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Berlin has a brilliant start-up scene

Interview with Niklas Zennström, co-founder of "Skype"

Donnerstag, 10. November 2011

Why is the start-up scene in Berlin currently so interesting?

We think that Berlin has a brilliant start-up scene, and it's a great place to start a technology company. This is one of the main reasons we are visiting Berlin and speaking at the university.

What we see in Berlin is a combination of the right framework for start-ups to succeed, and great people. Berlin is a large city with huge numbers of talented people, and the government and other institutions want to encourage innovation. For example, the Technische Universität Berlin has been really helpful and encouraged us to speak to students to encourage entrepreneurship.

Furthermore, there is a brilliant entrepreneurial ecosystem. There are some great angel investors who have been successful, and both national and international venture-capital firms, including my firm Atomico, are keen to invest here. There are also some great, successful entrepreneurs who are role models for aspiring entrepreneurs.

All of these things seem to be coming together at the moment, giving Berlin real energy. There is growing recognition for the city in the international technology community as a location for cutting edge start-ups.

What is the difference between Berlin and Silicon Valley?

This is a really good question. Silicon Valley is known for its huge and amazing tech scene, and it really is remarkable there. Everybody knows that, and people come from all over the world to work there.

However, there have been changes in technology, and at Atomico we believe very strongly that great internet companies can now come from great people anywhere in the world. The internet has led to much more sharing of information, and improved communication, making it much easier for entrepreneurs across the world to compete.

Also, there can actually be advantages to starting a firm outside of Silicon Valley. It's important for technology entrepreneurs to have an international outlook, and when I founded Skype, being Swedish forced me to be international in my outlook at the outset because Sweden isn't a huge country. Perhaps if I was based in Silicon Valley, there would have been a greater temptation to just focus on the domestic market because it's so large. That would have been fatal for Skype, partly because people save most money on international calls, but also because with internet companies, there are generally international category winners, and to a great extent it's winner takes all.

It can also be a lot cheaper to start a company outside Silicon Valley. The cost of hiring software developers there has gone up and up in California. This matters more than some people think because it often takes several attempts to get a successful business off the ground, with each one requiring more work by developers.

The TU Berlin supports many young entrepreneurs. In your opinion, is that an important factor? What should a university do to support young entrepreneurs?

It's great that TU Berlin supports entrepreneurs, and it's great to be speaking at the university with their encouragement. Before I say anything else, let me thank the people at TU Berlin who have made my talk there possible.

Unlike some well-known technology entrepreneurs, I didn't drop out of university, and I took my studies very seriously, studying both engineering and business. I think university education is really important and valuable.
But I also believe it's important for universities and business leaders to encourage students to think about entrepreneurship. It encourages them to consider an alternative path, which can be rewarding, improve the economy, and benefit all of us by encouraging innovation. This is particularly important in a difficult economic situation where entrepreneurship is all the more important.

I also believe strongly that students who are interested in entrepreneurship can use their time at university advantageously to mingle with students from other disciplines. Business students in particular should try to meet students from other disciplines, such as science or computing if they are interested in technology entrepreneurship. University can also be a great time to combine study with other, useful activities that encourage teamwork, personal development and so on. I would particularly encourage students to try something entrepreneurial.

What kinds of skills does a young entrepreneur need in order to be successful?

To be successful entrepreneurs need ability, self-belief and determination. Being in the right place at the right time also makes a huge difference, but by being determined, you can make it much more likely that you have good luck in the end. Perseverance matters. This is all quite obvious, though.

One thing that I particularly stress is that you need to lose a fear of failure, and this is more complex than it might sound. Often potential entrepreneurs know this, and tell themselves that they need to overcome this fear, and try to convince themselves that they have overcome it. This isn't quite the same thing as actually doing so. You have to not just confront the fear, but push through it.

There is a message in this for all of us, though, not just potential entrepreneurs. If we want innovation and entrepreneurship, and their benefits, then we all have a role to play in reducing fear of failure. What Europe really needs is a bit of a cultural shift. In the USA, for example, there is more of a culture of encouraging entrepreneurs, and less stigma attached to failing. This is so important, especially because many entrepreneurs who go on to be successful have failures along the road to success.

What personal advice would you give young founders?

For technology start-ups, I would say: focus on building a great business rather than a plan to sell a business, always keep the customer in mind and relentlessly improve your service to consumers so you are always the number one choice. Look for disruptive technologies that will change a market or create a new one, think big, think international, and aim to be the winner in your area. These are things we look for at my venture capital firm, and for good reason.

Importantly, entrepreneurs should not try to do everything at once, should stay focused on what matters, and surround themselves with really good people; great co-founders, employees and investors.

Interview by Stefanie Terp

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