Why Price Sensitivity is BS

Thank you very much. It’s a pleasure. After that long years, the wait was worth it because you have become an icon, so now I’m the underdog here.

Well, so you obviously did your homework. This is a very crucial question. So not in terms of the sports shoes, obviously, and as a Swiss German, I should say, that is on, but as a life lesson. Yeah. Puma made a very big impact, and I guess that you always have like two or three of those in your life, and Puma was was the halo moment for me. So as you know, I grew up German countryside, hence my crazy accent here. It was close to Manschen Glatbach, and I was the son of a farmer.

So at 16, 17, 18, I knew a lot about how to work in the fields and do all this nasty work that nobody ever wants to do in that age, but I was lucky that my grandma wanted me to hate banks. And the way she thought about it was, look, I give you $20,000 and you buy stocks. If you gain something, it’s yours. If you lose it, I cover it. And she thought I go to the local savings and loan bank, get a bad stock recommendation, lose the money, and I’m mad at the bank.

As it turns out, my affinity for football, yeah, mentioned Gladbach, was that they played in Puma shoes and Puma did the IPO and I said, Look, grandma takes the losses so I can go in fully leveraged, and at the time I was making $10 pocket money a month, I made 100,000 with Puma in three months. So I said, look, two phone calls, hundred years of pocket money, I become an investor. So at that moment, the the the sale was set for what I wanted to be in the future.

What did your grandmother say? So she obviously was delighted, also for the wrong reasons, so to say. I still did a banking apprenticeship, yeah, so that she probably disliked, but she thankfully lived long enough to to be able to see how how part of the story develops.

Well, yes. I think that was the other purpose. Of course, I lost the money afterwards, and that was probably her her real mission was it, so that you lose the money and make the lessons when you don’t have a lot of money. Because when you are young and lose a little bit, which is still everything you have, is just as painful as if you lose a lot when you are older. So this has been a very, very thoughtful lesson for me.

So I had a rule for long that when I had an exceptional hit, I would stop investing for three months because success makes you fear that you can walk over water, and you needed to force yourself to have these humbling moments to say, oh, no. No. No. That was luck. Yeah. Keep cool. Yeah. And don’t make silly mistakes now.

Well, not sure. So I think there’s a difference between a lot of different genre of investors. Yeah? So there are people that have a lot of money that if they have successes and think there’s a momentum mark, they pour a lot of money in the market, but for very different reasons. I’m always intrigued by the technology or by the founder, and this doesn’t scale with money so much. So and it has to be that final moment, yeah, and the special moment because I do want to fall in love with the founder and the the business.

Because at the end, I’m a I look at myself as an outsourced business development guy, and so I do spend a lot of time, so I do need to like everything with it. Why are you

Because that’s what venture is. Venture is not, you know, sitting in a nice office with borrowed power, yeah, of LPs and playing like in old Caesars times, thumbs up, thumbs down. So now I think the entrepreneur is the star because he has a single asset risk, and he is super passionate for one idea and for for with this idea, you’re advancing society, and I’m just a feature to increase the odds

Good question. I don’t know. It is always very different. So what I really, really despise is vanity. So there is a high correlation between people that post a lot or tweet a lot or whatever, using social media a lot, and efficiency. Always been, I think this for VC is similar than for entrepreneurs themselves. But it’s implicit sometimes, yeah? So it’s also, mistakes aren’t bad by design. You just need to understand and find a rule that you can avoid the same mistakes. So if you, if I wasn’t set up to have certain mistakes, I would also not get into the companies that finally make it.

So first of all, I do not get involved in a lot of companies. Yeah? And I’m totally fine if a founder rejects it for some reason because there’s young and in most cases young until there are a lot of new things coming to him at the same time and it’s very difficult to get them into a certain chronology. At the end I might have also made a bad job in promoting I can contribute.

So on the flip side, for me it is way more satisfying to see that those top entrepreneurs that I’ve backed, I’ve always, when they did the second the second business, I was always allowed to be one of the leading investors, be it with the SumUp or with or with with other businesses.

There there are several questions. So so if you have a certain mission and the mission requires you to be a little bit more outspoken or to reach a broader audience, then I think this is a perfect methodology to do this. Yeah? So then because you cannot achieve that aim in a different way. But what you are alluding to and what I’m despising is the the self promotion stuff. Yeah? So thinking, oh, look, I’m a cool entrepreneur, and for them, entrepreneur means sitting in Soho House in Berlin with an avocado toast and a cappuccino and thinking we rule the world.

