Ask HN: Next european hub Berlin?
As you know for sure, the UK chose to leave the EU on Thursday. As an immediate consequence, uncertainty is going to dominate for weeks or months until they realise their next move: sharp exit, stand-by, second referendum maybe. My question to you HNers is pretty simple: where do you think the next European hub will be, that is to say the new London, if any. I have had a quick survey within my network and the majority say it is going to be Berlin, also because there is something there already and critical mass will be easier to reach within the very heart of the EU. What do you think about? Thanks.
45 comments
[ 0.20 ms ] story [ 97.4 ms ] threadThe real challenge is we live in very fragile times and the EU is like a big Jenga game, as parts start to slip away the entire thing could easily topple and drive Europe back into a chaotic state not seen in many people's lifetimes.
Also: If you look at the numbers also from the Brexit votum, you will see that young people are very much pro EU.
[0]: http://www.heute.de/mehrheit-eu-wird-wegen-brexit-nicht-zerb... (German)
Actually, quite likely it will. One of the main arguments of the "Leave" campaign was curtailing immigration as in effectively reducing it to zero. Now, of course this isn't actually possible and Farage and others are already sheepishly back-pedaling on most of their bold claims.
If this whole Brexit affair is supposed to make any remote sense at all there will be limits on immigration, because if the UK will still allow free movement of people and goods from the EU what's the point of leaving in the first place?
Limits on immigration will mean less talented people in the city. It's as simple as that. Besides, people from the EU who're already living and working in London either will have to leave or apply for permanent resident permits. Only time will tell how hard those will be to come by but it'll be at least a major hassle.
1. When have politicians ever followed through with a promise they made?
2. Not even the Brexit bunch are stupid enough to intentionally cripple the economy, especially as immigration was an issue for a demographic of voter the Tories actually care nothing about.
What the UK could do is put more restrictions on migrants without a job and what in work benefits they can access.
Reforms to benefits for migrants were a part of the deal Cameron got from the EU earlier this year -- which is now void -- so Brexit really changes nothing there. Maybe the UK could be stricter with migrants out of work and still get the trade deals.
I expect visas for skilled workers to quickly become very, very easy, and visas for unskilled workers impossible.
At the very least you can expect things like construction or plumbing to become a lot more expensive (not that I consider either unskilled labour but those are typically not included when talking about visa for skilled workers).
Then there's the foreign exchange risk created by this whole mess, which will make skilled work more expensive as well.
I've been doing business with UK companies occasionally and up until now I had no problem with billing them in GBP. Now I'll have to bill them in EUR because I'm not willing to take the foreign exchange risk. Since the pound is already massively devalued against the euro and likely will continue to be in the next few years British companies will have to pay a premium for products and services from outside the UK.
Talent is still very high in Barcelona, as the city's attractiveness is not restricted to job opportunities and salaries: Weather, food, international connections, cost of living, location in mainland Europe, the Mediterranean, culture, sports, Pyreness at 2hr drive if you prefer skiing, lots of mountains closer to hike, excellent and cheap public transport network, fast trains to Madrid and Paris, ... What's not to love? :)
Of course this is not going to happen as the government is corrupt and has little interest on boosting startups. Their idea of business is siphoning people's money through utility bills (all presidents have / had ultimately become chairmen of different utility companies) and bank commissions.
Berlin is affordable but that's it. You won't find the best people, the best teams and a good legal framework.
The UK has a better legal system. The UK Ltd. is way superior to the German Ltd. and soon they will move away from the EU inherited laws which are too much market regulating. Especially consumer protection and labour law are just a big bummer for many and for startups in particular.
Besides, just check total fundings, exits, average fundings sizes, etc. then you see the difference. Berlin based startups got much moeny the recent years but slowly people question again the ecosystem since exits are missing. Ok the city doesn't have the startup history like a Valley or London but still. Clear successes are missing. The only huge thing was Zalando's IPO.
goods yes and only if you produce them, services no
anyway nobody would send stuff from UK to other countries even if the were in the EU; you would found country organization like you did before; so I won't see any changes, just for producers but most startups are not producing goods or to think further most companies in these expensive countries don't manufacture anything.
