Germans in the Valley
So about a month after we visited the valley, Germany’s Federal Minister of Economics and Technology Philipp Rösler packed a few hundred German entrepreneurs into a Bundeswehr Airbus and visited the Valley, too. Of course, I’m not saying that they got the inspiration from us, but honestly, what’s the point of going to the Valley in pack of 100 people. They visited Google, Facebook, and others, but I doubt they really got something out of that trip besides being able to claim that you have been handselected by the German Ministry of Economics and Technology.
Imagine yourself working at some SF based startup, and being told to have lunch with a delegation of German guys. “Ugh, what a waste of time.” would be my first thought. “Hopefully it’s not going to be Weisswürste and beer” my second one. No offense, these are certainly all great guys, but this looks a lot more like a PR event than actual help for the German startup scene. That’s mostly also what German newspapers said (I’d like to put some links here, but due to the recent Leistungsschutzrecht legal issues, I’d rather not. You search Google News for “Philip Rösler Silicon Valley” instead): too little, too late.
These were more or less thoughts when I first heard about this and saw the numerous photo galleries from the trip, together with that nagging feeling of envy at not getting that chance, and also a bit of pride at having done the same thing on our own initiative.
But then another thought popped into my head: “Wait a moment. Isn’t this exactly the kind of German mindset that I’m always complaining about?” I fear it is, it’s the feeling that the world is a zero sum game, that another guy’s gain is your own loss, that there is not room for growth anymore.
A consequence of that believe is also that you erect guarded walls, and make sure all your buddies are in. In the Valley, on the other hand, people understand that there is huge potential for growth. If you find the right way, you can create entirely new businesses giving work to thousands of people. For that, you need to always be on the lookout for new talent.
I don’t really understand why Germans think like that (I’m generalizing, of course). A friend once said he really likes the German word “Gründerzeit”, originally linked to the industrial revolution in the second half of the 19th century, it seems to nicely capture that German sentiment that there was a time for founders, and it’s called the Gründerzeit, so we don’t do that anymore.
This also reflects the impression we got from some German investors who take not only a risk-averse, but a very investment-oriented approach to VC funding. You get the feeling you are selling some kind of building loan agreement. If your business plan guarantees 8% return after 5 years, everyone is happy. That seems to be much more important than the will to actually build something and disrupt the existing market.
Many of the big German companies have venture investment branches (and some of these companies were actually funded back in the Gründerzeit), but to me this is hardly the same thing as true SV-style ventures. When was the last time Siemens really disrupted the market the way Apple did with the iPhone? (Not saying anything bad about Siemens investment guys or Siemens per se. They have a great business, let’s just say they’re not known for questioning the status quo.)
So I reminded myself to sit back and relax. I guess the good in all this is that the German government is actually trying to raise awareness for German startups, which is always good, right?
I once complained to a few scientists about the way science is represented in the media. Stories in Wired and other magazines really like to focus on the one guy heading the group and depict him as that stereotypical stubborn outlaw genius who managed to create greatness against the disbelief of his colleagues. Whereas in reality, science is much more of a team sports and very few successful scientists can allow themselves to be isolated in that way.
But then they told me: “Mikio, you shouldn’t complain about that, because these guys at least manage to give science a face, something the layman can relate to, and that makes sure they will understand when they divert tax money to fund science projects.” Well, I guess they were right.
Still, Berlin in particular likes to see itself as the next Europen Silicon Valley, but I think there is still quite a way to go in terms of mindset and culture.
A Trip to Silicon Valley: First impressions
At the end of April, Leo and I went on a one week trip to the Valley. Over the years, we had built up a number of connections in the Valley and we thought that now was the time to go over there and meet face to face. We end up having 20 meetings over 6 days, which made for quite a schedule.
It’s one thing to know abstractly that the Silicon Valley is home to most computer related companies, and to drive down Highway 101 and see another well known company every 30 seconds or so. “Oh look, there’s Evernote”—“There’s Intel”—“I think I just saw Salesforce”, and so on.
The situation gets even more intense once you get to San Francisco. Particularly SoMa, an area probably 2 times 4 kilometers wide, seems to host every Internet startup you have ever heard of, and some bigger ones, too. Twitter, Trulia, Flurry, Dropbox, Zendesk, etc. are all in that area. It’s as if the whole Internet industry has their offices in Berlin Mitte in the area between Unter den Linden and Leipziger Straße.
We spent a lot of time in coffee shops for free Wifi, especially in the Paris Baguette on University Avenue in Palo Alto, a Korean coffee shop which reminded Leo of his time in Seoul. To get Wifi access, you had to check into the Paris Baguette on Facebook, something I found pretty neat. As it turned out, this wasn’t a new general feature of Facebook, but something being test-driven in a few coffee shops in the Valley first. We found a few more such examples, like being able to pay with bitcoins in the Coupa Cafe.
