Why Berlin Needs To Become Europe’s Silicon Valley

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"Berlin is poor but sexy" - Klaus Wowereit

This article can be found here. Written by Dean Fankhauser on 12/05/2010:

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.