By Rob Morris and Jeff Skinner
homas Fuerst knew he wanted to become an entrepreneur after spending his formative years working for his family’s manufacturing business in Germany. By his 40s, the founder and CEO of WebID Solutions had worked in M&A and consulting, before launching a venture with his father that sold cutlery. But Fuerst’s most successful business achievement was still to come.
In 2004, the London Business School MBA graduate set up Fuerst Advisory Services, a consultancy helping German banks speed up their decision-making process for loan applications. It was this venture that gave him the idea for WebID Solutions, a video identification service used by banks to check the ID of customers looking to open accounts or get bank cards.
Traditionally, people in Germany had to go to a bank branch to show their ID before becoming customers. But Fuerst’s business, which uses video technology to verify the applicant’s identity, has made the process much quicker and easier.
For Fuerst and his business partners, turning the idea into reality was tough. First, they had to convince the German Federal Ministry of Finance to introduce new regulation that would allow banks to carry out ID checks using video technology. Second, the team needed to persuade banks to embrace a new digital approach to loan and card applications.
Both objectives were achieved through sheer hard work and persistence, which is one of Fuerst’s seven lessons for budding business owners.
1. It’s never too late to become an entrepreneur
Being entrepreneurial is a matter of mindset rather than age. Younger people generally think more independently and aren’t as easily pushed into the conventional 9–5 job. Someone aged 27–28 has less to lose as they’re probably not married and have no one else to feed, so of course they should give their business idea a shot. If it fails, who cares? They’ll still learn something from the experience.
2. But launching a business is harder when you’re older
It’s very difficult to do it in your 40s. From my perspective, the most stressful thing about launching WebID Solutions was giving up a regular income when I had a wife and two [now three] daughters to think about. I had no idea if or when the business would make money. At that stage in life, you may have kids and a mortgage, which makes things very stressful. That’s why I think you see fewer people wanting to be entrepreneurs in their 40s.
3. Do your homework
Once you have an idea, spend lots of time thinking it through and looking at it from all different perspectives. Talk to people about it and try to anticipate what your future customers will ask you about and what they’ll criticise. Try to get all that worked out before approaching anyone and verify the service you’re offering is something people want to pay for. That’s the basic homework and if you haven’t done that, you really don’t have a business at all to develop.
4. Hire someone who can get things done
You have to make sure you have someone in your team who understands execution and can do it. I see teams with three people who are independent spirits and have great ideas, but there’s no one there to execute. You’re bound to fail if you don’t have people who can make things happen and actually carry out your plans.
5. Be prepared to invest your own money
We financed the business from our own pockets, believing it would pay for itself as soon as we had customers. The banks started signing up from mid-2014 onwards; at that point, we had invested around €1 million (£881,000). I’d quit my job earlier that year to focus on the business, which was tough because it wasn’t making any money. We were employing people to carry out the ID verification calls with bank customers, but the business only had a few clients. Things changed in early 2015 when we had 20 banks on board – we could see the business was financially viable. We now have 110 banks signed up, including Barclays and Amex, offices in New York and Silicon Valley and our projected 2018 turnover is €12.5 million (£11 million).
6. You have to be persistent
Getting regulatory approval was a massive challenge. Luckily for us, the Federal Ministry of Finance gave us the greenlight on 31 January 2014 to develop video ID software for speeding up bank loan applications. We met with Dr Michael Findeisen from the anti-money laundering department every four weeks for 18 months. At one point he said, ‘I need to make a decision on this because I’m spending more time with you than my wife’. In every meeting, he raised issues or concerns about our concept and we went away and addressed each one. In the end, he had no more objections and backed the idea. As for the banks, we kept approaching them to explain how the service worked and answered all their questions. Once the new regulation was introduced, they saw the benefits and jumped on board for fear of missing out.
7. Selling your idea is easier when you have relevant market experience
I didn’t think the business was going to go anywhere, because of the regulatory issues we faced in introducing this technology and the reluctance among banks to adopt a more modern approach to loan applications. I felt there was little chance of us overcoming those issues, but I thought, ‘Let’s just try and if we fail, we fail. Fortunately for us, Dr Findeisen recognised that he wasn’t talking to a group of 26 year-olds looking to make a fast buck. We were in our 40s and understood financial services and regulation. We wanted to modernise the German regulatory environment and were given the opportunity to do that.
This article was originally published in London Business School Review.
Rob Morris is Senior Editor at LBS and Jeff Skinner is Executive Director of the Institute of Innovation and Entrepreneurship.
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