Starting Up a Small German Technology Business in America can be Nerve-Wrecking

It was on January 8, 1989, that I entered the United States for an eight-month assignment to train American engineers on German electronic control devices for paper manufacturing machines. It was not the first time I was here, and I have been back to Germany multiple times, if only for brief visits. In other words, I never really left the country since then, and I never looked back. In hindsight, I believe that I was meant to live here and that my birth country was not compatible with my mindset. I have been a rebel all of my life, and, unlike Americans, my fellow Germans have a problem with people who form opinions independently of authority.

In a way, I feel a kinship with the main character in the movie Dances with Wolves, Lieutenant John Dunbar. He was assigned to a remote western Civil War outpost, where he befriended a wolf and members of the Sioux tribe. That made him an intolerable aberration to the military that he had served previously. At the end of the movie, when he was captured, he spoke only in the Sioux language rather than his native English. I feel the same way, now that my English is better than my German, but that is not all. I have assimilated and live the American lifestyle, not with the intention to fit in but because it fit me. That put me at odds with my fellow countrymen, and this is what this post is about.

During the past twenty-plus years, after several other professional involvements, I established the American operations for two German businesses (consecutively and independently from each other, one in the late 1990s, the other in 2004). Both are very much involved in the Controller Area Network (CAN Bus) technology, which is primarily applied in automobiles but also industrial and medical control devices. I started both businesses with merely a computer and a phone. I managed to get both companies to an annual sales volume of over two million dollars with two employees. Both operations had the potential for at least five million dollars, but that would have required more of an American approach than the German headquarters would dare to invest. After the two-million-dollar peak, things went steadily downhill for reasons I will explain.

At this point, let me emphasize that I don’t see myself as a disgruntled ex-employee. As a matter of fact, I don’t have any ill feelings towards my former employers. I have studied their mistakes, and I have applied all the business ideas they rejected to my own company, Copperhill Technologies. I am doing well. Life is good.

Yet, I can’t help swinging a few punches if only for mere entertainment purposes. However, I cannot put twenty-plus years of experience into a few printable pages, so a few memorable stories must suffice.

Without naming a specific person or business, let me point to a few commonalities between my former Teutonic employers:

1. Both companies operated under the strict direction of their respective owners.
2. Both owners possessed a palette of narcissistic characteristics.
3. Both businesses were unable to provide quick prototyping solutions for customers.
4. Both businesses were unable to answer inquiries for high-volume orders in a timely fashion.
5. Both businesses operated with a tremendous lack of marketing knowledge.

Owner Mentality

Item 1 explains a lot of internal problems and inefficiencies. It is just not easy to give up control of something that is your baby, thus micromanagement blossoms. That is human nature, but it doesn’t benefit the business.

Narcissism

Item 2 is, naturally, closely connected to Item 1. I admit, my blunt characterization of narcissism bears the potential of being based on personal misgivings. However, I was responsible for the American branches and its employees, and narcissism is not beneficial in any aspect. Let me refer to some examples:

One owner, who was also a professor at a local university, insisted that he was addressed by his last name. In contrast, he addressed all employees by their first name. In private, I dubbed him the “Kaiser,” which is German for Emperor.

Both owners couldn’t find it in their heart to accept any ideas that weren’t theirs. The art was to convince them that any suggestion presented was their brainchild. Sorry, I don’t have that skill, and if I had it, I would still be working for them. However, when it came to choosing between solutions A and B, it was easy to recommend A when B was your favorite. They always fell for that one.

It was not quite as simple when it came to exploring new markets. During one occasion, I suggested that the electronic boards we offered should support an extended temperature range which is mandatory to penetrate markets like military and maritime applications, etc. That idea was, without any further discussion, dismissed as too expensive (which was simply a fabrication). Nevertheless, from that time on, newly developed boards came with an extended temperature range.

Another suggestion was to offer an extended power input range rather than the standard 12 VDC +/- 5%, for instance, to address the requirements of diesel engines. That idea never made it (the chip that does that costs a mere four dollars at volume = 1).

