Innoboard: How do you make sure that the appropriate start-ups, with relevance to the SBB AG, are selected? What hard and soft criteria do you use for the assessment?
Manuel Gerres: In the field of screening, we cooperate with partner companies, which specialize in targeted scouting. According to our briefing, they investigate the markets relevant for us and present potential portfolio companies that have relevance to the SBB and SBB customer needs on a monthly basis.
That the idea or the product potentially represents a significant added value for the SBB’s customers and that the company is already established and already has a testable product is important for us here. A market entry should also be completed. Since we want to test the start-up products with our customers very early on, this is necessary for us to test the idea on the market over relatively short routes and to decide on the further course of cooperation or partnership.
What risks may arise if the cooperation does not work?
Basically, there is always a certain risk for us in working with start-ups. We try to keep the risk calculable with different test cycles as well as customer feedback. Since we do not make use of corporate venturing, but focus on cooperation and partnerships, it is also important for us to check what level of financing the start-up has, what expansion plans are in the pipeline, and what the estimated course is over the next two to five years. If the start-up no longer exists for various reasons, we automatically lose a product that, in the best case, the customer already positively responded to. We, therefore, openly communicate this risk and explain to the customers that it is a partnership with a start-up. An open dialogue between the SBB and the start-up is, therefore, very important for both sides. We can often help with our network to provide, for example, business angels or VCs.
How do the entrepreneurship of start-ups and the structures of a traditional company like the SBB AG harmonize?
I think it is important that you pursue a common objective from the outset. If this exists, both “worlds” can often merge smoothly. A corporate company cannot have agile and fast structures of a start-up but instead has benefits such as reach, brand, loyal customer base, and more valuable assets that contribute to the growth of a start-up. Thus, both partners commonly benefit from the success and growth of the idea of cooperation. With this kind of balance, contrary structures become irrelevant.
How do you prevent barriers in a cooperation?
In my experience, it is the targeted dialogue. Open discussion about the aspired goals and schedules and what is conceivable for a common goal. Understanding of the other side is also very important. We invest a lot of time in order to understand, for example, product or business model descriptions of start-ups accordingly for the SBB. These are often highly influenced by VCs with little communicative fit for the day-to-day operations of the railway industry. Through mediation of use-cases and the potential cooperation model, this can be relayed more descriptively. We also explain the structure of SBB more precisely to start-ups, what goals we pursue, and what we do in your day-to-day business to make it more understandable for them.
Currently, the topic of start-ups is very fashionable. Is this hype perhaps overrated? Which topics could surpass the relevance of start-ups in the future?
In general, it is in fact true that the topic of start-ups has gained importance in the media. The corporate world is also becoming significantly more active, and everyone is currently looking for an appropriate model to deal with start-ups. I do not think that the hype is overestimated. From a corporate point of view, it will be becoming increasingly important to find truly sustainable models for working with start-ups and figuring out the real economic benefits therein. I am sure that the relevance of start-ups and the general founding of such will remain high and should continue to be strongly promoted.
Manuel Gerres is Head of Business Development & Start-Up Relations at the SBB. He is responsible for the SBB Start-Up Program and the associated tasks to open up new business areas and products for the SBB with external technology innovation.
Manuel Gerres was previously a partner of Seedlab, based in Berlin. Seedlab specializes in the development of new digital businesses and the building of start-up programs for corporate companies to promote external innovation.