3 ms·

"[Zoobe] Founder and chief executive Lenard Krawinkel told the BBC: "[...] You can employ people for far less money than in San Francisco - and even for far les

by watt 13y ago

"[Zoobe] Founder and chief executive Lenard Krawinkel told the BBC: "[...] You can employ people for far less money than in San Francisco - and even for far less money than in Asia."" Yes, the wages are low. Comparable to east-european wages.

potatolicious 13y ago
This seems like a short-term advantage, but a long-term liability - wouldn't a massive wage disparity simply encourage emigration/brain drain? Great for the startups that are there now, but seems to work against the goal of being a long-term tech capital.
- rdl 13y ago
  The thing about Berlin is costs of living are low and people want to move there for reasons unrelated to the economy (it is probably the world's best party/club/edm/etc. destination). There are huge numbers of 15-35 year olds who would take a 50-75% paycut and ~25-50% effective QoL decrease (in material terms) to live in Berlin vs. London or USA. I think it's the same with Israel -- Israeli tech guys would generally make 4x as much money and live 2x as well if they moved to the USA, but they have their own non-economic reasons for actually wanting to live in Israel, and then make Israel into an awesome startup place. This has been a key factor in several M&A deals, companies setting up in-Israel labs, etc.
  - martinald 13y ago
    This is a really great point. And not only 'would' take a 50-75% paycut - they already do this en masse. Another thing that is important is the ridiculously low rent. Seems to be ~75% cheaper than London. Many people in London/NY/SF/SV pay a whopping proportion of their salary into rent, so if you take a €2k/month paycut but end up spending the same amount less in rent, everyone's winning. As nearly every startup hub is really struggling with insane rents, Berlin could be a serious competitor here. I think Berlin's property market will have enough slack to take on a fair bit of population growth, too.
fidotron 13y ago
The thing is going on about low wages nullifies the point of desiring a tech hub. The idea is to bring money in and distribute it to those creating value. The fascinating aspect of SV is how successful it is in spite of how many disadvantages it has relating to cost of living and cost of employees.
- dasil003 13y ago
  SV is definitely impressive in this regard, but also note that the cost of doing a web startup has fallen dramatically over the last 15 years. Orders of magnitude more than any cost of living difference, and this is what is feeding the current SV boom. Cutting the cost of living is another valid way to mitigate the risk of early-stage startups and enable earlier ROI. Not sure it will pan out since Europe has other things going against it, but I don't think that emulating SV is the solution. The recipe needs to be local and differentiated from the SV conventional wisdom.
raverbashing 13y ago
"Comparable to east-european wages." I suspect you don't know what you are talking about. If it was really comparable to E-E wages, there wouldn't be a lot of Eastern Europeans working there (and yes, there are, I've seen it) For a tech-startup job you can bet on 30k€ per year minimum. And cost of live in Berlin is still cheap, €1k per month gives you a very comfortable living.
- rdl 13y ago
  From the perspective of US and London, net EE wages and Berlin wages are actually within epsilon. Getting awesome people easily for EUR 30-50k, with fairly simple business practices, vs. mediocre people for USD 100-200k, is a huge win; going from EUR 30k to...EUR 10k(?) with a lot more BS to deal with isn't a net improvement.
- purringmeow 13y ago
  They are comparable. Bulgaria/Romania: You can easily get 1500-2500 Euro gross with a few years of XP. Taxes and cost of living are lower too. Ukraine: An acquaintance of mine, who's sold a few startups, didn't have success there, because experienced people wouldn't work for less than 4k Euro. Developers get paid a lot in the big cities. Russia: Crazy high wages in Moscow/St.Petersburg, though cost of living is insane too. Don't know much about other countries, but the situation is definitely comparable.
  - raverbashing 13y ago
    Ah good. However there are still some regions not so fortunate, like Bielorussia
    - sentenza 13y ago
      Never, ever think about doing any of your startup business in Belarus. It is _not_ part of the common market and your operation can be annihilated by the (still autocratic) state at a whim. If you find good people from Belarus (which undoubtetly there are), try to get them visa to come to where you are.
purringmeow 13y ago
Actually, wages aren't that low. Taxes are high, specifically the tax brackets mess things a bit! Net salary is a bit over 55% of your gross income when you account for health insurance, pension, taxes AND you don't pay church tax. Examples: 4000Euro/Month gross, net == ~2395 Euro 5000Euro/Month gross, net == ~2897 Euro It would be interesting to see how much employees in Berlin cost their employers too.

