SXSW Part 2: Berlin Saloon
It’s our second day at South by Southwest, Austin’s international festival of media and tech.
While enjoying the free food and drink, we meet up with Stefan and Kerry, who both work for Berlin Partner, a company that offers business and technology support for investors and entrepreneurs in Berlin.
They talk to us about the ins and outs of everything that’s going on in this cultural capital. We talk about the growth of startups, and why Berlin’s becoming so popular for entrepreneurs.
Discussing how it compares with Austin, we sure learned a lot and had another very interesting and very successful day at the festival.
”Berlin is like New York in the 80s, and that was a great time.” - Stefan
Time Stamps:
4:30 - What the Berlin Saloon is and why we’re here.
7:33 - Why Berlin is such a hotspot for entrepreneurs.
8:59 - The mix of work and play in Berlin.
10:58 - How Berlin Partner and the German government encourages entrepreneurs to come to Berlin.
12:42 - The open mindset of those in Berlin.
13:52 - The range of entrepreneurship within Berlin and the main sectors within it.
15:49 - How reporters respond to Berlin Partner and what they do.
17:14 - The way that Berlin is seen as a hub of business by many Americans.
23:42 - Whether it’s easier to raise money in Austin or Berlin.
24:33 - What makes Austin attractive for entrepreneurs.
26:44 - The culture shock when moving to America.
Resources:
Connect with Kevin Turley: Website
Connect with Sebastian Sauerborn: LinkedIn
Connect with Stefan Franzke: LinkedIn
Connect with Kerry Quintiliani: LinkedIn
Episode Transcript
Episode 15: SXSW Part 2 – Berlin Saloon
You can really increase revenue and your bottom line by understanding cultural differences because people negotiate differently for example, if you are negotiating-
You’re listening to Move Your Business to the United States, with me your host, Kevin Turley.
And, cultures like that, when you’re negotiating, you never interrupt-
Kevin: So this is day two, Mount Bonnell Media here at South By South West, just heading into downtown Austin, we are tired but a happy crew, and we had an amazing day yesterday, lots seen, done and heard, and looking forward to lots more today. Sebastian how did you find yesterday?
Sebastian: So we had a really interesting first panel discussion that we witnessed between Malcolm Gladwell, the Canadian journalist and a person who drives a self-driving car company. And they were both basically discussing on the future of the self-driving cars and the risks of that, so that was an interesting start to the day and then I kind of- we split up, and Emmett had some interesting mentoring session.
Emmett: Yes, so it was the first time I have been on the podcast, and I was meeting with some of the experts in that field, at the South By South West festival, and I had two meetings, one with Sharon and one with Ethan. And you’re going to be hearing those podcasts soon. It was really inspiring and enlightening to hear everything that they had to share about their knowledge in their specific fields, seems like the festival is full of people, hugely knowledgeable about their own specific fields, and it’s great to be part of that discussion.
Kevin: And I think, our first day would you say, guys, was as expected, but also, maybe, not as expected?
Sebastian: It was definitely, as expected in some ways, I mean, definitely, we’d found out that there is no reason to buy food or drink, alcoholic or nonalcoholic, you’re getting it all for free at the large menus in large quantities to good quality, for example at the British Embassy so that was very refreshing and yes, I mean it was expected somewhat but then also unexpected in that sense that we’ve really sort of found out that too much planning isn’t really helpful, because so many things happen there and then on the spot, and the day takes a completely different direction.
Kevin: Would you agree with that Emmett, especially you pointed out, I think it was called, the British Music Embassy and we just wandered in, and we found some amazing stuff going on there.
Emmett: Yeah, it seems that any time we get held up in a line, or waiting at the bar or helping ourselves to some of the free booze and food as Sebastian was talking about, we are meeting and sharing our interests with lots of really inspiring and cool professionals. So, definitely, I would say, I was surprised in how welcoming it was as an environment and how open people were networking, yeah I think that it was everything I expected, but a whole lot more. So, I’m really looking forward to see what this day holds.
Kevin: So no predictions as to what’s going to happen today, we just don’t know, but that’s the fun of being in Austin, during South By South West. And the one thing that we do know though is that we have the big trade show this afternoon in the main hall of the conference center where we are hoping to link up with our friends from Ireland, UK and many other places. As you’re saying we just don’t know which way the day is going to go and that’s the fun of it. So, I think we’ve been safely driven into Austin now by our copilot here, Mason, Mason, anything you want to add about South By South West today?
