
Why Berlin should not look up to the Valley - urlwolf
http://thirdwaveberlin.com/2013/10/week-158/
======
dasil003
I don't think the problem is with the Californian model. Silicon Valley knows
how to do technology right for its own sake, and every technologist everywhere
can learn a lot about how to do technology right by looking at Silicon Valley.
Sure there is a gold rush mentality driving media and politics, and there is a
lot of greed at play as well. But rich guys in Silicon Valley are no more
greedy (and the true technologists among them are probably less greedy) than
rich guys everywhere else in the world. The big difference between finance and
tech is that deep down at the heart of tech is a natural curiosity and passion
for problem solving, whereas finance is fundamentally about arbitrage.

In order to take the right lessons from tech's failings you need to separate
the tech from its social consequences. The fundamental problem with tech is
that it kills jobs. It is about seeking greater efficiency in all things. This
is why politicians are wrong to try to solve unemployment with tech. It would
be great if everyone could move up the food chain in terms of creative and
technical work and that tech could create more jobs, but the problem is that
by its very nature, the 1% in the tech world will be more efficient than the
bottom 90% no matter how much training they receive. 100 great developers will
produce better returns than 10000 bad developers. There's no way around this
fact. Hell, if you have a powerful enough intelligence that was orders of
magnitude smarter than the smartest human then it could obsolete developers
entirely by being more productive _on its own_ than all the worlds smartest
developers.

Increased efficiency is theoretically good, but we're reaching the point where
we don't have the social capabilities to cope. We are wired to work, and to
need to feel needed, and to feel that we have an upward trajectory in life.
These things make it very difficult to cope with the impending unemployment
crisis and the environmental consequences of a ballooning disposable culture.
Tech is at the very heart of these issues, but Silicon Valley is not the cause
of these problems, it's just one microcosm of them.

~~~
tomp
> The fundamental problem with tech is that it kills jobs.

> This is why politicians are wrong to try to solve unemployment with tech.

The second does not follow from the first. Technology will always be killing
jobs, and local politicians can do nothing to prevent that. The only
difference they can make is where the profits from the old jobs go to; if they
just stand by and watch, they will all go to companies in a few global tech
centres, most in the US. However, if they encourage the development of a local
tech scene, the efficiency problem might be solved by local entrepreneurs,
meaning that they can still tax the profits, etc., making the local population
better off.

Also, I strongly disagree with your claim that "We are wired to work". We are
raised to work. And by "we", I mean particularly the people far away from the
equator, who always needed to work to survive. Personally, I would not work if
I didn't need it for survival (or more free time in the future), and I'm
certain there's many more people like me in the world. Why do you think kids
play in their free time, and teenagers party?

~~~
alper
That's not really the problem. The problem is that tech combined with capital
kills jobs and concentrates power/money with a very small group of people who
then do everything they can to gut the public sector.

There is still an immense amount of work to be done in schools, hospitals and
social services that is not being obsoleted by technology anytime soon. It is
not being done or done well because of a lack of money.

The solution then is much more taxes on capital, much less on human labour and
way more redistribution.

~~~
tomp
Exactly. But all of these is easier if the companies/people you want to tax
live in your city/country, not halfway around the globe.

~~~
alper
I can imagine a situation where Germany levies an import tax on Facebook at
the border of the secure European internet.

~~~
walshemj
I think it would be the French putting that idea first.

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room271
A powerful critique. As developers we have the ability to effect profound
change. But mostly we funnel our expertise into better advertising solutions.

Our industry leaders (Google, Facebook, Amazon, etc.) are all monopolies which
pay little tax and employ anti-competitive practices to squeeze out
competitors.

And few seem concerned with inequality.

Let's shape our companies towards something better.

~~~
Swizec
> But mostly we funnel our expertise into better advertising solutions.

That's the thing that pays most. For some reason our society rewards
advertising platforms. Everything from popular films and music, to every
successful medium ever, was founded as or taken over as an advertising
platform.

Maybe we as a society simply value advertising above all?

Personally I try to only work with companies whose business model is providing
values to users directly, but I can't argue with the fact that I am far more
willing to give my money to advertisers (so I can make a profit), than I am to
services that help me make the products I advertise.

