

Berlins new techno beat. why international tech startups should move to berlin. - mdariani
http://www.cnbcmagazine.com/story/berlins-new-techno-beat/1417/1/

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WordSkill
I actually returned from a week in Berlin just a few days ago, and I was
specifically there to investigate whether it would be a good place to base my
startup.

Just to be clear, I very much WANTED the city to live up to it's hype but it
has one major problem that, for me, was a deal-breaker: attitude.

It is true that there are lots of good, reasonably priced restaurants,
interesting bars, good public transport, cycle-friendly roads and reasonable
rents (although not as cheap as some are suggesting).

It is also true, however, that many Berliners have a HUGE attitude problem and
a completely illogical resentment of foreigners. I would say that the majority
of my interactions with Berliners were positive but I also regularly
experienced a snide, superior, strangely bullying attitude in service
situations.

Now, you don't go to any big city looking for happy faces and warm hugs and
you can shrug such incidents off, but it does wear you down over time. To give
you an idea of the extent of what I'm talking about, I find much bigger cities
such as New York, London and even Frankfurt, Munich or Hamburg to be far more
friendly - yes, even New York is less rude!

The passive-aggressive attitude towards foreigners is a red flag for anyone
hoping to run a business because that is absolutely going to crop up again and
again in the form of local government red tape and an extra scoop of bullshit
from landlords, suppliers etc.

More worrying is the aggressive-aggressive attitude - several times in the
course of just one week, I witnessed open hostility towards foreigners,
including locals interrupting guided tours to self-righteously tell the
tourists - people who had travelled across the world to learn about Berlin,
spend lots of money, create jobs etc - that they were not welcome. I have
travelled constantly for over two decades and I have never seen that happen
elsewhere, not even to obnoxious bus-loads of German tourists.

Fascinated, I discussed this with locals and was amazed to find that, even
among people who would identify themselves as left-leaning and anti-racist,
there is a general sense that foreigners are bad for Berlin, that they are
responsible for the commercialisation of the re-unified city. Bizarrely, they
don't see the connection between this attitude, this tendency to scapegoat
foreigners for all unwelcome changes, and the slow-building antipathy of their
grandparents towards the Jews in the 1920s and 1930s.

I am not suggesting that startup founders are going to be marched off to death
camps, but you should certainly visit the city and, before investing serious
time and money, think seriously about the realities of living in a city where
you are not welcome - no amount of buzz or hype can compensate for that
feeling once you are actually based somewhere.

Cities that I rate highly would be Singapore, Dublin, London and Santiago.
Amsterdam and Paris are beautiful but not business-friendly. Australia could
be good, great lifestyle, but they have lousy Internet infrastructure and
ignorant government. Several American cities - SF, NY and even smaller scenes
such as LA and Austin - could be wonderful, especially in terms of funding,
and the lifestyle is good, actual Americans are very friendly/positive, but
the current immigration laws are insane and do not take into consideration the
jobs and wealth you will create. I don't expect that to change until the US
disentangles itself from its various wars and is finally forced to face up to
its growing economic problems, but that won't happen for at least another
decade.

~~~
mdariani
foreigners are not welcome in berlin? your investigation about berlin seems to
lack many relevant aspects and isn't objective at all. do you care more about
the people who complain about tourists than all the other really relevant
points that are meaningful for a tech startup (young talented people,
universities, cheap rent, infrastructure etc.)? berlin is THE city in germany
where most foreigners live. i think this speaks for itself. you have talked to
leftists who always in general don't like change in their environment and who
would always prefer to live in the past than in the future. Come back to
berlin again and talk to people from the districts in zehlendorf, steglitz,
charlottenberg, mitte, etc.! i bet you will get the opposite answer there,
especially if you mention that you would like to come here to setup a company
that will create wealth for the berliner society & environment.

BTW: in nearly every other place on this planet locals who live at tourist
places complain about them, e.g.: mallorca, thailand (phuket), italy...

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econgeeker
The nice thing for europeans is that if you're part of the eurozone, you can
live and work wherever you like. A business doesn't have to be domiciled in
the same location as its headquarters or employees. In the US, many businesses
are domiciled in Deleware with no employees in that state.

But I think the question for Hacker News, or at least for the Hackers who are
interested in doing startups outside the USA is-- what's the international
Delaware?

What's the place to domicile your business, with reasonable laws and taxes?

Some possibilities I can think of: Hong Kong, Singapore, Cyprus and some of
the UK islands like the Isle of Mann might be good.

I love Berlin. It is a happening city, and I'm very happy to spend time there.
It has a very nice mix of cutting edge modernism and the former east german
sections which are still relatively inexpensive. And I just like germans.

I think startups can group employees wherever makes sense for their workforce.
If its all EU people then berlin might be ideal. But the business doesn't have
to be a german business. (Or does it?)

Edit to add: Obviously I'm writing this from the perspective of a self-started
or bootstrapped business. This perspective isn't likely to be appropriate for
people who plan to take outside investment.

~~~
timxpp
Is saving a few % of taxes that important for an IT company?

~~~
veyron
Choosing the best state based on tax considerations oftentimes reduces tax
bill by at least 5% of your net profits. Now, lets say you are making 2M per
year. 5% = 100K, which is more than enough to hire another programmer!

