Think big, start small - and be prepared to fail
Sharing experiences with Martin Strobel
By the end of 2015, Martin Strobel has quit his position as CEO of Baloise Group to go new ways. Among other things, he is acting as business angel for a portfolio of eight start-up companies today. In an interactive session with students and alumni of the Rochester-Bern Executive MBA he shared some of the learnings from his first year in a different world.
By Petra Joerg
A business angel supports start-up companies in an early phase with investments, knowhow, and links to his/her network. A perfect role for Martin Strobel who can build on many years of experience in the corporate world as well as a valuable network of people in all kinds of industries. In his first year as business angel, Martin Strobel has been working with successful and not so successful start-up companies… and he has learned a lot. Following three key insights which may be helpful for other entrepreneurs or investors.
The perfect product is not enough
Many entrepreneurs with a great product or service idea fail because they are too enthusiastic about their product or service. They do not understand that they are founding a (hopefully successful!) company, that there is a market with competitors which needs to be assessed, and that there are costs to get a customer. What can be done? “In order to understand their customer and their market better, entrepreneurs should run a pilot to find out more about the true decisions of true customers”, says Martin Strobel. Just listening to customer opinions or even worse following one’s own enthusiasm would not lead to success.
The right mindset matters
Entrepreneurs face many difficult situations, bankruptcy being the worst of it. So, it is important that they are prepared, be it for iterations or for failure, and that they always have options at hand. “You must be ready to question everything, embrace changes, and start from scratch”, says Martin Strobel. Ideally, entrepreneurs should think in terms of a successful company and not just a product or a service. In any case it would be important to build on a board of industry experts which can help with advise and connections as well as investors who truly believe in the business idea and trust the founder team.
Careful due diligence is key
A start-up company has no history and thus no balance sheets or income statements an interested investor could assess. So, how shall a business angel know whether or not to invest in a great business idea? “The basis is the conviction that the team is the right one”, says Martin Strobel. He looks at the experience, the interaction and the reaction to issues of the founders. Moreover, he takes a staggered investment approach, meaning: at first, he invests only some money, then watches the development of the company, underpins his feelings with milestone tests – and invests the next part of the money only if his observations turn out positively.
Given all those difficulties, one may doubt whether or not it is worth becoming an entrepreneur or business angel. Martin Strobel: “Of course, there are risks, but there are high rewards as well. I never saw as many happy people as in start-ups!”