Yeah? And then just in the afternoon thinking of some random entrepreneur, say, hey, great. Thankful to be part of the journey. So this is something where I say, look, geez, there’s so much more urgent things to do for a VC than doing those kind of things.

It’s pretty simple. For me, the progress of a society is the way how they can handle risk. And entire Europe has had societal and economic progress, especially in the fifties, sixties and seventies, and we were basically very good at financing innovation at the magnitude of 4% of GDP. So the banks financed it because they were in a regulatory framework where they were allowed to to do these kind of investments, and the innovation at that time was Bosch, Siemens, Porsche, you name it. So today the regulation has changed.

Banks do not finance innovation in startups anymore, so and today the only regulatorily compliant way of financing innovation is venture. And in Europe we are at 0.5% of GDP, so we are under financing innovation by factor eight in comparison to the levels that made us wealthy in the fifties, sixties, seventies.

Look. At the earlier stages, that doesn’t work. So if you discuss with banks, this is a rather complex discussion always. So I think they have not been trained and experienced in this kind of financing, and the banking side is the wrong one, but we should get our equations straight, meaning we cannot expect to create wealth in the way we have created if we are under financing the reasons why we created that wealth by factor eight. So this will probably not work.

Yeah. Look, that’s not how I look at it. So this what you’re describing is a cyclical element to it, and there is no no doubt that we do need to finance innovation, and there will always be phases of more liquidity, of exuberated pricing, and the pendulum always swings between the left and the right. If you think about the fact that from a start where we accompany a company until we exit it as easy eight to ten years, if you really want to make sure you get all the value creation, all of the phenomenons that you would be describing will happen at least once, yeah, in the lifetime of that company.

So this is something where I’m not concerned. Structurally, there is a lot of signs that the world has changed a lot. If you think about two thousands and early two thousand tens, there were no technical founders. So that and I thought lengthy about the fact why is that? Because we had the copycat nations where the the the samba brothers built the machine rocket Internet, but this was basically an absence of technical innovation. And the reason was an interesting one is that at that time, in Continental Europe, very few people that had an affinity to technology, they had economics at school.

So they were basically really afraid of becoming self employed. So, and if you see the first German value added tax declaration that you need to do as an entrepreneur, that can be pretty intimidating. So basically I even have sympathy for that. So this has thankfully all changed. If you now look at ETH or the Technical University Munich or the KTH in Stockholm, the quality of the founders is very, very different. You barely have any copycats anymore. You really have general genuine technological innovation and ideas.

You can answer it in a little broader scope. How much is, especially Continental Europe, the financial illiteracy problem? So basically, you see that politicians, you see it in a lot of instances. We are not thinking though how the same way, what can you do with money that The US does it? And also so my weirdest moment, it’s a funny funny anecdote also, is when we had the SPAC and we listed it in Frankfurt. So and then we we were speaking I was speaking to the CEO of Frankfurt Stock Exchange and said, look, this is cool.

Can we have this photo? Because the founders are really, really proud and this is the culmination of their journey so far. He said, yeah, yeah, we can do that, but there’s a price list for that. I said, what do you mean there’s a price list? Yeah, we are doing sort of an advertisement that this IPO is happening at the Frankfurt Stock Exchange. He said, no, no, no. The price list is make a guess, for the photo. €400? Mean €400,000. Just for the photo.

And what we did, we did a CGI of the interior of the Deutsche Borse and put it on a tapestry in our office, and then we we stood there, had our own bell and rang it, and it looked 100% authentically, but we did really not pay one to pay the $400,000. And I spoke to the Deutsche Bank and said, guys, you can fine to have a business model. It’s also fine to take a certain margin over a lifetime of a quotation, but don’t text people at the highest emotional moment when they are so proud to go to the stock exchange.

So this is what I mean with culture.

First of all, we do suffer the different aspects of the heterogeneity of our continent. Yeah? So there is no point in having three stock exchanges, because at the end liquidity is everything and we should basically say So

Yes, we should. So there was an attempt, but it was blocked by politicians. It’s still a little bit like a regional egoism, yeah, so which is part of the problem. So the second one is we do not have deep, deep capital pools. So I mean, when you think about a huge step was in 1974 when you had the ERISA Act, yeah, so that pension funds in The US were to invest in in venture funds, so and this made a big difference, and we don’t do we don’t do this in in Europe.

