‘We’ve Been Applauded and We’ve Been Sued’: Q&A with Simon Schaefer of the Factory

By David Knight |

This is the first of a two-part interview

It’s a project like no other in Berlin, and yet the Factory has been hit by the kind of delays familiar to anyone who has seen the German capital’s brand spanking new airport sit idle for the past few years. But finally, the city’s first real startup hub is set to open on June 11 with a spectacular event featuring Google’s executive chairman Eric Schmidt and the Mayor of Berlin Klaus Wowereit, amongst others.

Sitting alongside the former Berlin Wall death strip – indeed, one end of the main building actually formed part of the interior Wall – the Factory is a perfect illustration of the old-meets-new which dominates the city. A brand new building sits atop the old, which itself has been thoroughly refurbished.

With delays caused by everything from from grenade-filled bunkers to lawsuits, tenants including SoundCloud, 6Wunderkinder and Mozilla are finally ready to move in. As one of the first to write about the Factory over two years ago, we at Silicon Allee have been following its progress closely.

We sat down with Simon Schaefer, CEO of the Factory and the main driving force behind the project, to talk not only about the building itself but what it means for innovation, entrepreneurship, Berlin and the whole of Europe.

SILICON ALLEE: We first heard about the plans for the Factory in 2011, and now, two and a half years later, it’s finally ready to open. Why has it taken so long?

SIMON SCHAEFER: Many reasons. One really important reason from the construction side is that we had the worst of both worlds; we refurbished an old building and put a new building on top. In real estate, if you build a new building it’s fairly straightforward; it’s like building something with Lego. If you refurbish an old building, you can expect a couple of problems, but in this case we actually put a new building on top of an old one so statically, both interact, and it’s incredibly tedious to work with an old building where you keep getting surprises about the structure left, right and centre.

And what we didn’t know when we started the project was that this one building used to be four different buildings. So every different part of the building has different static prerequisites from an engineering standpoint. And lastly, the way that we look at or invest in startups is the same way we’ve built Factory; we’re a startup, our architect is a guy for whom this was his first big project. We’ve never done commercial real estate before. There have been a ton of learnings and a ton of iterations along the way, but what’s worth noting is that everybody that signed with us in July of 2012 is still with us even though we have had immense delays.

SA: If keeping the old building was so problematic, why didn’t you just knock it down and start again?

Simon: We love the patina of the building. From an emotional standpoint, if you have a relationship with a building it intensifies any potential you have, be it in the community spaces we have built in the basement, the amazing offices of SoundCloud and 6WK, etc. There are old prints on the wall from before the Second World War. Keeping that patina alive and also being very modest about what you modify in an old building, and having a very modern look contributing with the new building on top, gives us a lot of emotional bridges to the actual content that we deliver.

I am a huge fan of what’s been built in the last century and before – the first industrialisation was when this building was built, and now we are going through the next industrialisation in terms of the digitalisation of society, and transforming a building that has a history in the first part is, I think, really awesome.

SA: It seems like Berlin has more than its fair share of delayed construction projects, from the notorious BER airport to the ‘Kanzlerbahn’ U-Bahn extension, as well as the roadworks which never seem to be completed. Is there a reason Berlin is bad at this stuff?

Simon: When you find things like we did with an underground bunker, the first thing you have to determine is whether it is historic and needs to be kept, so there is a lot of shared interest from the people around you. And what we have to take into account with this specific development is that we are right next to the Berlin Wall memorial site. So this whole place has a heritage, and it’s one of the last few places where they actually make sure that the Wall and the way it was before is visualised.

So we had a lot of discussions going back and forth. Of course, finding grenades doesn’t really help your progress: we thought we would just dig a few holes and build the basement for the new building that is still to come, but suddenly you are opening up a bunker with grenades in it. In Germany, it is not so much the regulation side – regulations in Italy and everywhere else are as crazy as they are in Germany. I think it’s more the need to understand the history of a certain space and deal with that.

