Valentin Gruber, HomeToGo COO on M-and-A and Going Public

Michael Koenig: Hello, and welcome to Between Two COOs. I'm your host, Michael Koenig, and today our guest is Valentin Gruber, COO of Home2Go, a public company traded on the free market. Frankfurt Stock Exchange that went public via SPAC or Special Purpose Acquisition Company in 2021 at a valuation of 1. 2 billion after raising 150 million in VC funding. Valentin brings a wealth of knowledge with a career spanning the likes of Accenture, Audubon, and I hope I'm pronouncing that correctly, and of course, Home2Go. So Valentin, welcome. Thanks for being here.

Valentin Gruber: Thank you very much, Michael. Looking forward to our conversation.

Michael Koenig: Yeah, as am I. I'm excited for many reasons. The first, you're just a genuinely nice person. We got to, get acquainted beforehand, and it's always nice to talk to nice people, because that's just a [00:01:00] better conversation. But also you're in a really crowded market of vacation rentals and travel aggregators competing against those globally recognized brands like Airbnb. And then the second, or the third, rather, is You're a company that was born and raised in Luxembourg and Germany. You're currently in Germany. Okay. You're nodding your head. So I maybe got that wrong. Cool. We'll get some some clarification there and you went public in the German markets. Now I've featured COOs from two other German companies, Blinkist, and then get your guide, but both are private and you're public. So there's a big difference. And I really am excited to get into that. Maybe, can you just to start share a bit about what home to go is? And what your areas of responsibility are. And then also maybe a little clarification on that Luxembourg versus Germany thing.

Valentin Gruber: Sure. Appreciate it. So overall home to go. We started as a company 10 [00:02:00] years ago, back then, like you just mentioned this crowded space. Yes. It's a highly fragmented market. So there's so many participants along the value chain that are competing, but that are also partnering. And we started back then with the idea that a meta play, uh, would be perfectly settled in this market. The experience came from one of the founders who founded previously, um, Swoodoo, which was later sold to Kayak, which knew the space of meta already quite well. Um, the other part came from vacation rentals. And so, yes, as it's a fragmented market, a meta game makes sense. That's how it all started. And after a while you realize, well, you have the more and the less professional meta partners, some websites that you then link out to for the guests to make the booking, have a tremendous booking journey. You have a nice display. You have all the kind of payment methods you would wish for. And then you have the others. And the others are sometimes the websites that look like windows 95 for the ones who still remember, and [00:03:00] that do not necessarily build trust. And this is where you then start. where your customers actually start to discriminate between these platforms that look really nice and they automatically for you as a meta platform perform well. But these usually also are the bigger partners. And so we said, okay, there is a general gap here and, uh, we can either be the ones that are supporting the large suppliers and the large OTAs further, or we are the ones that are supporting the smaller participants in the market that do not have the professional means themselves to participate in a professionalizing world. And this is where we. moved our business model over or extended it, I would rather say, into a marketplace. So truly providing the full booking experience to our guests, to the traveler, and enabling them with smaller market participants to be successful in our platform. That extended actually even further down to, well, even if they are on our website, we still can see that they are [00:04:00] not Owning the right technical or data solutions to be professionally competing, uh, against larger providers. And this is where we then over the evolution of home to go also went deeper into the supply side, into the enabling functionality by building software for agencies, but also software for private hosts and are enabling our partners today with many more solutions around data and technology just in general. And so. The last 10 years have been, um, for sure right, uh, highly interesting because of this fragmented market. Uh, I think that's also what drove me originally to that company, that it is so interesting because you have so many partnerships and friendships, even more so. And so that this company just, uh, had a tremendous development over the last 10 years. And because you just mentioned it with regards to this Luxembourg thingy. Um, so yes, um, we are officially a Luxembourg SE company, but, um, the roots of [00:05:00] Home2Go are still where we are today and, uh, where I'm channeled in through today, which is Berlin, Germany. It was just in the formation of the publicly listed vehicle that we formed a Luxembourg company.

Michael Koenig: For our listeners here. I want to clarify, many are in the states. Even though you may not have heard of Home2Go, this is a very significantly sized company. Valentin, can you share, like, how many transactions are happening? How many listings are happening? Just so, Everyone here who's listening can wrap their heads around this and understand the true scale that you all are operating on.

