Business Life

In 1995, with the support of my parents, I opened a specialist shop for IT and computers in Bingen am Rhein, Germany, at the age of 17. At the same time, it was the first internet café within a radius of 50 kilometres:"Computerman" was born. In the shop I sold hardware and software, in Bingen and the surrounding area I also offered an on-site service around computers. Although I was technically almost unbeatable, I had no commercial experience. While there was money to be made with the on-site IT service, the shop itself was a big miscalculation and a loss business, which neither I nor my parents could have afforded in the long run. After only one year I closed the shop again. The computer shop became my first GmbH, the "Computerman PC-Services GmbH". I received the necessary start-up capital from a kindly gentleman, who had been a client of mine with his brokerage company, and now invested in me and the development of the company.

Initially, the main source of income continued to be IT services for the regional economy. At the same time, I designed a software for corporate use and managed the development until the completion of a marketable product. Chatjet ", a chat system for internal corporate communications and web-based live customer support, was first introduced at the Systems 1999 computer trade fair and achieved a breakthrough around the year 2000 despite the collapse of the New Economy (" Dot Com bubble ").

During this time I gained valuable experience as a managing director. The development and distribution of "Chatjet" to customers such as Sal. Oppenheim, Deutsche Post AG or the State of Baden-Württemberg were not only useful for my future activities in terms of experience in project management and sales.

With Computerman's services and the Chatjet product, I didn't get rich, but the company was profitable enough to feed me for many years, as well as a small but growing number of employees. At the same time, this gave me the opportunity to learn with Trial & Error or Learning by Doing what other people might have preferred to study. Whether accounting, writing business plans, accounting or marketing - there were things to discover, understand and learn everywhere.

In 2005 I was faced with a problem - the developed chat server system Chatjet continued to sell well. However, customers now included such big names as Deutsche Post, who held staff conferences with them. The permanent availability of the chat services operated by me, as well as the accessibility of the office network of Computerman from the Internet was therefore of crucial importance.

On the other hand, there was the company's internet connection: For a 2 MBit/s dedicated line with backup service I paid more than 2,000 Euro per month, which made it the largest running cost position. And despite all the provider's availability guarantees, the line was permanently down. So much money for so little performance? It couldn't have been.

I had the idea to have several of the DSL connections, which had become available in Bingen for the first time in the meantime, installed. Over each of these lines I wanted to build a VPN tunnel to my server located in a data center in Frankfurt, in order to use the capacity of these lines bundled together. I wanted to route the required fixed public IP addresses to my office independently of the line provider through the VPN. All in all, I wanted to become completely independent of line providers. But there was one problem: There were no routers that could have bundled several different lines as VPNs.

The idea of using several consumer broadband lines bundled together to save costs seemed obvious to me. If the idea was simple, but there were no products, there had to be a technical obstacle. And so it was: Even with only minimal differences in the running times of data packets on the individual lines, the packets would arrive incorrectly sorted at the receiver if these lines were used in a bundled form. However, such a mis-sorting would incorrectly interpret TCP/IP as packet loss in the Internet protocol, which would cause the data transfer rate to collapse. The Internet was simply not designed to allow the IP packets of a single data connection to take different paths at the same time.

So I set about solving this technical problem. I realized that previous implementations of the TCP/IP protocol could not be extended for this purpose, all attempts in this direction by other vendors had failed. So I developed a new implementation that for the first time made VPN bundling possible. The development of an own TCP/IP stack turned out to be quite a mammoth task.

As a software solution I could hardly sell my proof of concept - people would expect a hardware router. In addition, my handicraft solution looked very chaotic - six ADSL modems hanging on a computer caused a lot of cable clutter. So I wanted to create a router with the modems already integrated, so that you only need one single device to bundle several lines.

Together with the development team of Computerman GmbH and other friends from the nerd community (demoscene) I started to develop a suitable device. At the same time, I founded Viprinet GmbH - again together with members of the computer art community - which was to bring this development to market later on. All the shareholders brought a little money with them. As a thank-you for his support of me, my sponsor and co-partner also received some shares in Computerman GmbH. The name Viprinet is actually made up of "Virtual Private Network".

Our minimum start-up capital was soon used up. When our products were then about to be launched on the market in 2008, it became clear that the capital requirements predicted in the business plan could not be met without further ado - the high complexity of the subject matter was not yet matched by measurable sales successes for the products, and potential investors considered the plan to set up a router manufacturer in Germany to be too risky. Our house bank assumed at that time that we would build washing machines.

