Günter Faltin

Even as a schoolboy, Günter Faltin was always interested in economics. But the subject he found so fascinating as a young boy turned out to be quite dry and boring when he began studying it in college. In 1977, when Faltin became a professor at Berlin’s Freie Universität, he vowed to do things differently, i.e. to teach economics using his own successful companies as examples. The result of his efforts was Projektwerkstatt GmbH and its highly successful Teekampagne or “Tea Campaign.” In this interview, Professor Faltin speaks about good new business ideas, “truffle pigs” and how Berlin can become Germany’s start-up capital.

Professor Faltin, what does it take to become a successful entrepreneur?

Günter Faltin: It used to be that you needed a large amount of capital to found a successful company. Today, the most important resource that founders need is creativity.

But entrepreneurs still have to have some professional business skills to be successful, don’t they?

G.F.: Every company needs a high level of business expertise. However, the question is whether founders must have these qualifications themselves. I don’t think too highly of trying to make good businesspeople out of researchers. It’s a much better idea to get this kind of professionalism from outside, or to found a company based on components, i.e. by buying services from outside. 

You mentioned that creativity is essential for founders. What about inventions and patents?

G.F.: Patents and research findings are like raw materials - you have to make something out of them. But it’s not very often the case that you can bring a product to market based solely on a patent alone. You first need an innovative concept – what some call “entrepreneurial design.” The logic of research and the logic of markets are fundamentally different. Scientists can receive the Nobel Prize for their research. But whether or not they are successful on markets is a completely different question. Only a creative mind that understands how to make a market-ready product out of a patent can close this gap, i.e. someone who recognizes and literally “feels” the market opportunities that a patent holds. A sort of “truffle pig” that sniffs out opportunity. This is exactly what makes an entrepreneur successful.

What does a start-up idea have to have for you to support it?

G.F.: A good idea fills the gap that I just mentioned. Founders must work on this idea so long that it becomes sustainable on the market and shows clearly recognizable market advantages. And, by the way, a good concept should always stand on more than just one leg.

What do you mean by that?

G.F.: Take my first company as an example. The Teekampagne stands firmly on many legs: we have better prices than other companies, we test our teas for chemical residue, we support fair trade and we’re more transparent than other companies. When the business concept stands on several legs, the company is less vulnerable.

You argue that the principle of the Teekampagne is “function, not convention.” What does this mean exactly?

G.F.: Conventional wisdom has it, for example, that a tea store should offer a number of different sorts of tea in small 100-gram packages. But we can peel this conventional wisdom like an onion to the point where only the function remains. In other words, why shouldn’t we sell tea in large packages too? And why isn’t it enough to offer just one variety of tea, especially if it’s the best in the world? And do you really need to have a store? In the end, the only question that remains is: How do I get the tea from the plantation in India to the customer? This is the function. And in order to satisfy this function, the only component we really need is a logistics company.

You’ve lived and worked in Berlin for many years now. What do you value most about the city?

G.F.: Berlin has that special feeling of positive unrest. It’s an energy that lends itself well to unconventional thinking. It has a rich alternative cultural scene that is full of ideas. When you operate in such an environment, it’s very helpful in terms of discovering new ideas and approaches.

Would you call Berlin a founders’ city?

G.F.: Not yet. But Berlin does have the potential to become Germany’s leading founders’ city. This tremendous potential has not been exhausted by far. Berlin has a very unique concentration of science, business and culture, and it should be possible to take advantage of something like a Medici effect. In the heyday of the Medici family in 15th century Florence, an entire series of groundbreaking innovations were generated in a relatively short period of time. And we can assume that this development was made possible by the meeting of many creative minds from different disciplines.

Does this include art?

G.F.: I think of creative individuals as being the better “truffle pigs” when it comes to sniffing out good ideas. In other words, these days, entrepreneurs are much closer to being artists than managers. Only 15 to 20 percent of all start-ups are based on high-tech developments. The rest are so-called “creative concept” start-ups where the focus is on a specific idea or concept. It’s often the case that these concepts consist of many already-existing components, i.e. ones that have simply been thought through and combined in a new way. The best examples of these are Facebook and Skype.

What advantages does Berlin offer entrepreneurs and start-ups?

G.F.: Berlin is more tolerant, art-oriented and full of ideas than other cities. The city’s rich diversity of science is also a major advantage. The decisive factor, however, is the city’s interdisciplinary nature in the broadest sense. It’s all about thinking beyond the borders of one’s own discipline. Innovation is generated primarily at the edges of a discipline, not at the center. There needs to be a friction with other disciplines. This is something that could and should happen even more in Berlin.

About Günter Faltin:

Professor Günter Faltin is head of the Department of Entrepreneurship at Freie Universität Berlin (FU). In 1985, he founded Projektwerkstatt GmbH with the idea of the “Teekampagne.” The company is the market leader in the mail-order business for tea in Germany and the world’s largest importer of Darjeeling tea. Faltin initiated the Laboratory for Entrepreneurship and acts as a “Business Angel” for successful start-ups, including Buero AG, Direkt zur Kanzlerin GmbH and RatioDrink AG. In 2001, he founded the Entrepreneurship Foundation with the goal of promoting a more open entrepreneurial culture. In 2009, Faltin was awarded the German Founders’ Prize for his company Projektwerkstatt. In 2010, Germany’s Federal President Christian Wulff awarded him the Order of Merit of the Federal Republic of Germany as a “pioneer in the development of entrepreneurship in Germany.”