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We do have tech startups here in Germany, and quite a few of them. It's just that they tend to be funded differently, and with less of the wild valuation-specul

We do have tech startups here in Germany, and quite a few of them. It's just that they tend to be funded differently, and with less of the wild valuation-speculation that goes on in the US. I'm not sure that's a bad thing. As a corollary, the article cites European data protection law (in the context of not being able to collect usage data to improve the product) as a barrier to building startups which ... is also very wrong. You can (legally! Ethically! GDPR-compliantly!) collect all sorts of data with which to improve your product. I've seen it done, I've done it myself. There are a lot of people here, German and non-German alike, trying to furiously recreate the SV way of doing things, as if that's the only way to build a strong tech industry. To me that's both uninteresting (why replicate the same model everywhere?) and bad business (not all markets are the same, and that's not a bad thing). Maybe people would be more successfully adapting to the local context. It's certainly working for a handful of startup incubators I know in Berlin.

zorkw4rg 8y ago
meanwhile there is not a single tech startup from germany worth talking about, but yeah sure not everyone has to do it the SV way of doing things, like actually being successful
- cabraca 8y ago
  > like actually being successful lets be honest, there is a huge amount of SV startups that bleed CV money like there is no tomorrow. not to mention the ones that failed.
Jdam 8y ago
I’ve lived in Berlin for some years. What I‘ve seen from most of the startup scene there was that people are more collecting memories than building businesses. The predominant mindset was like „we don’t want to take over the world and we will most likely fail anyway“. The successful ones, like Dubsmash, leave for the US after a while. If I, as a German, was to create a startup in Europe today, I’d do so in London.
- groestl 8y ago
  > collecting memories than building businesses The lifestyle entrepreneur is a phenomenon that you can find in the US as well.
  - k__ 8y ago
    Guess it's predominant in Berlin, people are as removed from business thinking as possible up there.
- _petronius 8y ago
  I would humbly submit that your sample size is too small. Even just the Rocket Internet output is a pretty good indicator of the size and diversity of successful startups tsrgetting the German market specifically (and thus with no incentive to move out to the US).
  - Jdam 8y ago
    I‘ve worked at a major company that is more or less controlled by Rocket and my direct neighbor was the Germany-CEO of one of their successfuller ventures, so I think I have a rather good picture of Rocket. However, I think they have not met expectations. They have not become huge, and are just doing okay, what I consider as a failure, given their goals.
    - k__ 8y ago
      Yes, but that was to be expected from a company founded by a bunch of copy-cats.
  - konschubert 8y ago
    Rocket Internet is the opposite of innovation. If anything, the success of Rocket Internet proves the point that Germany is not good at startups.
- earthnail 8y ago
  I am German and co-founded a start-up in berlin. After it failed, one of my co-founders and me tried again - this time in London. Boy, what a difference. Seed funding, tech talent, tax situation, and lawyers to help you start your company - all on a better level. Yes, living was more expensive, but we actually enjoyed that - it put pressure on us and everyone working with us. We had a highly successful exit in less than a year.
baxtr 8y ago
I have to disagree. We don’t do tech startup like in the US or China. Yes, we do have a lot of great B2B industrial startups. But ask yourself this questions: as a developers where would you want to work? In the US that’s easy to answer, Google, MS, Apple, amazon. Where do you want to work in Germany? Which tech company provides the opportunity to earn a lot of money while working on really interesting topics at a large scale? That’s one reason the big US companies have offices here, to attract the talent.
- thatfrenchguy 8y ago
  “In the US that’s easy to answer, Google, MS, Apple, amazon. ” That’s a dangerous thing though to push as a one-stop solution I think. There is huge advantages to work for one of these companies, but the drawbacks are also there, and they’re definitely not made for everyone
  - baxtr 8y ago
    Well it worked for us in the car space. As engineer coming from university it is clear where you want to work in Germany: Mercedes, BMW, Porsche, Audi, great places to start a career.
    - expertentipp 8y ago
      > As engineer coming from university it is clear where you want to work in Germany: Mercedes, BMW, Porsche, Audi, great places to start a career. meh, working with embedded hard-heads on experimental features for a car segment driven by oligarchs, CEOs, and mafiosos.
      - baxtr 8y ago
        Please have look at that ranking: https://www.ingenieur.de/karriere/arbeitsleben/arbeitgeber/die-beliebtesten-arbeitgeber-angehender-ingenieure/ https://www.ingenieur.de/karriere/arbeitsleben/arbeitgeber/d...
maze-le 8y ago
Exactly, I've worked in 3 companies in Germany that you might call startups without venture capital. I think it is also a cultural issue, with investors and founders alike. Its like, a small company with an independent revenue stream and a small but reliable customer base is worth more than artificially (VC-)inflated companies, that might make it... one day... maybe.
- mk89 8y ago
  > is worth more than artificially (VC-)inflated companies, that might make it... one day... maybe. For who? It's probably more satisfying because you are making it without any help. But that's it.
  - maze-le 8y ago
    A colleague from sales told me an anecdote once, that she is not going to use the word 'Startup' again during sales pitches and general customer interaction. I worked in publishing at that time and customers in this sector tend to be more conservative and long term planning than in other sectors. Essentially they feared that the company might not exist anymore in 2 years to come, because of {acquisition, restructuring, bankruptcy} or some other reason. Appearantly beeing a 'Startup' seems to be associated instability and unreliability in some circles -- wich again is part of these 'cultural issues' wich I was talking about in the previous post.
