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LQD - Berlin as Start-Up Center

by ATinNM Thu Jan 9th, 2014 at 07:05:55 PM EST

Berlin's 'poor but sexy' appeal turning city into European Silicon Valley

A decade ago Berlin's mayor Klaus Wowereit tried to attract creative types to the city by declaring "Berlin ist arm, aber sexy" (poor but sexy).

It worked. The City's astonishingly low rents compared with other European capitals - a one-bed flat a short walk from Alexanderplatz in the centre of town can still be picked up for as little as €450-a-month (£373) - have helped draw arty people from across the world and made Berlin a major centre for artists, writers, musicians and, increasingly, technology and web entrepreneurs.

Berlin has more going for it than cheap rent but a low Cost of Living is a big help in fostering Creativity and it's blood-sister Innovation.


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Google maps accepted name change - Adolf-Hitler-Platz.
by Oui on Fri Jan 10th, 2014 at 02:35:17 PM EST
Google Apologises After Mis-Labelling 'Adolf Hitler Platz' In Berlin

Google has now apologised after it temporarily mislabeled a square in central Berlin with its Nazi-era name: Adolf Hitler Platz - and a screengrab went viral on social media.

The square, in the western Charlottenburg district of Berlin, is now Theodor Heuss Platz, named after the liberal first president of post-war Federal Republic of Germany, rather than a genocidal maniac.

by Bernard on Sun Jan 12th, 2014 at 12:38:56 PM EST
[ Parent ]
A modern city without its newly build Flughafen, but it does have its very own protest square O-Platz.
by Oui on Fri Jan 10th, 2014 at 02:37:24 PM EST
Guilt is Catholic. It's nothing to do with guilt. The city government sold thousands of city-owned flats. They stopped creating new social housing. This misguided housing policy was the work of the Berlin government. I can't blame it on a young Spaniard who has come here to study or look for work!

Why do we not have someone like this in the UK?

(Rhetorical question. But still.)

by ThatBritGuy (thatbritguy (at) googlemail.com) on Fri Jan 10th, 2014 at 03:11:24 PM EST
[ Parent ]
This is old news for us in the "old world":

August 2012:

Berlin finally starts championing its tech hub -- Tech News and Analysis

At last. After months -- if not years -- of complaining about a lack of official support from the Berlin administration, the city's senate has decided to start pushing it as a tech hub.

October 2012:

A guide to Europe's tech hubs -- Tech News and Analysis

For years, Germany's capital city has been an arty enclave with little or no industry. But now its startup scene is pushing hard, with a host of trendy startups and young entrepreneurs drawn in by low rents, an attractive lifestyle and easy access to Eastern European tech talent.

OK, for the US based people, London is the capital of EU "high-tech scene", at least that's what you read in the [English language] techie press (measured on successful "exits", ie "liquidity events", I suppose), Berlin coming next and Paris making a decent showing:

The web sharing economy is booming in the crowded streets of Paris -- Tech News and Analysis

Paris has such a vibrant web sharing culture that their American counterparts could stand to learn a thing or two from the Parisians. Blablacar found success with its ridesharing service, when that type of service has failed to take off in the U.S.
by Bernard on Fri Jan 10th, 2014 at 04:23:25 PM EST
London is too expensive for techie start ups, despite the govt trying to present the Old St hub as some radical initiative.

Rather these are pr and advertising start ups displaced from the more traditional West end. Their techie aspect is that they use new media and their success is measured in the column inches. Actual techie companies are rarely able to get such notice so quickly.

I'm told the real action, what little there is, is happening up north, somewhere between Nottingham and Halifax.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Fri Jan 10th, 2014 at 05:10:19 PM EST
[ Parent ]
Also the Thames valley from Reading all the way to Bristol. Back in the 80s, there was the famed 'Silicon Glen' in Scotland, essentially manufacturing plants established by Asian companies as beachheads to get around the import duties in the EU: it's all gone now.

In East London, there's also much brouhaha about the Silicon Roundabout; it even has its 'official' web page.

by Bernard on Sat Jan 11th, 2014 at 05:07:50 AM EST
[ Parent ]
Sorry, the Old St roundabout is Silicon Roundabout, which, as TBG points out, is just a bunch of pr people

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Sat Jan 11th, 2014 at 10:33:59 AM EST
[ Parent ]
Cameron is the kind of idiot who thinks PR and advertising are tech industries because everyone is using the Internet.

The real tech in the UK happens around the City, where you can earn six figures building trading systems and seven consulting on security, and around some of the top tier universities, which do Actual Research, sort of.

Silicon Roundabout is mostly Piers and Arabella types pretending to run 'full service branding and design' agencies, often with investment cash provided by rich relatives, with a bit of app development hanging precariously off the edges.

If you mash up the word 'social' with a business name that ends in 'ly' and has a cutesy logo in bright colours, you can play the start-up game too.

Your business probably won't be around a few years from now. But after grabbing a few fistfuls of investor cash and making out like a bandit, you probably won't care.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sat Jan 11th, 2014 at 05:24:03 AM EST
[ Parent ]
I'm not sure they build the systems anywhere near the City. Too expensive and actual coders are 10 a penny and can't afford the south East. Those are the guys up near Nottingham - Halifax.

