My Berlin Web Week started appropriately at the Pub Summit with Tech Crunch Editor Mike Butcher posing the question, well shouted from a table top, “Berlin, is it all hype?” For those outside the self-referential Berlin bubble, this is the ongoing question whether Berlin is/becoming the Silicon Valley of Europe. But what defines a replication of Silicon Valley anyway? (And does it even matter?) The heart of this question is relevant for any tech eco-system that has aspirations to emulate the consistent technology innovation (and wealth) of the Valley.
Berlin while home to hundreds of different types of start-ups is still defined by execution-focused incubators such as Rocket and newer players, Team Europe and Project A (amongst others). All these companies do very well from bringing low risk products with proven business models to market. So as you can imagine at Web Week conferences such as Heureka and NEXT, there was a lot of talk about company building, raising capital, the methods and value of execution. The message was loud and clear – you can’t have a functioning business with out great execution.
As a creative sort I know that ideas are cheap (there is no shock value left in that for me!), you have loads of them all of the time and most of them, while very entertaining aren’t that good for more than a giggle. Choosing which ideas to execute and the execution itself are of course the main features of any business decision, in any industry. But during the course of Gründerszene’s Heureka conference I was surprised to hear Luckasz Gadowski, Team Europe founding partner proclaim, “if you want innovation, be an artist” (I don’t think he meant it in a good way either.) In the showmanship of the moment I think there was an exaggerated flippancy to this comment, but it does demonstrate the prevalent ideology of process innovation in German companies. But when did tech business become just about execution rather than getting excited by disruptive innovation and great products? Surely these properties of enterprise should work harmoniously (with many other factors). So why put innovation at the opposite end of the scale to execution?
I am always wary when dichotomies are too easily created. Apart from being intellectually lazy, in our complex world nothing is so linear that you can have one quality down one end opposed to another quality at the other. I am uncertain what is to gain by using Artists as the examples of ‘pure’ innovation, apart from an attempt to devalue it? Prior to tech (and still thriving) is one of the greatest scalable industries of all, Modern/contemporary art –and it certainly didn’t get there by not executing. Practicing Artists might have a very different value structure or vision that they are fulfilling – but they still execute. One of my early business and art heroes, Andy Warhol famously quoted “Making money is art and working is art and good business is the best art”. (The Philosophy of Andy Warhol : (From A to B and Back Again) is still one of my favourite business books.)
Further, I am always surprised when people rely on dichotomies despite doing them selves a disservice, boxing themselves into a stereotype. Quite a number of Artists irritatingly do this (the tired old ‘selling out’ conversation) but straight up business execs should also be paying more attention to the corner they are painting themselves into. Navigating the chaos of current markets continually being disrupted Robert Safian explores the qualities of future business leaders, “Every enterprise needs to find – and evolve – the structure, system, and culture that best allows it to stay competitive as its specific market shifts. Business leaders need to be creative, adaptive, and focused in their techniques, staffing, and philosophy.” Knowledge across disciplines in fact seems to create buoyancy in troubled seas.
Beyond surviving disruption, developing disruptive technologies ultimately requires a creative leap of faith to imagine the unimaginable. While researching his upcoming book Hearts, Smarts, Guts and Luck, Anthony Tjan interviewed hundreds of entrepreneurs from around the world to find out “what it takes to be an entrepreneur and build a really great business”. He was surprised to discover that “of the entrepreneurs we surveyed who had a successful exit (that is, an IPO or sale to another firm), about 70% did NOT start with a business plan.” While you cannot bypass execution, nor is it advisable, a more holistic approach between all of the disciplines is needed. In fact, in the handy top 5 list for early start-ups that Tjan created from his findings, understanding the business model came in fifth!
A great example is the fundamental company building skill – bringing the right people together and getting them to work together – which any true execution model must rely on. Time and again entrepreneurs during Web Week discussed the issues of company building in a disruptive environment, in particular the importance of maintaining company culture while rapidly scaling. Sebastian Siemiatkowski, CEO of Klarna: describes his philosophy as the Uppsala model (named after his hometown) “money does not buy you time”. Paraphrased: you cannot buy a company culture. Having the cash to hire hundreds of programmers does not guarantee success with rapid growth brings its own problems. Culture is a delicate thing, if you continually ignore it and drive purely through singular metrics, the reputation of your company will eventually starve you of great talent (who want more than a great pay-check) – a problem I am sure Rocket is already aware of.
Proposing a new type of entrepreneur Max Marmer from Start-up Genome, wrote “Transformational entrepreneurs – Map of Socioeconomic Value creation”. This new type of entrepreneur brings together “the scalable tools and methodology of Technology Entrepreneurship with the world-centric value system of Social Entrepreneurship”. In doing so he addresses issues in both sectors. Despite the phenomenal growth and company creation in technology start-ups he is critical of the lack of projects with purpose beyond high exit valuations. Equally in the social enterprise movement, it was refreshing to hear Marmer’s critique ”the community’s propensity to descend into self-congratulation starves the founders of the critical feedback required for them to find the holes in their vision. The standards must be set higher than good intentions.”
This critique addresses the culture that our access to technology and incredible opportunities of scale has created. In the mad dash to scale and to exit valuations, what has happened to deeper thought, true innovation and real communities? “The most common mistake start-ups make is to think it’s all about technology and economy” Alexander Bard Internet sociologist (and NEXT speaker) sums up in ARMdevices.net interview. He continues “…psychology and history are actually more important to understand your future customers, friends and people you are going to connect with. Psychology is the under-rated factor in everything online today.”
Perhaps instead of hacking technology we should be hacking our culture. Events like the un-hackathon at the Californian College of the Arts are taking a more collaborative approach to the links between tech, design and business. Before any coding begins the teams use design thinking to connect strategists, designers and programmers to find innovative ways to solve problems facing communities. (I am pretty sure that no facebook games were made here.) The sentiment from culture hacking events such as this I think was summed up by favourite quote from Web Week, Dr Stefan Glänzer from Passion Capital, “instead of analysing models – start solving problems”.
The Berlin technology industry, while growing phenomenally, is still in development and until it truly becomes (disruptive) innovation focused will not be the next Silicon Valley, if that is even what it wants to be. However you feel about the big incubators, they have in fact created an eco-system in Berlin where a greater diversity of companies now have a much larger pool of talent, capital and experience to pick from. And I am glad I am here to see how it plays out.