Nurturing brands, companies, families and funds (#6)
Together with Adrienne Perramond, President of Business Angels Switzerland (BAS), we discuss the landscape of angel investing in Switzerland, lessons for entrepreneurs, the changing nature of branding and marketing in the D2C age and more.
Full podcast transcript:
Ben Robinson: Welcome to Episode Six. We are with Adrienne Perramond, who is an angel investor, startup advisor and an independent mediator. Adrienne works as the president of the Business Angels Switzerland, a Not-For-Profit Angel Investing Association. It’s the oldest one in Switzerland and before that, Adrienne did many things including a career in marketing in the consumer goods and luxury goods set and she went on to found a company called Transfer Solutions which was a relocation service based in Neuchâtel, which she sold in 2001.
So Adrienne, maybe you could start by… So you’ve traveled here today from Neuchâtel. Tell us about Neuchâtel because it’s a relatively large town right. But it’s not one of the most famous towns in Switzerland. What’s the appeal of Neuchâtel to somebody who’s never been to Neuchâtel.
Adrienne Perramond: Okay, so first of all, good morning. And thank you very much for inviting me to a p e r t u r e | podcast.
Neuchâtel is not Zurich, it is not Geneva, but it lies on the biggest Lake entirely in Switzerland, the Lake of Neuchâtel. So, we always have access to the lake and then in the back, we have the Jura Mountains. And Neuchâtel is great to bring up a family, a little frustrating because if you want to do any kind of business and you need to leave Neuchâtel you always have at least an hour to reach an airport or another big city.
Ben: And then are there other big companies based in Neuchâtel?
Adrienne Perramond: Yeah, of course we have other big companies as well.
Like Philip Morris, Johnson and Johnson, Celgene to name a few. And of course, some watch manufacturers as in Louis Vuitton Watch Group which sells TAG Heuer. Neuchâtel has also a lot to offer because it is the base for electronic and micro technology. And the EPFL has actually started Micro City, which is part of the EPFL based in Neuchâtel where they can profit from the expertise of that region which partly comes of course, from the watch industry and micro technology in general.
Ben: When we think about your hobbies and so on, are they are they lake and mountain orientated?
Adrienne Perramond: Yes, they are! You’ve summarized it really well because I, I like deep sea diving, so I don’t do it in the lake, but I will do it in wherever…
Ben: How deep is the lake? Because I know this is a question they ask you when you’re trying to naturalize to become Swiss… Do you know the depth of the lake Neuchâtel?
Adrienne Perramond: You know, I think that there are some places where it’s at least 150 meters. I mean, you know, don’t quote me on that, but…
Ben: We I’m getting into the lake but that’s one of the sensations I have. You know, when you’re going into the sea, and ease yourself in because it’s gradually getting deeper. Whereas in the lake, you’re diving and it’s immediately really deep…. I found that it freaks me out a bit.
Adrienne Perramond: Really? That has never struck me. But what’s nice about our lake is you can cross it relatively easily with a motorboat. And then on the other side, you have sort of sand dunes where you have maybe one meter of water and you can go, you know, with your children and play.
So, I mean, a lot of places are not deep at all and in the center must be pretty deep. Yes. So anyway, yes, deep sea diving. And then my other big passion is walking and trekking, walking in the Jura Mountains, but also tracking. And then last year, I went on a trek in North India, where the objective was to climb a summit up to 6,150 meters. So we did a 10 day trek walking between 4,000 and 5,000 meters and that was just incredible. And then the summit at one point I said, that’s enough now at 5,600 meters inside turned back, I think it was just physical limitation and also I am very Swiss…
…So I sort of anticipate and I measure, you know, my efforts thinking that after they have to get back down so at one point, you know, I thought that was really credible.
Ben: Well, so one thing I didn’t say in the intro, but that is interesting about your background is that you grew up between here in the US then you went on to study in the UK, how was that? How would you compare and contrast the US and Switzerland?
Adrienne Perramond: I was born in Basel, I went to school in German and then we moved to the States because my father was working in the pharma industry. So when I was 10, we moved to the states, my parents put me in local school, we came back just before I was 15, went back to German school then finally ended up doing my A-levels because I had missed too much German and my German wasn’t really good enough although today I mean, I speak Swiss German fluently.
Ben: What language did you speak at home?
Adrienne Perramond: French! I’m French speaking, my parents are French speaking so I grew up in French, went to school in German and in English, then after my A-Levels, signed up to go to the Hotel school. And suddenly last minute realized that actually I was more interested in business management more than the hotel industry. So I decided to go to the UK and went to Buckingham University, which at the time had just been created was the first private university in UK supported by Margaret Thatcher and maybe a little bit more practical oriented, just really perfect. A lot of international student and for me, it was just fantastic.
Ben: And why the UK, if you were familiar already with US?
Adrienne Perramond: At the time, I could have gone to Brown University Boston, it was very simple then. The dollar was 4-to-1 and my parents said if you go there, then you will probably not really come back so often and the UK was more reasonable. So it was more for economic reasons. It was a good choice.
Ben: But your children are now studying in the UK?
Adrienne Perramond: In the UK. Yes. So it’s true that the Switzerland has an excellent education system, having had a very international background for me the chance for the children to be able to also have an international experience and see other education systems is an opportunity. So my daughter actually she chose when she was 15, she asked to go to boarding school in the UK. So she packed her bags and went to boarding school and then she stayed to do her Bachelor and my son, he just did all his schooling in Switzerland and has gone off as well.
Ben: Well, and where was it in the US that you lived?
