Look far to learn more. For more exchange between startup ecosystems.
As the saying goes everyone is a lifelong learner, personally as well as professionally. This is true whether you are working for a startup or a corporation. But learning is an even more fundamental part of the startup culture. Startup employees and founders talk about learnings and how important they are all the time. The mantra of failing fast doesn’t work without the learning that is supposed to come out of failure. Learning is also tightly coupled to knowledge exchange, which allows us to learn from the experiences of others. Naturally we look for those that are famous, that have proven their knowledge to a worldwide audience. So here we go out and buy the books of famous entrepreneurs from silicon valley and read up on medium. After all they know what they do, right? At least they founded billion dollar companies!
Of course there is a lot to learn from silicon valley, the place itself and also the entrepreneurs that it is made of. But it is not the only place where innovation happens and knowledge is generated. In fact the overrepresentation of silicon valley startups creates a bias based on US circumstances. Not everything that works in the US, works in other places as well. And even more relevant: There is also a lot to learn from other ecosystems around the world, even the less developed ones. This is why I will use this post to introduce you to three different startup ecosystems that I spent time working in. In each of these places I was involved in the local startup ecosystem for a substantial amount of time. Upon reading you will realize that the differences between those places are more complex than a difference in how “developed” they are.
San Francisco — The Celebrity
Let’s start with the most obvious and prominent one. San Francisco is the celebrity in this list that everyone knows at least from TV and other people talking about. Silicon Valley is the place where the tech boom and startup hype started. It’s the place where most successful tech companies come from and where they prosper. The success stories of Silicon Valley are an inspiration for founders and employees all over the world.
I worked and lived in San Francisco for 7 months in 2013. During this time I had a lot of contact with different founders and employees of big and small tech companies. I’m still in contact with a lot of people from that time, and visited again this year for some workshops regarding my work at n26.
Silicon Valley is still THE place for startup founders. Even after tech booms in other countries a majority of unicorns is still located in the Bay Area as well as most well known and influential VCs. The funding rounds are bigger here than in most places of the world and the scene is lively with lots of events and knowledge exchange happening. It is truly a place of enormous concentration of talent especially on the tech side but also on the entrepreneurial and business side of things. One of the biggest advantages of Silicon Valley is also the instant access to one of the biggest markets of the World. The US is still the biggest economy, quite homogenous and happy to consume.
What a lot of people disregard when talking about high funding rounds in Silicon Valley, are the insane cost of living. These translate to high cost for office space as well as employees. Especially the latter is usually the biggest cost factor of a tech startup. So while a boatload of cash is always nice to scale your business the comparison looks a bit different once you factor in the cost. A junior dev earns 98k$ on average in San Francisco and around 48k$ in Berlin (Numbers from google). What’s worse is, that the purchasing power of the SF junior dev won’t even be significant higher.
The real secret sauce of the valley is not the availability of funding. Very special about Silicon Valley and San Francisco in comparison to the rest is it’s motivating spirit.
“The biggest risk is not taking any risk.” — Mark Zuckerberg
In most places around the world, people still have quite conservative views about working in startups. Working for a startup or being a founder is normal here. You will almost never hear someone say something like:
“Why should you work for a company that pays less?”
“These are just some kids playing”
“Why don’t you work for a real company?”
“What if that company goes out of business?”
“What kind of company is that? They don’t have profits?“
Sounds familiar? Not gonna happen in the valley.
Starting your own business is way more admired than anywhere else in the world and definitely more respected than a safe position in a big corporation. The whole vibe motivates people to take user problems and take them to the market. While most places in the world are biased towards job security, there is a strong bias towards entrepreneurship in silicon valley. But there are well known risks of starting a startup and if your idea is complete shit (sorry, not sorry) it’s not helpful for you if you are motivated to pursue it. Whether your surroundings are biased towards entrepreneurship or against it, in both cases you don’t get balanced feedback (if that exists somewhere). However this might still be a beneficial environment for people that already made up their mind and know the risks they are taking.
Berlin — The Executive
Berlin is one of the startup powerhouses in Europe. Depending on the list you look at the Top 3 in Europe will usually consist of Berlin, London and Paris in varying order given different criteria. This is no surprise as these are also the capital cities of the three biggest economies in Europe. I moved to Berlin end of 2017 to start as Product Manager at N26. As a German national I visited various times before and had some connections to the Berlin ecosystem even before I moved there. From all the places in this list I spent the most time in Berlin; totaling 12 months now.
Berlin has an exciting mix of innovation, execution focus and German skepticism
Berlin celebrated some success with unicorns being born here: Zalando, Auto1, Hello Fresh, Delivery Hero are all from Berlin. Startups in Berlin are not only about software. There is a huge scene of startups that focus on design and physical products with a direct to consumer approach. The scene itself is vibrant, there are more meetups, pitches and tech events than you could ever attend. Berlin startups tend to be very international, especially once they reached a certain size. To me it feels even more diverse than the melting pot California. At N26 for example we have employees from a total of 64 countries (Dec 2018), creating a diverse environment, with different views and opinions. My team alone is covering India, Russia, United States, Brazil, Australia, Belarus, Spain and Germany. Working for a startup is not a niche thing in Berlin, especially not among younger people. But the culture is way more down-to-earth compared to Silicon Valley. There is also less presence of big tech companies which makes it probably a bit easier to hire talent (although still very hard).
