From inception to exit: the LeanIX success story
Our GP Johann interviews our LP & Capnamic Managing Partner Jörg Binnbrücker on his journey investing in LeanIX at Day 0 and his involvement all the way through to company's successful exit to SAP.
Jörg, thanks for taking the time for this interview. Let’s get right into it. As the founder Andre Christ’s tennis coach during his younger years, what early character traits did you observe that you believe contributed significantly to his success in building LeanIX?
I would say it was 4 things. Firstly, he was incredibly disciplined. So he really was more accurate than the other guys on the court. Secondly, he was always eager to learn and to adopt different systems and strategic options in his game. Third, he was very competitive and had this drive to win. At the same time, he was a gracious loser. He was very fair, but at his core he always wanted to win. And, finally, he was very coachable. He was a great listener.
Fast forward to today. Who's the better tennis player?
I was the better tennis player in the past, but he's way younger, and I'm not playing anymore. He's still active. So I'm not playing against him today. If I did, it would be a disaster. So today he's definitely the better tennis player.
Were you actively involved when Andre was exploring various business ideas? What specific insight or guidance did you offer during this ideation phase, and what aspects of the LeanIX concept intrigued you?
I was definitely not actively involved in the LeanIX ideation. At the time, Andre was completing an internship at a VC before he started his professional career at DHL. This helped him to learn what is important to investors, and what needs to be in the business case and how to pitch it. I helped him significantly with that.
After that he started his career as a management consultant, and it was out of his consulting experience that he got the idea that architecture management was outdated and not sufficiently digitized. It was out of an experience with customers that the idea of LeanIX was born.
He pitched it to me and I told him I had some insights because I had seen a competitor from the past called Alfabet. Today that company is one part of Software AG. And I told them, okay, this isn’t a big market, because at that time the architecture management was a small use case. But Andre convinced me that this would change over time, because it was the perfect timing for a new tool which would help to understand the landscape of software in enterprise. And so they started the business. Andre and team were very close to the first customers. What was really convincing was the nature of the relationship to the customers and the expansion within these customers in early days.
The ICP was not necessarily the clearest, because there were some small customers as well as some enterprise customers. So at the time we invested it was not clear that this would be an enterprise sale. But the customer feedback was already very positive.
Reflecting on the initial stages of LeanIX’ss development, what do you think were your key contributions during the early stages of the company?
So when we invested, there were only four people in the business. Two founders and two developers. That was it. From day one we helped to shape the organization. The only bad thing was they took one of my guys from from Capnamic as COO! This was pretty early on, but it helped them scale up. We helped with the hiring and then sparring on the development of the ICP and product market fit. That was something we really engaged in and brought all our experience from our other companies. I think that was decisive.
Identifying true product market fit is often a pivotal moment. How did you and the team recognize that LeanIX had achieved this fit?
As I said earlier, it was the nature of the customer relationships. It was clear from customers that there was a need to have a tool which was more intelligent and a UX that wide range of personas could work with. Not just software guys, but also the C-level.
I think being incredibly close to customers was the key. And that the product was understood not just by the software architects, but by the CIO, and, in some cases, even by the CEO. Working on the dashboard early and making it meaningful to a wide range of user personas is what gave us good product market fit.
How relevant were the follow-on VCs and how did the board work change over time?
Insight was really helpful in helping the business expand to the US. They helped with the expansion, internationalisation and professionalization of the company. But all the follow-on investors did a great job.
We had bi-weekly calls within the board from early on in the lifecycle of the company. We had six board meetings a year, two in the US, two in Bonn and two hybrid.
For me, I had ad-hoc calls all the time with Andre, so sometimes on a daily basis, sometimes every couple of days. We spoke every time there was a question. We were just sparring the question and exchanging. So there was something very special, because I had such a close relationship to him over the lifecycle of the company. We don't do that in every case.
Coming back to the board, we were always very well prepared. The better the board is prepared, the more this translates into a direct outcome during board meetings. LeanIX was probably the best case in my career of the board working so well together.
What did you think contributed most to the excellent Board work? Was it the preparation of founder, the preparation of the Board members? Was it the overall setup?
I would say the preparation of the management team to get the best out of all the investors and their experience and knowledge. Concrete questions, concrete deep dives, the asks for preparation and answers ahead of the meeting.
What are the top 3 key learnings you gained from the entire process of selling LeanIX to SAP?
