Startup founders and NextGens (of established family businesses) face a very different set of challenges. While startup founders have to focus on the very basics of their company, this may not apply to the NextGens. Upon taking over the established business however, NextGens can instead encounter a set of traditions and cultures that seemingly do not allow for much room for change. Whereas Startup founders are generally free to drive their businesses in the direction they so wish. The two also have commonalities such as respect for entrepreneurship and a drive for growth. In this episode, we try to look at the similarities and contracts between the two situations.
The conversation explores how connections between startups and governments are formed, how the two sides can maximise working with each other and handle topics such as confidentiality, procurement and administrative issues together.
In this episode, we will delve deeper into startup investing with regard to the risks and rewards that might come from it.
The second episode of our EMEA Startup Podcast Series ‘Startups of today for the impact of tomorrow' focuses on the way startups and large companies collaborate.
The first episode of our EMEA Startup Podcast Series ‘Startups of today for the impact of tomorrow' focuses on the way startups are supported by accelerators. Abhijeet Malik, EMEA Startup Network Driver, Senior Manager, PwC Belgium, is joined by Hanna Asmussen, Founder and CEO of Localyze and Magali Roy Bentley,...
References to ""we"" or ""our"" are used interchangeably to convey the perspective of a collective of people or a broader societal context. This language does not refer to, or imply, the perspective of PwC. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.PwC.com/structure for further details
Abhijeet: Hi everyone and welcome to our latest episode of Startups of Today for the Impact of Tomorrow. This is a special episode. This is sad to say, the last of our series. And, this time we wanted to do something different and special. We, as PwC are very lucky that we not only work with startups and other players in the entrepreneurial ecosystem. We also work with established family businesses, which some people might consider our players in the startup ecosystem, given the amount of entrepreneurship they have and the investments they make in startups today. So using our relations with both sectors, I'm very happy to announce that we have two guests as usual for a very contrasting discussion around entrepreneurship from the perspective of a startup. But also from the perspective of entrepreneurship in an established family business. So without further ado, let me introduce my guests. So I'll start with Pedro. Pedro, you are the co-founder of MyCareForce. So please, would you like to introduce yourself? And more importantly, would you like to tell our audiences why you found the company?
Pedro: Yeah. Hi, everyone. So as Abhijeet was saying, I'm Pedro, I'm co-founder and CEO of MyCareForce. And we are a marketplace platform that connects healthcare professionals to shifts. Basically, we optimise the whole staffing process from sourcing, going through the vetting, and then the payment processing. And well, we started because we identified this flaw in the market and we knew we could solve it through leveraging technology.
Abhijeet: Thanks, Pedro. My other guest is Lari. Lari, welcome to the show. Thanks for being with us. And, you come from an established family business But you also have started your own business. Lari, please do tell our audiences about yourself and your journey.
Lari: I'm a third generation in our family business called Ensto Invest, which is a 65 year old electricity distribution product manufacturer. I'm also an entrepreneur on sports and wellness. It's called Erimover. As third generation, we came abroad on board in 2018. We now (in 2023) have five years of our ownership behind us for the third generation and going forward.
Abhijeet: Thank you, Lari. We frequently refer to the next generation in established family businesses as NextGen. So during this podcast episode, if we refer to NextGen, that's what we are referring to. Just for the sake of (clarity) for our viewers.
But Lari, maybe I'll start with the first question, which is around entrepreneurship, the spirit of entrepreneurship. Let me start with you. A lot of people might assume that entrepreneurship means you have to start your own company. Is that something that you see, maybe from your story but also other NextGen that you have met from established family businesses? How do people see that entrepreneurship, especially when you've grown up with an established family business around you?
Lari: I think it's mostly so that you need to be entrepreneurial. It doesn't mean straight that if you are an owner of an established family business that you have entrepreneurial skills or attitude. Because I think that's mostly what you need to establish a business. In (an) established businesses as family businesses are, normally, it's not that hectic that entrepreneurship is. For timelining, you can have a one week time in a startup to get your funding straight. And then you have a little bit of a lazy family business in the sense that decisions can be made in a longer perspective and it takes a longer time. So, I think that entrepreneurship is something that in our, for example, we have two entrepreneurs in our eight owners or the third generation owners today. Hopefully, (some) incoming new ones. But mostly that doesn't mean that if you get your NextGen and you're in your family business, it doesn't mean that you're an entrepreneur. I see myself as an owner and entrepreneur through my own ventures.
