Why Berlin is leading the way for entrepreneurs
These days, when someone asks me where I live, I tell them it's seat 2B on a British Airways flight en route to a city in Europe or Africa. Along with Amit Pau, the managing director of my firm, I'm building EntrepreneurCountry Global to help non-technology mid to large enterprises to embrace their digital future.
Crisscrossing the continents gives me time in the skies to reflect on my meetings with both corporate execs and startup guys. And each month on these pages I hope to piece together a mosaic of what I've seen and learnt.
Recently I was in Berlin to speak at Tech Open Air, a three-day interdisciplinary 'unconference' now in its fifth year, and it seemed like everyone I met had worked at Rocket Internet. Led by Oliver Samwer, Rocket has been hailed as many things: the European answer to Alibaba and Amazon, a massive VC investor, a builder of businesses. But the real contribution that Rocket has made to the European internet landscape is that it has educated a generation of young people – literally 20,000 or so – to launch and run internet businesses.
Franziska v. Hardenberg, founder and CEO of Bloomy Days, is one of these Rocket alumni. Bloomy Days delivers fresh cut flowers in surprise arrangements anywhere in Germany. On the face of it, you could think of it as yet another ecommerce player in the online flower market. I did. And then I met Franziska.
She started off the meeting by saying that she had re-engineered the entire flower industry's supply chain across Europe. Well, of course she had! Chop chop. I was starting to wake up. Then she said that the only way the business model would work was on a subscription basis. So as a result she had great cashflow. She's eliminated the idea of 'old flowers' being delivered, and got rid of those awful bouquets, too. The latest idea is to give the tools to offline stores to make them part of the Bloomy Days revolution. Watch out, world, this woman is on a roll!
Franzy epitomises to me the new Berlin. It's bold, ambitious and really starting to like its place in the world. Entrepreneurs from around the European continent are settling there and it has an air of Zeitgeist about it. There are a whole host of new venture funds and individuals who have created this new Berlin.
Christian Thaler-Wolski, formerly of Wellington Partners, now setting up his own Berlin-based fund, is one of them. He's totally focused on backing entrepreneurs from central and eastern Europe as he was born in what was East Germany. These eastern European entrepreneurs are the ones to watch these days due to their unbelievable ambition and drive.
Stefan Heilmann of IEG Banking is another star in the Berlin constellation. He's been banking the big deals for 15 years, and at a recent 'David & Goliath Must Dance' dinner that he and I hosted together, he had just completed yet another deal. Christian Macht, head of Rakuten Germany, attended as did Nicole Junkerman, who has sold her business to Len Blavatnik, a Ukranian oligarch.
But Berlin also has another face, and that's the one that appears to be deeply uncomfortable with what is coming out of Silicon Valley. It's tried to shut down Uber. Amazon is tangling with a large Berlin-based union. Mathias Döpfner, the chief executive of Springer, Germany's largest publishing house, said he was "afraid of Google". Germany's privacy approach, which is at odds with Silicon Valley's freewheeling use of data, scored a victory of sorts when it influenced the European Commission's view that Google must allow people to remove personal information from the web. It shows the deep dilemma that Germany, as epitomised by Berlin, has regarding the American internet empire.
More so than London, Berlin's emergence as a tech centre indicates that Europeans are trying to create a unique internet identity and framework for the digital world. The big US internet platform firms, Amazon, Apple, Facebook and Google, use our consumer data in their business models, creating multi-billion dollar market capitalisations. So the judo move would be to outdo them on business model – not try to thwart their efforts at their own game. What Germany should do, and Berlin-based startups should take the lead, is showcase to the world that they have a better approach to consumer data: namely that they will recognise the economic value of it in the transaction. This could be done through cashback deals and other innovative ways of recognising that consumers' data belongs to them. Any services derived from it should give an economic value to them.
This is what I was missing in Berlin. I don't doubt that these great entrepreneurs will be successful, but will they create an alternative system where value accrues to the old economy in Germany? What about the nine-tenths of the German iceberg that are manufacturing, engineering and energy? How will it engage with digital applications and services?
No one I met seemed interested in engaging with what I'm convinced is going to be the hard work of the next ten years in Germany and across the Continent – getting the digital Davids and the non-tech traditional Goliaths, whether they be banks, insurance companies, retailers or media firms, to build collaborative models that create value for Germany and Europe. Most European venture funds are simply looking for which US tech platform firm they can sell their startup to.
Rocket Internet should be commended for outstanding execution in the business to consumer space but, in my opinion, the real game is about helping Deutsche Bank, Metro, Allianz and others access net new digital revenues.
Originally published here: http://businesslife.ba.com/Stuff/Travel/Why-Berlin-is-leading-the-way-for-entrepreneurs.html as part of British Airway's new Column – Adventures in EntrepreneurCountry.
Other articles on Ariadne Capital: San Jose Mercury News Profiled Ariadne Capital: Elevator Pitch: Julie Meyer of Ariadne Capital on how to crush it in Europe
- Tags: 2014, amit pau, ariadne capital, ba business life, berlin, blog, Christian Macht, Christian Thaler-Wolski, David & Goliath Must Dance dinner, digital ecosystems, entrepreneurs, featured, germany, global, IEG Banking, julie meyer, Nicole Junkerman, Rakuten Germany, rocket internet, Stefan Heilmann, tech open air