What needs to happen to move from constant fundraising mode to a 20 million investment? You have to prove that the business idea works. That's exactly what Alexander Henn and Philip Magoulas, founders of the Munich startup, have done. Shore, and were recently able to convince investors such as the Funke Media Group, the Metro Group, and Bayern Kapital.
What does Shore actually do? The Munich-based startup offers digitization solutions for small and local service providers. While industry-specific solutions already exist, Shore's software-as-a-service concept Shore and the associated product diversity, the startup clearly sets itself apart from other providers on the market as a specialist for B2B digitalization solutions.
Perhaps no one knows better than Alexander Henn, founder of Shore, that the path to this point wasn't always straightforward. Back then, he started with Termine24 – now Shore – and repeatedly realized that the chosen path sometimes required some adjustment to lead to success. We spoke with him about the lessons he's learned today.
- Take your time and find the right team!
"At the beginning, everything had to happen very quickly. Therefore, we didn't look for the right team, but instead relied heavily on freelancers who weren't necessarily always very committed to the project."
The logical consequence of this: Instead of relying on numerous freelancers, Shore now relies on a permanent team. And they take the necessary time to find suitable people. The team currently consists of almost 250 employees and plans to continue growing – but only in a very targeted manner, as Alexander emphasizes. The focus is on IT.
But it's not just the team that's crucial, but also the choice of business partner. And for Alexander, who never really wanted a partner on board, it's also a new step:
"I was always the type to start a business on my own. I never sought out colleagues or partners because I believed I was more agile and faster on my own. Once you have partners, you have to make arrangements."
A clear attitude. Until he met Philip Magoulas, a Zalando employee from the very beginning, by chance in Berlin. What Alexander appreciates about Philip: His visionary way of looking at things. His entrepreneurial courage. And his experience in scaling a company from 10 to 1,000 employees without disrupting processes. “Without him, Shore’s rapid growth would have ended in chaos,” Alexander admits quite openly.
What both have in common is the conviction that the digitalization of local services can be the next big thing. And their success clearly proves them right.
“We did everything wrong at the beginning”
- Focus on one idea and don't work on three at once!
"We did everything wrong at the beginning. For example, we initially developed far too much. This required a lot of people and resulted in far too high costs."
The resource-intensive development process cost the Munich-based startup a lot of time and money. But Shore is now starting to see some positive aspects in this – because the company is benefiting from it in the long run:
"Although it took us a little longer to develop our product in the beginning, the test-driven approach with different development levels ultimately paid off for us, as we ended up only having to throw away a few of the things we developed."
Nevertheless, there's a risk of getting lost in too many ideas – as Alexander has seen with other providers on the market. The result: You get stuck in a niche. That this isn't the case with Shore is partly due to its solid product development. But also because the Munich-based startup was lucky enough to find a good entry into the market right away.
- Don't insist on things just because you initially thought about them that way!
"Especially if you're starting a business on your own and don't have much money, you should be prepared to quickly abandon products that don't work. So don't just develop things and hope that everything will turn out well."
At Shore, this meant abandoning the original B2C business model relatively early on and instead focusing solely on the "customer management system for service providers" (B2B). A classic pivot, in other words. Furthermore, the focus is on products that are easiest to market to target audiences:
"We started with online booking. Of course, that already existed before, for example with Booking-Table. But there was no solution that covered all areas. Booking your doctor the same way you book your hairdresser – there was no provider for that yet."
In addition to the appointment booking element, there's also a module for customer management, a web module for creating your own website, one for iPad-based POS systems, and much more. The individual modules can be combined according to customer requirements.
Sending newsletters as easily as sending an SMS
The Munich-based startup's claim: With Shore, you no longer need any other systems to manage yourself digitally. And: Sending a newsletter should ultimately be as easy as sending a text message.
A clear advantage of refocusing your target audience: The number of small businesses like hairdressers, restaurateurs, or nail salons that are often still at the very beginning of digitizing their operations is enormous. And with that, of course, the number of potential leads is also enormous.
- Think strategically and not just about tomorrow!
"Looking back, I should have thought a little more strategically. Not just thinking about how I could make money next year, but also about what the big issues would be in the next five years."
Thinking strategically is probably easier once financing is in place. However, finding suitable investors wasn't always easy for Shore:
"In Germany, you need a significantly higher proof of concept for large investments than, for example, in America. You're only measured by sales and—especially for a software product—receive relatively little trust."
The Munich-based startup has now completed its proof of concept and landed a larger deal a few weeks ago: In the last financing round in summer 2016, Alexander and his team raised a total of €20 million in investment capital. In addition to the Funke Media Group, Bayern Kapital's Wachstumsfon Bayern (Bavarian Growth Fund) is also on board. Alexander has only good things to say about them:
"We have experienced Bayern Kapital as a very fair and pragmatic partner, a real stroke of luck for us. We were always very apprehensive about raising state capital, especially because the whole process is naturally bureaucratic. But now we're happy to have them on board."
- Make your own experiences!
"Despite all the helpful tips you get everywhere in the startup scene, I believe that you can't automatically transfer experiences from others. Instead, you should just do it and try it out."
Accordingly, Alexander does not think much of constant networking and exchange within the startup scene. "When you're building a company, you don't really have any time to network."
“We were able to fly under the radar for a long time”
However, he is quite happy with his company headquarters in Munich, also because he and Shore “unlike Berlin, it was able to fly under the radar for a long time.” In addition, employee turnover in Munich is very low – people enjoy living and working in the Bavarian capital.
On the other hand, Alexander believes this sometimes makes things extremely difficult for startups. For example, when it comes to finding suitable office and residential space:
"We spent over a year looking for suitable office space, which can be a real disaster for a startup. Finding apartments for new employees is also extremely difficult and keeps quite a few people busy in our HR department. Of course, it's a bit easier in other cities."
And what happens next?
"Until now, the money has never lasted very long; we were essentially always in constant fundraising mode. With this latest investment, we have, for the first time, a larger window of opportunity to work with the money and reach break-even on our own."
So, the outlook is good. Shore has also set itself the goal of not remaining a European phenomenon. And indeed, initial successes have already been achieved in the American market. With the fresh investment, these will be expanded even further. Alexander is confident that this could lead to innovative software developments and new opportunities for collaboration.
But Shore doesn't just want to invest in internationalization; it also wants to further expand its offerings. For this, developments don't always have to come from within the company. The idea: a marketplace for other providers.
"We have now built up a large customer base that other providers could also leverage for their products. This will enable Shore to cover topics in the future for which we don't have our own developments. We want to become a kind of marketplace for all areas and products that might interest our customers."
So it will be interesting to see what happens next at Shore. But they certainly won't be flying under the radar from Munich.
