Michael Cassau is the founder and CEO of Grover which brings the access economy to the consumer electronics market, by offering a simple, monthly subscription model for the best in tech. The company has raised over $300 million from top tier investors such as Global Founders Capital,, Seedcamp, Samsung NEXT, coparion, Enjoyventure Management, Chromo Invest, main incubator, Augmentum Fintech, K-Invest, Commerzbank, June Fund, Circularity Capital, Verengold Bank, and Hannover Innovation Fund to name a few.
In this episode you will learn:
- Being a solo founder, and its advantages
- Building your team with freelancers on Upwork
- How humans and technology have become inseparable
- Why renting rather than buying products
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About Michael Cassau:
Michael Cassau is fascinated by the intersection of retail and finance, and is motivated by a personal conviction that there must be a flexible and efficient way to access consumer goods.
Michael Cassau founded his company Grover in 2015 with a simple goal in mind: To give people more freedom and help them maximize value by offering a flexible and affordable way of accessing technology – by means of monthly rentals.
Built on a circular economy business model, Grover makes the most out of the lifecycle of tech products, reduces waste, and brings the philosophy of access over ownership to the huge consumer electronics market. Michael Cassau has a background in economics: Prior to founding Grover, Michael Cassau worked as an Investment Professional with Goldman Sachs, where Michael Cassau acquired in-depth insight into the mechanics of the financial system.
Later, Michael Cassau was Co-Founder and MD/Head of Roll Out and Operations at Rocket Internet. Michael Cassau studied Economics and Finance in Heidelberg and Copenhagen.
Connect with Michael Cassau:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have another entrepreneur from Europe, and this one comes from Germany. I think that we’re going to learn quite a bit on how you scale from the early stages all the way to Series A and beyond. Then also how you build your team, how you balance equity and debt, and you name it. So, without further ado, I’d like to welcome our guest today, Michael Cassau, welcome to the show.
Michael Cassau: Hi, Alejandro. It’s a pleasure to be here. Thank you very much.
Alejandro: Born in Moscow and raised in Berlin. Tell us about this transition there, and how was life growing up?
Michael Cassau: Yeah, good. When I was a child, I came to German and grew up in Berlin. It was a great time at a French high school, actually. If anyone starts speaking French to me, it’s going to be bad by these days, but there used to be a time where I did my French vocabulary as well. Yeah. The time was great.
Alejandro: Very cool. Was there anyone in your family that was an entrepreneur or into business? How did you develop this love for economics or law, which you would study later on?
Michael Cassau: My family are almost all only entrepreneurs. Except, my father was a doctor, but my stepfather is an entrepreneur in Germany. My grandfather was an entrepreneur, so there was always this thinking that you do your own thing, and you figure out what that thing is.
Alejandro: Then, why law? Why did you get that curiosity for studying law?
Michael Cassau: I always wanted to study law as a child. I thought law was amazing, and studying law in Heidelberg was always that thing. When I was a little bit older, I got interested in more economics and heard about game theory. I thought, “Okay, this is really fun.” When I studied economics, I figured out that the normal course of studies is probably suited toward normal students who would invest a maximum of 40 hours a week into studying and party the rest. But I wasn’t interested so much in partying. I thought, “This is precious time. I can learn, and I may as well study something else on top of it. This will maybe be another 40 hours, so I have 80 hours to invest.” That’s why I said, “Let’s put law on top of it.” It worked out really well. Those two things are very different in a way. Economics is heavy at the beginning. You need to attend lectures. Law is not so heavy at the beginning, but very heavy at the end, but you can learn a lot from the books. I don’t know. Law always came easy. Actually, a lot of the solutions are written in the laws themselves, so you can deduct the solution precisely. I succeeded in that. Economics also came very naturally. I thought that was always a very good combination because a lot of the things in law are about incentives and deterring, and a good economics education broadens your perspective on the world.
Alejandro: Absolutely. Also, becoming a lawyer in Germany is really tough. I don’t know how many more years you would do, let’s say in Spain or in the U.S.
Michael Cassau: Yeah. It’s crazy. Becoming a lawyer was a no-no then, after a while, because you would then be stuck. Yeah, that was a no-no. I just wanted to get the legal theory. I never wanted to actually practice law because you’ll be stuck in one jurisdiction, and I didn’t want to do that. You always do the first degree, which is your state examination. Then you need to practice and be a clerk for two years and do another second term. I didn’t do the clerkship stuff. I did the theory, the first examination, and then I thought that was a good education. I got the most out of those four or five years at University.
