[ekurutepe]

As the author states the tech sector does not directly employ Berlin's currently unemployed and has to import talent from outside (disclaimer: I'm such an imported talent into Berlin), it still creates demand for services and increases employment in other sectors as it grows, and gives an option for the city's youth to consider the tech sector for their future.

However as the author states, the sustainability of the tech sector is very critical, but this not specific for Berlin. Even in the silicon valley there is a trend towards more sustainable growth models as the hundreds of SaaS startups here on HN would testify.

Being a really open and relaxed city with a high quality of life, Berlin stands a good chance of attracting talent, allowing them to try out their ideas and hopefully create an IPO or two in the next ten years. I can't see why the author categorically dismisses that option.

[hef19898]

I asume that's due to his insight in the germany industry at general. I'm german and I don't see that neither. I try to explain that, at least a little bit.

Germany, despite being technologically strong, is not very inovative. At least not in the sense of new, scaling products. One of the most famous examples is MP3. Also, Germans in general are quite risk averse. And if new companies are founded and are successfull, they tend to end up in the mittelstand model. While that indeed is one of the cornerstones of the german economy, these companies are most of the time too small for an interessting tech IPO.

Yet another reason is the way the german industry is structured. We are very manufacturing driven, which extends all the way back to education. And manufacturing companies is what the german economy wants. So, if a start-up devlops a new way to manufacture, say, ball bearings there are basically two outcomes. They either find enough investors to built an own construction site and / or the necessary structures to outsource production and sell to the various industrial customers. That's expensive, especially compared to the archtypical SV start-up, that's risky which drives of most banks and goes against the common risk aversion and takes time and people. People, again, are hard to come by since most tech people (read: engineers of all colors, mathematicians, physisits,...) all want to work for one of the big names instead of a small, newly founded company. More on that and education later. The second outcome is that they either get bought by some existing company or the patent is liscensed or bought. In this case it doesn't really matter wether the product in question actually the light os day or not, the company simply doesn't IPO.

Finally, what in my opinion makes it very unlikely that a company has a sucessfull tech IPO in germany anytime soon is people. There's education, focusing on producing people for the existing technologies and, even worse, companies. Some universities have programs for entrepreneurship, but these programs are small, young and mostly producing start-ups that end-up aquired. But it's at least a start. Another problem start-ups are facing on the people side is that most students in technical domains want to wrk for, say, BMW or Audi. Meaning these companies can pick the, at least in theory since there's always the chance of missed talent, the brightest people leaving the rest for the smaller players. And for a start-up to succseed you need the brightest (try to beat BMW here). Finally, failure and unemplyment carries a certain stigma in germany. So once you tried a start-up and failed in terms of future emplyment you are facing two major problems:

- You failed, by definition that's your fault and we don't hire losers (slightly exagerated)

- You have been your own boss for a while, which means you are unable to work under a boss. We can't need people like that.

And finally, German engineering and technology tends to be over engineered. And the shows in all aspects, be it tech, processes, products, you name it. That's great for existing products since it usually produces quality (if this quality is actaully needed or not is completely different question). But that also makes things like a MVP very hard to built and almost impossible to sell in Germany. And why building something in a market you can't sell to.

That's my take on why the author and I see a (major) tech IPO out of Berlin unlikely.

[zeit_geist]

> Germany, despite being technologically strong, is not very inovative. At least not in the sense of new, scaling products.

That's the result of a tech-centric worldview (read startups, sw). Quite the opposite is true, for instance in the area of 'Green Tech'.

> While that indeed is one of the cornerstones of the german economy, these companies are most of the time too small for an interessting tech IPO.

I don't your argument here. You mean success == IPO here? There are plenty of highly profitable Mittelstand companies with a profit and revenue much higher than e.g. LinkedIn. What does that mean here, that LinkedIn is unsuccessful or that the other Mittelstand'ish company is? IPO is not a value of its own as some reports might indicate. Looking at Mittelstand, as the author wants us to, is about the values surrounding a company, for instance to re-invest money in a sustainable way, that it is not about growth for growth's sake (which seems to be an inevitable by-product of going public!) but making better products.

> Finally, what in my opinion makes it very unlikely that a company has a sucessfull tech IPO in germany anytime soon is people. There's education, focusing on producing people for the existing technologies and, even worse, companies.

For University-level education, this definitely and absolutely does not apply.