Abhijeet: Great. Thanks for that. Pedro, you have founded a company. In fact, you founded a few. My big question is, do you see a difference in people such as myself? I've not founded a company. I've only worked for other companies. People such as yourself who have founded companies. Is there (what) someone would call a difference in people who have the entrepreneurial spirit versus people who don't?
Pedro: Yeah, I think so. Because I mean entrepreneurs, I think we are, as I like to say, good generally. We are not specialists in a specific area. We have to wear multiple hats during at least the first stages of the startup. We need to know a bit of the marketing operations like managing people, HR. So you have to be pretty well rounded. And, I guess that's one of the main differences when we compare with people that had corporate careers or followed a different path.
Abhijeet: Thanks. Lari, you come from an established family business and you want to found a new business.
What would you say would be the easy part and what would you say would be the challenge when you are NextGen?
Lari: I think the main thing is that we have the responsibility for the established business. Then if we want to do our own ventures, how do we manage this? Because they will somehow mix up in that sense in every scenario that I have seen, somehow. But of course, the funding and so on, it might be easier to acquire through the family business and the background. But as I said earlier it doesn't mean that you are an entrepreneur or you have the entrepreneur skills that are needed for the entrepreneurial route. We see a lot more of this. I just need to have my own venture type of businesses through the family business NextGen. Which is also a good thing. But sometimes you should also know that you don't have the skills needed for that. Please focus on the family business or whatever path is better. So the responsibility for the family business is one and then you have the responsibility that you need to choose your own path which you want to take. I have decided to go on the entrepreneurial way, which has not been so easy because we have in our family business very strict measurements for the investments and we don't invest in our owners’ own ventures.
Abhijeet: What would you say, Lari? I'm sure you know of other family businesses NextGen and even people who've tried to set up their own ventures. If some of them don't succeed, what would be the key reasons for failure in those cases?
Lari: I think the attitude in the end is when you're born into a family business in the next generation. It's not a bad thing. You might have it a little bit easier. You don't have the entrepreneurial (attitude). I must do things, I must accomplish something. I think that sometimes you can fail very fast if you have the wrong attitude towards the entrepreneurial (venture) that it's easy if I have a lot of money and I can just build a business. But it's not just the money, it's the idea, it's the networks, it's everything involved. So believing that the entrepreneurial way is as easy as the family business being a NextGen. I think I have seen many failures on that.
Abhijeet: Okay. And, talking of failures, Pedro, from your personal experience or the people that you've worked with or interacted with, what's the appetite for failure amongst founders? People who are very entrepreneurial in your opinion?
Pedro: Yeah. I mean, for founders, I guess you are used to failing more often than not. And, I guess that's part of the game and part of the discovery. Lari was saying that you fail in NextGen companies when you're not good at management or the funding, etc. But at startups, we are testing a lot of things and we are trying to discover what customers want. So we are trying to discover. We are doing interviews. Understanding what they need in their daily lives. How will our product make the difference? So you are always failing because you are always testing dozens of hypotheses every day or every week. And, when you find the one that works, it's the one you have to pursue. That's when you know you have a startup that will be here for a lot of years.
Abhijeet: Let's say you have an idea and you want to found a business on that. As a founder, when you see the idea failing for example, how important do you feel is it to stick to the idea and stay loyal to it? And, how important it is to learn from the failure and actually perhaps move in a different direction.
Pedro: This is not my sentence, but everyone said, fall in love with the solution, not the idea. So if you want to solve a problem. And, we all have a mission, we have a mission that you want to achieve. But the path is not clear at this stage. I don't want to say it doesn't matter, but having the means to achieve your ‘the end’ is not the most important thing. The most important thing is actually solving and delivering a product that people actually like and actually makes a difference.
Abhijeet: That brings me to another important aspect of entrepreneurship (that) is, Why start up something new as a business? What would be the potential reason? I'm going to go back to you, Lari, on this first. Why do you think that NextGen sometimes starts a new business? Is it really because they want to have something of their own? Is it something that they want to use to bring in new innovation to existing businesses? Is this for social impact? They want to make a legacy, make a change, solve an important societal problem? In your opinion, what would be the key drivers for NextGen?
Lari: I think if we see the studies on this, I think the main reason is that they want to build something of their own. They want to be seen as creators of something of their own because we are normally seen as “you got it so easy, you didn't need to do nothing” and the money is pouring from the walls. The idea is that you want to build something (of your) own and create on top of that. That's the passion that drives. And, you can decide that you want to give that to the family business, the passion, or do you want to give that for your own ventures or mix them up somehow as I have done. Because normally in family businesses, it can be so that many of them want to go to a very operative level as an owner. And that sometimes you don't have that opportunity in a bigger established business. You need to leave the operative leaders to lead the business. So you have some time to do your own ventures and not focus so much on the family business. I think that's also one route why they decide to build their own. But I think for myself, I just wanted to do something good also on my behalf. I was always bullied in sports. So that's why I wanted to have an opportunity to help other people achieve their goals in sports.