So in I think the the most pension funds invest according to the endowment model in The US, meaning you get basically a venture allocation of 10 to 13% plus, and the European pension funds invest 0.02% in venture. First of all, it’s already shocking because the numbers in The US, it’s not that the risk has risen, it is that also the return has over proportionally risen. And if you think about it in a different way, if you forced, I’m very careful with the word forced, you have to force pension funds to do it, because then, a, you would get a way higher return, which makes a huge difference for the pension on the buying power a pensioner has.

So for example, if you have a normal worker that pays in €1,000 a month at the age of 20, 20, and when he is 64, with a German pension fund he has $750,000, and an American one, three point five million, just because of compounding of higher yielding assets. So meaning, we all say we have problems with the retirement system, so this is a very easy fix. We are just in two conservative asset classes, but at the same time, this money being unlocked from the pension schemes would solve the entire problem of financing innovation.

And the best, you would solve two problems and nobody had to pay for that. Except one politician needed to tackle this problem, and they all are very afraid to touch anything that has to do with retirement.

think, yes and no, but this is still a luxury problem because we’re coming from a world where the the life insurers are discussing that they could not even provide the 3% minimum yield, yeah, for for the pensioners. So, I mean, even if you’re a mediocre fund, yeah, into two x, this is this is on a logarithmic scale in a different orbit to what we currently have.

No. So it’s always better if we have it, but it will come back at some point. And good companies are always worth something, and there are always a lot of people be willing to engage with them. There’s always an exit market for them. I’m relaxed because at the end, everything burns down to the qualities of the assets, and and then you mitigate a lot of these risks.

No. I don’t. It’s not it is. It will become anyways. Yeah? So at famous quote always is when Uber started in San Francisco, people said, but the taxi market is only 250,000,000, and today Uber’s revenue in San Francisco is 600,000,000. So and if you do the math on on defense, which we can do a little bit later, you would see there’s massive money coming into it, creating this market and creating a lot of a lot of opportunities there. But at the same time, I’m not so keen of building portfolios.

If I find cool companies that make a difference, that is where the beef is. And if you have one or two of them, every portfolio looks great. There’s a lot of things you don’t know about the market and we have to work very much in building the ecosystem. Hence, my willingness and drive to serve as a chairman of the NATO Innovation Fund to exactly build this ecosystem.

It is a it’s a mean to an end. You have to build portfolios in order to get money from institutional investors. But on the way there, you make a lot of concessions. So you have to think about how much do I reserve per company? Am I at some point shot out? Or can I reuse proceeds to get to a pretty high investment grade? Because if you do three times the money, but if you have a 100 minus 20% over ten years management fee, that’s 80, times three it’s $2.40.

But if you have a 100% investment grade because you can use proceeds, then three times is 300. So you see, this has nothing to do with any company. That’s just trying to please the framework around the rules of deployment, so to say. I think this is something we need to obey to because we are we we do need this money, but this is for me something that has nothing to do with investing. So and if you find the cool companies, this is basically what what what I’m intrigued by.

I I don’t know if I should pride myself for that, but at least I am regularly asking my very understanding investment advisory boards to be a little bit more generous on these rules. Yeah? So I do believe that if you see the right company, you should take, yeah, a lot of risk and overproportional risk on those.

Look. So there’s a a variety of things here. So first of all, I would not necessarily categorize it as defense investing. At the end, it is all deep tech and one customer emerges and that are the MODs. There’s a very good reason for that because suddenly you are forced to think a little bit more about the technical sovereignty, about the capacity to defend yourself, and the limitations are in the classical equipment you cannot build it or buy it so quickly because there are limitations on that.

And secondly, the efficiency works on the different technology versus established equipment is very, very different. You have a thousand euro drone that takes out a 10,000,000 tank. You have a 500,000 submarine unmanned, which can take out a 500,000,000 submarine, the classical one, and the same for basically every category. So there is a huge shift, and the Ministry of Defense need to see where do I allocate. And deep tech can make a big difference in these kind of mechanics. And so that’s why, yeah, we are very committed at at NATO level to invest in technologies that enhance the defense capacity of the NATO member states.

There has been a long time of of the peace dividend, so to say. Yeah? I mean, me included, I had never thought that we would get to this kind of a situation where we we are at we have we see a war on Europe territory, and if it then comes to the fact that we seriously need to think about being able to self defend ourselves, then you start to make up the mass. So what has been achieved? What did we do with the in the ministries of defense?

And some numbers are very misleading. So for example, everybody says, yeah, but Russia has the capacity or the economic power of something between Portugal and Spain. But in terms of purchase power parity, they’re spending more on defense than the entire NATO member states. There are for me, these kind of things happen gradually, more with facts of observation. So for me it was not, or still very difficult to see that an entire continent is depending on availability of Internet if Elon Musk with Stalin has a good day and if he has a bad day he shuts it down, and this is what defines an availability of a certain technology.

