‘The money is still there,’ says APX managing director Jörg Rheinboldt

APX is an early-stage accelerator in Berlin, but it’s not quite your average accelerator — it’s essentially a joint venture between giant European publishing house Axel Springer and Porsche, the German automaker. Earlier this month, we sat down with APX managing director Jörg Rheinboldt to discuss what makes APX different and how it’s weathering the coronavirus pandemic.

Rheinboldt has quite a bit of experience as both an entrepreneur and investor. He co-founded Alando.de, which was acquired by eBay in 1999 and donation platform betterplace.org in 2007. In 2013, he became CEO of Axel Springer Plug and Play and during his time as an investor, he put money into companies like N26, Zizoo, Blogfoster and Careship.

“We started APX because Plug and Play wanted to become more of a platform for matchmaking between startups and corporates,” Rheinboldt said when I asked him about the project’s origin. “We, the team, enjoyed investing in early-stage companies a lot and Axel Springer also enjoyed investing in early-stage startups a lot. So we decided to stop investing in new companies Axel Springer Plug and Play. We had invested in 102 companies — and focus[ed] on finding interesting teams to invest in with a new company that we needed to found.”

Image Credits: Dominik Tryba

Rheinboldt took this discussion to his boss, Mathias Döpfner, the current CEO of Axel Springer, who encouraged him to find another shareholder. “If it’s only us, you might have to do what we want — and maybe you don’t want that,” he said Döpfner told him. In looking for a partner, Rheinboldt approached the Porsche family, which he had met at some of his previous investor events. The family was looking to diversify its portfolio, so after a few more meetings, including a presentation at Porsche’s leadership summit, the two companies decided to get into this business together.

One interesting thing Rheinboldt noted — and this isn’t so much about the Porsche family as a general observation — is that family offices are often resistant to getting into venture capital, at least in Germany.

Travel savings tool Service shuts down, citing COVID-19 downturn

Service, a tool that helped you get compensation when there are flight delays and find lower hotel rates after you’ve already booked, today said it would shut down its service.

The company, which launched in 2015, says it faced a fundraising round that collapsed two weeks ago and was in the middle of an acquisition that collapsed on Friday. It cites the current economic downturn and COVID-19 as the reason for both of these events.

Service will shut down later this week, on Friday, March 20. It’ll try to refund subscribers (pending its cash position), route all pending claims directly to existing users and delete all personal information from its customers within the next 30 days.

It’s worth noting that Service founder and CEO Michael Schneider also notes that since it was founded, the company never turned a profit, even though it recovered over $4,000,000 for its customers.

“Despite partnerships with major brands such as KAYAK and Microsoft, we have never turned a profit, despite a focus on revenue growth and cost cutting through software automation,” Schneider writes. “We were in the middle of a fundraise when it collapsed two weeks ago, and then we were in the middle of an acquisition that collapsed last Friday due to everything going on with COVID-19 and the economy.”

With the current downturn in travel, we’ll likely see more travel startups collapse. Margins are notoriously low in this business and a lot of companies depend on what is essentially affiliate marketing revenue. Since the travel industry is currently in a tailspin, that source of revenue is quickly dwindling for this class of startups.

Service had raised a total of $5.1 million since it was founded. Investors include Founders Fund, which led its seed round, as well as Menlo Ventures, Maveron, Xfund, Flight Ventures and others. The company last raised a convertible note last September.

“I remain proud of what we accomplished over the last nearly five years, and I’m grateful to our investors, employees, and customers for all their support. While I regret not succeeding in building a sustainable long term business, I am proud that we tried, and that we made people’s lives a bit easier around customer service,” writes Schneider.

How Axis went from concept to shipping its Gear smart blinds hardware

Axis is selling its first product, the Axis Gear, on Amazon and direct from its own website, but that’s a relatively recent development for the four-year old company. The idea for Gear, which is a $249.00 ($179.00 as of this writing thanks to a sale) aftermarket conversion gadget to turn almost any cord-pull blinds into automated smart blinds, actually came to co-founder and CEO Trung Pham in 2014, but development didn’t begin until early next year, and the maxim that ‘hardware is hard’ once again proved more than valid.

Pham, whose background is actually in business but who always had a penchant for tech and gadgets, originally set out to scratch his own itch and arrived upon the idea for his company as a result. He was actually in the market for smart blades when he moved into his first condo in Toronto, but after all the budget got eaten up on essentials like a couch, a bed and a TV, there wasn’t much left in the bank for luxuries like smart shades – especially after he actually found out how much they cost.

