René Seifert

Entrepreneur, Global Citizen, Flat World, Internet, Web 2.0, Innovation, Start-Up

Archive for October, 2006

SPIEGEL-Article: German Emigration

Just returned to Bangalore from the highly inspiring EO (Entrepreneurs’ Organization) conference in Lisbon. During transit in Frankfurt I bought the newest issue of Germany’s leading news magazine “DER SPIEGEL” with the expected article on Germany’s problem of “brain drain”, i.e. qualified Germans leaving the country to seek for better opportunities abroad.


I say “expected article”, because I got interviewed for this story around three months back and in addition got chased for the respective photo-shooting through the streets of Bangalore. And I feel humbled that the published story even begins with featuring me and my rationale as the prototype for this rampant phenomenon which is doing Germany as a whole certainly no good. But reality bites and the article makes a well researched case on the broader picture. Funnily, my favorite publication “The Economist” has a parallel coverage in its current issue on exactly the same topic, too: 144,000 Germans have left the country last year, 128,000 have returned, with the balance a loss.

What is more, there is an asymmetry between the level of qualification between those who return as opposed to those who quit which tends to reinforce the drag on the economy further. With the other exemplary cases of German emigrants in the article, our motivation can be indeed well summarized with “I have enough”. Exactly this was my reason to quit the country three years back when I was deeply appalled by basically everything. I had enough of the government, economy, society, gay marriage, politics, bureaucracy, depression, a climate of envy, obsession with Nazi-past, …, you name it. With my favorable situation to travel to my old home country once a month, I have developed a more benign view, realizing that the famous grass is not always and everywhere greener on the other side. Yet, that revelation cannot mask the prevailing structural problems that haven’t ceased to exist in Germany.

As the article rightly quotes me, I was and I am still thrilled by the vibrant pulse of Asia, and the opportunities in India in particular. And my response to the question if I could imagine coming back to Germany for good was: “Hardly, because what is happening in India at the moment, is just the beginning.” Funnily, in the same edition of the SPIEGEL, there is also a story of Thomas Friedman, author of “The World is Flat”, visiting Berlin and being desperate how slow Germany was. He did not even manage to send out an urgent e-mail. His hotel did not have internet, neither had the publishing house Suhrkamp where he was presenting his book. I feel it’s worth mentioning Mr. Friedman in this context as the phenomenon he describes with the “Flat World” and Bangalore at its epicentre constitute very much the particular attraction for me to move to the “Silicon Valley of Asia” instead of, say, Mountain View, California.

After three years, I feel that I have found a bit more of a balanced view than in the beginning. A view which also strongly resonates with the many great discussions I have had with my fellow entrepreneurs during the last days in Lisbon: In the nutshell Germany need a culture of entrepreneurship which would require quite a shift in current conventional wisdom: That labour is not a scarce good, but the driving force of and for a dynamic economic momentum. That with the existing issues, we don’t constantly need “more of the same”, namely government programs, tax increase and another expansion of the state sector, but we need exactly the opposite with less of all that. And finally the insight that what people do and what they work is part of the many choices we fortunately possess in order to be true masters of our destiny.

Entrepreneurs’ Organization: European Conference in Lisbon

Exciting three days in Lisbon for “fueling the entrepreneurial engine”, in the beautiful Penha Longa Resort with a fantastic crowd of fellow entrepreneurs on learning sessions and networking events.


The kickoff yesterday started with a very inspiring keynote from Francisco Pinto Balsemão, former Prime Minister of Portugal and today biggest media mogul in the country. He spoke about his life when he turned from journalist to politician and from politician to entrepreneur. Absolutely savvy how to catch an audience, he appeared absolutely authentic in what he had been doing throughout his entire life.


Towards the end of his speech, he said a lot about the challenges that the internet is posing to a media group like his where a lot of “management by cannibalization” has to take place. What this means? Well, although as a publisher you know that the online edition of your newspaper property will badly eat into your more profitable printed edition, you have to do it. Better cannibalize the business yourself instead of letting the others do so.

