Two years ago they were on the Lions’ Lair, the German version of TV pitch show Shark Tank or Dragon’s Den, getting turned down because their CEO wasn’t on the set. That alone doesn’t make good TV but when you discover that the CEO was also the entrepreneurs’ father, it becomes clear that the Lions’ Lair producers were going for the kind of schadenfreude that reality TV loves.
And now those entrepreneurs, Maxim and Raphael Nitsche, are multi-millionaires at the age of 22 and 21 and the Lions’ Lair investors are going empty-handed. On October 18, Santa Clara, Calif.’s Chegg, a stock-listed education firm, bought the Nitsches’ company Cogeon for €12.5 million ($14.7 million) to get Math 42, a math tutoring app the brothers developed while in high school. Living well is the best revenge.
The sale produced a collective sigh of relief from Berlin’s nascent start-up scene. Venture capitalists and would-be CEOs love to praise the capital city’s vibe but it’s produced precious little beyond the Rocket Internet clone-factory of the three Samwer brothers, investors who’ve made a name – and business – by mimicking US success stories like eBay and Zappos.
Their HelloFresh mail-order meal kit business is headed for Frankfurt in early November with a valuation of as much as €1.5 billion. Rocket also bought a minority financial stake in the Delivery Hero food delivery business in 2015, which continues to trade above its €25.50 June IPO price. Rocket still holds part of the company.
That makes the success of Cogeon and the Math 42 app all the more refreshing since they’ve nothing to do with Rocket and the Samwers – the business instead took several hundred thousand in seed money from German educational publishing house Klett. Their business partner slash father, as well as their mother, is a math professor and they started playing chess when they were 4. Mind games were on the menu of all family festivities.
“[Math’s] got a certain elegance in a world that’s getting more complicated,” says Maxim, the older of the two. The app was the natural evolution of growing up in the smartphone age while moonlighting as math tutors. Both were frustrated at how math was being taught. “It’s not about stupid formulas and memorization.”
Their father supported the app’s development and also pushed the pair to write up a business plan. Then they went on TV looking for cash, but the investors refused to give money because their father was not present. In interviews, the two young men say they actually rejected an offer on Lions’ Lair but that was left on the cutting room floor.
The brothers are now essentially a thinktank for Chegg in Berlin and have put their math degrees on hold. This kind of chance, they say, only comes once in a lifetime. And they’re not planning on buying any Ferraris for now.
The app currently costs €2 a month and may become free when it’s rebranded and re-released as Chegg Math next year. It’s been downloaded more than 3 million times around the world and takes its name from Douglas Adams’ Hitchhikers Guide to the Galaxy where a computer devised 42 as the answer to the great mystery of existence. For now, it’s the answer to their existence.
Andrew Bulkeley is an editor with Handelsblatt Global in Berlin. To reach the author: firstname.lastname@example.org.