Why to Procure Procurement Optimization
Next up in our series ‘Innovations Made in Berlin’ is procurement solution Lhotse.
Henning Hatje and his co-founders Can Akin and Jan Berssenbruegge discovered an area in which companies can save money. The solution is a tech layer to be added onto enterprise resource planning (ERP) and supplier relationship management (SRM) systems, with the idea of reducing costs through standardization and consolidation of the supplier base. In other words, with Lhotse a company can control all expenditure and minimize maverick spending by individual managers.
We asked Henning Hatje to explain why procurement needs something new.
This series is called “Innovations made in Berlin”; What is your innovation? When did it originate, and where? Can you describe the place, and who was involved?
Lhotse is a procurement solution for all non-strategic spend. The idea originated 2 years ago when we realized there’s an immense untapped potential in procurement processes. I was working at BCG [Boston Consulting Group] at the time and I saw first-hand how huge the opportunity is to digitize procurement, so that it’s optimized, simplified and easy-to-navigate even by business users who are not procurement experts. My co-founders Jan Berssenbruegge and Can Akin joined me on our quest to make this happen and we’ve never looked back!
What do you sell and why should someone buy it?
Good question! The procurement space can be difficult to describe to people who are not in it, so let me share an analogy with you.
Our company name comes from the mountain Lhotse which sits right next to Mount Everest – the reason that most people have likely never heard of it. Attention is focused on the massive Mt. Everest – neglecting its smaller brother, Lhotse.
The same holds true for tactical spend in procurement. Across firms of all sizes, focus lies on the 80% of spend considered to be strategic. The final 20% tactical spend is overlooked – remaining largely unoptimized. We are changing that.
We help companies optimize their indirect spend, increase transparency and enable their procurement teams to focus on what matters most.
How did you find funding for Lhotse?
As a fast-growing startup in Berlin, we count some of Germany’s most successful tech entrepreneurs and VCs among our investors. We raised our seed round in July 2021. We know our angel investors and VCs through our personal networks and have built trusted relationships with them long before an actual investment decision had been made on both sides.
What advice that you got at an early stage helped you the most while starting and growing your business in Berlin?
We are still early stage and get great advice on a constant basis. My best advice is likely that, given all the advice we got and are getting, we as a founding team need to find the best way for our particular company and situation. There are many things we should and could do, but only we know which ones are really crucial in our stage.
How did you manage to establish contacts to potential clients?
The procurement world might seem quite small to outsiders, but we are an extremely large and yet very close-knit community. That's what I find so exciting about the industry! People help each other – across companies –, something I haven’t really seen in other industries or sectors. What has helped us the most is to be a proactive part of this community early on, and to seek exchange wherever possible. Attending industry events has been a great way for us to meet new people, exchange ideas and grow our network.
What do you want to achieve in the next six months?
The next six months will definitely be busy for Lhotse! We have a lot planned in the books, including improving our product and adding value with new features, based on all the user feedback we are getting on a daily basis. Our team is also growing quickly, so we are building out our internal organization to enable the team to be as effective and fast as possible.
“It’s very important to have a diverse team so that we get different perspectives from people who might have different backgrounds and skillsets.”
How do you find the right people to work with?
For us at Lhotse, it’s very important to have a diverse team so that we get different perspectives from people who might have different backgrounds and skillsets. We are quite lucky to have a very close-knit and welcoming team, who have a never-ending supply of determination, grit and passion.
What is right now the biggest challenge for Lhotse?
As we are working with larger companies and enterprises, our sales cycle is longer. Complex IT security requirements, as well as approval from works councils are also factors that increase complexity. However, this is something we expected from the very beginning. Our team has a lot of experience with these ’hurdles’ from our time doing complex consulting projects at BCG.
What is your reason why Berlin is the place to be?
Berlin offers everything an entrepreneur or a start-up founder can wish for – creativity, innovation, expertise, you name it! Lhotse has been Berlin-based from the start – we never questioned starting our business here, as the city has so much to offer.
“The biggest lesson for me is the importance of perseverance.”
What have you personally learned so far on this journey?
I have learned a lot during this journey, but the biggest lesson for me is the importance of perseverance. We have gone through so many changes and versions of our product because we were always passionate about changing the procurement industry and this passion kept us going, even when times were tough. Take it from me – determination, perseverance and grit will always take you far!
Thank you, Henning.
Look out for the next Innovation Made in Berlin!
Interview: Olaf Bryan Wielk, ideenmanufaktur
Header image: © Lhotse