Frank Salzgeber: “We need to take more risks!”

Frank Salzgeber is a serial entrepreneur and the Head of Innovation and Ventures Office at European Space Agency – meaning that he oversees the largest Space entrepreneurship network in the world. He has supported over 750 startups and 500 businesses and invested over 45 million Euros in Seed.

He will give a talk on sTARTUp Day stage on the 31st of January about why we need more space. We asked him to introduce this topic, to talk about the day-to-day operations of a space agency and how they are helping startups.

When one thinks about the European Space Agency, the first things to pop into the mind are astronauts and space flights. What do you actually do?

Yes, this is true, and the actual reason I joined the space agency - it was astronauts. This is the most exciting part. It's about humans, curiosity, exploration... but this is only the smallest part of it. The biggest part is three major commercial applications in different fields: 

  • Telecommunication, which we have as satellite TV and broadcasting everywhere. When you look outside your window you will see satellite dishes - this is what we do.

  • The next thing is weather observation. And it's not only the weather, but it's also the satellites which take images of the Earth. You can see these on Google Maps but also these are the measurements of how we see climate change. You need it for agriculture, you need it for disaster monitoring, you need it for stock exchange.

  • With the camera in the sky and with the satellites you also use another thing –navigation. Global navigation satellite systems, which we don’t use only to find the way, but your power grid, your cellphone networks, even the bank transactions are using the time signal.

Do you develop the satellites and maintenance them or …?

ESA is a multi-governmental agency, which has 22 member states with Canada and Slovenia also associated. We help to develop this industry, this toolkit and these space infrastructures, but we also help companies in utilizing it. This is what we do with science partners and with the incubation. We also want startups to use the data we are generating.

So what we are - I’d say ESA helps the industry - we are the nice uncle with the right address book, right advisors and money in our pockets to help them. We don't take shares, we don't take equity, so we are the good guys and ladies in the game. Not somebody who is running an accelerator and takes shares even before they help you. Which I think is good. We can take risks in the industry where others can't.

What does your average day look like? What are the important highlights?

My average day of course depends, but my problem is that I'm not so much involved with the day to day business.

The average day when being in management is solving problems. It's the fixer, it's the firefighter part. Thinking of a strategy - what we can do with the long term development of the market. A lot of people think in quarters, even politicians think maybe two-three years ahead, but if you want to build an ecosystem you have to think long term. Maybe not as long term as some of our customers - some think ahead hundreds of years. But I think when building an ecosystem you have to have ambition.

So I'd say I deal with administration - I'm the one who has to solve the problems and deal with long term vision and strategic planning.

And then what I will do - I work with a selection of startup companies and this is what I really love to do. Hands-on work with startups. Otherwise, you lose contact and you do not understand other real issues - cash flow, finding partners, etc. So I think this hands-on coaching is the best way to do it.

How many startups are you currently coaching?

Our system selects over 200 startups and 120 business cases per year. So you have to select them down. This year I'm supporting a little bit more. In January we were in Israel Space Agency, which is a part of Israel's Ministry of Science and Technology and helped their startup program for space. We are not going there to learn, but to support, which is cool.

Therefore it depends - I cannot say the number, because with some companies you coach them for half an hour and then you'll leave them to your network. That's the advantage you have - your address book is bigger and you can ask for favors. You say, "Contact Martin or contact Peter and send your best regards from me".

Because sometimes companies don't need money, but they need to get a chance. Our job is to open the doors, they have to close the deal.

The Irish have a nice saying, "On the shoulders of the giants you see further". So we are the giant for the startups. Tartu Science Park is also a giant. The only thing we have to allow is these kids climbing on our shoulders and we have to tell them, "If you fall, don't worry, we help you get up again."

So you provide quite a lot of support for startups.

We try. Our next case after this one is a startup company related to cryptocurrency and using space. So I think it will not be a problem to find them the right partners in our space agency. Sometimes all we can give is time for listening, advice and sometimes we can do more.