    - mk89 8y ago
      I think this is unrelated to being self funded or being in the A, B or C round. It's more about the fact that any new cool young company can disappear soon, if there is no business. And this happens both if investors give you money or if you simply don't make enough money. That's the way it is... Eventually, if the business doesn't work well, it doesn't work well... It's also somehow the reason that nobody got ever fired for hiring ibm or whatever the saying says...
kayoone 8y ago
Well, I am a german and i'd argue we'd need to do it the SV way to have the same kind of global success stories. Sure your small german startup can be GDPR compliant and find it's niche, but making products of massive global scale is inherently harder here than it is in the US because of a number of things, only one of which is data privacy. Not saying as a consumer i do not prefer EU privacy laws, I do, but it will be hard to compete on a global scale being handcuffed in a lot of these smaller areas. (privacy, language barriers, taxes, salaries etc)
- opportune 8y ago
  This may come as a surprise but most big companies are just making everything GDPR compliant for all users because it's easier and it's not like the restrictions you need to put in place affect data quality too much
bayesian_horse 8y ago
Tech "startups" are supposed to be profitable almost right away. Which precludes much of what is worth trying. The problem is that this attitude severely limits the potential upside.
hnkf 8y ago
The article is wrong on many levels, you’re right. As a Berlin-based developer I’m not sure where they’re getting their facts. Blaming GDPR for everything is another stupid trend I detest. I’ve inplemented a lot of stuff related to it and it’s definitely not what it gets pictured as. At the end of the day it speaks more of the zeitgeist among Quartz’s “high-earning readers”.
- apexalpha 8y ago
  >Blaming GDPR for everything is another stupid trend I detest. I’ve inplemented a lot of stuff related to it and it’s definitely not what it gets pictured as. Every law that remotely hinders the purist form of the free market is detested in Anglo media is seems. People have no problem hailing Amazon as a tech wonder and celebrate Bezos as the richest man alive. But how about minimum wage and proper working conditions in their warehouses? 'ah should get a better job then'. They are 'at will' employed. Just because a law restricts business doesn't mean it's bad.
  - hnkf 8y ago
    Thank you! It’s easy to forget many of the “safety nets” we enjoy in Europe stem from socialist-style welfare policies that our forerunners fought for.
- AsyncAwait 8y ago
  > Blaming GDPR for everything is another stupid trend I detest. From what I noticed, it's mostly coming from the U.S. where every piece of regulation is seen as "government impending businesses that create jobs", including regulation against polluting etc. I am not sure how actual citizens feel, I suspect not as strongly against deregulation as the press make it seem, but they're definitely a lot more against it than in the EU.
sonnyblarney 8y ago
" less of the wild valuation-speculation. I'm not sure that's a bad thing." This is one of the classic misunderstandings of European entrepreneurs and investors. In finance - things with low risk, tend to produce low yield. This is generally well established because there are a lot of 'eyes on the info'. For example, we can calculate how much it costs to extract a new shallow water Oil find. Most of the variables are known. Though it's not so clear in early-stage, the rule will still apply because the easy hanging fruit generally will be culled when there are intelligent actors. So - you need to take on risk. Otherwise, you're probably not attacking a big opportunity. European VC's usually come out of the world of finance - in fact, VC is considered a part of 'Private Equity'. In PE or big funds, they invest in one or many companies, and expect x% return. Some more, some less. In PE, if a company were to go bankrupt, it would wipe out the portfolio profits. Imagine if Warren Buffet put money in CN Rail and it turfed.Bad. But in VC - you get 9 fails and 1 home run. The fails are hard to swallow but they are an inherent part of the system. Culturally, Europeans especially Germans are not good with that kind of failure. It can be seen as a permanent mark on one's competency and status. In Austria, up until recently, a CEO who put his company bankrupt could face criminal charges. All of this makes sense in a culture of high standards and expectations, coupled with social solidarity of workers (i.e. you but us out of jobs, you pay!). European LP's are not used to losing their money. European workers are not used to equity, to losing their jobs, to total instability. European BigCo's often do not recognize value in startups. The culture in Europe is very protocol and status oriented - you're 'value' is a function of the prestige and power of the entity you represent. Ramshackle, scruffy coders showing you 'you can do something amazing' is just less potent an opportunity than it is in the US. And of course, the exit opportunities are not there. And then so many other systematic issues like the fact almost nobody will learn to speak German, immigration etc. etc.. - all of this makes it that much harder. Much of what I am saying is stereotypical of course, but it's real enough. I think Europe should take their disadvantages and turn them into advantages and use their 'longer scope of vision' to do value creating things. Europe is good at getting people together and going 'big projects' that have a long term view. Like CERN. And EU treaties. I can see some very powerful things concerning money - European countries are smaller and more nimble. Sweden does some cool stuff. What if a Swedish Crown corporation enabled a digital currency that could be used globally? Because of the integrity of the institution, and the fact that it's backed possibly by a 'real economy' - it could be a very powerful export. Much in the same way if you make 'jet fighters' you don't just go and sell them you need your countries diplomatic corps to work with you. EDF in France (Energy) is tied closely to government, and that kind of stuff - i.e. nuclear, generally needs some hefty scale. But also expect that many of the gains in such situations will be socialized, and maybe not come in the form of crazy billionaire status for founders.