Valentin Gruber: Sure. So because we are combining these two worlds from meta to marketplace, we combine also the best of both worlds. So on the one side, um, we have over 15 million authors, including everything that also people in the U S I used to from VRBO or booking com, but [00:06:00] also, uh, enrich this with a lot of more. providers that are maybe not traditionally to be found on these platforms. So this is where we have one of the broadest selections in the world with regards to offerings that leads to then a lot of transactions. And, uh, to not make this podcast out outdated, uh, in two months from now, just follow our publications. Yeah. You can always see how many transactions there are this year. Um, we are guiding, um, Um, on a, on a net revenue basis, um, for, for 220 million and, uh, 10 million profit. And, uh, yeah, of course there's much more travel volume because we are just living off that commission that we are making of the total travel basket. Um, we are talking in the, uh, one digit billion space. Um, when you consider all the transactions that have a touch point with our businesses because you can imagine all the softwares there is There are billions transacted, um, across Smubu, Zekra, and so on. [00:07:00] So our subsidiaries that are enabling, um, the supply side, but there is also, we are also talking billion, uh, or north of billion, uh, When we are talking just with regards to the home to go brand, uh, in, in euros, likewise dollars at the moment, uh, when we talk about transaction volumes.

Michael Koenig: And you just mentioned the corporate structure. Uh, we have a parent company home to go, and then you mentioned subsidiaries. Can you tell it just, you know, we're setting the stage for the, the rest of the podcast here. How many subsidiaries do you have? Were these subsidiaries? Acquired and come into existence through M& A activity or subsidiaries that you created within Home2Go for whatever sort of organizational legal structure that might have, uh, made sense.

Valentin Gruber: Yes. Um, So like I said, where the past is meta, then we transformed into the marketplace. Then we looked at the weaknesses of the marketplace. We saw the possibilities on the supply side, you know, each marketplace [00:08:00] consists of supply and demand. Um, my focus is the supply area and, um, much of that then went into, okay, how can we enable the supply further? Well, probably we should take own action and then you can think. Build or buy, right? Classic question, uh, business 101. And, um, this is where we decided to buy. So all of the subsidiaries of Home2Go that you see have been previous acquisitions in different spaces among the value chain and Um, home to go has a couple of consumer brands. This just has to do with shelf space. So, you know, with Google, uh, and the Google search, you have so many potential answers and the more you, the more space you fill on the search page, the nicer it is. So for that reason, we still have many consumer brands. They are, however, all run from the central home to go team. Um, but there you will find a Casa Mundo. You will find a Vimdu for the US, uh, the known brands, rather tripping. com and so on. And then we have the other [00:09:00] rather supply focused solutions, um, which is, um, SACRA where we're developing software for agencies that are allowing them to. operate and to distribute vacation rentals of respective owners. And we are also having Smubu, which allows homeowners to list their property on multiple of the large OTAs like Airbnb, verbal, booking. com. And they consolidate, however, all the pricing and synchronize, synchronized pricing, but also the availability and the messaging and so on. So for rather focused for smaller hosts, we have solutions like Atraveo, Atraveo. If you don't want to manage the software, then this, so to say, is the service on top of just having the software. This is where we operated in its entirety, including all the customer service. We distributed on all the platforms. You don't have to do anything. You pretty much just get information on check in and check out of the guests. And it's even more so. So it just depends on the deeper you go into [00:10:00] the. From the software to operating the software and the service part where we also, um, as you see in our latest reports, split the company, uh, into segment reporting and now are operating the home to go marketplace, but also home to go pro where we are consolidating the various solutions we acquired over the past years for the market.

Michael Koenig: And so just real quick, because again, this is a little bit different in terms of splitting the reporting, what was the strategy behind that? Why do it that way?

Valentin Gruber: Because I think for the market, it is hard to understand that you have such a hybrid. It is still like, Many people look at Amazon, like, what do you take from Amazon? Well, it's not just all the marketplace model. Like you're neglecting one of the biggest parts and they have the biggest server play in the world. And same for us now, just that we are not in the same size sphere yet. But where we said it's much easier for the markets to, to explain the dynamics. Of a marketplace separately looked at, then from the pro space, [00:11:00] they have their own dynamics and the pro space, a lot of subscription, we're making the same monthly revenue every time. Whereas in a marketplace with the seasonalities that you have in booking vacation rentals in January, a lot of people book, that means you also have a lot of marketing expenses. And then you have all the travels taking place in the summer season. And this is where you then have the revenues and the profits, but no one books a new vacation end of August. Suddenly. And so this marketplace dynamic versus the pro dynamic of providing software solutions or service solutions works quite differently. And to be better capable of explaining this to the market also, and primarily because it's two different customer groups, the one that's targeted towards the traveler, the other one towards the. person trying to rent out, if it's an agency or a private host, um, are separate.

