– 5 key learnings from building and selling a digital medium-sized company –
My story begins in October 2007: studiVZ is the star of the start-up scene, Brands4Friends shows what is possible with the new generation of e-commerce models and Rocket Internet is only just being founded. At the time, Berlin is definitely the place to be if you have little money but big ambitions as a young founder coming directly from university. The square meter of office space in Berlin-Mitte costs between EUR 5 and EUR 8, good developers cost no more than EUR 3,500 gross per month.
I got to know Jan Beckers at WHU Idealab. In Oliver Samwer’s workshop, his idea of “bringing the classic university curriculum vitae books online” does not make it into the second round. Nevertheless, Jan calls me a short time later and asks if I, as CEO, would like to found the company with him. With Henning Peters he has a strong CTO at his side and with Lukasz Gadowski and Oliver Jung the first league of business angels is behind him. As CMO, Pascal Tilgner complements the founding team perfectly. I’m on fire and agree.
The line between other co-founders and first employees then blurs. However, they all have one thing in common: There are incredibly talented and motivated people in their twenties who we managed to win over to Absolventa’s vision. Sascha Kubak, today managing director of the Trendence Institute, takes over the sales department with Ann-Carolin Helmreich, today a sought-after performance coach and social entrepreneur. Tim Keding takes over marketing, later he became founder of, among others, Shoepassion.com and Monteurzimmer.de. After fouding Absolventa, Henning Peters founds the “spotify for e-books” skoobe together with Holtzbrinck and Bertelsmann, and sells another foundation, RiseML, to Nvidia. Pascal Tilgner is now very successful as a private investor after he sold the Deutsche Auftragsagentur (DAA), which he founded, to Bosch Thermotechnik. Absolventa initiator Jan Beckers is the founder of IONIQ (finleap and heartbeat labs), was named Entrepreneur of the Year by EY and, with BIT Capital, is one of the world’s most successful investors in technology stocks.
Over time, more top managers join such as Daniel Schoppmann, current Absolventa CTO, Victoria Tschirch, today managing director of the FUNKE subsidiary Passion 4 Guest Rooms, Ben Fischer, current Absolventa CMO, Adrian Hensen, today founder of On Purpose, or Lorenz Hartmann, founder & Pickmotion’s CEO.
It soon turns out that the basic idea behind Absolventa has already been tested many times and has always failed. With the pivot towards a job exchange of the classic design, we are able to build the German market leader for entry-level jobs with a lot of hard work and passion. A well growing and profitable German Internet medium-sized company. At the beginning of 2015 we sell Absolventa to the FUNKE media group.
The cooperation within the management team was something very special for me. I had the privilege of working with people who, with a view to their abilities, could all set up their own companies and be CEOs, but who decided at the time to spend part of their careers with me at Absolventa.
In my opinion, it only worked because we took into account a number of principles in order to work with top talents.
#1 Don’t be bossy
It actually goes without saying nowadays: top managers who have free choice to decide where they want to work cannot be squeezed into a hierarchical organization with little freedom. The phrase “I’m in charge here, that’s why we’ll do it as I think it’s right” was not heard once at Absolventa. It was simply not necessary: We developed a common vision, then operationalized it and assigned it to the various areas of responsibility. The managers were free in their areas of responsibility. The unspoken agreement has always been: I trust you, you are the expert, do as you think best. I only interfere when our common goals are in danger due to a lack of results. Needless to say, when it comes to certain subjects where you think you really know better, it is sometimes difficult to accept a completely different approach. In the end, however, I am convinced that this is the only way for top managers to develop their full potential and remain loyal to a company in the long term: allow freedom and demand responsibility for the results.