zorkw4rg 8y ago

meanwhile there is not a single tech startup from germany worth talking about, but yeah sure not everyone has to do it the SV way of doing things, like actually being successful

cabraca 8y ago
> like actually being successful lets be honest, there is a huge amount of SV startups that bleed CV money like there is no tomorrow. not to mention the ones that failed.

Jdam 8y ago

I’ve lived in Berlin for some years. What I‘ve seen from most of the startup scene there was that people are more collecting memories than building businesses. The predominant mindset was like „we don’t want to take over the world and we will most likely fail anyway“. The successful ones, like Dubsmash, leave for the US after a while. If I, as a German, was to create a startup in Europe today, I’d do so in London.

groestl 8y ago
> collecting memories than building businesses The lifestyle entrepreneur is a phenomenon that you can find in the US as well.
- k__ 8y ago
  Guess it's predominant in Berlin, people are as removed from business thinking as possible up there.
_petronius 8y ago
I would humbly submit that your sample size is too small. Even just the Rocket Internet output is a pretty good indicator of the size and diversity of successful startups tsrgetting the German market specifically (and thus with no incentive to move out to the US).
- Jdam 8y ago
  I‘ve worked at a major company that is more or less controlled by Rocket and my direct neighbor was the Germany-CEO of one of their successfuller ventures, so I think I have a rather good picture of Rocket. However, I think they have not met expectations. They have not become huge, and are just doing okay, what I consider as a failure, given their goals.
  - k__ 8y ago
    Yes, but that was to be expected from a company founded by a bunch of copy-cats.
- konschubert 8y ago
  Rocket Internet is the opposite of innovation. If anything, the success of Rocket Internet proves the point that Germany is not good at startups.
earthnail 8y ago
I am German and co-founded a start-up in berlin. After it failed, one of my co-founders and me tried again - this time in London. Boy, what a difference. Seed funding, tech talent, tax situation, and lawyers to help you start your company - all on a better level. Yes, living was more expensive, but we actually enjoyed that - it put pressure on us and everyone working with us. We had a highly successful exit in less than a year.