I think for a continent, this is too poor. There needs to be a consistent strategy how we basically level ourselves up in terms of of of our capacity there.

It’s not all as all. The ammunition is is a cruel one. Yeah? So the numbers I have from the military is, like, four days in Germany and UK and five in France, which is 25% more, it doesn’t make a difference. There are other effects which are mind boggling. So for example, with the new hypersonics, if they have a warhead, the reaction time of any US president is twelve minutes. Before, when the rockets went that fast, you had a way higher reaction time. So basically, there’s a new reality that forces us to think more technologically about it.

The other example which I found very, very surprising, to say the least, is even if you buy US fighter jets, the way how it works is you are the owner, it stands somewhere in the hangar and you want to start flying, you have to put in the way where you want to fly, and then this data is sent to The US, and if they like it, the machine starts. If not, it doesn’t start. So this is not exactly how a sovereign how a sovereign spirit works, would guess.

So this will have a very big influence. Yeah? So that’s why I, for example, also believe that some the player like in Isar Aerospace is a perfect situation for sovereignty investing.

So the space will be a very, very big opportunity and a very crucial technology ecosystem to to co own, so to say. Think about it like the Starlink. So a Starlink, if it can connect to a mobile device like Apple, theoretically the entire European telco industry would be obsolete. So, and if suddenly the self driving cars are more dependent on low orbit satellites, do you think that in the competition between Tesla and the European car industry, we would have easy access to the Starlinks? And even if we wanted to have our own constellation, would we have easy priority on the transport on SpaceX into low orbit?

So these are very, very fundamental technologies where we’re either left out or we have a very stringent plan how we get into those.

Yeah. Currently, we either we get a slot in a in a SpaceX, with all the restrictions that there are, or we we have Ariana. But Ariana based largely sold a 100% of their defense transport capacity to Amazon. So basically, as Europeans, we are, for the time being, not able to send own satellites at our own discretion whenever we want to.

Six years. Six years. So do we just wait? Or speed up and build the next champions that guarantee us this technical sovereignty that we need in many many fields.

So what worries me most is that you at some point, we need a a European unanimous view on what is important to us, and then we need to act on it, and then we need to support this.

what I mean. That’s what I mean, and you’re perfectly right with this. And I think also, in this case, I I think Trump has a point because it’s pretty naive to think that everybody else pays and and we don’t need to pay. Yeah? And it’s even worse. So look, if you think about the German budget, not only didn’t we pay 2%, but whatever we paid, the 1.4, 60% of that is salaries and pensions. It’s not that you buy equipment and become more able to defend yourself.

It is conceptually wrong. Coming back to the question what worries me most is a very, very clear view, what do we need and execute on it?

Be because the electorate doesn’t give them benefit of the doubt. So the politicians fear they cannot win by doing that, historically, which was probably they have some sympathy because if everybody thinks you’ll never have a war, then all the the inhabitants of a country probably say like, why do we invest in that if we will never have a war? But if they knew this is the ammunition level, this is the constant threat that we have, then you will have probably a very, very different view.

Yes. And you still need to explain a little bit more. So, funnily, as you see, Rheinmetall has become sponsor of Borussia Dortmund. So this is also done this deal in in sync with the politicians to bring this topic in the midst of the population and make it visible to everybody. So I think there there is this explanation that is currently happening.

Yes. So you always have that. So you never get fired for buying IBM. Alright? This this is the mental thing. There are some advantages as facts because you you cannot get the the equipment we bought in enough numbers, and the efficiency in Ukraine shows that you have to buy other stuff. So there is a very clear, you know, way so that that people need to understand. We we get need to get into a very different, let’s say, asset class of defense equipment.

There’s a overview. I I I commissioned a study, so which in which I analyzed all this kind of stuff. Yeah. And clearly came out that in terms of threat, historically, most of the European countries have spent in the vicinity of 3.5%. Poland is at six or seven, the Baltics are even higher, and Finland is also way higher. So this is actually not a crazy number. So I try to understand what are the repercussions if we went in, as a German, to 3.5%. Basically that meant we had to spend 100,000,000,000 extra, roughly.

So with all the economic theories, if you drop a 100,000,000,000 into an economy, provided you can spend a lot of it in in the home base, so let’s say Germany or even Europe, then you immediately basically get back 80 to 110% of GDP effect. You would get 25, 30% of immediate tax effect, and you had something like 40% of household income. So if for a period of four, five years the net effect on Germany, to put it a little bit polemically, if you ask the German electorate, Do you want to be indebted with 63% of GDP and not able to defend yourself?