Adrienne Perramond: So first, we lived in New Jersey. And then we lived in the Midwest, which was Minneapolis, Minnesota. And that was, I mean, you asked me, was it you know, living in the States as a young teenager, it was just wonderful. And it was very difficult coming back to Switzerland where it was more of a stiff environment. I mean, at school, I came back to school and the German Teacher, He said to me, You do understand I mean, you’ve been away for five years, there is no way I can give you more than so much as a grain you know, in German out of almost principles somehow, whereas and the Anglo Saxon… says it’s more like, okay, let’s find a solution. And you know, you’ve done great. And let’s continue like that. And it’s just a little bit less survival.
Ben: Having said that you’re still a fan of the Swiss education system.
Adrienne Perramond: Yes, because we have, I think, a very good quality and high level education system. And what we have, which translates us from a lot of other countries is that students go to university, but we have a whole system parallel, which is what we call the apprenticeship where you finish school at 16. And then you can go on to learn a trade, or you’re encouraged to learn a trade, maybe go to a school of commerce. Learn, sort of go a technical school. Or moreso, prepare yourself to go to what we call the Hautes écoles, where you can also do a bachelor and it’s parallel to the university and it’s more practical, it’s more concentrating on real business cases or… also engineering schools and if you want to go into Tourism, Health, Hotel, then you can go to an hautes école which is often more targeted to that kind of business sector.
Having said that, so we have only 20% of our students who go to university and many more who do parallel studies. And we’re very strong with that instead of if you compare to France, where children will go on to school until they’re 18, even those who don’t like school, whereas here, if you’re not really academic, you can stop school at 16 and still go on to do what you want to do.
And you can continuously move laterally from one to the other. So you can finish school at 16, do a technical school, and then still do what we call a passarelle, which is like a bridge and then do an activity which enables you to go to university.
Ben: Most of what you just told me other than that, that’s great.
Is that one of the reasons why unemployment is so low in Switzerland because the school system or the education system is providing the skills the economy needs, rather than just pushing everybody to university education?
Adrienne Perramond: Yeah, it’s also a strong economics of our country, but certainly that we cover more, I would say our young adults are probably better prepared and cover more.
Ben: Because the unemployment rate is something like, [Adrienne: almost like nil] I mean, you know, there’s always like frictional level of unemployment where… there’s just a level of unemployment that comes with people switching jobs. And it’s below even the frictional level of unemployment you see in most countries. So you’re a fan of the Swiss education system because it’s much more vocational and much more sort of multifaceted versus most countries.
Are you still as big a fan of the UK education system as you were?
Adrienne Perramond: I am, I am. It’s different. Well, even the UK system, you do your bachelor, and then usually you go out and you get to work. Whereas on continental Europe, you do a bachelor and then you do a master’s and it’s different. So even the UK is relatively pragmatic, you may then go back and do a Masters later on or…
the basics of marketing have not changed. I see the startups. I mean, they still have to identify their target group, but how they’re going to go to market, evaluate the barriers to entry, the pricing strategy. So in that sense, the basics of marketing haven’t changed. The tools have changed, clearly.
Ben: Okay, may we slightly change track now because I want to talk a bit about consumer goods. This is an industry that we’re fascinated by what or at least the transition that this industry is going through has been fascinated because clearly a lot of people talk about how the internet has always changing many industries. Not that many people talk about how it’s changing consumer goods. But to us it’s having a radical impact, I suppose what we’d like to do is ask you to compare your experience today working with startups with the time when you worked at TAG Heuer and Kraft and tell us what you think has changed about marketing in those years, what’s, you know, what’s been a constant and what has radically changed about marketing?
Adrienne Perramond: Okay, so I would say the basics of marketing have not changed. I see the startups. I mean, they still have to identify their target group, but how they’re going to go to market, evaluate the barriers to entry, the pricing strategy. So in that sense, the basics of marketing haven’t changed. The tools have changed, clearly. And to me fascinating is how you can reach the consumer with just a click through social media and internet in general.
the consumer has a lot more bargaining power
Ben: You know, I think we’ve observed this happening which is you don’t need to have billion dollar marketing budget today to have brands that people would recognize, but I suppose it’s almost the converse of that is theoretically any direct to consumer company stands a chance. But I suppose the converse argument is that people’s attention span has got shorter and shorter, and are bombarded with messaging and marketing every day. So for me, it feels a bit like a double edged sword, which is, in theory, anybody can go direct to the consumer, because the cost of distribution content is practically zero. Having said that, it’s quite difficult for whatever you distribute actually land with the consumer, because the consumer is time-poor, attention-poor. how do you how have you seen that play up?
Adrienne Perramond: You’re right, I would go even further and say that the consumer is distracted. And how do you keep your audience engaged? So I would say yes, I would speak about reaching the consumer, acquiring it, and then retaining it. To reach it, yes, it’s certainly easier and faster. How to acquire it, it’s probably very difficult because the consumer has a lot more bargaining power. The consumer has so much more access to competitive products, they have more choice through higher competition and the fact that everyone can reach the consumer more easily. Yes, it’s more difficult to acquire and then to retain. I would say you probably have less loyalty.
Ben: Yes, because I think the way you put it is better than the way that I put it. You’re drawing a distinction between reaching the consumer and actually acquiring the consumer, which is a really good way of expressing that paradox that everybody can reach theoretically anybody in the internet age but it’s very difficult actually to get their attention and acquire then.
What do you see in terms of tools that used to work and tools that work now for acquiring customers?
Adrienne Perramond: Well, acquiring the customer is fulfilling a need, if you can fulfill a need… I would say acquiring the customer is, well you used to have consumers’ full attention because the consumer would go there where he knows that he’s going to get the product, let’s say he goes into a store and he wants to buy a watch then he’s there and you have his full attention. Today, he will do his homework at home or shop around on the internet, may then decide okay, I want to buy you know, TAG Heuer, or maybe going to a store and still then buy, but then after that, you may think you’ve required to consumer and then it’s the retaining also which is then difficult because TAG Heuer may try and keep your loyalty. But on the other hand, you’re on YouTube watching Breitling that is using influencers to talk about their brand. So you’re continuously wooed by competition.
