What we read this week (22 November)

Our favorite articles of this week. Have a great weekend.

Articles of the week

  • What Screens Want
    Brilliant web essay by Frank Chimero, and not only because he features James Burke and The West Wing. I bet that this one will come up in a lot of conversations in the next months.
  • Prada Revolutionaries
    “Bright Green has become the left's version of right-wing transhumanism: an excuse to not solve today's problems, because tomorrow's technology will fix them for us.”
  • Tom Armitage » Driftwood
    “Driftwood is a talk I gave at Playark 2013. It was meant to be a talk about leftovers (the theme of the conference being ‘reclaim’), and about Hello Lamp Post. In the writing, it turned into a broader overview of my own work – on six years of projects around cities and play.”
  • Meet The ‘Assassination Market’ Creator Who’s Crowdfunding Murder With Bitcoins – Forbes
    “Assassination Market, a crowdfunding service that lets anyone anonymously contribute bitcoins towards a bounty on the head of any government official–a kind of Kickstarter for political assassinations.”
  • Ross Andersen – Humanity’s deep future
    "When we peer into the fog of the deep future what do we see – human extinction or a future among the stars?"
  • Bitcoin As Protocol | Union Square Ventures
    “There is no other widely used protocol in the world today that accomplishes this: with bitcoin anyone can make a statement (a transaction) and have this be recorded in a globally visible and fixed ledger.”
  • Content economics, part 4: scale | Felix Salmon
    "It’s almost impossible to overstate the importance of the CMS when it comes to the question of who’s going to win the online-publishing wars."
  • InMoov » Project
    "Here is “InMoov”, the first life size humanoid robot you can 3D print and animate. You have a 3D printer, some building skills, This project is for you!!"
  • Apple and Google Maps, and Defaults | Matt Mullenweg
    “If Microsoft did this a decade ago we’d call for the DoJ to reopen their investigation. Apple has the best phone, best tablet, and in many ways the best operating system — we should not give them a pass for this blatantly self-interested and user-hostile stance.”
  • Instagram and Youtube — Benedict Evans
    "WhatsApp and Instagram are not in different categories – they're direct competitors for time and attention." – This spot on.

Week 158: About the Berlin Startup Scene

Instead of their pilgrimages to San Francisco, startup founders should travel to South Germany to learn from the Mittelstand how to build sustainable companies that benefit their communities as much as their founders.

I have became a technology industry skeptic.

That’s not a sentence I’m uttering lightly. After all, just a few years ago, I would have described myself as a technology determinist, a true believer in the power of technology’s ability to transform the world for the better.

Tech is the new finance industry. I’ve said so before and, unfortunately, I’ll have to stand by this statement. When Entrepreneurship centers are flourishing and universities like the MIT can’t cope with demand of new applicants, when professors teaching at those departments are announcing that young people don’t want to be investment bankers and instead are seeking their luck as tech-startup founders, I feel the urge of pointing to history and reminding us how the same happened before in finance. With its final transformation to a self-observed, self-deterministic sphere in the 80s, the finance industry became a huge magnet for young people who believed in the promise of becoming something bigger than themselves and not minding to earn more money than they could possibly need in their life-time. The demand was so huge, universities and colleges had to invent new departments just to cope with the demand of people wanting to acquire the right qualification to become an investment banker.

The same happens in the technology industry, especially in Silicon Valley. There is no doubt in my mind that it all started with good intentions, but when looking at things today, I doubt that we are on the right track.

Just take a close look at incubators in Silicon Valley. Despite talk of changing the world, they are fundamentally not significantly different from military boot camps. Despite the promise to cherish individuality and creativity, those institutions are rewarding conformity and punishing differentiation from the proposed model of the particular organization. Said models of executing upon predefined processes, usually created by rich, most likely white, males. Again, despite the talk, those processes aren’t there to help founders. Instead they are built around financial risk assessment models. Those rich, white men do want their money back. And then some. All of this is by no means an accident. It’s an elaborately designed system, which is in place to ensure and increase inequality. To put that into numbers: “between 1992 and 2007, the income of the 400 wealthiest people in the United States rose by 392 percent”.

All of this is surprisingly Ford’esque and I’m not one of the people who are saying that as a compliment.

I find this all especially appalling when I hear the talk about and by Berlin’s tech scene. In recent years, Berlin was pushed into becoming a potential place of investments. So far, with only mild success. A flourishing new industry is by itself not a bad idea for a city with above average unemployment rate. That is, when this industry has the potential to contribute something meaningful to solving the problems of the environment that it’s becoming part of.

While there are significant factors why Berlin is a great place for new things to emerge – still fairly cheap, high quality of living – it is by far not because so many potential employees for a technology startup are among Berlin’s unemployed. This is not exactly news. Most founders and CEOs are openly talking / complaining about how hard it is to hire good people, how they have to lure people to Berlin. Apparently Eastern European developers are in high demand.