Or with 68, 69% after the five years, and you would be able to defend yourself. I think that’s that’s the ultimate question that that we have to ask, and the choice that that will

What what I described, we do have to come up with our own sovereignty, so that means investing now. If we can provide it fast enough, that’s fine. If we can, probably there will have to be other

Constraints, capacity constraints is the one, but you still need to have some of those, so that will be a fight for the scarce resources. And the others basically is along the efficiency, so you do have drones, and if you extrapolate the development, what will be happening there, you saw you had like one drone, yeah, that got fled by one soldier, and then you have the next level of development will be swarms, and then you will have the attacking swarms and defending swarms, and so there is so much going on here that there has to be a little bit of foresight, where does electronic warfare go, and then we have to equip ourselves to be efficient in that field.

So this will probably be in the technical part of the equipment, and that is also why I do believe the chances for deep tech investors that have good ties into the MODs have a fantastic chance now. If we think about 2% investment in defense of GDP and 5% of that in, basically, in tech, buys us 50,000,000,000 demand from NATO member states in Europe. So if you think it’s a three times revenue multiple, we’re talking 150,000,000,000 market cap. If we do the same with 3.5% GDP and 10%, then we are at 150, 160,000,000,000, yeah, and for more like $405,100,000,000,000 market cap a year.

So this is the the chance here where you would say from economic understanding, the reason why this is a very attractive field as investors to go into that.

Look, it’s not that different. So technically you have deep tech companies that have a superior sensor, that have a software instead of managing the operating system of an Android phone, it manages like Otterion the operating system of a drone, you have very similar traits. You have one customer, one different customer, and who has a very special procurement process, which probably you have to learn a little bit. That’s basically at the beginning what is not so much the difference.

Well, you have to reinvent an ecosystem, and an ecosystem that basically hasn’t ever worked together. So there are very few startups that ever worked with primes. There are very few startups that have worked with the MODs, and vice versa. So this has all to be reinvented. Everybody has to get to know each other, everybody has to develop a certain level of trust, and the interesting way what I’m currently thinking is how does this ecosystem develop? What is the the mature market? Is it a little bit like the pharma industry?

Because the pharma industry, if you think about a Novartis, they are basically a gigantic organization if it comes to distribution and regulation, but not invention. So a big prime as moloch in distributing because they have years and years of lobbying into the MODs, and they are pretty good at regulation because if you want to sell something, need to fill out 800 pages of what do I know, And they all have that, and startups will never have that to some extent. Only the big ones like the Helsing’s and the Underworld’s.

So the question is, how many of the startups become sizable companies and become a prime in their own sense? Or will we have a market like a pharma market where you have basically a lot of innovation that gets accelerated through the cooperation with with primes?

Look, of of course. And not only if it’s a pre seed or pre seed round, it’s also, if you think the process through, has to be, to some extent, also at the growth capital stage, because if the growth capital is always provided from The US, then basically you are abolishing your own sovereignty at that stage already again. Then you have the influence in the boards, which then comes from the big investors, which might have at some point a different interest than as if it was a European one.

So it’s interesting to see the examples we have in The US are, might not be 100% transferable to Europe because The US defense budget has like 14% R and D, which translates into 94,000,000,000 own R and D a year, which is allotment, which is proprietor findings that then finds its way its way. In Europe it’s four percent, and so 9,000,000,000. So the necessity when it comes to embracing innovation to cooperate with the VC world and VC financed innovation is way, way higher in in Europe than it is in The US.

The biggest mistakes. This is a trust thing. There’s this very fragile situation now that you have to sell into the MODs. You have to break the procurement processes as they are, and if you if protagonists get into the game that just do it because it’s easy or they perceive it’s easy to raise the funds in defense and then become active, yeah, there might be a risk that this fragile trust level there is jeopardized. So it’s very important at the beginning we are very serious, yeah, and very sober and honest players in that field so that we we do not lose that there’s this beginning trust thing.

Oh, yes. Of course. And basically, they it is their gift, and they are fast tracking the development of the ecosystem. So basically, when I started with AOL in 1995, I was responsible for online banking, right? So to bring online banking to the German banking landscape. There was nobody in German banks that wanted to do online banking. There was no way how to sell online services into banks. So it is all a process. So as much as it is a process to do that now in MOD, so that is why the mission of the NATO Innovation Fund is bringing these trust levels.