Mason: Traffic.
Kevin: Traffic, right, okay, so there you have it, there is a lot of traffic, Austin is buzzing with South By South West, you’re nobody unless you have the South By South West line around your neck and it really is, seems the be the center of the universe at the moment and we’re just pulling up to the conference center, about to be dropped off by Mason, so talk to you later, bye for now
Emmett: Hello, it’s Emmett again, and welcome to another beautiful day in Austin, I’m just going to fill you on what we are up today, as our guys are just about ten meters ahead of me, as we are carrying down Six Street. This episode is about the Berlin Saloon, the German takeover of one of the bars here, on Six Street, at South By South West. Pretty cool, we’re coming here to meet Berlin Partner, representing startups from the German capital, here exhibiting the innovations to the South By South West, and US audience. And as we can hear the sound of Berlin techno, we prepare ourselves for another day of unexpected delights, here at South By South West, 2019, with Mount Bonnell Media
Sebastian: We are here on South By South West 2019 in Austin Six street and we’re currently at the Berlin Saloon, which is the temporary home of Berlin Partner, the economic development agency of Berlin, the capital of Germany, and we have some very special guest here and I would ask them to introduce themselves.
Stefan: I’m Stefan, I run for Berlin Partner, as you mentioned, it’s an economic development agency, we are here with ten companies, to help them to make the first steps in the United States, that’s one of the things we are doing for the Berlin startup ecosystem.
Kevin: And I’m here with, we’ve also got Kerry, who’s come all the way from LA. Tell us a little bit of what you are doing, Kerry
Kerry: Well, my name is Kerry Quintiliani, which I know is a tongue twister, I work on PR on behalf of Berlin Partner, and my job is to draw attention to the company and to spread the word of all the good things going on in Berlin, to reporters in the States, so they’re educated and they know it’s happening. And then interest companies possibly in moving to Berlin.
Sebastian: That sounds really good, so tell us something Stefan about the ten companies that you brought here, what industries are they, mainly tech, or, what are they?
Stefan: It’s a really great portfolio we bring here to Austin, typically these startups are in Berlin with more than four thousand different startups have a focus on fin tech and IOT, and nowadays AI companies 70% of all the AI companies based in Germany are located in Berlin.
Sebastian: I’m sorry if I interrupt you, I think we also need to mention here, that I think I’m right if I say that Berlin is considered the startup capital of Germany, right?
Stefan: Not only of Germany, you’re absolutely right, but even of Europe, you know, together with our colleagues in London, we are really, two big tech hubs of Europe. And, that means that 70% of the received capital, which startups in Germany raise, are raised in Berlin, 70% of the talents the numbers of startup they are all in Berlin, this is really amazing to see.
Kevin: Stefan, tell me why is Berlin such a hot spot, I mean, what do you think has made Berlin such a hot spot for entrepreneurs?
Stefan: I think the DNA of Berlin and the DNA of entrepreneurs is similar, we are both international, we have an international approach, we are open minded and we are the city of freedom, and that means that thousands of talents of the world are coming to the city every year, we are growing and they are all well-educated, speak different languages and they want to do business and in Berlin we have really, a class of established companies, because companies like Siemens, BMW, Volkswagen, Lufthansa, SAP and so on, they are in Berlin and open up innovation because they want to work together with the startups and the talents and this is really vibrant economic system nowadays.
Kevin: So when you’re talking about those kinds of large corporate entities that are tapping in to this entrepreneurial spirit that is in Berlin, is that going to blunt the entrepreneurial drive, does that in some way sanitize what’s happening in Berlin?
Stefan: Yeah, I think yes, so, to have both, the established industry and to have the entrepreneurs, this is really a great mixture, and together with an open minded society, and cultural, club culture, you have both together. You can- you have the right employees, the right business things for you, and at the end of the day, you can make party. So, this is really, really cool mixture that we have nowadays in Berlin.
Sebastian: I think it’s also about Berlin, I’ve lived in Berlin myself, only for a year.
Stefan: Oh, really?
