Good Practice Cases: we’ve been interviewing some of the companies that have attended our Scaleup Summits.
Today, we’re interviewing Lukas Olbrich, Managing Director at Sablono. We met through our Open Innovation for Midsize companies program that we run with the support of the European Commission.
The goal of this program is to expose traditional mid sized companies to Open Innovation and help them to engage effectively with startups to drive innovation in their organizations.
We’ve provided a select group of mid-size companies with dedicated assessment and scouting, and then facilitated 1:1 meetings with innovative startups, in which Mathesia was included.
In this interview, Lukas shares with us his experience from the startup perspective. A summary of the podcast is presented below.
Can you start by introducing Sablono?
We provide a software platform for construction management in large scale construction projects – projects often don’t know what has happened in which area of the project and sometimes in which location. We bring it all together in one solution to manage highly complex teams.
We’ve started 6 years ago and we always had the idea to turn projects more process oriented and push the construction sector to become more formalized, to know what’s happening every single day.
We found the German market to be not ready for these solutions and have had to pivot multiple times – getting into large construction projects, such as the Louvre Abu Dhabi in 2015 – then we jumped into UK and now we operate across Europe and the United Arab Emirates.
The construction sector is a tough market and resistant to change – as a company itself, what are your current needs for growth and the next steps for future?
Our priority is always to make our customers successful and we work with corporates of different sizes.
Our strategy has been a little different than a lot of startups: we raised a seed round but not more than that – having worked very closely with our customers instead, trying to find a niche we can grow in.
I strongly believe we’ve found this niche in digital task management – given our growth in the last 24 months.
To answer your question, our first objective is always to win new clients – and we’re looking to scale through our Series A round.
When you search for new clients – what kind of relationship do you seek to build with them? From a pure procurement deal to co-developing?
It really depends from customer to customer. Some just want help in digitizing processes and others, often multinationals, come with a clearer vision of transformation.
Our standard offer is to sell the solution and implement it, but we do prefer to work closer with clients in a way that we call “co-innovation”. This can accelerate both the corporate and the startup when there’s a fit.
We know from experience that a startup will work 24/7 on their client’s problems – as this is their way to scalability – and we had a great experience in the early days.
In the future this might happen less and less as the customer base grows and products become more complex – we’ll likely have a higher ratio of direct clients rather than close partners.
Yet, we always start to see a client as a partner – we want them to be successful, we visit their sites, we take their feedback, we understand how they work and how we can improve our solution..
Naturally, as you scale, you have to make choices and prioritize as you mature.
In the early days as a startup, you develop very close relationships with your customers – that’s what being a lean startup means. This helped us very much, but when you get to scaling, you have to choose how the partner’s vision fits with your own DNA.
What matters to you most when you’re trying to find a corporate partner is the fit – does that mean the added value that you can bring as a startup?
Obviously the construction market is very fragmented and there’s a high level of complexity in construction technology. We’re a bit of outliers in this space, as there’s not so many companies operating at this level of detail.
We really needed the early adaptors – when we were lucky, there was a corporate looking for exactly this solution. That’s what I meant by the vision.
Then as a startup you have to decide if you can make that client successful and you are willing to invest in that relationship.
It’s one of the hardest decisions as a startup: it’s a trade-off between short term gains and what it means for the long term. In SaaS it’s about making your customer successful long term.
Let’s drill down a bit in this dilemma – you have to choose between companies that have a vision and know what they or companies that you have to educate about your solutions?
Let’s say yes, educating the customer can definitely be a dilemma.
Indeed the clients that we made successful very quickly were the ones that had a vision, a clear set of requirements around what they wanted to achieve.
When we found that their vision and our solution fit well together – you can accelerate the processes
As with many innovations, you always have the topic of education.
Just recently, I had a call with a project team living in the old world, not looking into the future or understand the innovation that we bring – and this can still happen.
Of course it’s more rewarding to find a partner that understands the way you’re heading and wants to go the same way – then you can really build a partnership.
At MTB, one of our topics in startup-corporate collaboration is really having a shared vision. From our point of view, we try to think if this is a topic where we could intervene.
I think you can, I’ve noticed with internal innovation teams – as we get procured by these teams and they introduce us to other business units – they essentially source us.
You’re basically doing that from the outside perspective
Not only it’s valuable to have someone source us but in steering the relationship, re-emphasizing the joint goals and defining objectives at the beginning.
We always try to figure out: what is the added value in steering the innovation project from an outside perspective?
You act as an intermediary – you know startups are more agile than corporates – but there’s a point in all projects where corporates realise “ah, you need to improve the communication on that”, “the startup delivered more slowly than we expected” or “didn’t deliver what we expected at all”
In these situations an outside view can be very helpful in bringing the team together (startup and corporate) and steer them towards the future and the goals that want to be achieved.
We find quite often also that innovation teams can be silo-ed away from the rest of the business units and have different targets – which relates to MTB’s efforts in working with midcaps – have you had experience working with smaller companies less used to open innovation?
We’ve had both sides.
In the first two years of the company we worked mostly with smaller companies that worked only in a certain region, up to 1500 employees.
We’ve definitely noticed the difference in working with these smaller companies compared to multinationals.
What we find is that the smaller companies know exactly what’s happening in their business – almost everyone knows what projects are happening and what innovation is happening.
Whereas in multinational, one side or region does not know what the other knows. You might create internal competition which for a startup can be a really bad experience.
Say that you’ve been working for 12 months and in Asia, for example, another startup was sourced by the Asian team for the same purpose and now the corporate has to make a decision on which solution to go for – as corporates want to standardize their activity.
