Berlin hopes growing tech community will lift city's economy
BERLIN — The courtyard of the nightclub Picknick was packed with partygoers dancing, shouting over the music and snapping photographs of one another, by all appearances just another night in this dilettante party capital. But appearances, on this recent Saturday night, were very much deceiving.
The images snapped with iPhones and BlackBerrys were projected in a constantly changing slideshow on the side of the neighboring building by a new photo-sharing application called EyeEm. The plastic foam clouds dangling from the wires crisscrossing overhead were the logos for the popular audio-sharing service called SoundCloud, which has roughly 7 million users.
Both companies, co-hosts of the event, are part of Berlin's rapidly growing Internet startup scene, which has won the attention of investors in Britain and California, including the high-profile actor-investor Ashton Kutcher, who is a backer of SoundCloud.
"I kind of get the feeling that the whole city of Berlin is a startup," said Alexander Ljung, chief executive and one of the founders of SoundCloud. "It's fast-moving, chaotic. You don't really know where it's headed, but you know it's headed in a good direction, and that's a startup feel."
Ljung and his co-founder and chief technology officer, Eric Wahlforss, met in the computer labs at the KTH Royal Institute of Technology in Stockholm. But the two Swedes decided to move to Berlin to start their company, which now employs nearly 70 people.
Berliners will vote Sunday to elect the city-state's next Parliament and, in the process, on the future of Klaus Wowereit, the city's long-serving, popular mayor. Polls suggest he will win re-election, but his ambitions for federal office — he has even had his name bandied about in the media as a potential candidate for German chancellor, following in the footsteps of a former West Berlin mayor, Willy Brandt — will be affected by the future of the city he has governed since 2001.
With the vote nearing, a national debate over the fate of the reunified capital has broken out in the German news media, over the pub-crawl tourism that residents say is ruining the downtown, over fast-rising rents and even the burning of automobiles that have been rampant this year. The city's heavy debt burden and reliance on money from richer states like Bavaria and Baden-Wurttemberg were the subject of a cover story in the weekly news magazine Focus.
It was Wowereit who coined the famous catchphrase of Berlin as "poor, but sexy," that has stuck to the city, which has an unemployment rate of 13.3 percent, the highest of any state in Germany and well above the national average of 7 percent. He chose to aggressively market the city as a creative capital, emphasizing fashion, art and music, hoping that the magnetic effect of the city's popularity with tourists would rub off on the economy.
Peter Englisch, a partner with Ernst & Young in Germany responsible for midsize companies, said Berlin had done a good job of marketing itself, but not as good a job nurturing the companies it attracted. "A lot of other cities have startup support, welcome packages," Englisch said. "It's an inspiring environment, but the second step, turning potential into growth, is where I'm pretty sure Wowereit isn't doing enough."
Berlin has been a creative hub and a destination for young expatriates from other places for years. But its hipness never translated into badly needed jobs for a metropolis that never recovered an industrial prowess that was wrecked by war and division. Now the developing Internet startup community is offering a tantalizing glimpse of a possible economic future for a city that for years appeared to have none.
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