Now people say, oh, we get financed so we can start a dual use company, that which wasn’t the case before. The entrepreneurs basically were left alone. And then, oh, with NATO, yeah, there are some people in the MODs that now are responsible to embrace early innovation and and adopt it. So these processes need to be accelerated, and this is how how the ecosystem will be developed.

I think this is the the entrepreneurial spirit. Yeah? And basically, it’s a little bit the spirit that, yeah, we can take very fast decisions in the organization. But I was on my way to Munich at that day, and I was discussing with Daniel for long, yeah, if he ever wanted to open it up, and so if he felt like he wanted to open it to investors. At that moment then, I said, okay, he said, Klaus, I I think I should open it up. I’m con con contemplating.

I said, all good, all good. So I changed the direction and didn’t fly to Munich. I flew to Stockholm. I was two hours later in Stockholm, had my scan, went through everything and I issued the term sheet the same evening. And sometimes this has to do with total uncorrelated experiences you have. So I’m regularly going to Lanzerhof, which is a clinic in Germany where you have like precautionary examinations and they talk with you about how important it is to have it in certain intervals, so not only have you all the parameters of your blood, but you also have it over a period of time so you can see it.

So I basically was subconsciously trained for a situation like with Neko where you had the same phenomenon with the moles, the skin examination, also with the blood, so that you have it over a certain period of time, and everything that I’ve thought was very cool with the Lanza Hof, yeah, that you’ll get like a report where they say this is your number, this is the interval in which your number should be moved for a certain parameter, and then an explanation what too high and too low has cause and effects.

So all this I thought was very, very cool for way more people than than we think, and people become more health sensitive. That’s why I implicitly felt there’s a very very big market. And as I’m always been a product guy, starting from AOL, and I fell in love with the product, and that was a very quick consideration.

Absolutely not. Why not? Because the good things, I would still do them. The good companies I’ve invested in, even if they were 30% more expensive, and the shit I don’t wanna have, admit it’s worth 30% cheaper. So the beauty is I’m not in the buyout where buying makes a difference. I’m in the business where right judgment makes a difference, yeah? And even if you misprice it at the beginning at 20%, 25, it doesn’t make a big difference at the end. People are always stuck on this valuation thing, and valuation is for me a hygienic thing.

First of all, the first hygiene factor is if the founder tells me a decent price, and a decent price is interesting. If he’s too expensive, I think, what the heck did you smoke? Yeah? And if it’s too cheap, then he said, look, you don’t understand what it is because at the end it is a pact that we both do, which honors everything I’ve done in my life as an entrepreneur, the aspiration and the perceived execution skills. And this is the result of that is a price.

And this is you can have a confidence interval around it, but that’s not not rocket science. So do you care about ownership or is it percent of cash deployed

This is a typical fund question. I do think that you need to have ownership, in that sense that some of the the crypto funds that I’m seeing, they invest many many many companies, very very small sums, so it never makes a difference if you’re right. So you need to make sure that it makes a difference if you’re right. The reason why I sometimes argue this is I feel I’m an outsourced business development guy, so I have a certain number of hours available to help you, and I need to make sure that the compensation level, as it should be right on your side, must be right on on our side as well.

So and that’s basically how you come up with finding a common sensitivity to agree on.

So I was lucky to be to be investor in Stardoll, which was led by Matthias Micha, a great entrepreneur in Stockholm. And Daniel was CTO there, and we got to know each other. Obviously, there was for sure a a unilateral appreciation for him, but obviously also a reciprocal one. So then at some point when he started Spotify, he asked me whether I would be willing to to be on board again.

But look, I mean, all the big ones I invested in were not obvious ones. So you could say when when the time I was looking at Spotify, it was I’m not sure. I wouldn’t say it’s illegal, but we had music and we didn’t have the rights. Yeah? So at the time when I invested in Skype, there was no business model, because Skype out wasn’t even invented. Yeah? At the time when I invested in Airbnb, it was also very, very early. So

How did that come to be? So it’s a lot of luck, so in these situations. So in the case of Airbnb, it was a discussion I had with Guy Ossieri, who’s the manager of Madonna. We were chatting and he basically was advertising it so heavily and was trying to convince me. I think at the end I followed his logic and luckily I made that decision.

Yes. Revolut is I think it’s the biggest blessing that we have in the European ecosystem currently as a company. And we basically, we missed it in The UK team at the time. I still remember then my son came along and said, look, I found this cool app, yeah, and he was raving about it with his friends at the dinner table. Yeah. And I looked at it and with my product affinity, I said, wow, is this cool? And then I just ordered. Yeah. Literally, I ordered the team to get into that cap table, and this was a very short one.

