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Networking in Silicon Valley

Shandy Lo

Two German entrepreneurs traveled almost 10,000 kilometers to Silicon Valley to find a backer for their startup idea. They tell us what’s so special about networking in the U.S. and why it’s not the same in Europe. (Photo: istockphoto.com)

 (Photo: istockphoto.com)

Every startup founder dreams of being successful and of attracting an investor. Aspiring entrepreneurs Jörg Bienert and Michael Hummel were prepared to go as far as Silicon Valley in pursuit of their dream, and managed to secure a million-dollar investment deal from Sun Microsystems co-founder, Vinod Khosla. Their company, ParStream, has developed a technology that delivers ultra-fast analytic results on big data.

Bienert and Hummel were able to spend three months in the nerve center of the IT world after winning a place on the German Silicon Valley Accelerator Program. This initiative, funded by the German Federal Ministry of Economics, aims to give German entrepreneurs the opportunity to build up business networks in Silicon Valley and, ideally, to find an investor. In this interview, Jörg Bienert talks about his experiences in Silicon Valley, explains the obstacles faced by startups in Germany, and points out the potential pitfalls.

SAP.info: What gave you the idea to set up ParStream?

Jörg Bienert: ParStream is actually a spin-off of our consulting company, empulse Gmbh. Back in 2008, we were commissioned to work on a tourism project that involved developing an online travel search engine.  We had to analyze 14 billion datasets, but we couldn’t find a database technology that would help us do it. In the end, we developed our own algorithm and compression techniques and created a prototype with one billion datasets on a single server. And that’s where we got the idea for ParStream.

Why did you decide to apply for the German Silicon Valley Accelerator Program?

We’d been to Silicon Valley a few times before and we knew that networking was supremely important in the U.S. Things happen at a very different pace over there.  When we heard about the program, we thought it would give us exactly the opportunity we needed to build up those all-important networks.

Was it always your intention to go to the U.S.? Did you consider Europe or Asia at all?

As far as we were concerned, the United States was really the only option, because Silicon Valley’s IT network and ecosystem are unique. There’s no better place to find customers and business partners.

How did you qualify for the program?

Basically, about forty startups turned up on a specific day to pitch their business ideas. Each one had a ten-minute slot. We were one of the six who were selected. Starting in June 2012, we then had six months in which to build up contacts in Silicon Valley and spend time with our coaches, honing our ideas and our business interview techniques.

What benefits does the program offer?

Being accepted to the program means that you are automatically provided with an office and a number of coaches. You have to pay for your travel, accommodation, and living costs yourself. Obviously, it’s very important to have a place to work, a roof over your head, and the infrastructure you need; in other words, a stable base from which to work. Another valuable component of the program is the coaching you receive, because it teaches you how to present your business case to a potential investor and makes you aware of all the aspects you need to consider. The most valuable element, however, are the networking opportunities that the program provides. It opens doors for you and gets you introductions to all kinds of people – including potential investors and venture capital companies. For me, these networking opportunities are what make Silicon Valley so unique. You get to meet the right people much more effectively and faster than you do in Europe.

Jörg Bienert, CEO of ParStream, talks about his startup experience and how to find success in Silicon Valley (Photo: private)

Who were your coaches?

Most of them were fellow Germans, but we also worked with Americans who had spent time in Germany.  They all had an entrepreneurial background or had founded startups themselves.

Your stay in Silicon Valley was clearly a great success because you managed to secure an investment from Vinod Khosla. Was it as simple as it sounds?

The general rule of thumb is that it takes at least three to six months to find an investor. We attended 60 meetings with potential investors while we were in Silicon Valley. During the most intensive period, we had up to seven appointments scheduled every day.

What did you learn from the program?

What we found was that once our talks with one investor had reached a relatively advanced stage, other potential investors realized that we were an interesting option and that we would soon be “snapped up”. This speeded up the whole process significantly and gave it a momentum of its own. Inquiries started pouring in from all sides. What we learned from this is that you should never give investors the feeling that you’ve got plenty of time. You have to exert a certain amount of market pressure.

Networking is supremely important. It’s vital to talk with lots of people, because you sometimes discover new contacts purely by chance. It took us no time at all to build up a network that is at least as big as the one we have in Germany.

What difference has the investment made for you?

Well, our bank account is certainly looking pretty healthy (laughter).  Seriously though, it gives us the foundation we need to plan accurately for the future and to investigate other avenues of investment. The fact that an American businessman has invested in us has also altered our image on the German market. We wouldn’t command the same degree of attention if our investor were German.