Michael Koenig: Okay. And this is one of the things that I find so interesting about Home2Go. You know, you look at Airbnb, uh, VRBO, unless [00:12:00] I'm mistaken, they don't offer this software solution to enable those other businesses to create their own listings and have that nice non Windows 95 experience that, that you talked about. It's a brilliant strategy because, as you mentioned, it brings stable revenue to what is otherwise very seasonal and fluctuating. Now, tell me about that strategy. How did it come about? Because this is a very strategic direction that, you know, you start off and you're now diversifying the business and the revenue streams.

Valentin Gruber: Correct. And it really started from this marketplace idea when, what I quickly touched up in the beginning, even when you're operating a marketplace where you're providing the entire booking experience, you still see that conversion rates behind providers are vastly different. And if you then started to, uh, looking into the reasons [00:13:00] you can go from A to C and you find so many reasons, but, uh, what is clear is the bigger, the provider, the more professional, the provider, the better. It starts from how responsive are their servers? Uh, like how much load can we put in? How current are the availabilities and the pricings we have in the system? How do reviews work with them? Do they have one way reviews, two way reviews? Do they have these reviews translated? How do they provide all the currencies? Do they have all the amenities that are possible in a vacation rental provided to you? Uh, how attractive are the texts? written. And this is where we saw that it's simply, it's not, uh, it's not all the same. And this is where we started to think, okay, well, we can sit here and complain all day long that you are simply not able to make the small providers better because even if we call them, even if we have the conversation, they say, I can't change it in my system. I don't have the opportunity. There [00:14:00] is no button where I can click increase the resolution of the photos. They only allow me the seven 26 megapixel stuff. Yeah. And so I cannot upload high resolution. It doesn't allow me, I have a picture limit of like, great. That's amazing. So you will never be really successful on high resolution screens. If you can not even provide HD. Quality. And, um, this is really what triggered it. We said, okay, well, there is a desire. These people are providing amazing guest and host experience. These agencies and hosts, they're really taking care of the service aspect of it. And that's where the strengths are, but we cannot expect at the same time that they are also the tech savvy people that maybe we in our little ivory tower here are, um, to have. Uh, develop or be capable of managing such tech solutions needed to compete. And this is what really drove us in that direction.

Michael Koenig: And that's one of the things that [00:15:00] I do love about home to go is it's a software I always love when there's a software that enables people to bring their goods, bring their business. And in a better way to market, whether it's bringing an offline experience online I don't know vacation or travel experiences, or whether it's enabling, the mom and pop shop to be able to better market their goods. So that's, that for me is such an interesting part to this company. Now let's back up because. We just talked about the strategic reasoning behind why you created that platform, but you've got some serious strategic planning chops. You spend time at Accenture that's bootcamp for strategy, I love to give people some instructive advice. We all are looking at our strategic roadmaps. We're [00:16:00] looking at, in some cases what even is our strategy? Depending on the stage of the company. How do you think about this? What sort of framework have you developed in order to pursue and think about and formulate strategies?

Valentin Gruber: I think something that we heavily preach to all of our leaders and within the companies that everyone here is very close to the detail, very close to the customer, to whatever problem that is supposed to solve. And with this. Like we always start with an idea and then we test it and then we iterate on it. And then at some point you hit a limit. And when the deeper you are connected to that issue, the more obvious you're also aware of the limitations. And then you just need to think back. And the better, you know, these limitations, the better you also would know how to solve it. And if then the answer is. I know how to solve it, but I can't do it in the current setup. [00:17:00] Perfect. And let's change the setup. And this is where then for us, a new strategy was created. Okay. So there is an opportunity to solve something in the purpose of the home to go marketplace, but we can't do it in the current setup, um, because we need to change our partners and that's not a marketplace. thingy. So this is when we then went back. Okay. So if we want to change that, like, what is that space looking like at the moment and what further implications would this have on us? And this is then how we rather went into it. Like, okay, there is an idea that makes us better. What are the further benefits, but also the implications and potential risks of it. And are we willing to go down that way, or do we see any other. And so for us, there is no, no strategic framework. Usually we start with a problem statement. We write down a problem, a paper, and then what solutions we ask people like to please chime in and, [00:18:00] uh, contribute whatever their experience is or whether there's anything we neglected or oversaw, um, and then let's go for it, but we want to be quick. We want to do a quick trial and errors. It works or it doesn't, um, but learning quickly rather than over theorizing it, uh, has proven to be, uh, the more valuable way.

