Heureka 2013: eCommerce pioneer Stephan Schambach – why Germany needs a NASDAQ

heurekaStephan Schambach can rightfully be described as a pioneer of eCommerce – in 1992 he launched software company Intershop, one of the first services that allowed shops to sell online. Both Intershop and his second company, Demandware, successfully launched on the stock market in the US, where he spends most of his time at present.

We caught up with Schambach at the Heureka Conference 2013 to find out why Germany needs a NASDAQ in order for the startup industry to stand a fighting chance against the US...


Who are you and what do you do?

I am a technology entrepreneur, I have run and built companies for 20 years – my most recent company is Demandware. I am chairman of the company now, it went public about a year ago.

What is the state of eCommerce in Germany right now?

I think eCommerce is in very good shape worldwide, but also in Germany. It is a $700b market worldwide, it grows by 16 to 20 per cent per year and grows even faster in Germany. Yet it is still only a tiny fraction of retail – six or seven per cent. So it has a lot of room to grow. And I think we are going to see these high growth rates for another 10-15 years.

Do you think startups need to be headquartered or launched in the US in order to really be successful?

US-born startups usually have a better shot at becoming a worldwide leader in their specific segment. That has a lot to do with financing, exit and IPO opportunities, and the stock exchange. It's also a massive advantage to have access to a large, homogeneous market.

Your speech at Heureka focused on the fact that Germany needs a NASDAQ – why is this?

Firstly, Germany had a form of NASDAQ up until 12 years ago, called Neuer Markt. During that time, despite all the difficulties, it created a valid business model for VCs where startups were founded and funded properly, so they could build their own technology or service. The best of them could go public and provide a liquidity vehicle for the VCs, plus have a currency to continue to grow and acquire other companies.

This cycle has been interrupted since then and as a result there is only seed financing going on outside the US – particularly in Germany. I think that if you can fix this than the money will come. There is no need to create government  programs for more venture capital; matching funds is not necessary. What is necessary is to re-establish a path for companies to list and become public.

Are you optimistic about this happening?

Right now, it may sound like a bit of a pipe dream, but the issues with the Neuer Markt that existed are from 10-12 years ago – much has changed in this time in the financial industry. There are much more stringent regulations, they are much more disciplined now, there are better laws and better enforcement.

I think some of the negative things that happened around the Neuer Markt couldn’t happen in that form today. And there are no regulatory barriers. So I think if everyone comes to the table – all the stakeholders, like Deutsche Börse, the investment banks, VCs, startups – I think it could be re-established. And it would be the single best thing that could be done for entrepreneurship in germany.

What’s your opinion on Facebook Commerce?

Well, Facebook and other social networks clearly influence eCommerce. But my experience is basically that it is more an influencer than a real transaction platform. We have seen a lot of brands experimenting with intergrating into Facebook, only to see that the marketing effect is there but it doesn’t increase sales. To use Facebook as an eCommerce platform in itself requires very specific business models and may only work for digital media, or for games or specific products that carry a very high margin where its possible to take a 20-30 per cent cut. It won’t work for the variety of goods being sold through eCommerce say at Amazon, or directly from brands' websites.

What do you think are the three most promising startups coming out of Germany?

That’s a loaded question – I don’t know! But I hear a lot of good things about Lieferheld, for example. I see a lot of really clever startup ideas and those who find some way to either not need a lot of cash – less than two million to make it to a certain size, or those that find a way to flip the company to a US Inc. and get professional US VCs involved... those have a realistic chance and every year there is a handful that do that.

What's the best business tip you ever received?

It’s not really a tip I got but it’s something I learned the hard way. That is – you take the money when you can get it, not when you need it.

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