We’ll certainly use the capital to expand our business in Germany, but our main objective is to build up our U.S. business. Our development operations and company headquarters will remain in Cologne, Germany. After all, it’s the German “GmbH” that Vinod Khosla has invested in.

Would you say that startups in the United States have it easier than their counterparts in Europe?

Investors in Silicon Valley move faster than European investors, and business talks begin at a very early stage. That’s what the market thrives on. The process of investing in startups and entrepreneurships is part of daily business life in Silicon Valley and enjoys a much greater status than it does in Europe. The Americans are more willing to take risks; in Silicon Valley, particularly, you sense that there’s a very different spirit at work in the business community. When you add this to the high-speed communication and networking that is possible there, you get a very different momentum.

We held investment discussions in Germany too, but we soon realized that it made more sense for us to focus our efforts on the U.S., because things happen faster there and we need to establish our product on the U.S. market.

Would you say that Germany’s startup culture is off the pace?

American companies are more willing to take risks. They move faster. And they believe in new technologies. They are also more open to new business models. In the past, German companies have tended to invest in startups that copy a business model, so-called “copy cats”. Germans focus more on where and whether a model has already been successful. There are lots of German startups developing on a very high technological level, but it takes them longer than their American competitors to get their products to the market. So they end up being overtaken left and right by U.S. companies.

In Germany, it takes too long to arrange a business meeting with a partner or an investor.  In the U.S., networking happens much faster. And you have to be prepared to follow the pace. For example, business partners expect you to respond to an e-mail inquiry within 24 hours.

What advice can you offer startups that want to try their luck in Silicon Valley?

They should be prepared to adjust to the way Americans do business and be sure to stick to the rules.  We probably broke them on a couple of occasions. Never postpone appointments, always show up on time, adapt to the way communication takes place, and be straightforward.

Would you say that it is easier to found a startup in Germany today than it was three or four years ago?

Lots of investors in Germany are certainly prepared to take more of a risk than they were a few years ago. The reason is that the hurdles to investment are lower and less difficult to surmount. Cloud services, for example, have made the IT infrastructure much cheaper and more flexible: As long as you have a notebook and mobile data connections, you can work anywhere. And, thanks to the Internet and social networks, it has become much easier to find contacts and build up networks.

What are the typical mistakes that young entrepreneurs make?

They tend to devote too much time to the development phase, which means that by the time they take their product to the market, the market has gone. Also, they spend too long “cooking in their own juice” and fail to obtain feedback from outside. Startups should always be willing to learn. Another common mistake is omitting to conduct a market analysis.

What are your three “top tips” for startups?

First, build up a good network. You won’t get anywhere without one. Second, act fast. It’s very important to make and execute on decisions quickly. And third, stay in control. You should never assume that things will simply start happening just because you’ve made a few good contacts. You have to stay on the ball and show 150% commitment.

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Why 3D Printed Food Just Transformed Your Supply Chain

Hans Thalbauer

Numerous sectors are experimenting with 3D printing, which has the potential to disrupt many markets. One that’s already making progress is the food industry.

The U.S. Army hopes to use 3D printers to customize food for each soldier. NASA is exploring 3D printing of food in space. The technology could eventually even end hunger around the world.

What does that have to do with your supply chain? Quite a bit — because 3D printing does more than just revolutionize the production process. It also requires a complete realignment of the supply chain.

And the way 3D printing transforms the supply chain holds lessons for how organizations must reinvent themselves in the new era of the extended supply chain.

Supply chain spaghetti junction

The extended supply chain replaces the old linear chain with not just a network, but a network of networks. The need for this network of networks is being driven by four key factors: individualized products, the sharing economy, resource scarcity, and customer-centricity.

To understand these forces, imagine you operate a large restaurant chain, and you’re struggling to differentiate yourself against tough competition. You’ve decided you can stand out by delivering customized entrees. In fact, you’re going to leverage 3D printing to offer personalized pasta.

With 3D printing technology, you can make one-off pasta dishes on the fly. You can give customers a choice of ingredients (gluten-free!), flavors (salted caramel!), and shapes (Leaning Towers of Pisa!). You can offer the personalized pasta in your restaurants, in supermarkets, and on your ecommerce website.

You may think this initiative simply requires you to transform production. But that’s just the beginning. You also need to re-architect research and development, demand signals, asset management, logistics, partner management, and more.

First, you need to develop the matrix of ingredients, flavors, and shapes you’ll offer. As part of that effort, you’ll have to consider health and safety regulations.

Then, you need to shift some of your manufacturing directly into your kitchens. That will also affect packaging requirements. Logistics will change as well, because instead of full truckloads, you’ll be delivering more frequently, with more variety, and in smaller quantities.