Michael Koenig: How do you prioritize those problems? How do you know which ones to go after first? Because we can spot a million different products. I don't, I hate the generalization there. We can spot many different problems within our products, within our organizations, but not all problems are created equal. How do you think about which ones to chase and put time and treasure behind?

Valentin Gruber: I would love to provide you with a really innovative mechanism that we've developed at home to go. I probably cannot. So I would say we're still following the classic RI logic. So how much is the effort that we assume to create, uh, to, to, to need for that change. And, uh, what [00:19:00] is the effect that we expect from it? And then we sometimes have simply where either through experiences or intuition, We have different opinions and then we take a bet. And, uh, I think, I think Patrick also, our CEO, who's responsible for the product piece, uh, is the most perfect example for that. He places so many bets, um, on this, um, that we, um, Yeah, that it's sometimes interesting on when he wins and when he loses.

Michael Koenig: Sure. Well, keep it simple. I mean, there's nothing wrong with that. We don't need to have some elaborate strategy or framework, rather. Make it simple, boil it down to those first principles, right? And you're able to figure it out. Now, one of the really interesting things that you just highlighted, though, is the ability to self critique. You launched an MVP to solve a problem. There's certainly this is a difficult thing. to embed within a [00:20:00] culture. It's the cultural aspect or rather value to be able to let go. And while you want people to take ownership of a, a solution that they've created, there also needs to be that ability to, to self critique. And if necessary, Kill what you've been working on. Like, how did that come to be? Because it's not easy to do, but this is how you run your company. How did you foster it? How do you encourage people that it's okay to take bets, but more importantly. It's also necessary to be able to let go.

Valentin Gruber: Probably also a topic many companies, um, um, are facing. And so for us, um, we had that issue. We also worked it out with our management. Like, okay, how do we work with ownership and accountability and responsibility? What are even the differences? How can we make it more clear? How can we live better up to it? Of course, it's within our principles, like with our management and leadership principles [00:21:00] written, like probably within every company. Yes, we had the book, uh, no rules rules from Reed Hastings and Erin Meyer. Yes, handed out to everyone in the management team. And we said, okay, um, self critique and the four a principle. Um, you probably also have it in your shelf, right? Um, like for a principle and feedback and self critique is something that we need to live by and we need to embrace it, uh, an open era culture. Would I say that we are there yet? No, but I think the, the longer you work together, the more you focus on building up the trust within team members, that it is about sometimes shared responsibilities. Sometimes. It, it is also okay to, uh, call out a name. And, um, I think a lot for us is also role modeling, like, yep, this was a bet we took. Um, we failed, I failed, my fault. Let's move on. Um, the [00:22:00] important thing is, however. There is something in between, and this is always the learnings, like what do we take from it? And the most valuable thing, like whenever we make mistakes, like, did we understand why we made the mistakes and what did we take away from it so it doesn't happen next time? So, like I said, I wouldn't say that we reinvented the wheel. I also don't think it's necessary. It's really an execution game um, on how well can you establish it in your company and My feeling is like the higher the pressure is in the company, um, the more this gets forgotten, the better everything is running, the more it is embraced.

Michael Koenig: And you mentioned some of your leadership principles and cultural principles. How do you approach leadership? This is a pretty large company. It's in the public eye. It withstands scrutiny. You have other competitors who don't have these reporting responsibilities. And so how do you go about, let's talk about maintaining focus, but also just your leadership [00:23:00] approach in general.