I also attempted to discuss the vast potential of Electronics Logging Devices (ELD) for diesel trucks and the associated SAE J1939 vehicle protocol (SAE J1939 uses the CAN Bus technology, and ELD development was thus well within reach). As a matter of fact, during the past years, billions of dollars were spent to meet the ELD requirements set by the US government. I deemed it an excellent opportunity to get even a small piece of the pie. The answer was a flat, “We don’t see that in Germany.” You may have guessed it, my primary business is SAE J1939.

I didn’t even bother mentioning the vast future market of Automotive Ethernet, which is the leading technology for autonomous vehicles. Yet again, exploring and developing Automotive Ethernet solutions is part of my business plan.

Quick Prototyping

The inability to provide quick prototyping solutions appears to be a general problem for German technology businesses. Most companies in the CAN Bus market offer reliable and highly efficient components. What is missing here is flexibility, may it be mental adaptability or diversity of product offerings. The attitude is that the product was thoroughly designed and provides everything the user needs. Well, that does not apply to every customer. That leads to the topic of customer projects, besides regular sales, one of the pillars of a successful technology business.

As I mentioned previously, I have been dealing with this scenario for more than twenty years, and the vast majority of potential customer projects (I would guess, about 95%) did not make it. Needless to say that this created frustration on both sides. I grew increasingly hesitant to ask for quotations, while my German counterparts grew more hesitant to produce them. The inability to produce results, in combination with the wasted efforts, was one influential factor preventing any further growth.

The point is, there was an unsettling pattern that all these projects had in common:

• Quotations from the parent company took a tremendous amount of time, in average, four to six weeks.
• The pricing was usually outlandish (in lack of a better word) due to the estimated development efforts.
• The statement regarding the development cycle was usually something like, “We can start the development in twelve weeks. We expect the first prototype about eight weeks after the project start. Manufacturing can start twelve weeks after approval from the customer.”

There is no need to comment on the problem of accepting these offers. The time frame was simply not acceptable. I tried to express my concerns over the years but was ultimately categorized as a notorious complainer.

But I would like to add some more insights:

• Quotations were developed down to the last cent and minute because “we don’t want to lose any money.”
• Quotations were developed by people not familiar with the technology, thus requiring the help of specialists.
• Be aware, Germany has roughly double the holidays than the US, and the average vacation time is 30 days (total for the year). When a specialist is on vacation, the quotation will have to wait.
• No quotation of significant magnitude leaves the house without the owner’s approval. If he is busy with other matters, make an appointment (maybe next week?). If he is on a business trip or on vacation, the quotation will have to wait.
• Quotations were developed by people nervous about the aspect of justifying the result to the business owner.

At this point, let me address the “losing money” issue. Such inquiries usually came from large, reputable companies, and they were attached to the prospect of high-volume orders. The way I see it, this should not only be a motivational factor, but it also lowers the pressure of creating a deficit. That view did not apply to my German colleagues.

High-Volume Inquiries

The slow quotation turnaround also applied to high-volume inquiries, mainly for the same reasons as listed above. In one instance, a well-known manufacturer of agricultural equipment asked for a quotation for 10,000 software licenses. They were in a time crunch and needed pricing within ten days. They got it after four weeks (quoting US$50 per license), at which time they didn’t even bother to respond. To stress the point, they asked to purchase a standard software product, no customization required. The risk of “losing money” was absolute zero.

Current high-volume customers had to place their orders sixteen weeks in advance, creating massive logistic problems for them. This caused tremendous friction between an angry customer and us as well as between us and the German parent company. The apathy level on the German side was mind-boggling.

At some time, I was asked to contact one of these customers, a manufacturer of medical devices, and offer a new board. The intention was to boost the production output for this particular board.

