Europe’s creative capital, Berlin has always been “the poor city”, the city with unemployment rates of 12%+, an ongoing cultural divide of East and West and a contemptuous attitude to work and commercial growth.
The mayor of Berlin, Klaus Wowereit is famous for many political quotes, though the one that stands out to me is “Berlin is poor but sexy”. Meeting local Berliners you begin to understand that this is the accepted view of most inhabitants here.
However, something is changing in Berlin and I think it’s about to become a very exciting place for young entrepreneurs and internet start ups.
Berlin is Special
There are very few cities in the world with the infrastructure, technology and talent that Berlin provides. Not to mention the fact that this city is very cheap!
It has an abundance of empty apartments and office space. The cost of food, alcohol, clothing and other living expenses is significantly cheaper than the US and Western Europe.
Geographically, it’s hard to find a more suited place for a start-up. It has extremely talented and cheap engineers in Eastern Europe with access to capital and established markets in Western Europe, not to mention the standards of living. If you’re young, ambitious, though still like to have fun, well there isn’t a city in the world that can party like Berlin, trust me!
It’s international
Berlin is filled with expats, and they’re coming in droves! They’re coming from East and West. Nearly everyone I speak to in London “dreams” of living in Berlin.
It is advised to learn at-least some basic German, however, everyone speaks perfect English. Websites such as Toy Town and The Exberliner make life much easier for English speaking people in Berlin. They help organise events, and offer a lot of valuable advice on almost any topic.
Germany has lacked an international airport for decades, however next year that is about to change. Berlin is finally getting a world class, Bauhaus designed international airport, putting Berlin back on the map for international travelers.
Who’s here?
There’s an exciting list of start-ups in this city and they’re growing more rapidly than elsewhere in Europe. Is this a sign of things to come? It probably should be. Some of the most exciting start-ups include SoundCloud, Aka-Aki, Babbel, Twinity, SongBeat, My City Deal and the recently purchased Dopplr.
Why not?
It’s difficult to hire and fire, Germany has one of the highest regulated labour markets in the world.
Whether or not an employee contract exists, all employees have basic rights to:
- holidays
- sick pay
- chose to work part time
- receive training
- receive maternitiy / paternity leave and related employment protection
Germany is a lagger in the digital world, sadly known as copy-cats not innovators and Germany is usually 2-3 years behind the US in digital trends. Some examples of their copycats include StudiVZ, infamous for copying Facebook shamelessly and the recent rush towards group purchasing, otherwise known as flash marketing has led to GroupOn copycats such as My City Deal.
It’s harder to raise capital here. Sillicon Valley, London and New York have the benefit of established VC’s and Angel investors. This is starting to change with the advent of early stage VC firms such as Team Europe. However, it is no where near the point it needs to be in order to challenge and compete with the Valley in regards to raising money.
Berliners are lazy. I know it’s a very controversial thing to say, but compared to the Valley, New York and London, it’s generally true. There needs to be a new standard of work ethic and drive, otherwise this city will never get kick started. I think this industry could just be the thing to do it.
Berlin needs to be a start-up hub
Since the Berlin wall came down two decades ago, Berlin has been a vacuum on German funds. It has very little, if any industry, unemployment has been at unacceptable levels for too long, reaching 14.2% in 2009. One in three youths are on welfare, and there isn’t a bright future anywhere in sight, yet.
With some help and determination, I believe this city could be a perfect European hub for start-ups. With some private and public assistance, there is an amazing opportunity to build next generation creative digital start-ups that will have a distinct advantage over any European and perhaps US start-ups, should it be executed properly.
There needs to be a better cultural understanding and support of start-ups. Young people need to be inspired, trained and educated in the world of entrepreneurialism and there needs to be incentives given to investors world-wide in order to get their attention and more importantly, their dollars.
Berlin is already Germany´s start-up capital: http://bit.ly/9Y7235 (DE).
A good Berlin start-up map is here: http://bit.ly/9YXzX8
Germany’s but not necessarily Europe’s.
Nice map!
interesting points. It’s not going to happen, but interesting points.
I moved iliketotallyloveit.com from Bremen to Berlin when I moved to Germany from NYC. Berlin is a great city.
Why not Zee? The article lists a few benefits of Berlin, bu there are more. Also, surprisingly many people are coming from London to settle here.
Great analysis! Some days ago (April 23, 2010) Dan Romescu (experienced in mobile tech and business) and I (technology analyst, strategiclabs.de) have realized the “ARBcon.europe – 1st European Augmented Reality Business Conference” – in Berlin. Successfully, despite some volcano trouble.