Valentin Gruber: I would say what is in general unique to us and the way we've built our management is that. When we discussed what will be our structure of management, we quickly got to the topic. Every leader needs to be connected to the problems to solve and to the potentials ahead. And therefore, we want to have the most competent person to take the decision. And we had an issue Originally that we had so many levels in management. So you have a director, then you have to senior director and you have to VP SVP, and then it goes to a C level. And if it's not clearly distributed to whatever budget or what it is, so you take a decision, then it's going up and down the ladder. And then the C level talks to a VP. And then this is how a decision is made because one overpowers the other. Um, but the discussion held in the end is not the one by the two competency year. People that are going head to head. So we are rather fostering what [00:24:00] we've established is that the most senior management, um, aside from the board that we have to have, uh, just by the company structure that we have, but that everyone here is capable of taking the decisions in their space because they are truly the knowledge and competency owners in that space. And they are very, very connected to the teams. And so if you would look at the board and then the next level, it's a very, very broad. Team that is also supporting each other in a certain way, um, based on seniority or topics or experience, but, um, where we don't further differentiate to create truly going for the best ideas. There was also the management approach. for me personally is I do have the competency owner on that topic. So there is only a small likelihood that I will be way smarter in taking the same, uh, in taking a better decision than the person in charge. So even though I'm responsible for me, it's rather the [00:25:00] questioning technique on how do I make sense of the decision taken? And is it for me, from all perspectives understandable. And so you ask the same questions every time, like you go through the different stakeholder audience groups. Um, does it make sense for them? You go through the financial considerations of an idea. You go through the team aspects of an idea. You just try to question and to further firm up. the decision that the lead has made. And I'm always positioned as the sparing partner. And the more times decisions are right, and we are successful with whatever is decided, perfect, the more freedom you also achieve. The more times We rather get to very diverse results, well, the closer you get to the topic.

Michael Koenig: Hmm, yeah, what you just described, it's almost remembering that you're not the smartest person in the room, and embracing that, because you shouldn't be the smartest person in the room. You want people, and you hire people who are better. at [00:26:00] their specific their specific discipline than you are. And that's especially true for the COO role, which covers so many different breadths of things. You just talked about, you, yourself inquiring and learning more from each of your experts in their discipline. Yeah. This is an art because you have to balance that I want to learn more, but I also don't want to come across as though I am questioning your expertise, right? Because that can then become, personal and so it's really this fine dividing line. How do you go about that? What is the specific way where? Someone comes to you to say, Hey, but this is where I'm going. You're like, okay, I really need to learn more about this. How do you what are the questions you ask? How do you approach that so that you can maintain that fine line?

Valentin Gruber: If I can't understand it, it doesn't make sense. So [00:27:00] that's why it's simple. Like, uh, I wouldn't say that I'm above average IQ. And so. You need to explain me and I need to be capable of understanding. And if I don't understand it and you can't explain it in a way that I can understand it, then we don't not going to do it. And so this is where I just need to ensure that I have fully understood it. And then I feel like, okay, then it, then it's legit. I wouldn't say that I have a particular way of. questioning it because the people, if you have a certain IQ, but EQ, um, you have a feeling with how much certainty, um, an idea is presented. Um, you get the feeling like how much uncertainty there is when the proposal is brought up. And so, you know, where to poke more and where to poke less. And there are some, uh, more obvious things and some less obvious things. And so I think the basis for it is to have a really good trusted relationship with each lead that I'm, I'm working with. So they know and sometimes if needed, I start that way. It's like, Hey, now next 20 minutes, don't take it [00:28:00] personal, but let's go through this. We only have this much time. So this is going to be a bit more direct with less flowers than you may be used to, but now let's go through it. And then probably if, if I already had a pre read, uh, and already made up my mind, then we are very quick through the points and just like that. Um, but. Yeah. And sometimes, sometimes it also takes a third eye because I'm even too close to the topics. And so a third person might actually raise a good question. And it's like, Hey, why are we doing this like that? That's a good idea. I should probably bring that up. Um, because also, of course I get Get drawn into things and, um, yeah, you need to be very aware of your biases. And so after a certain time, the deeper you get into the topic, you also develop a bias for it and potentially bias for success. And then you stop questioning, uh, and reflecting, uh, enough. And this is then where a third opinion, uh, helps. Many times.

Michael Koenig: So [00:29:00] you mentioned the pre reads. Is this something that has been, and this is very tactical but it's so interesting because it's how do we make decisions and how do we consume new information as efficiently and effectively as possible? Is this a. Okay. Standard practice within home to go. How do you approach pre reads? Amazon has the six page pre read thing which is, I think a little bit overkill, but again, they're one of the most valuable companies in the world. So, you know, Who am I to actually say that, but what's your practice at home to go?