The sales guys are the ones who get to go to London and eat expensive lunches and make promises that cannot be met for platforms that don't exist.

A great example of the art of fake sales is that the BBC bought a system called ENPS to put news editing and production on desktops for journalists. They made promises in their first presentations that had all the techies in stitches cos we knew it was undeliverable and BBC management are still bellyaching about it now. They could have asked, but nobody in senior damagement ever listens to the great unwashed.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Sat Jan 11th, 2014 at 10:40:19 AM EST
[ Parent ]
Mediocre coders are ten a penny. There are plenty of those. Good coders and project managers who can be trusted to bring in a project on time and budget and have it work reliably are much rarer. And if you're on 100k+bens, London isn't impossibly expensive.

There are a few superstars who earn a lot more than that, because they've graduated out of the hired tradesman role that most code monkeys work in to real consultancy.

But this assumes that management understands IT. Banks and trading houses need to have at least a bit of a clue, because if they don't bad things happen.

The BBC - not so much. They used to have world-leading training and even some R&D. But then it all got Thatcherated and MFA'd, so the fuck-up you're describing is hardly a surprise.

The triumph of marketing over substance, hand-blended with spivvy dishonesty and grasping self-interest, mashed-up with festering contempt for real competence and talent, is the very essence of Thatcherism.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sat Jan 11th, 2014 at 10:51:47 AM EST
[ Parent ]
The top rank UK computer people get poached by US companies either directly (Jonthan Ive, etc.) or indirectly through satellite offices.  

Going back, in 1946 the UK had the computer industry.  They had the theory, they had the people, they had the machines.  By 1952 this technical lead had evaporated.  Partially from the lack of capital, partially from the lack of situational awareness, partially from snobbery (Tom Flowers wasn't one of the Kool Kidz from Oxbridge,) and partially from the fact, technologically speaking, the UK Elite and Decision Makers are some of the most ignorant people on the planet.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sat Jan 11th, 2014 at 12:45:56 PM EST
[ Parent ]
The UK computer industry was killed by Cold War politics.

In short, Bletchley had not just cracked the Enigma machine, they'd also cracked the far more complex Llorentz coder. They'd told the Russians about Enigma, they "forgot" to mention Llorentz.  

When the Russians invaded Berlin they thought they got a system which we couldn't crack and they used the Llorentz machines for the next 30 years. In order to preserve the secret, we publicly dismantled the code breaking systems and dispersed the teams, creating an entirely new branch over in cheltenham.

Of course, this had the effect of destroying the civilian computing industry in the UK, an absolute gift to the US. But then again, we gave away supersonic flight as well (any resemblence to the Bell X-1 is entirely designed).

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Sat Jan 11th, 2014 at 01:34:04 PM EST
[ Parent ]
That's a big part of the situational awareness I mentioned.  The Soviets thought Lorenz was unbreakable and it was that cognitive error that caused them to keep it even after the US developed a computer industry.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Sat Jan 11th, 2014 at 01:47:49 PM EST
[ Parent ]
Vague recollection of talking about this several years ago.  But with Google & etc. dumping millions into the area it seemed worth bringing to people's notice.


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Fri Jan 10th, 2014 at 05:20:24 PM EST
[ Parent ]
London has an inconsequential semiconductor presence and software is primarily servicing the banking sector. Other than that I think the big guys (google, etc) have satellite offices.

you are the media you consume.

by MillMan (millguy at gmail) on Fri Jan 10th, 2014 at 11:03:05 PM EST
[ Parent ]
Sacking Berlin - How hipsters, expats, yummies, and smartphones ruined a city - The Baffler
The idea is to cash in on Berlin's cachet by branding it as a "Creative City"--but it is also, to judge by what has happened, to gut public services, to sell off public housing, and to strategize about new ways of turning taste into profit. This new Berlin is a city where imaginative expression supports, directly or indirectly, a grand scheme for making a small number of people rich. One of these days, some lucky Berliners and expats will finally attract venture capital from London, Palo Alto, and Boston. But the others--the scenic poor and the clever unemployeds who make the city so attractive--will find it ever more difficult to make ends meet.
Also, in German:

Start-ups in Berlin - Between Hype and Reality - Spiegel Online

Konstantin Guericke, founder of LinkedIn, has already lost patience with the capital. His conclusion in "Handelsblatt": "Everyone should go to Silicon Valley." One would only need to imagine two equally good teams with each an equally good product, one in Berlin, one in SV. "After a year the German start-up has maybe 100,000 customers. The American will have a million."


Schengen is toast!
by epochepoque on Sat Jan 11th, 2014 at 02:55:18 AM EST
Gutting public services and selling off public housing can't be laid to the high-tech Creative Class who, maybe, comprise 100,000 people out of 3.5 million.  

