This is Part One of our interview with Vishal (https://www.linkedin.com/in/thevishalrai/), co-founder of Acellere (http://www.acellere.com/). Accellere is on “mission clean code”. In this interview, he gives a great overview of his personal perspective. Vishal is a very inspiring interview partner. Just take a look at the quotes.
Here is the crash Joe hints at in the interview, in German called Gründerkrach 1873: https://en.wikipedia.org/wiki/Panic_of_1873
T-Systems, the German cloud provider https://www.t-systems.com/de/en
The IT cluster Rhein-Main-Neckar, Joe hints at (article in German only) https://de.wikipedia.org/wiki/IT-Cluster_Rhein-Main-Neckar
Netflix cannibalized their own DVD business, for the streaming service e.g. https://www.business2community.com/business-innovation/breaking-netflix-business-model-history-future-vod-giant-01582436
Tune in to this great interview. Just some quotes from the interview here:
Joe: Hello and welcome everybody this is Joe from startuprad.io here with you in Frankfurt. We would have loved to do a YouTube video with this interview right here right now but unfortunately, it turned out my camera had just died on me and we could not fix it. So actually, I’m here doing just an audio only and I’m here with a guest.
Vishal: Hi everybody, this Vishal I’m the founder and CEO of Acellere and it’s a pleasure to be talking to you.
Joe: Completely my pleasure as you guys cannot see we’re sitting here next to the windows and we have an amazing view over spring in Frankfort with bright sunshine and this stuff. So we are in a very good mood and it’s really amazing here in the office, I got to admit.
Vishal: Thank you, thank you.
Joe: And you guys are actually doing a startup here right?
Vishal: Yes. So we have this startup based out of Frankfort and we are doing some exciting stuff.
Joe: You are not originally from Frankfurt; can we first tell our listeners a little bit about you. How you actually got here and what did trigger the idea of your startup right now. That will be the first step interesting for our listeners.
Vishal: Sure, so I am originally from India and I used to work for a very large global company in the US before coming here. This was a technology company and it was really nice working in California and Seattle before that. My previous employer did software consulting services, one of the biggest majors in the world. When I joined that company, it was a small company and they could pick up very good people and therefore they did very good projects in terms of quality. However, as the company grew in two thousand and nine we were about one hundred and forty thousand people globally.
Even the biggest companies in the world, with almost infinite resources, are struggling to write good software.
Vishal: However we were… I saw that and more and more software projects were actually failing and not achieving their status goals you know in terms of quality or essentially software products were just going up. And what I realized that software, on one hand, is becoming really, really critical for everybody. But on the other hand, if this was the quality of software that was being developed in the world by the best technology companies. There is a problem and there is a fact that in about five years maybe seven software is going to be in our bodies and you don’t want that software to crash as often as your phone does.
Joe: No, you really don’t want it.
Vishal: So that’s what I’m saying that even the biggest companies in the world with almost infinite resources and brand are struggling to write good software. And that was a challenge that my co-founder and I saw as an opportunity. You know obviously, if software was not being written well there were some problems in the tools and technology that was being used to develop software. And given this huge challenge that’s coming up in the next five years you know, he said let’s build a platform which will help people write better software and that’s our mission right now. It’s just really mission clean code just like how we have mission clean water, clean energy, we really want to help everybody on this planet write clean software it’s that… it’s very important for us. Now to answer your other question why Frankfurt? Why Germany, good question.
Joe: And that’s why I’m asking.
The German corporates are the biggest champions for startups.
Vishal: I think it was…so when I was working here with my previous employer I was… I had my network in Germany and therefore it was a natural choice that when I decided to form the startup it would be Frankfurt because this is where I was working. Now in hindsight was that a good decision or not? Only time will tell but there are two things that I have observed over the last eight years, I start as… a startup is about eight years. One is the German corporates I think are very under-rated, the biggest German corporates like B.M.W., Volkswagen, Commence Bank, Continental. I think these are companies who actually support a lot of startups through projects and opportunities which is very unique and often not… and it’s underappreciated. You know people in the West and in America often look down on Germany saying you guys don’t have the innovation spirit, look at Silicon Valley and I would like to contradict that and say you know I think the German corporates are the biggest champions for startups. On the other side, you have the investment environment around here, which I think is not proportionate to the capital that could be made available to the startups in Germany. And I think that something needs to be done there, I think that’s… so these are my two observations that I have made and to answer your question why German? And I would say why not? You know Germany was the startup nation after the war to almost eighty’s and all the middle strands that were built and grew were actually startups. They were not built through processes so…
The German corporates are underrated. They support startups with projects and opportunities.