If you're dealing directly with consumers then yes. If it's B2B then no, you won't have to. And there are lots of startups offering services for businesses only.
IMHO Berlin might sound cool as a startup hub, but there is a huge lack of talent. Companies are struggling to find a decent dev/design team, probably because the payment is way too low than average. It's true that Berlin is cheaper than London ( and overall Germany ), but definitely is not so cheap to attract good IT people to join your journey with those numbers.
On top of that, giving stock-options here is a bit hard ( legally ), so companies are struggling to offer some "virtual shares" of an employee pool as a compensation, which will never make you as rich as if you are one of the first employees of a unicorn.
Everything else from offices, meet ups, parties, nice food, international city is here and I think is much better than overcrowded and expensive London ( That's why I'm still here :) ).
Exactly. You can't whine about the lack of talent and at the same time offer 50K-60K EUR to senior engineers...
I'd say, "cheap labour" is (was?) the main reason one might find Berlin attractive.
For an outsider to come to Germany and attempt to set up a life there from scratch, they would need at least 60-70K (for medium towns) and at least 80-90K for places like Munich, Stuttgart or Frankfurt, probably even more. These are the numbers from several years ago, today everything has become much more expensive. And for a family person even more than that.
Speaking from experience, I lived and worked in Germany for several years, and eventually I had to leave. One of the main reasons was the low payment, I was basically struggling to make the ends meet (with my modest salary of only 40K). In the end I decided I had better things to do with my time and returned home. I am aware of other people who finished their studies, had a look at the local job market, did the math and didn't even bother to try things out.
The other reason that pushes talent away from the German market is lack of recognition. There is some unhealthy division of labor that is prevalent in German companies. Basically, native Germans are deemed to be the brain center of the entire operation and foreign specialists are regarded as grunt workers who have little say in the process or influence over things (as well as practically no opportunities to rise up in the ranks). I can't see any real talent being enticed by this general framework.
As a resume, German companies need to pay much better and need to open up to other people and other cultures, if they want to become a real startup hub. You can't build a rich and vibrant place full of progressive ideas around a close-minded mentality and with people trying to survive on a diet. With the present state of things, they might trick some talent into joining on a case-by-case basis but most likely that relationship will not last.
Do I count myself as a talent? I really can't say. I'm an educated person (I have both Russian and German academic degrees), also enthusiastic and entrepreneurial type, full-stack developer, I can do complete projects and have ideas of my own which I've been trying to turn into my own products. I suppose I could have contributed a lot in a receptive environment, but my experience was that nobody really needed any unsolicited input or contribution, you just implement the things as you're told and the thinking is done by the other guys. So I took my ideas elsewhere.
This all truly is a shame, because on the whole Germany is a fantastic country with lots of nice and smart people. Yet there are certain [mental] barriers that prevent it from becoming something more. I very much hope people eventually remove those obstacles and then the IT industry will begin to flourish in Germany.
And yes, Berlin really is a cool place to live in. If it were to become a startup hub, then it would be just awesome.
That being said, I'm all for higher wages in Berlin and happy to see that some companies (like mine, SoundCloud, Zalando, ...) are paying quite a bit above market average to attract talent.
What is more interesting is that around EU prices of cars / consumer electronics, etc is relatively the same [1]. Not to mention airplane tickets, holidays which also cost the same in London and Berlin, but guys from London can spend on these more.
As a summary IMHO, having a small rent doesn't mean that competition rules shouldn't apply for Berlin and it's talent pool. From my perspective it looks like they don't. Founders put average salaries for their teams in their projection plans and in the end have their hands tied, because "no budget for 80k+ developer". It's a bit sad. Kudos to your companies ( exclude Zalando - sorry ) for putting more money for employees, nevertheless I consider them settled companies already, since they are huge.
