Niels has been in venture capital for the last decade. How he got here involved a career in Germany, being the CTO for a promising startup, where an IPO turned into 5 years of scrambling for life and a 2-year trip around the world with his wife and two kids in their small yacht Jonna. Niels looks back at what has shaped him and explains just why he thinks he has the best job in the world.
Since the mid 90’s I have been fascinated by startups. While I was at Siemens in Munich, I was a part of a project to improve innovation by starting up internal ventures challenging existing product lines. Together with a co-founder I started up a team in 1996 to launch a large screen online access phone. We built a fantastic team, created a state of the art hardware and software platform, struck great alliance deals with Apple and Microsoft .. but failed. I got a taste for being a part of all the processes involved in building a product and a business. And a strong distaste for corporate politics.
I left Siemens and Germany to join Berlingske Online as CTO. We had a great run and built 17 online media products in 2 years. In 2000 I was asked to join the startup Netdoktor as CTO focusing on professionalizing their tech organization and product roadmap prior to a planned IPO. 2 months after I started, the dot-com bubble burst and the IPO turned into 5 years of scrambling for life and very rapid business development. It was hard work but a fantastic learning experience. I often refer to this period as my ‘real life MBA’ which allowed me to move from technical management to business development. I loved being at Netdoktor, but after the 5 years I decided to take a break with my family.
I had worked very hard and had had a couple of blackouts. I needed a reset and to do something completely different. I wanted an adventure and to experience the world – really experience it, not just by flying from place to place. So, for two years I sailed around the world with my wife and our two kids in a small sailing yacht.
It is quite a project to sail around the world and I regard it as my own little startup. The key to getting it off the ground and succeed was to tell everyone about the project so it wasn’t an option to chicken out, to learn from everyone we could find with previous experience and to plan meticulously, breaking down the project into surmountable pieces. And you need to set a deadline for taking off because you will never be fully ready. Talking to other sailors, everyone agrees that the hardest part is to get up and go. Once you are out there, all it takes is a lot of persistence and stubbornness. In many ways, it is comparable to starting a business. You need to be wildly optimistic and passionate about your project to make yourself do what is necessary to succeed – and to make others follow you. You need to learn from others and then set your own course and launch.
"The key to getting it off the ground and succeed was to tell everyone about the project so it wasn’t an option to chicken out."
There were times when we wanted to quit. In the middle of our 3 weeks crossing of the Atlantic we had a major family crisis. My wife was seasick, the weather was hot and humid, we were thousands of miles from the nearest land and she longed for normal work life instead of wasting her life away on a small uncomfortable boat. But the thing is, you cannot turn around and go back against the wind in the middle of the Atlantic, so we agreed to have a family council and decide on whether to continue or go home upon arrival in the Caribbean. When we got to shore, the weather was great, adventure was on our doorstep and the mood shifted. Of course, we should carry on.
Our trip around the world has strengthened and defined our family and has shaped me mentally. I am not afraid of big challenges. I know that a big challenge is, in fact, just made up of smaller challenges. Perhaps you won’t succeed all the time, but if you try hard, there is a good chance you will succeed in enough to make your project fly. It has made me unafraid of change and trying new things, because I have a strong belief that I will succeed.
When we started our trip, I thought I would spend my night watches contemplating life and what I would do when we came back. Once on the journey, it is an all-consuming job to make that gipsy life work. Only two months prior to homecoming did I start to think about my new future work life. In Cairo, I bought myself a pair of leather shoes and the closest thing to a business attire I could find. I looked awful, but I was ready for interviews.
When I got back to Denmark my former boss at Netdoktor had just gotten an investment from SEED Capital for his new venture. He called me and asked me if I would be interested in becoming a capitalist as they had an opening for an investment manager focusing on software startups. I had just gotten an offer for a position as management consultant, but who could decline such an opportunity? He connected me with SEED Capital and I ended up signing on … a decision I have never regretted for one second.
I have the best job in the world. As an investor, I feel extremely privileged to get to work with a lot of different startups within tech and medtech. The founders are passionate and knowledgeable and their companies are molding our future.
I have always been deeply fascinated by programming. I can program, but I was never super good at it so I migrated to management. I love that you can imagine a construction that doesn’t exist and build it. You can build dreams with software. I don’t think you can underestimate the importance of software in relation to our society. All industries will, in some way, be impacted by software.
Having been part of a startup before is very important when you work in early stage venture capital. It is so important that you understand what the founders are going through.
My strength especially lies in early company building with product- and business development going towards product market fit and initial go-to market strategy.
At one point in Netdoktor we had to do a major restructuring, which meant that we had to fire a lot of people. It was not a pleasant experience, in fact one of the harder periods in my work life. However, afterwards I was surprised to learn how much a leaner organization was still able to do. For a startup, it can a very valuable exercise to, occasionally, imagine that you have to cut down in staff. Where would you cut and what effects would it have? Especially if you have grown rapidly, you will find ‘fat’ that could be relevant to cut. Do not be afraid to do this. It will improve efficiency and performance culture of your company.
"I think many VCs, most angels and almost all startups tend to underestimate just how much capital is needed to build a global category winner"
The health sector is interesting right now. It is one of the largest budgetary categories for any society and we are increasingly being challenged by the fact that we live longer and have more and more lifestyle diseases. We have a health sector beset by an outdated way of thought and old systems and processes. Health tech startups who are turning everything upside down and innovating the health sector from without are extremely promising.
Like many others, I am also excited by what machine learning and AI can do. We have talked so much about big data, that the word has kind of lost its meaning. But these data can now be used by algorithms to strengthen products and provide companies with a sustainable advantage in the market.
I am very good at making quick decisions. In my mind, big decisions should be made quickly. I try to make these decisions as informed as possible, but speed, is to me, more important than gathering all relevant data before deciding. This of course has the consequence that I am wrong occasionally, but I am not afraid of admitting when I am wrong. To me, it is more important to make a decision at the right time than being right every time.
I admire Elon Musk. His level of ambition and his ability to succeed with a project is impressive. Also, the projects he has chosen to focus on are fascinating. If he succeeds, it will change the way we live on earth. If that’s not impressive, I don’t know what is.
I am easily enthused. In this line of work, I think you have to be. Entrepreneurs who believe in themselves so much, that they are willing to do whatever it takes to succeed impress me. Even though people think they are crazy, they push on. One of my favorite examples is Endomondo. Three well-paid McKinsey consultants with lucrative careers before them decides to believe in a project, which, at the time was quite speculative. We barely had smartphones. That ability to be single-minded about a project is astounding.
My wife would probably describe me as a pragmatist and an optimist. I am very solution-oriented probably due to my background as an engineer.
The thing that surprised me the most about venture capital is just how difficult it is to pick the winners.
Some entrepreneurs are better than others at leveraging their relationship with investors. Some will always see an investor as an opponent. They lose out on a lot of good input.
I think many VCs, most angels and almost all startups tend to underestimate just how much capital is needed to build a global category winner.