Hélène Huby

Last week, TechCrunch EU revealed (here) that OTTO Group and Jozefak would probably build together a new project named Liquid Labs. Three weeks ago, OTTO Group made a two-digit-million euro investment in the Oryx-Project, a new incubator for Internet, mobile and e-commerce, driven by former managers from the well-known Rocket-Internet incubator. OTTO couldn't invest in a better and more experienced crew, than the one which, around the Samwer-Brothers, successfully contributed to build up Groupon, eDarling and Zalando (one of OTTO’s biggest competitor in Germany).

The Oryx-Project is an example of where the corporate innovation strategies are heading: seeking direct access to innovative infrastructures; establishing vicinity to innovative thinking, creative approaches and practices; and capturing the good and fresh ideas at an early stage.

To put it in a nutshell, large German companies want to bridge the gap between them, their products and the new digital markets that are moving and transforming very fast. Wanting to boost their innovation capabilities, they seek the vicinity of the digital start-up world.

And they are right in doing so. The most famous and popular digital innovative services and products are coming from the start-up scene.

To quote but a few recent German examples, Amen (a platform for stating your opinion) won TechCrunch’s Europa Awards “Best Mobile or Apps Start-up”, it received $2 million in seed funding and its investors include A-Grade and Index Venture; Gidsy (a peer to peer marketplace for activities, local events and workshops) received $1.4 million in seed capital from Ashton Kutcher, Sunstone Capital, Index Ventures, Werner Vogels and Peter Read; myTaxi (a peer to peer marketplace for taxi drivers and users) is leading the European market and has received $10 million funding in January 2012 by Daimler car2go unit, Xing AG founder Lars Hinrichs, T-Venture (Deutsche Telekom AG corporate venture fund) and KfW Group.

There is nothing really surprising in this observation. It is a known-fact that start-ups are more agile and more creative in their approaches than large groups.

Because of the pressure of the competition and the necessity to raise money rapidly, start-ups struggle to build their proof of concept as fast as possible. They have to be highly creative in order to distinguish themselves from lots of competitors. It is also vital for them to have the perfect time to market.

Pressure of competition and the requirement for innovation and time to market affect large companies as well, but not to the same extent, since they can tap into more stable cash flow than a start-up, and they can rely on assets like reputation, brand image and so on. Moreover, their large scale and often complex structures and internal processes impair their agility and creativity.

Moreover, taking into account that their handling of innovation is going to make the difference between success and failure, how can large German companies approach innovation? How can these corporations embark on digitally-transformed-markets, without being equipped with the creativity, the agility and the digital-native knowledge of start-ups founders?

A first and classical answer is to buy great start-ups. For example, in March 2011, Axel Spinger bought 75% of KaufDa, a local deal-hunting-adviser. Corporations are also trying to hire people coming from their digital competitors, but these people are not easy to attract, and their start-up culture do not always fit with the corporate culture. Large German companies have also created venture capital funds (like T-Venture which belongs to Deutsche Telekom AG). And, last but not least, they are investing in incubators (see OTTO’s example).

But these actions are just a first step, as the advantages of the start-up world, that are so desperately wanted in the fields of innovation in large companies, are not yet included in the structures of the company themselves and even less in the company’s culture, but remain outside the company.

So what could be a next step for German corporations? Where to start?

Looking at the infrastructure and processes that the start-up-world has created in order to turn ideas into projects and eventually into businesses could be a good point of departure.

Labs: create an environment for creativity and entrepreneurship, e.g. a  lab or an indoor incubator, and reward the employees who come up with great ideas. Labs and prototyping will create unexpected results. Google, for example, has a lab culture, and, as the New-York Times recently disclosed (here), people are working at imagining the future in the secret lab “Google X”.

Agile processes and beta prototypes: learn from methods in agile web-development like user-feedback, retrospectives and short-term project-iterations. They can save a lot of money, and they give you a first feedback from the market. For example, Google regularly offer its users to test experimental features. Users’ feedback helps Google deciding to integrate or not the new features.

Innovation culture: innovation is first and foremost a cultural change that has to come from above. Implication of the very top management is vital to the survival of ideas and projects. Look at Apple. Steve Jobs epitomized innovation.

Local incubators and co-working spaces: lots German cities have great start-ups (Berlin, Hamburg, Munich) and Berlin is becoming the European start-up hub. So Germany has the perfect local ecosystem to produce great innovations. Taking part into a local incubator and/or an open co-working space as a large company is the perfect way to strengthen the local culture of innovation. Such a participation triggers internal changes in the company itself. The ongoing project of a co-working space at TUI Germany (here) is an example of such an initiative.



Hélène Huby is Project Director Germany at faberNovel. faberNovel architects an open and digital future with visionary organizations.

Lena Schiller Clausen is co-founder and CEO of betahaus Hamburg, a coworking space that hosts freelancer and start-ups and is frequently visited by large companies.

Peer-to-peer taxi booking apps are developing quite well in Europe. Great news for the consumers. But taxi companies are worrying.

In 2009, the German Hamburg-based start-up MyTaxi created an app which connected directly taxi-drivers and consumers. Consumers could then book directly a cab. In 2010, the American start-up Uber came up with a quite similar idea : an "on demand black car service". (here)

Approximately 2 years later, how does the European market look like?

Well, MyTaxi has become one of the biggest players. The application is available in more than 20 cities in Germany, they are present in Austria and in Switzerland. They received Series-A-Funding in March 2011, coming from T-Venture (the corporate Deutsche Telekom VC Fund) and the KfW.

But competition is great, and it is coming from London and the USA.

Last year, Hailo raised $3M in seed funding from Atomico Ventures and Wellington Partners (2 funds that invested in companies such as Skype and Spotify, so Hailo has great investors!). Hailo launched its app in November 2011, and there are already more than 10% of the London cabs which are using the app.

Coming from the USA, Uber launched its app in Paris last December (see here the TechCrunch article). The very same month, Uber announced that they received $32M From Menlo Ventures, Jeff Bezos and Goldman Sachs (see here the TechCrunch article). So Uber has now the financial capacity to expand very fast in Europe. Moreover, as Uber has already spread in American cities (from San Francisco to New York, Washington DC, Boston, Seattle and Chicago), there are lots of American who are using the app, and who are Uber’s European potential consumers when they travel to Europe.

Another question mark is the reaction of cab companies. They are not really happy with these new competitors. In Vienna, a taxi driver has been sacked because he was using MyTaxi app. In Germany too,  taxi companies are attacking MyTaxi (here). Let’s wait a few months to get the Parisian reaction, but for sure, there will be one.

Update : MyTaxi has just announced that they got car2go and Lars Hinrich (founder of XING, the German LinkedIn) as new investors. More information here