[hef19898]

Actually, I mean IPO. Not in the case of success, but general success wasn't the question. Beyond that, I agree with you here, both linked in and german mittelstand companies are successfull in their own right. Yet, they are very different.

Green Tech is en vogue right now in germany, yes. But after what happened to the solar industry and is currently happening to the wind power industry leaves me a little bit sceptical. But I have an opinion all of my own on all of the green tech stuff which I'm pretty sure is very different to yours.

Having studied in Germany, I disagree with you regarding education. My experience was that trying out new things, experiment and question the status-quo is not actually encouraged. Sometimes quite the opposite. In Germany, a lot of effort is spent on improving exiting technology, which is, again, one of the key strength. But as strengths go it can be really weakness in a different context. And when it comes to disrupt things (which start-ups should do) this attitude becomes quite a handicap.

[zeigor]

My advice was "learn from them", not "copy them". There are certain aspects of Mittelstand companies that make them more appealing to what I'd describe as important qualities in a company. Long-term thinking, being involved in their communities, etc.

It was a counter argument to a massively Silicon Valley focused industry. A plea to extend the horizon of what constitutes a best practice.

[hef19898]

I like "learn from them". In my opinion there are lessons to be learned everywhere. These mittelstand companies are certainly doing something right.

If that's the massage, I comletely agree. If Berlin can actually create new breed of start-ups that shows certain characteristics of mittelstand companies that can only be a good thing.

[rmk2]

The tech sector does absolutely nothing for the unemployed or to allay the wider social problems in Berlin. The last big wave to hit Berlin was the move of parliament from Bonn, with countless media companies settling in Berlin in its wake. However, these companies also attract people from outside, these are the now (in)famous "Schwaben" coming in. Berlin is hip, and young, educated people come from all over the place (and world) to be part of it. That, however, does very little for Hellersdorf, the Märkisches Viertel, Siemensstadt etc. etc. What all of this brings is a further social divide in the city and further gentrification á la Prenzlauer Berg and Mitte.

So far, I fail to see how technology companies are going to be any different.

[walshemj]

Do German tech companies not participate in the much vaunted Apprenticeship system?

In the UK we normally think of Germany as having very good technical education that puts us to shame - for some reason does this not work in IT?

[rmk2]

They don't. The German apprenticeship system[1] requires formal certification and a coordination with Berufsschulen (trade schools). This would require a far longer existence and half-life than most startups have.

[1]: https://en.wikipedia.org/wiki/Apprenticeship#Germany

[Xylakant]

I know some that do. The certification is not bound to the company, but rather to a person - our designer here is certified and she could have an apprentice. The coordination is manageable, you just shouldn't expect your apprentice to be a full time employee.

[walshemj]

Why is that? has the chamber of commerce which appears to be in charge not been doing It's job and defining an apprenticeships for IT or where they to concerned with traditional engineering?

Why are not larger companies in Germany not training IT apprentices.

A start up almost by definition requires more experienced workers.

[junto]

The apprenticeships schemes are great, but very very rigid. This is fine when you are learning to become a Tischler (joiner or cabinet maker) because the techniques of joining haven't changed much in the last 100 years, so if your apprenticeship under a Meister Tischler take 5 years then the technology is still the same.

Try that with IT. Did MongoDb exist 5 years ago? Did Node.js? The list is endless.

Information Technology moves too fast for the German style and concept of apprenticeships (in my opinion). There are apprenticeships for Informatik, but I see them much like undergraduate Computer Science courses.

My experience of CS undergraduate studies are that you will learn the basic concepts, and a bunch of bullshit thrown in that you'll never use again in the workplace, but that is about it.

[walshemj]

So you do an apprenticeship to learn the basic underlying principals of the trade/profession not to get taught by rote the latest new shiny thing (tm).

Having more people who have been taught properly from first principals rather than only learning the latest trendy thing woudl be a very good idea! You would certainly have less of the "developers who cant program fizz buzz problems"

And I would expect a competent person to be able to pick up mongodb or nodejs even before they had finished the 4 year apprenticeship.