by watt 13y ago

potatolicious 13y ago

This seems like a short-term advantage, but a long-term liability - wouldn't a massive wage disparity simply encourage emigration/brain drain? Great for the startups that are there now, but seems to work against the goal of being a long-term tech capital.

rdl 13y ago
The thing about Berlin is costs of living are low and people want to move there for reasons unrelated to the economy (it is probably the world's best party/club/edm/etc. destination). There are huge numbers of 15-35 year olds who would take a 50-75% paycut and ~25-50% effective QoL decrease (in material terms) to live in Berlin vs. London or USA. I think it's the same with Israel -- Israeli tech guys would generally make 4x as much money and live 2x as well if they moved to the USA, but they have their own non-economic reasons for actually wanting to live in Israel, and then make Israel into an awesome startup place. This has been a key factor in several M&A deals, companies setting up in-Israel labs, etc.
- martinald 13y ago
  This is a really great point. And not only 'would' take a 50-75% paycut - they already do this en masse. Another thing that is important is the ridiculously low rent. Seems to be ~75% cheaper than London. Many people in London/NY/SF/SV pay a whopping proportion of their salary into rent, so if you take a €2k/month paycut but end up spending the same amount less in rent, everyone's winning. As nearly every startup hub is really struggling with insane rents, Berlin could be a serious competitor here. I think Berlin's property market will have enough slack to take on a fair bit of population growth, too.

fidotron 13y ago

The thing is going on about low wages nullifies the point of desiring a tech hub. The idea is to bring money in and distribute it to those creating value. The fascinating aspect of SV is how successful it is in spite of how many disadvantages it has relating to cost of living and cost of employees.

dasil003 13y ago
SV is definitely impressive in this regard, but also note that the cost of doing a web startup has fallen dramatically over the last 15 years. Orders of magnitude more than any cost of living difference, and this is what is feeding the current SV boom. Cutting the cost of living is another valid way to mitigate the risk of early-stage startups and enable earlier ROI. Not sure it will pan out since Europe has other things going against it, but I don't think that emulating SV is the solution. The recipe needs to be local and differentiated from the SV conventional wisdom.

raverbashing 13y ago

"Comparable to east-european wages." I suspect you don't know what you are talking about. If it was really comparable to E-E wages, there wouldn't be a lot of Eastern Europeans working there (and yes, there are, I've seen it) For a tech-startup job you can bet on 30k€ per year minimum. And cost of live in Berlin is still cheap, €1k per month gives you a very comfortable living.

rdl 13y ago
From the perspective of US and London, net EE wages and Berlin wages are actually within epsilon. Getting awesome people easily for EUR 30-50k, with fairly simple business practices, vs. mediocre people for USD 100-200k, is a huge win; going from EUR 30k to...EUR 10k(?) with a lot more BS to deal with isn't a net improvement.
purringmeow 13y ago
They are comparable. Bulgaria/Romania: You can easily get 1500-2500 Euro gross with a few years of XP. Taxes and cost of living are lower too. Ukraine: An acquaintance of mine, who's sold a few startups, didn't have success there, because experienced people wouldn't work for less than 4k Euro. Developers get paid a lot in the big cities. Russia: Crazy high wages in Moscow/St.Petersburg, though cost of living is insane too. Don't know much about other countries, but the situation is definitely comparable.
- raverbashing 13y ago
  Ah good. However there are still some regions not so fortunate, like Bielorussia
  - sentenza 13y ago
    Never, ever think about doing any of your startup business in Belarus. It is _not_ part of the common market and your operation can be annihilated by the (still autocratic) state at a whim. If you find good people from Belarus (which undoubtetly there are), try to get them visa to come to where you are.

purringmeow 13y ago

Actually, wages aren't that low. Taxes are high, specifically the tax brackets mess things a bit! Net salary is a bit over 55% of your gross income when you account for health insurance, pension, taxes AND you don't pay church tax. Examples: 4000Euro/Month gross, net == ~2395 Euro 5000Euro/Month gross, net == ~2897 Euro It would be interesting to see how much employees in Berlin cost their employers too.