Ben: You worked in the consumer goods industry, and you worked in the luxury industry. And it seemed to me that it’s much I mean, intuitively much easier to acquire and retain customers in the luxury industry, because, you know, there’s a higher barrier to quality there. And I’m just wondering, would you agree with that statement? And then secondly, if we look at mass produced consumer goods, what’s the future? Is there still a place for the mass produced consumer goods, companies and products?
Adrienne Perramond: So first to speak about the luxury brands? Yes, I mean, there is still the desire to buy luxury brands, there’s a certain loyalty. Why? Because it’s not necessarily a need, but it’s an image and this brand will reflect the image you want to give and so I think that if you can feel comfortable with a brand and stick to it in that sense, so yes, there’s certainly more more loyalty concerning luxury brands. What concerns mass consumer products, the difference I would say is that the consumer has changed. You have the Eco conscious consumer, we’re moving towards less consumption, less waste, manufacturers are challenged to find new packaging methods. So yes, we still need products but the way we consume them is changing. The consumer is more comfortable with recycling. We’re heading away from the throwaway culture to “I take my mug with me everywhere”. Having said that, and I mean my children, they prone that and it’s very idealistic and then I think of the family where both parents work, come home at seven in the evening. I don’t see them going into the local store with their their Tupperware to buy the evening meal. So, I would say what’s really going to make the difference is the packaging.
Ben: That’s an interesting distinction you draw between, you know, what’s theoretically possible for the consumer to do to be more green versus what’s realistic. But in general, there’s, as you say, there’s a general push towards consumers wanting more sustainable products, maybe high quality products, at the same time is there’s now this opening for new brands to reach the consumer directly. And in that context, what happens to brands that mass produce not particularly high quality products, and used to get away with it by spending lots of money well, first of all, by producing at such scale that they could price more competitively, and then spending so much on marketing that they could get the consumer to buy their product, even though is potentially lower quality than the alternatives. Can that model still work in an age where it’s possible to produce things on a smaller scale for each different type of customer demographic at the same time as it’s possible to reach that consumer at the same time, that consumers are demanding high quality products?
with DTC, the consumer has changed from physical interaction to much more of a digital hiding… behind the comfort of the digital world, and in that sense there is an opportunity to reach the consumer in a more emotional way and that is being met in the DTC with the influencers.
Adrienne Perramond: Well, I would say if you take DTC, as in direct consumer that automatically is more of a local market because you know, to succeed, you’re going to concentrate on more of a local area. So in that sense, that’s changing. But if I look at mass consumer… the industry like General Electric, for example, or even Procter and Gamble, what they’re doing is I mean, General Electric, their most profitable line of business is, for example, the health sector where they are working on medical diagnostics equipment as in MRI and health data management. And they are spending over 5 billion in R&D compared to for example, Nestle, which has I think about one in 1.7 billion in R&D. So take General Electric, they’re not just selling appliances or they are working on innovation through the R&D and hopefully will buy the startups that are innovating, which will help them keep up with the market the way it is today. And if you take Procter and Gamble, yes, what will happen is you can take, for example, a product of theirs like Clear Blue, which is pregnancy tests where you have Eva, which you may have heard of, which is a startup, which has developed a wristwatch and the mobile app which women can wear and which will give them the nine vital signs of fertility and help them see when they are most fertile. Well, now they want to move on to and use their product as a contraceptive method. So I mean, you have ClearBlue, you have contraceptive methods, which will be replaced by more new, innovative and disruptive products.
Ben: The answer isn’t to carry on doing the same thing. So these mega consumer goods companies won’t carry on with the same business model of mass producing for the mass consumer. Instead, what you’re saying is they’re likely to either push into areas where there’s still a moat… where they can still price and operate at scale, or not necessarily mutually exclusive, but then they’ll also buy startups and then get access to these goods that are selling to these different demographics. Or they’ll invest in tech and data and the sorts of things through which they can sustain loyalty and higher pricing and deliver higher long term value to the consumer. What about pricing? At the start, you said lots of things haven’t changed, customer segmentation is important, brand is important. If you think about toothpaste, one of the ways in which you might want to price toothpaste is based on the subscription, because you know, you’re always going to need toothpaste every couple of months. And so you don’t open that consumer up to temptation to be acquired by different brands every two months. Instead, you get the customer to sign up to a long term subscription.
Adrienne Perramond: The company or the startup still has to define its pricing strategy. The pricing has changed, probably you can change it two ways:
(a) is with the infrastructure service. So how you get it to the consumer and maybe a lot of companies are starting to do that is to acquire DTC startups which will enable them to get to the consumer more easily. And the advantage of that is very important is, to understand your consumer you have direct access, and you’re much more flexible and you can be more innovative and implemented much more easily. So they will change the way the product gets to the consumer.
(b) Or you could, for example, do like Harry’s Razor Blades, where you try a type of subscription, if you like, you can order the razor blades directly to your home. Same thing as contact lenses. It took me a while but at one point, I realized I could order my contact lenses through the internet and with a click of a button, I reorder them when I need them and they come directly to my home. Well there there’s not maybe a lot of marketing involved because it’s more of a product that I need. But if you take Harry’s Razor Blades, the way they’ve managed to address the consumer and create a certain loyalty is the way forward.
So, there is less physical interaction, people need to be entertained, they need to be somehow emotionally touched in another way, then maybe in the past where you would have more physical interaction. And so in that sense, you need to identify yourself with others maybe more so because you’re alone in your digital world. And I would add that brands should actually lead the example of helping consumers move away from this digital filter bubble that we’re in.
