Interview with ‘Boersen’
Today Carsten called Dagbladet Børsen and 5 hours later we were seated at Café Den Blå Hund at Frederiksberg with journalist Louise Kastberg.
We spend 1,5 hours together and Louise took enough notes to fill up half an A5 pad. She found our concept surprising and asked good broad questions such as:
- How did you get the idea for Rainmaking?
- What makes Rainmaking unique?
- Do you have some good advice for other entrepreneurs?
With regards to the good advice, she had asked to prepare something before the meeting, so I brought with me a text with 7 good advices. It was probably too much text, as it needed to fit into a certain box in the paper. But the stuff you didn’t get to see there will be posted in this blog, as I, in all immodesty, believe that they are pearls of wisdom, which can make an enormous difference to most entrepreneurs. The 7 advices didn’t exactly emerge from nothing or by theorising – they are the sum of our experiences from 15 start ups and are the way we make companies in Rainmaking (or at least try to).
Reading the 7 advices again last night I had a feeling, which can only be described by compromising our decision to go against the flow of other entrepreneurs (who said Morten Lund) and never swear on our blog: it’s bloody poetry!
We eagerly await the article and will post the date here on the blog when we know it.
Ideas from other Entrepreneurs?
Supplementing the questions of the journalist, who Martin just wrote about, I can add another question that we often get, most recently when Thomas Mølgaard and I visited the Iværk fair yesterday:
Do you accept ideas from outside Rainmaking and cooperate with other entrepreneurs?
We might be getting some pretty good ideas in Rainmaking, but in all likelihood there are even better ideas in the world around us. So why do we love our own ideas so much then? We probably could cooperate with other entrepreneurs with excellent business ideas, but lack the execution power?
The Rainmaking Way
When we start a new project it is crucial to be able to do it "The Rainmaking Way" without large hesitation or resistance. This e.g. means that we typically run a small test of the business model and only carry on if we believe that the company can be sold at a three digit million amount within 5 years.
Consequently we have a high degree of portfolio-thinking in our approach to our companies and are not afraid to kill "zombie firms", that don’t create the expected value and hence causes defocusing. Subsequently The Rainmaking Way requires a high level of cold-bloodedness which is rare amongst entrepreneurs who enter a project with all the time, savings and lifeblood and neither can’t nor will let go, even if the potential proves to be smaller than hoped for.
Open to ideas and new partnerships
In this way our reservations can be boiled down to two criteria: (1) there must be a potential for a three digit million exit within 5 years and (2) we must be able to conduct the project The Rainmaking Way. The latter doesn’t necessarily mean that we need the dominant part of the ownership, but we do need the authority of decision and hence be able to carry out the project as a part of our culture and best practices.
Within these boundaries we are always open and ready for dialogue. We even have a policy stating that Rainmaking will give up a 5% share to the originator if the company is based on an external business idea. Such ideas can come from creative individuals or companies who see a market potential, which they can’t or will not meet but still prefer to see the idea launched rather than forgotten.
Write about your business ideas on this blog or comment on our attitude to cooperating with other entrepreneurs.
Where do all the ideas come from?
A journalist asked me that question yesterday and we would like to share the answer with you here on our blog.
If we look at our current companies, they are all (except one) related to two ideas that arose approx 3 years ago.
"The eye-idea"
In 2005 I had a laser operation at Hamlet and haven’t needed glasses since. I was really please about my operation and told my good friend, Morten K, about my experience. He used lenses himself and soon decided to go for a similar operation. However, he went through the trouble of searching the net for information and found a clinic in Malmoe who perform the exact same operation – at half the price.
Morten travelled for 45 minutes and got the operation for 20.000 DKK. My transportation to Hamlet was only 30 minutes but in return I paid 40.000 DKK. We compared our experiences and concluded that quality and service was at least as good in Sweden. We wondered why no Danes knew of this possibility and Morten soon got the idea to make a company which should promote Swedish eye operations at the Danish market.
We made a referral contract with the Swedish eye clinic, and had taken our first steps. Today this company is called GodtSyn (www.godtsyn.dk) and this year we are sending 2.000 patients from Denmark, Norway and Sweden to our Swedish partner clinics.
18 months ago Morten and Carsten had the idea to expand the activities to Germany. The market was ideal and we made a joint venture with the Swedish eye clinic, which gave us control over the machinery. The new business was named CityLasik (www.citylasik.de) and has just been sold to the leading chain of eye clinics, Memira, which is owned by the Swedish investment group Investor AB.
"The lunch-idea"
In 2005 I worked as head of business development for the gastronomic entrepreneur Claus Meyer. One of his firms had a lunch kitchen which catered for 500 people Monday to Friday. The kitchen experienced deficits and I assumed the task of learning why. A high customer turnover proved to carry high sales expenditures and spells of excess capacity. I interviewed the customer who had left and asked them why. They made it clear that after a while they wanted variety and had decided to find a new cater for their lunch.
These findings inspired the idea for at network of many different lunch kitchens, between which the customers could swap. This should make it possible to retain the customers in the network AND satisfy their need for variety. Thinking led to doing and today Frokost.dk (www.frokost.dk) serves 6.000 meals every day produced in 20 kitchens which the customers alter between.
Six months ago we felt ready to investigate if the concept could be expanded to other cities. It was not easy, but we eventually settled for a suitable city: Oslo. Hence, we are currently testing if Lunsj.no will be the next company in Rainmaking.
And the future?