It was to replace an older (but not yet outdated) version purchased by the customer, and it was about 40% lower in price. Not only were they asking me to take a 40% hit on a high-volume account; they also expected the customer to undergo a design change. Any modification of medical devices requires extensive testing, and they involve approval procedures, procurement changes, and more. The process can take one to two years to finish and can cost up to several hundreds of thousands of dollars if not more than a million.

The inquiry was a high-priority matter for the German parent company, but eventually yielded no result.

Marketing Knowledge

It is well known that only “hungry” businesses understand the need for aggressive marketing. Both parent companies I worked for had their respective local customer projects that accounted for a significant portion of their income. Consequently, their marketing budget was meager, and activities at the time were limited to the most obvious, inexpensive methods such as Google Ads. And yes, each business had a part-time person with a basic knowledge of website design.

My initial marketing during the late 1990s was focused on attending trade shows and technical conferences. One show, in particular, the Real-Time Embedded and Computing Conference (RTECC), was valuable to our business, because I was also able to conduct technical seminars. It was an excellent opportunity to introduce the technologies we applied, such as Controller Area Network, SAE J1939, and CANopen. My presentations usually attracted high attendance, but with an emerging Internet, visitor numbers steadily decreased after some enjoyable years of prosperity.

That was also the point in time when I initiated the development of an e-commerce website. Until then, we had a rudimentary, US-dedicated website, and we invested some significant money into Google Ads. But the costs per keyword ran out of proportion due to stiff competition, and the effectiveness was questionable at the time. I deemed it more useful to invest the marketing funds into website design. E-Commerce websites are template-based, meaning you select a theme that frees you from actual website design. They offer a great variety of marketing-supporting features. With the right service provider, product pages load fast and reliably.

Needless to say, but my approach was years ahead of that of the German parent company. Their website at the time looked like it was designed under MS-DOS. They eventually switched over to Drupal (I am sure somebody recommended WordPress but was overvoted by the owner).

Still, my activities were watched with suspicion. The first complaint was about the display of pricing, and I had to disable it. A potential customer had to apply to view pricing because only US-based entities were allowed to see it. The fear was that our pricing may be lower than theirs due to favorable currency exchange rates.

In the next step, we switched the website to mere catalog mode, meaning we disabled the possibility to purchase online. The argument from Germany was that we paid too many credit card fees — Company expenses were discussed down to the penny.

Over time, I also ceased most of the activities that modern marketing is about, such as social network marketing. In the case of my YouTube videos, they complained that my voice was not professionally trained.

Very much toward the end of my employment, they realized that the US website drew more traffic than theirs. I knew that already; I monitor website performance on a daily basis.

The twist, however, was that they needed my website to save their online marketing. Despite massive investments in Google Ads, their ranking was terrible, by about a factor of 2:1 worse compared to mine. Reasons were the unacceptable slow loading times, non-existing mobile-friendliness, too many unresolved hyperlinks, too many suspicious scripts, just to name a few — I have done my research.

They instructed me to copy content 1:1 from their website to mine, specifically those pages with new products. I tried to argue that you can’t fool the Google search algorithm, but — you may have guessed it by now — to no avail. After only a week or two, my website ranking crashed into nothingness, and theirs stayed at the same, pitiful level. Needless to say, they still don’t have a clue.

Conclusion

As I wrote in the beginning, I don’t have any ill feelings towards my former employers. I have studied their mistakes, and I have applied all the business ideas they rejected to my own company.

Copperhill Technologies, a Massachusetts corporation, was established as an electronics engineering and consulting business with the main focus on the development, prototyping and sales of embedded systems for Automotive Ethernet, Controller Area Network (CAN), SAE J1939, and Local Interconnect Network (LIN). And we’re doing good.

And (every pun intended) the ranking of the Copperhill website is (at the time of this writing) about factor 12 better than that of my last employer. I update the website on a daily basis. I use the advantages of modern e-commerce tools to the maximum. I engage the popularity of several social networks for my marketing. You can even buy my products through Facebook. Quotations are provided the next business day. Prototypes are available within a few weeks.

It feels good to apply all the measures that work.