Ben: In terms of reaching the consumers. So I guess theoretically, you know, if you think about marketing theory, it shouldn’t be theoretically possible there to be such a multiplicity of small brands in the marketplace. Because the consumer being rational and have limited time and attention, would seek to use a supermarket theoretically or Amazon. But it’s just quite interesting that we now see such proliferation of brands and products. Are platforms like Shopify making this possible. And is it a long term trend? i.e. are we living in this new world of the long tail of very small suppliers? Or is this just a moment in time phenomena? And ultimately, people will buy everything through Amazon and they don’t really care or they can’t manage with quite such a fragmented supplier base.
Adrienne Perramond: I think that they go into the store, they have, you know, a huge variety in terms of products… but on the internet, it’s just as bad actually, except you’re in the comfort of your home, you still have to you know, decide which one. So, how do you decide what you want? I think that with DTC, the consumer has changed from physical interaction to much more of a digital hiding… behind the comfort of the digital world, and in that sense there is an opportunity to reach the consumer in a more emotional way and that is being met in the DTC with the influencers. But it’s interesting because the influences they can if you take Kylie Cosmetics, it’s a brand but to me it has probably very little loyalty. What the brand is… it’s the image that Kylie Jenner portrays she as a person and you identify with her and the cosmetics in itself is nothing special on it on its own.
Ben: There’s two things that you said that I want to pick up on. The first one is around influencers and the second one is around the emotional pull of brands. So if we start with influencers, why do you think that’s so much more important than in the past? So, why do you think it’s, it doesn’t work as well for us to hire famous people and have them market the brand, why did why do you think it’s somehow more authentic, if people pay influencers because it’s still asking somebody to advocate on your behalf?
Adrienne Perramond: I would differentiate the influencers, which are George Clooney, which will market if you like your brand and give a certain image that you can identify to, and the influencers, who are themselves, marketing their product and getting their product out, and which is working. And this comes to your second question about the emotion. So, there is less physical interaction, people need to be entertained, they need to be somehow emotionally touched in another way, then maybe in the past where you would have more physical interaction. And so in that sense, you need to identify yourself with others maybe more so because you’re alone in your digital world. And I would add that brands should actually lead the example of helping consumers move away from this digital filter bubble that we’re in.
Ben: So listening to you, I think what occurs to me is that, one, using emotions is important because we need to cut through the noise and engage a consumer who is busy, time-poor, attention-poor. To that, I think I agree with you on that. And then I think the second thing is when listening to you. And this crystallizes something I’ve been thinking myself, which is the role of the consumer has changed, right? The consumer is no longer just somebody who passively consumes, the role of the consumer is somebody who’s also an advocate for the product, because that was the difference was that we weren’t connected to each other in the same way as before. You know, because we are now networked consumers. And so the emotional pull makes us feel something that’s more likely to make us advocates for the brand. And then secondly, our advocacy is more likely to be heard than it was in the past, because we’re all connected to each other through these social channels. And I think that’s the difference, right? You know, in the past, you used to have to pay for George Clooney to advocate on your behalf. But now, not only does that feel inauthentic. But secondly, if you can use emotion, you can get the consumers to do that for a much bigger scale than you can today with George Clooney and the decline of mass marketing channels, right?
Adrienne Perramond: Yes, but also because the consumers’ objective has changed, he wants to live a memorable experience. Maybe they will prefer an experience over ownership, there’s less the need to possess material things. It’s maybe partially financially more attractive, but it’s more the experience of living someplace original in someone else’s home. In that sense, the consumer has changed and has other demands. And adding to that is of course, again, the whole eco-conscious consumer, he will more and more want to know if I buy this clothing, where is it being made, how is it being made and how is it being transported?
Actually, our biggest problem was that sometimes they had too bigger budgets, and we couldn’t find expensive enough housing. Twenty years ago, it was totally different.
Ben: Great. Okay, so we’re going to change track again, would ask you about Transfer Solutions. For the benefit of our listeners, what is a relocation agency?
Adrienne Perramond: Okay, a relocation agency is, you have just accepted a job in another country, you are moving to this new country and you will arrive and sooner than later you need to be 100% productive in your new job. And you need to organize your life around your job, accommodation, maybe you have a family and you need to go to a nice-schooling, where am I going to be able to continue my pilates, it’s another language. So, relocate to a new environment and get organized as quickly as possible as you can be in your new job?
Ben: And I suppose, I don’t know if this is the case in other countries, it does feel to be particularly acute in Switzerland, which is everything you said is true. If you’re moving to Switzerland from another location, you’ve got all of those things that you said a true right, which is it’s a different environment you don’t know the best places to live close to, you know, proximity to the best schools, you’ve got the language barrier. All those things are true and in addition, what seems to be the case here is that you’ve also got an acute shortage of housing, right? So you want somebody to be giving you the very best advice and helping to find the very best property because there’s so much competition for those properties. So when you formed the company, how important was that last point?
Adrienne Perramond: Well, Neuchatel is maybe a little bit different because the market is relatively small at the time, the biggest problem was having furnished apartments because there was no real demand for that. But otherwise, the housing market was relatively accessible. Actually, our biggest problem was that sometimes they had too bigger budgets, and we couldn’t find expensive enough housing. I would say the main difference is 20 years ago, it was totally different. You didn’t have the internet to help you. Today it’s different. You can shop around probably find your local gym that corresponds exactly to what you’re looking for relatively quickly. Probably most of the information is in English. So it’s different. 20 years ago, there was a real need for relocation services. And actually, my thought was, in Neuchatel, there was really no relocation service. There were a few international companies.
Ben: Okay, so you were ahead of the curve on this 20 years ago when you started Transfer Solutions. It was one of the best.
