March 1, 2021

Berlin’s Tech Scene Offers Hope to Economy

BERLIN — The courtyard of the nightclub Picknick was packed with partygoers dancing, shouting over the music and snapping photographs of one another, by all appearances just another night in this dilettante party capital. But appearances, on this recent Saturday night, were very much deceiving.

The images snapped with iPhones and Android smartphones were projected in a constantly changing slideshow on the side of the neighboring building by a new photo-sharing application called EyeEm. The plastic foam clouds dangling from the wires crisscrossing overhead were the logos for the popular audio-sharing service called SoundCloud, which has roughly seven million users.

Both companies, co-hosts of the event, are part of Berlin’s rapidly growing Internet start-up scene, which has won the attention of investors in Britain and California, including the high-profile actor-investor Ashton Kutcher, who is a backer of SoundCloud.

“I kind of get the feeling that the whole city of Berlin is a start-up,” said Alexander Ljung, chief executive and one of the founders of SoundCloud. “It’s fast-moving, chaotic. You don’t really know where it’s headed, but you know it’s headed in a good direction, and that’s a start-up feel.”

Mr. Ljung and his co-founder and chief technology officer, Eric Wahlforss, met in the computer labs at the KTH Royal Institute of Technology in Stockholm. But the two Swedes decided to move to Berlin to start their company, which now employs nearly 70 people there.

Berliners will vote Sunday to elect the city-state’s next Parliament and, in the process, on the future of Klaus Wowereit, the city’s long-serving, popular mayor. Polls suggest he will win re-election, but his ambitions for federal office — he has even had his name bandied about in the media as a potential candidate for German chancellor, following in the footsteps of a former West Berlin mayor, Willy Brandt — will be affected by the future of the city he has governed since 2001.

With the vote nearing, a national debate over the fate of the reunified capital has broken out in the German news media, over the pub-crawl tourism that residents say is ruining the downtown, over fast-rising rents and even the burning of automobiles that have been rampant this year. The city’s heavy debt burden and reliance on money from richer states like Bavaria and Baden-Württemberg were the subject of a cover story in the weekly news magazine Focus.

It was Mr. Wowereit who coined the famous catchphrase of Berlin as “poor, but sexy,” that has stuck to the city, which has an unemployment rate of 13.3 percent, the highest of any state in Germany and well above the national average of 7 percent. He chose to aggressively market the city as a creative capital, emphasizing fashion, art and music, hoping that the magnetic effect of the city’s popularity with tourists would rub off on the economy.

Peter Englisch, a partner with Ernst Young in Germany responsible for midsize companies, said that Berlin had done a good job of marketing itself, but not as good a job nurturing the companies it attracted. “A lot of other cities have start-up support, welcome packages,” Mr. Englisch said. “It’s an inspiring environment, but the second step, turning potential into growth, is where I’m pretty sure Wowereit isn’t doing enough.”

Berlin has been a creative hub and a destination for young expatriates from other places for years. But its hipness never translated into badly needed jobs for a metropolis that could not recover an industrial prowess that was wrecked by war and division. Now the developing Internet start-up community is offering a tantalizing glimpse of a possible economic future for a city that for years appeared to have none.

“With Depression, war, fascism, the wall and the mass migration of talent out of Berlin, it’s quite clear that the city was set back by historical circumstances,” said Richard Florida, professor of business and creativity at the University of Toronto, whose research has drawn a link between bohemians and economic growth. “Looking at the experience of other cities that remade themselves, like Pittsburgh, shifting to an open technology-savvy creative economy takes at minimum a generation.”

One of the guests jostled by the crush of people at the party at Picknick was Florian Weber, a German who was one of the original engineers at Twitter and now one of the founders of a new site called Amen. “When I moved to Berlin four or five years ago it was a very different time. You rarely saw start-ups. Now, in the last one or two years you see people really doing innovative things,” Mr. Weber said.

It was perhaps inevitable that the start-up scene, concentrated around Rosenthaler Platz in the central Mitte district, would earn the moniker “Silicon Allee,” after the much-imitated Silicon Valley and the German word for avenue. The question is whether the city can live up to the hype.

“In the next two years we will have a multibillion-euro company here in Berlin,” said Christian Reber, 25, the chief executive and one of the founders of the company 6Wunderkinder. Mr. Reber, who, unlike many of the foreigners, hails from the nearby city of Brandenburg, is a vocal booster of the tech community and an equally harsh critic of the clones of American and other foreign Web sites that Germany had been known for until recently.

“I was at a conference and a guy said Germans are perfect executors, but too uncreative to create technology,” Mr. Reber said.

“I grew up learning we were the land of ‘Dichter und Denker,’ ” he said, using the German for poets and thinkers. “I hate copycats. I hate stealing ideas.”

In the brick-and-mortar world, the center of the scene is St. Oberholz, a cafe at the busy intersection of Rosenthaler Strasse and Torstrasse, home to the monthly mixer known as the Silicon Allee meet-up. The advantages that made it so popular with the tech people that it was one of SoundCloud’s unofficial first offices are not apparent at first sight: extra power outlets, unlimited free Internet and a welcoming attitude for people who want to set up shop and do their work there.

On an average afternoon the cafe could almost be mistaken for an Apple store, with all the Mac laptops open on the tables. Ansgar Oberholz, the cafe’s owner, said the development had come in spite of the city government, not because of it. “They don’t grasp it structurally and when they do, they do it wrong,” Mr. Oberholz said.

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