Seasoned entrepreneur and investor, Florian Heinemann, joined us in his favourite neighborhood cafe in Silicon Allee to share his experiences in Berlin’s startup community. Since moving to Berlin after graduation, he’s worked with several prominent people and co-founded company builder, Project A. He shares his thoughts on work and life in Berlin and Germany’s standing in the digital society.
First up – in which year was Project A founded?
Project A was officially founded towards the end of 2011, but we became operational in the beginning of 2012.
Tell us about the founders. Is it just yourself, or are there others involved?
We started Project A as four partners, however today we have six people in total running Project Three out of the six are founders and three came later.
What inspired you to start Project A?
We very much liked the idea of supporting companies’ operations, instead of being just a provider of money. In this sense we wanted to provide actual competence and operational support to companies. I liked that model a lot, and we basically tested that during the Rocket Internet time. Before Project A I was at Rocket for five years as a managing director, and I always liked this kind of model – working with companies more operationally. But at Rocket, obviously, the model was quite different – we started companies from scratch, and then hired the management. This way, you owned the companies. At Project A we said, let’s turn this around and give the founder a more relevant role. Essentially we thought, let’s support founders that have already started companies themselves and try to find a model to support them operationally. So in many ways it’s a little bit like Andreessen Horowitz, who had this idea of being able to provide more value beyond the capital they invest. In 2012, we started with exactly this model – taking founder led companies and trying to be more helpful than just providing strategic advice. Now, quite a few VCs are internalizing HR capabilities, PR capabilities or other verticals to further support portfolio companies. When you look at the breadth and depth of the kind of operational support we provide, I would say that Project A is probably still very unique, especially in Europe. I don’t know of any similar firms that would have internalized 95 people just for this kind of operational support.
Tell us a bit about your competition and why you are better.
To be honest, competition is probably not the right word because obviously we are competing with other VCs – we compete with anybody providing money to start-ups – but on the other hand, if you look at the reality of cap tables and startups, you compete with everybody but at the same time you have to cooperate with everybody as well. You’re never financing a startup yourself but it’s always a consortium of people and in every startup it’s a different mix of people. So you’re not die hard competing like Oracle is competing with SAP for example. You always know the people you might be competing with on a deal, and might be on the cap table together on another deal – that’s completely normal. But also, I wouldn’t really view the other VCs in Berlin as competition. If you look at the availability of venture capital here in Berlin and even though it has increased over the last couple of years, I think we still have too little. So, if you compare it to the US or if you compare it to even the UK, I think the breadth and depth of providers of capital to startups is still too low. Though the competition has increased in the past few years, I think there’s still too little options for entrepreneurs. There should be more VCs and I hope there will be.
You’re a seasoned Founder. What advice would you have for entrepreneurs starting out in Berlin?
The good thing in Berlin is there’s a lot of networking. I’d suggest to first try to find your suitable network. If you’re an active networker, you can get into the scene really easily and very quickly. With the steady influx of people it’s very easy to get connections here. And even if you don’t have a great idea for yourself already, I would just try to pick one of the cooler startups here to work for. I think that’s the best way to get a very authentic access to what’s happening. Then, after this experience, you can start to build up your own career or think about your own entrepreneurial endeavours.
Also, try to find out who the angels are because I think that is a very interesting angle here in Berlin. You have a lot of former entrepreneurs, some are also still active entrepreneurs that have had one exit or two exits and started to reinvest. There’s at least a group of a hundred to hundred-fifty people that are able to write 50,000€ cheques after two hours of meetings. So I think if you want to start, and if you want to get your first few hundred thousand euros for funding, that’s a lot easier to get than perhaps ten years ago because there’s simply a lot more people now who are willing to do that. And all those investors are very accessible, and it’s also very helpful for us at Project A. Since we cannot just write a check after a one hour meeting, even though I would really love to do so, we rely very heavily on people that we know and trust; angel investors like Philipp Moehring and Christoph Maire for example. If they invest, then we take a very serious look at all the things they invest in. So I think that’s why getting in contact with these kinds of people can be a real accelerator or booster for somebody that wants to be an entrepreneur in Berlin.
Apart from this cafe, what is your favorite spot in the neighborhood?
I live in Prenzlauer Berg, and every day I drive down to our office at Nordbahnhof passing the wall – the former wall. I just love passing there by bike and then to the office. It’s just awesome. You can still see the tunnels that were dug under the wall and also the church that has been basically demolished and now a new wooden construction on top of where it used to be. There’s this enormous, iconic picture of an Eastern German border guard escaping the former east by jumping over the wall. He was supposed to guard the border, and he basically thought, “shit was now real and I need to get out.” He jumped over even though he was supposed to guard it. It’s so cool, to live and work in such an iconic place. All of the stuff here has so much history, and now there’s such a large tech community here. All the people on their hired bicycles buzzing around, while beneath there’s all of this history. I think there’s not many places that are more livable than this, if you appreciate this history. If you don’t appreciate this, obviously it doesn’t really matter. I think that for somebody that has some appreciation of history, I think it’s just incredible.