Adrienne Perramond: There, of course, they had them in Zurich, they had them in Geneva, [Ben: right]. But in Neuchatel, they didn’t have them and that I really realized, because when I then started, so I went very proudly knocking my first company who said, Oh, thank you very much, but we’re just fine. And people love coming to work for us. And there’s no demand for that until they would call back and say he or she won’t sign please help me because the family doesn’t want to relocate, they’re lost… And and this is where we could really make a difference for our client. Our client was not the family relocating, but the company who really wanted that person to come and work for them.
Ben: And when you launched the company, is that you have any coincided with a real boom right in companies moving here because looking at I mean, maybe Suisse Romand more than the eastern part Switzerland, but it seems that there is there’s been a slowdown of multinational corporations moving into Suisse Romande. But the time that you were doing this was a period when lots of companies were moving here for whatever reason. Do you think that you were doing this in exactly the right place at the right time?
Adrienne Perramond: Neuchatel, that was a little different. in Geneva, you had Procter and Gamble that arrived with about 1000 employees. One go from I think they came from Munich. That was totally different. In Neuchatel. It was mostly existing companies, but who had trouble convincing foreign employees to come and work for them. But one example where Energizer they were closing their factory in France, and France being France, they of course had to find solutions for their employees. So they could either pre retire or they were given the opportunity to come and join Energizer in Switzerland. So they hired us to organize a two day program for these 10 families to come and see if they could, you know, be motivated to come to Switzerland. And actually three families did move and integrated. And I like to believe it’s partly because we showed them that it was possible to do it. So the whole family, the children, the spouse, of course, if you can, let’s say you’re going to accept the job. You don’t know how you’re going to convince your spouse who may be is giving up their job or doesn’t know how he or she will integrate. And then having someone who will show you in a nutshell the benefits of the region and show you that you can be organized and when you have your accommodation where you can get the things you will need if the person doesn’t speak the language, accompany them wherever they need to go. I mean, that makes all the difference.
Ben: Why did you sell the company?
Adrienne Perramond: I had to make a decision. I had just given birth to my fourth child at that time, and I was already extending to the Lausanne market as well, either I needed to find other ways to expand the business because the market just was not big enough. So I could have, for example, offered additional services to the expats, I mean to the company as in maybe the billing system and what have you… That was one decision, or the other was, yeah, maybe I could sell it to a relocation service who wanted to penetrate the Neuchatel market. And I then chose the latter option because I had this opportunity to then sell to this company who wanted to quickly expand their relocation service.
Ben: So you built this company that you’ve successfully sold while also looking after three kids, right? How tough was that?
today, parents still need to make choices, they still need to make choices. […] I like to take the example of Helena Morrissey, she’s a very famous CEO of an investment bank in the UK… she had nine children. Well, her husband stayed at home and took care of the children. Great. It’s a decision they made together. But you need to make choices!
Adrienne Perramond: The tough part was working from home, actually. Because it’s very difficult to then separate family and professional. On the other hand, it gives you the flexibility to juggle with both, of course I had an Au Pair girl to help with the children.
I would say that I was privileged because I could choose whether I wanted to work outside of the home or have more flexible activities, which would enable me to take care of my family. And in that sense, I put my career on the back burner. It was a choice I made and leads me to today’s world where a lot of the parents, they want to have it all and they can.
I mean, they could have it all in the sense that, I mean now the external structures that exists for the children. Daycare centers and canteens, there were no canteens at the time, I mean, your children came home for lunch. And now even in Neuchatel, we have canteens. The fact that there are more government laws that have come out. I mean, imagine that a parent can have up to three days off per month to take care of their sick child. And it’s usually, I’m afraid the woman who will take these three days, not often of the father. But having said that, I want to come back to the question of choice. At the time I made a choice, my choice was also partly based on the fact that we were in Neuchatel, which is a smaller market, and they were probably less professional opportunities also for me, and that I had a husband who traveled a lot. So where we both going to be away a lot?… Yes or no.
So that was a choice that we made together. And today, parents still need to make choices, they still need to make choices. I like to take the example of Helena Morrissey, she’s a very famous CEO of an investment bank in the UK, she had nine children. Well, her husband stayed at home and took care of the children. Great. It’s a decision, you know, they made together but you need to make choices. And I think today it’s a little bit of, I want it all, I want it all and sometimes and I think it’s negative for the women, they want quotas. They want supposedly the same rights, if not more than the men take parental leave, okay? The women have parental leave, why not offer parental leave to one or the other? Why should both of them have it? To me? It’s a question of choice of responsibility to…
Ben: Transfer Solutions was a business that you could run around your family, the other obligations and responsibilities, and if I interpret you correctly, you’re saying that versus then and now the infrastructure that exists to support two parents that want to work is much better than it was. So if, if canteens even a Neuchatel, so you have canteens you have, you know, better childcare crashes, but you’re saying notwithstanding that you still need to make these choices about who’s going to be the primary breadwinner?
Adrienne Perramond: Families. They don’t want an Au Pair or a living nanny because they want their privacy or they don’t want to use an additional room for a live-in nanny. So what happens is at six o’clock, they drop their pencil and they say, Well, sorry, I have to go and pick up my child or my child is sick, I cannot take him to the daycare center or my child has ballet class, and more often than not, it still falls on the mother who will, well because the father, he doesn’t have the time. But she has a management job.
So, it’s not still not very attractive for the employers today.
I was a little naive, because I had seen how other politicians work around me and I thought “it cannot be that difficult. I’m going to go in there. It’s like a business and I’m going to look at it and we’re going to set it straight and then no problem.” And the fact is, it’s not that easy. And that was a good lesson that took me 13 years. And it was a good lesson because politics is not a business.
