Berlin is not the German state with the strongest economical power in the country: it may rank in GDP beyond Köln, Munchen, Stuttgart, Hamburg, Frankfurt, and Mainz corresponding states. But everyone who visits Berlin can feel the cultural atmosphere and the creative spirit which feed the German capital with an unrivaled soft power of innovation.
I had the chance to explore three Berliner innovation places that reflect this state of mind. Following previous post on place #1, below is the review of places #2 and #3.
2. Plug and play Axel Springer
Joerg Rheinboldt is MD of Axel Springer Plug & Play. Serial entrepreneur, expert in building ideas, companies and organizations, he told a fantastic story about Plus & Play.
Plug & Play started at beginning of 2013, following a JV between Axel Springer and Plus and Play US. It’s a small team of 5 people, all ‘swiss knifes’. Premises are typical berliner spirit, as it was former studio of an artist whose paintings are still on the wall. It is close to headquarters but not inside.
Plug & Play proposes a 3 months acceleration program for start-ups. It welcomes 10 to 15 companies, based on a standardized deal, 25k€ with 5% capital, very young companies with a lot of synergies with Axel in order to create as many opportunities as possible. At the end of week 13 is Demo Day, were investors are invited for companies to pitch to them. Actually, contacts start before the demo day which turns more to be a party day!
Time spent is learning time, mainly to meet with other people, with 1 to 3 meetings every week. 120 mentors participate to a Mentoring Day: it’s a 90′ session with a team and 2 mentors, dedicated to experience sharing, and nurturing a shrewd deal flow for investors. Plug & Play companies are early stage, and need more money to go forward. Plug & play invests in the next stage only if an external investor is investing as well.
3 programs were completed so far: at the end of the third program, all companies found investment, amounting around dozen of k€, and up to 2 million.
Plug and Play went scouting start-ups in Tel Aviv: 23 companies were reviewed, and 7 were invited. The angle of Tel Aviv trip was to look for teams with technical competencies, as Berlin resources are more business executive oriented. Start-ups can come from every country to join Plug & Play.
Some start-ups examples are:
- a Ticketing company with a technical tweak, showing personal recommendation around you. A white label version of their product was implemented at Axel Springer media;
- Blogfoster, micro online marketing, combining high quality advertising display on blogs, with a very targeted offer for brands;
The objective of Plug & play management is to build a portfolio, and see how it develops, knowing how much is spent, not knowing yet how much will get out. Another goal is to get in touch with entrepreneurs for the Axel management, and facilitate business relationships in a pragmatic way. For instance, the head of Axel Springer national sales introduced some start-ups to his customers, and one of them, acting in electronic distribution, cooperated with a startup on innovative indoor navigation, with ultra sound recognition.
Michael Paustian is Axel Springer Creative Director, and Head of Strategic Product Development. He drew some clear lines about Axel Springer digital transformation, showing impressive determination.
Axel Springer experience is related to media brands. Its digital endeavor consists in turning publishing brands into digital assets. While keeping major brands like Bild or die Welt, some core business were sold to speed up in digitazing: Axel Springer acquired new assets, like marketplace seloger.com and online media aufeminin.com, reaching a threshold of 64% from digital revenues. 180 companies were bought.
Similarly, Axel Springer progressively hired 120 coders to run digital projects in the agile way (scrum and sprint) which is popular in the Silicon Valley. Axel Springer ambition is to remain n°1 media publisher, and to be n°1 market place in Europe.
Acquisition strategy has 3 main targets:
- Buy new things: 1.4 billion is dedicated to spend on acquisition, going for early stage and pioneer companies;
- Plug and play, similar to a VC game;
- Build ventures with companies, by use of revisited corporate venture, involving close business cooperation.
This third domain represents much higher ticket sizes: Axel Spinger funded 9 companies where it owns the majority. The focus is on something where Axel Springer can leverage its capabilities: Axel spinger provides reach, audience, and marketers, helping to monetize much faster. The challenge is to act in start-up mode, and Axel Springer Ideas considers itself as a toolbox for the ventures, providing support when they ask.
A successful case is about shopping: Shop Now suggests personalized offer on your phone when you enter a shop. Axel Springer marketers connect the service with the brands. They get an incentive, a share in Shop Now. 11 people are dedicated to help start-ups find their way.
3 Berlin partner
Berlin partner reminded me of Paris Region Economic Development Agency. Its aim is to welcome businesses, and help them to grow. 5 innovative clusters are targeted: Healthcare, ICT / Media / Creative industries, Transport / Mobility, Energy, and Photonics.
Berlin Partner promotes the image of the city with design challenges like ‘Invent the next Berlin’s souvenir’ ( the Design Souvenir Award).
Large companies like Pro Sieben, Google, Gaming companies are taking ground in Berlin. Berlin offers training and cooperation with Hochschule and Universities, and is a launchpad for German and international market.
What makes Berlin so uniquely innovative?
It’s a mix of :
- Free space: Berlin was designed for 11 millions inahbitants, and actually holds 4 millions;
- Vivid information sharing in the clusters;
- Virtuous entrepreneurship cycle, with successful start-ups founders reinvesting in new ventures; a hundred of emblematic start-ups are listed on the gorgeous wall ‘the hundert‘;
- Cross-culture platforms with Berlin weeks (fashion week, web week, re:publica, game week;
- Junction with more traditional industries, like industrial design (Bauhaus-Archiv Museum is in Berlin, and Berkin is UNESCO City of Design).
This formula shapes Berlin as a playground for experimentation, with tolerance for uncertainty and risk. As Axel from Hub:raum sums it up: ‘More and more people want to build a company, and if it fails, well, it’s OK.’