Everphone is expanding to the U.S. by renting out cellphones, tablets to corporate clients
BERLIN, Germany – Looking out from the rooftop of his office building, Everphone executive Falk Sonnenschmidt can see where the Berlin Wall used to stand. To his east, he sees Soviet-style apartment blocks, and to his west, centuries-old buildings with richly decorated facades. He’s glad to play a role in meshing the two sides since the wall came down in 1989 to help create a tech hub here.
Everphone shines as one of Germany’s most successful tech startups. Founded in 2016, it had sales topping $80 million last year, mostly in Europe. Two years ago, it opened its U.S. headquarters in Miami. In January 2024, it raised another 270 million euros (roughly $290 million) to expand worldwide, mostly providing cellphones and related services to large companies. It supplies, supports, manages, and recycles phones, tablets, and other mobile devices for a monthly per-user fee.
The venture grew out of an accident. In 2015, serial entrepreneur Jan Dzulko dropped his cellphone, and even with insurance, it took him two months to get back on track with a new device with all his data reloaded properly. Dzulko realized his insurance covered financial risks but not operational ones. He wanted something like a car rental, where he could hand in the damaged device and drive off easily.
BUILDING A BUSINESS-TO-BUSINESS VENTURE IN TECH
Dzulko started Everphone renting phones to consumers but soon saw an opportunity in supplying companies, which want to make sure their employees’ phones work effectively. In Germany, companies typically provide phones to staff.
Today, most of Everphone’s customers are large enterprises that each rent at least 250 devices, from phones to tablets and laptops. Clients see Everphone as a convenient way to manage the devices, freeing up time for their own IT personnel to perform other tasks. Companies often save 20 percent by outsourcing their device management to Everphone, says Sonnenschmidt, chief revenue officer.
Growth has been spectacular. Starting with roughly 900 phones under management in 2018, business soared 10-fold by 2020, thanks in part to a pilot project at an Ernst & Young office. That project let employees upgrade from company-designated phones by making a small monthly co-pay. Later, Everphone partnered with Germany’s largest phone carrier Deutsche Telekom – the majority owner of T-Mobile U.S. – leveraging its sales network to offer the carrier’s business customers the option of Everphone’s service. Many signed up, including large automakers. They are billed for Everphone services on their Deutsche Telekom bill.
“Deutsche Telekom really improved our professionalism. For example, they demanded more forecasting and more reporting,” says Sonnenschmidt. “It’s been a great learning journey for us… We try to bridge that gap between large corporates [such as] Deutsche Telekom and their major corporate clients, to be a speedboat in between, making things work.”
NAVIGATING A DIFFERENT MARKET IN THE U.S.
From Germany, Everphone expanded in Europe and then crossed over the Atlantic to the U.S. Today, it handles more than 400,000 devices in Europe and North America, with plans to triple that volume soon. Still, business in America has proven quite different than Europe. For starters, U.S. companies don’t typically provide phones to employees, often providing stipends for payment instead. To adapt, Everphone has hired tech and telecom executives experienced in the U.S. market and leveraged its network of clients in Europe to open doors at the U.S. offices of those companies.
Americans often respond differently to sales pitches too, says Sonnenschmidt. “My perception is the U.S. is more opportunity-driven. So, when people hear about something new, they reflect on: How can I benefit from that? How does this help me achieve my goals?” he says. “And I perceive in Germany and Europe that people don’t want to make mistakes, so they’re more focused on: How is this risky? How can this be a problem in the long run? So, if we speak to German companies, we have prepared a lot of arguments and solutions to problems they bring up, such as integration or end-to-end processes.”
Initially, Sonnenschmidt says he was surprised by Americans’ welcoming reaction. “In the U.S., people tend to say: This sounds great, and as a German, I feel: Wow, I never got such positive feedback from a first meeting,” he says. “But we’ve found that doesn’t mean that they’re your potential customer.”
Today, Everphone employs about 300 people worldwide, including some 20 in its Miami offices in the Blue Lagoon area. It expects hefty international growth this year, thanks to its latest fundraising led by U.S. financial giant Citigroup. Executives hope the financing can help bring another 1 million phones into Everphone’s system. It’s also adding more business-friendly features, from market intelligence to ESG (Environmental, Social, and Governance) reporting increasingly sought by shareholders.
CEO Dzulko expects 100 million euros ($108 million) in annual revenue for 2024, up one-third from 2023 results. “I am so confident in our team, service and especially future growth that I have personally invested in this round of financing as a founder,” Dzulko announced. He’s counting on growth partly from partnerships with device makers including Samsung, Google and Microsoft.
WHY EVERPHONE SET UP IN MIAMI
Everphone chose Miami as its U.S. headquarters partly because of the presence of other German businesses in South Florida, including airline Lufthansa, appliance maker Miele, tech equipment maker Siemen, and logistics leader Hellmann. “We’re in good company in Miami,” says Sonnenschmidt.
Miami also offers excellent air links, with ample options for flights from Germany and other European countries. It’s closer and has a smaller time zone change to Germany than Chicago, San Francisco, or other sites further west in the US. There’s ample financial and sales talent available, “especially in the last five years,” with the influx of tech and finance firms from New York, California, and beyond. Plus, Miami opens doors to Latin American investors, including some with South Florida offices. “It’s a great place to access more than U.S.-focused capital and talent,” says Sonnenschmidt. Since arriving, executives also have been pleased with the business-friendly attitude of local leaders, even meeting with Miami Mayor Francis Suarez.
BERLIN’S RECENT TECH TAKEOFF AND THE U.S. MARKET
When its wall came down after 28 years in 1989, Berlin lagged as a tech center. But things quickly changed, as the city was declared Germany’s capital in 1990. With government funds flowing for integration and rents cheap in the eastern half, young creatives and entrepreneurs flocked to Berlin, many starting tech companies.
As momentum grew, venture capital funds followed, as did offices for top German companies, including electronics giant Siemens, carmaker Volkswagen, and software leader SAP.
Some tech startups, building on Germany’s eco-consciousness and the popularity of on-demand car rentals, opted to rent and recycle tech hardware, developing “the circular economy.” In addition to Everphone, those firms include Grover, which set up its U.S. headquarters in Miami in 2022. Grover lets consumers and businesses rent such items as Airpods, laptops and cellphones through monthly subscriptions. That Berlin-based venture has raised more than $1.7 billion since its founding in 2015.
Indeed, Berlin has grown into such an important tech hub that there’s now a push to link its fintech sector with Miami’s, with events recently held in each city. Alexander Daamen, head of the Berlin Finance Initiative USA, says the effort aims to prepare Berlin-based finance and tech startups for the U.S. market “by cultivating a strong network of like-minded entrepreneurs and leaders. By facilitating knowledge and partnerships, we can help overcome barriers to enable growth for participants in our network.”
When expanding to the U.S., Sonnenschmidt cautions German and other international companies not to underestimate the size of the market and the costs involved. “You’re really entering a continent, not just a country, and you need to budget accordingly,” he says, recognizing differences even among U.S. states.
He also suggests companies find “nuance” both to adapt to the U.S. business culture and preserve their corporate culture developed at home. He’s seen some new entrants to the U.S. try to do things just like home and fail. Others instead hire all U.S. executives and succeed, but create a culture unlike their home base, making for problems in managing the U.S. unit and integrating it into their business worldwide.
“The idea is glocalization – to build a global culture with local tastes,” says Sonnenschmidt. “What we learned at Everphone is to find people who match culturally with our home culture. We are humble, not loud about our achievements. We value and seek out humility.”