Sebastian: Many years ago, many years ago [smiling] I’m not, you know, it’s- talking about twenty years ago, so- and it has changed a lot believe me [smiling]
Stefan: Yeah really, really-
Sebastian: But I think there’s also about Berlin, I think, rent and these things are not as expensive as say for example, in Munich, right, if I’m correct so-
Stefan: No, that was, you’re absolutely right, ten years ago. But as you mentioned, a lot of things changed. From a perspective from London or from New York or from LA, you’re right, the living costs are lower than the average of the other cities. But, when you have the German perspective, it’s really fast growing ecosystem. That means that the people earn more money, and that’s why the price for apartments in office area are going up.
Kevin: Tell me this though Stefan you know this entrepreneurial spirit that is descended upon Berlin, is it something which is innate to people that are coming there and the kind of atmosphere that you’re talking about there, or is this something which the government, either at city level or state level has been part into, is this something completely depending and free flowing?
Stefan: It’s both, I think, the government set the right roots, they are invited, the talents. For us as an economic development agency we create new services for the talents. For example, when you’re not of a member of the European Union, we guarantee that your working and living permit is organized by us in five working days. So this is really fast, if you compare with other locations, it’s six to eight months, and we do this because we know that there is really a need for it and together with the government we arrange new processes on this. On the other hand, as I mentioned, it’s in the DNA of Berlin, and the entrepreneurs love this, you are really free. There is free space, you can try, and fall, and try again, and yeah, this is really possible to do new things, and yeah, this is really cool situation.
Kevin: Kerry this sounds like the American situation, where people start, they fail, they start again, they start, they fail better, you know, which is much more the American thing with entrepreneurialism, what we’ve been discovering with American entrepreneurs, whereas Europe, is not like Stefan is describing, it is kind of, you fail once and you have to keep your head down and say nothing more. So do you recognize this kind of spirit when you go to Berlin that there’s something of the America’s?
Kerry: I think that the beauty of Berlin is how open the community is to new ideas, there’s a large student population, there’s a lot of universities in Berlin, there’s a lot of art galleries in Berlin, the music in Berlin, it’s so forward going, that I think if you’re going to fail anywhere, it’s not a bad place because you can get back up, someone will support you and put you back up on your feet and push you toward a new idea. They’re very all-encompassing and encouraging there.
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Kevin: So, tell us a little bit Stefan about the range of entrepreneurialism, are we talking about particular sectors, particular industries or we’re talking everything and anything?
Stefan: No, not everything, we started as the center of E-Commerce in Europe. And, that was fifteen years ago. It was concentrated on E-Commerce, B2C, nowadays we have a lot of startups in the B2B sector, as I mentioned, we have a focus on IOT that’s why, because the German industry is really focused on manufacturing and production and the internet of things is very necessary to create new businesses for the production companies. Fin tech is really amazing, the development of the sector, we have in Berlin three hundred fin tech companies, then the financial and normally the financial service in Germany is located in Frankfurt, but the new things, the new stuff, they are created in Berlin.
Sebastian: And Kerry, so what’s the response here in America to these people from Berlin I mean, I think America historically has some strong, I guess emotional, political, historical ties, I mean, remember Kennedy and his famous speech where he says “I’m a Berliner” the Americans strongly supported Berlin in a very critical time period, you know, then there is the story of so-called Rosinenbombers when basically Berlin was besieged by the Russians and they were no supplies, then the Americans threw it via airplanes into Berlin. So what’s their response to Berlin entrepreneurship and what do they say, investors, media and the public?
Kerry: It’s interesting, the reporters that I’ve spoken to, are interested in Berlin Partner, because they didn’t know, they just aren’t aware of what’s going on in Berlin and that’s part of my job, right, as a PR person to educate them on these things, and I think that as we move forward, we formed relationships with reporters already, we’re going to bring those relationships further along, and then build up other ones at the same time. It’s just a matter of time before they get it, you know.
Sebastian: Do you think this is also a language problem?
Kerry: I don’t think so, because most people from Berlin speak really nice English, so I don’t think it’s a language problem I think it’s just a- sometimes in this country it’s a little easy to get focused on what you have and you don’t look beyond, and what Berlin and Berlin Partner offers really is so attractive to companies that are looking to build up, that they should consider moving and reporters are starting to get that too, which is exciting.
Sebastian: So would that means that, say, an American business, you know, let’s say an American startup looking to build European bridge or base, by that having considered typically mainly places like London, which is now a little bit difficult because of Brexit, and maybe Dublin before, you know, which gets somehow crowded. You think they consider potentially Berlin as a hub for their European operations?