“Even though I was a techie, and I wanted automated shades, I couldn’t afford it,” Pham told me in an interview. “I went to the designer and got quoted for some really nice Hunter Douglas. And they quoted me just over $1,000 bucks a window with the motorization option. So I opted just for manual shades. A couple of months later, when it’s really hot and sunny, I’m just really noticing the heat so I go back to the designer and ask him ‘Hey can I actually get my shades motorized now, I have a little bit more money, I just want to do my living room.’ And that’s when I learned that once you have your shades installed, you actually can’t motorize them, you have to replace them with brand new shades.”

With his finance background, Pham saw an opportunity in the market that was ignored by the big legacy players, and potentially relatively easy to address with tech that wasn’t all that difficult to develop, including a relatively simple motor and the kind of wireless connectivity that’s much more readily available thanks to the smartphone component supply chain. And the market demand was there, Pham says – especially with younger homeowners spending more on their property purchases (or just renting) and having less to spare on expensive upgrades like motorized shades.

AXIS Gear 1The Axis solution is relatively affordable (though its regular asking price of $249 per unit can add up depending on how many windows you’re looking to retrofit) and also doesn’t require you to replace your entire existing shades or blinds, so long as you have the type that the Gear is compatible with (which includes quite a lot of commonly available shades). There are a couple of power options, including an AC adapter for a regular outlet, or a solar bar with back-up from AA batteries in case there’s no outlet handy.

Pham explained how in early investor meetings, he would cite Dyson as an inspiration, because that company took something that was standard and considered central to their very staid industry and just removed it altogether – specifically referring to their bagless design. He sees Axis as taking a similar approach in the smart blind market, which has too much to gain from maintaining its status quo to tackle Axis’ approach to the market. Plus, Pham notes, Axis has six patents filed and three granted for its specific technical approach.

“We want to own the idea of smart shades to the end consumer,” he told me. “And that’s where the focus really is. It’s a big opportunity, because you’re not just buying one doorbell or one thermostat – you’re buying multiple units. We have customers that buy one or two right away, come back and buy more, and we have customers that buy 20 right away. So our ability to sell volume to each household is very beneficial for us as a business.”

Which isn’t to say Axis isn’t interested in larger-scale commercial deployment – Pham says that there are “a lot of [commercial] players and hotels testing it,” and notes that they also “did a project in the U.S. with one of the largest developers in the country.” So far, however, the company is laser-focused on its consumer product and looking at commercial opportunities as they come inbound, with plans in future to tackle the harder work of building a proper commercial sales team. But it could afford Axis a lot of future opportunity, especially because their product can help building managers get compliant with measures like the Americans with Disabilities Act to outfit properties with the requisite amount of unites featuring motorized shades.

To date, Axis has been funded entirely via angel investors, along with family and friends, and through a crowdfunding project on Indiegogo which secured its first orders. Pham says revenue and sales, along with year-over-year growth, have all been strong so far, and that they’ve managed to ship “quite a few units so far” though he declined to share specifics. The startup is about to close a small bridge round and then will be looking to pin down its Series A funding after that, as it looks to expand its product line – with a focus on greater window coverings style compatibility as top priority.

 

How to build STEM toys

On chilly Saturday mornings my father would fire up the kerosene heater and get the back of our garage warm. He’d turn on the old radio, constantly tuned to the local public radio station, and Wait, Wait, Don’t Tell Me or Harry Shearer would come on, clearing away the static like gust of wind through cobwebs.

“Get your old clothes on,” he’d say, sticking his head into the warm kitchen. I’d still be in my pajamas. I’d grunt and grumble. I wanted to watch TV or play with my computer or read or do anything other than sit on a milk crate in a cold garage and fix the car.

But that’s what you did. If there was something to be done on the car back in 1985 – back when I was ten and my Dad was still alive – we did it ourselves. Everything in those old engines was accessible. Nothing was packed in, nothing was covered in plastic cowlings, hidden away and out of sight. Back then you could follow the brake lines through the car just by laying underneath it. You could see which belts needed tightening, which seals were leaking, and what was going on with the spark plugs. So that’s what we did. We replaced brake pads. We pulled out the oil plug and let black crude flow from the little hole like a solid thing into a cut off milk jug. We turned little screws to fix the idle. We gapped spark plugs, changed tires, and generally did everything we could do that didn’t require a mechanic’s lift.

Sometimes the fix was easy. We’d jack up each side and put on his studded snow tires in November, just after Thanksgiving, so we could drive, the road sizzling under us, to the Ohio River Valley and up slick hills to visit our cousins. We’d check fluids and top things off. We’d replace an air or oil filter.