Berlin was once heavily overshadowed by Rocket Internet Ventures, that copied successful products from other markets in order to push them to success with lots of funding as well as professional execution. Thus Berlin had the reputation of being a rather un-innovative but execution focused ecosystem. Zalando, the unicorn mentioned earlier, is one example of a former rocket internet company. Looking at the unicorns born in Berlin you can see that they most of them (all?) have roots in e-commerce. I don’t think this is really true anymore but the strength of the Berlin ecosystem compared to other places is still more on the execution side of things. Startups like Contentful, Bunch.ai or Mapify show that also non e-commerce innovation is happening here.
Berlin has an exciting mix of innovation, execution focus and German skepticism. While you will definitely find a motivating environment, investors and other people will demand proof of your success. You will be expected to proof the monetizability of your idea way earlier and people will tell you rather early if your idea sucks. Depending on your business this can be good or bad but definitely explains the prevalence of e-commerce businesses — they generate revenue from day 1.
Belgrade — The Teen
Belgrade (Serbia) is the surprise visitor in this list. It’s not on most people’s mind for starting a company. Which makes it the most interesting in this list. Belgrade can be seen as the representative for many less developed ecosystems on the globe. Every ecosystem has it quirks influenced by the local culture, economic situation and history. But most of these places suffer from a combination of typical “early stage ecosystem problems”. These are usually in the following categories:
- Low availability of funding
- Low awareness towards tech entrepreneurship
- Low attraction for international talent
- Lack of a market for startup acquisitions.
But on the other side you will have very different local problems as well as a non crowded market. It can be very exciting to tackle those, and the impact on peoples life you can achieve is often greater.
The different circumstances in Serbia create a lot of interesting solutions, that probably won’t exist somewhere else.
My experience regarding Belgrad as a startup ecosystem draws from a 4 month period I spent working in Belgrade. During said time I worked on a local project sponsored by the European Union. The goal was to identify issues of local policy and regulation impacting small and medium businesses with a focus on the tech industry. In order to identify those I talked to a lot of founders but also incubators, event organizers as well as politicians in the course of this project.
Tech is a booming sector in Serbia approx. 10% of the GDP are generated in tech with a growth of the sector projected at 20% (Reuters). Also the government seems to see the potential in the tech industries at least to some degree. During my time in Serbia I often heard the sentence “Tech is the new raspberry” (Raspberries are the biggest export of Serbia). However a lot of the local tech industry seems to be outsourcing companies. It makes sense, wages are lower, but there is no big time difference to Western Europe that makes management harder. Also a lot of companies that might be perceived as “startups” due to their vibe are focussing on outsourcing or simple digital products. Examples being Wordpress themes or plugins. Products that build on an existing ecosystem and could be sold without having a salesforce. But there are also classic product focussed startups, e.g. workchain.io, TruckTrack.
Founding a startup is still a very niche thing in Serbia, with most people looking for secure jobs at big employers or the state. It’s a rough environment with regulatory hurdles as well (thus my project). An example would be a major finding of our study: Anti money laundering laws that were so restricting that micro transactions (e.g. in app purchases) are basically impossible. The small size of the Serbian market also forces a lot of startups to focus on other markets, often resulting in a move of the company to that place as well. After all especially if you are bootstrapped it’s hard to perform user research and market testing in the US while you are in Serbia.
The interesting thing about less developed ecosystems, as mentioned before, are usually the quirks and problems of the local market. The different circumstances in Serbia create a lot of interesting solutions, that probably won’t exist somewhere else. One example is Farmia.rs a startup that is building an online marketplace for Farmers to trade cattle (Agriculture is one of the biggest industries in Serbia). There is also a local interpretation of eBay called Limundo.com. Balkanviator.com a travel site explicitly for traveling the balkans etc. It also felt to me like the amount of constraints introduced by the young ecosystem and regulatory framework create some interesting learnings for those involved and gives them a certain creativity to deal with it. A promising model some founders used is to found in Serbia and later move operations and sales to the US for the bigger market while profiting from the low cost of labor in Serbia.
Every place is special
As you can see from this list each of these places is unique and has a special set of challenges. No question, it is definitely harder to build a billion dollar company in Belgrade compared to San Francisco, but this is not the point. The point is that each of these places generates different learnings. Startup ecosystems developed in different directions when the tech boom started in those places. Based on the specific cultural and economic circumstances at that time different strengths prevailed. Companies with specific traits survived and in turn shaped the ecosystem as well as local teaching at universities and the scene, creating a circle of amplification. The logical consequence is that we can learn different things from different places. We are living in a world of globalization and while we look abroad to sell our products we less often look abroad for learnings. We are missing out because of this. Next time, maybe consider a less obvious place to learn something new.
This year I went to San Francisco as well as Stockholm for knowledge exchange and I will continue to do these trips. Next on my list are London and Paris. What do you think? Did you ever look abroad to connect with local founders in a lesser known ecosystem? What made you do or not do so? Feel free to let me know in the comments :)
Interested in joining one of our N26 teams as we grow?
If you’d like to join us on the journey of building the mobile bank the world loves to use, have a look at some of the roles we’re looking for here.