[1] : http://www.iclarified.com/55272/iphone-6-prices-around-the-w...
Except that people contemplating a move from elsewhere -- especially from outside the continent -- need to think about certain things beyond their immediate living expenses. Like, you know, building savings buffer for the (inevitable, for most) return home, and maintaining a salary level not astronomically far off from what they can get in other major hubs (simply to not have to flinch at that inevitable question, "How much are you currently making?").
Which is what is fundamentally broken with the idea that salaries just need to match local living expenses. 80K salaries would do a lot to bridge the gap for outside talent, and wouldn't cost all that much more -- and in any case not nearly much as the opportunity cost of missing business opportunities due to not being able to assemble performant teams.
Again, I'm all for higher wages in Berlin, but let's be realistic, the market rate is what it is, no company in its right mind is going to hire someone asking for +50% with no good reason.
Also, this thread is about European tech hubs. Have a look at average startup salaries in London, Paris, Nordic countries, ...
They can give up on the idea of recruiting people from major hubs (SV/London/NYC) then.
Generally people who have some sense of reasonableness and proportion (that is, who don't aren't fixated on the dollar amount of their salary to the exclusion of all other factors) don't mind taking a bit of haircut to live in a greatly more affordable area (and to do interesting work).
But a 50% haircut ($120K to $60K) is really a hard pill to swallow for such folks.
From the SV and NYC, you're probably right. From a company's point of view, why would you even try? In Berlin you can easily hire people from all over Europe and nearby countries without much immigration hassle.
As for London, I don't agree, it's very easy. London salaries aren't that great on average, not every software developer works at a hedge fund.
Well a few lines up from here someone was claiming the exact opposite -- "there's a huge lack of talent." (Which would seem to imply both local talent, and talent that can be drawn from outside).
- London: higher salaries, much higher CoL => lower disposable income
- Dublin: barely higher salaries, higher CoL
- Amsterdam: similar/lower salaries, higher CoL
- Paris: lower salaries, higher CoL
- Stockholm, Helsinki: lower salaries, higher CoL (and crazy housing situation in Stockholm)
- Southern/Eastern Europe, Baltics: low CoL but the salaries are bad
You want to make good money? This leaves Oslo and Copenhagen where your overall purchasing power isn't going to be that much higher. The true outliers are Luxembourg and Switzerland where the tech ecosystem sadly isn't very exciting (why do you think a Swiss would take a job in Berlin? :)
I don't think Europe will ever be able to create a tech hub similar to the SV. And without a high concentration of talent, salaries can't go that much higher. London might get somewhere closer to NYC, but right now there's a very significant gap between finance and the rest. And Brexit will certainly not help.
Still probably more expensive than Berlin though :)
Not really. From my experience, only very large companies can sometimes offer you about 1-2K as a compensation for your relocation expenses and that's it. Consider yourself very lucky.
>> the market rate is what it is, no company in its right mind is going to hire someone asking for +50% with no good reason.
High living expenses is a good reason already. Also, what is not immediately obvious, an employee whose mind is constantly occupied with things like looking for a cheaper apartment or finding a more paying employment is not going to be performing well. He/she has other needs and building your product well just isn't high priority for them.
My experience has been that German bosses in general do not comprehend how hard and expensive it is for somebody from far away to come to Germany and organize their life in there. A lot of people arranged for everything they need in life years ago and already forgotten about it. With the young generation, many live with their parents, they basically have their own free apartment in the parent's house, they have a car purchased for them and some money in their bank account to cover their immediate needs. A very convenient setup which makes them oblivious to how much those things actually cost in the real world. It happened many times when in a conversation with them I shared my experiences and practically the universal reaction I was receiving from them was along the lines of: "Really? Now, that's tough. Good luck to you then."
If you come to a new country you by definition have nothing and you have to procure everything from the most basic tools to whatever you're going to need as a professional. Consider what you have to purchase/pay for:
Rent an apartment, pay the security deposit, pay the agent commission, purchase a set of furniture for the entire apartment (most are offered empty and unlivable), purchase the household appliances. Unless you fancy living with roommates, eating junk food and sleeping on the floor.
