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.
> 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.
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.
My advice was "learn from them", not "copy them". There are certain aspects of Mittelstand companies that make them more appealing to what I'd describe as important qualities in a company. Long-term thinking, being involved in their communities, etc.
It was a counter argument to a massively Silicon Valley focused industry. A plea to extend the horizon of what constitutes a best practice.
I like "learn from them". In my opinion there are lessons to be learned everywhere. These mittelstand companies are certainly doing something right.
If that's the massage, I comletely agree. If Berlin can actually create new breed of start-ups that shows certain characteristics of mittelstand companies that can only be a good thing.
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.