Valentin Gruber: I find it funny. I also, I'm very, very, very, um, convinced that not every pre read at Amazon has six pages. Um, but, uh, it's, it's of course easy, like, uh, Hey, you're successful and then publish whatever you want. And everyone believes that that's the religion you live by. But, uh, So, pre reads are extremely valuable because you can digest information, um, in, in the most comprehensive way, you can go back to it, and in a, in a, in a [00:30:00] verbal word, there is so much information lost, uh, by only listening. Then your mind starts wandering, and then you probably lost two sentences in between, so everything is, uh, that is in writing, I find it more effective. Not necessarily efficient because words are quicker than maybe I read, but, um, yeah, um, so pre reads, um, usually depends on the topics. There's some topics that are quite straightforward. I don't want to have a pre read because I'm already in the topic. But then there are some topics where they're particularly multiple stakeholders where I always want to have a pre read filled out from every side. And, um, where I first want to have all the information that we have available from the different stakeholders collected, and then we can approach it together. Um, because otherwise it doesn't make sense. And also where working docs are probably still the best. Like, I don't want to create a nasty presentation around it, but let's have a working doc. Everyone plugs in what they have, and then we just play the commenting game. And then we are not dependent on all having the same availability in our calendars. If you have seven people and you try like to [00:31:00] solve an immediate issue now, Well, try to find the time in the calendars. Um, we try to, for example, therefore have like focus Wednesdays where there are no regular meetings allowed. So you always have time for what is important right now. But I think many of these things, particularly if they have a higher degree of complexity can be much better handled, um, just in writing. And so you have a working doc, everyone goes through it, documents it. And, um, I think it's also an Amazon way of working. Like we start many meetings by, okay, here's like, I was just in one, actually in two meetings already this morning. Um, so, uh, here I wrote. together the information. So the first 10 minutes of the meeting, everyone read it and everyone commented in it. And then the meeting actually started after 10 minutes of silence, but everyone had the same knowledge then. And then with pre read someone doesn't commit that they didn't actually read it or you read it yesterday, but there was so much other information in flow so that we actually start some meetings, even our global management meeting with you read through what everyone has updated on. [00:32:00] And then you ask questions in it. And then these questions are publicly answered and then we move on. But we've increased efficiency with that by factor four, probably, and how long the meeting is now versus it was before. And at the same time, I feel like the information digested by the people has increased because everyone has to read it. And before people just like either didn't listen, also not everyone is a great presenter. Yeah. So there are some people that speak so monotonously that you fall asleep, uh, you know,

Michael Koenig: That's so interesting. You're creating a synchronous moment to digest and or rather consume and digest asynchronous work. That's kind of interesting. Earlier in this episode, you said every leader has to be connected to the problem. What does that actually mean? And how do you go about, how do you maintain that?

Valentin Gruber: It's tough. So I think the general thing is that we don't want to have managers that are [00:33:00] just managing people. Um, you are always connected to the topic. And that means that when, when it comes hard to heart, you go into every single detail and you strive to understand it to the last dot. And that can in times be. a tremendously tedious work, but you're so much smarter after. You also feel accomplished, to be honest. Um, but you're so much smarter after because usually you detect not the one thing that you were looking for, but probably five additional ones. Um, and so you're a little bit more, you feel a bit more grounded once again. So that's, uh, where we say we want to have all of our leaders being connected to the details whenever needed.

Michael Koenig: Yeah, I love that. That's really interesting. How can you make a decision if you don't fully understand the problem, the context, and then the proposed solution to also evaluate, does that actually solve the problem? Because you'd bring in a different skill set, a different mindset about how you evaluate things. Previously, Also we touched on the SPAC in the opening here for listeners, [00:34:00] as a reminder, Home2Go went public in 2021 using this SPAC vehicle, which is also called the or rather is a acronym for Special Purpose Acquisition Company. SPACs made, they've been around for a really long time, but they have this huge comeback in two years in the limelight from 2021 and 2022. Since then, they've cooled substantially, you maybe see it happen once or twice. First, Valentine, TLDR so people can get on the same page here. What is a SPAC, ? And then, why did you all use a SPAC .

