From a historical perspective, Germany is a nation with a dichotomous past. Germany is perhaps typically known for its engineering, manufacturing, economies of scale, and regulated, orderly principles throughout industry and law. However, this image is rather contemporary and limited; it is an image that is ignorant of the tumultuous and impressive history of the Germans. In addition to what is traditionally attributed to Germany, it is also known for its art, thought, and political movements, all of which have led to some of the most unique intellectual movements in history. From Dadaism and National Socialism to the automobile and quantum mechanics, the German story has much to tell.
Within the last century, Germany has endured a number of hardships: devastation from two world wars, economic collapse, and division by two radically different states. And yet, despite these difficulties, the German people have continually recovered and are now stronger than ever.
Germany’s persistent character makes it a strong candidate to be a hub for startups, and the relentless pursuit for improvement has driven contemporary Germany’s success. As with most attributes, this stubbornness can be both positive and negative. For a startup founder however, such persistence is to be desired and expected, even.
There are important psychological factors that embody Germany’s underlying personality, partly due to their recent history. The first is that of regulation. Germany is currently, perhaps more than ever, risk-averse. Discussions with the Berlin based BVK (German Private Equity and Venture Capital Association), investors, and startup founders reveal that the German people are particularly cautious, and rightly so. Such behavior allows for a slower, albeit more stable growth. One must ask, however, what could be done in Germany to cause a cultural shift away from these slow-growing assets and begin experimenting with more lucrative options.
The second topic in the personality of Germany is the fear of failure. Culturally, Germans don’t take failure lightly, which helps explain their aversion to financial risk. In short, because Germany has had major setbacks in its past, it is afraid to venture into the potentially dangerous unknown. What Germany needs, then, is a source of motivation for entrepreneurial exploration along with some assurance of positive return on investments.
The argument here is not advocating for a behavior of imitation. Germany does not need to be like America. Attempting to substitute cultural structures from one country to another will be met with an incredible amount of resistance. Rather, as with other great innovations, the very nature of any given system can be best utilized when one utilizes the natural processes of a system.
The Germans are a people that can be valiant, bold, and persistent in their goals. In terms of culture, manufacturing, and scientific discovery, the Germans have performed exceptionally well. However, this persistence has not transferred fully to the realm of entrepreneurship. Despite this hesitation, cities such as Munich and Berlin have displayed incredible startup growth and, consequently, have proved their potential to create excellent startups, such as Soundcloud and Rocket Internet.
As a nation focused intensely on manufacturing, industrial applications, energy solutions, biotechnology, and chemistry, Germany need not conform itself to the Silicon Valley mold. In fact, such imitation is actually detrimental to an economy. The entrepreneurial ecosystems that thrive are those that stay true to their own environment and utilize the readily available resources, rather than attempting to force conditions that are not native. And while Germany has made evident progress in the realm of software, there are industries better suited to Germany.
Major strengthening of entrepreneurial resources is necessary in order for Germany to fully express its bold personality in the realm of entrepreneurship. Fortunately, the basic framework for an entrepreneurial ecosystem already exists with Germany’s open and diverse culture. However, with increased governmental support, lower barriers of entry into a market, local business incubators, research institutions, a connected community of entrepreneurial agents, and a culture that promotes innovation, Germany certainly has the potential to become a strong entrepreneurial leader within the European Union.