The first and overall learning is that it’s really about the team, but not just how the team is preparing for a sale. It's about the development of the team over time. So when Andre started, this was his first venture. He had no experience in building a company. But he was really eager to learn, and I don't see that that often in teams. Andre was somebody who was listening and executing on feedback directly. So we would chat, I would have some ideas, and he just executed the ideas and tested it. I wasn’t always right, but he tested everything and was listening deeply to all the investors and the experiences they had. So that was really key. So what I look for in teams today is the willingness to learn and to adapt and to understand different views on any given topic.
The second one is expansion. It’s hard to go to the US. We tried it with three different managers initially, and it really only started working when one of the founders moved to the US and stayed there for a year at least.
The third one is: don't think you are ever prepared for an exit. There's tons of work and you have to start early in order to be ready. If you start from zero, you have no chance with exiting to the a company like SAP. LeanIX was always great with documentation and high quality data rooms. But the company was not completely ready, we still had a lot of work to do. So work on that from day one to be ready whenever you have the chance to sell.
I would love to double click on the willingness to learn. How do you balance this willingness to learn and coachability of founders compared to founders who think that they have figured it out and have the confidence to be bold?
You have to be confident. You have to be bold. But you also have to be open. Open to discussing things, testing things. At the end of the day I need a founder who is really bold enough to do his thing. It has to be balanced. This is the hardest part of diligence, understanding if the founder is really ready to do it, and open enough to have a second opinion on some thoughts. I still make mistakes in this area.
I think this bleeds into my next question. I think the relationship that you had with Andre was unique, because you knew him from childhood and you had a certain level of intimacy with him. That isn’t usually present with most founders you work with. How did you keep this level of intimacy? And, second, what's your advice on building this founder-investor relationship and intimacy for people that you haven't played tennis with in the past?
In the end, Andre was the only one I really had the chance to give tennis lessons to! So this is an outlier. For others it’s about engaging early, understanding all aspects of the founder’s life and career and having the same goal setting bias. After that it’s about having regular exchanges, and being very transparent about everything from day one. And you don't get to be friendly with everybody. What matters is the loyalty and the transparency in a relationship. And then it could be really, really professional and intimacy is not so important with respect to one’s private life, but on the professional part. It has to be like you trust the guy on the other side 100%. You never fake it. It's never theater. It's always reality. Intimacy develops in the tough times. When the founder sees that I'm on their side, and I'm not against anything. I'm just trying to help. We tried to start early with LeanIX in due diligence, for example, by bringing them customers. We were also very critical on some points. So the way of conducting the relationship is being honest and open, but being tough on them, and that's what best friends have to do. And that's what we try to do in our role. But it's not so easy. It has to be somehow in your DNA, you know. But it works out pretty well if you if you start early and they really believe in you.
Having talked to both of Andre and you, I noticed that you have very different characters. How did these different characters interact with each other? Did this lead to significant problems or challenges along the journey?
I would say we are different characters. We have different DNA. We are different people absolutely. But we have the same values. 100%, the same values. And that's what it's all about. That provides the basis for a relationship. I don't see that as a problem or as a challenge.
People probably see my character differently than it really is. I'm actually very close to Andre's character in many respects. On some points I'm different. I'm louder. I'm more outspoken. But he's salesy too. In a different way, you know, everybody does it differently. Most importantly, our values were aligned. And that didn’t change over time. It was the same from day one.
How did the entire journey with Andre and LeanIX change your investment philosophy and the way you approach venture investing, going forward?
In many aspects. So regarding the product, I was really fighting myself. I asked myself if this really could be a case for us as a venture firm because I had some experience with earlier competitors in the market. So I didn't understand at first that the product would change and enhance the market. So you really need to understand where the market is, what the difference in the product is and get deeper insights.
On the founder side, it's really important that the founders I work with don’t have a strong a vision about themselves already, because they need to change over time. They need to adapt. They need to be a manager on one day, but need to be founder on the first day. I need flexible people. So I think differently today about the founder’s character and on market and product. LeanIX helped me with that because of this success and because of the time I spent with Andre and what I learned from him. How he developed and what he did to develop. You know he did a lot of coaching with a lot of different people and you know that approach really changed my mindset too. So I think it was really helpful to me as an investor, to have the the chance to work with him.
Do you have a coach as well?
Absolutely. I change coaches from time to time but I have coaches in different portions of my life: business, sports, psychological.
Thank you, Jörg for your time!
*This interview was edited lightly for clarity.