Valentin Gruber: Sure. So probably first, why do we choose the public market versus further going, staying private and just going for the next round? And, uh, everyone probably remembers 2020, 2021 crazy times on the public market. So every valuation, uh, was much higher on the public market. It was much easier to get a lot of money for a very good valuation on the public market. So this is what caused the original [00:35:00] appetite. Then as background, what is a spec versus a traditional IPO? So, you know, when you are a company with some history, um, and you want to go public, there's quite a lot that you need to prepare your company for in order to go public. Whereas a spec is more or less just like a wallet. It's just a bank account with a lot of money on. Um, so compliance wise, it's tested quite quickly and therefore the going public process for the wallet Your bank account is quite easy and quick. And then this thing is already public and then it buys into a company and they're there with this company becomes public. So I think what it originally suggests you is that it's way simpler to go public if you go by spec the TLDR. is it's not. So it's, I would say it's pretty much 80%, I don't know, like, don't probably don't quote me on it, but 80 percent of the effort is the exact same. I would [00:36:00] honestly say even 100, because in the end, you still need to be, you know, Public market compliant. And so if you do it in the beginning, or then in the process of the specking, so merging together with that spec vehicle, um, you, you, you have the same requirements. And so short long, it's the same outcome. And today we are operating like there wouldn't be any difference. There also is not because at the moment you merge together with the spec and that's. Traded vehicle, um, that stock market trading is changed to your name. So like on the stock market, uh, our short is HTG, hope to go. And so now you wouldn't even know that we were Lakestar connected, uh, as, as a spec. Um, and so that just transforms into, uh, one of your investors then who holds a lot of stock of you. And so, yeah. Um, but the process there with, I would say. In the first place seemed easier. Uh, on a second view, it's pretty much the [00:37:00] same as going public, but, um, yeah, I think what it does, however, do, uh, emotionally is that there is less uncertainty, uh, particularly in the beginning on the rise of specs is that a spec you already know what you're getting. You already know, like the team that is buying you. You know, the investors, the money, and you know, the amount also that is coming to you. And so this is already clear and you already know the, the valuation of your company. So I think it has less uncertainty than a completely free going public process where you're not know in the beginning of who are your investors going to be? How much money will you raise at what valuation? Um, so I think there you're just provided with a bit more. But I would say a bit more certainty than in the classic IPO process.

Michael Koenig: Yeah, and I mentioned that the merger value from the SPAC was 1. 2 billion, but that came with [00:38:00] 225 million in cash, if I recall. Okay, so you get an influx of 225 million, you already have 150 million, which, you know, reason goes to stand that. A large part of it was already spent, especially when you're making a lot of those acquisitions. So, 225 million of fresh cash in the bank. What do you do? I

Valentin Gruber: mostly grow and spend it on M& A, to be honest. Something you keep for rainy days because I think everyone just slightly before went through COVID, and this was like, uh, yeah, you don't know what's going to happen tomorrow. And I think everyone was still convinced of that. Well, or at least needs to plan for, um, such a scenario again, whatever it could be. So, uh, yeah, you put some aside for the regular growth to get to profitability. You put some aside for MNA and you put some aside for rainy days. And that's where you are. And if you look at our track record of the last year, since [00:39:00] 2021, we acquired quite a few companies. And this is also where the vast majority of cash then goes.

Michael Koenig: Interesting. And a lot of companies don't just necessarily chase those acquisitions or whatever the, the technical term of of inorganic growth, versus organic growth. But. It worked for you to get to this point. So it makes complete sense that is, a strategy that you continue to pursue for further growth with that though, comes, you know, how do you evaluate what you're buying? How do you make the decision of. You know what you're gonna go and say, hey, let's let's buy this one. What's that? You know underlying You know strategy there or just mode of thinking

Valentin Gruber: so I think with regards to general mna I also recently read the article I think it was by bain or so, um that companies who do mna Uh are generally more successful than companies that don't do mna, but there is a high Difference in how well you do M& A, uh, influencing your success, of course. But over the past years, companies have been [00:40:00] becoming more professional in dealing with M& A and this becoming a huge success factor. And I think we're on the journey there like to just Constantly with each deal, you get better. Um, so I would say that with the first year, we probably made some mistakes that we wouldn't do in a deal today again anymore. And generally what we are looking for is like what I said in the beginning, we're looking for what is the, what is the problem that we have and how could we solve it through an M& A deal versus just building it ourselves. And There are some interesting synergies because of course, what we are serving as a vertical chain, there's a value chain and um, I do have synergies in between that. And these are then automatically companies like the further we go in the value chain, country wise, what become interesting targets. And then you need to see whether there's any availability for M& A because not everything is up for sale. Then the price is always a question, right? Everything is a matter of price. Um, then [00:41:00] you need to look for the person like for the personality match. And like, do we have the same thing in mind? Do you have founders that want to stay in? What is their ambition? What, what are they looking for? Are they looking for 10 X growth? We are not the right partners. Are they looking just to get out within the next one year and hell Mary, we are probably not the right partners. So you need to have alignment and the expectations and ambitions. And I think one hard criteria for us is in the M& A we are doing, we are only buying profitable companies, like in the strife of becoming a profitable company or being a profitable company ourselves. Um, we also only buying, uh, profitable companies.