baxtr 8y ago

I have to disagree. We don’t do tech startup like in the US or China. Yes, we do have a lot of great B2B industrial startups. But ask yourself this questions: as a developers where would you want to work? In the US that’s easy to answer, Google, MS, Apple, amazon. Where do you want to work in Germany? Which tech company provides the opportunity to earn a lot of money while working on really interesting topics at a large scale? That’s one reason the big US companies have offices here, to attract the talent.

thatfrenchguy 8y ago
“In the US that’s easy to answer, Google, MS, Apple, amazon. ” That’s a dangerous thing though to push as a one-stop solution I think. There is huge advantages to work for one of these companies, but the drawbacks are also there, and they’re definitely not made for everyone
- baxtr 8y ago
  Well it worked for us in the car space. As engineer coming from university it is clear where you want to work in Germany: Mercedes, BMW, Porsche, Audi, great places to start a career.
  - expertentipp 8y ago
    > As engineer coming from university it is clear where you want to work in Germany: Mercedes, BMW, Porsche, Audi, great places to start a career. meh, working with embedded hard-heads on experimental features for a car segment driven by oligarchs, CEOs, and mafiosos.
    - baxtr 8y ago
      Please have look at that ranking: https://www.ingenieur.de/karriere/arbeitsleben/arbeitgeber/die-beliebtesten-arbeitgeber-angehender-ingenieure/ https://www.ingenieur.de/karriere/arbeitsleben/arbeitgeber/d...

maze-le 8y ago

Exactly, I've worked in 3 companies in Germany that you might call startups without venture capital. I think it is also a cultural issue, with investors and founders alike. Its like, a small company with an independent revenue stream and a small but reliable customer base is worth more than artificially (VC-)inflated companies, that might make it... one day... maybe.

mk89 8y ago
> is worth more than artificially (VC-)inflated companies, that might make it... one day... maybe. For who? It's probably more satisfying because you are making it without any help. But that's it.
- maze-le 8y ago
  A colleague from sales told me an anecdote once, that she is not going to use the word 'Startup' again during sales pitches and general customer interaction. I worked in publishing at that time and customers in this sector tend to be more conservative and long term planning than in other sectors. Essentially they feared that the company might not exist anymore in 2 years to come, because of {acquisition, restructuring, bankruptcy} or some other reason. Appearantly beeing a 'Startup' seems to be associated instability and unreliability in some circles -- wich again is part of these 'cultural issues' wich I was talking about in the previous post.
  - mk89 8y ago
    I think this is unrelated to being self funded or being in the A, B or C round. It's more about the fact that any new cool young company can disappear soon, if there is no business. And this happens both if investors give you money or if you simply don't make enough money. That's the way it is... Eventually, if the business doesn't work well, it doesn't work well... It's also somehow the reason that nobody got ever fired for hiring ibm or whatever the saying says...

kayoone 8y ago

Well, I am a german and i'd argue we'd need to do it the SV way to have the same kind of global success stories. Sure your small german startup can be GDPR compliant and find it's niche, but making products of massive global scale is inherently harder here than it is in the US because of a number of things, only one of which is data privacy. Not saying as a consumer i do not prefer EU privacy laws, I do, but it will be hard to compete on a global scale being handcuffed in a lot of these smaller areas. (privacy, language barriers, taxes, salaries etc)

opportune 8y ago
This may come as a surprise but most big companies are just making everything GDPR compliant for all users because it's easier and it's not like the restrictions you need to put in place affect data quality too much

bayesian_horse 8y ago

Tech "startups" are supposed to be profitable almost right away. Which precludes much of what is worth trying. The problem is that this attitude severely limits the potential upside.