Mobile Augmented Reality is an emerging technology with an enormous impact. Since we believe that creativity + couriosity belong together we took both the chance and the risk and organized this in a kind of adhoc style (just 9 weeks from intention to reality). We can say from experience: Berlin is a fine place for making things like this happen! One nice factor are the geo coordinates – we actually had speakers/guests from 17 countries (Press Release April 27, http://www.arbcon.eu/media).
Yesterday the next conference “next10″ was the first time in Berlin, not in Hamburg – and it was cool.
Startup hub? Think of clean tech and third wave (AR, internet of things, sensor web, Social 3.0 …). So yes, let’s do it!
atleast they making the best beer in the world-> and thats a BIG ThumbsUp :P
@Vasco: And there will be lot of more startups soon here in Berlin.
Not one of the startups does make a relevant amount of money. Not one. Berlin may be cheap, but so are the people, too. Petty-minded and precocious people, who don’t have a vision or a clue at the best, Silicon Valley in Berlin needs other peeps in the first place. And business-wise it’s a very bad idea to found a startup in Berlin, because there’s no money. It’s just simple as that. E.g. why does Apple not have a retail store Berlin, but in Munich, Frankfurt and Hamburg? Believe me, if you want to make money you don’t go to Berlin.
“Germany has lacked an international airport for decades”
Tell that to the people working at the Frankfurt/Main airport (FRA)…
Typo, Berlin.
Here’s an indepth look at some Berlin start-ups such as SoundCloud:
http://www.exberliner.com/articles/the-future-belongs-to-geeks
Berlin offers me many opportunities since I was born here. Also for me as an entrepreneur this city is the place to be. The versatile environment and little living costs helped me essentialy on my way. I strongly believe in the potential of Berlin and try support the city for example with networking events for people working in the web industry – called “Online Marketing Lounge”.
Being an entrepreneur myself, I cannot agree. Though it is a very appealing thought that any city in germany would become a striving pinnacle of todays tech-scene, i highly doubt that this is in the realms of anything feasable.
For instance: the german culture by itself is very pessimistic and by far not opportunistic enough to compete with other countries. This does not neccessarily mean that grand ideas cannot be born from german startups, but it does imply that the mass of ideas will be copy-cats (as in “taken from already proven concepts”), which are less likely to faily.
This by itself isn’t a problem, but it sets the tone of a scene that cannot be leading in its field. It takes bold people with bold ideas to change a market, not copy cats. Many other european countries (france,switzerland or britain for instance) are more likely to generate such startups…
This is of course a general oversimplification of the problems we currently face, but the german venture market, on which only copy-cats generate their somewhat needed funding, further indicates that this is not too far from the truth.
And who could blame the guys roling the big bucks?! Moneywise, the german market is more than underfunded, with their biggest players coming from the print-media (even they lack the capital to fund an entire industry efficiently).
Unless there’d be an overwhelming change of culture and a new industry structure that supports young startups with grand new ideas, it is highly unlikely that anything will come to change..
I have built a startup in Berlin previously and am now doing so elsewhere. For a reason.
The talent pool in Berlin is simply appalling. Cheapness only gets you so far. An appropriate place to bootstrap some copycat startup built on PHP junk but a terrible place to create technology that can grow into a huge business. The startup scene is basically comprised of marketing people from a handful of good business schools (i.e. from outside Berlin) leading tech people who would typically not even be able to get an interview at a proper Silicon Valley startup with their mediocre skill set.
http://www.heise.de/newsticker/meldung/Zwei-Milliarden-Euro-fuer-Aachener-Silicon-Valley-934596.html (sorry can’t find an english version)
Aachen will become europe’s sillicon valley. Even though its much smaller, it’s much more international.
Berlin is the capital of internet startups, but sillicon valley of europe mhrr….. i don’t think so.
Given the fact, that Berlin has a very high startup density, it is also very likely, that some of these Web-enterprises (as we have seen in the past with flagships like zanox) will make their way to the very top. The Internet-startups I am currently working with in the Berlin region assure me, that the circumstances are absolutely favorable. Startup capitol, by any means, Silicon Valley, hopefully.
Berlin is fabulous for arts, political lobbyists and has become the indisputed party capital of Europe. There is also a striving startup scene in Berlin, nevertheless we have opted to start our next startup in Hamburg.
Why Hamburg?
Hamburg is Germany´s media capital, with Hamburg@Work it has the biggest and oldest network of new media startups, in games it´s also a real hotspot with players like Bigpoint and others, many of the most talented developers live here. Hamburg is also the city where Google, Facebook and Xing have their German headquarters, all within less than half a mile away from Hanse Ventures, our new startup accelerator in the heart of the city. Founders who found their startup together with Hanse Ventures can move in a fully equipped central office and benefit from full service infrastructure of designers, programmers, online marketing specialists, high level contacts, seed financing and administrative support. We welcome founders who come in, plug in and play.