Ben: So, you’ve also been involved in local politics for a long time. What, Why did you get so involved in local politics? Was it some of these questions around supporting working parents? You know, what was the motivation for getting into politics?
Adrienne Perramond: The main motivation was, well, first of all, I was a little naive. And so I made a donation to the Liberal Party, and they then called me and then I was hooked. And then I felt I was, well, I was working from home, I had more time and I felt it was my civic duty to be involved in local politics.
Ben: Do you think that sense of civic duty was something that came from your schooling? Why do Swiss people feel this very strong sense of civic duty.
Adrienne Perramond: It was two things. It’s one that I had, maybe I thought I had something that I could contribute, and I had the time to do it. So no, it is not due to to my schooling or it was more of a personal desire.
Ben: Do you think that through local politics you can have a bigger impact in Switzerland than you could in the UK, or the US, because such a large amount of autonomy is devolved down to the cantons and the communes?
Adrienne Perramond: Well, it’s difficult for me to judge how political system are locally in other countries, what I can say for Switzerland is I was a little naive, because I had seen how other politicians work around me and I thought it cannot be that difficult. I’m going to go in there. It’s like a business and I look at it and we’re going to, you know, set it straight and then no problem. And the fact is, it’s not that easy. And that was a good lesson took me 13 years. And it was a good lesson because it’s not a business. It’s not a big mistakes business because….
Ben: I think that’s one of the biggest mistakes people make to draw that analogy between business and politcs.
Adrienne Perramond:…..and all business people I know who entered politics after a few years they leave again because it’s just too frustrating. It’s frustrating for two reasons. One is because you have to take into consideration if you take a village of certain infrastructure, you may have to keep up build, even though its support local communities, social welfare, you cannot just exclude that completely and run it like a business. The second is that you’re continuously confronted by people across from you who don’t have the same opinion as you
Ben: You can’t just say I’m the CEO do what they say……..
Adrienne Perramond: No, no. So it’s good to be challenged, but it can be very frustrating as well.
Ben: Is it fun politics in Switzerland? And I mean, you use the term you want it to put things right. But I would argue that’s, not from any particular position of knowledge, but it was seems to me that very little seems that needs to be put right. And secondly, I can’t imagine it being that exciting, Swiss politics, because maybe I’m wrong, but when I think about Swiss politics, I was thinking about, you know, working like utilities of you know, it just works is in the background.
Adrienne Perramond: Exciting is NOT the term I would use. Again, the exciting part of feel like is that you are representing the people who elected you and so you have a certain responsibility. It’s fun when you have the majority. It’s less fun when when you don’t. But I was, for example, in the school commission or in the finance commission, you have to deal with the issues, find solutions. And yeah, it is a challenge to try and convince the other parties to see your way. So that can be exciting, Yes.
Ben: You used the term, you wanted to put things right, what needs to be put right about Swiss politics, because it just seems to, you know, those of us that are not that close to that it works, unlike, you know, right now, for example, Anglo Saxon political environment.
Adrienne Perramond: By putting right, what I mean is, but that’s, of course, my opinion is limiting government regulations, giving the individual and society more liberty, more responsibility. So which is of course a long term ideology, and more down on a practical basis is not living above your means. The Swiss Germans actually are much better at that than the Swiss French.
Business Angels Switzerland, we call ourselves BAS. We are a nonprofit association with about 90 members. We all have one thing in common… we’ve been lucky and we want to give back to young entrepreneurs, share our expertise, invest some of our money, and share our networking.
We are really a club where we… I can say we’re friends. We meet we have a meal together, we listen to startups pitch, we do the due diligence together, we share, we compare, we call, we ask for advice, and the members know each other. And although we then invest individually… we do all of the screening, due diligence, investment process together. And afterwards, we follow the company together. So it’s a close knit community.
Ben: We should talk about Business Angels Switzerland, which is what you’re currently working on. So tell us a bit more about Business Angels Switzerland, what what does the organization do? How did you get involved? What’s the difference between Business Angel Switzerland and some of the other angel investment groups in Switzerland?
Adrienne Perramond: Okay, so Business Angels Switzerland, we call ourselves BAS. We are a nonprofit association with about 90 members in the Swiss French and in the Swiss German areas, mostly Zurich area. We have members who pay a membership fee, come from all kinds of different backgrounds, could be young retired people from a legal financial, lot of engineering background, marketing, independent individuals who’ve had maybe successful companies that they’ve sold. We all have one thing in common… we’ve been lucky and we want to give back to young entrepreneurs, share our expertise, invest some of our money, and share our networking.
Ben: So I’m not going to name any other angel investment groups because I don’t think you probably want me to, but they exist. And in the mission statement in their day to day operations, they sound like BAS. So how would you draw a distinction between BAS and some of the other angel investment groups?
Adrienne Perramond: I would say there are a few differences. The first difference is that we cover really all sectors, were not specialized in one sector. So its life sciences, ICT, a little bit of FinTech but not so much, CleanTech… so the product and technology sector. Another difference is that we are really a club where we… I can say we’re friends. We meet we have a meal together, we listen to startups pitch, we do the due diligence together, we share, we compare, we call, we ask for advice, and the members know each other. And although we then invest individually, so maybe a big differences, we don’t put our money together in a common part, which is then invested everyone invest their own money. But we do all of the screening due diligence investment process together. And afterwards, we follow the company together. So it’s a close knit community. And I would say that’s it.
Ben: It is like angel investment group meets social club.
Adrienne Perramond: In a way Yes. In a way. Yes.
Ben: And how do you get the deal flow? How do you get the entrepreneurs bringing their companies to you and escape.