Where do you see Berlin five years from now?
That’s a difficult question, because obviously if you look at absolute terms in terms of capital availability, quality of entrepreneurs, etc. it will all develop. I think we are certainly heading in the right direction.
But I think what really worries me is, are we really fast enough, as Berlin, Germany, or even Europe as a whole when compared to the US or China? There’s a winner-take-all tendency in all digital businesses because of the network effects, and if you basically say that the rules of digital business will apply more and more to the overall economy, just because of the digitalization of value chains, then we are actually losing ground in digital business in Berlin, Germany and Europe. And this is something that actually worries me a lot. I also think that people are not realizing enough, also on a political level, that this is actually what’s happening.
If we just look at Germany, it has been built on an SME model – small companies winning in niche markets with nobody noticing really for 30 years. It is a country where families became millionaires and even billionaires in large numbers, accumulating a lot of wealth and making this country very wealthy in the process. But this SME model is at odds with the very nature of digital business given their network effects, winner-take-all mentality and strong tendencies toward scale. So, in this sense, you will have to completely change around the mentality of how the economic structure in Germany works. But the question is really “is there enough to keep us competitive?” We cannot just think in terms of Berlin and Germany, but we have to think as Europe. I think the only economic unit that’s big enough to really theoretically stay competitive with China and the US is Europe, and we are further away from a European kind of joint vision than ever.
Is there a single group, individual, or project that has been most influential to you during your time as an entrepreneur in Berlin?
A lot of people have influenced my work, so unfortunately I cannot just name one. First I would have to definitely point out Oliver Samwer. Without him I wouldn’t have even been in this scene. He was at the same school as I was, WHU in Koblenz, a small university where a lot of great entrepreneurs have come from.
Another person is Robert Gentz, the founder of Zalando. I worked quite closely with him during the Rocket times as well. So he was definitely somebody who influenced me a lot, and really showed me one thing – that potential beats experience in new businesses.
If you look traditionally at knowledge, you always argue that the people who are experienced will beat the ones who are new to something. When you look at the Zalando crew, it was all inexperienced people, even including the ones that did logistics. They designed one of the biggest fashion logistics facilities in Erfurt from scratch and they didn’t really know anything about logistics beforehand. They just were smart and thinking about it in a fresh way, and came up with something that supposedly is one of the most efficient new facilities.
If you’re smart, young, willing to learn and are really agile and flexible in your thinking there can actually be a better way to gain a superior kind of knowledge compared to just having the experience beforehand. You have to unlearn certain things and let go of certain patterns, and I’ve found that a fascinating kind of insight.
Also Klaus Hommels, one of the most prolific European investors and founding partners of Lakestar, who was one of the earliest investors in Skype and other companies. He’s also the only German internet investor on the Forbes List. I’ve always appreciated something he taught me, “if you do one or two things right, that can be more impactful than always hustling and doing all these things.” This is even different than the way Oliver works. Oliver Samwer, he’s just always hustling. He’s always on. He’s like on a natural kind of cocaine rush eighteen hours a day. So he never rests.
Can you name one particular moment that’s been pivotal during your time in business.
When my first company that I had cofounded had merged with another company, my shares were sold to Amazon. That was the first time I had some money, and I thought of angel investing.
For me, I come from a decent background. My parents are both teachers and academics, so education was always very important, but we never had a lot of money. So that was the first time I had some money and I was able to actually start supporting other entrepreneurs. Obviously you need some luck, but for me that brought me into this whole investing and mentoring stream that I’m now still a part of and that I enjoy so much.
The second was probably, from my own perspective, the Zalando IPO. That gave me the ability to invest more aggressively and also to pre-finance some of the commitments that led towards Project A. The gave me basically the ability to do a lot more things that I am doing now today.
Has Berlin’s informal nature and unique history, urban fabrics, city divide, etc. been a positive aspect of your time in the city? I think you answered this at the start, but you can add to it.
I think that there’s a lot of diversity here in Berlin and I like it a lot. It’s more relaxed than Munich or Hamburg, for example. It’s also a lot less stiff and a lot more international. It’s heterogeneous – you can be authentic and no one really cares. I mean, I’m probably more of a normal guy, and here I can just be a normal guy, but there are people that are a lot more eccentric and they can be a lot more eccentric here. And I like that.
Nobody cares if you speak English and don’t speak any German. For whatever reason, nobody cares and I think that’s a good thing. I think that provides a lot of good ground for creativity.
Everybody should do something with some kind of dedication. I think everybody has a responsibility to use their talents in a certain way, whatever it is. I think it’s also their duty to do so, not just for society, but for themselves. I mean if you want to lead a happy life or some fulfilled life I think you need to find something that you’re doing, whatever that is and whatever combination that is. And I think Berlin is great to achieve that, because it also gives you the time to actually figure out what that is, because it’s not so expensive to stay here.
Finally, Coffee, Tea, or Club Mate?
Thanks to Florian for contributing to our neighborhood interview series.
Curious to learn of Project A’s work? Check their Soundcloud stream
Interview: Andrew Haw
Photography: Colby Minear