Check it out: http://www.hanseventures.com
And best of all: Berlin is just 1,5 hours away, so you can hop on a train whenever you feel like partying big time.
I was happy to read this article by @deanfankhauser
particularly because the headline hints an interesting possible future for Berlin. Berlin is currently the Startup Capital of Germany ( http://frische-fische.de/popup_bilddetail.php?lid_pi=835 ) and to my knowledge developing faster than any other German city in regard to web/digital businesses. Whether in the long run any city or region in Europe will be THE European Silicon Valley, I do not know. For the foreseeable future I expect more than one web cluster in Europe (different language families being one of the reasons). However, Berlin is and will stay one of the 2 or 3 leading areas in Europe which deserve the attention of the Silicon Valley. Berlin offers ideal conditions, the first and foremost the atmosphere and the people.
I see the negative points Dean makes, but as not so harsh – the positive side massively outweighs the negative points. Some like the “new standard of work ethic and drive” Dean demands for Berlin (Germany/Europe?) I’d rather not like to see or I see them as a misconception (Berliners work significantly more hours than Hamburgers, Bavarians…( http://www.businesslocationcenter.de/de/E/ii/seite0.jsp ). But the whole thing which makes Berlin special is in my eyes the relaxed atmosphere, the possibility to try things out, the relative, at least for a period of time) absence of the need to fight to stay afloat as I have seen it in NY or SFO.
I see the proximity of Hamburg as an additional value, I do not agree with @Sariks insinuation about a competition between the two cities, not more than between San Francisco, Redwood City and maybe San Jose (though I understand that he is as passionate about Hamburg as I am about Berlin :-). The distance between Hamburg and Berlin is similar to the one between San Francisco and San Jose. I believe we should see things on a higher, not micro level, so many Hamburgers and Berliner are travelling every day between the two cities that I see first and foremost benefits from this North-Eastern-Connection. I am happy about any VC which adds to the so much sought after solution to any startup’s financing problem. Whether they are located in Berlin or Hamburg is generally of second importance. So congrats @Saric and crew, I know you are already very busy working on your contribution to the German startup scene. The rise of Berlin as Germany’s and maybe Europe’s Internet hotspot has advantages for the whole industry in Hamburg and Germany at large because it brings international attention to our country and its digital industry.
We believe enough in Berlin that we will move our startup there soon. There are lots of other founders to share experiences with, and several universities where you can recruit new talent. Costs of living, rent etc. allow for frugal operations, and wages are not as high as in the south. Also, the vibrant atmosphere is inspiring.
@Alexander in my comment I actually intended to insinuate the idea of a strong alliance between Hamburg and Berlin, at Hanse Ventures we are completely open for ideas of founders in either city. One of our next top startups will actually be in Berlin.
I like Berlin a lot and founded a company here in 2005. But I was frustrated by how lazy German programmers can be – out the door at 5 pm, sometimes even earlier on Fridays, no possibility of working on the weekend. So I agree with one of the comments above that there is better talent in Cologne and Hamburg, etc. If I had ever proposed the kinds of “coding contests” that facebook and Google often hold, my coworkers could have laughed me out of the room.
Great Article and i wish groupon goodluck
Thank you so much for sharing information that Berlin is Special and many other things about Berlin. There are good points about it.
Stay in the States and leave Berlin in peace.
Whomever said that the culture of copy-cat-ism and pessimissim prohibits berlin or any place in germany from being a Sillicon Valley is exactly right. About 6 or 7 years ago I met with an IT company on the request of the owner. We met once-a-month for 6 months to discuss launching a new company. And basically every idea I had (I should preface this by saying I am an American) was immediately challenged and I was told all the reasons why the idea would be impossible. fast forward to now and Facebook has implemented most of them.
In order to be a successful entrepreneur you need optimism. In order to build a successful product you need to be optimistic too.
Saying berliners are lazy people might even be acceptable but how do you dare saying what they should do or what their work ethic should be?
Berlin doesn’t probably move at the pace NYC or London do. it doesn’t need to and it probably doesn’t want to.
Too late.
The Rhine-Main-Valley, especially around Darmstadt, is already the “Silicon-Valley” of Europe.
http://www.darmstadt.ihk.de/innovation/InformationsKommunikationstechnologie/softwarestandort_rhein_main_neckar/946398/Rhein_Main_Neckar_bleibt_Silicon_Valley_Europas.html