Said startup hype lead to a furious emergence of new initiatives and new incubators. Seemingly any company with some change to spare and the desire to become part of the new gold rush. The saddest part here is that all those companies don’t even try to create a romantic, technology deterministic narrative like their Californian counter parts. Their language and footprint is corporate, they are here for the profits.

Which begs the question: what would be the virtue of welcoming this industry into the city with open arms? Klaus Wowereit, Berlin’s mayor in his third term, thinks that he has an answer. Recently, McKinsey published a pro-bono study for the city of Berlin. “Berlin gründet – Fünf Initiativen für die Start-up-Metropole Europas” (Berlin founding – Five initiatives for the european start-up metropole). Therein Wowereit postulates in a forword that the tech industry can have a significant contribution as a tax payer and employer. This comes from the man who sold out this cities real estate to the highest bidder without any regard for cultural and societal impact. With no significant contribution to fight unemployment, he leaves the city with a future promise for tax income. An unlikely scenario.

Unfortunately, there is no way out of this. Pressured by overwhelming attention from around the world, the city governments is cornered into shaping legislation or at least appearing authentically as if it can contribute something of significance to a development that mostly emerged because there was little to no regulation at all.

With pressure rising from investors waiting to be wooed, the government does what most governments would do and that is looking at so called best practices. Despite the fact that there is an overwhelming body of theory to the fact that is impossible to copy same models and various, failed attempts to copy Silicon Valley else where. Before anybody points toward Tel Aviv, let me say this: There is a strong correlation between a long-standing, overwhelming presence of huge facilities by US tech giants and the success of Tel Aviv’s tech scene. There is also a geo-political factor that can’t be replicated and it doesn’t hurt having a man of Yossi Vardi’s stature in your corner either.

Just last week I heard Joachim Bühler from BITKOM – an tech industry lobby group – say that he discusses many initiatives with city officials and all of them are trying to emulate Silicon Valley. One of the various observation documented by the McKinsey study states that there is lack in funding for technology companies seeking A & B investments rounds. There is plenty of seed money to go around and it hasn’t been easier to get some cash and hack away for six month, but when it comes to financing your dream to become bigger than Facebook things eventually get tough. The only reasonable hope that bureaucrats in this city can have to change something about this is fact is by luring financially strong and successful investors into the city. That, in turn, means luring in more US-based funds to the city.

There are three most likely outcomes for startups these days. Die unsuccessfully, get acquired by an US based technology company, or IPO. Most tech startups end up in the first category. This is by design and has been a long standing practice in the technology sector. Only the most successful of all companies end up in the last category and there is no reason to believe that the Berlin tech scene will produce a likely contender for a big tech IPO. That leaves the second category, acquisition by an US company. It’s that category that will ensure that neither qualified people, nor tax income will be left in the city as soon as something of significance will emerge here. This will not stop Berlin’s government walking down this path, because of the lack of courage to come up with a unique, feasible and realistic approach for a city in need and because those US investors will make everybody work according to those risk assessment processes that they teach in their incubators.

This is a dangerous path and one that is not only being applied in Berlin. All over a financially unstable Europe with high youth unemployment numbers, technology and startup culture is en vogue in city, state and federal governments. The same mistake of attempting to copy our spying American friends is happening everywhere.

We stand at the crossroads. We have a generation of founders that are unwilling and unmotivated to pursue anything else than world fame and the attempt to become the next Mark Zuckerberg. Those desires are fueled by investors who don’t care about fame, but about the returns on investment that is associated with finding the company that can become the next Facebook. And as addition to the team of people who will not help us get out of the financial crisis, we are seeing politicians completely incapable of coping with a rapidly changing world that are eager to build up those “ecosystems” that seem promising enough to help them campaign in the next election.

The technology utopia transformed itself from a hippy’esque LSD dream where technology will solve all of humanities problem to a well oiled machine in which the brightest people in the world are busy building new features that will make advertisers spend more money on the information that those apps gather about us and in which only a small fraction of the extremely hard working people can say for themselves that they are in fact Mark Zuckerberg.

I don’t want to leave you with the impression that I am a staunch opponent of anything tech, on the contrary. It is now that we have to debate how we want to see the technology industry evolve beyond its Californian Ideology model. I am all in favor of Berlin becoming the new startup capital. The question is: what kind of startups do we want? What kind of people do we want to start them? This is far more about goals and demeanor than about market opportunity and finance. We in Europe have the privilege to learn from companies that are building products and solving problems for generations now. Germany’s Mittelstand is still the backbone of its economy. European founders should stop traveling to San Francisco and instead focus on their national and European markets, the problems that those markets experience and how they can be part of the solutions to issues like massive youth unemployment. But foremost, they should concentrate on building a company that can stand on its own feet, that is not setup to race from one venture round to the other with the sole goal to exit as quickly as possible and be part of a machinery that never seems to be interested in being sustainable in itself.

Let me finish with a question: what do you think who employs more people? A company like Facebook with a world-renown brand that is worth about $100 Billion on the stock market or a hundred companies that most people have never heard of which are each worth a billion dollars each?