Kerry: I definitely see Berlin as a hub, I think Stefan can probably speak better to that, because I have the one way with the reporters, I’m not so much with the companies that are moving, but I like to pass that to you.
Sebastian: What do you think Stefan? Is there an interest for set up something in Berlin?
Stefan: Yes, for sure, for the Americans, we are building bridges since three years in now so-called startup lines, we partnered with the economic development department of New York and when they go to their ecosystem and ask, “do you want to enter a foreign market” and they say “yeah”, then European market could be the next for us, then they are bringing the startups from the East Coast to Berlin. Because of the Brexit, typically, these startups from New York enter via London the European market. But because of the Brexit and we are now, ten, fifteen days before the Brexit, and nobody knows, happen the Brexit, what are the circumstances, we see that a lot of companies from the United States and from China enter the European market via Berlin. And as we talk about, the differences of Berlin to the rest of Germany, Berlin is like an island like London is for UK or New York and Austin is for America. I think it’s not the typical economic system, and the typical people, it’s the same in Berlin, and that’s why the fit is really, really good between Austin, New York, LA and Berlin.
Kevin: That’s really interesting Stefan, is that, cause what you’re describing, there’s a world city and most of us consider Berlin a world city. I know that the division of Berlin prevented it from its full, taking full part in the world, but that’s now a history, but, would you say that the people you work with have that kind of global vision, that kind of world vision for their products, for their services, for their business?
Stefan: Yes, they have the global vision, because, to give you some numbers, in Berlin we have 4000 startups, innovative, scalable startups. Half of them, the entrepreneurs are not German guys, they come from foreign countries. We have, I know startups in Berlin with no German employee. Yes, they have typically thirty, forty, fifty employees, and they are coming from twenty different nations. And so, they have the global perspective in the company, and that’s why it’s really easy if you want to expand to different markets, you have the right employees from the countries in your startup that makes it really easy to enter new markets. So this is really big advantage in Berlin.
Sebastian: I think another thing, as far as I know, somebody told me, a client actually said this to me, so I need to verify if this is true or not, but as far as I’m aware, also the public funding situation is quite positive in Berlin, right? I mean it’s never easy but it’s basically easier than in other places and better funding options are available.
Stefan: Yes, but it’s a new situation for Berlin. To be honest, ten years ago, the Berlin or Germany’s startups raised 200 million dollars. Last year, the Berlin startups raised 2.7 billion dollars.
Kevin: Wow
Stefan: And this is the growth in ten years. It’s 70% of the received capital in Germany, so it’s quite a big number.
Kevin: So, 70% of received capital in Germany is Berlin based.
Stefan: Yes.
Kevin: Wow, that’s incredible.
Stefan: Yeah.
Kevin: And that’s all owed to you? [smiling]
Stefan: No [smiling] it’s the work of-
Kevin: You suppose to say yes [smiling]
Stefan: It’s the work of the startups but I think Berlin Partner did quite a good job.
Kevin: No, it’s a- I mean, we’re joking, but it’s a great testimony about the power house that Berlin is becoming. And presumably Stefan this is a story which is just going to get more-
Stefan: Yeah, absolutely, you are absolutely right, we are at the beginning of a really great period of success for Berlin startups, because we see every startup and this is the second thing not only we’re raising money to have exit in Berlin so once they get back the money. We have a lot of really great successful exits for Berlin startups, as I mentioned Relayr, it’s an IOT company, five years old and last year they were bought for 310 million euros from an insurance company in Munich and there are a lot of companies like- from Asia, like, from Japan, the SoftBank they invested for example last year, 65 million in a fin tech company, and they are very proud that they can do this job and that’s why I really think it’s the beginning and for Berlin it’s very great to see that we do the similar things that people did in New York, so, a lot of people say, Berlin is like New York in the eighties and that was, I think, quite a great time.
Kerry: It was pretty great, yeah [smiling]
Sebastian: And the companies that you brought here for example, and I saw them pitching before for capital. So, I mean, it raises the question, would it not be easier for them to find that capital in Berlin, rather than coming all the way to Austin?
