Be patient, don’t fall prey to “fear of missing out”: as you will learn, don’t think you need to invest immediately in everything; there are always opportunities, even if they are not instantly visible right now.
Recognize that there are many people out there that want to give you advice but it is your own money, so be careful and considerate.
As a part of my series about “Investing During The Pandemic”, I had the pleasure of interviewing Heinrich Zetlmayer.
Heinrich is an accomplished digital investor and turnaround growth expert. He is the Founder and Managing Partner of Blockchain Valley Ventures (BVV) and a partner with MAS (Management and Advisory Services Ltd). His journey with BVV started at the launch of Lykke Corporation; the global trading platform based on blockchain technology. Heinrich saw a need for the investment of blockchain activity in the market, and with Lykke and his partners he set out to create BVV. Heinrich has a unique wealth of experience as a previous Vice President of IBM, Co-CEO of ESL, and former leader and Senior Partner of Arthur D. Little’s Global Operations Practice.
Thank you for doing this with us! Before we dig in, our readers would like to learn a bit more about you. Can you tell us the “backstory” about what brought you to the finance industry?
Istarted as a mechanical and automation engineer and then did my Ph.D. in production organization, which was very helpful for developing structured thinking and process and organization improvement methods. It was always my ambition to be entrepreneurial and be involved in venture capitalism, however, I chose to first follow a consulting and corporate career path to put all of this on a solid foundation. My experience is now very useful in the emerging “business of blockchain”, especially in terms of how to judge opportunities, add value, and spot where this technology will have an impact.
Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or take away you took out of that story?
There have been many stories from over the years but the one that stands out most is from my engagement in Esports (until today). When I first got involved in the emerging Esports industry, my peers and business network thought I was making the wrong move. Even during my time at ESL gaming, many investors always wanted to see the proof points. By the time we had the proof points, they were already clear to everyone, and by that stage, the early investment opportunity was gone — however, it took many years for others to see this. When you do something new, there is always uncertainty. That’s the nature of it, and the more innovative and new the topic is, the more uncertainty there is. However, that’s the essence of entrepreneurship and that’s why it is so rewarding when instincts are successful. This is why I now focus on venture capital and blockchain.
Are you working on any exciting new projects now? How do you think that will help people?
Yes, and several of them have a direct impact even during this pandemic. Blockchain technology and cryptocurrencies (done right) have a huge potential to bring financial access to the broader population, and at the same time bring cost reduction in industrial and financial processes. The current pandemic crisis has exposed the shortcomings of our supply chains and highlighted how blockchain technology can help. I am currently very proud of our portfolio company www.peddler.com who helps deliver goods from small neighborhood shops to people at home with a simple process.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
There are many people from whom I have taken inspiration from, who have shaped my experiences, supported me, and influenced my thought process. You can never and will never win alone. Choosing one person, in particular, is impossible as I am grateful to so many! At the moment, I am working together with fantastic people at BVV including our board of directors. In my early years, my Professor and Mentor Prof-Dr.-Ing. Joachim Miberg, who later became the Chairman of BMW, definitely put me on the right path and always reminded me to stay focused on what you want to achieve and to go about it in a structured way.
Let’s shift a bit to what is happening today in the broader world. Many people have become anxious from the dramatic jolts of the news cycle. The fears related to the coronavirus pandemic have understandably heightened a sense of uncertainty and loneliness. From your experience, what are a few ideas that we can use to effectively offer support to our families and loved ones who are feeling anxious? Can you explain?
You must have trust in our combined capabilities to overcome a crisis like this and you have to recognize that you are in a period of “low visibility” in terms of looking into and preparing for the future. So the best plan is to focus on what you can do best right now, both personally and professionally. Try your best now and then reassess the situation in a few weeks again. The daily news frequency is helpful to spread information but it can end up consuming your whole day resulting in you not completing what you set out to achieve. Stay focused.
Ok. Thanks for all that. Let’s now jump to the main core of our interview. As you know the stock market and the economy in general have become extremely volatile and uncertain. Many people “dollar cost average” and put aside a monthly sum into a long term savings plan for retirement, college, or a home purchase. If a loved one or a client came to you and said, “I have been saving and investing $500 every month in an S&P 500 index fund. Over the next few months until the dust settles, should I be doing something else with my money?”, what would you say to them?
Well, I don’t really want to give financial advice but I will point out that having cash savings is not always a bad thing for most of us. When uncertainty is high the potential for mistakes is also high. With the view of developing your savings, one must look at both the upsides but also the downsides. Sometimes simply “staying put” in highly uncertain times is a good strategy.
Eventually the economy will recover and rebound. Certain sectors, like travel and hospitality, might be hurting for a while. But other sectors, like technology and healthcare, might do very well. If someone wanted to prepare today to take advantage of the future recovery, what would you suggest they do?
My focus is on technology, healthcare/pharmaceuticals, and all relevant, promising innovations. We are living through times of great technological and medical innovations, which will drive advancements and business opportunities in many sectors. Important technological breakthroughs will continue for many years to come.
Are there sectors that provide exciting and lucrative investment opportunities today, specifically because of the volatility and uncertainty?
We need to distinguish between the public and private markets. Particularly in the private markets, there are definitely lucrative opportunities as companies seek capital amid more moderate valuations. There are, for example, many startups in the fintech and blockchain sectors, which have proven their worth, from customer and revenue traction. These startups are now looking for investors to support scale and growth, and if you can co-invest together with the existing reputable investors, this provides a good opportunity. Normally there is little access to these types of opportunities, but now there are gaps in financing rounds, allowing investors to step in.
Are there alternative investments that you think more people should look more deeply at?
Every investor is different, so I won’t give direct recommendations, but in general, people should explore how they can benefit from so-called private markets through direct investments, funds, or offerings from their investment advisors or banks.
If a person in their thirties and forties came to you today and said that they have $10,000 that they want to put away today for a long term investment what would you advise them to do with it?
I think the classic answer is equity through an ETF that mimics the stock markets.
Ok, thank you! Here is a more general finance question. You are a “finance insider”. If you had to advise your adult child about 5 non intuitive essentials for smart investing what would you say? Can you please give a story or an example for each?
- Start out small. Investing needs to be learned, especially the tricky balance between psychology and rationality.
- Be patient, don’t fall prey to “fear of missing out”: as you will learn, don’t think you need to invest immediately in everything; there are always opportunities, even if they are not instantly visible right now.
- Recognize that there are many people out there that want to give you advice but it is your own money, so be careful and considerate.
My favorite general example is from my parents. They had invested in a much-hyped prominent IPO many years ago, with many banks and news outlets advertising the IPO and investment advisors sending their clients into the IPO with the best of promises and recommendations. The IPO actually went very badly very quickly and became clear that it was all artificial hype. Lesson learned: you need to understand what you are doing and follow the points that I mentioned earlier.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“A person who never made a mistake never tried anything new” — Albert Einstein.
I always try new things and strive to develop myself. That has allowed me to not be trapped in things less relevant in today’s world and helps me to stay agile.
Q.13 You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. 🙂
While the current pandemic has spread worldwide, there are notable side effects which have empowered interesting movements. Firstly, we now fully grasp how dependent we are on each other in a global world. No one can get through this alone. Secondly, pollution has decreased across the world. These two ‘side effects’ should challenge how we live when the pandemic is over and find a new normal for working, where we consider our actions more carefully. I certainly will use virtual tools even more than before, look at my travel pattern, and make sustainable choices over convenience going forward.
Thank you for the interview. We wish you only continued success!