I was following the social media stuff, as there was a company called Xing in Germany, and there was, like, Friendster, and then you had, like, MySpace. It was fascinating that Friendster, being, like, the sort of first social media, yeah, the only thing they basically invented is I could see through whom I know somebody else, the six or seven degrees of what knowing each other. So and then suddenly, MySpace came and they just added music to it. And the whole herd moved away from Friendster to MySpace.

And suddenly MySpace was the hottest thing on Earth. And then Facebook came along and suddenly introduced like clear names or voyeurism. And then everybody moved there. And so until then, I did not fear that there was one single argument why the value was captured. And then they announced that they were willing to do introduce the API, and at that moment I said, Jesus, if that’s the API, then all the music or all the innovation is easier to happen within Facebook because you take advantage of the network and don’t need to build the network again, and then the value will stay.

And at that time I needed to figure out how I get into it, and then I, for two months, called everybody I knew in the valley and I ended up with Matt Cohler. Like a little coincidence because I was at Benchmark as a VC and he was with Benchmark. And so that was established, the connection and then I bought some shares that he could organize. Thanks, Matt, by the way.

Yeah. So look, I mean, also it’s a little bit like a personality. So if I wanna have it, I wanna have it now. Yeah? So and then you try to preempt it. So in these times, what the examples I was saying there was the market was not in the same professional state as it is now, so there was always room for, like, cowboys like me that tried to get into some situations in a different way.

is good. Yeah. I like fintech. I was always working with Shailandra from Sequoia in in the Indian market. So and we looked at it together and he was so kind to help me getting into it. Very early innings and I backed also Coonal company he had before. And so he was happy to to have me again on the Stebb’s cap table.

It’s also a mentality thing. Yeah. So I come from that area in Germany called Cologne, Bonn, and Dusseldorf who are very easygoing people. Yeah. So they have, like, a little bit like I would say they’re like the Dalai Lama. Sometimes it’s good if you get what you want, and something is good when you don’t get what you what you want. I have felt that a lot of lot of cases, even if you don’t get what you want, it turns out well and it’s for a good reason.

Yeah? So I still remember, being son of a farmer, I didn’t have a clue about anything what I wanted to do in life, and that didn’t so much change after my studies. So I thought, wow, that’d be cool to be in as Goldman or McKinsey or BCG or Monk Stanley, and I applied several times everywhere, but they never wanted to give me a job. So kudos to their smart H and R departments because I would have been a terrible employee. It was clearly not what I wanted, but in hindsight it was, yeah, the savior of my life, yeah?

So otherwise it would have been way worse. And it’s the same with companies. So my biggest nightmare, I wouldn’t say, but boy, at that time it was a pretty nightmare, was a company called Wunderloop where basically I worked with a friend of mine like three, three and a half years just to lose 60% of my wealth. The market wasn’t mature enough for it. Well, I was a little bit too early. It was a cookie based advertising platform that was probably like one to two years too early.

But I, during the process, I got to know somebody who wanted to buy this company but at the end didn’t. I, we then hurried it off and we decided to found MacaFoni together, a company in Turkey that we sold for $150,000,000 several years, two years later, two and a half years later to Nez Per. So it overcompensated the loss of that one company. So I’m a big believer, if you are ethical in the things you do and you’re friendly, then luck comes to you and you can make a positive thing also from a lot of losses.

Look. Everybody has that. So be cool. Everybody has that. There’s a common trait with all the entrepreneurs and investors. So I I got in at king.com at 2,500,000 and sold something at 100, and I could have sold at 5,000,000,000, so I didn’t do it, obviously. So I basically Is that the one you think about most? No, I don’t think about it. Yeah? So I think it is I think at the time, this was still an arguable call because Candy Crush didn’t even exist. It was a very different company at the time.

But it’s a fantastic team, and they deserve very much to be so successful as they were. So I’m totally relaxed. It is a little bit like a certain number of criticism that you get. If you don’t get it, you are not there.

At the beginning, it hasn’t been like that, very affluent. So the beginnings weren’t that glorious. It was a a long journey to to get where where we are now. We had a very normal and very tight family life, so I very consciously decided to be basically, during the two thousands, at home at at five or six, yeah, and then we had supper, then we did homework, and then I brought them to bed, and then at nine I sat down at the at the desk again. So this was a very conscious decision, yeah.

If it is unilaterally explains, yeah, this is the outcome. Now I think there has been a lot of very valuable input my then wife was giving to the kids, then the love and the the home that that she created. So this is probably everything working together there.