So an investor had to be found. A private investor from outside the sector was recruited via contacts of an existing shareholder, Mr. Hans-Jürgen S. His GERES Group invested in wind farms. The then Managing Director Hans-Jürgen S. was enthusiastic about the company and invested funds from his participation in GERES. This was the first time that the production of the first product series was secured. At CeBIT 2009, we showed for the first time how our products could also be used in vehicles: The Gigabus offered live video streaming at every seat and super-fast Internet throughout the bus. The trade fair presentation turned out to be a complete success and the first sales partners could be won.

Since no further investors could be found even during the current market launch, the founding partners had to help out together with GERES time and again from their own funds with loans and capital increases, so that all participants reached their economic limits. In the course of this, the founders' shares continued to dilute, and when GERES took over the shares of a retiring shareholder (the real estate agent mentioned above), GERES finally held 62% of the shares in Viprinet GmbH. The founders were therefore no longer majority shareholders but minority shareholders in their own company. However, since I had secured my rights in the articles of association (all decisions required my consent, there were strong rights for minority shareholders), I felt secure. A mistake.

Despite the disagreement among the shareholders, Viprinet itself continued to develop very well. In 2011, the company even posted profits for the first time in spite of everything.

However, as a result of the disagreements, the company has been cut off from any outside financing possibilities since 2010.  In order to be able to grow further, it would have required the further construction of a component warehouse. This is especially true because the availability of electronic components was very variable at the time due to various disasters in Asia. In 2011, monthly sales of up to 350,000 euros and a warehouse with a purchase value of more than 500,000 euros combined with only a current account credit of 233,000 euros from the house bank. We therefore had to serve our warehouse almost exclusively from our cash flow.

Despite this madness, we were able to launch new products at CeBIT 2012. After that was done, I pulled the rip cord in March 2012 and filed for bankruptcy at the district court of Bingen. The company was placed under the provisional administration of an insolvency administrator. The company was thus finally deprived of control by the warring shareholders. I myself was still under heavy fire, but the company and its employees no longer had to suffer from the company's shareholders. However, I had to live with the fact that the capital I had invested, including the guarantees I had given to the company, was no longer there.

Since the company was focused on me as a central figure in its entire structure, the insolvency administrator was quickly aware that a continuation of Viprinet GmbH would only be possible under my leadership. He realized that when I left the company, i. e. when I sold it to a third party, the company would lose most of its value because a large part of the know-how was in my brain. Nevertheless, it was not possible to persuade GERES to sell its shareholding, even if the insolvency administrator acted as mediator.

In close cooperation with me, the insolvency administrator almost seamlessly continued the company - there was no loss of supplier relationships or employees. Even the supplier loans granted to Viprinet's partners via a factoring company could be continued without interruption.

The insolvency proceedings were seen by most of the parties involved as an opportunity to enable the company to continue its successful future under a new shareholder structure. If the partners could not agree on a separation, they would now be forced to be separated.

The insolvency administrator considered it the most sensible thing to sell the company in a public sale process and to advertise it. The creditors' meeting of Viprinet GmbH should then decide which of the bids submitted would be accepted. The founders decided to offer the company, as did GERES and some third parties. The highest and best bid came from my Kissel Ventures GmbH and my colleagues. It was designed in such a way that the money should be enough to pay all liabilities - no one else except the perpetrators themselves should have to suffer from the insolvency.

While GERES - cautiously put it this way - didn't exactly spark a storm of enthusiasm in the courtroom filled with employees, partners and suppliers, my offer received full support there. Whether it was the employment office, employees, suppliers or banks - everyone spoke out clearly in favour of my plan. In the end, the vote was taken and the result was overwhelmingly clear. Cheers were on the rise, and Viprinet celebrated extensively. There were GERES canning, GERES dart and a huge GERES piñata.

Due to the insolvency proceedings of Viprinet GmbH and the associated uncertainty in the market, there was a considerable backlog of project-related orders - many customers had waited for an order until a secured successor company to Viprinet GmbH was ready. The new Viprinet Europe GmbH was therefore able to process a large number of orders directly after taking over its business activities. Market confidence was quickly restored. After all, nothing had changed operationally except for the addition of "Europe" to the GmbH name.

The mission of getting the insolvency administrator to return the money paid to him to the creditors was much more difficult than expected. It certainly did not help that Mr W. and GERES did not meet their guarantee obligations, but that the GERES management company first renamed itself and then filed for bankruptcy. Thanks to this insolvency at GERES, Mr. W. did not have to contribute to the compensation of the creditors. Complaints about this and other GERES issues also delayed the completion of the insolvency proceedings at Viprinet for years. The creditors had to wait much longer for their money than the insolvency administrator had actually promised them in court. It was not until the beginning of 2017 that the proceedings were finally brought to a conclusion.

