Berlin, the Startup City: Big Dreams and Growing Pains

There’s no shortage of emerging tech scenes labeled as the “next Silicon Valley,” and Berlin often tops that list.

When the Berlin Wall fell in 1989, it attracted an onset of artists, musicians and other creatives to the city. While housing prices in other European cities skyrocketed over the years — particularly in London and Paris — Berlin remains relatively affordable, offering young, aspiring entrepreneurs a lower-cost, lower-risk platform to jump-start both careers and companies

It’s easy for international workers to get visas in Berlin, too; especially compared to the U.S. The city is a multicultural hub, with a blend of British, French, Spanish and American expats. You don’t have to speak German to thrive in Berlin.

Google is one of the major players helping startups set up shop throughout the city. Although the tech giant’s German headquarters — with more than 400 people — is in Hamburg, and its engineering center, based in Munich (with 300 staffers) is much bigger than its Berlin presence (just 40 workers), it’s been focusing more of its efforts in Berlin in the past few years.

In fact, earlier this year, its Google for Entrepreneurs program helped open and sponsor The Factory, a co-working space for new startups that’s inside a refurbished brewery. It sits on a spot once occupied by the Berlin Wall and is the new home for both small and bigger startups, including the local offices of SoundCloud. The popular music company, with Swedish founders, famously moved to Berlin years ago to take advantage of the scene.

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Berlin Beats Rome as Tourist Attraction as Hordes Descend

Wieland Giebel’s stores near the Brandenburg Gate that sell Berlin Wall pieces for less than $10, miniature Trabant cars, and 3,000 books about the German capital were struggling four years ago. Then tourism kicked in.

“The interest in Berlin’s turbulent history is huge,” said Giebel, a 64-year-old whose sales have risen 20 percent since 2011. “If I ask my customers why they’re visiting Berlin, they tell me: ‘Because everyone wants to come here.’”

Berlin — which has surpassed Rome as Europe’s third-most visited city, after London and Paris — is the fastest growing of the continent’s top 10 destinations. The city’s economy expanded the most of all German states last year after overnight stays from tourists climbed 8.2 percent to 27 million.

The boom is changing the face of a city once termed “poor but sexy” by outgoing Mayor Klaus Wowereit for a bustling nightlife that came with cheap living costs, low wages and high unemployment. While it’s a godsend for business owners like Giebel, others view the influx as an invasion of visitors rampaging through their once-quiet neighborhoods.

Adam Tellmeister, a Swiss artist who’s been living in the eastern district of Prenzlauer Berg since 1989 and deals in his works with belonging and home, says Berlin is undermining the quality of life by focusing on ever-growing tourism.

Juggling Jobs

Many “Berliners have two jobs, and are trying to pay their rent that is rising fast, and on the weekends, when they need calm, hordes of flat-rate drinking tourists are bussed into their neighborhoods,” Tellmeister, 53, said while eating beef goulash on Oderberger Strasse, an area filled with bars and cafes. “That leads to stress, the fear of losing your clanship and eventually, anger. This can’t go on.”

Visitors get their first glance of Berlin’s struggle to keep up when they arrive at Tegel airport, designed for a fraction of the 55,000 people traveling daily through the gateway and only connected to the rest of the city by bus.

A new airport, under construction since 2006 and first set to open in 2011, is years behind schedule and has almost tripled in cost amid at least 60,000 construction faults. There’s still no opening date.

The new airport is critical to the city’s economy, with tourism sales more than doubling from the turn of the millennium to 11.5 billion euros ($15 billion) last year. The city-state’s job market expanded the most in Germany in the first quarter as restaurants, hotels and others in the service sector added positions. Berlin’s unemployment rate was 11.1 percent last month, moving the city out of the bottom slot among Germany’s 16 states for the first time since 1997.

Dynamic Growth

Cornelia Yzer, Berlin’s economy minister, said she expects another visitor record this year on the heels of what will probably be the city’s busiest weekend ever in November for celebrations marking the 25th anniversary of the fall of the Berlin Wall. The city will place 8,000 illuminated balloons where the Wall once stood and release them on Nov. 9 to symbolize the event that ended the Cold War.