Besides Lunsj.no we are at present testing three different ideas. The first is an online purchasing network, which is an idea of Morten K (based on personal experiences once again). The second idea is a chain of fertility clinics, which Carsten felt like testing in the wake of the fast success with eye clinics. The last idea is consideration on extending CityLasik to other countries, if there is a market with favourable conditions for a chain of eye clinics.
In addition to this we would like to grabble with a high tech project, e.g. within CleanTech. Hence, we will not try to arrange visits at universities, research offices and laboratories. We will look for an idea, close to launch and with obvious advantages for the customer.
Generally speaking we will be more systematic in the process of idea development in the future. We will follow some clearly defined selection criteria and will evaluate many ideas every time we chose one. We believe that it is important to have a wide selection of ideas, so that only the best are selected.
What do you think about our approach to idea development? Please write us a comment.
How happy should we be?
Every Saturday morning I sit and ponder an issue that can be called "enthusiastic leadership".
Last week we held our quarterly meeting during which we informed the employees from of all of our companies of Rainmaker’s overall development as well as the development of the individual businesses. Following the meeting, Carsten and Morten K. felt that we had not been enthusiastic enough. At the time I didn’t have a take on the matter, but now I find myself looking back... Carsten told us about the sale of CityLasik in Germany during the meeting. We made a reasonable million kroner deal for 2/3 of a company that has only existed for 12 months. Carsten and Morten B. were lightning quick in establishing seven clinics in Germany's most important cities, building up an organisation with 20 competent employees, recruiting a handful of the top doctors, and reaching a patient level of about 150 operations per month.
The company was sold to Memira, which is owned by Scandinavian’s largest capital fund, Investor AB. We have agreed to an earn-out in which we will be able to add more than ten million kroner to the total sale amount if we reach the budgets that were put together with Memira. That’s good going for such a short amount of time! Though it is true that Carsten discussed the deal calmly, without the excitement one might expect. So why aren’t we worked up about things? Because we have not yet reached the 100 million kroner in cash that we dream an average exit should bring us. And because over the last three months we have been forced to scale down our expectations for two other companies, Frokost.dk and GodtSyn.
Like most people these days we sense that both corporations and private businesses are more reluctant to spend money, and this means that we cannot sustain the aggressive growth rate we had originally envisioned for Frokost.dk and GodtSyn. So how happy should we be as partners and managers of Rainmaking? Should we celebrate the fact that with the sale of CityLasik we have created a secure financial situation and are thereby in a strong position to embark on future business endeavours? Or should we be disappointed by having to tone down expectations for our "safe bet" businesses, as well as by the fact that we have not earned the millions of kroner that we can feel in a private financial sense. The answer is a given: we should be extremely pleased! We have achieved some fantastic results in challenging times – and this is reason enough to be proud. This sense of pride and satisfaction should be communicated to our colleagues, as everyone likes to feel that they are a part of the overall success. Carsten and Morten were right; the tone of the next quarterly meeting will be much more enthusiastic!
Rainmaking in CleanTech?
I spent the last three days at the CleanTech conference at the Bella Center., where there were university representatives, researchers and industry people from around the world. We are considering whether Rainmaking can assert itself in a CleanTech project.
The challenge lies in the fact that we lack expertise in this area, which makes
On the other hand, we are attracted by CleanTech’s great potential, as the company lies in an industry (or more correctly a "movement") that is undergoing significant progress. It’s already been hyped in Silicon Valley, and we are now considering whether or not now is the right time to join in.
It will be a challenge, but we like challenges! When we started up in the eye surgery business, we weren't given very good odds. But we got things going, and just two years later we are considered to be among those with the most expertise in the business in Scandinavia and Germany.
Let the race begin!
More CleanTech…
Today we received the first result of our networking efforts at the CleanTech conference: a 54-page business plan for a new technique used for charging electric cars.
I feel it will be difficult to create a good partnership with entrepreneurs who have already gone far with their ideas and who presumably wish to run their projects on their own. They want our help, but they most likely do not want to share a sufficient amount of ownership and decision-making authority. One of our principles for the projects we take on is that they must be "Rainmaking projects". By this we mean that we manage the project, that it must become a part of our business factory, our best practices and our infrastructure. We see this as the most effective means of creating value. On the other hand, we are always open to making an exception to the general rule if it makes sense in a given situation, so one of these days we’ll have to take a look at the electric car business plan.
Today we also met with one of the big VCs here at the main office. They manage three billion Danish kroner and still have 2 billion kroner in "free" capital, so they are quite open to making new investments. We discussed the possibilities of a win-win partnership between them and Rainmaking. They receive countless business plans that can be divided into three categories: a) the great ones that they want to invest in right away; b) those which are immediately rejected; and c) those which have potential but which are not yet mature. From now on they will send projects from the last group to Rainmaking so that we can assess whether or not we can play a role in "upgrading" them to the level needed for the VC to invest in them. Now we’ll see what becomes of this partnership. I think it’s having these VCs in our network is a huge asset, as they have great insight when they evaluate their sea of business ideas and meet a great number of entrepreneurs.
We also met with a CleanTech entrepreneur who has a number of exciting inventions and new concepts for bedding. He has plenty of wind in his sails, though it will most likely be difficult to form a partnership with him because he is a "self-made man" type of guy who prefers being in control of the entire project. No matter what, it was interesting meeting with him, and one can’t help but have great respect for the results he has achieved (several hundred employees throughout 6-7 different businesses).
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