Michael Koenig: Yeah. And it's such a good discipline because you have. I mean, what goes into profitability? Like, yeah, obviously you're making more money than you're spending, right? No, but what goes into profitability is just a refined machine and certain financial discipline that is so necessary. And if you're [00:42:00] going to build a company that lasts versus one that fizzles out. Valenti, time for my favorite question. We've all had those moments where we've seen something completely off the wall and we've just thought I never thought I'd see that this is a crazy thing. Do you have one that you can share with us? Because most of them we can't talk about, but perhaps there's something that you can share.

Valentin Gruber: Sure. I think one is, I actually brought two for you. So one is our favorite story. So when we IPOed, Um, you know, all these famous videos and pictures of people standing on the floor and of the stock market and then ringing a bell and boom, confetti goes off and you're now publicly listed. So, um, yes, of course, we also inquired for the process, but, um, This is like what blew me off is how much it costs to stand on the floor of the stock exchange. It's been a significant six digit number and that you would have needed to spend to stay on [00:43:00] that day in this case in Frankfurt, uh, ring the bell. Um, you're allowed to bring so and so many people, but like not even a quarter of the team, uh, to be there together. And so there we said, no way we're not going to spend that money to then in the end go there with 40 people. So this is where I think even though we're a public company where a lot of startup spirit, uh, once again emerged, uh, we went to the flea market to your opposite side of the office, uh, got a big bell on one side. It says captain on the other. It doesn't, we got a big TV, uh, where we projected the stock exchange floor on. And, uh, then we had a camera team here and we did the same recording. Also standing on the stock exchange floor on this huge screen behind us, ringing the bell, having a lot of confetti, but it didn't even cost us, I don't know, it was like less than 2000 euros the entire event. And the rest, we just blasted out with throwing a nice party where we could celebrate with everyone. So that was super [00:44:00] cool. And, and I think one of our favorite stories.

Michael Koenig: I love that. Hang on. Hang on. Hang on. There's some financial discipline there that we just talked about, but also I also always wondered okay, you're at first off, I didn't know that it costs so much money to ring the bell, but I always wondered what happened afterward. You're up there for such a small amount of time. And there's so much excitement. And then it's just like, well, what, what do we do now? You guys want to get breakfast? Let's go get some pancakes. That's amazing. I love it. Sorry, you said you were about to say there was another one.

Valentin Gruber: Well, we, so, um, because we were quite annoyed about stock exchange, we had, uh, like large trucks that we had branded with our company and they were driving through Germany and one unfortunately broke down right in front of the stock exchange. And this was of course perfect for, for pictures to be taken. Uh, while the engine failure was able to be fixed after two of that truck being stopped. There, um, but [00:45:00] just the flex outside of the stock exchange would have cost so much money, the truck was way cheaper. And, uh, so there was another, another nice gig. And so, yeah, I really like those two stories and I think else what really surprised me. I think every one of us in this role is used to surprises. One that was quite particular, um, was, uh, M& A deal, um, where we were supposed Go and negotiate. And last minute, we got an address change and so changed the address in our GPS and drove there and figured out that we were invited to the family and friends branch of the guy that we were trying to buy sitting there with. his family, his kids, friends, for brunch for two and a half hours, him trying to talk on the side with us while making some scrambled eggs. And it's like, this was just so far away from everything you would expect to have happened that day. Um, we had in the end a great time, [00:46:00] but, uh, that M& A deal, I think it was his way of saying, I'm not up for sale. I'm so happy. But nice to meet you guys.

Michael Koenig: And what a, what a flex, right? What a power move. Hey, look, I can squeeze you in with my family. I mean, uh, Assuming that the family's cool with that, but also just the. If you want to buy me, make me an offer, like really make me an offer because otherwise I'm just going to keep making eggs. I love that. That's hilarious. Valentin thanks so much for joining me. Where can people go to keep up with you and home to go?

Valentin Gruber: Sure. So to keep up with me easiest ways on LinkedIn, you will find my profile to keep up with home to go, follow us, subscribe to our newsletter, follow our investor relations communication. You will hear quite a bit about

Michael Koenig: it. And thank you to you all Valentin. I'm so appreciative. Very special. Thank you to you for joining us and thank you to you all for listening to Between Two COOs. Tune in next time for our next COO chat and be sure to subscribe on Apple Podcasts, Spotify, [00:47:00] or wherever you listen to podcasts so you never miss an episode. Just visit BetweenTwoCOOs. com for more. And if you have a minute please leave us a review on Apple. Podcasts and tell others about the show so they can get great advice from phenomenal COOs like Valentin. Thanks for listening to this week's episode of between two COOs tune in next time and until then so long.