“Berlin’s dynamic economic growth is to a large part positively influenced by tourism,” Yzer said in her wood-paneled office in Schoeneberg, a stone’s throw from where John F. Kennedy made his famous “Ich bin ein Berliner” speech five decades ago. “The retail industry alone gets 40 percent of its sales from tourism.”

Sold-Out Concerts

Berlin, which has almost as many hotels as New York, will increase the number of beds by 20,000 to about 150,000 in the coming years, Yzer said. The boom is accompanied by concerts that sell out in minutes, crowded subways that used to be half empty, and 300-yard-long lines to get into Berghain, the cathedral-like dance club that on weekends draws Berliners and tourists alike for two-day techno parties.

Monika Herrmann, the mayor of the Friedrichshain-Kreuzberg district that’s turned from a gritty area with yearly punk riots to the center of cool with trendy bars, said Berlin should seek less tourism and hand visitors a code of conduct instructing them on trash, noise and respect for residents.

“I have the impression that some visitors think this is some sort of Disneyland and we locals are the extras,” Herrmann last month told daily newspaper Tagesspiegel.

On weekend evenings, the train, tram and bus lines arriving at the Warschauer Strasse station in Friedrichshain-Kreuzberg disgorge hundreds of locals and tourists, who meander around on an 80-meter-long bridge with a view of Berlin’s TV tower.

Red-haired punks pull at the leashes of their barking dogs as Australian backpackers stroll around. A group of singing stag partygoers from England block the way of bike riders ringing their bells furiously as their revelry merges with that of nearby street musicians. A 24-hour supermarket supplies partygoers with beer, sparkling wine and hard liquor.

Josephine Froehlich, a 25-year-old architecture student with blonde, chin-length hair and a bright smile, lived not far away on Simon-Dach-Strasse — until she’d had enough.

‘Reckless Partygoers’

“It was packed day and night, summer and winter with many reckless partygoers,” she said. “I had to get out.”

While her new home in the back courtyard of a Kreuzberg apartment building shields her from noise, she’s trying to avoid nearby streets where quiet hangouts have turned into places providing “food and drink for the masses,” she said.

Some shops now sell “Berlin doesn’t love you” stickers with a crossed-out heart which locals have plastered on lampposts and walls. The city is spending 300,000 euros starting this autumn to find “concrete solutions” for issues that crop up from tourism, such as dispatching garbage trucks more frequently to visitor-heavy areas or sending more night buses to streets dotted with bars and clubs, Yzer said.

The central Mitte district has tried unsuccessfully to block beer bikes — vehicles equipped with kegs, a sound system and space for 16 singing tourists pedaling away — from streets around the Brandenburg Gate. The Berlin government has banned illegal rental flats and those wanting to offer apartments to tourists now have to register with the city.

Tourism Needed

“Some people may complain that the line at the baker is too long, but without tourists, that baker may not exist,” said Burkhard Kieker, the CEO of VisitBerlin, the city’s tourism marketing arm. “Today’s partying tourist who feels welcome may come back as a father tomorrow and the day after start his own company here.”

The bottom line is that Berlin is seeking more visitors because it needs them. Tourism made up 10.6 percent of the city’s gross domestic product last year, according to a Bloomberg calculation. By comparison, the figure is 5.1 percent in London, according to the city’s marketing company. Most Berliners understand this dependence, with 88 percent saying in a recent poll that they welcome tourists and the economic benefits they bring, Kieker said.

Guided Tours

Dallas resident Rachel Sheppard visited the city for five days in August, taking guided tours of Berlin’s city center and the Sachsenhausen concentration camp, and said she didn’t run into any disgruntled locals.

“When I was standing in the U-Bahn station and didn’t know what to do, a local Berliner came up to me and said: ’You look lost, can I help you?’” said Sheppard, a 22-year-old industrial engineering student at Southern Methodist University. “So I had a good experience.”

Giebel, whose mother fled with him from East Berlin to West in 1952, started his business 17 years ago and has expanded into publishing. He now churns out a new book every two weeks, explaining to visitors the city’s many facets.

“They come here because they want to know what we have made of our city,” Giebel said. “Tourism is saving Berlin.”

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