How I got into VC
The story of how I went from peanuts to VC
Instant Paper
Growing up I quickly learned that I could get nice things quicker if I did something for it. So pretty early I started to sell my old toys and clothes at flea markets (or just in front of the house), delivered newspapers, or sold peanuts for the great price of 5 cents / piece (pictured in the photo above -my old friend Finn on the right side and myself on the left side).
This allowed me to work my way up to my own (RC controlled) car, flashy (G-Shock) watch and plenty of entertainment (video games). As you can see the choice mostly landed on electronics, so you can imagine how excited I was when computers found their way into private homes. Not to say the internet, oh my!
Unfortunately, the same wasn’t true for my mother. Or at least she would rather see me draw or play with lego than hang out in front of a computer - something I probably have to be thankful for today (trust me, I’ve got mad lego skills). However, it meant that when I was around 12 years old and the internet finally arrived in private homes around Germany, my only interaction with computers was either at friends houses or when I could sneak into my step-dads office.
After being caught several times, it was clear that a rule had to be established. After some arguing and good arguments, I came out as the winner: 30 minutes of computer time every day - Jackpot!
Well at least that’s what I thought. After the first few sessions it became clear that including the time it took the damn 56K modem to connect to the internet, I was able to read only 5-6 sites tops! How could this be enough when I knew that there were hundreds, thousands, maybe millions of websites on which I could read about the most amazing new video games or see funny pictures? Since my mom wasn’t willing to renegotiate (never ever), it was clear: I needed a hack. Luckily, my step-dad had a printer.
From then on, when I started my internet sessions I was prepared: The printer had enough paper and I had a list of sites I wanted to visit next to me. So as soon as the clock started ticking I navigated to the first site, opened the links I just had to see (“a new Gameboy game with 3D battles?!”) pressed print and was off to the next one. I estimate that I was able to visit about 5x more sites this way. Plus I could enjoy hours of reading afterwards, without the time ticking in my head. I felt quite clever. That was until my step-dad discovered that his printer kept running out of ink. And ink wasn’t quite as cheap back then, oops.
Catching Fire
Fast forward 10 years. Somehow I managed to get into one of the best business schools in Germany (at least that’s what they say) and I didn’t only have my very own MacBook and iPhone, I had also made quite a bit of money selling them since my junior year in high school. See, when the first iPhones came out in 2008 and everybody went crazy over them, prices at eBay.de were going through the roof. Even for used handsets. Sure, supply was limited and the iPhone was a revolutionary device, but it was still a bit nuts and the prices that were asked were definitely too high for me. At that time I earned €5 / hour at a pizza delivery service.
So I started looking for alternatives and pretty soon I remembered that electronics in the UK were quite a bit cheaper than in Germany (a fact I discovered when I spent some weeks at a boarding school over there). So I checked ebay.co.uk and it was true. The average used iPhones could be bought for around 30% cheaper than in Germany! I remember thinking: “They tell us all the time at university that “arbitrage” doesn’t exist - but there it is right in front of my eyes!”. Although we’d already had the European Union for more than 8 years, the Germans just didn’t buy from UK sellers and vice versa.
Where I saw an opportunity, I think most people didn’t. This was my reasoning:
- Firstly, it was a cross border transaction. This meant a lot of unknowns: high shipping costs (the low nominal price made this almost irrelevant), a foreign language (although most people speak some English here, many are not that confident when it comes to monetary transactions), the risk of paying a toll (which was nonsense of course, since there is no toll in trade between EU countries) and a foreign currency (which was actually quite positive, because the € was very strong at the time).
- Secondly, I think it was a matter of convenience. Yes, the shipping times were longer and often the phones came with a SIM lock. Plus eBay was filled with frauds and scams , so what if they got screwed? They would never get their money back! All not a big deal if you already had an iPhone, knew your way around some open source tools and could evaluate a seller’s reviews. :)
Whether my hypothesis was correct or not, I started buying used iPhones from UK sellers, “polished” them a bit and shipped them off to happy German customers. This way I made around €80-100 per device, for around one hour of combined work. Waaay better than the €5 I earned delivering pizzas to stingy tippers. This experience opened my eyes to a couple of things:
- Arbitrage is very real.
- People are willing to pay a premium for convenience and certainty.
- You can make money on the internet.
- If you can pull it off, being self-employed beats having a boss every day.
Growing into Point Nine
This went on until I read about Team Europe, a Berlin based company builder, for the first time in my second semester at university. I was excited: There were these guys that were building one internet company after the other, making crazy bucks while having fun doing it! I decided that this should be my next summer internship. So out went my application for a Business Development internship at Team Europe. And then… silence, I didn’t hear back for around a month.
Just before I was about to save my entrepreneurial dreams for later and accept an offer from a consultancy firm, I finally received a reply. My application “was interesting”. Yay! Four phone interviews and a personal meeting with a founding partner followed. Pawel, who joined Team Europe after some years in investment banking was looking for someone to help him with the €6m Seed Fund, which today is Point Nine Capital Fund I. I am not sure when in this process I was switched from Biz Dev to investment analyst, but working on / evaluating not just one, but multiple businesses every day? Even better!
So I met Pawel in a small restaurant in Frankfurt and we talked. After some Q&A and discussions I started to talk about my little Apple business, an aspect I didn’t put in my application because of its “grey” nature. When I concluded with my learnings from that experience (certainly not as complete as above), I could see Pawel grinning. He had just invested in WirKaufens (the German http://www.gazelle.com/) and they did exactly what I was doing! Just on a way bigger scale, more efficient and.. well, completely legally. If there were any doubts that this was where I wanted to be, they were gone now.
This internship let to a consulting role when I had to go back to uni and ultimately to my full-time position as an Associate when I graduated in 2012. By then Dealpilot & Pageflakes co-founder and angel investor Christoph Janz joined as a partner and Point Nine Capital was spun out off Team Europe to become an independent entity.
Looking back, it is quiet funny how I ended up here and I am excited to see what’s on the horizon for Point Nine and myself in the coming years. It has definitely been a fun ride so far. And one thing remains particularly amusing to me: While I am no longer wasting printer ink, I am still saving websites for later. I just use Instapaper. I guess habits die hard, even as technology changes.
