"Startups are important drivers for digitalization"

Startups bring the very speed that large corporations often lack, making them important drivers for digitalization. Startups play a key role for Deutsche Telekom. We spoke about this with Anette Bronder, Director of the Digital Division, and Thomas Kicker, SVP Group Partnering and Business Development, at Deutsche Telekom.

In 2012, Deutsche Telekom opened its incubator hub:raum; it was joined by the TechBoost startup program in 2017. Why do startups play such a major role at Deutsche Telekom?

Thomas Kicker: Startups play a key role for Deutsche Telekom in at least three dimensions: firstly, talents. They give us the opportunity to work with exciting people who don't want to work directly in a large structure. Secondly, technology. Startups often take a completely new, unencumbered approach, enabling them to design new technologies or products that we hadn't thought of. And last but not least: transformation, because our industry is subject to constant change. The "young at mind" mentality and entrepreneurial risk-friendliness are aspects that are important – at certain dosages – to the ongoing transformation of Deutsche Telekom.

Anette Bronder: From the business perspective, speed is the primary factor today. Startups bring the very speed that large corporations often lack, making them important drivers for digitalization. Particularly where growth topics like the IoT and cloud computing are involved, young companies usually have the right nose and a foot in the market first. On the other hand, they lack access to customers, for example, or the possibility to scale their business models. The task we face is to consolidate strengths early on and create synergies. 

Deutsche Telekom is increasingly taking stakes in startups, like the recent investments in Berlin IoT startup relayer and the Israeli firm Axonize. How do options like this make it to the table? 

Anette Bronder: It varies. Some of our startup discoveries come from the hub:raum team. Our colleagues in the global tech hubs – such as Berlin, Tel-Aviv, and San Francisco – keep an eye out for promising business models, especially scalable ones. That's how our partnerships with FlashNet and Ecobins came about. The solutions from these two startups are very interesting for city governments: FlashNet has developed a smart solution to manage the brightness of streetlights as needed. Ecobins supports smart planning in the management of waste separation and the emptying of waste bins. 

Other options are discovered by our investment arm, Deutsche Telekom Capital Partners. Like our stakes in relayr and Axonize. In general, we pursue two goals: organic growth and expansion of our own portfolio.

Thomas Kicker: By the way, as a major telco, we're also an attractive strategic partner for the startups. We offer the best connectivity, technological expertise, some 160 million customers worldwide, distribution capacity, and a trustworthy brand. 

Startups are associated with hip co-working spaces and young, somewhat nerdy founders from urban centers. SMEs, in contrast, are often connected with rural solitude or traditional crafts. How does that fit together, Mr. Kicker?

Thomas Kicker: Some of these stereotypes are true, to be sure. But there are also very conservative startups and very hip SMEs, as well as hidden champions that might have their headquarters out in the countryside, but can keep pace with any Silicon Valley startup when it comes to culture and dynamism. The most important factors today are forward-looking values like risk, dynamism, diversity, authenticity, and a solid feel for business. A question of the logic and the problem they want to solve. 

In one sentence: What can startups learn from us big guns? 

Anette Bronder: Perseverance and end-to-end (E2E) experience with the establishment of business segments.

Thomas Kicker: The responsibility to think big – in the sense of scalability – and, of course, our market experience is very important for company founders. 

What do Deutsche Telekom and T-Systems learn from them? 

Thomas Kicker: Not taking ourselves too seriously and taking risks now and again. Not worrying about covering every single eventuality. In short: just doing it. 

Anette Bronder: … and the talent to just do it. In terms of process simplicity.

Mr. Kicker, as head of partner management, I'm sure you keep track of all the hot topics. What are the hottest solutions and startups on the market right now? 

Thomas Kicker: Tough question. The biggest hype is probably on AI and blockchain-based solutions right now. Of course, you have to look beyond the buzzwords and ask questions: how strong is the team? How far along is the market and the technology itself? What about the network and the investors? How innovative is the idea? "HelloFresh" immediately comes to mind. This Berlin company develops kitchen recipes and puts together packages of groceries for cooking them directly – a truly innovative idea for our fast-moving society. HelloFresh scored 268 million euros from its IPO in November 2017. or take Magic Leap, a mixed reality startup from Florida, which doesn't even have a product yet, but is already worth more than six billion dollars and recently secured 461 million dollars in new funding. 

Ms. Bronder, what startup solutions are particularly relevant for T-Systems business customers right now? 

Anette Bronder: IoT solutions, without a doubt. The market moves quickly – whether mobility, health, or manufacturing. And each industry sector has its own specific requirements. The elevator industry needs robust IoT hardware that can go without battery changes for many years and guarantees network coverage even deep inside building interiors. In contrast, the automotive and logistics industries need custom-tailored hardware for dedicated use cases. Cloud requirements also vary by sector.  

When we partner with startups, we aim to meet these requirements with as little adaptation as possible and, at the same time, turn up scalability to the max. Axonize develops based on Azure IoT components, for example, a kind of preconfiguration that we can use directly, to implement customer projects faster. 

When it comes to cloud computing and IoT, it's often difficult to separate the two cleanly. How do you work internally and together with startups?

Anette Bronder: Whether IoT or the cloud – when an exciting partner pops up at one place in the Group, we work hand in hand to capture the maximum benefit for our customers. The logistics solution from Roambee, for example, is perfect for SMEs and corporate customers alike and we feature it in both of our portfolios. We present one face externally, however, and have created a single landing page for all of the Group's IoT products. We take the same approach with our cloud portal. 

Thomas Kicker: It's important that there is a lead, cross-department of course, ideally even department-independent. Particularly for interdisciplinary topics like the smart city, where many different technical components come together, which means a large number of specialist departments is involved, our task is to keep track of the big picture and get the best people together.

If I offered you a million in funding to found a startup right now, which problem would you try to solve with modern technology? 

Anette Bronder: My passion is sports. I'd probably create a health app, to make sure the teams are in top shape and at their maximum performance before important tournaments.

Thomas Kicker: I would make it my mission to reduce e-mail traffic by 90 percent and develop collaboration software that is as simple as Whatsapp and as secure as our Telekom cloud. And, of course, a world peace app would be great, too. ;-)