Why is that? I don't know. But I think the feedback loop from "put money in,
get money out" is much quicker with advertising platforms than it is with
services I use during creation.

~~~
skriticos2
Well, if you have a product, you also need some form of advertising to let
people know your offer.

Sad thing is of course, that modern advertisement is based on subconscious
influence to make the product part of your lifestyle instead of presenting you
a balanced presentation of the benefits and drawbacks.

Shameless plug: I released a desktop app for project tracking in the Ubuntu
Software Center a few days ago as side project. Here is a non-subconscious
manipulating presentation about it:

[http://www.youtube.com/watch?v=xA_KckRueLQ](http://www.youtube.com/watch?v=xA_KckRueLQ)

Note: the initial package has a dependency issue. A fix is in review.

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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.

------
sumoward
Thanks, an erudite contrarian view like this is always stimulating.

I had heard about but did not know very much about Mittelstand.

[https://en.wikipedia.org/wiki/Mittelstand](https://en.wikipedia.org/wiki/Mittelstand)

We have lessons to learn from European paradigms as you point out. However I
think you are a little harsh on founders, the pursuit of fame may be an issue
for a small minority but is hardly a universal issue.

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phreeza
Cached version:
[http://webcache.googleusercontent.com/search?q=cache:of5dj13...](http://webcache.googleusercontent.com/search?q=cache:of5dj13mn20J:thirdwaveberlin.com/2013/10/week-158/&hl=en&gl=de&strip=1)

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zeigor
Here is a re-post of the blog post:
[http://thirdwaveberlin.tumblr.com/post/64289810298/week-
note...](http://thirdwaveberlin.tumblr.com/post/64289810298/week-note-158)

Sorry, I wasn't prepared for ending up on hacker news. Thanks for the feedback
so far, will try to answer to some of the comments soon.

------
walshemj
Having now manged to read the article the author does seem to have a chip on
his shoulder and is writing this from a distinct political stance making glib
remarks like “our spying American friends” doesn’t really help in this context
does it.

In addition “rich white men” comrade who do you think owns all those
Mittelstand companies - Germanys far less diverse than the US or the UK in
that regard.

Mittelstand is all very well but there are a number of problems with then in
that they are very tightly controlled secretive family businesses - there
appears to be no worker participation in the ownership of these companies what
so ever.

Mittelstand companies have also recently benefited immensely from the Euro
selling all those Porsche Cayennes to Greece

I think possibly German concentration on traditional engineering means there
is less hinterland to build tech start-ups from – and I suspect that IT
training has been starved as mech and electrical engineering probably played
the political game better.

~~~
Swinx43
Just out of interest, how much worker participation does big tech companies
like Google, Microsoft, Apple or Facebook really have? From what I can tell it
is all perceived participation and the CEO and more importantly the investors
have the final say. There is a massive difference between worker participation
and investor control, workers are rarely investors or share holders in big
companies.

~~~
walshemj
You haven't seen any of the stories on here about RSUs and stock options which
are widely distributed in SV Companys?

My Mate will be getting over £60k's (tax free) worth of shares next year from
his FTSE100 employer this is just the basic share options that every employee
has access to.

------
danmaz74
This is a really big problem, and I can feel it myself. Now that I've got
customers and seed money, should I try to create a sustainable business that
grows organically? Or should I move to London - I'm in Rome now - and try to
enter the VC game as soon as possible, as a mentor insists?

The sustainable business way appeals a lot to me, but what about the risk that
competitors with lots of money crush us just by out-spending us? And what
about the ecosystem? But the places with the best ecosystems are very
expensive, how can you enter them without VC money?

The problem is that there is no proof that the mittelstand model can work for
tech startups, while there is proof that the SV model can.

~~~
lumberjack
>The problem is that there is no proof that the Mittelstand model can work for
tech startups, while there is proof that the SV model can.

To me it seems pretty obviously that one is the antithesis of the other.
Mittelstand seem to work well in established markets with a sensible good
quality product or in niche markets where they could often be the only
manufacturers worldwide. It does not strike me as the kind of enterprise that
aims to grow fast and disrupt markets.

