Andreas Kunze: “I enjoy stepping out of my comfort zone.”

Andreas Kunze matches the word high-flier like nobody else. For five years the 28-year-old has been CEO of his start-up KONUX, which develops systems combining sensors and artificial intelligence. Since then Andreas Kunze is jetting around the world and back and forth between the offices in Munich, San Francisco, Paris and Tokyo. He is meeting important entrepreneurs of Silicon Valley, as well as Chancellor Angela Merkel and other political heavyweights. As a ‘Technology Pioneer’ he was an invited guest at the World Economic Forum in Davos in January. Here, leading experts get together to discuss current global issues. The young entrepreneur on his inconvenient studies at TUM, his experience at Silicon Valley and a life in the fast lane. Mr Kunze, what is special about your start-up? We are using sensor data to make a statement on an asset’s ‘state of health’. This could be an elevator, a pump or a switch. Meanwhile every asset has numerous sensors used for control purposes. We changed the conventional approach and thought about what else the sensor data could be used for. Namely to predict how stable an asset still is at the moment and when it will probably fail. This helps to schedule repairs better and to postpone them to times of lower capacity utilisation. Thus, in the event of repair, it’s not necessary to bring the entire operation to a halt. One of your biggest clients is Deutsche Bahn. Yes, railway systems and switches are our core business. We want to make a contribution to trains being more on time in general. In Europe nearly 20 percent of all delays are down to switches. Each country invests billions into repair and maintenance. A lot of it is done manually. That means, people go out there and visually inspect, perform individual measurements, write protocols and so forth. Our technology changes that now: attached to the switch is a kind of high-end mobile phone, only much more robust, that measures the relevant parameters. These are transmitted to the artificial intelligence system and compared to data of ‘healthy’ switches. Should there be any deviations, one can take a closer look, analyse where the problem is and schedule an inspection or a repair. But this market is very specific since there usually is only one major railway company in each country. True. But we are already successful in three countries. Germany, Sweden and France has our systems. Soon Japan will join. This will be the first time that we are leaving Europe. But due to the client situation we had to think internationally from day one. In two years time we want to operate in more than a dozen countries. That’s an ambitious target but we are well under way. Leading experts are apparently convinced. Last year at the World Economy Forum in Davos, KONUX was already honoured as one of 30 Technology Pioneers worldwide. These include young businesses from all around the world, whose work will decisively influence economy and society. We are very honoured and proud that we have been acknowledged as pioneers in the fields of the future Artificial Intelligence and Predictive Maintenance. A selection committee of more than 60 academics, entrepreneurs, and venture capitalists, many of whom notable members of society, is choosing the start-ups. Past Technology Pioneers include major players such as Google and Twitter. In the past five years, only three other German companies have been nominated apart from KONUX. Your start-up is also one of the fastest growing start-ups in the field of Artificial Intelligence in Germany. Does this development scare you sometimes? No, never. My mentor once endowed me with a phrase: “You have to believe in your own destiny.“ What does it mean to you? I am convinced that you have to believe in your own concept and in what you want to achieve. How else are you supposed to persuade other people to give you money, or to join you on the journey? Even when things don’t work out it’s important to keep believing in it and to continuously improve. That’s the only way to grow. Have you inherited this positive attitude from your parents? I am not from a family of entrepreneurs. My mother used to be a part-time accountant in a small company. My father is a civil servant at Bayerische Versorgungskammer and has a law degree. They are both not the most venturesome people. So where did your entrepreneurial spirit come from? I got very lucky with the people I met during my studies and in the initial stages of founding the business. My personal mentor is Andy von Bechtolsheim, one of the first Google investors – also a TUM Alumni by the way. He knows his way around Silicon Valley extremely well, has created multiple start-ups and knows first-hand what’s important. Also while studying at TUM I kept meeting amazing people, such as Oliver Bücken, who founded for example bücher.de and was a lecturer at TUM. It’s not without good reason that we filled the KONUX Board of Directors with top-level people, who contribute a lot of experience in Information Technology and in starting a business. The first and most important thing you should learn as a young entrepreneur is that you basically don’t know anything and have no experience. But we want to join the big players and thus have to see where, and from whom we can learn a lot in a short time. You were born and raised in Munich and after finishing high school enrolled at TUM. Why did you choose the program Information Systems? I attended a high school with an emphasis on economics and wanted to pursue this direction, but with an additional technological focus. However, not one too strong. When I was already involved in my Information Systems degree it was a bit of a shock, because I didn’t expect it to still be 80 percent Computer Science in the program (laughs). That was pretty inconvenient for me, but very important. What do you mean? If you are very comfortable in a situation, nothing ever changes. But the way it was, I had to get into the mindset, read a lot and I tried to find other people who were facing similar challenges, and with whom I could then tackle them as a team. And one of these ‘someones’ I struggled through the Computer Science lessons with is now our Chief Financial Officer Maximilian Hasler. Based on this experience at uni I now enjoy deliberately stepping out of my comfort zone. You met your co-founders Vlad Lata and Dennis Humhal at TUM, as well, right? Yes. In my fourth semester I participated in the Manage&More Program at UnternehmerTUM, the Center for Innovation and Business Creation at TUM. Here, students from different technical backgrounds