In order to get lucky the Berliners or expats have to do the work to get to the position to get lucky.  Merely having a Creative Idea isn't enough. Creative Ideas are ten a euro. The idea has to be turned into a prototype product, then into a salable product.  It's somewhere between having a prototype product and a salable product that VCs get interested.  Up until then start-ups, even in the US, rely on personal savings and the Three Fs: Fools, Family, Friends, for working capital.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sat Jan 11th, 2014 at 12:12:22 PM EST
[ Parent ]
Is there much private consulting (or facilitation) for start ups going on, that is not VC-predatory? Fun to see public education and business facilitation producing most benefit for top financial actors (for free for them, as well).
by das monde on Sun Jan 12th, 2014 at 05:43:17 AM EST
[ Parent ]
Finland has Strategic Centre for Science, Technology and Innovation (SHOK) where they build ad-hoc groups that are Public/Private funded.  But AFAIK they aren't in the start-up funding business.  In the US there are federal government agencies funding start-ups.  DARPA is the best known.  The CIA is a player in SV.  Other countries are starting to move in that direction, Estonia is looking to become a start-up funder.

But these are minor.

The operational paradigm is start-ups pitching to VCs and in the general run of things VC funding is predatory funding.  VCs have a 2 to 3 year Time Horizon and no interest in the long term health of the companies in their investment portfolios.

 

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sun Jan 12th, 2014 at 12:05:54 PM EST
[ Parent ]
One would only need to imagine two equally good teams with each an equally good product, one in Berlin, one in SV. "After a year the German start-up has maybe 100,000 customers. The American will have a million."

If true it means the Berliners need to up their PR, Advertising, and Marketing game.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sat Jan 11th, 2014 at 12:21:06 PM EST
[ Parent ]
Grand Theft auto, the most popular game on the planet, is made by a bunch of guys in an Edinburgh warehouse. You don't need to go to Silicon Valley to get a million sales

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Sat Jan 11th, 2014 at 01:24:47 PM EST
[ Parent ]
And Angry Birds, too!

Guericke happened to be in the right place, at the right time, with the right product, and now he thinks that's how it works.  Well.  it doesn't.  His big success with LinkedIn has as much to do with luck as anything else.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sat Jan 11th, 2014 at 01:51:50 PM EST
[ Parent ]
Software application development requires neither physical infrastructure nor local social infrastructure.

you are the media you consume.

by MillMan (millguy at gmail) on Sat Jan 11th, 2014 at 08:36:37 PM EST
[ Parent ]
That is very much an exaggeration. Developers get bored easily. They need entertainment. There is a reason all those geeks working in Silicon Valley live in San Francisco. Berlin has covered that aspect. And it is enough for a start-up.

But it is not enough in the long run. You need a workable airport. It is also good to have a local university to cooperate with and to get non-core staff as the company grows. Berlin can manage that.

Yet Berlin has one core problem that is very hard to solve. Developers age and at some point you need other support services which means hiring solid family types. And they need good schools. That condition is not negotiable. As private schools in Germany are unusual, Berlin will have to fix its public schools.

by oliver on Fri Jan 31st, 2014 at 11:33:29 AM EST
[ Parent ]
I remember articles all the way back in the late 90s saying that Berlin was no longer cheap. That was arguably in reference to artists and not engineers or MBAs, but still.

you are the media you consume.

by MillMan (millguy at gmail) on Sat Jan 11th, 2014 at 08:39:29 PM EST
[ Parent ]
This should have been a root level comment.

you are the media you consume.

by MillMan (millguy at gmail) on Sat Jan 11th, 2014 at 09:54:34 PM EST
[ Parent ]
Berlin is "cheap" when compared to other major metropolitan start-up areas.  Average residential rent in Santa Clara county is $2,128 per month, in Berlin it is 695€ ($950.)

Rent costs impacts a start-up in two ways.  The first is the immediate costs for the business location.  The second is salaries have to be sufficiently large to cover the cost of residential rents.  A five person company in Santa Clara would have to spend $10,640 a month, $127,680/year in residential rental coverage - call it - where as in Berlin that figure is $4,750 or $57,000/year.  Guesstimating the business rental cost differences are "the same," That's roughly $140,000 a year, working out to anywhere between $280,000 to $700,000 over 2 to 5 years (typical start-up period) of scarce working capital allocated to Fixed Business Costs, essentially thrown away, by a start-up choosing to locate in Santa Clara over Berlin.  

Now there may be solid and sufficient reasons for choosing Santa Clara but they don't eliminate the Cost Difference.


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sun Jan 12th, 2014 at 12:42:43 PM EST
[ Parent ]
Berlin is rapidly growing as a startup center... in energy, too, as well as other types of tech and bio... but you can't overnight develop 60 years of infrastructure build as in Silicon Valley.

Though Yurpeen VCs are a growing presence in Berlin as well.

Please remember that the euro crisis is one cause of Berlin's accelerating costs, as wealthy from southern Yurp (and elsewhere of course) invest in Germany's main cities.

"Life shrinks or expands in proportion to one's courage." - Ana´s Nin

by Crazy Horse on Mon Jan 13th, 2014 at 02:10:46 AM EST
[ Parent ]


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