In 1931 Ferdinand Porsche, the Austrian-German automotive engineer and founder of the Porsche car company, created an engineering office that served as the 20th century equivalent of a start-up working out of a garage. The space allowed Porsche and a hand-selected team to experiment with a variety of ideas and directions before deciding to develop a sports car as its core business.
Fast forward 90 years and Porsche is trying to use a similar approach to tackle new fields of business. Forward 31, a company builder unit within Porsche Digital, is tasked with building new companies with entrepreneurs that focus on strategic opportunities beyond the auto maker’s core business.
“We want to take up this founding spirit,” say Jesse Kamsler, a company builder at Berlin-based Forward 31. The unit is focusing on building platform business models that include new partners from different industries.
The appeal for entrepreneurs is that if Forward31 helps with the company building the startup can gain decisive advantages like expert knowhow in businesss building, budget, access to a strong network and other assets, says Kamsler. And, entrepreneurs sit in the driver’s seat of the stand-alone business.
The appeal of the model for an incumbent like Porsche is that it creates a channel to experiment and reach new customer segments. When new ventures are intermingled with the main business, projects often end up fixing problems in the current business instead of finding new paths to growth. If new ventures are to scale, they will need room to take risks and try something different, Kamsler says.
A Beginner’s Mindset
Porsche -like every other traditional car maker – is being confronted with changes on every front. Autonomous driving, connected cars, electrified vehicles, and smart mobility all promise to radically transform the automotive sector. Car companies are, of course, attempting to build strongholds in these emerging fields. But McKinsey has estimated that securing a strong position across all four areas would cost a single player an estimated $70 billion through 2030. Individual car companies are not in the position to shoulder this level of investment alone, which is why they are striking industry alliances and making targeted acquisitions. At the same time, they are also experimenting with ways to move into entirely new sectors.
Reinventing the business requires what the Japanese refer to as “shoshin”, a willingness to let go of pre-conceptions about how things work and approach the task with a beginner’s mindset, say Kamsler, who hails from the American Midwest and previously worked for a Swiss investment bank and helped build digital business models for Bayer and Mercedes Benz in Germany before joining Porsche’s company building unit. He and his eight teammates at Forward31 have expertise in software engineering, design and business development. The team’s expertise is being used to determine whether partners’ business ideas have go-to-market and scaling potential. “We go for speed, hypothesis and testing at the early stages,” says Kamsler. “There is no pilot purgatory. We are here to help focus and validate that each company solves real problems and is going to have a real impact.”
Changing The Way People Work, Live, And Move Around
Some of Forward31’s announced startups literally aim to change the way we work and live.
One, announced in January, is a new digital platform that Forward31 is developing with The House of Beautiful Business, a think tank and community that focuses on topics such as the future of work, diversity, an ethical approach to technologies and building sustainable business models. Through in-person gatherings, online programs, publications, and joint projects, it aims to “inspire and enable leaders to reinvent their organizations and themselves, and to shape more humane futures for business and society.”
The idea is ”to create new spaces to help people and companies to transform,” says House of Beautiful Business Co-founder Till Grusche. The company he started with Tim Leberecht was originally based around consulting services and an annual conference. The new subscription-based digital platform will give House of Beautiful Business a “more frequent and more meaningful way of connecting people and allow us to reach a bigger audience,” he says. Physical conferences are known for the business deals and projects that stem from encounters. “The digital platform will help us scale that and take our content experience to the four corners of the world, allowing us to interact with our members throughout the year and have more impact,” Grusche says.
Another of Forward31’s partnerships is with The Embassies, a Zurich-based company that is developing a digital platform and a habitat that will provide tailored, premium living in retirement. The aim is to establish a global network of around 30 embassies in cities such as San Francisco, New York, London, Zürich, Copenhagen and Berlin. The first location is due to open in Europe in early 2022.
The concept of the individual embassies is built on three pillars. Residents and visitors will be able to make use of public restaurants and leisure facilities in their building. A membership will provides access to curated events, as well as to gym and spa programs. All of these events and programs will be open to people of different ages in order to ensure there is a mixing of generations. Members – known as Ambassadors- will be able rent an apartment in one of the buildings on a permanent basis and have the opportunity to stay in other buildings in the global network when traveling. The vision is that through the digital platform, residents will be able to tailor services, activities, foreign travel and day-to-day preferences to their own lifestyle.
“The people we are targeting have a lust for life and for great culinary and intellectual experiences and this isn’t going to go away as they get older,” says Founder and CEO Jan Garde. “We want to offer them a contemporary experience that fits with their lifestyles.”
Having Porsche as a company building early on “is invaluable,” says Garde. “Porsche has one of the most prestigious brands in the field so when you are building a lifestyle company it is a no-brainer.” Garde says he also likes the approach. “A lot of big companies just come in and take over,” he says. “Company building is so much more than that. We are in good hands here.”
Not surprisingly, some of Forward31’s new companies are centered around mobility. It has, for example, partnered with the Lufthansa Innovation Hub to spin-out a startup called RYDES, which bundles mobility options such as car and bike sharing offers, e-scooters, shared taxis and public transport services, so that users can plan and book their journeys via a single app. The service is aimed at companies that want to give their employees a “mobility budget” and offer them bookable options. RYDES’ first customer is the flexible workplace provider WeWork. Organizations and individuals who have a WeWork membership will be able to take advantage of the RYDES offer in the future.
The Road Ahead
Other new companies are in the works. “We do not have all the answers in advance, but we know that to go beyond the core we need to bring in beginner’s thinking, gather real world data, validate models, build on them and bring them to market,” says Kamsler. “Reinvention is a natural part of a business’ lifecycle. You have to commit to this change to win.”
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