work together and here I met Dennis, my future co-founder, who studied Mechanical Engineering. Vlad and I both attended courses at the Center for Digital Technology and Management, whose focus is on supporting highly gifted students and promoting entrepreneurship. Having finished my bachelor’s degree, I added the master’s at TUM and shortly after we already had our business idea. So in my second master semester I attended the business plan lectures at TUM in order to get all of it out of my head and onto paper. The third semester should have been the thesis’ time. I wanted to write it at Stanford. I had a research scholarship. But then everything took a slightly different turn in the US. What happened? Instead of focussing on our studies we started to look for investors in the US (laughs). Vlad and I moved in with Andy von Bechtolsheim, one of our current investors, into a room above the garage. This was the jackpot for two reasons: first of all we didn’t have to pay rent and second we lived with someone who was an infinite source of knowledge. How did that come about? I had already met Andy previously at an event in Germany. He is usually dressed very neutrally. In any case, we stood next to the orange juice and talked about what I was up to. I didn’t even know who he was. I told him that we are dealing with database optimisation. At some point he asked me to sit at his table for dinner because he found the topic fascinating. He was the one who encouraged me to go to Stanford and the Silicon Valley. Did this idea immediately convince you? I laughed and asked him who was supposed to pay for that. He said: “If you are willing to invest in the flights I will make sure that you get to know the most important start-ups and the relevant people.” In the same night I looked for flights, on the next day I got the confirmation that the offer still stands and then that summer, I flew over. Because rents are incredibly high there, Andy offered us to move into the room above his garage. And how did you experience Silicon Valley? I was only 21 at that time. I saw all these CEOs, who were around 30, and which technology they had brought out. I thought: “Well, what they are doing isn’t rocket science either and they are already managing companies.” This obviously didn’t match the German picture I grew up with. Over here, one usually joins a company, becomes a manager at some point and then, as a 50-year-old plus maybe CEO. Have these observations encouraged you to start your own business? Definitively. But back then I thought I had to go to Stanford to use the ecosystem there to upgrade my ideas and to become CEO. In retrospect this proves to be a slightly exaggerated view. Over there, they all put their pants on one leg at a time, too. The local ecosystem does indeed offer many possibilities but also here in Germany the situation for start-ups has improved a lot. What do you mean? If you look at Silicon Valley like an ecosystem then it only developed because start-ups shared their profits with their employees. When Facebook went public there were suddenly more than a thousand new millionaires and several new billionaires. The same with Google and over there this happens every year. These employees again create new companies and invest in new businesses because of their experience in the first start-up, and like that it goes on and on. In Germany we are only at the beginning but I think especially for Munich chances are good that we can establish an ecosystem. Frequently one of the location advantages required is a good university, ideally a good technical university, since the major companies are the tech-companies. Luckily we have such a university (laughs). Have you implemented profit sharing in your own company, as well? Yes. When we set up the business we decided: “More shares than we are holding as founders will go to the staff pool and everyone joining us, in turn receives a share of it.” A resulting additional effect is that we either all win together or lose together. It works pretty well. At the moment it looks like you are winning. It is indeed a massive difference to 2014 when we started out and were so small. Back then we had a capitalisation of 4,000 euro. That was everything we could somehow scrape together. Now we have collected a little more than 50 million US dollars and already have more than 50 employees. In this quarter alone we are hiring about 20 new people. It’s strange but somehow this has all become normal by now. Was there anything in the last years that did not go so well? In the very beginning we made the mistake of hiring mostly people very similar to us. They were all in a similar age group with similar technical backgrounds. Initially this felt good because you reach agreements quickly and get along really well. But the problem is that your own perspective, which in the case of us young entrepreneurs was not very broad yet when we started the company, could not broaden like that. Meanwhile our team comprises about 17 nationalities. Our people join us with completely different experiences and at different ages. We are discussing more but this adds a positive dynamic and a holistic view to decisions. One of your office doors states the date 04.2024. What is happening on that day? This is when we aim to go public in the US. Ideally we will be having several hundred employees that are involved in the company ownership by then, and who will receive disproportional amounts of money – and will start companies or invest. In that case we will one day have Germany’s largest ecosystem for start-ups in Munich – and not in Berlin (laughs). And what’s next in your private life? Can the founder of a start-up also be a family person? I am now 28, so I still have some time left to do that. Currently all my attention goes to KONUX. My family and friends are supporting me in doing so. Right now this is my focus and I don’t really think about anything else. But I don’t work through the weekends anymore. The initial years were a bit crazy: not a lot of sleep.You think through the entire endeavour again and again. Today I can look out for my work-life balance more. Occasionally I go to the mountains or to a lake, skiing or hiking. I would like to read more, if I had more time. How do you spend the time on the plane to the US? Working? Either sleeping or working. Because I fly intercontinentally a lot, whether it’s to Tokyo or San Francisco, I mostly have good wifi. This is a good opportunity to get work done that would otherwise pile up since you are a lot less distracted than in everyday office life, which is all about getting from one meeting to the next.

