare the German and American models of innovation/entrepreneurship, and uncover the cultural factors that drive the German economy.

The planning for this trip began in late 2015 and has consisted of weekly meetings, outreach to a wide variety of companies, and soliciting student feedback.  The result is a tour that combines cultural sights, company visits/fireside chats, and social events to provide a complete immersion and facilitate learning.  Students will be visiting established companies that include BMW, Siemens, and Airbus in addition to startups such as Soundcloud, Number 26, and Coffee Circle as well as small medium enterprise “hidden champions” such as EOS.   Further, students will be participating in interactive experiences such as a design challenge with German students at the Technical University of Munich or driving the latest BMW performance vehicles to Neuschwanstein Castle.

The background of the students participating in the trip are varied with former media professionals, private equity analysts, engineers and entrepreneurs.    Their participation will play a key role in the success of this trip as we look not only to observe Germany but to compare its business/innovation environment and culture to that of other countries.   We look forward to starting strong on Sunday in Munich and updating the Columbia community along the way.

Diego Cuenca ’16

Germany 2016