Training: Mountain Flying

Today was a good day. After the breakfast with Richard Charkin, I went to do something which is heavily recommended if you want to cross the Alpes or take a trip through them as a pilot: Mountain training. It is mainly about the weather, when you can’t with a Cessna 172 just fly above the hilltops, but you have you fly through the valleys. Then a constant alertness for strips where an emergency landing could be performed in the unlikely case of an engine failure. And some phenomenons like downdrafts with rotor effects that can occur when crossing a mountain wall which one should be prepared for. Mr. Gerhard Breu, the instructor from Schwabenflug, is not just a very good trainer and extremely polite person, but also a true champion on this topic who has a lot of valuable information on his website.

Besides the training, it was fun and beauty, too. We were flying over the most popular castle, well, in the whole world ;-) Schloss Neuschwanstein, which is cetainly one of Germany’s biggest tourist attraction. See here the pictures:



Today was a lot of writing, just posted an article on the Blog of Holtbrinck eLAB in German language about the value of a social network here.

Breakfast with Richard Charkin: India from a Publisher’s View

“Saturdays are good for blogs, I get the most hits”, says Richard Charkin, who is an active blogger himself. Another experience of his: “If you don’t blog every day, you lose your customers.” And looking at this blog, Richard really writes very regularly and then also very substantially. Given the fact that on the sidelines he has the job being CEO of Macmillan, it somehow lets me pale in my occasional indolence in not always writing that regularly.

Just returned from a very inspiring breakfast with Richard in Munich where we initially went off to talk about India. Macmillan is very strongly established on the Indian subcontinent, with its subsidiary Macmillan India being a major schoolbook publisher and running a very successful publishing business process outsourcing (BPO). We were exchanging thoughts on what role India will play in digital media, namely internet and mobile in the future and what the specific challenges existed for a publishing house if it wished to be somehow part of that game. At this point, as Macmillan India is a publicly listed company, I have to point out that of course Richard at no point made reference to concretely planned activity which by any means might have implication on the stock price. It was a breakfast where we spoke on a very broad and generic level.

We were coming from different lines of argument, but arriving at pretty similar conclusions: On the one hand, India still has to prove that it is able to create consumer-centric digital services which might have the appeal to scale globally. Second, an effect which might at the first glance appear like a turbo-charge to foster exactly that: India is presently being flushed with Venture Capital. Evalueserve, a business intelligence firm, observes in a report that 44 US-based VCs are rushing to invest on average US-$ 100 mn, with a strong focus on the sectors mentioned above. Nominally this adds to US-$ 4.4 bn. Yet, this value still has to be corrected by the purchase power parity, something that also for instance “The Economist” regularly does, by a factor of 5. Doing the maths, one ends of with US-$ 22 bn to pay for management, staff, development resources and marketing power in India in order to get a company off the ground. For me this means that way too much money is chasing way too few great concepts and also not enough capable entrepreneurs to execute.

In the nutshell, a publisher is not a VC in the first place. And the VCs are already there in abundance. So running into a head-on competition by throwing just even more money into the ring, will certainly lead to a bloody red ocean. But a publisher has other assets and capabilities a VC does not have: setting-up businesses, building operations itself and using the multiplying forces of its existing ventures. So in my view, a kind of hybrid which combines the deal-making capability of a VC with the institutionalized hands-on skills of, say, an incubator could create a marketplace that VCs are not able to address. See in that regard the similar arguments of Terry Garnett on the higher end of the buy-out investment market about which I wrote a few days ago.

Clearly, Richard and touched upon a whole variety of other topics: cricket, the future of on-demand printing in books and e-publishing. On the latter, Richard is more skeptic than me, arguing that to a vast extent a consumer buying a book has similar motives like buying furniture: you want to have it, touch it and see it – but not necessarily read it :-) I decided to give myself a try when I will be in the U.S. in two weeks where I will buy the Sony Reader for $300 odd. But I was also pretty franc saying: “I give myself a likelihood of 60 % that after three months this thing will be lying useless in the corner.” In that case Richard would have proved to be double right: e-books don’t work and the gadget would have become a sort of decorating “furniture” of its own kind.