You have been in the ESA for a while now. And you said that humans are the one thing that very much inspires you and makes you stay. But what else has made you stay in ESA for so long?

You have to find a job where of course you have a fair salary, but mostly, where you have fun and where you can laugh. We have supported over 800 companies and when you see emails or texts from companies who have become successful and raised millions, who say, "Hey, Frank! Thank you! Without you, we may not have made it." This is something that gives a lot of good karma back. Because at the end of the day - what is it about? Is it about the money or is it also about gaining excitement?

A good example is the case of Solar Impulse. Piccard and Borschberg were the guys who flew solar jet around the world. 16 years ago, when I started as a Head of Technology in ESA, they asked us about space technology, and we helped them. They asked us if we want to have a logo on their plane because they had to pay. And I said, "We helped you with your technology. We are part of your success because we have contributed." Now their entire operation and technology team is creating a startup company with the gathered know-how. And guess who they asked to do the startup company with? With ESA!

So the circle is closing. That's how you know you have done something right - when you have X amount of managers from startups, who sell their business and come back to the Netherlands and say, "Frank, I'm not a serial entrepreneur, I'm becoming an investor. What are some good cases?" Then you know you have created a circular economy and that is a good feeling.

Also, you see that with time the things have grown big. Like with our partners, like Andrus Kurvits and his team. We would love to work with Tartu Science Park people because their emotional bank account is full, they are excited, they want to change things and this is fun. Jobs that you do should be a little fun.

You are searching for new startups, ideas, and innovations and help them through incubators. What makes you passionate about it?

We help with the idea generation, making a business case out of it and with the creation of the company. I just got an email from a company we supported 12 years ago! And they have another project. It's like you become part of a family and see people growing. And sometimes they become super successful and maybe forget you because they are super successful and don't remember they received support. But some people come back and that is good.

But there is also a problem that people in Europe are used to that there are incubation programs everywhere. But what we need is a handover, a handshake between one layer to another. We work with international corporations where we help them to find customers abroad, using our network. It is very important to create an effective family that works together.

Success takes time. It's not done in four years. The survival rate of our startups after five years is 86%. And a lot of people say, "Wow, that's good!" And I always say, "Ah, I don't like the number." I'd like that to be a 60% survival rate because an 86% survival rate means we are not taking enough risks. So we have to take more crazy ones.

We have to fail quickly and start again.

And it tells me that we take in great people and bright minds. Investors always like that, but I say we could go lower and take more risks. It's our job. Companies do that by coming to accelerators and spending their time, but what is our risk? We give them support, we give them government money, is that a risk? We get paid to do that. So let’s do that better.

When picking up startups to incubators, what are you looking for?

This is a question we often get asked. It's pretty easy - we look into the team, the business model and THEN we look at the technology. I'd say none of the companies have a technology problem, we only help to make it better. Usually, the business model is problematic. If you are in an early stage, then the only model I believe you can do is to change 50% of the business case.

But what about the team? What are the key factors you look for in a team?

I like complementary teams. When you look into a lot of successful companies, there is always more than one person. If you look into Apple - Wozniak and Jobs. Same with Microsoft, Google, Facebook, etc. With more people, you are stronger. So a mixed team in terms of maybe mindset, gender, background - it's always better. As I like to say, the best party is always the mixed people party, where are 20 people you know and 50 you don't. Then it's fun. But if you know everyone, it might become boring. Innovation comes with laws of evolution and diversity.

And of course, we want to see them, so they have to pitch. On paper, they can tell you a lot of things, but if someone is a salesperson, you see it. You do not see it on paper. If somebody is introverted, you see it when you see them. With startups, we want to see that. In later activities, we turn to paper. But seeing the people is important.

Which is better - helping others make their ideas come to life or being an entrepreneur yourself?

I have done both. The positive part of entrepreneurship is that you can do everything by yourself, and you have the theoretical power to make a lot of money. The bad part is that you are very affected by a crisis that is not dependent on you. It was 2003 when the bubble burst. So I had to lay off 100 employees - I had to go from 350 to 250. And letting go people you have hired yourself is really tough because there is also pressure put on you.

