Berlin to Get Second Factory – and Future European Expansion Also Possible

By David Knight |

In the second part of our interview with Simon Schaefer, CEO and driving force behind the Factory, we discuss the politics of entrepreneurship in Europe and enjoying basement bars, diplomat-style. He also confirms work is ongoing on a second Factory campus in Berlin, and reveals how he would love to see Factory-style projects elsewhere in Europe.

You can read the first part here – and don’t miss out on the star-studded Factory grand opening event next week.

SILICON ALLEE: A big part of the ethos of the Factory is about bringing people together. How are you going to get the wider tech community involved?

SIMON SCHAEFER: That’s one of the areas where we have to have support from others because creating things like community events is costly. But we have developed a 400-capacity auditorium where we can do events, and all startups on the premises can use these for free. Additionally, a lot of companies from the outside have approached us to interact with the startup community. I think this is a great form of exchange. If you have five startups explaining to the CFO of Allianz, for example, how startup culture works, they are learning about themselves as well.

We strongly believe in the community doing events by itself, and with for instance the funding from the Google for Entrepreneurs, we are actively supporting that. So we will do BBQs, we will do sporting events, we’ll have sports companies bring in basketball stars to play basketball with everybody. We are going to do a lot of that stuff. And that’s one of the reasons why I am really looking forward to everybody finally moving into the main building. Now I can do these things because there are enough people on premises – it’s been difficult so far.

Initially we’re doing the startup fair, which we will do every year in summer, we’re doing dinners where founders meet other people looking to interact. So I think there are a lot of potential for that, but the community needs to design some of that itself. It can’t be done top down.

SA: The auditorium is in the basement of the Factory building, and are we correct in saying there used to be an old diplomatic bar down there as well?

Simon: It’s still there, we’re keeping it as an events space for smaller groups at night, with a big music system, a bar room and a lounge room. It was actually the Nigerian Ambassador to the GDR’s private event space. All the community spaces that we have are available for the tenants to do whatever they want, and stuff like Social Media Week in September, we are providing them with the space for free because they are not-for-profit.

SA: It may have been a bumpier ride than you had imagined, but when you look back now at the beginning of the project, has it turned out the way you had envisaged?

Simon: The interesting part is that even though we had a lot of obstacles along the way, the investors have always backed our initial vision. So conceptually, we haven’t made a single change, which is really great. The only changes we have made are a few learnings from interior designing for startups – you don’t need 20-person boardrooms, you need four-person boardrooms, and a lot of Skype cells. That is something that architects initially don’t really relate to.

And additionally, there are a few aesthetic things which due to time pressure we didn’t do exactly the way we wanted them. Thing that could have been better, and that I will still be working on in the next couple of years to improve. But generally speaking, we were able to stick to the overall concept from the beginning to end, which is really great. Big thanks to the investors for that, without them it wouldn’t have been possible.

SA: The Factory building across the courtyard from the main building, which was previously a SoundCloud office and now hosts 6Wunderkinder, is set to become apartments – for whom?

Simon: One of the things we have learnt from working with startups and putting our concept out there, is that a lot of people come to Berlin wanting to interact with the startup scene, but are having a difficult time finding the right entry points. And it can be costly – they rent an apartment on Airbnb, have a horrible roaming prepaid contract on their phone, and it’s all just not a good way in. So we have designed the Factory Fellowship, which is sponsored by larger corporations, some of which we will name when 6Wunderkinder has moved into the main building and given back the building. The idea is that we curate a little bit – not too much – who is moving in. People have to apply for it. For three months they can live there for free, potentially for six months they can stay, and we are looking to bring together designers, programmers and, as I always say, exhibitionists – those who can sell the stuff – to potentially form companies there. So you will be able to find your co-founders by living there, or to move on and work for a startup that is already on premises. It’s a flow for talent, both potentially to larger corporations, startups, or creating new companies.

SA: What about the other Factory apartments, such as those on Brunnenstrasse?

Simon: We need some of them for people flying in to visit. Any apartments on premises are obviously for founders and not so much for companies or those at companies already on premises, but those that want to be.