~~~
BvS
I would rather start up in a nice city andy worry about taxes once I'm making
2M a year in profits than risking to live somewhere less enjoyable without
knowing if I will ever have to pay taxes anyway.

~~~
econgeeker
You don't have to choose between a nice place and low taxes. high taxes and
regulations can give you cities like detroit and chicago while low taxes and
regulation can give you cities like hong kong, monaco, panama city, etc.

In fact, the point of my comment is that the business could be located in a
low tax jurisdiction, resulting in more funds flowing to the bottom line,
while the owners and employees could be located somewhere they like, even a
high tax jurisdiction if they wanted.

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timxpp
Not to forget: Instant(!!!) green card for anyone earning more than 65000
Euros/year.

The only issue I still have is the "awful German language" ;-)

<http://www.crossmyt.com/hc/linghebr/awfgrmlg.html>

(Mark Twain's 1880 book A Tramp Abroad.)

~~~
econgeeker
Do you have a link to the green card program? Is it EU wide or germany
specific?

~~~
blumentopf
<http://www.bamf.de/DE/Migration/Arbeiten/arbeiten-node.html>

In the middle of the page, "Hochqualifizierte (§19 AufenthG)": Highly
qualified people like scientists, technical specialists with a wage of at
least 66.000 € can immediately get a work permit.

Unfortunately that portion of the site hasn't been translated to English yet.
Use Google Translate or call the BAMF for help.

An EU-wide effort called Blue Card is also on the (legislative) way.

The possibility that getsat mentions in a sibling comment to this one is
described at the bottom of the page under "Selbständige (§ 21 AufenthG)". This
possibility actually refers to founders of a company, the one described above
is for employees. It's not 500 k€ though, but 250 k€. Still a lot of money. :(

------
tybris
I thought it was Lond.. no Helsi.. I mean Amst... Oh, never mind.

There's only one thing remotely comparable to Silicon Valley in Europe and
that's Ireland. It's where the laws are right for tech. companies and
Facebook, Google, Amazon, Microsoft, Intel, IBM, and possibly even Twitter got
together and are attracting a ton of engineers, which are creating a ton of
start-ups, networking events, and even quite a bit of VC.

~~~
timxpp
Compared to Silicon Valley (or even the US east coast) Germany as is low-cost
country. Developers earn only half the US salary - and can live well with it
("free" (well, tax paid) healthcare, schools, universities,...)

And since a few years, finally a decent immigration policy!

~~~
BvS
Healthcare isn't actually paid through taxes. We have mandatory insurance and
you have to pay a certain percentage of your income so it's pretty cheap if
you don't earn that much. Once you earn more you can switch to fixed monthly
amounts and if you can't afford it at all the government pays.

Probably better/cheaper than in the US (for most people) but far from perfect.

------
chadp
glaring omissions from the article what are the personal and corp tax rates?
(high!) and how easy is it to hire and fire employees (hard I hear).

No one doubts the nightlife and leafy suburbs of germany are nice

~~~
hussong
Personal tax rates are higher, at the same time you get better (and cheaper)
healthcare.

Corporate tax rates are indeed higher in Germany. At the same time, there are
lots of funding opportunities for startups from communal, national and EU
business development programs, that can be seen as sort of a tax break.

Hiring is probably harder, since programmers are generally less interested in
startups and prefer safe corporate jobs (outside of Berlin). Wages are
significantly lower in Berlin than in West German cities. Firing is much
harder than in the U.S.

~~~
sneak
The healthcare is not included in the cost of personal taxes.

Private healthcare here is much better, and about the same cost. It's a red
herring.

~~~
hussong
Of course it's a separate payment, I was thinking in terms of total cost per
employee.

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sausagefeet
Great! I'm looking to move to Berlin next year, I'm glad I have prospects.

~~~
thingsinjars
I'm moving there in approximately 30 hours. Urk.

~~~
sausagefeet
Nice, start networking for me!

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tylee78
berlin?? everyone is leaving berlin. It's the worst place to do business in.
it has been mismanaged for decades now. crime rate is high. public schools are
a disaster. if you are 20 something you might find the dirt and parties hip,
but as soon as you have a family it's the worst place you could think of
(unless you have a lot of money). for a tech company better cities are munich
and hamburg if you really want to relocate your business into a country with
high taxation and burdening regulations...have fun.

~~~
martin_k
Hamburg and Munich are among the most expensive places in Europe. Living costs
in Berlin are probably half (you can rent a place for under 200 EUR if you
wnat). There is also a much better startup and developer scene. So if you are
into the whole startup thing, Berlin is pretty great.

And the crime rate, schools, ... compared to the US? Really? ;)

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shareme
It seems to gloss over this ..

If I form a startup in the USA and it goes belly up once assets are sold off
to pay creditors I am free..however in the EU if startup goes belly up you are
still on the hook as far as the difference between what is owed creditors and
what the assets sold for..or am I wrong on this point?

~~~
timxpp
You are wrong. A corporation in Germany/EU offers the same protection as a US
corporation.

~~~
Locke1689
In the US it costs maybe a couple hundred bucks and a week or so to set up an
LLC and an S-corp(<http://en.wikipedia.org/wiki/S_corporation>). How much
would this cost and how long would it take in the EU?

~~~
martin_k
The minimum share capital of a GmbH in Germany is 25,000 EUR. Registering
should not take much longer.

~~~
Locke1689
25,000 EUR is a fair bit of money, especially considering the avg. YC
investment is < $20k, IIRC. Also, correct me if I'm wrong, but it looks like a
GmbH operates almost nothing like an S-corp.

