Northzone

Growth investors since 1996

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Ich bin ein Berliner


Some snippets from PJ's recent visit to Berlin- on the start-up scene, jamming at the GP Bullhound Summit, and how piracy reinvented the music industry.

Berlin is to the European venture scene what the Macintosh team was to Apple in the 1980s. A bold, momentous, and increasingly self-aware contestant that has risen into the limelight out of nowhere. It’s the one place in Europe where the only thing cooler than being an up-and-coming rock star is working for a tech start-up. And the slightly odd thing about it is that unlike its sister hubs around the world, Berlin has few original claims to fame. Instead it would appear that so far the hype has been built around exciting immigrated businesses, and, of course, the Samwer clone factory. However, this is a partial analysis of Berlin. To do it justice, it is important to recognise what the Samwer brothers have done for the city: they’ve created an ecosystem from scratch at a staggering pace.

To quote the late Steve Jobs (who sort of quoted someone else): “Real artists steal and ship”- meaning that Berlin’s lack of creativity proves that execution is key. And for a city that has successfully branded itself as the Cool Capital of Europe, the attraction to Berlin is obvious. It remains a haven for the eclectic and creative bunch: it’s cheap, edgy, and culturally relevant. It represents a lack of legacy infrastructure and a world where anything is possible. There is no doubt that grassroots creativity is just around the corner.

Kudos to GP Bullhound, who put on a brilliant event, with interesting panels and a great crowd. The mood was relaxed, and PJ even had a jam session with some of the other speakers. The topic he discussed together with Dr Nils Bortloff (Universal Music), Nils Holger Henning (Bigpoint), Nancy Cruickshank (TMG), Marc Strigel (SoundCloud), and Michael Stenmark (Foxrain) was that of the revolution within the music industry. PJ and a few others agreed that the music industry has never been on a healthier path, and this is thanks to the advent of piracy. The piracy movement was essential in bringing down the industry and getting creative destruction going. No innovation would have been possible otherwise. It was only natural that a new generation of consumers -enlightened by the internet- would turn the model upside down, and bring change. Daniel Ek, founder of Spotify, belongs to this previously labelled "lost generation" who saw no value in paying for music. And whilst some lost hope of a more democratic music world screaming “it’s time to change” at the big record labels, others decided that time was ripe for a bottom-up revolution. And so the world changed.

The lesson here is that the big players in a variety of industries, today more than ever before, need to embrace change (newspapers, book publishing, and film, to name but a few). A fear of losing the status quo is the main force of inertia plaguing these industries. The thought of eliminating the role of middle men is a big worry for those holding the cards. How will the system work if the role of publishing houses and record labels all of a sudden needs to be reassessed? The good news is that there will always be a place for service providers to make the life of creative easier and smoother. The question is what’s the fair economic model in this digitally enlightened world?

Either way, Berlin remains a promising creative and investment destination, still perhaps lacking some of the deeper ecosystem elements such as wholesome ties with telcos and large corporates, that cities like Stockholm, London, and Copenhagen benefit from in terms of business opportunities, recycling of skills, and ties to international markets.


28/06/12




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