Ideally, though you should do both.

I think if you want to help people, it's good to make your hands dirty. Only then are you a good coach.

There are coaches who have never sold a pencil in their lives, never gone through the same problems as startups, never had to promise people to pay them at the end of the month.

I'd say going the hard way makes you tougher and a better advisor. So this is maybe the reason why I like advising so much right now because your life is connected from backwards, not onwards. For me, now there is a logic in this saying, and therefore I think I'm a better advisor than someone who has only theoretical knowledge.

I once had a guy who complained, "Why are you not selecting me, I'm running out of cash." And my answer was, "Sorry, my friend. You are the CEO. If your company is running out of cash, it's your problem as the CEO, not my problem as an agency. Don't bullshit me." And this is cruel, but you also have to do this. We can support you but we are not responsible for the business.

What are the benefits of space research and how does it affect our everyday life? You already mentioned the maps and etc., but what else?

Yes, as I said - maps, navigation, telecommunication, space observation. Our society would have a problem if we switched it off because nothing would work anymore. Your bank stops working, telephone calls will cease to exist, etc. There would be no astronauts flying without space. When everybody thinks about 5G, you have to see the map of the world. Who will cover 5G, 4G and 3G and the terrestrial? I think its coverage of the world is about 80%. But with the rest, there is nobody flying, nobody crossing. This could be done by space.

We have big facilities which are built at the moment and could make the internet worldwide. It will be in space. And it's good because it will bring freedom to people. What happens when mister Putin decides to switch off the internet and disappear from the grid? If you still want to have a backup, you need to have a satellite and you are back in. It allows you to have certain access even if the government wants to forbid it. It gives you the internet on a plane, train or a cruise ship. If somebody decides to increase forestation, it will show up on the map. You show them the map and the pictures and it doesn't lie. You can move the picture back and forward and the resolution is 25 cm today. So it gives a good view of the world. Satellite technology really helps, it's a great tool.

What are the current biggest space technology innovations? What can we expect in the future?

I think that the future will be that if you want to build something on the moon, why you have to bring the material from the Earth all the way to the moon? You will have the exploration of asteroids and, etc. We will have invaded Moon and Mars. Nobody wants to stay in the cradle forever. Especially Europeans. We are explorers. So we want to go to the highest mountains, to the North and South Pole, to the deep sea. Hundred years ago - going to India was a huge adventure. Now the solar system is our adventure. So I think this is what we see - the space becomes a commodity in terms of data and technology and that will take us to the next level and outside of this world. And this will probably happen sooner than expected.

You use the phrase, "We need more space" a lot. What do you mean by that?

I like the double meaning. The first of course - I think we need more visions like the ESA is. 22 member states working peacefully together - that's great. I'm 50, so I was still in the military during the Cold War, so the Russians where the bad guys, Americans the good guys. Today I'm not sure what's the right thing. There are blue boxes, red boxes, Russians and Americans. So we need ESA. I still believe it’s a great thing, and we need more space technology.

But when I say "We need more space" I also mean more space in our minds.

We have to see the big picture. We shouldn't think too limited. And I think Estonia is a nice example of that. In your country, to create a company it takes four minutes. This is a global mindset right away. You are seeing bigger. All Estonian people that I know are very open-hearted and open-minded.

And this is what I mean by "We need more space." Innovation and openness starts with the brain. And this openness we need to teach to everybody. Because closing embargo and doing things all alone doesn't solve our problems like climate change, pollution, etc. You need an open mindset to solve problems, and when you have that, you will come out with big ideas. You are not limited by the limitations of others surrounding you. If you do something new and there is no friction, you are doing something wrong. You have to stay open, allow friction and ignore it.


Frank Salzgeber is one of the speakers of sTARTUp Day. He will give a speech on the topic “We need more space” on the 31st of January 2020 in Tartu!

The interview was conducted by Anna Marin Mõttus and edited by Kai Aet Salvan and Riin Lisett Rei from the sTARTUp Day PR team.

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