And other times, when the problem was too big, he’d consult the Chilton repair manual. This manual held deep arcana about the Ford Fairmont or the VW Vanagon he owned. They made a manual for almost any car, like an O’Reilly book for mechanics. The books remained pristine in that grubby garage because that book held everything we needed to know about fixing everything in the car. He took good care of them.

When we pulled the manual I knew we’d be out there for a while. The kerosene heater would hiss as I rumbled my dad’s stuff, pulling out old copper wire and magazines, avoiding the places I knew he hid guns or old copies of Mayfair. I’d try to build my own things until he needed me. One year I was working on a banjo (it never played right) and another year I made a shoulder-mounted rocket launcher (I didn’t shoot my eye out). He’d call out for tools. Monkey wrench. Needle nose. 11mm. No, the other one. The jar full of bolts he collected over the years, unsorted. He knew where everything was and he knew when he needed it. I was his assistant in the slow surgery he performed.

And I’d take part. I’d hold something while he twisted. I’d get my small hands in where his big hands didn’t fit. I’d hold the trouble light, a yellow caged thing that burned you if you touched the metal bulb cage.

Once I sprinkled water on the hot bulb. It exploded and he explained thermodynamics to me as he picked glass out of the cage and screwed in a new light.

When we were done, after hours of slow, methodical work, he’d fire up the car and we’d go for a drive. The knock would be gone (or sometimes it would be worse). The brakes would work better, the steering would be stronger, the engine would purr instead of lope. We’d drive down the street to White Castle or BW3 or just down to the highway to open the thing up and see if still drove. It always did.

Tools, not toys

The last time I did my own work on a car was in Fairfax, Virginia. My brake pads were going and I figured I’d replace them. I knew how. I bought the Chilton, bought the pads, and sat in a parking structure, jacking up the car with a little screw jack that threatened to buckle.

I put them on backwards. Front pads in the back, back pads in the front. The car drove like crap.

I gave up and took it to the Sears repair center around the corner. That was in 1999 or so, back when Sears still ruled the malls around DC.

“Missssster BIGGS,” yelled the service guy over the din of daytime TV and pneumatic tools. He was laughing.

“We fixed it, man. You did a great job, though, really,” he said. He handed me a bill.

And that was that. An entire body of knowledge lost in a heartbeat. I haven’t cracked the hood except to top up my washer fluid in two decades. Why, when the car is more robot than mechanical horse?

But those cold weekends weren’t a waste. I learned to riddle out problems, to dig through old books for good answers, to accept nothing at face value. The broken part is always out of sight – a seal, a cracked hose, a fracture in a piece of cast steel – and it’s great fun to suss it out. So I did learn something. I learned to think through physical problems by solving physical problems. I learned electronics by replacing wires. I learned patience.

Fast forward to today’s fashion for STEM toys. These toys are supposed to do all the work that my father did with me on those cold Saturdays. A little robot that runs around on the floor is supposed to replace building and learning. A box of parts that fit together like Lego and animated with a few lines of code should be enough for any kid to get a body of knowledge so deep that we won’t be plunged into a dark pit of ignorance come 2040.

But they toys don’t work. I’ve been very critical of modern STEM toys because they are just toys. The only things I’ve found remotely education are Scratch, with its BASIC-like mental syntax, and Adafruit products that require actual soldering. Every other one, from the Nintendo Labo to the broken robot at the bottom of our basement stairs, are junk.

It’s our responsibility as parents to educate. There’s not much opportunity to do that anymore. Education without a goal is empty. I learned by tearing down and building up. It’s hard to do that these days when everything is deeply disposable. But maybe there’s hope. I’ve vowed to show my kids the command line, the protocols, and the code behind their favorite games. My son owns Bitcoin and he follows the price like a stock trader. My daughter builds Raspberry Pi things on a regular basis, understanding that she holds a computer, not a toy, in her small hand. We learn how to fix broken things, opening old gadgets from my childhood, cleaning the contacts, replacing the batteries. One of our favorite games is the Dungeons & Dragons Computer Labyrinth, a game we resurrected with a little careful troubleshooting.

This fiddling is obviously not the same as what I did with my dad. I doubt I’ll be able to recreate those mornings, as much as I hated them then and love them now. Maybe my days of cold garages and NPR are over. And maybe all our children deserve are Logo Turtles made out of injection-molded plastic. But I’m willing to bet that somewhere out there there’s a kid who wants to do, not be told to do, and at the end of the project wants to feel the wind in her hair and smell a cold snap coming across the plains, crisp and clear and full of the future. And it’s our job to provide that feeling, no matter what. We can’t offload that onto a toy.