Tech in Berlin – Beyond the Hype

Poor but sexy, up-and-coming city, the startup capital of Europe. These are some of the adjectives you will encounter when people describe the city. Moreover, you will find stories of successful startups like Soundcloud or Zalando and news of tech monsters that have recently opened offices in Berlin like Amazon or Microsoft. It sounds as if the city has everything you need to thrive in your career or maybe even make a big breakthrough with your own company. Maybe this is the opportunity for European companies post-Brexit that will be better off relocated in major new European cities, Berlin among those, the Euro-Tech-Gold-Rush of the 21st century is here!

[Image courtesy of BarnImages - http://barnimages.com]

Berlin has in its record incredible positive cultural events like the 90s-early 2000s rise of techno, David Bowie, the love parade among other things, I'm not here to debate these events or its music scene, my focus is tech. I decided to make this post as I consider most of the online content concerning tech in Berlin misinformation and at the very least to I'd like to help readers make a more accurate picture of the current state of tech in Berlin.

Unfortunately, I come here with some stories and facts that will try to expose the city as it is, to try to give you a more realistic view of the city because in this case not all that glitters is Bitcoin. I'm tired of reading articles praising the Berlin tech industry that contain literally zero details. You will read things like: “Cheap rent, lots of space, Great parties and nightlife, Affordable rent, great apartments, Cost of living and lifestyle are great”. This was taken from a real article, see how they repeated three times that rent is low. We get it, rent is cheap. For how much though? Compared to where? How does it compare to the amount of monthly income? Are funding opportunities available? What is the hiring rate of these companies? Certainly, you won't find these statistics online anywhere.

I studied and lived in Berlin lured by stories and promises about the city, I'm a female engineer who's coded since the age of 17, I hold a Bachelor degree in CS and a related masters degree from a German university, from Berlin more precisely. Right now I work for a tech company in Denver, so this is the tale of my experience that everything that happened in between... in Berlin. With me immersed in the tech industry and sparkled with some recommendations for people who's seriously thinking of relocating there.

Tech is one of the most competitive paths and certainly one with great opportunities. I never expected to be easy but for me it's highly rewarding. In our lifetimes we've experienced the birth of behemoths of the likes of Google or Amazon and even the decease of large companies like Nokia. Proof of the fact that tech moves at the speed of light as fortunes and technologies are created and even squandered in matter or just few years. Which brings me to my question:

Where are the German equivalents of Google, Amazon, Microsoft and others? Well there are none. There is Siemens which is a Berlin company, probably the best known worldwide. One large company, in a city of 3.5M. Some might argue “well, that is not the point of the entire Berlin tech scene”, people are there to create new companies with new ideas and fresh approaches just like Soundcloud did. The truth is that Soundcloud engineering team is located in Berlin and it was founded in Berlin but it's also a fact that Soundcloud, according to a Bloomberg article from 2015 is losing $29 million a year, with a revenue of about $14 million. So Soundcloud loses money, tech companies around the world lose money – no big deal. It is a big deal because unless you've been lucky enough to have enough investment to stay afloat despite big loses you have a real tough path ahead. The reason Berlin is advertised as a startup paradise is beyond me but loses in tech companies are higher than revenues. But loses are not unheard of in the tech world, I mean, Twitter just became profitable in 2015 (most likely) so there is hope for these companies. I wonder happens in other companies that aren't so lucky.

So how big is the startup ecosystem in Berlin? according to a report released by the Statistical Office of Berlin-Brandenburg only about 4.5 per cent of the overall number of new companies founded in Berlin in 2012 are IT startups, quite low compared to the hype present in the media. But there are still further doubts published by the Spiegel and Techcrunch.

The Berlin startup scene is a total bubble - Nobody has a real job

I took these two sentences from the guardian article from 2013 “Berlin and the tech startup scene – 10 things to know before making the move” which explain the reality of most medium to small startups in the city. You searched for a job and you got some calls, congratulations! Now the reality of work and wages will hit you. Unless you're one of the lucky few who got hired by a large company and you signed a real contract or even luckier who got funded in spite of constant loses the reality is that you'll be stuck in a company where Getting paid is a luxury not a right because until just recently minimum wages are required, since 2015 German law introduced minimum wages 8.5€, but the former mindset is still there. That means employers will take advantage of this fact to make you work for low wages. And even today interns have basically no rights and are the most exploited employees in Berlin. But frankly, an engineer has it almost as bad.