Stefan: These ten startups we brought to Austin, they want to enter the US market, and we have friends here, Capital Factory, they help us and our companies, and together we decide that, when you go to the US market you need US knowhow, so you need US capital, and that’s why they want to raise money, not for building things in Berlin, but to do stuff here in Austin.
Kevin: Stefan can you talk a little bit about the attractions of Austin, we’re sitting in Austin and now we are at an International festival, but it sounds to me you already got skin in the game when it comes to Austin, you know this city and Capital Factory. What’s the attraction to an entrepreneur in Austin at the moment, to European entrepreneur?
Stefan: Normally when we are, from the European perspective, we first think about the West Coast, Los Angeles, San Francisco.
Sebastian: Nobody knows Austin, right? A lot of people don’t know it right? [smiling]
Stefan: The second is New York and Boston. But when we are talking with the startups and when they want to have a hint and advice, we said, it’s maybe easier to go to Austin, because it’s a big market too, open minded people, and I think it’s a little bit similar to Berlin. Not only because of the club culture, and the party and the musicians and the creative scene, but there are a lot of startups here and a good university and that’s why I think the first step to do business in the United States, Austin is really a good first point.
Sebastian: I think you’re absolutely right, I mean that’s our experience as well and you know, the big advantage of Austin is that you have cities like San Antonio, Dallas, Houston, so it’s essentially a market of twenty, twenty five million, in close proximity, so a half a day by car you can get to any of these cities, and that’s an ideal environments for startups.
Stefan: I totally agree.
Kevin: Yeah, there’s also something about the fact that in some ways Austin is quite a manageable city for Europeans, because downtown Austin is a relatively smaller area, there are blocks, you know, as opposed to some American cities, for example, Houston I believe which is very spread out, and in your experience Kerry is there a little bit of a cultural shock when European entrepreneurs come to the United States in that, just how the infrastructure works here because Berlin and London are very much cities with undergrounds and with very good networks and people walk around, whereas here as you know, car is king, right?
Kerry: Yeah, absolutely, especially in LA, you can’t get anywhere without driving. I think that when we see companies come over from the European market at first they are surprised by the share size of where they are. So, Austin I think is very manageable city. It’s very walker friendly, you can bike, you can hail a hackney, you can take any method of transportation.
Kevin: That’s good as- right [smiling]
Kerry: Oh my God yeah, yeah, but I think LA is just punishment, if you go to LA to start, it’s just too big, you have to have an in there before you start.
Kevin: And do you think Stefan, that Europeans kind of, maybe Americans overestimate how much of this culture shock that is to Europeans, we expect cities to be compact and usable, we don’t expect to have to drive everywhere or drive through, you know, chemist or drive through banks, drive through everything, I mean you can drive through everything here, did you find with some of your entrepreneurs get a little bit, sort of, there’s a cultural shock when they come to the United States?
Stefan: Not because of the mobility sector, because of- we know it, if we are going, it’s- there is section International approach in Berlin, so that this is not the cultural shock, I think there are some others. When these startups pitched and then the investor said, “oh that’s awesome”, then the Berlin startups think, “hey really cool, I will get the money”, and “awesome” five years ago was “super cool”, now “awesome” is no, it’s like everywhere, so when you don’t hear, it’s really *cking amazing, then so, in Berlin someone said, hey it’s really cool, you get the money, yeah? This is the cultural shock, because the definition of the words and the meanings are totally different.
Sebastian: So, well, Stefan thank you very much that was an excellent conversation, we are really interested to talk to the entrepreneurs afterwards, and have a conversation, and Berlin, sounds very interesting, I mean, I love Berlin, I’ve been there- I go there regularly, at least once a year, just for visiting, and I see it’s really nice, it’s a great city, great place to be, so hopefully we’ll stay in touch. Thank you very much
Stefan: Thank you very much [smiling]
Kevin: And thank you Kerry as well, it was a very good insight into the LA version of Berlin.
Kerry: It’s my pleasure, thank you so much
Kevin: Thank you
Next time on Move Your Business to the United States, the one thing we are learning about South By South West is to expect the unexpected, you just never know what’s going to happen next, who you’re going to meet next or what’s on the next-
You’ve been listening to Move Your Business to the United States, with me, Kevin Turley.
And for this show featuring staff for South By South West, you’re also joined by me, Emmett Glynn.
To find out more, go to mtbonnell.com and remember, ‘Dream big, dream America’