It sometimes felt as if the whole Valley was turned into one big sandbox to try out new business ideas and new pieces of technology. Already on our first day, when we sleepily sat in the sun trying to shake off our jetlag, we noticed that everyone seemed to be an entrepreneur. People were discussing business models, hacking on their websites, pitching, wherever we went. Later, people would complain that it’s so hard to hire anyone because everyone wants to be a founder.
As we started to talk to people, we also noticed people being quite open and supportive. It’s probably our German bias, but when you talk to people in Germany about your business, they quickly get defensive and start to question the merit of your whole approach. “Hasn’t that been done before” or “I think I still don’t understand what’s so great about that” are the kinder things friends of you would say. In contrast, people in the Valley seemed much more open as if there’s a general understanding that it doesn’t hurt to try. Even if people weren’t impressed by your approach they’d offer some piece of advice. It was also very common that people offered to connect you to other people which might be interested.
Originally, we had no meetings scheduled for Friday, the day when we were flying back to Germany in the evening, but in the end we had three meetings more or less back to back just because of these introduction. It felt as if we could have stayed for another week without getting bored. People later told us that they know of people who came over for three months and still could have gone on.
As someone said: The funny thing about the Valley is that although it’s all about the Internet and being connected online, actually meeting face to face counts so much.
Reclaim your data, own a piece of the cloud!
Lately I’ve been discussing quite a bit with Leo about the current state of the ‘Net. Sure it’s nice to get all those services in the cloud for free, but in the end, you either have to worry about what exactly happens with your data, or what you can do against companies shutting down cloud based services like the Google Reader, leaving you with a pile of useless XML files, a bit like letting you take home the remnants of your car after compactification.
I used to say that the main problem is that the user is the product, not the customer, but this post by Derek Powazek convinced me that even paying for the service won’t ensure that you get decent support and control over your data.
In the end, the only thing that helps is to reclaim your data and the service itself. Just like your wordpress powered blog on your own root server will stay around as long as you pay the bills, both data and the software to make it come alive should run on a computer you control.
But how have ended up in a situation like this anyway? Here is my little history of networked computing.
In the mainframe era, computers where huge bulky machines, and only large institutions could afford to have one. People invented time-sharing operating systems to make those computers usable to many people concurrently, which were usually connected through dumb text-terminals. Those terminals mostly worked in a block-oriented manner, meaning that they presented you with a form which you would submit to the server to get the results, a bit like a form on a web page.
Obviously, services where hosted centrally, and you very much depended on the mainframe for storage and providing the service.
All this changed with the advent of the Internet and the home computer. Instead of a relatively small number of large mainframe computers you got a large network of small machines. Services like mail, ftp, and even http were designed in a way that they could run in a decentralized manner. In principle, anyone could hook up a computer to the network and run the services he was interested on his server.
Of course, you had to solve a number of technical problems, getting good bandwidth to your home was a problem, you had to use a dynamic DNS service to map changing dial-up IP addresses to a DNS entry, you had to know Linux or some other variant of UNIX, but it was possible.
Server virtualization made things a lot easier. People realized that most of the times, computers were sitting idle anyway, so why not combine them virtually in a server. That also made it possible to host a large number of servers in data centers, where they also had constant internet access, for relatively small amounts of money. (BTW, virtualization already existed in the mainframe era.)
Server virtualization and the resulting technology of putting lots of PC-type servers into racks (which look a lot like the mainframes of old from the outside) allowed companies to create massive server farms for their data intensive services.
It probably all started with Google search and Amazon. Google, because they needed to store an index of the whole web somewhere, Amazon, because millions of people wanted to use the website each day.
Lead by this example, other companies followed, and nowadays it’s entirely normal to rent out thousands of servers in the cloud (virtual or otherwise) and build services on that private armada of computers.
I’m not the first to point out that this is really just the same setup like the mainframe era, only with different technological means. While your computer is in principle able to store enormous amounts of data, and it can provide the same services as the machines in the cloud, it’s reduced to a screen to run some web browser.
So we went full circle from centralization to decentralization and back, gaining and losing control over our data and the services we need.
But there is a way out. Now it’s easier than ever to rent a piece of the cloud. We already spend enough dollars per month on our smartphones, and probably also for some cloud based services like cloud storage, why not spend a bit more money and also own a small machine somewhere in the cloud?
If that seems odd to you, have you ever noticed that a smartphone is already a bit like a small server in the cloud? It runs Linux (well at least some do), is always connected, comes typically with a few GB of local storage. In principle, you could install some dynamic DNS program on it to become a full Internet server.
Of course, managing virtual machines is still much too technical for the ordinary person. We would also need a new type of cloud based service which would keep only data which needs to be global in the company’s server farm while offloading user specific data to the user’s servers.
But technically, it’s all possible. And wouldn’t it be cool? ;)