Adrienne Perramond: So what we have is… we have a platform and a lot of our startups will sign up on our platform. They either come on their own because we have a certain reputation in the Swiss ecosystem, but we are also, we the members, quite active. We have a general manager. She is the key person in the club who organizes the events, but also is very active in the ecosystem and is in constant contact with startups. Our members are ambassadors, you can sign up to be an ambassador. And then you participate in events and you encourage potential startups to come and sign up on our platform. We participate in juries, for example, the Venturekick jury where we see potential startups could be interesting for our members, we encourage them to sign up on our platform.
one of our criteria for investing in a startup is that they have an exit strategy, exit strategy does not mean that they have to sell their company within so many years, it could be that they will be profitable and buy back our shares. And that is maybe a way to shorten the time to exit.
Ben: Can you point to any great success stories, companies that you’ve invested in that have big exits or pretty large organizations today?
Adrienne Perramond: BAS has existed for a little over 20 years and a little over 10 years in the Swiss French or so it’s the oldest but still relatively young. We’ve had about six exits in that period of time, which is 5% of all of our investments with returns that have multiples of between 2.6 and 10 fold, and over between three and some are oldest investments lasted 10 years which is not surprising for the Swiss market which has a long lifecycle. All in all, we’ve had about 120 investments, today I would say we have a few companies that are hopefully close to an exit. I can mention one which is called SMIXIN, which is in the CleanTech. So it’s a diffuser, just put in the tap, which enables you to wash your hands with soap, rinse your hands with one deciliter of water, so this could be used in all public areas. It’s a company which was started seven to 10 years ago, and now they have just have CWS, who took a big stake in this company over 10% and which is going to help get it to the market. So, It’s a promising startup, you have to be patient. It’s long go to market. That’s one of the things that in Switzerland, we’re like a deep nation good with product technology. With our engineering schools, we have access to innovative R&D, which leads to products, but it’s a long life cycle. I mean, it’s like 3 years at the headquarters, 6 years go to market, and then the growth is another, I don’t know, 6 to 10 years.
Ben: When people join as angel? Is that something that you have to impress on them in the fact that they need to be very patient because Switzerland is not like many other markets, which is on the plus side, you have, you know, fewer failures, but on the negative side, it takes a lot longer for some of these businesses to reach their potential because we’re talking about B2B typically, deep tech,would you say that’s a fair description Switzerland?
Adrienne Perramond: It is. And what you could do is try and find or encourage alternate methods of exit possibilities. One would be that when you have the follow on round, and the next investor comes in, that he buys you out, and maybe a little bit less of an interesting multiple, but it enables you to get your money back and reinvest it. So it’s interesting for the ecosystem and what we say to the startup because that’s one of our criteria for investing in a startup is that they have an exit strategy, exit strategy does not mean that they have to sell their company within so many years, it could be that they will be profitable and buy back our shares. And that is maybe a way to shorten the time to exit. And one example is a startup that we invested in, I think it was two years ago, two or three years ago, and we’ve just had an exit now with a multiple of close to three times being bought back by the next investor.
Ben: When you look at the investment market, you see that as a big gap. So you’ve got companies that where it makes sense for venture capital, because these companies will have a clear exit versus those that will go on to be reasonably successful, generate lots of cash. That is, do you think there’s a model to not invest equity but maybe invest debt you know, and it’s not well served by banks because banks like to invest in companies that have a long history of financial records and assets they can lend against, which is not typically the case for a startup
Adrienne Perramond: We do invest with convertible loan, we do do that. But the idea is always to have an equity stake at one point that is the basis of angel investing is you have a stake in the company. So, yes, the question is, how do you then realize your investment at one point?
Ben: Have you thought about creating a secondary market for those that aren’t IPOs suitable, but would have people that want to get access to those cash flows and dividends.
Adrienne Perramond: The dividends could be interesting in Switzerland because we don’t pay taxes on capital gain. But otherwise, for me as an angel investor, it’s it’s not interesting now, but maybe.
I won’t look at the other angel investing groups as competition at all. Personally, I like to work with them, because let’s say a startup is looking to raise a million, they won’t get a million from BAS. Our investment rounds vary between 150k and 400k. And if you can have another angel investing club who will also invest, then it’s positive for everyone. So I like the idea of working together and there’s enough to go around.
Ben: What’s the value proposition of BAS versus other Angel clubs if there’s competition for angel investing, arethere’s some things that you offer that other clubs don’t?
Adrienne Perramond: You know, I asked young new members, why did you choose BAS?
Well, you know, we looked around we went to the different angel investing clubs and we chose to come to BAS because of the way we work with together and being able to share the experiences and it makes it more fun.
But I won’t look at the other angel investing groups as competition at all. Personally, I like to work with them, because let’s say a startup is looking to raise a million, they won’t get a million from BAS. Our investment rounds vary between 150k and 400k. And if you can have another angel investing club who will also invest, then it’s positive for everyone. So I like the idea of working together and there’s enough to go around.
Ben: We looked at the data from Swiss Startup Ticker, and there has been a massive rise in the size of the venture market in Switzerland over the last three or four years. What would you put that down to, do you think it’s just because more and more people are realizing that it’s an asset class that has much higher returns than others? And also you have more capital seeking returns because living in a country with negative interest rates?
Adrienne Perramond: Yes, the way asset management and investment in general has has been since the financial crisis is that, Yes, it was more difficult to invest in traditional asset classes. And so there was certainly an interest to do more Angel or even investing in funds which are active in seed capital or series A or B.
Having said that there’s also a curiosity and an interest to be part of the Swiss startup ecosystem. It can be through mentoring and coaching through participating in foundations or associations that support startups or through investing money. And if you are all alone, then it’s difficult to find the startups it’s difficult, you will have maybe a small amount invest. So you can either join an angel group that will invest for you, or you can be an active angel investor in association like BAS which will give you access to the startups.