Besides, there is already Middelstand tech businesses. They are the software
houses that write niche B2B software like time table schedulers for schools
and such.

~~~
zeigor
Disrupting market is not easy, but it significantly easier, if the first
priority of the company is not being self sustainable and instead rely on on
venture capital. Twitter is an interesting example in that context. A company
that surfaced a unique user behavior and created utterly new communication
patterns. Yet, because it didn't focus building a business, it ended having to
rely on archaic business models to finance itself while in the process
disregarding the people who helped make it grow.

------
oscargrouch
A serious question speacially to the German crowd of this post:

Im very interested in alternative cultural models for tech products in the
digital age, specially because technology has such a impact in peoples live,
and can improve the quality of life of everybody in so meaningful ways..

So, where can i find more about the Mittelstand? is there some discussions
about it somewhere? is there any group trying to think new models that
contrary to the status quo can create a virtuous cicle in the whole community
and not only for a particular group of privilege?

I am very interested at this, and as a Brazilian i keep an eye in what Europe
are doing, and how they are thinking , since they are not taking the SV model
for granted, and just repeating.. but trying to get a new meaning out of it,
without forget its own cultural values.. (at least it was what i feel and are
confirming by reading the posts from the german fellows)

Im asking this, because is that what im trying to do too.. I dont want to just
launch what i have in hands in the current model.. i think we can do better..
so im interested in all movements over this topic.

Note: im specially interested in social groups, and less in literature about
it.. as i think this is still in formation.. and new cultural models(if any)
are in its infancy

------
Tichy
Can't open the article right now, but here is one question I have that might
fit: hasn't Sillicon Valley actually started in the middle of nowhere? These
days the saying is to go there because that is where the investors with the
money are. But the money is there now because some people succeeded with their
factories built in the countryside?

Here in Germany there are also quite a few towns that are built around one big
company, for example Wolfsburg for VW.

No doubt Berlin is attractive at the moment, but the things that make it
attractive are quickly disappearing - cheap cost of living, lots of empty
buildings, lots of diverse culture.

I for one don't look forward to the living conditions of the valley, where
people have to share rooms at extremely high costs just to be able to be
there. It seems very ironic that while it is presumably one of the richest
places on earth, the valley sounds like a horrible place to live in.

~~~
walshemj
SV started where it did because land was very cheap and large government
contracts for "blowing stuff up" (tm)

------
mrflett
The author is correct. After attending a recent JS conference I didn't notice
any of the hartz IV people there but just a bunch of exiles from other tech
cities who had moved to berlin for something exotic. Unfortunately this will
mean a direct copy of silicon valley as all the people moving here to create
the tech boom know nothing else to copy. Would be good if the tech here was a
focused on solving real world problems instead of creating the next latest and
greatest advertising model...

~~~
wuschel
Excuse me, but have you been to the Valley? I have not. But I have been in
Berlin, and I can assure you that I have seen my fair share of hipster
copycats. Not that there are not rock solid tech companies operating in the
region. It is just my impression the startup scene in the german capital is a
bit one sided: mostly marketing, media and marketplace platforms. Is that the
future of mankind?

I have found a few people that have a tech/scientific background and take up
the fight in the startup scene, but so far all but one them have moved to the
US.

I would be greatly interested to connect and meet with people from
technology/science that would like undertake a venture in wet-/soft-/hard-
ware. But alas, there are few of them into the startup scene in Germany, for
most a heading to the industry sector after their dissertation/master.

So, if you are one of the above --> contact me.

------
triplesec
Site down, cached text version:
[http://webcache.googleusercontent.com/search?q=cache:http://...](http://webcache.googleusercontent.com/search?q=cache:http://thirdwaveberlin.com/2013/10/week-158/&strip=1)

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oscargrouch
I cant open this link, the domain name cannot be resolved :(

$ nslookup thirdwaveberlin.com

> Non-authoritative answer: __* Can 't find thirdwaveberlin.com: No answer

------
jessaustin
_Tech is the new finance industry._

That would be a good thing, right?

~~~
qzr3
yes.sure

------
oscargrouch
In simple (and sad) words:

There is no passion anymore