What we read this week (9 Sep)

Every week, we filter a few of the most relevant articles about the digital business for you. Here’s our hand-selected reading list for the weekend. Enjoy!

It seems like last week’s first test round of our reading list hit a sweet spot. So we’ll try and do this on a weekly basis for a little while and see how it goes. Please do let us know if it’s helpful for you. I present to you a small selection of the most relevant things we read this week:

Enjoy your weekend reading!

Every week, we filter a few of the most relevant articles about the digital business for you. You can see all our recommendations (including the archives) at “What we read this week“.

What we read this week

There’s a lot to read out there, every day, every week. It’s part of our job to dig in and find the most relevant discussions. Thus I present to you an eclectic mix of some of the must read articles about what’s happening in the digital business.

There’s a lot to read out there, every day, every week. It’s part of our job to dig in and find the most relevant discussions. So we figured we might as well surface some of them to give you an at-a-glance overview of what we find relevant for our business. And thus I present to you an eclectic mix of some of the must read articles. If you have the time to read only a few articles this week about what’s happening in digital businesses, these are a good start.

I’m curious to learn if this is a useful format for you. Let me know!

Week 34

Last week was fun. A lot of fun.

We met a bunch of new people, like Kelli and Darius from Wells Fargo. They found us on the interwebs and asked us if we wanted to meet during their visit to Berlin. And so we did. Very interesting conversations, and a great chance to swap insights from the US and Europe. We always appreciate this kind of open and frank discussion a lot – for us, internationalisation of our operation is always a very important topic as we like Third Wave to operate from Berlin, but on a global level.

On this note, it also felt as if it was a very startup-driven week in Berlin. Amen emerged on the interational stage with nice press coverage. With a rockstar founder team they are definitely a very welcome addition to Berlin’s technology landscape. It’s also good to see some locals in the core team. There was a lot of buzz about Berlin’s startup scene, but people also rightfully pointed out that most of the well known teams are expats who come to Berlin and not Germans or Berliners who take it upon themselves to create something big.

In addition to that our friends from Readmill – in cooperation with Eyeem – had a great party in their new offices. It was packed, and in true Berlin style even the police showed up in the end. Big up for organizing a cool event with amazing people. If you don’t know Readmill yet, you should definitely sign up and await the beta invite. What we saw so far is very slick and well thought out. They’re very well positioned to become a really interesting player in the market.

On top of that, we enjoy watching Yourneighbours transform themselves completely into their new startup Gidsy. Sharing an office with them is inspiring. Have you ever watched people just go? Doing their thing with whatever energy they have in themselves? Having an idea for a startup is the easy part. Mustering the courage to follow the dream is the hard part, but one that is essential for the success of a company. And Gidsy has it all. (They’re hiring, too.) You go, guys!

Week 28

When we started out, traveling usually meant that a few of the must-do-things got postponed to a later date. But that just doesn’t scale for us. That’s why this week note is being written in New York City, more precisely in SoHo’s Bookstore Cafe. But enough with the coffee, why is it that Peter and I are in New York again I hear you asking.

If you, dear reader, haven’t noticed it already: we have a rotation principle for writing week notes and it’s my turn again.

When we started out, traveling usually meant that a few of the must-do-things got postponed to a later date. But that just doesn’t scale for us. That’s why this week note is being written in New York City, more precisely in SoHo’s Bookstore Cafe. It’s not only a good place to shop for some serious print, they also have barista skills. (At least if a La Marzocco machine is any indication, which it usually is.) After being coffeed up with the black gold from Blue Bottle and Gimme! Coffee I went for one of their home brewed iced teas. Also a very good choice.

But enough with the coffee, why is it that Peter and I are in New York again I hear you asking.

Sometimes we are more fortunate than even our confidence into our skills would account for. On our last visit to Gotham, we met up with many interesting people and potential clients with a clear goal: to extend our business beyond Europe. A simple goal, but it isn’t easy to establish yourself in one of the most competitive cities of the world as a Berlin based company.

That said, we were successful and got invited to be part of an amazing project. While we once again can’t really talk about our work (NDA), we can say that much: we are helping a very smart group of people shaping the beginnings of a potentially very successful startup. Our job is to shape the strategy, the product itself, give input on the social and mobile components of the business as well as prepare the European launch of the service.

Going deep into the core of the product itself is exiting and we enjoyed the two full days of working with the whole team a lot. We’re very exited about the things to come and it looks like we will be back to New York soonish as well. We will hang around in New York till Thursday morning before heading back to Berlin. There are some meetings scheduled – we will drop by the Urbanscale office today for example – but if you are interested in meeting up, ping us.

Last week was busy as well. We visited the Berlin based conference re:publica. It’s always fun to see so many geeks come to our home turf. Johannes joined the Seedcamp as a mentor on Thursday. From what I heard, there are some really exiting things happening in the European tech community.

That said, we wish you a great week.

Travel plans: Peter and Igor are in New York till Thursday. Johannes will be in Hamburg on Wednesday. Again, if you’d like to chat, get in touch.