Ben: I know you are relatively sector agnostic, but is anything you particularly look for in the startups. You know, do you have an “investment thesis”?
Switzerland is I would say, compared to other countries, it’s a startup country. The startups are everywhere in Switzerland.
Adrienne Perramond: Okay, so at BAS, what we do is we have a jury and the jury will pre screen the startups before presenting them to the members, our criteria is that they have to be based in Switzerland, they have to have a disruptive technology. So that is, there has to be an innovation. Services all that, less so. I mean, unless they have software, something which is innovative, if possible with an IP… and then they have to have a low valuation and have an exit strategy and offer a place on the board either as a member or an observer. And if they meet this criteria, then usually there’s a pretty big chance that they will be invited to come and present which does not mean that the members will be interested.
So, I would say it’s the innovation and it’s the team and it’s the valuation and it’s the milestones they set. And for me personally it’s the way they manage their cash flow in anticipation of maybe future rounds. And again, we have a long life cycle. So if you have a product, maybe it’s disruptive innovation, but it’s also risky because you have the prototype, maybe you don’t even have the prototype yet, but then you will have to industrialize it, you have to go to market and the market in Switzerland is small. So, at one point you want to export, which is, of course more costly than if you were, let’s say, already in the States, so all that you have to take into account. And sometimes the startups don’t anticipate that enough.
Ben: How bullish are you about Switzerland as a startup ecosystem? And you can answer that both in absolute terms, and also relative to other places, if you wish.
Adrienne Perramond: Switzerland is I would say, compared to other countries, it’s a startup country. The startups are everywhere in Switzerland. It’s true that roughly 50% of the startups come from the Zurich and Canton of Vaud region. But then you have 7% in Geneva, 5% in the ZUG area, but you have Basel, you have Fribourg and what’s interesting is the entrepreneurs, the startups, they profit from the expertise of our industry. So you will have Life Sciences, of course in Basel, but you will have incubators like Biopôle in the Lausanne area, then you will have startups in Saint Gallen. So it’s all of Switzerland that is involved in a way like maybe a region in another country.
Ben: It certainly seems to be a well balanced ecosystem in the sense you know, not many places have such a good coordination between government, specialist and world-beating universities, world leading incumbent companies as well I suppose a lot of capital that can be invested.
Entrepreneurs… keep your valuations low.
Adrienne Perramond: The Swiss startup ecosystem is very dynamic. It’s very dynamic, partly because we have our two engineering schools. We have EPFL in Lausanne, and we have the ETH in Zurich, which has doubled its researchers in the last 20 years. It attracts a lot of foreign brains. So we have excellent schools and parallel to that, we have all the parallel engineering schools and what we call the Haute ecole, the Lausanne Hotel School. Saint Gallen. And then we have the government support, which is very important is industries that enables startups to have grants link to R&D, training mentors, and sometimes not enough matching between the startups and investors, but they have a budget of CHF200 million, which may seem like a lot. In Israel, it’s 1.6 billion. So that’s the big problem in Switzerland, there’s no money in government support. I mean, there’s no money in this was an example of government support.
But if you look at how much is being invested, its last year was about 1.4 billion and in the States, it’s 155 billion. We are certainly more risk averse, but probably Europe in general and I would exclude London… Internet companies will probably never really develop the same way in Europe, as they do in America and in China, that’s partly due to lack of expertise.
So yes, if you take Switzerland we have created the foundation IDEP which is specializing in AI has started a master’s in AI works together with the EPFL. Great, and it’s good and and if they can develop the research and development, that’s good, but if they are any good, they will most probably leave. So why it’s partly because of the funding. And if you take the US as an example, they’re less risk averse, and they just invest faster and more.
Ben: What would be your either your one piece of advice, or your one request from the different stakeholders within the Swiss startup ecosystem. So let’s call them entrepreneurs, investors and universities and policymakers.
Adrienne Perramond: I would say that for the stakeholders, the ecosystem is to develop on the one hand the link between the startups and the investors but more so trying to fill the gap between seed investing, which is what angel investors do and follow on investments where the VCs, they want to see revenue, they want to see the product working. And there’s a gap in between.
And there’s only so much that in angel investors can invest, but often it’s just not enough. And our strategy at best is when you invest you should take into account the same amount in follow on investing because there will be a follow on round before you can attract big investors. So for the ecosystem, that’s what……
Ben: So you would like to see the government coming in to fill some of that gap between the seed investor and the series a VC investor.
Adrienne Perramond: For me the ecosystem is not only the government, the government can through organizations like InnoSuisse, Digital Switzerland, promote and make the startup world more attractive to investors. Yes, but the whole ecosystem has to… and even that the VCs and us, we should also work at filling this gap between ours and the future investors, so, it’s not just the government.
Entrepreneurs… keep your valuations low. Why? Because you will need follow on rounds, you will have set your milestones but you will have your product development your go to market will have taken longer than you think you may need an additional round and if your valuation is too high, you will spend too much time trying to get this funding you cannot get because you are not generating revenue yet and you’re not far enough advanced in your product development and a down round is always frustrating for everyone. So I would say, keep your valuations low and think cash all along you will need if you don’t have cash, you don’t have a business and if you need to concentrate on getting more cash, then you’re taking away your energy from your from your business.
And for the investors, angel investing is exciting. It can be very rewarding, but it’s very risky and you need to diversify and you need to set an amount that you could basically lose. Angel investing is giving something to the ecosystem. It’s helping entrepreneurs. It’s networking, but it’s also getting a return on your investment.
Ben: Perfect. Adrienne, thank you very much for your time. Thank you very much for making the trip from Neuchatel.
Adrienne Perramond: Thank you, Ben.