Next, you need to perfect demand signals to anticipate which pasta variations in which quantities will come through which channels. You need to manage supply signals source more kinds of raw materials in closer to real time.

Last, the source of your signals will change. Some will continue to come from point of sale. But others, such as supplies replenishment and asset maintenance, can come direct from your 3D printers.

Four key ingredients of the extended supply chain

As with our pasta scenario, the drivers of the extended supply chain require transformation across business models and business processes. First, growing demand for individualized products calls for the same shifts in R&D, asset management, logistics, and more that 3D printed pasta requires.

Second, as with the personalized entrees, the sharing economy integrates a network of partners, from suppliers to equipment makers to outsourced manufacturing, all electronically and transparently interconnected, in real time and all the time.

Third, resource scarcity involves pressures not just on raw materials but also on full-time and contingent labor, with the necessary skills and flexibility to support new business models and processes.

And finally, for personalized pasta sellers and for your own business, it all comes down to customer-centricity. To compete in today’s business environment and to meet current and future customer expectations, all your operations must increasingly revolve around rapidly comprehending and responding to customer demand.

Want to learn more? Check out my recent video on digitalizing the extended supply chain.

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Hans Thalbauer

About Hans Thalbauer

Hans Thalbauer is the Senior Vice President, Extended Supply Chain, at SAP. He is responsible for the strategic direction and the Go-To-Market of solutions for Supply Chain, Logistics, Engineering/R&D, Manufacturing, Asset Management and Sustainability at SAP.

How to Design a Flexible, Connected Workspace 

John Hack, Sam Yen, and Elana Varon

SAP_Digital_Workplace_BRIEF_image2400x1600_2The process of designing a new product starts with a question: what problem is the product supposed to solve? To get the right answer, designers prototype more than one solution and refine their ideas based on feedback.

Similarly, the spaces where people work and the tools they use are shaped by the tasks they have to accomplish to execute the business strategy. But when the business strategy and employees’ jobs change, the traditional workspace, with fixed walls and furniture, isn’t so easy to adapt. Companies today, under pressure to innovate quickly and create digital business models, need to develop a more flexible work environment, one in which office employees have the ability to choose how they work.

SAP_Digital_Emotion_BRIEF_image175pxWithin an office building, flexibility may constitute a variety of public and private spaces, geared for collaboration or concentration, explains Amanda Schneider, a consultant and workplace trends blogger. Or, she adds, companies may opt for customizable spaces, with moveable furniture, walls, and lighting that can be adjusted to suit the person using an unassigned desk for the day.

Flexibility may also encompass the amount of physical space the company maintains. Business leaders want to be able to set up operations quickly in new markets or in places where they can attract top talent, without investing heavily in real estate, says Sande Golgart, senior vice president of corporate accounts with Regus.

Thinking about the workspace like a designer elevates decisions about the office environment to a strategic level, Golgart says. “Real estate is beginning to be an integral part of the strategy, whether that strategy is for collaborating and innovating, driving efficiencies, attracting talent, maintaining higher levels of productivity, or just giving people more amenities to create a better, cohesive workplace,” he says. “You will see companies start to distance themselves from their competition because they figured out the role that real estate needs to play within the business strategy.”

The SAP Center for Business Insight program supports the discovery and development of  new research-­based thinking to address the challenges of business and technology executives.

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Sam Yen

About Sam Yen

Sam Yen is the Chief Design Officer for SAP and the Managing Director of SAP Labs Silicon Valley. He is focused on driving a renewed commitment to design and user experience at SAP. Under his leadership, SAP further strengthens its mission of listening to customers´ needs leading to tangible results, including SAP Fiori, SAP Screen Personas and SAP´s UX design services.

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The Future Of Supplier Collaboration: 9 Things CPOs Want Their Managers To Know Now

Sundar Kamak

As a sourcing or procurement manager, you may think there’s nothing new about supplier collaboration. Your chief procurement officer (CPO) most likely disagrees.
Forward-thinking CPOs acknowledge the benefit of supplier partnerships. They not only value collaboration, but require a revolution in how their buying organization conducts its business and operations. “Procurement must start looking to suppliers for inspiration and new capability, stop prescribing specifications and start tapping into the expertise of suppliers,” writes David Rae in Procurement Leaders. The CEO expects it of your CPO, and your CPO expects it of you. For sourcing managers, this can be a lot of pressure.

Here are nine things your CPO wants you to know about how supplier collaboration is changing – and why it matters to your company’s future and your own future.

