Why US Startups Like Etsy Prefer Berlin Over London

Why US Startups Like Etsy Prefer Berlin Over London

For American startups who have grown to the point where they want to expand into Europe, there is an obvious path to follow – fly across the ‘pond’ and end up in London, an Engish-speaking world city with a well-established entrepreneurial culture.

But, as a senior figure at Brooklyn-based Etsy revealed, US startups are increasingly finding their way to Berlin.

Matt Stinchcomb is the European director at Etsy, an online marketplace for vintage and handmade crafts. He told Silicon Allee that Berlin is the place to be for American companies looking to make a name for themselves in the European market.

“We didn’t pick Berlin because we thought it was the European startup capital, we picked Berlin because culturally we thought it was the right fit for Etsy,” Matt said. “The attitude and creativity of the city reminds me of Brooklyn, and combined with the low rent prices, we thought it would be the ideal location to set up Etsy in Europe.”

While Etsy is a well established company, with its Berlin offices having been in operation since 2009, there is still a kinship with the Berlin startup scene: “Because we’re moving to all these new and different countries and getting things started, it makes us seem like a young company again. In Berlin, where we only have six people, it makes our office have a very startup feel.”

And Matt would know that feeling – Etsy founder Rob Kalin was his roommate while the company was still in its development stage, only joining up officially a few months after its launch in 2005. But Matt is also keenly aware of the America-to-Germany corporate culture shock.

He added: “It’s challenging, in terms of the bureaucratic nature of the country. America is very business-friendly, and you can start a business there in 20 seconds with internet connection or one phone call, everything happens automatically. I think that Americans have a very entrepreneurial spirit too, and thats really exciting.”

From an American perspective, Matt said, he feels that Germany has more of an old-fashioned and traditional approach to business, with significantly more barriers for young companies to face. “If Etsy had started here, it just would’t have been feasible; we simply didn’t have the financial backing to do it. When we did set up in Berlin, it was a slow process – and American companies just aren’t used to that business speed.”

As for the ongoing debate over the clone culture in Germany’s tech scene, Matt believes it is inevitable as growing companies become so focused on their native markets that they fail to consider establishing themselves in other countries. He said: “The initial thoughts you have as a company is not to move overseas, it’s more thinking about buying servers to keep the site up! I think that’s why you see a lot of copycats and clones popping up in international markets, because someone has proven a good idea can work somewhere else, and they see an opportunity.

“And I think, in general, German VCs need to be able to see how viable an idea is before they invest. With overseas examples, you can have the proof the concept works, without having the risk.”

However, Berlin isn’t just about struggling through endless paperwork for international startups looking to relocate – it all depends on your company’s market appeal. As Etsy’s handmade products, unique vintage items and cute crafts have a global appeal, tailoring a business strategy for the European market was not vastly different from those used to build it up from startup into a well-established company in the US. Etsy also has many small teams based across the world, including in Paris, London, Japan, Canada and Australia, showing that the right business model and product can have an international appeal.

Every city is different, however, and Matt had some firm advice for anyone considering a move to Berlin: “Get a German attorney, and don’t be afraid to ask for help from other companies, both German and international, to do it right the first time!”

About Toni Ellis

7 comments

  1. “American companies just aren’t used to that business speed.” Germany listen to this man. this is a shot over the bow a warning shot.

  2. Slow speed and more bureaucracy also got advantages: a robust economy. Even a small crisis makes companies fall left and right in the states while Germany was left pretty much unaffected. The required financial backing plays a role as well of course.

  3. “… reminds me of Brooklyn, and combined with the low rent prices”

    I honestly can’t hear it anymore! 1: NewYork-Berlin comparisons, 2: Berlin has low rents.

    Berlin one of the worst income to living expenses ratios in Germany. Even local politicians have realized that – exploding rents and gentrification were main issues in the elections last year.

    The reason why startups are founded and funded in Berlin is because the wages for well educated worker bees are very low. Investors can build up a company for a fraction of the price than what they had to pay in the States or England. If an office costs a few bucks more is almost irrelevant.

    • PS: I have to correct my last sentence: “That office space in Berlin costs a few bucks less is almost irrelevant.”

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