hnkf 8y ago

The article is wrong on many levels, you’re right. As a Berlin-based developer I’m not sure where they’re getting their facts. Blaming GDPR for everything is another stupid trend I detest. I’ve inplemented a lot of stuff related to it and it’s definitely not what it gets pictured as. At the end of the day it speaks more of the zeitgeist among Quartz’s “high-earning readers”.

apexalpha 8y ago
>Blaming GDPR for everything is another stupid trend I detest. I’ve inplemented a lot of stuff related to it and it’s definitely not what it gets pictured as. Every law that remotely hinders the purist form of the free market is detested in Anglo media is seems. People have no problem hailing Amazon as a tech wonder and celebrate Bezos as the richest man alive. But how about minimum wage and proper working conditions in their warehouses? 'ah should get a better job then'. They are 'at will' employed. Just because a law restricts business doesn't mean it's bad.
- hnkf 8y ago
  Thank you! It’s easy to forget many of the “safety nets” we enjoy in Europe stem from socialist-style welfare policies that our forerunners fought for.
AsyncAwait 8y ago
> Blaming GDPR for everything is another stupid trend I detest. From what I noticed, it's mostly coming from the U.S. where every piece of regulation is seen as "government impending businesses that create jobs", including regulation against polluting etc. I am not sure how actual citizens feel, I suspect not as strongly against deregulation as the press make it seem, but they're definitely a lot more against it than in the EU.

sonnyblarney 8y ago

" less of the wild valuation-speculation. I'm not sure that's a bad thing." This is one of the classic misunderstandings of European entrepreneurs and investors. In finance - things with low risk, tend to produce low yield. This is generally well established because there are a lot of 'eyes on the info'. For example, we can calculate how much it costs to extract a new shallow water Oil find. Most of the variables are known. Though it's not so clear in early-stage, the rule will still apply because the easy hanging fruit generally will be culled when there are intelligent actors. So - you need to take on risk. Otherwise, you're probably not attacking a big opportunity. European VC's usually come out of the world of finance - in fact, VC is considered a part of 'Private Equity'. In PE or big funds, they invest in one or many companies, and expect x% return. Some more, some less. In PE, if a company were to go bankrupt, it would wipe out the portfolio profits. Imagine if Warren Buffet put money in CN Rail and it turfed.Bad. But in VC - you get 9 fails and 1 home run. The fails are hard to swallow but they are an inherent part of the system. Culturally, Europeans especially Germans are not good with that kind of failure. It can be seen as a permanent mark on one's competency and status. In Austria, up until recently, a CEO who put his company bankrupt could face criminal charges. All of this makes sense in a culture of high standards and expectations, coupled with social solidarity of workers (i.e. you but us out of jobs, you pay!). European LP's are not used to losing their money. European workers are not used to equity, to losing their jobs, to total instability. European BigCo's often do not recognize value in startups. The culture in Europe is very protocol and status oriented - you're 'value' is a function of the prestige and power of the entity you represent. Ramshackle, scruffy coders showing you 'you can do something amazing' is just less potent an opportunity than it is in the US. And of course, the exit opportunities are not there. And then so many other systematic issues like the fact almost nobody will learn to speak German, immigration etc. etc.. - all of this makes it that much harder. Much of what I am saying is stereotypical of course, but it's real enough. I think Europe should take their disadvantages and turn them into advantages and use their 'longer scope of vision' to do value creating things. Europe is good at getting people together and going 'big projects' that have a long term view. Like CERN. And EU treaties. I can see some very powerful things concerning money - European countries are smaller and more nimble. Sweden does some cool stuff. What if a Swedish Crown corporation enabled a digital currency that could be used globally? Because of the integrity of the institution, and the fact that it's backed possibly by a 'real economy' - it could be a very powerful export. Much in the same way if you make 'jet fighters' you don't just go and sell them you need your countries diplomatic corps to work with you. EDF in France (Energy) is tied closely to government, and that kind of stuff - i.e. nuclear, generally needs some hefty scale. But also expect that many of the gains in such situations will be socialized, and maybe not come in the form of crazy billionaire status for founders.