Joe: What many listeners may not know there was actually another startup age in Germany. You, the guys may know that Germany was once split in like hundreds of little kingdoms and all this stuff and then they were reunited eighty-seventy-one. And after that, there was actually a founding boom which for example, the Gruenderkrach after stock company was introduced to Germany and everybody set up a stock company like later Dot-Com companies … like ICO’s right now. And then surprisingly it ended also in a crash, so Germany has some experience in that. They went through the cycle and they will go through the cycle again, but actually what you say yeah, there was a real rebuild phase and then I think there was an earnings phase. And now the people who build up the companies after the war they are in the process of retiring so that’s why there’s new generation of leaders coming in right now. You feel something of this?
Vishal: I, you know sorry to sound pessimistic here but actually…
Joe: You’re permitted to do that don’t worry.
Vishal: I actually don’t think so. If you look at you know the world is…there is a race now happening globally for digital leadership and I think America is definitely on pull position. No doubt about it if you look at the infrastructure company, look at the e-mail that you use, the products that you use they are from Microsoft or Google. I mean you don’t use…name one Cloud leader from Europe or Germany that we here in Germany use in our day to day business world?
Vishal: I think they have an opportunity.
Joe: Yeah, okay.
Vishal: I think they have an opportunity, they have certain legacy challenges you know they come from a time of monopoly. But I think they are trying with the new organization.
Joe: We may tell our listeners here that T-systems used to be part of Deutsche Telekom used to be at the monopoly company providing everything related to telephone and communication services in Germany back in the days. That’s where the T is coming from and actually what I just learned a few weeks ago that here the Rhine mine area including T-System, Software AG and SAP. It’s like measured by revenue, it was a few years back the second biggest cluster in terms of software revenue just behind Silicon Valley in the world meaning ahead of India, head of the Custos in China. Ahead of even the other places in the United States so they are actually doing it but as I always love to say that Germany is pretty bad in marketing.
Vishal: I don’t deny… I think it’s not a bad thing to understate your services. But if you really look at impact you know. Look at impact there is a company that America throws up now in the recent past China, that wasn’t even alive ten years back. I mean every five years there is a company that comes, I mean Google, and the people think Google is a giant. Google is barely a fifteen-year-old company, look at Tencent, look at Alibaba, and look at the big war. E-commerce war happening in India with flip cards and stuff. These are companies that weren’t around ten years, these companies have…and there will be a company that is probably a company being formed today in America or China. Which is going to be a market leader in what it does in five years and the reason is too forward, I think it’s not competency I think if you look at and I purely talk from software. I don’t have capability Germans are or from Germany in the open source world of software, Germany is among the top two, top three contributors to open source. So if you look at Gate hub, I mean that’s the Gate hub data that I’m looking at you know which is a popular repository of software data. And if you see the G.O’s from where the commits happen or contribution happens to open source Germany is in the top three. What does that mean? There is tremendous talent in this country in software, they are a global leader in open source movement.
Germany is among the top 3 contributors to open source software. There is tremendous talent here.
Joe: And they take advantage of the many days of vacation as well?
Vishal: I think that’s a great thing. I think people make fun of Germans but I think it is a very, very good and this is the nice thing about Germany and I would encourage everyone to really consider Germany as an option for coming to work or setting up the company. Because in today’s times when everyone is running and killing themselves I think Germany still has this very good human value respect which for people working and I think that’s tremendous. That is really very, very good, however, that has to be coupled with a bit of an animal spirit of creativity and innovation and entrepreneurship. Which can be supported, I think the talent is here and I think the German talent is as good as any in the world I would say top notch. The capital is here but there is entrepreneurship is a risk game.