1. The need for supplier collaboration in procurement is greater than ever

Over half (65%) of procurement practitioners say procurement at their company is becoming more collaborative with suppliers, according to The Future of Procurement, Making Collaboration Pay Off, by Oxford Economics. Why? Because the pace of business has increased exponentially, and businesses must be able to respond to new market demands with agility and innovation. In this climate, buyers are relying on suppliers more than ever before. And buyers aren’t collaborating with suppliers merely as providers of materials and goods, but as strategic partners that can help create products that are competitive differentiators.

Supplier collaboration itself isn’t new. What’s new is that it’s taken on a much greater urgency and importance.

2. You’re probably not realizing the full collective power of your supplier relationships

Supplier collaboration has always been a function of maintaining a delicate balance between demand and supply. For the most part, the primary focus of the supplier relationship is ensuring the right materials are available at the right time and location. However, sourcing managers with a narrow focus on delivery are missing out on one of the greatest advantages of forging collaborative supplier partnerships: an opportunity to drive synergies that are otherwise perceived as impossible within the confines of the business. The game-changer is when you drive those synergies with thousands, not hundreds of suppliers. Look at the Apple Store as a prime example of collaboration en masse. Without the apps, the iPhone is just another ordinary phone!

3. Collaboration comes in more than one flavor

Suppliers don’t just collaborate with you to provide a critical component or service. They also work with your engineers to help ensure costs are optimized from the buyer’s perspective as well as the supplier’s side. They may even take over the provisioning of an entire end-to-end solution. Or co-design with your R&D team through joint research and development. These forms of collaboration aren’t new, but they are becoming more common and more critical. And they are becoming more impactful, because once you start extending any of these collaboration models to more and more suppliers, your capabilities as a business increase by orders of magnitude. If one good supplier can enable your company to build its brand, expand its reach, and establish its position as a market leader – imagine what’s possible when you work collaboratively with hundreds or thousands of suppliers.

4. Keeping product sustainability top of mind pays off

Facing increasing demand for sustainable products and production, companies are relying on suppliers to answer this new market requirement.

As a sourcing manager, you may need to go outside your comfort zone to think about new, innovative ways to collaborate for achieving sustainability. Recently, I heard from an acquaintance who is a CPO of a leading services company. His organization is currently collaborating with one of the largest suppliers in the world to adhere to regulatory mandates and consumer demand for “lean and green” lightbulbs. Although this approach was interesting to me, what really struck me was his observation on how this co-innovation with the supplier is spawning cost and resource optimization and the delivery of competitive products. As reported by Andrew Winston in The Harvard Business Review, Target and Walmart partnered to launch the Personal Care Sustainability Summit last year. So even competitors are collaborating with each other and with their suppliers in the name of sustainability.

5. Co-marketing is a win-win

Look at your list of suppliers. Does anyone have a brand that is bigger than your company’s? Believe it or not, almost all of us do. So why not seize the opportunity to raise your and your supplier’s brand profile in the marketplace?

Take Intel, for example. The laptop you’re working on right now may very well have an “Intel inside” sticker on it. That’s co-marketing at work. Consistently ranked as one of the world’s top 100 most valuable brands by Millward Brown Optimor, this largest supplier of microprocessors is world-renowned for its technology and innovation. For many companies that buy supplies from Intel, the decision to co-market is a strategic approach to convey that the product is reliable and provides real value for their computing needs.

6. Suppliers get to choose their customers, too

Increased competition for high-performing suppliers is changing the way procurement operates, say 58% of procurement executives in the Oxford Economics study. Buyers have a responsibility to the supplier – and to their CEO – to be a customer of choice. When the economy is going well, you might be able to dictate the supplier’s goods and services – and sometimes even the service delivery model. When times get tough (and they can very quickly), suppliers will typically reevaluate your organization’s needs to see whether they can continue service in a fiscally responsible manner. To secure suppliers’ attention in favorable and challenging economic conditions, your organization should establish collaborative and mutually productive partnerships with them.

7. Suppliers can help simplify operations

Cost optimization will always be one of your performance metrics; however, that is only one small part of the entire puzzle. What will help your organization get noticed is leveraging the supplier relationship to innovate new and better ways of managing the product line and operating the business while balancing risk and cost optimization. Ask yourself: Which functions are no longer needed? Can they be outsourced to a supplier that can perform them better? What can be automated?

8. Suppliers have a better grasp of your sourcing categories than you do

Understand your category like never before so that your organization can realize the full potential of its supplier investments while delivering products that are consistent and of high quality. How? By leveraging the wisdom of your suppliers. To be blunt: they know more than you do. Tap into that knowledge to gain a solid understanding of the product, market category, suppliers’ capabilities, and shifting dynamics in the industry, If a buyer does not understand these areas deeply, no amount of collaboration will empower a supplier to help your company innovate as well as optimize costs and resources.

