“Don’t fire the founder – unless you absolutely have to”
With his extensive experience in directing and advising international companies such as Bigpoint and MTV, the London entrepreneur Simon Guild will now round out the board of the cross-platform learning system Babbel (Lesson Nine GmbH).
Simon, in a recent interview you said,: “Don’t fire the founder, at least not immediately. Work with him or her.” Which of the three founders would be the most likely to get fired by you?
I don’t like firing founders at all. And Babbel is doing fantastically well so I cannot really imagine why you would want to fire anyone right now. You should only do something like that when things are going seriously wrong because you can be sure the business will lose a year if you do.
If firing the founder is the last choice, what should you be doing first as a new board member?
The way I operate is to get deeply involved in businesses where I am on the board, so building relationships in the company is critical and means working intensively with the founders. I often start by emphasising analysis as a good basis for appropriate decision making. Always treat the causes of the problem rather than the symptoms. In a recent speech I used the example of small children who start to scream irrationally at dinner because the vegetables are touching the meat. The next thing you know, they are screaming because the vegetables aren’t touching the meat. So I asked the audience what to do about irrationality. The right answer came from my wife. You say, “I think you are tired and you need to go to bed.” So you identify the real problem. Unfortunately, an investor often thinks the only thing he can do is shoot the founder because generally he or she is the only person they know well. I like to get to know the whole team. With Babbel, I had a very good feeling about the team from the beginning and that made a big difference. I really liked the founders. They seemed like good people to me. They have a good sense of what they are trying to achieve. The world has some bad people in it and personally I prefer to work with good people!
What other reasons did you have for joining Babbel as a board member?
I believe that Babbel started in the right place with the right team and the right product. It has already started to define how we learn languages today and how we will in the future. And I like the subscription business model. I also have a personal interest in Babbel: my wife is French, we speak French at home. I also speak German and some Spanish. My children are learning these languages too. Now Babbel has got me started on Dutch and Babbel has even made learning this fun - something my Dutch friends find hard to believe! But the challenge that Babbel took and the way it works is, that it focuses on how to keep the experience both entertaining and rewarding. Like playing games, learning a language is about achieving something and about having fun doing it. Learning languages also has the advantage of making you feel better about yourself when you make progress because you are acquiring a real-world skill that will only degrade through a lack of practice. I got something right. I achieved something. I can communicate. I like that.
You once said that as a Board Member you should watch customer and competitor behaviour like a hawk. What do you think about Babbel’s customers and competitors?
When I looked at the competition I noticed that there are a lot of language-learning companies, but none of them have positioned themselves really successfully in the global market - yet. And none of them have really got their marketing right, in my opinion. There is a lot of ‘free’ in this area. In the early years of online games, we emphasised ‘play now for free’. That’s useful to start with, but now that people know games are free, we have to give them other reasons to play. As soon as I see something for free, I start wondering what the catch is. How do these people make money? Are they selling my data to the NSA? I think that we can and should be honest with consumers and say there is a free level and there is a paid level. And the paid level is worth the cost. Babbel has a great product that I believe people are willing to pay for. Babbel’s customers come in many shapes and sizes because there are lots of reasons for people to learn a language and lots of different people wanting to learn. Languages are not going to go away because languages are part of your identity and culture. Speaking a hundred words of English is great for survival; speaking 500 words of Dutch will impress everyone. That’s why Babbel is a universal product.
Simon, you have been and are still involved with a lot of start-ups. What do you think about the German start-up scene?
German start-ups are some of the best I’ve seen in Europe. I may have been lucky, I don’t know, but the German businesses that I am working with now, and have worked with recently, have been very successful. Berlin is obviously an interesting place for start-ups in Germany. I really like the fact that it has become so international in only a few years. And it is still the cheapest capital city in Western Europe which attracts the kinds of young people you need in the early stages of a business. I think it may get harder in the next two or three years: a lot of money has gone into a lot of businesses and a lot of them won’t work. That’s normal, but may not yet have been widely experienced in Berlin. But Babbel is not going to be one of those because it is a genuinely good business.
What are the challenges facing Babbel and your visions for the company in the future?
I think there are some really interesting challenges. Firstly: internationalisation. It is one of the key areas I help with in the companies I am involved in. When I went into Bigpoint, it was a very German business. We made it really international and we made a lot of money doing that. Secondly: differentiation. Babbel is not the only language-learning business in the market, so we need to create clear differentiation. What is Babbel really about? In my experience, a lot of internet start-ups are weak at marketing. It’s a huge generalisation, but most of them are product companies. They come from having a good product idea and they understand customer acquisition but they don’t necessarily understand marketing very well. It’s about positioning the product in the mind of the consumer. That’s essential when you have multiple competitors. The Babbel proposition is simple and clear. The challenge is to position the product in different countries and to give different groups of people slightly different experiences. It is easy to imagine that Germans want to know how things work, so instructions are important, while people in the UK are more intuitive, so ease of use is important. Babbel wants to keep them all interested in learning languages.Berlin,