Abhijeet: Thanks for that, Lari.
And, so Pedro, a similar question. Why do founders found new companies rather than maybe join existing ones? Is that having something of their own, solving an important problem which exists either in business or in society? What is the trade off? Or, creating something new? What would be your opinion as the key driver?
Pedro: I think it's the thrill of building something new. Something from scratch and having that impact in society. Times are always changing and evolving. Now we talk a lot about AI. Every founder is trying to introduce AI in their businesses. Personally, I like real world problems that I like to solve. And that's what we are solving with our company. Sometimes I have friends that say, look, I just wanted to have my own business to have loads of free time. I don't want to say that (like) this, I don't want to spoil it but that's not true. When you're starting your own business, you have to be completely devoted to it. You have to motivate yourself. To be resilient. I think it's the journey of creating something new. The challenges that you face every day. You don't have one day like the other. So that's that roller coaster that you go through. And all the learnings. I always say that as founders, we learn ten years or we grow ten years in two years. And that challenge is what keeps me going.
Effect of new technology and societal issues on entrepreneurship
Abhijeet: Great. I'm really interested to hear a few of the contrasting points from the two of you between the NextGen and the founder experience. But at the same time, there are a few similarities as well, which is quite interesting for me. But moving on, actually, a perfect segway onto the next topic that I wanted to discuss was a new technology, a new disruption and there are new topics which come in our societies. Where we are today, we were discussing very different things 10/20 years ago. I would like to take that as (a topic), does that affect, in terms of starting new ventures and entrepreneurship on both sides? Or, is that something that you have to be very mindful of? Perhaps you're starting a venture just to sort out the challenges that new technology and other things bring forth.
This time I'm going to start with you, Pedro. What do entrepreneurs think, founders think about new technology, about new societal issues? Is that something that really plays in their mind or are they very much focused on their initial idea?
Pedro: No, I don't think so. As a founder, you have to be open minded. You have to as I was saying before, you are trying to understand what the market wants, what customers want. You have to be aware of what's happening around you. What other ventures are starting. What other founders are doing. So that you can incorporate new technology, if that makes sense, in your business. Because as a startup, you have to be with the latest technology, the latest trends. So of course, you have to understand what's happening around you. And that's actually an opportunity, as I was also saying, the journey and the tracking of new things. No day like the other. I think that new things that come up are like the gasoline that makes us continue and build new ventures, new things and innovating.
Abhijeet: Great. And Lari, would you see new technology and opportunity, a headache to manage? How do you see it?
Lari: I think I have the entrepreneurial spirit. In that sense that I love when things are progressing, going forward. Sometimes in family businesses, we type to be the slowly moving or (slowly) changing. But then when the world changes as fast as it is changing right now, I think you need to be interested. You need to be there to actually understand what's happening around you because otherwise you don't have the business anymore. If you don't do so. I love new technology. But it needs to be a mixture of customer service and new technologies. Because I think in some cases we lose the touch of the service that many need. That's something that I'm myself, I want to understand the new technologies and be involved in that. But I also want to make sure that we have, for example, customer services in the future also. Because I think that in the end, we are here for each other as people. Technology is just helping us through and making things easier. But we don't lose ourselves in technology. That's something that interests me also because everybody is talking about it. But then we're losing the grip of the service.
Abhijeet: Would you say as a NextGen who is a successful founder of a new venture, do you think that you are in a better position, perhaps, to have the new technology but be able to integrate it into existing businesses? And also keep the good parts of what's kept the business successful for a very long time?
Compared to what would be your advice for other NextGen who are not (far ahead) with their ventures? How could they bring in new technology and new ideas into existing businesses?
Lari: I think innovation needs to be constant. It doesn't mean if it's a family business or a new venture or any venture in that sense. You need to have innovation all the time. You need to see what's happening. You need to put together the new with the existing one. There's no easy way to say how it's done. But I see just opportunities. I would like to be a little bit faster also on the family business side. But then sometimes the breaks are coming and then I need to go to my own venture. And, I can do it maybe faster here and try and fail and then do it again if it doesn't work. I think that's exciting from my perspective. Because of course I need to involve nine others in the family business so that it's not just my business alone.