Andreas Kunze

Bachelor Information Systems 2013 After graduating from a high school with an emphasis on economics in Munich, Andreas Kunze opted for a degree program in Information Systems at TUM. Here he met his future co-founders Vlad Lata (Bachelor Information Systems 2012) and Dennis Humhal (Bachelor Mechanical Engineering 2012, Master 2015). During his subsequent master program Andreas Kunze went to Stanford University in California on a scholarship in 2014. Together with Vlad Lata and Dennis Humhal he started the company KONUX, whose CEO he is today, at the same time. KONUX combines smart sensors and AI-based analytics to enable higher train punctuality and network capacity through predictive maintenance planning and an optimised utilisation of railroads. KONUX closed a 33 million US Dollar Series B funding round in early 2019. Andreas Kunze is one of the World Economic Forum’s ‘European Digital Leaders’, as well as a Member of the Expert Advisory Board for Artificial Intelligence at the Bavarian Ministry of Economic Affairs, Regional Development and Energy and a ‘European Young Leader under 40’. In 2017 KONUX has received the TUM Presidential Entrepreneurship Award, which annually acknowledges outstanding spin-offs, whose business idea significantly rests on research conducted at TUM.

This article was published in KontakTUM 1/2019

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Photo: Adobe Stock/sumnersgraphicsinc; Graphics: dietrabanten, München