"Startups generally don't die of thirst, they drown"

Start-ups want to serve all customers. Christoph Rößner from Laserhub explains why that's nonsense.

Christoph Rößner founded the company Laserhub. What sounds like a technology start-up with lasers is actually a platform that brings together buyers and suppliers in the metal and sheet metal sector. Customers can order metal parts via Laserhub, and the start-up automatically searches for the best supplier, which should relieve buyers and salespeople on both sides. The start-up now employs more than 100 people and has set its sights on German "hidden champions" such as Trumpf as customers. Here, the founder reveals why you shouldn't chase after all potential customers.

Mr. Rößner, with Laserhub you mediate between suppliers and buyers. Is there still a need for that in the 21st century?

The status quo is sobering. Most of the time, a company needs a certain metal part and writes to a handful of trusted suppliers. They then painstakingly determine a price and respond after a day, sometimes three or a week. The quote that the suppliers come up with takes them two to three hours and in the end, the chance of getting the order is maybe ten percent. The company that needs the parts has to wait a long time. We're changing that with an automated, digital platform.

How does Laserhub's platform work?

Companies can specify what they need on the platform and we price it using an algorithm in a few seconds. The buyer then sees what it costs and a supplier gets the order, which they have to accept within a short timeframe or the next best supplier will get it. This way the supplier has a secure job, the company saves time and effort and we have a healthy margin.

Who were your customers in the beginning?

They were extremely wide-ranging. In the beginning, every start-up wants as many customers as possible and we were no different. We tried to take every order, but we realized after nine months that it didn't make sense at all.

What did you do differently?

We first gathered all the facts. How big are the orders? Who are the customers? What are the patterns? We pulled in as many data points as we could. For a start-up as young as ours, that means a lot of people hitting Ctrl+C and Ctrl+V in Excel spreadsheets a lot, but it's been worth every second. But that's only half the work.

What's the other half?

We asked our most important customers to talk to us and asked them lots of questions. Through this, we realized there were more data points that matched. We looked for clusters. And that can be quite simple, partly with questions like: Where is the best performance? Who is actually responsible for purchasing metal parts? Is the buyer over 50? Where does he break off the process and for what reason? These conversations led to commonalities and that then resulted in a target segment for us.

Which one is that?

Basically, we have two customer groups: small medium-sized companies, which are usually referred to as hidden champions, and large corporates that need prototypes quickly. We already had that in our gut, but it's one thing to have that in your gut and quite another to know it. It changes the whole demeanor, you go into negotiations with a broader chest, sales knows much better how to acquire. We have geared everything towards this and are concentrating on it as a priority. We continue to serve other customers who are not such a good fit via the platform, but we don't put any more energy into it.

Aren't you letting business slip through your fingers with that?

You can't do everything. Most startups have that problem. I have a saying: start-ups don't usually die of thirst, they drown. That is, they try to satisfy all customers and take every order. In doing so, they totally lose sight of the data that might show that they make much less revenue, margin or profit with certain customers. We had to learn that too, and in the end, that's the best thing we ever did. That doesn't mean you can't grow the business from there.

What do you mean?

We notice that we get to smaller companies and suppliers through the hidden champions, so that radiates in a way. That's how we get new orders and also the corporates who are buying from our current customers are taking notice of us. That's what we're looking at next now, but the main target group remains the hidden champions, we simply have a "market fit" for that and you have to take advantage of that.

When is the right time to narrow down the target group in this way?

Exactly at the threshold between "first mover" and "mainstream". This means that the product should already be in place, as should the processes, and it is probably precisely in this phase that the first hiccups occur. Not all processes suddenly fit all customers and you have to look at where you want to go, i.e. who is actually the customer. This is difficult for many start-ups, but it is perhaps the most important exercise.

Thank you very much for the interview.

Personal details: Christoph B. Rößner is co-founder and member of the management board of Laserhub GmbH. He studied Industrial Engineering at Pforzheim University of Applied Sciences and completed his MBA at Steinbeis University Berlin. His previous positions include Kurt Prinzing GmbH & Co. KG, the companies ABB, Eight and TTS Tooltechnic Systems. He is responsible for sales and marketing at Laserhub.