Alejandro: Of course. You got your feet wet. You were associated in places like Linklaters and Latham & Watkins, but then you did your Ph.D. in economics. I know that at one point, you received a call that changed the course of everything. What was that call?
Michael Cassau: Yeah. That’s right. One thing you need to always do in order to be very good at something is to have a very strong imagination. Otherwise, there will be no motivation. Every time I was studying very hard for economics, I’d picture myself as, “I’m going to do my Ph.D., and this is going to be amazing. Maybe I’ll go into science themselves”. The next day, you study law, and then you’re like, “How is that journey going to look?” You’ve always got to set right the imagination in a way.” First, I finished economics and pursued a Ph.D. in economics, which I didn’t finish because of that call that I’m going to tell you about in a second. It was, for me, the next step. I started out with the Ph.D. in economics at the Max Plank Institute in Munich. I didn’t go to the Chicago Graduate School, which I got accepted for economics, which I always thought was amazing. I started that while finishing the state examination in law. Because I was pursuing different opportunities, I got this call from Goldman in London. They were like, “Do you want to join us?” Obviously, I interviewed with them. I had to make a decision with them within a day or so. I got feedback. I thought, “What’s the path forward here? Are you going to churn through the Ph.D., and then eventually become this or that, or do you want to go back to business and cancel the stuff?” For me, the question ultimately came down to how passionate are you about being an economics professor? Because once you study hard for economics, you have this imagination, and everything looks great if you think about being a professor of economics at Harvard or MIT or so. In order to pursue that as a profession, you’ve got to be fine about being a professor of economics at a Tier 3 or Tier 5 university. The topic itself needs to be your passion. For me, the answer was, “No. I don’t want that. I either want to be a professor at a super prestigious university or not at all, and then that means you’re not passionate about the topic at hand.” The decision was clear then. “Let’s call this a day and go to London and work at Goldman.”
Alejandro: Very cool. You were working there for a couple of years in London. I know these people were reading the Financial Times, and you opted for reading like TechCrunch, which is not so much like the Wall Street stuff. I know that opened your eyes, and that helped you to think perhaps there was a different future for you.
Michael Cassau: Yeah. I quickly developed what is called the fear of missing out, which is something in here, as well. Goldman is a great place. The good news about Goldman is you have a bunch of nerdy people there too. It’s not like you’re in the wrong place if you are very curious. But the interests, at some point, are very different. Some people like to read [9:15] and all the industrials and stuff like that. Goldman had the policy of up to 8:00, and you get a free dinner. Obviously, as junior there, you always work super late, so everybody makes use of that free dinner, and then you sit at your desk. I noticed everybody’s reading something like the Financial Times, except I would go and read only TechCrunch, and what are these startups doing? I developed the thought that “I think I’m missing out on something here, which could be a lot more fun and a lot more learnings.” For me, the primary pursuit was always to learn as much as possible, and I thought this could be a very, very interesting space, even faster-paced than PE. At some point, the thought of tenure-career progression means that I’m no longer at this desk, but at the office across this desk. It just killed me, and I thought, “I’m going to try something else,” and I went to Rocket for a few months.
Alejandro: Why, Rocket? You had the family entrepreneurial roots, and here you are questioning what you want to do with your life and with the future. Why did you decide someone else rather than to go at it when you were reading all these stories of TechCrunch?
Michael Cassau: I think what you do in that instance, I think coming out of University, less and less people are doing that. But you’re looking for maximum learning at any moment in time at the first base. I thought, “I’m going to look into what Rocket is doing and how these people are doing it there for ten months, and then afterward, I either go back to London or do something else.” But I thought that at this moment in time, I can learn something from there. It turns out that it was a perfect decision because the problem that I encountered by moving from London to Berlin is the one that sparked the problem that I’m solving today with Grover. I ended up staying six months at Rocker Internet, and then went at it myself, so I didn’t lose out on any of it.
Alejandro: What were you doing at Rocket Internet?
Michael Cassau: I was launching a venture called Spaceways Internationally. I was the head of rollout at Spaceways, which is a box storage startup where you help people declutter, and this business will pick up your stuff in storage boxes, and then you pay 6 euro a month. Decluttering was a precedent in the U.S. as well. My job was to rollout the venture internationally. I launched it in Sidney, Toronto, Chicago, Paris, London, and Singapore, essentially. Every month, you’re somewhere else, like the complete opposite of your work at an investment bank where you run at express 24 hours a day. You travel, and you launch, and you negotiate with those 3PLs, and you give them your SLA, you prepare an SLA, etc. It was a great experience.