Video: Truth in Advertising

I remember working as Head of Markting at Bayern 3 a lot with “creatives” from likewise “advertisements agencies”. And admittedly, I always had a bit of a deranged relationship with their “hipness”, their “briefings” and “re-briefings” and “de-briefings”, not to mention the kind of bullshitting during a pitch. A friend just sent me this video, 12 minutes from the Cannes Film Festival 2001, and I was cracking almost down from laughter. It’s relieving, and in all its exaggerated irony, just as irony is: it bears some core of truth.

I guess as a good boy I have to mention that the language is vulgar and offensive. So, ok: The language is vulgar and offensive. Enjoy :-)

Bangalore-Event: Terry Garnett “From Venture Capital to Private Equity”

If I went to all of them, I’d get even more obese than what I got during the Oktoberfest. I am speaking about the high-caliber events in Bangalore that are happening on a huge scale these days: great speakers, smart audience to network with – followed by a lavish buffet on Indian food one can hardly resist.

But tonight I went. Terry Garnett was on, at a session of TiE. Terry who? Maybe this gentleman is not too famous by his name, but he has an amazing track-record and has found a very exciting niche in the investment industry. In his 25-year career in technology he used to head the global marketing for Oracle (“I worked for Larry”) and then started out in the venture business working as a partner for the Rockefeller family. After 6 years, he started out his own firm with a partner, Garnett & Helfrich Capital which could clearly be identified as a “Blue Ocean Strategy”. His firm does not go into head-on competition like the 1000 US-based VC-firms in the early stage, neither is he at the other end of the scale in the in the corporate buy-out business. In the latter value creation derives to a huge extent from pure financial engineering. He in fact defined a new industry with being a VBC (=Venture Buy Out). His first fund comprised US-$ 350 mn, and his firm is in the process of raising a second one at US-$ 850 mn.


In comparison to a classic investor, there are several layers of complexity which have to be mastered and institutionalized, but can in turn create an amazing performance. A VBC does not create a dealflow of companies which are for sale anyway. Rather, supported by the trustful network of contacts he has established, Mr. Garnett is looking for divisions in companies which have a great product but in his analysis are badly underperforming. An ideal candidate would be: good brand name, loss making, de-motivated management and revenue upside in his assessment 3 to 4 x. He convinces the management to spin it off in a separate entity whereby still keeping 20 to 25 % as a stake. Following the due diligence and take-over, the real-work begins: Restructuring and literally “carving the division” out from its incumbent infrastructure. “Carving out”, an expression Mr. Garnett tonight certainly used a dozen times. Two companies in the portfolio are presently for instance Ingres and WYSE which – like accidently – have been sponsors of this evening (see picture top right corner).

VBC requires very active investment. One of the biggest challenges is finding the best possible man-agement to stage the company anew (“it’s all about people”). The major attraction is a fat salary plus 1.5 % of a company which is generating, say, US-$ 40 mn in revenue. He mentioned that he was able to poach a senior manager from Oracle away. (I am not sure if “Larry” found that so cool …) He altogether reserves up to 20 % of the equity to attract, retain and motivate top-talent in order to turn the company around. Finally, he has the classic job of portfolio management to bring the company at some point to a liquid event and give the money – hopefully with a nice return – back to his limited partners.

During the Q&A-session I asked Mr. Garnett how this diverse complexity in his own organization can be scaled. He replied that it was indeed one of the biggest challenges. Opposed to classic VCs where each partner works on one deal alone, often the whole board of four partner gets pooled to work just on one deal/project over several months. Then there is hired staff in infrastructural roles, like one full-time-employee only taking care of facility management to find office space around the world. And finally, there a many, many consultants which work on a project-to-project basis. Huh, that’s complex indeed, and to some extent reminds me from my experience of some parallel challenges on the level of a company-incubator.

India: The call of the East

The interview I gave was a horror, it happened last Tuesday, October 3rd in Munich, local time 11 am. Vikas Kumar, editor at the Economic Times of India, called me as agreed upon and I was – sort of prepared for it. The problem, however, was that I had been to the Oktoberfest (here it is again) the day before and had such a bad hangover that I hardly got out a single straight sentence. Well, given that miserable state, I have to be thankful in multiple ways about the overly charming article in the Corporate Dossier of yesterday’s edition with the title: “The Call of the East”.