If you look at huge projects like the airport, or the central train station that was way overdue, took way too long, didn’t get finished the way it was planned, I think our political system gives you a lot of potential for interference in a good way. There is a lot of public discussion, such as with the future of the Tempelhofer Feld. It’s great that we debate all these things, but of course it means that certain projects are probably not going to happen. That whole atmosphere of a basic democratic system enabling everybody to discuss it builds in a lot of potential for delays.

SA: What kind of an impact does Berlin’s unique history have on these projects?

Simon: It can have a positive impact. If you look at the social context of this city, you realise that there are no defined areas for certain social groups. One street in Kreuzberg can have entirely different occupants than the next. And I think this is also part of the reason why all these interesting people from all over the world come here, because it’s so diverse. It’s like a startup in itself. It doesn’t have a ruleset yet on how it functions, in that it’s much different to places like London, Paris or Rome that have have certain verticals – Rome has the church, with its incredible impact on the social structure of the city. London has the financial district, a huge impetus on how the city functions. Paris has fashion. But Berlin doesn’t really have anything yet, because at some point in time it was bombed flat to the ground almost, and I think that is a huge potential and one of the reasons why a project like ours is even possible.

In London, we wouldn’t have been able to buy the building straight up. But additionally in the social context and the architectural design of the city it makes a huge difference that Berlin has that certain type of history. But yes, for building stuff, that doesn’t make it easier but more difficult.

SA: Talking about Berlin’s communities, how has the neighbourhood around the Factory reacted to the project?

Simon: It’s really weird – we’ve been applauded and we’ve been sued. At the same time, it’s a positive attribution of our concept that we didn’t turn it into luxury apartments – positive for the whole neighbourhood. And some of the things that aren’t finished yet like the restaurant and the gallery space are what is lacking in this specific neighbourhood and will drive it more towards being a true Kiez.

And lastly, I think we are bringing very interesting people there. This is my key point. If we were to do this as apartments and just sell it, you would have a mix of people obviously, but right now in terms of the amount of square metres and the people there, we have a very interesting mix. Out of 100 people we have 30 nationalities, and I believe any neighbourhood can only thrive if you bring a lot of intelligent outside potential to a certain space. So I think the impact overall is positive.

SA: The restaurant will be in the main building, but it will be open to the public.

Simon: Yes, it will be on the ground floor where the back of the building was actually part of the Berlin Wall, and we’ll make sure that fact is known. We have also managed to find one of the original chandeliers from the former parliament of the GDR [known as the Palast der Republik, subsequently knocked down]. We’re in the east part of town, and that building having been torn down, is one of the worst things that our German society has done in the past 20 years. It was horrible they tore it down; it was thanks to a winner’s mentality. It had amazing interior and exterior design, including an enormous chandelier inside from which we have saved a piece that is going up in the fifth floor of the Factory where we work.

That’s part of the reason why we built a new building on top of the old building rather than tear it down, because it’s a symbol for that change. You can’t erase what’s there and do everything new, even though some startup people, technology people, think that’s necessary. I think that’s not true. The positive emotional attachment of those that are inside the building and the way they forward that positivity actually says yes, that was the right decision.

SA: The original plan called for lots of community space, including a co-working space. Is that still there?

Simon: Absolutely. We have been struggling to build the new building in the courtyard, which will be community space – co-working etc. That’s where the bunker is, which is why we haven’t started it yet. There were other obstacles along the way; banks that decided that startups aren’t a good client after they realise who our clients are, a lot of stupid stuff.

Additionally, we have a few spaces in the building that we have reserved as fluctuation space, as growth space, and these will all be occupied by small teams. And we are working very hard to build another building elsewhere where we will have a lot of community space.

Our perfect ratio that we figured out, is that the ground floor of whatever you do needs to be occupied by the community and co-working, and then the floors above can hold any size of startup. But you need that influx of people that just want to tap into the scene or that want to get involved but don’t know really yet what to do there, and to really propel what’s going on in terms of building talent inside companies, or building the potential to form new companies, you need that community space. So we will have as much as we can.

Watch for the second part of the interview next week, in which Simon discusses the impact the Factory can have on the rest of Europe and how he has become heavily involved in the political process. And there will also be a few titbits about the Factory itself…