Alejandro: I think that for you, this opened your eyes, and it was a very nice segue into Grover because you moved back to Berlin, and then you find yourself with all this tangible stuff, and that makes you think, “There’s probably a better way to do this.” Bring us through that top process and through all the way that you incubated Grover and how you brought it to life.
Michael Cassau: Yeah, absolutely. I think one thing you always do between two jobs is, you travel. Coming from London to Berlin, I also spent a few weeks traveling. Just before that time, when I arrived in Berlin, I was in Rome. A three-day, four-day weekend cost you maybe 500 euros, and you drive a Vespa all day. You have the time of your life, but then once you hit Berlin, you have to a one-bedroom apartment, which is great, but certainly, you need to furnish it. For the first time in my life, I needed to furnish an apartment. It was clear that I would not need those particular things when I move back to London. I cannot take it anywhere with me. My wife is not going to want to have this once we move together, and so forth (my girlfriend back then). So, I needed it only for only ten months. I definitely didn’t want to buy it or invest in it because I could create much more pleasure for myself, much more utilities for myself by investing 3,000 euros in experiences rather than in things. I also didn’t want to commit to long-term debt in a loan because I didn’t want to pay back a debt on a product that I no longer use when I move back elsewhere. I thought there should be a service, like Spotify or Netflix for physical things, where you can exchange the product that you’re having for the same monthly payment. Suddenly, you can have things that are new to you while paying the same, and suddenly you detach marginal utility from marginal cost. That’s where it’s good to have the economic utility theory of thinking that typically, things are most valuable to people when they are new, and they become less valuable over time or with increased quantity. With that business model, where you pay the same per month, which is a marginal cost, you incur new things as you please. You should be in a position as a consumer to be in an area where your expected utilities are always higher than your expected cost. That’s why I thought, “Okay. Economic theories are on our side. This makes total sense, and it’s time to liberate people and distribute freedom from debt to the people, giving leverage, but the things that people need rather than with that, so they can buy them.
Alejandro: How much time did it take from the minute that you came up with this idea and you started to question, “I’d better wait to do it,” until the moment that you actually gave your notice at Rocket and decided to really jump all in on this idea?
Michael Cassau: The problem came about in the summer of 2014. I started complaining to my [15:48] like, “This is insufficient support.” Back then, I didn’t know this could be a business model. I started with Rocket and support, but the idea grew and grew on me and developed. I think it was, then, in the winter that the noise of, “You’ve got to do that; there are no two ways about it,” grew a lot harder. So, I gave my notice in January.
Alejandro: Why did you go at it alone? Obviously, you’re a solo founder here. Being a solo founder is tough, so why did you go at it alone?
Michael Cassau: I don’t know. I don’t want to depend on realizing my imagination on the fact of whether or not I find a co-founder or not. That’s not an option. I think if you have an idea, and you’re passionate about it, and you want to execute on it, it shouldn’t matter whether or not you have a co-founder. For me, personally, when I started out, I was actually seeking out for a co-founder. I found one, and I said, “Let’s do it together,” but he jumped ship after a few weeks because he had another startup running and that seemed to take off like that. He said, “Sorry. I’m going to leave you alone here.” I said, “Okay. No problem.” I think the premise of having co-founders — yes if you can find a person that can equally scale with you forever, that’s great. But other than that, you’re much better off by assembling a perfect team at any moment in time.
Alejandro: Got it. What were the early days like, but before you walk us through the early days and how you assembled that team, I’d like to know, for the people that are listening, what ended up being the business model of Grover? How do you guys make money?
Michael Cassau: Our business model is the monthly rental of technology, of consumer electronics, so we went into technology. Also, MyPhone tanked into sync. Technology is something that needs to proliferate people. It’s humans and technology. Today, you cannot think about one without the other. People need technology to be productive. Children need iPads to make sure they can do education in school. Schools need that. So, technology is everywhere, whether this is productivity, like iPads and computers, or fun like consoles, or even connectivity like the new smartphone. Technology is full of creating everywhere. The early days were like — first of all, all things started. I need to see whether there are people who would use that service if it was available. Getting the website up and running was the first thing. This is where the phone would come in place. The only person going forward if I were to launch a new venture, I would look out for the best CTR who can build a website in just a weekend or so. In absence of that, you’ve got to work with freelancers. You’ve got to make sure the website gets up and running quickly, so you get the first people on your website to see whether anybody actually wants to transact, and that’s how the early days were looking. You contract with people who build the website, who build a brand around it, and you start attracting traffic.
Alejandro: Very cool. What was that team like? How did the team come together, and how did you go about building that team?