After GERES retired, Viprinet quickly returned to growth. While at the beginning of Viprinet's history, the main selling point was the inexpensive replacement of expensive dedicated lines, this has now changed: more and more data and services have been outsourced to the cloud by companies, including for mission-critical applications. Failures of the connection thus caused companies to lose a lot of money and in some cases even human lives to be at risk. The reliability of Viprinet's products was now in the foreground. Snowden's revelations also made it clear that it is an advantage to have critical network infrastructure built in Germany instead of coming from the US or China.

Sales grew with the wind behind them. Soon the space in our office and production rooms became scarce. In 2014, I took a big step forward: Together with a partner and supported by the house bank, we bought the 12,000 sqm former area of Racke in Bingen. This not only gave Viprinet enough space, but also the option to create a high-tech start-up centre in the middle Rhine Valley with this company as a "lighthouse". This was combined with the groundbreaking energy concept developed by us, which will hopefully be implemented from 2017 onwards. My other investments in Kissel Ventures GmbH will also be based here in the future.

We have only just started out small, and we are converting and dismantling it step by step under full letting. Currently, a quite impressive photo studio is being built in a former wine storage hall, and Viprinet will then move into newly renovated areas within the site.

In the long term, however, our plans are bigger: the former large-scale winery comprises an extensive building complex between Stefan-George-Straße and Gaustraße. In the coming years, a unique place for working and living is to be created here. In line with the town of Bingen's development plan, the overall concept is based on a general revival of the site and transformation into an "innovation park", the environmental balance sheet of which is to enjoy a unique selling point throughout Germany. However, in order for this to work, we still have to find some co-investors. Details about the project can be found on the Innovation Park website.

In 2014, we were fortunately able to win a new partner at Viprinet, who brought in a large investment. For the first time in Viprinet's history, we now had the opportunity to make long-term strategic investments instead of always living from hand to mouth. For two years we were able to take the time to develop a completely new generation of products, both in terms of hardware and software - after 8 years of product maintenance, it was high time for a "rewrite". We will now reap the fruits of these efforts from 2017 onwards.

The project to move away from one-off sales as a device manufacturer was really costly. The problem was that our products had always been durable due to their quality and modularity, but this was raised to a new level with the new product generation. How could we live if customers only bought something every 5-10 years, but in between they wanted to get long-term support and firmware updates? Our business model was unsustainable and would eventually kill us. So we had to start focusing on a steady stream of revenue. However, it is extremely difficult to change an existing business model and not to annoy partners and customers. It took us a year of preparation and a lot of persuasion to get it right. However, the consequences were not without consequences: some of the angry partners lost a lot and were unable to record any sales growth in 2016. In the future, sales will flow regularly and permanently in new projects instead of at the beginning of the business relationship - we have therefore adjusted to the fact that it will take a good year for the figures to rise again significantly (but then sustainably).

Investments in management development have not been 100% successful: After the company had 50 employees by the end of 2014, too much time went into managing the operative business instead of being able to focus on strategy and vision. Now that we had the financial resources to do so, we decided for the first time in Viprinet's history not to "breed"our managers ourselves, but to purchase experienced managers. However, these caused an explosion in our wage costs, and in some cases did not quite match our corporate culture. In the area of distribution, employment contracts across national borders also created a bureaucratic monster. I thought it would be a little too easy to buy up my skills, and I had gained another experience.

All in all, the investment phase from 2014 to 2015 was a good decision, which has brought the company forward. One catch, however, should not go unmentioned: if you invest several million euros in a relatively short period of time, you don't really have to post these investments as expenses and therefore as a loss according to German accounting law. And although we were doing better than ever before as a company, and we had set the right course, our 2015 balance sheet looked as if we had a meteorite set in. German accounting law in combination with a completely nonsensical way of taxing venture capital investments is the reason why in Germany, compared to other Western countries, virtually nothing is invested in venture capital.

The team consisted of a technical employee from Germany and one full-time employee from sales, administration and marketing (which came from the region). In addition, there was a managing director - a seabeared and very lovable elderly Danish. The gentleman was a close friend of one of our associates, and we all trusted him and found him to be extremely symphatic. We didn't have any trouble trusting him with a lot of our money.

Every German company trying to do business in the USA underestimates the intercultural differences. I was well prepared for them, but in the end they met us harder than expected. This was clearly evident, for example, in the area of marketing. When we were preparing our appearance at the Interop IT fair in Las Vegas, it became clear that the Americans in the team could hardly laugh at the black humour spread by Viprinet, while we considered their ideas of what a clever trade fair concept might look like to be childish and embarrassing. In the end, I was actually on loan at a trade fair stand with a James Bond theme. To my complete surprise, it was a great success and we received many compliments.

Outlook

"I can't remember any great wisdom from my mouth. Whether it's my mouth or my brain who's to blame, I can't say, no, I can't figure." -- Simon Kissel