Vishal: And you cannot assume that you will do entrepreneurship like you do banking, it is…banking is all about covering risk, ensuring that the money is safe, everything is complying, entrepreneurship is just the opposite. You have to take a risk and you have to be ready to fail and that is not here and that is the problem that I see with the investment community here. There is this fear, the investment is done but then they almost take it like a bank and that doesn’t work if you look at companies. The average… an idea, bold idea to function needs a certain amount of capital and runway which is just not available here. And that has to change, that has to change and Uber in its infancy would never get funded in Germany, never. And AirBnB would be look down upon I can guarantee you if AirBnB guys are pitching to VCs they would say you guys are going to break ten thousand laws. And you guys are going to be absolutely unsuccessful and you guys are crazy but because you don’t move forward by following what happened you move the world by changing it. I’m not saying these are beacons but they have created an enterprise, they’re creating jobs, they are creating tax revenues.
Joe: I was just talking a few months back to an entrepreneur here in Germany. They actually started a company and their name was protected I believe in the United States or something for a porn website and every German investor was shying away. And the American investor said we’ll give you the money but make a deal with those guys.
Joe: And I said that’s an amazing marketing opportunity, they could give out vouchers to all the visitors of those website.
Joe: Exactly, I mean it’s just I find and I think there’s a reason for it. It’s changing now but I think there’s a reason for it the traditionally VC’s here are not run by entrepreneurs even today. There are a few I think and full disclosure, I think the VC that as investor in our company Capnamic, I think they are run by really smart guys you know Olaf and Joerg and Christian. I think they’re an exception but most of the big VC’s here I’ll probably be whacked for this but they’re not run by entrepreneurs. They’re run by consultants or investment professionals, in America, most of the successful VCs the Sequoias and Accels have been founded by entrepreneurs. They made money and they are giving it back and that’s what entrepreneurship is when you support a startup you have to share your experience in your entrepreneurial life. And that’s what startups need a lot, they need support, they need someone who understands that startups are not always sunny days like today. And they will be downsides and upsides and only someone who’s been an entrepreneur, who’s been through the trough and the high can be a good guide and an investor. And that’s changing now, I think a lot of successful people in Germany, entrepreneurs who have sold their companies and are becoming VC’s, I think they will bring this to the table but that was the reason. I think this is too much of conservatism in investment here, maybe it’s… I’m not a VC maybe they have their own guidelines. So they can’t do it because they are all at the face of it really smart people and they probably know what they’re doing but that has to change. That really has to change and I think, sorry go ahead.
Joe: No, don’t worry. Go ahead with it, I’m a consult myself I get frequently approached by VC’s and other investors and actually they… I do believe the people they are hiring are dependent employees. And it’s like there’s a nice saying to get your head around what we’re talking about, in the investment community where I work usually they say “nobody was ever fired for buying I.B.M.” meaning a big market leader taking no risk. And that’s one of the protests many consultants do as well because if they take a risk for their company and then they fail that could ruin their career. So they are… I wouldn’t say they’re not risk takers, but they’re usually discouraged from taking the risk and they mentally take this to the next job with them. Not saying that consultants cannot be good investors, not saying entrepreneurs would be the only successful investors, but I do believe there’s something about what you’re saying. That there is right now from my feeling there’s like I say a generation missing from entrepreneurs who made it successfully and then seeding other businesses especially here in Rhine mine. We had a very nice lot of exits through Daimler to Bosch and the other companies but actually, it’s not enough yet here.
Vishal: You’re right, I think and I sense the. I think maybe I’m not meeting the right people but when you create a company and you have to believe that you can make an impact globally. And not that I am creating the company to be bought over by Daimler or Microsoft. You should have an aspiration that I would want to be the next Microsoft and that is happening, I think I see a few startups now having leaders and founders who have that mission. It’s not there but it’s not there in the numbers that one needs to drive a revolution in entrepreneurship and innovation. I think people have to realize that the…you know they have to let go of their holy cows, as they saying in India.
Joe: Yeah, it’s the same in Germany.
Vishal: You have to let go of your holy cows. What got you here will not take you forward and today people should be in mission mode because the future you know of leaders. I mean the future global giants are going to be countries that are leaders in technology, digital technology. The economic mind will move to where digital leadership is and that is not seen here and I’ll think of a very simple example the cost of startups here is so high. If you’re a startup, maybe I’m very naive and people might just say again you’re touching our holy cows but the whole fees, legal fees, compliance fees, notarization fees, paperwork. Tax compliance there is…you know the biggest item on a startups balance sheet is the compliance cost which is not there in India, it’s not there in America, it’s not there in China that’s getting much better. Why is that?