Michael Cassau: In the early days, you go to meetups, at least this is what I did in 2015. Maybe going forward, I would do it differently. I went to a lot of meetups and did a deep dive into this kind of startup culture. You meet other people who are looking to do something. Then you find a designer who’s looking to do something with a startup, so you bring them onboard. Upwork is great if you’re looking for freelancers, by the way. And you assemble a team. Also, you go to universities and talk to people, “Here’s what I’m building. Do you want to join? Can you code?” You hustle together a team of people who can take step one with you.
Alejandro: In your case, it didn’t take much time to raise some money. How much capital have you guys raised to date?
Michael Cassau: To date, we’ve raised 300 million in capital, out of which a big chunk is asset-backed debt financing for the asset growth and equity as a remainder.
Alejandro: Got it. As I was mentioning, you guys raised the seed round in November. Your founding your date is April, so October, but pretty early on.
Michael Cassau: Yes, in October.
Alejandro: Can you walk us through how that fundraising journey has been for you?
Michael Cassau: First, you fund it yourself. That’s what I did — a lot of bootstrapping, financing it yourself, going about the first lab site, the first product shipment. But also look at early-stage programs that I could learn from. One of those programs I found was Seedcamp. I saw it and thought, “This is great.” I went to London to visit one of their initial demos and how they go about it, and then I applied. You apply with the video, and they said, “Come to our Berlin event,” which was in May 2015, and we were one of the first startups to be accepted. They invested the first 25,000 euros just a few months after the founding date.
Alejandro: Very nice. I know that for you guys, then you did your Series A. You’ve also done some really nice balancing between debt and equity. So, why did you guys always keep close to mind having that balance of equity and financing and debt financing?
Michael Cassau: One of the things that I did early on in 2015 was that I was, first of all, looking to work together with leasing companies. I thought, “Maybe we can lease back products that leasing companies would be interested to work with us on that.” It turned out that nobody was. The second thing is, I asked my network, “Does anybody know a good leasing lawyer?” One of my friends from University had just finished an internship with one of the most renowned asset-backed financing lawyers in Europe, that everybody apparently knows. It was my luck that he took me seriously from the very beginning. They met with me in a co-working space that the lawyer and one of his partners, all senior partners, and they immediately said, “Look. We completely understand what you’re doing. This makes total sense. What you do with consumer tech products, we do on a regular basis with cars. Like, asset-backed transactions are vastly available in the environment, and we’re going to set up, together, an asset-backed financing structure on your portfolio. It will work like that as well.” I said, “Okay. This is amazing, this slice.” We started out working on that basis. Ever since we’re looking to, and always are, creating the consumer tech asset class as a secure, sizable, and debt-fundable asset class that can by itself be a security portfolio to a lender.
Alejandro: How do you think that founders, especially the ones that are listening to us, should look at equity versus debt building up a business?
Michael Cassau: It depends on the business. If you don’t have any fixed return assets to invest in, then you shouldn’t take debt because it can also turn around the other way. You should take equity, like we do, for the purposes of business growth. But if you’re building software, I think equity, as a good valuation, is always making sense. Now, there are multiple new debt instruments available for startups, but we ourselves haven’t raised any debt on the business side of things. We always raise debt for the asset purposes only.
Alejandro: I know that in your guys’ case, I believe that there was a round that got a little bit complicated with some people backing out, or maybe the timeline wasn’t being met when you guys anticipated it. So, you had to put the foot on the gas and accelerate the process. Tell us what happened there, and how did you guys turn it around?
Michael Cassau: One thing that complicates fundraising in a scenario where you raise both equity and debt, and you want to make sure that you have a lot of headroom in your debt facility to make proper use of your equity in order to grow where you also finance asset purchases is that at some point, especially at the beginning, one can become contingent upon the other. Assuming you have a long process on the debt side in place, which is about to finalize, and you’re simultaneously finalizing on the equity round, if one of those two pieces falls apart on short notice, you need to find an alternative relatively quickly. That’s one of the things that happened to us. We were in a process on the debt side, and something happened suddenly. Then you want to make sure you have an instant alternative in places, which we did in order to close the round successfully.
Alejandro: In a marketplace or in a platform like yours, where you have all these different products and people go in and get it for a monthly fee rather than buying it all in one go, how do you go about building the supply and demand of a platform like this?
