Time to walk the walk – why the Berlin startup scene is still in a bubble of hype2012-09-11 7
In his latest colulmn, Joel Kaczmarek tackles the thorny issue of the German internet scene – is it all PR and no substance? And is there anything we can do to address this?
For my recent vacation I prescribed myself a media diet – I didn’t read any emails, I barely went online and did not get involved with any work issues. As I emerged from my holidays, I take a quick scan of Facebook. Posts there celebrate the German internet scene – some announce that Bild editor in chief Kai Diekmann has visited them, others post photos of a meeting with Economy Minister Philipp Rösler.
These posts are from contacts, friends and business partners, to whom I don’t begrudge success, just like every startup and business. Media attention and social esteem are important building blocks in order to advance the German internet scene. At the same time, the repeated self-adulation also confirms a suspicion of mine: that the level of PR is often inversely proportional to the performance of German startups.
Talk the talk, now walk the walk
The astonishing thing is that while often copycats are experiencing very little attention in the public debate (and if they do, it’s in a negative light), successful companies report rarely on their economic relevance, if ever. Many, mostly “innovative” startups bang their drums vigorously, but make little, while copycats usually disclose little, but deliver most of the clout. As one commentator put it, who talks the talk should also walk the walk.
6Wunderkinder is one of those examples that substantiate this last observation: After all the hype, the anti-copycat revolution, Berlin’s flagship collaboration tool Wunderkit has flopped, with attention now refocused on their own to-do app Wunderlist – monetisation to be announced.
The same can be said for Amen, which has been in virtually every magazine and, according to Gruenderszene’s last examination in November 2011, had only 50,000 users, most of whom were inactive. I respect both startups for their services and because they have set themselves challenging tasks – much walk followed the talk.
Another example is Amiando. The ticketing service from Munich had press presence like no other startup and the participation in numerous events for Amiando PR was almost inevitable. So when in December 2010, the service was sold for “only” €10.35million to Xing, it was – at least for me – a big disappointment. Why? Because Amiando’s constant presence in the press had suggested a bigger deal.
Don’t get me wrong: I like Felix Haas and am very happy with his team. He’s done a great job because his startup was as innovative as it was representative. Nevertheless Amiando is for me an example of the hype, this favouritism, that is created artificially through blogs and magazines produced on the German internet scene.
The best counter-example is probably the Samwer empire. In just over three years, I’ve had about two press releases issued by Rocket Internet, but we have written an estimated 300 or more articles about the incubator and its portfolio companies. There is a Rocket article every three days. Why? Because Rocket creates things of relevance – for better or for worse.
Myth-making instead of results
In part, this view may be unfair in terms of innovative players because of the risk-averse German VC-funded landscape. So PR for less well-funded startups is important, because free marketing attracts users. And fair enough: innovative products where completely new behaviours and concepts emerge (about collaboration with 6Wunderkinder or exchange via Amen) can be simply too complex and challenging. And many copycats that start with just as great a fanfare will also not do justice in the long run.
I am still of the opinion that to promote this form of myth-making, and hype the public expectations of the German or Berlin internet scene, is a symptom of “innovative” startups. But I’m not about to attack certain groups – each entrepreneur deserves respect, whether the degree of innovation in his work lies in the idea or implementation. To me, it’s more about the perception of our scene – again, something to address and make suggestions for how to create value beyond PR.
OK, let’s not kid ourselves, my colleagues and I are – with Gründerszene and VentureVillage – also part of this hype-creation. If Christophe Maire coughs too loudly in the direction of a startup, something opens under the Samwers, or Lieferheld and Lieferando name their next mark, we write an article. And of course we also create certain stereotypes.
That’s all well and good, and the increasing political and media attention on our scene confirms this trend. But at the same time I’d like to give a few suggestions on how our scene can develop a bit more substance.
Giving the German internet scene more relevance
Lars Hinrichs said in one of our interviews, “Europe plays only in the county league in the Internet”. Even if I find the portfolio of HackFwd hardly boosts this division, I think Lars is quite right with this statement. We (and I mean explicitly the media) praise Berlin as the new Silicon Valley and celebrate each article in the classic offline press as an act of state. At the same time, I’ve seen virtually no significant exits, let alone a Facebook or Twitter from Germany.
Instead, we make a myth for our scene that – especially in Berlin – we cannot currently meet. Of course, along with London and Tel Aviv, we are one of the most promising internet spots in the European orbit, but our track record so far is still at the start of an upward trend. We have had, as I said, barely any exits and we lack strong later-stage teams, while money for the seed sector is practically lying on the road.
Germany’s internet scene is similar to Silicon Valley in about the same way one would compare Cobra 11 with Die Hard: The substance is the same and it pops a lot and loud, but it’s not quite the same.
Out of the county league, into the Champions League
OK, but what would we have in its place? I started this post with the gut feeling that I know the hype currently gets on people’s nerves, but with little thought about alternatives. So what can we do?
Do well and talk about it, not the other way around There may be individual cases, but we tend to be willing to produce hype before a real product exists. Banging on the drum is legitimate, but a little more foresight would not hurt in the production of press stories.
Discover humility and modesty as values again This point speaks, I think, for itself.
Focus more on work I don’t know about you, but I am always astonished how many startups find the time to show up at virtually any networking events attended by so many cameras. Although I appreciate good conversation and socialising is important to business success, focus on their work could help now and then too. Marco Boerries of Number Four and Arndt Kwiatkowski of Better Marks seem to be focused on work, not propaganda.
Less social, more business model It’s a strange fact that virtually all new “innovative” startups often touch on social issues, while the Samwers give them a wide berth, because social issues don’t fit blueprint and they simply do not understand. A little more focus on their own business models would probably not hurt for many startups, especially since the monetisation of Samwer-ups is usually much clearer.
Think globally and solve problems Even Martin Weigert has recently urged in an article that while there are constantly new web and mobile companies, there are very few high-end technologies, global startups or real problem-solvers.
Accept failure What I like about the 6Wunderkinder is their open approach to the failure of their main product. If Germany wants to be big on the internet, it also requires a culture of failure, because we can learn from mistakes and those most willing to fail will also make themselves stronger.
Rethink VC Capital remains one of the most important levers for positive influence on the German internet scene. And while early-stage capital is always present, it seems that German founders have to go on an international capital search. In the early-stage, think about where the VCs are connected and in particular, question their own investment criteria, as this will probably be an important issue in the next few years.
So, what points did I forget? Or do you completely disagree? Let me know your thoughts in the comments section below…