Oh, yes. So they all got the same the grandma test, so they have some exposure, and that’s the best way to see if they like what they what they can experience. So now, look, it’s a very open discussion I have with them.

I think Lee Fixer is a very cool guy. When he was at Tiger, he was in MercadoLibre, he was in Yandex, he was in Flipkart, and it basically, it was a one man show on the plane, starting there was ’28, 29. This is an amazing achievement. Also, the way he applied thoughts to conquering markets, very, very impressive.

Crazy persistence and patience, things at least two levels more profound than others. It’s very logical and is always a very friendly and well rounded character. And he has uncompromising ethics in everything he does. Very important to me.

Investment defined as the the returns delivered, and I would say every single cent I invested in any of my four kids, multiple is not measurable. But if you want to, as I said, have a different coordinate system with that. If for what it’s worth, if you insist I have something like six, seven investments more than a 100 times money, one even a thousand times, and some more like six or so in the range of 30 to 60 times money. But this is not the currency. The very nicest currency I have to tell you is I have some very, very crazy cool thank you emails from the best founders worldwide that say, Thank you for your help.

You kept your promise and made an impact on my journey. So this is what makes you proud. This is when you sit, when you are 80, you sit in front of the chimney and with a glass of wine, yeah, and then you say, This is what you have lived for. You didn’t live for six or eight percentage numbers of funds. That doesn’t matter at the end. It is more like the impact that you made for people.

That’s not how I think about it. It’s a little bit what we just discussed with the Dalai Lama thing. I’m fatalistic about it. So everything that I thought was bad well, a lot of things when I thought of those I thought were bad turned out to be good, and a lot of things that I thought were good turned out to be bad, so time will tell. I’m easy on that.

You still can, I would say? Also because, yes, you are an ambitious entrepreneur, but it’s not everything in life. Yeah? So you are also human being, you have friends, you have family. I think it is sometimes an equilibrium in life and not a single parameter that needs to be optimized.

I think it is more nuanced, so I think on the very top of the pyramid it’s exactly the same. You will People fight like maniacs and there is everything that you do in order to get somewhere, but I think the broader base under the bell curve is more complacent, more entitled. You have more discussions on this crazy woke shit and on ESG and what do I know. This is not that some sounds that you see it in in in different in different geos.

I said, if you saw my portfolio, you wouldn’t have asked that question.

So I know I’ve I would have guessed this from Shaq because we have this discussion very often, and there are clear advantages of being an angel. You are very free. You you do not need to do fundraising. The decision takes as long as you want to. So but you always die one death. So meaning a platform has also something interesting, and you can achieve something with a platform that you cannot achieve as an angel. There’s a right time for being the one or the other. So I think Mark Evans, whom I admire a lot, he was spectacular, good at at Benchmark, but afterwards, now even better as an angel.

So I think maybe the everything has its time.

That’s what I mean with social media. Will

I believe that there’s a very, very high chance it becomes super big for a very reason. So you have the execution skills that are are unparalleled and proven, and the markets are so much bigger if it comes to health. So at the end, music is not a big market. It’s an okay market, but it’s not a monster big market. And as Daniel said last, that the pay, the the the sum of what The US spends on heart diseases and medication, all that kind of stuff in The US, is in the vicinity of Apple’s revenue worldwide.

So that means if you are moderately successful, the size is so much bigger. And I do think that with the product we have currently at Neko, with the ideas that Daniel, Llama and the team have, yeah, there is a very high chance that they will absolutely smack it.

That’s an interesting one because everybody asks me very factual things and geared shorter. There are very few people that sit down and say, you know, basically I’m doing a journey for like ten years. What makes me happy over a period of ten years? Because there will be some fatigue moments from the normal work, or what did you make, and what do you individually make out of it, because happiness can have many facets and just being successful and eight times divorced is also not the ideal dream of happiness, right?

So it is not only factual things, it’s a lot of things of what makes you proud, what were the moments, how should I design my life, yeah? So this is things that I always ask. So it is very great luxury if I can have some some friends that are ten, fifteen years older that have mastered the next ten year period in terms of of prioritizing your the the the pros and cons and the important ones.

There are two things that make me would make me happy, and that’s the final word then. I need to be proud. Proud of my eight year old me, what I have achieved and what I have dreamt of, and proud of my 80 year old me, when I look back and say, how how have I been have shown integrity with with the people I’ve worked with, integrity with my partner, with my family? These are the two things that are the the North stars for for making me happy.