When talking about Berlin startups that have lasted more than five years, only a few names come to mind. One of them is undoubtedly ResearchGate, a social network that offers a new kind of collaboration between scientists and is on a mission to “make research open”.
Founded in 2008 by Ijad Madisch, Sören Hofmayer, and Horst Fickenscher, ResearchGate has since grown to a network of 13 million member scientists with around 270 employees. It’s also backed to the tune of over $80 million in funding by investors like Bill Gates, Benchmark Capital, Goldman Sachs and Tenaya Capital. Recently, the company has shifted to focus on monetization and plans to break-even with the coming round, according to Madisch.
We caught up with ResearchGate’s CEO Ijad Madisch about meeting Bill Gates, why it can be dangerous for startups to raise too much money too early on, and how Berlin’s tech scene can improve moving forward.
Before founding ResearchGate, you were on a path to become a medical professor. Did you have any prior knowledge of what being an entrepreneur entailed?
No, not at all. I also didn’t really want to become an entrepreneur. I was never a big fan of the idea of going to a business school to build businesses. I was convinced businesses could only work if they came from people coming from the industry they might want to change.
In the mid-2000s, I was in Boston doing some research at the Harvard Medical School for a couple of years and met a good friend from the Harvard Business School. On my last day before going back to Germany, I still remember we went for a long walk in the city discussing the future, and he said to me: ‘You will be an entrepreneur, for sure. I believe that.’ And I was like, ‘No, no, I’m going to become a medical professor.’ He saw that coming, which I didn’t. Later on, when I started ResearchGate, this friend helped me set everything up and taught me how to talk to investors.
Who were some other mentors and figures that have played key roles in helping the company grow?
Early on, my parents were the ones who taught me a lot of smaller things which I’ve retrospectively recognized as important elements of being a successful entrepreneur. After that, it was my academic professors, friends, our first angel investor Joachim Schoss then Matt Cohler – who became the strongest influence – and, of course, in all the years after we started, the co-founders. We all help each other grow and get through tough times together.
Through Matt Cohler, you met Bill Gates. In 2013, it was announced that ResearchGate raised a $35 million Series C round led by the Microsoft co-founder. What was it like to pitch to someone of that stature?
Pitching to him was surreal. Especially because before that I was just reading about him in articles. In the end, I wasn’t doing anything much different when pitching to Bill Gates as I was pitching to Matt Cohler or anyone else. It’s almost always the same.
A lot of people ask me how I raised so much money. First, $35 million, and then later $53 million. But these numbers only start to make sense – or you can only begin to grasp them in your mind – if you’ve raised €5,000 or €10,000 before, which is also a lot of money. One thing I would recommend to entrepreneurs is to not raise too much money in the first one to three years because it can destroy the company and how you deal with money. You can start becoming numb. A lot of entrepreneurs get way too much money, too early and this huge amount of money can seduce you into decisions you wouldn’t make if had have less money. It doesn’t teach you how to build something up with little money – or to build the right things.
When I last interviewed you in 2014, you told me that turning a profit wasn’t the main priority. Now, the company seems to be taking aggressive steps to becoming a money-making entity. Can you talk about this shift?
If you start to build up a product, you usually see linear growth which accelerates over time. The exponential growth you might see – it usually doesn’t exist and in my opinion, is often fuelled by a lot of marketing. When you build a product and see linear growth, I think it’s crucial that you don’t try to monetize too early because you might destroy the product you’re trying to build. If you don’t treat monetization as a product on its own, it might just be put on top of your product and then it’s not creating value for the user. That’s why we were really strict about not monetizing then.
Once you reach a certain point in your growth though and you’ve already created value with your product for the users, then you’ll find the right moment to monetize. We started monetizing three years ago and started to slowly understand what the users need as well as how we can monetize the network and content in a way that funds a platform like ours long-term.
The company has been based in Berlin for nearly a decade – almost as long as SoundCloud has been around. What are some of the biggest changes – good and bad – that you’ve noticed in the evolution of the city’s startup scene?
What we’ve been going through in the past couple of years is a natural evolution. Companies like SoundCloud and ResearchGate have helped to create a scene with a lot of talent. I’ve seen a lot of companies come and go – but I’ve always tried to stay focused on product development, work towards our mission and not be a part of the hype. The appeal of Berlin can only be seen through the success of its companies. For now, we have companies like Delivery Hero, which went public, and Zalando, of course.
Sometimes people try to find simple solutions to complex problems and end up wasting money from other people, which I don’t find so cool. This is where the Berlin scene needs to grow and learn a lot. When looking at founders in the U.S. vs. in Germany, you can see that a lot of founders in Germany come from business schools and not from the industry they’re trying to change. This is where I see a lot of room for improvement when it comes to how we’re building startups, who we’re giving money to and what kind of startups we’re giving money to. Again, this will all come; it’s just a matter of time. It’s not going to happen overnight.