If you're a software engineer, you're most likely going to be buying a workstation, a couple of monitors, a large desk, an ergonomic chair, a printer, a scanner and whatever else you need. Unless you plan not to do anything programming-related beyond office hours.
If you're going to a location where the public transportation system is not well developed or if they like to call strikes there all the time, you'll also need to purchase a car and get yourself a local driving license. Unless you enjoy losing hours in commute and regularly being late for work.
See how the numbers quickly add up. And somebody's got to pay for all this fun.
Notice how I'm talking about the basic stuff only that practically every person would need. I haven't even gone into family/childcare expenses.
I remember having a conversation with my boss about all of this. I was trying to get across the point that the amount I was receiving was making it impossible for me to set up a life at that location. To which I was told if I was unable to rent an apartment then I should consider renting a room instead and share the apartment with others. Now, that's positive. Definitely a thing to say to a talent who has multiple other options and the whole world open. And since the same level of payment was being hold firmly by all other German companies I negotiated with, I finally made the choice to move out.
That probably explains why there's so little true talent you can find in Germany. The treatment just isn't good.
I mean, yes the market need to improve wages, but considering also the different work culture they are not _that_ low compared to the us ones.
People who work for US startups seem to be very driven to succeed, regardless of the costs. It's seen as encouraged to constantly work, regardless if if the stress might cause you to keel over before you're thirty.
In Europe, there still seems to be an 'eight hours a day is fine' mentality, even in startups and small businesses. The idea that having a family and life and other activities is as important as becoming rich.
Maybe the mindset differences can be summed up as 'work yourself to death now but hope to retire early' or 'work less hours but work for more of your life'.
http://rethink.beta-i.pt/2016/05/04/report-lisbon-startup-sc...
http://www.buala.org/pt/cidade/quem-vai-poder-morar-em-lisbo...
It's right there, many big companies already have their offices there, English is the official spoken language, it is basically a far as uk to reach from the point of view of any European citizen, and it is cheaper (I guess).
Taxation is lower BUT actually enforced: there is no such thing as City of London corporation, isle of man or crap like that.
I guess it is less "developed" than London, but becoming the next European tech hub might be a great drive for development.
For example, bus/subway stops are only announced in German, not in English.
In Milan, Italy, bus and subway stops are announced in both Italian and English, public transport works very well in my opinion.
It's a pity that doing business in Italy is basically a rat race, taxation is ridiculously high (compared to the services and services level you get) and there is a crazy bureaucracy, otherwise Milan would be an awesome place for a tech hub.
What you can't do without German is to integrate in the society. Which is pretty tough even if you speak German. Without it you're basically disconnected.
The ticket machines are really simple, select region, select type of ticket and input money, how badly can they translate it?
As for the bus/subway, they stops are announced in German, but how hard is it to figure out "Nächste Station," and even in more complicated cases you can pick up the few words you need to understand. Even the hobos speak English.
Startup meetups, events, investor talks all happen in English, I work in a company where the official language is English, as is in most larger IT companies.
For basic communication you should also put in a little effort to learn a few German phrases (which is the polite thing to do) for necessities, and you'll have no problems.
Well, yeah -- it's like, a foreign country, you know.
If you live in one of the large cities (particular one of those that are used to welcoming tourists) and mostly deal with young people from the tech industry you'll be able to get along without ever having to speak a word of German.
Signage - particularly in small towns that are not used to foreigners - will be in German exclusively but to understand those a little bit of tourist German will be sufficient.
That said, what's so bad about learning another language? It'll broaden your mind and teach you a thing or two about another culture. Besides, learning German isn't all that difficult for a native English speaker (perfecting it probably takes a very long time but nobody will expect you to be perfect).
London will remain an important node, but without additional incentives (ie. subsidies) no single place will take over the roles that it fulfills now inside the EU's talent market.