In this interview, Christhi Theiss, discipline leader for Venture Creation at BBVA New Digital Businesses, talks about the success factors for startups, the need for diversity within organisations and the trends he spotted for the last year leading BBVA’s external venture building studio. He also explains why and how BBVA is looking for disruptive startups that are able to solve a specific problems in the short term and become relevant ecosystems in the long term.
Christhi Theiss recently started working with BBVA, as the discipline leader for Venture Creation in New Digital Businesses (NDB). But his relationship with BBVA is longer than that: while being an entrepreneur and executive leading innovative startups in the U.S. and Europe, he also worked closely with BBVA, notably on Trust·u. Before that he enjoyed an over 10 years accomplished investment banking career, heading Europe for capital markets businesses in London, Paris and Madrid.
Theiss is also an advisor for startups and the European Union with a focus on business design and product market fit.
Q: You’ve had quite a few roles, as an entrepreneur & executive in startups but also from the investment side. Why do you think banks should create or support startups in the first place?
A: It seems just the smart thing to do. If you look around, you see all kinds of verticals, and businesses, being totally disrupted. Look at what Airbnb does to the hotel business, Uber to taxis or Amazon to retail shopping. And the list goes on and on. So many of the successful startups don’t only disrupt one industry, they go into different verticals at the same time, especially in Asia, with Alibaba and Tencent for example. Both went from ecommerce and social communication respectively into other verticals mainly using mobile payments as a wedge.
The cycle of innovation is extremely accelerated, especially in the last five to 10 years. And it’s increasing. So firms who right now are not innovating in terms of testing new business models through creation of startups, or use innovative ways to change their business model and find wedges to reach more growth, will be left behind. Creating startups is a way of trying to disrupt yourself before somebody else is disrupting you. And this includes banking.
Q: Talking specifically about BBVA. How do you think venture creation benefits the bank?
A: I believe venture creation brings value on various levels. For one, we are constantly exposing the bank to new ideas, business models and new ways of doing things. Then, the business ideas which we research and companies we create have a strong focus on growth in either revenue or customers. They are always supporting our overall strategy and are aligned with each respective business unit’s medium and long-term goals.
Also, through the BBVA & Anthemis Venture Studio and collaborations, we are bringing external expertise, different views and backgrounds inhouse, enrichening idea diversity and that’s another key element for successful innovation. If you really want to make an impact, you need to have diversity. You have to get exposure to new ways of looking at the world, at problems. And BBVA is doing a good job here.
Q: From your previous experience, and working at BBVA in venture creation: what are the success factors for a startup?
A: It mostly is the combination of a great ecosystem and the ability of the team to execute properly. These two things must be there. If you don’t have both, your startup probably won’t go anywhere.
The ecosystem allows for access to talent, capital and infrastructure. And the execution part is heavily dependent on the team. You need a founding team with the right skills, knowledge and network, who are able to efficiently use time to iterate quickly. In short: deploy their solution, test it with their target audience, understand what went right and implement these learnings in a new cycle, where the feedback loop starts again. The ability to shorten and accelerate this feedback loop is one of the pillars we look out for.
BBVA & Anthemis Venture studio being in London, we are able to cover all of this thanks to the network that they have within the ecosystem. An important part of our work is to know which founders are successful in our areas of interest, who just sold their company and want to start a new one again. We are trying to involve these founders in our new ventures, as historic data shows that probability of repeat success is much higher if you already have built a great startup before. Summed up, we are very much data-driven in selection and monitoring success. But we also focus a lot on the human factor.
Q: For the last year you’ve been looking for these success factors in the ecosystem working with BBVA & Anthemis Venture Building Studio, and you have already co-created and supported various startups. Talking about the first one, Cledara: what do they bring? What did you see in their business model?
A: Cledara has an amazing vision. At first, it just looks like another B2B startup helping companies to cut and control their software subscription costs. But it’s much more than that. Their business model is based on issuing one debit card per customer’s employee, which is then used to subscribe and control SaaS expenses company wide. Now we already see clear signs that Cledara’s companies start using these debit cards for all sorts of expenses.
What we see here is a path towards creating a single payment gateway for companies used for any business related expenses. Also, it shows great promise to evolve towards a SaaS marketplace. As Cledara has already SaaS usage data of a variety of businesses, it could propose new SaaS services to new and existing companies. This would significantly increase transparency for this sector and help building a new ecosystem.
Q: What are some other interesting trends that you are seeing getting relevance in the market and that BBVA is interested in?
A: One trend which is clearly backed by data is the strong growth and predominance of startups running platform business models which then evolve into ecosystems. They usually have a marketplace uniting different parties and solving one big pain as starting place. From there, they evolve into adding services and solving other pains of their target groups, increasing the value of the initial platform through network effects, thus evolving into an ecosystem.
Q: Are there any specific ecosystems or areas BBVA is interested in?
A: The best way to find where to build a great ecosystems is to “start small”: find a real pain in an underserved sector and solve it efficiently. We see quite a few underserved sectors. The micro and small business sector is one of them. Another very interesting one is the “family” sector. Here, there are many unsolved pains, from financial challenges like financing education or first-home buy for your kids, retirement planning to managing care for your loved ones at old age just to name a few. We are currently deep diving into this and discovering promising solutions which should lead to creating new startups in the near future.
Q: Working with the studio you explore many different ways of finding new ideas and new fits in the market. One of them is reverse innovation. What is this?
A: It’s basically a methodology to get new business ideas. It’s about researching products and services that startups are successfully deploying in less economically developed regions. And then test if these products and services could somehow be introduced in more advanced economies like Western Europe. One of the startups which we came up with thanks to this methodology is the rotating saving application that Stepladder is using, the second of our venture studio’s recent co-creations.
Q: How does it work?
A: Through their platform a group of 10 or so users save together for a fixed period of time, like 1y. All members pay each month the same amount into a pool. The pool is then monthly paid out to one of the circle members. This kind of system accelerates savings and builds communities but didn’t really exist in Western Europe. It’s very common in South America, Mexico and in India. This is one of the sectors which we really liked. And they also show already good traction.
Q: How do you share these new ways of looking at problems with the rest of the bank?
A: A key tool, we just put in place to spread our insights within the bank, is the Venture Creation Community of Practice, a worldwide BBVA network where we centralise and share our hardwon knowledge, business ideas, trends and best practices. Like that we can support business units in all regions to set up their own innovation networks. Any BBVA colleague interested can apply for access to our CoP.
At the same time, while deep diving into solving any problem, we always involve early on related business units into the solution seeking process. Thus exposing external trends, new ideas and solutions to our colleagues.