Abhijeet: Sure. That brings me to one important point I wanted to discuss with the two of you, and that's the concept of legacy. So I'll start with you, Pedro. Someone had said to me once that established family businesses were startups just a few generations ago, right. They've just managed the succession quite well. So as a founder, do you think of legacy? In your opinion, from your journey, but also the people that you've met along the way, are most founders interested in solving the problem and moving on to the next problem? Moving from one venture to another? Or, (are) a lot of them also thinking about the legacy they will leave behind in the company they have founded or the companies moving and becoming more long term?
Pedro: So I think there are two completely different profiles. So the first one is the founder that is a self starter. That's trying to create new things. And that founder, that profile (who) is not prepared to be in a company for 10-15 years and then pass it to the next generation. Because this founder has a search profile. He's trying to find the product market fit. And, when he finds it, it's not interesting anymore. He has to be a manager rather than this crazy founder trying to convince the world that his idea is great. And that's why I think it's completely different. So what usually happens and also venture capitalists (VCs) and everyone that's investing, what they're looking for is that type of founder that is finding the product market fit. When they find the product market fit, they scale it. And, when they scale it, they will probably substitute the CEO because their skills are not perfect for that time. It's a different profile to manage a 200-250 people company than the ones that manage a 70 people company.
Abhijeet: Okay thanks. Lari then speaks from the experience of, as you said, some NextGen want to have their own story. They want to have their own venture. But legacy is important on both sides for them. For perhaps the established family business and continuing that for the next generation. But also perhaps their own venture. How would you say they balance the two, maybe from your own journey because you do have a successful venture?
Lari: I think the legacy is one (topic) but we need to remember that the world is changing pretty rapidly. For example, we got to a point that we needed to make hard decisions right away when we became owners of our established family business. That we can handle these many products that we had. If we want to be the best in something, we need to make decisions and also to focus on the right thing and we need to decide which is the right thing. But we ended up selling one and a half years ago a little bit less than half of our business. Which was the building system side. So the customer end products. And, we focused solely on the electricity distribution products and we saw that the future is there. And, we can’t compete with the bigger players in the lighting business and junction boxes and so on. It's easier to focus on something and be the best at it. I think also family businesses easily go so that they fall in love with their shares and what they're doing. That they don't realise that the world has changed. What is the main core business that we're selling?
Do we need to change that a bit? Do we need to focus on something to get better profitability to actually solve the problem that as us owners, we want to solve? Because without profitability, you have nothing to solve because you don't have enough resources to solve them. So mainly sustainability and so on, it comes when you have profitability. Then you can actually solve those types of problems in business. I think mainly on the legacy side, I would say that of course it's always been a little stressful because in Finland, I don't know in the world also, it used to be said that the first generation builds the business. The second keeps it as it is. And, the third generation destroys the business. So I'm hopefully making sure that that doesn't happen. And, it's transferred to the fourth generation, which is growing fast.
Abhijeet: Great. So very interesting for me to know that even long standing businesses have to make these very difficult decisions. Important decisions for the sake of continuity and legacy. And on that, my final question to you, Pedro. What would you say when founders have started a new business, they have tried to find the right fit for a problem, connected that to the need in the market, they've solved it and now it's time to move either by their own choice or by the choice of the VCs. How's that feeling at that stage?
Pedro: Well, that's a tough question because I'm not at that stage yet. But what I always say is that the company does not have to go with what I know. But I'm the one that needs to go with the company's growth. I'm trying my best. So we were two then we were ten for quite some time. Now we are 18 and we are growing. So we are always learning, I guess. Knowing what are your strengths and your weaknesses and working on them are very important for you to grow as a manager and as a founder. And that's what I try to do. So I know we have to become millions. There are several stages within the company. You face different challenges and we are going through many of them for the first time. So what we are doing is trying to adapt, to learn and do the best we can. And, so far we have been successful. And, I'm super excited for the next few months and for the growth of the company.
Abhijeet: Great. Thank you. So on that note, I really enjoyed the discussion. Just knowing the different perspectives of NextGens and co-founders. I hope our viewers found this interesting as well. I would like to thank the two panellists for coming in, sharing their stories and their perspectives. So as they say, all good things come to an end. And, with that I'm sad to announce our podcast series Startups of Today for the Impact of Tomorrow, is ending with this episode. But to all our viewers who have joined us over the past year on this journey and you have enjoyed our discussions, interactions, and perspectives with our various guests, I would say stay in touch. Follow us on our social media and go check out our website.
