The Munich startup CQSE helps companies make their software future-proof for the ongoing digitalization of the economy. The four founders discovered a trend in 2009: More and more companies, both large and small, are realizing that their software is no longer up-to-date. They are therefore turning to the expertise of the expanding startup. How is CQSE doing? And what management tips does the CEO have for other fast-growing startups?
When companies change their software and want to incorporate new features, there's a risk that future versions of the software will no longer function as before. This presents companies with various challenges.
Understand software and make it future-proof instead of annoying or fatal consequences
It's annoying, for example, when an insurance company updates its software and suddenly can no longer calculate the correct premium. Or when an automobile manufacturer wants to change its braking control system and, in the worst case, the car no longer brakes. These examples span all industries, as software plays a crucial role almost everywhere and, like a machine, requires regular maintenance.
To understand and maintain their own software, many companies proactively approach CQSE. The name says it all. CQSE stands for 'continuous quality in software engineering,' and that's exactly what the Munich-based company offers with the help of its analytical tools and expert perspective. Dr. Martin Felkas, Dr. Elmar Jürgens, Dr. Benjamin Hummel, and Dr. Florian Deißenböck jointly founded the company in 2011.
Smart look by experts
We have spoken with the managing partner Dr. Deißenböck and asked him how his company works. Two things are important: In evaluating the software system's future viability, both analytical tools, keyword "algorithms," are used. But also manual analysis, i.e., what he calls the expert's in-depth look. He explains:
"The combination is important because algorithms alone cannot comprehensively answer customers' questions. A key factor for the future viability of a software system is: how well is it documented? In other words, how well can the next user understand what the system is doing. The algorithm can't decide that. I need a human for that. But we don't touch our customers' software systems ourselves. We don't fix defects ourselves, but rather make concrete suggestions for improvement—and we do so continuously."
Ultimately, objectivity counts when considering things. Even when looking at things from a sly perspective. Strikingly, the CQSE team website boasts more doctorates than ever before outside of the healthcare sector. This is no coincidence, as the company is a spin-off of the Technical University of Munich, founded from the computer science department of Professor Broy was founded by doctoral students.
A special recruiting process
But it didn't end there. Dr. Deißenböck explains:
"We've structured our recruiting process so that, in addition to people coming directly from their master's degree, we consistently 'pick up' excellent experts from the field who have completed their doctorates in the field. This allows us to concentrate this in-depth know-how in analyzing such issues within our company. In fact, it's the case—and I'm very proud of this—that we have a concentrated concentration of expertise, which is also perceived as such. And not only by our clients, but also in the scientific community."
This special expertise is a unique selling point of the company — or how does the founder himself assess the competition?
"With this sharp focus on the future viability of software systems, we are actually the only ones in Germany so far. Of course, that doesn't mean that the major management consultants don't offer this. But a company that is explicitly focused on this issue—there's no other in Germany."
The company currently has 30 employees, and the number is growing. CQSE has experienced growth of 30% to 40% in recent years. Gate startup center The startup was therefore in the best possible place until now – where else can you grow from 40 to 400 square meters? The forecasts remain optimal, so the startup is now looking for a new home. At the end of 2018, the company will move into its own office building in Freiham, in western Munich.
Financing through bootstrapping
The startup has been self-financed so far. Aside from two research funding projects, there has been no external funding. Since CQSE initially started as a pure consulting business, the founders were able to bootstrap relatively easily. The research projects funded by the German Federal Ministry of Education and Research (BMBF) provided freedom. Furthermore, the projects made it possible to create a solid foundation for 'toolmaking,' i.e., the development of methods and algorithms for better software quality. Dr. Deißenböck says:
"At the same time, we haven't experienced exponential growth; rather, we've grown organically. Of course, we could have pursued completely different things with outside funding. We consciously decided against that. We always wanted to be our own bosses and intend to remain so in the future."
The company founder describes the most challenging issue currently as finding a good match between the order book and the number of available employees, or rather, recruiting good employees. This is despite CQSE having two successful personnel pipelines: the early involvement of TU students, including the supervision of their final theses, and the strong networking in the academic environment with doctoral candidates.
Tips for fast-growing companies
We wanted to know: Is there a mistake from which the founders learned an incredible amount?
"Hm."
Thoughtful silence.
“It’s not a good sign if you’re not so aware of the mistakes.”
But then he spills the beans:
"A very important issue for us is the equal treatment of all employees. Looking back, I found the salary negotiations to be very difficult at a certain point. Therefore, some time ago, we introduced a very transparent salary model that is understandable for all employees. This eliminates the need to discuss things with every single applicant or existing employee. But the implementation of the new model was lengthy because we had to reconcile the existing contracts."
The CEO therefore advises other growing companies to consider how they want to structure their compensation model very early on. This ensures everyone feels comfortable and minimizes time spent on individual discussions. This allows the company more time for its core business.
Happy or not? – “Absolute recipe for success”
Open feedback from its own employees is also important for CSQE. For this reason, quarterly employee reviews have proven to be effective. Initially introduced more or less by accident, the founder would continue to do so.
"Once a quarter, we get employees to consider whether they're happy or not. And they're supposed to reliably present the points where they're unhappy. I would call that an absolute recipe for success."
“Don’t let it drive you crazy”
When asked about the best advice for other founders, Dr. Deißenböck answers:
"My primary advice would be not to let all the hustle and bustle surrounding startups and all the consulting services out there and all the things you're supposed to do drive you crazy. Instead, focus on what you're really good at and whether you can find a client for that. And if you can answer that with 'yes,' then you can move forward with complete peace of mind."
