Transcription for Sascha Badelt

Jeffery: Welcome to the Supporters Fund Ask An Angel. I’m your host Jeffery Potvin and today we’d like to welcome Sascha. Welcome to our show.
Sascha: thank you very much for having me today.
Jeffery: Well I can say we’re very excited to dive in and learn more about ourselves and have this great conversation. And after our conversation and having a bunch of research and going through a lot of stuff, I’m going to say that I think you were actually born to work with startups and invest through your career. everything you’ve done just seems to really work around the early stage startup scene. So, it’s amazing that we get to dive into all this.
Sascha: Thank you very much. Yeah, maybe I can start. I was not born into the startup scene because when I was studying in Hamburg in the 90s I wanted to become a journalist, so I studied political sciences and journalism. I even started to work in the radio and then tv, basically news. But then I found that journalism at the end is talking about what other people do all the time which is interesting. you get to know people, very interesting people who do interesting stuff. But after a while I thought, I’d rather do the interesting stuff myself and let other people talk about me. That was my, let’s say, my dream at the end. And I had maybe the great opportunity at one time to start working in a business consultancy that was working around media. So, it was a Swedish consultancy when all the internet started and they helped basically editorials and all kinds of media companies to digitalize. This sounds very strange now but back then, it was like 87, all the media companies and Hamburg was a media capital in Germany. they were under pressure. they needed to basically back then, they had to go on the internet or they had to convert their business into or part of their business. they had to be connected to the internet. So, today we would say they had to digitize their business model. So, that was the connection between my journalism and business. When I started back then, it was called Media Consultant. And then I was at the end, Business Consultant. And I saw a lot of interesting companies. like we worked for example for Battles Man which is one of the biggest media companies in the world. And on one hand, we tried to find ways to offer their content, their print titles on the internet with different services around which is now common sense. But back then, basically we had to think about what else we have to offer as added value around the content because it was not just putting the same content you had in the print magazine on the internet. But that’s where we developed. For example, for all the business titles, we developed interactive added value like portfolios and you could watch stuff like that. I also was involved in the intent of Battles Man to build up an Amazon competitor. Battles Man back then which was much bigger than Amazon, built up something that was called EOL Battles Man online. you have to know that Battles Man had a big branch of book selling so they’re still one of the biggest editorials in the world. So, they thought we are the right company to sell books and we have to do it much better than Amazon because we have invented all this. They have invented, for example, the book clubs. there’re book clubs all over the world whether you subscribe. And there I found out for the first time why big corporations have a problem in innovation and why companies like Amazon can basically move much faster and create much more innovation in a short time than this huge multinational company patents month. And from their failure and from the failure of our project where I was involved in, I had my first big learnings, how innovation should work and that, let’s say big organizations and these processes, that they were working with are not suitable for innovation. But my story then went on because everybody back then in that time in the end of the 90s, in my surroundings, were dreaming of building up a startup. That was a big first. It’s a wave of founders in Germany where people, like the founders of Zalando and Rocket Internet, founded their first company. And one of their stories was they built up a company, an eBay clone, and sold it after four months to eBay for I can’t even remember was millions. let’s say 10 million. nothing to live forever but that was like one of the stories that they were told. And everybody thought we want to build up a startup. We want to be startup entrepreneurs. So, two colleagues of mine started a company. That’s it. It was like an online lottery company connecting with the state lotteries, a reseller of state lottery in Germany. There was no such thing. The lottery is still one of the most analog businesses. It’s state-owned so it’s very slow. And they thought we just built up a reseller. We’ve learned this from a project that we’ve done together for the Swedish state lottery. And Sweden back then and still is always ahead of us in digitalization. And let’s say technology also. So, they learn from this project and build up a company. I was still too happy in my business consultancy. I was really happy with my work and I thought this is the best workplace ever with a great office. It was in Germany. We were like the kings because we were the people who knew about the internet and we flew business class all around Europe. And I was young. And I thought I was so lucky to be here. So, I didn’t quite understand why they would leave all this and build up their own company. But after one year, they approached me and said, why don’t you come work with us. And I was thinking about it and back then I wanted to go abroad. I wanted to work abroad. That was one of my objectives, to work somewhere else. And one of the possibilities I had was Spain because I knew some Spanish. So, I thought about what I can do to really add something interesting to their business. So, I was looking at the Spanish market regarding the state lottery and the regulation and I thought it was a good market to build up a branch of their company. So, we negotiated and I got a very small share of their company. Still, I was feeling like an entrepreneur and built up a branch in Spain which was a big adventure for me. I didn’t have a clue about building up a company. I was just jumping into the cold water as the same in Germany. And it was a lot of fun. I started in 2001. And when I already had some ideas on how to start, we negotiated a budget to build up the branch. the Twin Towers were attacked and so basically everybody was very much afraid of what could happen in the next years. the new economy in Germany was in a big crisis. stock prices fell down. So, basically the consequence of that was that I was in Spain. i had a little office shared in the basement and didn’t have any budget. I had my salary but nothing else. And they said you can stay there for a while. we will go on paying your salary but you have to find your own way. It was kind of frustrating. But it helped me to learn something that later on became more or less mainstream, the lean startup approach. because I was there, we had plans to build up a big platform. because in the lottery, every market is different. There are different products, different regulations. So, basically, I had to build up a new platform. That was my idea. i spend around half a million euros just for the first setup of the platform because I thought I need all the products to be really be able to approach the market and say I’m an online lottery platform. So, I needed all the lotteries and all the services. And of course, it had to be perfect to start with. But when they cut my budget, I was kind of bored. I started at first. I waited and then I thought let’s do something. And I had a great team because I basically hired those people that dropped out all the new economy companies here in Spain because I was in the middle of a crisis. everybody shut down and I was sharing office with a German company that was basically reducing stuff to a minim and later on closed down. And I took the best people of this this team. And then we sat together and said let’s do something on our own with low budget. what we did is we used existing software which is now nowadays, basically the way to go. there’s so much software as a service around. But back then, there wasn’t. What we had was Excel Access which was a database for Microsoft. And what we did was basically build an HTML facade in front and in the back end. We had Excel and access and manual work and we started with one simple product which was a subscription to the basic lottery here in Spain. And it was really successful as a subscription because it was impossible for us to do a real real-time business. or you buy it today and then tonight you take part in the lottery. So, the subscription was. you bought your subscription today and you started next week and that was something we would handle in the back end manually. So, we learned a lot about the customer. We learned a lot about marketing and we generated cash which helped us to then build a step-by-step platform. That was the greatest learning I’ve ever had as an entrepreneur because I understood that if I had the money that was promised, I probably would have failed for sure. because all the years afterwards, I saw so many people with this idea. We have to first build a huge product and then we go and talk to the market. And I saw myself in a lot of companies, successful companies who started like this as well. And then basically it became mainstream with the books Eric Reese and Rice and all the others. So, I was still learning basic skills as a manager, because I had a small share of the company. And then I had to learn another very difficult lesson because of the company in Germany. They did an IPO basically. they realized all their dreams. They built up a company in 2000, went public in 2004 and had both of my colleagues. then had 30 million in cash in their bank account and another 60 million in shares. So, I think