I started my career on the vocational track track (in mech eng) and on my second day at work they said "pop down the the company library there is a book on FORTRAN learn it"

[tbolse]

There are quite some apprenticeships in the field of IT! They are existing for quite some time now - at least for 13 years:

(sorry for caps lock - this is copy and paste) - FACHINFORMATIKER ANWENDUNGSENTWICKLUNG (software eng./dev.) - FACHINFORMATIKER SYSTEMINTEGRATION (sys. integration) - IT-SYSTEM-ELEKTRONIKER (IT technicians) - IT-SYSTEM-KAUFMANN (IT business) - INFORMATIKKAUFMANN (again IT business) - Mathematisch-technische Software-Entwickler - Informationselektroniker - Fachangestellte für Medien- und Informationsdienste - Mediengestalter Digital und Print

In conclusion: the chamber of commerce ideed did its job. If they did it very well is a question of perspecitve.

To bring this into startup context: Most very early Startups won't take apprenticeships as this is an additional workload and overhead (apprentices want to be tought...) that might not pay off in the short term. As an apprentice I would also think twice about joining a startup as one needs at least 2 1/2 years to finish the apprenticeship. (Startups might not exist that long.)

my 2 cents

[walshemj]

Wow some of those are a mouthful ;-)

But your right a startup with say 5 developers trying to develop a product in a short time scale is probably not suitable for trainees.

How how do the apprenticeships is it day release or block? 1 day a week at college and working 4 days a week is not that to much to ask from an employer? especially as apprentice's probably are paid less.

I am assuming there is a system of training levies so that the cost is born across the whole of industry - when I did mine (in mech eng) we joked that the government gave the employer more in grant subsidy for us than our actual salary.

[xenonite]

Actually these apprentices exist. ("Fachinformatiker", "Duale Hochschule")

[VMG]

Honest question, why should it be the responsibility of tech companies to solve social problems? They are in the business of solving tech problems.

[rmk2]

If you actually would like to stay in a place, perhaps it would be good if that place actually functioned? Berlin with its brilliant handling of its airport (delayed), public transport (broken), water supply (to be bought back) and famously brilliant decision making in all things concerning finance[1], pretty much doesn't. Berlin is the state with the second highest debt of all German states, just behind the notoriously broke Bremen. Another reason is Soziale Marktwirtschaft, which, actually thinks that exactly that is one of the functions of economic wealth[2].

[1]: http://www.spiegel.de/wirtschaft/soziales/bundeslaender-rank... (2011 data)

[2]: https://en.wikipedia.org/wiki/Social_market_economy

[Tichy]

public transport isn't that broken, I get around quite well. The water supply things seems to be mainly a battle of ideologies, again my water supply works fine atm. Presumably the tech companies will at least pay taxes and alleviate the debt. I am no specialist on that subject, but I suspect it also comes from the unique history of Berlin, not (just) financial incompetence. Problem for a long time has been that Berlin is very big, yet has no big industries.

Actually I often wonder what all the people here do for a living. I guess the main employer is the government now.

[Xylakant]

> I am no specialist on that subject, but I suspect it also comes from the unique history of Berlin, not (just) financial incompetence.

Financial incompetence and bad planning are a strong factor. West Berlin used to be subsidized before the wall fell and since nobody ever questioned the amount of money flowing here they could basically do what they wanted. After the reunion Berlins administration expected the population to grow to 5 million by the year 2000 but that growth never materialized. Still, they kept spending money like they used to.

> Problem for a long time has been that Berlin is very big, yet has no big industries.

It actually used to be the core of the german tech industry. There's whole quarters named after companies: Siemensstadt, Borsigwerke, ... and whole blocks in the city that used to be factories - Oberbaum city that used to be the Osram Lamp factories, Varta, ... A lot are now converted to office space.

> Actually I often wonder what all the people here do for a living. I guess the main employer is the government now.

Government is a strong factor. A lot of media companies moved to Berlin and a lot of service and support, especially for companies which trade a lot with eastern europe. The BASF has their whole eastern european business support in Berlin - that big tower at Warschauer Strasse. Berlin is fairly strong with biotech startups as well. No industry to speak of, though.

[rmk2]

I'll reply to you regarding public transport, but this goes for all of the other replies, as well. The repeated failures every winter and overall frailty of the network seem to be a consequence of years of mismanagement and increasingly aggressive under-funding/cost-saving/corner-cutting by the Deutsche Bahn. While this certainly does not result in immidiate widespread collapse, it is just one sign of the degradation of the underlying infrastructure. So while "broken" might be somewhat harsh, I do think that this is directly the direction we are heading.

