Monat: März 2013

  • Book Review: „What would Apple do?“ by Dirk Beckmann

    by Anika

    As I wait at the central station in Hamburg for my delayed train to Cologne, I notice the huge white posters advertising the new iPad mini. This triggers, as if often happens, the thought, „Wow, what has Apple come up with now?“. The hype around the success story of the probably most innovative company in the world and its founder Steve Jobs has fascinated the media, retail industry and e-commerce sector for years. Apple products (iPhone, iPod, iPad, …) or the AppStore are well-known to roll up entire markets.

    During the last two years alone, more than seven German-language books have been published about Apple. Subject of discussions are mainly the development of the company, the life of Steve Jobs and the company’s unique design.

    The economic book „What would Apple do?“, which was on the short list for the German Book Prize 2011, I have looked at more closely. It is written by Dirk Beckmann, CEO of a German digital agency and an expert in digital innovation. ,It deals in an entertaining way with Apple-related questions like „What makes Apple so special?“, „What can you learn from Apple“ and so forth.

    According to the author, there are three things, which make the company unique: its business model, technology and the design of Apple.

    Apple’s business model

    Apple exclusively produces products with the sole aim of deriving profit. Apple’s secret of success is to continuously develop new, complete supply chains, implement own ideas without compromises and to make resulting platforms, products and solutions usable by other companies. However, Apple controls Apple-compatible products of other companies (such as apps) to the smallest detail. One could assume that Apple has a ’madness of control’ regarding its products. For example, all apps developed by other companies run through strict controls and must be released by Apple.

    The company offers a wide range of products and waives a comprehensive market analysis. However, sophisticated marketing and advertising strategies will be implemented. Apple’s success is especially noteworthy in terms of the digital music download through the development of a revolutionary software, the AppStore. In December 2012, the company published a press release in this regard, in which it declared a new record: AppStore customers downloaded more than 40 billion apps, of which nearly 20 billion alone in 2012.

    Apple’s technology

    Apple knows how to not only use existing technologies and assembling these to its liking but it also develops entirely new applications and revolutionary products like the iPhone with its new user experience. As an innovative technology brand, the company is investing exorbitant sums in research and development of their products.

    Ipad and Co. are developed as an integrated package of hardware and software preventing a ‚function overkill’, and the user does not notice the technology, while using the device. Apple particularly focuses on the customers’ needs. The products are extremely easy to use, can interact with other Apple products and are of high quality. In addition, the users’ devices can be customized with various apps.

    Apple’s design

    Over the years, Apple has become a well-established and modern lifestyle brand. A special role in the brand building process plays Apple’s design. The company intents to trigger the customers’ emotions such as excitement with its products. Apple is convincing for instance with a reduced structure of the company website, an innovative design of stationary AppStores as well as visually appealing products.

    Last but not least…

    Reading this book has given me a broader understanding of the phenomenon Apple. The author Dirk Beckmann has chosen the title of the book consciously referring to the book „What would Google do?“, which was written by Jeff Jarvis in 2009. The book focuses on the aspect how you can benefit from the success strategies of internet giant Google. In „What would Apple do?“, Beckmann has repeatedly related to the business model of Google. I have not discussed this aspect in this blog article as it should only concentrates on Apple.

    Beckmann praises Apple at the highest stage. I would have liked to learn even more about the failures and problems Apple faces e.g. problems with the sales figures, staff fluctuations, criticism of the production in the Far East or the constant pressure to innovate. In addition, I was not that excited about the chapter „What would Apple do?“, which demonstrated potential business models of Apple by means of examples such as a car, a kitchen or an e-learning platform. This chapter could have been covered by just one example. The remarks were partly irrelevant and have been repeated.

    Moreover it should be clear, that the strategies and concepts of Apple are not simple transferable to other products, but rather be seen as an inspiration for other companies. Likewise, I would have found it interesting to learn more about the development of Apple’s key performance indicators. The author describes Apple’s development over time without mentioning the company’s key performance indicators (sales, development of R&D expenditures).

  • Conclusion: Venture Capital – does it still work?

    …finishing of my post series in regards to VC industry changes …

    Will prices for start-ups significantly change?

    In my opinion most start-ups will continue to raise the necessary funds in Germany. Firstly, venture capital never played a significant role here and secondly a large range of new capital sources have been developed over the last years. Corporate investors have become much more active and crowd funding offers a new way to raise initial proof of concept financing. Universities and government agencies have also been offering additional financing sources. So I believe that in terms of start-up financing there will not be a significant impact from the declining venture capital funding. Internationally, this will probably be a different story.

    But what does it mean for valuations? Again I believe that most German start-ups would not have been sold/continued financing rounds to/with VC funds in any case. Trade exits are the normal route to go for start-ups here and most corporates are not only willing to invest in start-ups but have been allocating significant amounts of capital. In terms of pricing I also believe that Germany is looking at incredibly low valuations anyhow and that equity markets are not an exit route for start-ups due to depressed listing outlooks. Hopefully corporate capital availability will actually help to increase pricing levels here.

    In my experience …

    Overall, I believe that corporates will play a significantly larger role in the German start-up scene than VCs ever had, have and will. The OTTO Group alone has an early phase incubator (Liquid Labs http://www.liquidlabs.de/), later stage incubator (Project A http://www.project-a.com/) and a later stage VC funding partner (eVentures http://www.eventures.vc/). Most other large German corporates are following this trend and are establishing their own teams.

    In addition, I am pretty sure that we will start to see an increasing number of more specialized incubators that offer additional guidance and support as well as follow-up funding through corporate buyers. Here an interesting trend from the US are specialized healthcare incubators like Rockhealth or Medstartr.

    “Rockhealth is one of the growing incubators in the healthcare industry. They help teams with venture capital, advice and their network to find proper healthcare business models & help to scale them. The startup industry is just starting to innovate around healthcare and those incubators are likely to be in the centrum of this development.” http://rockhealth.com/

    These significantly more specialized funds will take over start-up financing and provide industry trade buyers for growing start-ups. Entrepreneurs who are looking to grow their business should therefore forget about impressing VCs and start building their corporate contact network.