My favorite lines of the article:

He’s done 14 days of beer guzzling at the Oktoberfest in Munich, where he’s gulped down 40 litres of beer. “A cruel act of self-destruction ,” is how he describes the experience.

Ya, ya, ya, I confess: guilty. Now all back straight to highly disciplined work for the next 50 weeks. On a more serious line, I feel truly humbled that Indian media is paying attention to the work of the last three years in this amazing country. It was certainly a high “risk-high reward” decision that time back to move here, yet I feel that after some hard droughts the situation is starting to swing towards “reward”. What confirmed my decision was the fantastic 20-pages survey in one of the latest Economist-editions on the new globalized world-order, titled “The new Titans”:

China, India and other developing countries are set to give the world economy its biggest boost in the whole of history […]. What will that mean for today’s rich countries?

It means quite a lot. My major takeaway: Don’t be afraid, the upsides are far bigger than the possible losses. Second: Don’t fall into protectionist patterns; it will just postpone the effects from the immediacy of a global market – but with a really hard landing. And third: Revamp your society towards structural change as the engine for prosperity by initiating a culture of achievement right from the start in education.

After three years in India, I had the chance to see what dynamic of a fast growing economy means – against all odds for example from a government which is not really helpful, to say the least. Whenever during my travels to Germany I switch on the “Tagesschau”, Germany’s leading TV news, I can’t believe my eyes what alleged “problems” my country is dealing with. I believe it would be a great cure to send some of these useless union leaders for an internship to any of these fast growing Indian com-panies to see a few things with there own eyes.

First, that their bargaining power in Germany has been diminished badly as the supply for work had increased beyond their reach – yet within the reach of entrepreneurs who understand how to source from a global talent pool. And second, to witness how an economy can thrive if people feel that through their very own effort their lives can improve dramatically and they will try hard to get there. This is indeed the antithesis to the whining, complaining and demanding of unfortunately not negligible parts in German society.

Blog Design

Uups, if you check out the eLAB-Blog, you’ll see a really, really nice design. This somehow also calls for revamping my own blog. It looks simple, yes, also functional, but at the same time a little bit dull. But as usually, it’s a matter of time and energy. Or as we have the saying in German: “Der Schuster trägt selbst immer die schlechtesten Schuhe.” (=The shoemaker himself always wears the worst shoes” :-)

Holtzbrinck eLAB Blog is live

As I had mentioned in a few previous blogs, I had been working on the blog concept for client. And now it’s live. Ladies and gentlemen, please welcome in the blogosphere the official Holtzbrinck eLAB-Blog There is a bunch of great people who are going to write on a regular basis. Myself has written already the first article and I will continue to function as a sort of moderator. Check it out, just a brief note: It’s in German language …

New: Jumbo Jet from Frankfurt-Bangalore LH 754

After a few great days of vacation in my beloved Croatia just touched base in Bangalore again and had to face on another front how much India is appreciating. It’s one of these small things that taken together form strong and undeniable indicators: My “shuttle flight” LH 754 and LH 755 between Frankfurt and Bangalore and return are no longer server by the Airbus A 340, but now by the biggest commercial passenger aircraft: Boing 747, the “jumbo jet”. At the same time, Lufthansa has also launched its 6th destination in India, flying three times a week from Frankfurt to Kolkata. Go, India, go!

However, for my premier on this plane yesterday, we faced a really heavy clear air turbulence (CAT) south of Mumbai which I had never experienced to such an extent. It came from nothing, that’s how these CAT are, started to shake the plane heavily, then the nose dropped and we lost some 300 feet of altitude within seconds as I could trace from the onboard flight information system. A young woman sitting right of me started to cry, I tried to calm her down by saying: “It feels shitty, but it’s not dangerous.” Somehow I did not sound convincing. After 15 seconds everything was over, the plane went smoothly again, and the pilot spoke to the passengers saying: “Hope nothing happened to you. This turbulence for us also came by surprise, there was nothing on our radar” No, nothing happened. All good, all safe, all alive.

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