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A brief report on the Berlin startup scene

This is a cross-posting from the blog of my consultancy Turner Hopkins; I thought it would be of interest to readers of this blog.

 

Over this last week Sarah and I were back in Berlin, where we stayed for nigh-on a month a couple of years back. It's one of our favourite cities and we need little excuse to visit, but for the record, the catalyst was one last chance this year to see Meshuggah live. (For those not in the know, Meshuggah are a technical death metal* band from Sweden, and just about my favourite musical thing in the world; I've seen them four times in three different cities this year. And Sarah? All I can say she is long-suffering and supportive beyond the call of duty, or, indeed, sanity.)

 

So, the purpose of the trip was mostly pleasure, but as ever we ended up having a couple of very interesting meetings, this time with Maria Molland, Chief European Officer of the chic lifestyle/household accessory-commerce company Fab.com, and Max Kossatz, co-founder of Archify, a smart new service which offers "All your browsing history and social network updates in one place", and is now in open beta.

Off the back of those conversations, not to mention just being in town for a few days, Sarah and I found ourselves chatting quite a bit about the Berlin startup scene (which S had in any case been researching for her UKTI trip to Boston the week before – of which more anon) and I thought I might jot down some of our observations here.

 

Things have really built up a head of steam here since our last visit, although in fairness things were feeling lively even then. There are not only a lot more startups but more co-working spaces too. Of these, the most prestigious would seem to be The Factory, which is invite only and will see the poster child of the Berlin startup scene, Soundcloud, and social game specialists Wooga move in sometime next year.

 

 

Indeed, it's perhaps one sign of the scene maturing that it's running into some of the problems being experienced in other hubs like London. Chief among these, of course, is the shortage of experienced talented staff, most markedly developers – with many of these being taken up by the more successful startups, like the aforementioned Soundcloud.

 

While not perhaps quite as polygot as London, Berlin really is highly cosmopolitan. We were particularly struck by the number of young Americans we ran into (or, more likely, overheard in various bars and cafes), and it turns out there's at least one straightforward reason for this: it’s remarkably easy for US citizens to get a three-year visa to come and work here. But I think there's something else too – a close cultural bond between Berliners and the US which may have its roots in the Cold War, even though many young would-be entrepreneurs weren't even born when the Wall came down. (It's also worth noting that, conversely, it's incredibly difficult for citizens of former Eastern Bloc countries to get visas to come here – which certainly won't help with that shortage of developers.)

 

One market that's very strong here is e-commerce; that's one of the reasons, of course, that Fab has its European headquarters here, with 250 staff. Indeed, apparently the first question a potential will ask of a startup is: is it an e-commerce business? And the second and third questions are just as revealing: Has it been done before (ie. is it a "clone" business**)? and: What are the implications around privacy and security? This last point illustrates something widely known about both Germany and Austria: that concerns around privacy are really, really strong (there's still no Google Street View in Austria and Germany came late to the party – with considerable restrictions.) The problem, as Max pointed out to us, is that so often privacy and security issues are confused, with the result that it's difficult to raise funding for innovative businesses built on anonymised data.

 

Finally, something of overwhelming benefit to the startup scene here – and, I dare say, to any business sector which employs a lot of young people – is just how cheap property rental is here. That's got two upsides, of course: business space is more affordable than in many equivalent cities; and it's a truly attractive city for talented young professionals from all over Europe to come and live in.

 

We're looking forward to our next visit then – although we might wait until the snow clears…

 

*Yes, technical death metal has its own Wikipedia entry. Why wouldn't it?

** The cloning of US sites is generally seen as a good thing in Germany; check out this story about the extremely successful Samwer brothers.

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