What can IoT startups and the German Mittelstand learn from each other?O'Reilly Solid 2014

Hi. I'm @peterbihr.I help companies with their strategy & run conferences about emerging technology.

One conference is about the Internet of Things: ThingsCon.

Web: thewavingcat.com Mail: peter@thewavingcat.com

Let's talk about the German Mittelstand.Germany's equivalent of the Silicion Valley, but for hardware exports.

Warning: In the name of brevity, beware of some blatant stereotypes.

What is MittelstandA really vague term:

» SME (often <500 employees) and/or

» family-run businesses & < €50m revenue

» But size isn't everything.

Backbone Of The German Economy» 99% of tax-paying enterprises (95% family-run)

» 66% of full-time employees

» 38% of revenue

» 83% of trainees

» 70% of exports

(Source: IfM)

German manufacturers: Similar rules applyToo large to be Mittelstand, but culturally similar: Big family-owned corporations in Germany like Bosch.

» 52b revenue

» similar values

» owned by a family-run foundation

What's special?

Traditon in industrial design

Verticals» electrical engineering

» industrial systems

» high-tech manufacturing

» export driven

» B2B

No niche too small!

Cultural backdropThe stereotypes? They're true! (Well...)

» risk averse

» ambitious, but humble

» trust-focused

» inward-focused

» focus on long term relationships

Mostly run & owned by families. That changes a lot.

“Don't think about next quarter. Think about the next generation.”

ResilienceHire and fire? Unheard of.

Economic crisis? Hardly layoffs.

Creates trust, commitment. Almost cradle-to-grave.

“Market driven? Our engineers build the best product they can, then we find a market for it.”

no VC moneyFor most businesses, bank loans will do just fine!

(Local banks and government funding programs can help.)

What do startups and Mittelstand have in common?» swift decision making (both run by the owners)

» (different flavors of) innovation

» global perspectives

What's different?» speed: agile & quick & growth hacking vs

deliberate and long-term

» mindsets: down to earth, quality trumps price, long-term relationships

» focus: inward vs outward

Struggling? (1)... with all the things that are second nature to startups:

» More open sharing (vs closed innovation)

» Fast iteration

» Fail culture

» Being approachable

Struggling? (2)With consumer products and cloud-based services (privacy, etc. )

What can startups learn from Mittelstand? (1)» Go after niches that aren't sexy but profitable

» Think long term. Really long-term. (Unlike many VCs.)

» Build resilient partnerships (internal & external)

What can startups learn from Mittelstand? (2)» Build the very best you can (don't chase the

market)

» Don't give up control over your company

» Don't outsource key skills: Even seemingly simple things need deep knowledge to produce (sawblades?!)

What can Mittelstand learn from IoT startups?» Find or create new niches

» User research. Learn from user behavior, don't assume anything.

» fail culture

» launch early & often

» agility (in the startup sense of the word)

For the Internet of Things, all these questions & their effects will be amplified.

“Question: How can we get both sides closer together?”

“Question: Can we replicate some of the good effects elsewhere?”

More exchange

» Meetups

» Trips & visits

» Build a trust relationship

» Build stuff together

“Your thoughts & experiences?”

Image sources:

» Screenshot Herrenknecht http://www.herrenknecht.com

» Screenshot BWT http://www.bwt-group.com/

» Peter Mackey (CC by nd)

» Steve Jurvetson (CC by)

» Andreas Klein (CC by sa)

» Peter Bihr (CC by nc sa)

» Bosch product photo

Thank you!Peter Bihr

Twitter: @peterbihrWeb: thewavingcat.com Mail: peter@thewavingcat.com

Here today: Come say hi!