Because before funding, before you actually start a business, I think it’s really really difficult to find your co-creator, you co-founder. It’s really difficult to find the right people. And I believe the more we bring people that are like-minded and have shared interests into the space, both for living and working and for off time and events, the more can potentially be created from it.

What’s important to note is that we are not trying to drive it in a certain direction. We are not trying to give it too much influence. We are trying to give it space so that it can go from there.

SA: Looking beyond the big opening next week, you’re already working on another space elsewhere in Berlin. What’s the status report?

Simon: We are already actively developing the building. We have a few really cool companies that we had to send away because we didn’t have space [on the main site], so it’s kind of a spill over space for the original campus if you will. It’s in Kreuzberg-Schoeneberg, a really nice building.

And we are actively also looking into other options together with the city. We have requests that in total size would fill about five of these campuses, and requests keep coming in. I’m a strong believer that not only ICT, but the whole entrepreneurship sector is going to flourish. We have the first hardware startups at location; I think it’s really important to not just look at mobile and software, but to look beyond that. And if you take that into account, I think there is easily enough space for three or four of these campuses in Berlin.

SA: What about the authorities on the European level?

Simon: The European Commission is of course really interested in what we are doing because if you look at what the European Investment Bank has invested in, specifically in the south [of Europe], putting millions into projects that might create 20, 30, 40, 50 jobs, here the proportions are the opposite; you invest very little and the potential is very large. So the EC and the EIB are rather interested in what we are doing and are following very closely, and we are hoping to build this in other places in Europe also to understand better what circumstances create successful entrepreneurs.

SA: How involved have you had to become in the political side of things while developing the Factory?

Simon: Much more that I thought initially. What I realised is that being an independent organisation, we are not driven by shareholder intention, we are not in the mix with others out there creating incubators. I have the potential to influence policy makers in a positive way, and being an entrepreneur myself, having started a couple of startups, some more successful than others, and having invested in a lot of companies, I know a lot of the early stage issues and obstacles that are there.

And intriguingly enough with a project like Factory, people ask us for our opinion and I am using that right now to create more relevant policies for startups. And it’s interesting to see that very few entrepreneurs take the time to do that. I had the chance to speak with [European Commissioner for Digital Agenda] Neelie Kroes and [President of the European Commission Jose Manuel] Barroso recently in Brussels at an event, and it’s intriguing to see how much they actually suck up the information, like a sponge, because not enough entrepreneurs actually take the time to engage with long term policy goals.

I’m a strong believer in Europe, I’m a strong believer in the entrepreneurship realm as a whole, and what’s great about the time we are in right now, not only has the founders’ culture created more self-proficiency at actually being really good at what they are doing, but additionally, Mr. Snowden has made it apparent to every grandmother on the street that we need European technology companies. And so, in the next three years, five years, I see a lot of interest in what we do, in entrepreneurship and technology, a lot of funding opportunities, a lot of opportunities for growth in Europe, and I am actively working to make that framework a bit more functioning for people like us to start more companies.

SA: Are we going to see Factory Amsterdam, Factory Warsaw, Factory Rome etc in the future?

Simon: If it is down to me, then yeah. All of it. I think that specifically if you look at countries with high youth unemployment rates, they are all capable of using the Xbox, they are all capable of using their smartphones, and I think what’s great about Factory is that it creates tangibility, but it also presents role models. People get to see what these guys are actually doing. I think in certain countries there is a lack of that. There is not necessarily a lack of human intelligence, or human capital availability, but there is a lack of knowing what to go for.

I think a project like Factory and countries like Greece, Spain, Italy, Portugal or even in the north, wherever it makes sense, in the east specifically, I think it creates a momentum which clearly is what we see here; we have created a lot of momentum without issuing any press releases. It creates momentum which make the positive sides of entrepreneurship, the positive sides of the ICT and startup community, very apparent and very tangible. And I think if that takes away even 2 percent of 60 percent youth unemployment by bringing people in to want to be entrepreneurs, I think that would be a very necessary goal to achieve and I would be happy to be able to do that.