Michael Cassau: You always start out with demand. We started out with demand, and then we were purchasing the supply on demand. For the first year or so, we didn’t have any planning in place except those things that we would advertise. We would say, “This is the range of products that we can make available to you. Let us know if you want it by checking out.” So, demand is always first, and then you build supply. These days, it’s a little different. You have a lot more planning, and the scale is very different. We have a very professional team that does supply planning and demand planning, and we get better terms and support, so it’s very different, but you start out with demand-making, always. At least, that’s what we did.
Alejandro: Is that like the data, maybe buttons that you put in, and if enough people click on it, then you get an idea, or how do you really capture that demand?
Michael Cassau: First, for us, it was like that. You’ve got to form an opinion around what are likely going to be the products that people want. Or in a more middle level, you’ve got to offer your service to people and see whether this is working. You cannot just survey your roots of success, and then, “Okay, what do you want?” You’ve got to make sure and put it out there. That’s what we did at the beginning is, get your latest tech on demand. We put product pictures up and put a monthly price on it. Then we notice people actually transacting on it. Then we had a product selection and support, and we also had a little tool, which was, “Request your product.” We were capturing demand for products that weren’t available through that, so that inspired us. Over time, you put a lot more products on the website, and you see what is the interaction with those products with your traffic, and how does that match together? Then at the next level, you see the customer behavior depending on what things they are renting and how does that work out. You try to get more efficient over time, but at the beginning, it’s as stupid as getting something up and seeing whether somebody clicks on it and transacts.
Alejandro: Out of curiosity, what is the coolest product that you’ve seen lately that you guys have launched?
Michael Cassau: The coolest product? I think the Samsung flip phone is one of the coolest ones I think we’re launching.
Michael Cassau: In the smart home category, we have a lot of things that are quite new. We also have electric vacuum cleaners there, which we don’t invest in a lot, but we see whether they are happening. We have some experimental things, but typically the top category is smartphones, tablets, computers, audio, and so forth are going very well. There’s a lot of demand for your everyday tech, gaming very much, and particularly during corona gaming demand is high. We’re also launching a Grover scooter soon.
Alejandro: Got it. Obviously, you guys are starting with a store, and then building up into a mall. I’m wondering what the future holds for this. In that regard, Michael, imagine you go to bed tonight, and you go to sleep for five years, an unbelievable snooze. Then you wake up in a world five years later where the vision of Grover is completely realized. What does that world look like?
Michael Cassau: It’s a combination of your having subscription demand at Grover, but also, you’re eventually managing your financial journey with us. The world looks like: you have a subscription, like an all-you-can-eat subscription with Grover. It costs you maybe 99 euros a month. You rent three products. You manage those subscriptions in the Grover app. You have a Grover debit card, maybe, and you’ll have no reason to either purchase things elsewhere or to finance things elsewhere.
Alejandro: There’s one question that I typically ask the guests that come on the show, and that is if you had the opportunity to speak with your younger self, with that younger Michael that was still at Rocket Internet and thinking about launching something in the future. Knowing what you know now, you’ve been five years at it, hypergrowth, incredible success that you have achieved, but there are many ups and downs, and it’s not a straight line. If you had that chance to give yourself one piece of business advice before launching a business to that younger Michael, what would you tell yourself, and why knowing what you know now?
Michael Cassau: Good question. I think I would say, “Believe in yourself.” I always believe in myself and have a strong conviction about the things that I do. But, obviously, as an entrepreneur, you learn a lot as well, and you will make thousands of mistakes, always. Depending on what kind of mistakes you make, people may think you’re stupid or not, and everybody things something, and then if you fundraise, thousands of people tell you, “No,” and are arrogant, or this and that. You’ve got to have such a thick skin as an entrepreneur that you’ve really got to believe in yourself. Obviously, you cannot be numb to feedback. You want to learn, and you want to improve in a way, but, at the end of the day — how do you call it? Like, hindsight is 20/20; feedback is 20/20 as well. If you fundraise, for instance, as a feedback +/-, some people tell you, “Your internationalization blends into a [32:37]. That’s why we don’t invest.” Other people tell you, “You guys are not international yet,” etc. At the end of the day, everybody tells you or whatever somebody tells you is also a reflection of themselves, so you’ve got to figure out what is your center of confidence? What are you really, truly believing, and is this the right thing? So, think about it. Believe in yourself is the most important part. This will help you out in standing up to things, believing in your vision, in your imagination, and just keep going forward at all times.
Alejandro: I love it. Michael, for the folks that are listening, what is the best way for them to reach out and say hi?
Michael Cassau: Reach me on LinkedIn: Michael Cassau.
Alejandro: Amazing. Michael, thank you so much for being on the DealMakers show today.
Michael Cassau: Thank you, likewise. It was a pleasure.
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