#2 Don’t ask for permission, beg for forgiveness
Especially a young team that moves quickly makes tons of mistakes. That’s okay, as long as the mistakes happen only once and, above all, are not fatal for the company or cause lasting damage to the organization. As a CEO, how do you know in good time whether a particular initiative by a manager is a potentially fatal mistake? Who is responsible for identifying such errors at an early stage? My answer: the CEO and not the manager. The CEO must be close enough to what is happening and proactively communicate with the managers in order to identify dangers in a mutual dialogue. It is fatal to pass over the responsibility to the manager in order to avoid mistakes. As soon as managers cover their backs with the CEO for every little thing because they are afraid of failure, the whole organization becomes slow and cumbersome. Our Head of Marketing, Tim Keding, kept reminding us: don’t ask for permission, beg for forgiveness.
#3 Sharing is caring
Every top manager has been involved in the company from the start. Initially, only a few shares were available for the participation program. This was not a problem insofar as we were all certain that we would head for an exit north of the EUR 100 million in the next 18-24 months. Having 0.5 percent of the company felt therefore very appropriate.
Over time it became clear to me that an exit somewhere between EUR 10 and EUR 20 million would be more realistic and that it would take us more than 5-7 years. I shared this insight transparently with all top managers. It was immediately clear to everyone that half a percent in this scenario was no longer a particularly exciting incentive. The non-operating shareholders were of great help to us in this context: They made a considerable amount of shares available, which I distributed to top management in line with their performance.
Even after the exit to the FUNKE media group, we dealt with the earn-out payments in a similar way. Only in this way did the exit, that turned out to be smaller than what we had hoped for when the company was founded, turned into a great financial success for all the managers who made it possible.
My conclusion: top talents expect absolute transparency and performance-based participation in the overall success. If the CEO optimizes only for himself and not for the whole team, the team quickly breaks up.
#4 A temporary marriage
It is in the nature of things that top managers have multiple career options at their disposal at all times. There is no lack of inquiries about other management positions for them and the option of starting one’s own project or company is a constant thought.
It was clear to me that we couldn’t give every talent a perspective for many years to come. At the same time, everyone was central to the company’s success and an unexpected leave would have been very problematic.
Two instruments have proven themselves right to tackle this challenge: At the start of the annual management offsite, everyone first spoke in detail about their sensitivities and their prospects at Absolventa. At the end of the day there was full commitment from every manager for the year ahead. Of course, the respective commitments at the meeting itself did not come as a surprise. It was an unspoken rule that thoughts of leaving should be spoken out the moment they arise. It has worked that way over the years without exception. That certainly has to do with the fact that we didn’t hold it against someone when he or she wanted to pursue another passion.
The second principle was that everyone had to develop their own successor. Only when a capable successor was available was the manager “allowed” to leave.
These two simple principles have given us an incredible amount of stability and continuity over the years.
#5 Side projects
Probably the most controversial topic was the handling of commercial side projects done by our top performers. In many successful companies the principle prevails: one hundred percent focus on the job, commercial side projects are prohibited.
At Absolventa we did it differently: Side projects by our top people were allowed by prior arrangement. Would Absolventa have grown even faster if we had banned side projects? I don’t think so for the following reason: Side projects, if they are pursued outside of working hours, pay massive amounts on the manager’s know-how. Ultimately, this know-how also benefits the employer. In my experience, this effect outweighs the mental distraction that a side project naturally also brings with it.
It is important to mention that the topic of side projects played a role especially in the early days of Absolventa. Our managers were in their mid-twenties, had no families and worked almost around the clock. From 9 a.m. to 7 p.m. at Absolventa, evenings and weekends for their side projects. With regard to mothers or fathers of small children, who apart from their families can find only 40 hours to work, my assessment of side projects with regard to the benefits for the employer is less positive.
Conclusion
These 5 principles have contributed significantly to the success of Absolventa. In addition, companies have emerged from the Absolventa ecosystem that now employ hundreds of people. These include: Shoepassion.com, Passion 4 Guest Rooms (monteurzimmer.de & pension.de), Deutsche Auftragsagentur (DAA), Clevis Research, Founders Kite Club and Sellics.
Adhering to these principles has not always been easy. Your ego moves in a different direction from time to time. However, the experience that I would like to share as CEO is: Adhering to these principles makes your own work so much more productive and fulfilling.