9. Remember that there’s something in it for you as well

All of us want to do strategic, impactful work. Sourcing managers with aspirations of becoming CPOs should move beyond writing contracts and pushing PO requests by building strategic procurement skill sets. For example, a working knowledge in analytics allows you to choose suppliers that can shape the market and help a product succeed – and can catch the eye of the senior leadership team.

Sundar Kamak is global vice president of solutions marketing at Ariba, an SAP company.

For more on supplier collaboration, read Making Collaboration Pay Off, part of a series on the Future of Procurement, by Oxford Economics.

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Transform Or Die: What Will You Do In The Digital Economy?

Scott Feldman and Puneet Suppal

By now, most executives are keenly aware that the digital economy can be either an opportunity or a threat. The question is not whether they should engage their business in it. Rather, it’s how to unleash the power of digital technology while maintaining a healthy business, leveraging existing IT investments, and innovating without disrupting themselves.

Yet most of those executives are shying away Businesspeople in a Meeting --- Image by © Monalyn Gracia/Corbisfrom such a challenge. According to a recent study by MIT Sloan and Capgemini, only 15% of CEOs are executing a digital strategy, even though 90% agree that the digital economy will impact their industry. As these businesses ignore this reality, early adopters of digital transformation are achieving 9% higher revenue creation, 26% greater impact on profitability, and 12% more market valuation.

Why aren’t more leaders willing to transform their business and seize the opportunity of our hyperconnected world? The answer is as simple as human nature. Innately, humans are uncomfortable with the notion of change. We even find comfort in stability and predictability. Unfortunately, the digital economy is none of these – it’s fast and always evolving.

Digital transformation is no longer an option – it’s the imperative

At this moment, we are witnessing an explosion of connections, data, and innovations. And even though this hyperconnectivity has changed the game, customers are radically changing the rules – demanding simple, seamless, and personalized experiences at every touch point.

Billions of people are using social and digital communities to provide services, share insights, and engage in commerce. All the while, new channels for engaging with customers are created, and new ways for making better use of resources are emerging. It is these communities that allow companies to not only give customers what they want, but also align efforts across the business network to maximize value potential.

To seize the opportunities ahead, businesses must go beyond sensors, Big Data, analytics, and social media. More important, they need to reinvent themselves in a manner that is compatible with an increasingly digital world and its inhabitants (a.k.a. your consumers).

Here are a few companies that understand the importance of digital transformation – and are reaping the rewards:

  1. Under Armour:  No longer is this widely popular athletic brand just selling shoes and apparel. They are connecting 38 million people on a digital platform. By focusing on this services side of the business, Under Armour is poised to become a lifestyle advisor and health consultant, using his product side as the enabler.
  1. Port of Hamburg: Europe’s second-largest port is keeping carrier trucks and ships productive around the clock. By fusing facility, weather, and traffic conditions with vehicle availability and shipment schedules, the Port increased container handling capacity by 178% without expanding its physical space.
  1. Haier Asia: This top-ranking multinational consumer electronics and home appliances company decided to disrupt itself before someone else did. The company used a two-prong approach to digital transformation to create a service-based model to seize the potential of changing consumer behaviors and accelerate product development. 
  1. Uber: This startup darling is more than just a taxi service. It is transforming how urban logistics operates through a technology trifecta: Big Data, cloud, and mobile.
  1. American Society of Clinical Oncologists (ASCO): Even nonprofits can benefit from digital transformation. ASCO is transforming care for cancer patients worldwide by consolidating patient information with its CancerLinQ. By unlocking knowledge and value from the 97% of cancer patients who are not involved in clinical trials, healthcare providers can drive better, more data-driven decision making and outcomes.

It’s time to take action 

During the SAP Executive Technology Summit at SAP TechEd on October 19–20, an elite group of CIOs, CTOs, and corporate executives will gather to discuss the challenges of digital transformation and how they can solve them. With the freedom of open, candid, and interactive discussions led by SAP Board Members and senior technology leadership, delegates will exchange ideas on how to get on the right path while leveraging their existing technology infrastructure.

Stay tuned for exclusive insights from this invitation-only event in our next blog!
Scott Feldman is Global Head of the SAP HANA Customer Community at SAP. Connect with him on Twitter @sfeldman0.

Puneet Suppal drives Solution Strategy and Adoption (Customer Innovation & IoT) at SAP Labs. Connect with him on Twitter @puneetsuppal.

 

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