This is one of the biggest topics I found.
And of course, another topic is speed. Smaller companies can decide much more quickly and have the authority on budget and sending out purchase orders.
Multinationals you might have spent 3 months working on a contract and you find out that John Doe from the US also has to look at this contract and this will take another 4 weeks in the approval process. These kind of things don’t tend to happen with smaller companies.
Dealing with corporate internal politics is always something we try to prepare our startups for – reminding them to understand that just because you’re talking with one business unit, it doesn’t mean the whole organisation is aware of you.
Yes, and this actually goes in line with the question of how you scale WITHIN your client.
I still feel that corporates need a lot of help in understanding how they should do that.
We have a client who is very easy on innovation.
Construction projects can just source new solutions and have their own budgets to do it.
While this is a very good thing in many aspects and makes them very agile, this client then has a bottleneck in what relates to bringing these items back together and understanding what they do – which implies that an innovation doesn’t survive more than one project – not a great thing for a startup as we don’t typically invest for the short term gain but for the long term partnership.
One recommendation we typically give to our startups is to look at a client for the results it can give you not for the resources it has. While big companies have a lot of resources and the payoff might be big, the efforts required and the chances of success can be low. On the other hand, working with a smaller company gives you results quicker, you’re much more likely to develop a closer relationship…
Yes, I think it depends very much on the stage of the startup. Looking again into our history – our contracts with large multinationals wouldn’t have been possible without the successful root through smaller companies.
They helped us mature our offer and understanding of the market.
I’m very sure no multinational companies would’ve taken the risk to invest in our solution but after we had proven the concept on multiple large scale projects which were handled by 250-1000 employee companies it was a lot easier to build the trust into our solution and services. I’m very sure this wouldn’t have happened on year one.
Can you check our assumption that smaller companies tend to not be so experienced with open innovation?
I tend to agree that this is the case.
Our early clients: yes they knew we were a startup but mainly they considered us as a service provider but didn’t look at us from an innovation perspective, there was no real structure around that.
It was on our DNA that we tried to engage with the client deeper without them actually realising that it was open innovation what we were doing.
These smaller companies definitely didn’t see this as co-innovation and it’s partly a matter of communication – we only referred to it as ‘reference customers’ – on the other hand, when you look at the product development roadmap, it can happen that the customer asks you feature for feature for feature. When this roadmap is not clear between the two of you, it becomes very hard to discuss.
Your client can consider you as a systems provider and then ask you for multiple features which don’t actually fit your solution. This is how feature creep can happen.
Let’s take a step back – by now you’ve been involved in several matchmaking activities by Mind the Bridge.
You sourced us and invited us to the Scaleup Summit in London 2018 – focused on construction technology. That’s where we started building relationships with companies such as ACCIONA.
Then you brought us to the Brussels Industry Days 6 months later, where you had, compared to the Scaleup Summit, booked multiple meetings for me personally. This one was very successful for us – and it led us to a contract 6 months later with a corporate that you brought to the table.
As a startup you look at these matchmakings and you consider if you should take part, what is the outcome? Do I have the time or is there something more valuable?
These experiences, being introduced to a large multinational corporation from Europe, who also do projects in the Middle East, then you immediately understood that what we provide can help them in one of their current projects. That’s a game changer and you never question these activities again obviously.
There’s a huge difference between a warm introduction than something you do by yourself – I think you can see that corporates trust you, Mind the Bridge, and then the trust between startup and corporate can come much quicker.
That’s exactly the intention with our Summits – that both parties are relevant, ready to collaborate. Have we done enough, could we do more for you?
My feeling is that, comparing the two events, Brussels was much more tailored than London – when you mix startups from different sectors it dilutes the possibility of making a relevant connection.
So my personal preference is smaller events as I’m a fan of warm introductions.
To wrap it up, what message would you give to startups considering joining these activities?
As a startup, what I learned is that it’s important to ask “What stage am I in? Do I know what I’m offering?” and based on this, “What do I want to get out of a matchmaking event?” – is it about finding clients or investors? So, understand your stage, your goals and the details of the event – to understand if it’s valuable for you.
I’ve also seen it often (and done it myself) that it’s very hard for the organisers if startups just come for 1 or 2 hours – then no one gets any benefit.
And from the other side, what advice would you wish someone gave to the corporations before they talk to you?
It goes back to the topic of vision: are you clear on what you want to achieve? Please don’t talk to a startup just to source the market and understand what’s out there. Yes, you can do that but then don’t invite them for a day to fly over somewhere, jump on an online call instead. Talk to a startup in a deep conversation with the goal of having a cooperation. Once you know what you want, defined your requirements and built a team around those requirements who would also execute what you want to achieve and work with the startups. Then be willing to take the risk and consider the startup as a partner.
A startup is not a cheap company to develop a product for you – a startup needs to be considered a partner from the first day. That has several layers – maybe a startup actually has more experience in the area that you want to innovate in than you are – be open to that. Don’t force a startup to go in a direction they don’t want to go or where they’ve been before and it doesn’t make sense.
The next one, be willing to raise a purchase order and really pay for the services the startup provides. There will be a financial side to this cooperation, it won’t be there for free. This goes hand-to-hand with: be willing to put in your own resources, in terms of there being a team to do that.
Then just go and enjoy the ride, see how you can learn on how startups work in an agile fashion, maybe see how you can smoothen your internal processes – you’ll never work like a startup, but you can get a little closer.
What I like about that is: you get as much as you put in.
And with that, thank you Lukas!
By Ricardo Silva
Head of EU Projects – Mind the Bridge