Joe: But I got to admit I was doing an interview with a list from Bliss Chocolate she actually set up her startup here in Frankfurt as well. And she said okay, there’s a lot of compliance and legal costs especially if you first set up the business, but the big advantage of having it here in Germany is you want to set it up and then it goes like clockwork.
Joe: And in other countries, you still have to do this, you then have to do that and you’re running around much more you don’t have the costs associated with it but you’re spending more time. And in Germany, if you want to set it up it takes a little bit longer but then it goes like clockwork.
Vishal: Yeah, I mean I completely understand that but when you are starting a young company right the biggest thing that you probably should be focusing on is your product.
Vishal: Is your sales and if you’re given… you know and if you have to spend… I mean I understand this is, this is very good but it is not in the spirit of entrepreneurship. I’m just saying it’s good, it has its merits because obviously everything has to be compliant you don’t want people having an animal spirit here doing startups. But if you really… you have to change, you have to really change and move forward with the next generation, the millennials are very different and that, I mean look at the broadband speed in Germany. Let’s start… I mean if you want a digital startup you need good broadband not in big towns alone you needed in the small town where someone can start a young company from his or her house. Compared to South Korea and I think these are… I’m not saying theses’ are a negative thing but I’m saying if we aspire to be the best in the world, if you aspire to be market leader, if you aspire to create hundreds SAP’s. Today we just have one SAP which was found in the seventy’s. Where are the next SAP’s? I mean if you just look at the brand perspective right in terms of car companies you have… you don’t have one Mercedes you have a BMW, you have an Audi, you have a Volvo, and you have a Porsche. You have so many digital, global giants these are giants not just in Germany, you go to any part of the World Mercedes is known. BMW is known, Audi is known.
Vishal: Porsche is known, I mean everybody. SAP? What else? Why?
Joe: Yeah, that’s a problem.
Vishal: So, and that’s what I’m saying and it’s you know we can be sitting here and saying we pat our backs saying we’re great yes. You should change when you’re at the top. And today I think Germany is a very good position I think the economy’s doing great, it’s a very stable economy, excellent education, world-class infrastructure. You have everything set for you, it’s an open goal, go shoot it, we’re just sitting there on the sidelines having our beers and breakfast which is great. Someone’s going to come and take the ball, today there’s no competition, this is where you should slay, and this is where you should create a hundred SAP’s here. Unleash the animal spirit. I mean that’s what I’m saying you know good leaders take opportunities at the top, you innovate at the top. Netflix is a great example he cannibalizes his own business, read Hastings and said you know what I think DVD business is going to go out of stock. Amazon reinvent itself every day that’s how you, you know to drive a country, you need that spirit to drive innovation and I mean I think Europe needs a leadership and Germany is in the right position to provide it. Someone has to really keep the ball in the goal, that’s what I fear and no one is kicking the ball, its set for them. It’s an open penalty.
Joe: So we’re looking for some soccer players here in the startup scene.
Vishal: Yes. In the political scene, we need some great football champions, we need the German you know they’re the world champion in soccer the great football team. We need the same leadership politically, we need the same leadership economically, and we need the same leadership in the community, investment community. And I think we’ll get there, there is nothing that stops the best research in the world. MP3 was invented in Germany but who made the most money out of it? The Americans. Dolby was invented in Germany but who make the most money out of it? Americans. So if I was someone from an outer planet I would say this is great, so the Americans just look at the best German invention and now the Chinese are doing it. And then once all the hard work and the money has been spent by the taxpayers they just buy it. So are we the breeding ground for innovation for the rest of the world or shouldn’t we also monetize it for our own economy? And that’s what I’m saying someone has to see that. I don’t sense the urgency here and people are very cautious it’s almost like and it is a cultural thing. I think that is understandable but I think and I come back to the argument of the German corporate are the shining lights and I think BMW and Mercedes and Porsches’ are trying to innovate. But you also need digital leaders, you need to span five SAP’s as… you know from Frankfurt, from Munich, from Berlin and that’s how you’ll grow and have the leadership. And that’s all I’m trying to encourage, we’re trying to do that in our own little way through my company.
Joe: And we’ll get back to part two of this interview talking about your company, okay.