More information on this answer on Quora:

https://www.quora.com/What-is-the-average-salary-for-an-intern-at-a-tech-startup-in-Berlin

From that article:
“So the worst case imaginable would be now that the startup offers you a 35 hours / week contract (and then expect you to work 40 hours... ) which would result in 1120€. After taxes you will have ~860€ to live with. If your employer plays fair and gives you a 40 hour contract you will have a monthly income of 1360€, which is a net-income of ~1000€”
that answer sounds realistic. That is approximatelly 12K€ / year.

Alternatively, you can actually believe this report (created by Berlin Startup Jobs, Jobspotting and Aalen University) that says that the median salary is somewhere between 2500€ - 3300€, with a huge gender imbalance.

https://jobspotting.com/en/journal/berlin-startup-salary-report/

There is the opinion that attracting people to Berlin is the foundation for a healthy startup ecosystem, but what good does it make if you pay employees enough to make a living but not enough to even buy a car. Truth be told, yes there will be offers but most of them will be for unrelated positions, low-skill and even hourly-wage positions (I was asked to be a translator and customer service clerk so many times when I clearly applied for engineering positions every single time). The only thing this system achieve is exploitation of employees, who, when they leave, leave positions to be filled by other needy underpaid overworked/underworked employees.

So people who were attracted to the city to work in this ecosystem will face bills with something around 1000€ in their pockets because they are working for “projects” instead of working for a company with a contract signed that gives you a real sense of security. I see a real problem in the mindset of the startups because they will argue that the city is cheap so you get paid less but in my opinion that is not a good reason to not pay your tech employees a decent salary. At the time I left in 2015 landlords seriously expected you to pay 700-800€ for apartments with no sun, in a not so nice area. You might be lucky, but you probably won't.

EXPECTATION

[This is a file from the Wikimedia Commons]

REALITY

[photos by sergimontes https://www.flickr.com/photos/sergimontes/sets/72157632392783032 (CC BY-NC-ND 2.0) ]

Innovation - in Berlin?

Most foreign workers that came here, lured by the "hot startup scene" are sick and tired of it and wanna get away from it, sometimes they blame it on the weather (seriously, it sucks big time! an average of 4:45 of sunlight per day. It is sunny 39.7% of daylight hours. The remaining 60.3% of daylight hours are likely cloudy or with shade, haze or low sun intensity). And the working environment isn't that great either, you will find “serious” PhD in CS completely and utterly disdaining front-end developers for not working in "industrial" languages like C++. You will experience companies where QA and user interface are second class citizens and even when users don't “get your interface” companies like to blame it on users for not being smart enough. Sometimes you'll only have to share office with coders who won't do a single line of code and just drink Club Mate until funds get depleted and can go on to the next startup with another year of experience as a growth hacker. Places will deem technologies like SQL too extreme and stick with access while others try to code their own databases from scratch for a web application written in Lisp. I know all these quirks are common in other “incubator cities” but Berlin definitely takes the gold in all negative aspects.

TAXES-TAXES-TAXES

But wait, it doesn't add up. I just saw an open position for 50K€ ad on the internet! Salaries cannot be discussed openly and publicly according to German law so it may or may not be the real number. However, if that is indeed the yearly salary for a junior engineer in Berlin you will end up paying 35%-50% in taxes to the German government plus 200-400€ premium a month for mandatory health insurance. That varies depending where you are from and how much you earn. That is a big haircut.

It will hurt your career if you stay long enough – A few recommendations.

Now let's talk about career expectations, if you're ambitions you won't find what you're after in Berlin, if you try to have a real career in tech or build the next big thing then Berlin isn't for you either because if you do it you would be the first one to ever make it in an environment that is not ready for it. I was lucky to get my next tech job outside Germany because my resume didn't help. It was nothing but projects and enterprises that got nowhere not because I didn't want to or I couldn't fill the role as expected but because Berlin startups almost never do what they intend to do.
Berlin always has been advertised as the next big thing in Europe since the wall came down, that's something I learned the hard way because new blood and new money is vital to their economy. So if you really wanna try out the Berlin tech scene do it but have a deadline and a budget after which you'll return so if/when doesn't pan out you can carry on without hurting your career and dreams elsewhere.

Tech has these issues almost everywhere you go but not all condensed into a single place – the Berlin Tech Scene, which let's face it, it IS a scene, is definitely not mature like other cities in Europe, however, it's has gone nowhere and in my opinion might not go anywhere in a long long time. Maybe in a decade or more it will be worth looking at again and worth making sacrifices for but in the meantime: Don't drink pay attention to the hype, I'm sure better opportunities are waiting for you elsewhere.