Understanding market transformations as a key to build hyperscaling platforms

In our latest conversation with Josef Brunner, CEO of leading IoT platform relayr, we talked about key success factors for building a platform business. And he was clear right from the beginning that it is not about technology, it’s about focusing on outcomes for the customers and to understand market transformations. Only when you understand bigger trends and market shifts you can build a platform business to be ready at the right time at the right market.


Intro

Josef Brunner is an entrepreneur at heart and the CEO of Relayr, his fourth company (and his last one according to him).

Relayr, which was founded in 2015 in Berlin and acquired in 2018[NDL1], is the company you call when you want to transform your business from CAPEX to OPEX : in other words, if you have machines, whatever the purpose of the machine may be, be it grinding diamonds or cutting metal sheets, you can convert it into an “as a service model” with Relayr.


Keeping the complexity away

Building multiple companies is a journey full of learnings and starting Relayr was no exception to the rule for Joseph. His previous companies were all addressing one specific problem, in a given market, with one dedicated product. Therefore it was relatively easy to launch and scale these companies. But Relayr is different as it provides something very abstract: a middleware and a technology foundation to enable new business models. How do you sell this to customers?

As Josef simplifies:  it is easier to describe the company as “to get from CAPEX to OPEX”, than by explaining the technology behind it. This is actually one of his main journey’s learnings: keeping the complexity away from the customer and avoiding mentioning technology.

Focusing on outcomes

According to Joseph, the key is to “simplify the value proposition, solve the problem holistically for the customer, put the outcome at the centre of everything that you do. Stop selling technology to technologists, sell outcomes to businesspeople.” Everything else: the machine, the technology risk transfer, finances…, all these tools only exist to deliver that outcome.

A recent example of a customer engagement was Trumpf, a global market leader in producing  laser cutting machines. Relayr worked with Trumpf to come up with a pay-per-use model that focused on making Trumpf’s customer more successful by guaranteeing they were getting the best results with the best price in the market.

This sums up a key lesson for platforms, as they play the middle-man role and are based on sophisticated technology: focus on the customer problem and sell solutions, not technology.

Beyond customer problem: Market transformations drivers

Josef did not go through this journey on a single-handed race. He had mentors to learn from: for instance, John Chambers always advised him to“ not focus on a product, a problem, or a specific market, but to focus on a market transformation or focus on problems arising when transitioning from one market to another”. Indeed, Cisco started off as a routing company, but then quickly realized that B2B networks were rising, so they bought a switching company. This is the biggest capability you need.

“If you don’t only drive market transformations, but you can also foresee those trends. And as soon as the market transformation is happening, you have an offer, ready to capitalize.”

And today, Joseph thinks energy efficiency is the biggest market transformation of our time, and that entrepreneurs have not started to grasp it. As governments and societies are pushing to get rid of fossil fuel powered economies and adopt renewable energies, energy waste management is taking a bigger role for industries.

By addressing inefficiencies and waste in our global economy, the way we produce, ship and sell, we would make a major leap forward.

Joseph considers that by reducing waste, we would not need to radically change our way of life. We could just have the same one, but more efficient. That’s the solution we should investigate. Take the internet as an example: consuming a lot of energy through the IP protocol in an exponential way, significantly more than the airline industry. We could easily save a few percent of the global energy consumption if we were able to make this more efficient.

One last piece of advice

If he had to conclude, Josef would advise:

“Place the needs and the problems of your customers at the centre of what you do, don’t have a romantic relationship with technology, have a romantic relationship with the business case.​“​

Thank you Josef for the great conversation and the insights.

The complete episode can be listed at your favorite podcast provider.