The water supplies do work fine, the problem however is, that, much like Dresden's sale of its city-owned flats to the Gagfah (an investor), selling core infrastructure to investors risks long-term sustainability in favour of short-term profit. You might be right though that this is somewhat down to ideology.

[raverbashing]

Berlin's public transport system is probably better than 90% of systems all around the world.

London and Paris are comparable (and worse)

Cost cutting by DB? So the problems are in the S-Bahn rather than the subway/BVG?

Edit: ok I read some answers, I'll add that DB is rebuilding the bridges on Yorkstraße

[karl42]

The public transport certainly has its problems, but overall it works rather well and is far from being broken.

[Xylakant]

wait for winter and watch the s-bahn. Actually, it's not the BVG (City owned) that has major problems but the S-Bahn which belongs to the Deutsche Bahn. There was a major collapse in summer 2009(?) when the authorities realized the the S-Bahn had been saving money and cutting corners on maintenance for trains and basically compelled them to take 2/3 of their trains out of service for emergency maintenance. They still have not recovered fully, some lines are still serviced with under length trains or on a schedule that's half as often than actually planned. Whole lines getting shut down due to lack of personal or trains. Berlins public transport used to be outstanding, now it's sub-par.

[redbad]

I always wonder what basis for comparison people have when they complain about Berlin's public transport. Because, as somebody who's witnessed first-hand how it works in nearly every major metropolitan area in North America, and many across Europe and Australia, I can say without doubt that the situation in Berlin is phenomenal. A few slow or cancelled S-bahns in the dead of winter do not make a system sub-par.

[kokotko]

how is public transport broken in berlin? it's one of the best i've ever seen (availability wise)

[_ak]

Before 2009, it was much better, especially S-Bahn, which used to have much shorter intervals. But no, S-Bahn decided to be cheap on maintenance, which ended catastrophically in 2009, and they still have to recover from that. They're still trying to get back to the old schedule, but lack the train cars resp. the people to maintain them (which they had fired).

[lumberjack]

Nobody is pleading tech companies to do anything.

People are just discussing whether substantial investment to attract tech companies is wise if the hope is that tech companies will contribute towards fixing social problems or even contribute substantially to the local economy.

[junto]

My assumption is that the author doesn't believe much in trickle-down economics. His last statement is particularly telling:

  Let me finish with a question: what do you think who 
  employs more people? A company like Facebook with a world-
  renown brand that is worth about $100 Billion on the stock
  market or a hundred companies that most people have never 
  heard of which are each worth a billion people?

The reality is that Germany's Mittelstand is full of SME's doing well for the themselves and employing lots of people. They have built themselves up using a very traditional model:

1. Idea

2. Borrow money from the bank

3. Employ people

4. Build products/services

5. Sell products/services

6. Profit

7. Re-invest and repeat from [3].

8. After 20 years of repeating - sell company, take-over, child inherits

Failure in this instance is often catastrophic to the founder.

I also think that there are a number of SaaS startups that are simply SME's and use the label "start-up" in order to try and get target investment from the VC daisy chain. Their model is often aimed at short cutting and gambling without risk to themselves:

1. Idea

2. Borrow money from investors

3. Build products/services

4. Sell products/services

5. Repeat from [2]

6. After 10 years of repeating - fail, acqui-hire, sell (and integrate) or IPO

Failure in this instance is often a learning experience to take into the next start-up venture.

One notable point that the author doesn't mention is the German adversity to risk. The average Germans doesn't take massive risks. The start-up model holds massive risks to investors, but or course the returns for success are equally huge. Germans would prefer a guaranteed 1.5% return per year to a risky 1000%. That isn't likely to change in the near future.

[zeigor]

You are right, I don't believe in the rhetoric of trickle-down economics, because it is just that: rhetoric. The US is a good case in point for that.

[oscargrouch]

Isnt the second model what is producing bubbles? the profits goes to the financial sector, and (sometimes) to the founder..

Companies with broken business model, or with no business model at all get overvaluated while companies with more traditional models are worth nothing these days. (Compare the prices for Instagram, Facebook.. with big companies like Nokia or Blackberry)

In times like this the best bet is to create private companies and not open it to the stock market at all like the old days..

The SV model may create instantaneous billionaires, but someone will have to pay for this wonderland(of a few) in the end..

and probably will be the government(aka the tax payers)

my question is: isnt this model broken in the long term? will it survive? who wins? who lose?