1/ I'm currently spending a few weeks in Germany, a good opportunity to read and reflect on that great country.
2/ My firm @_TheFamily has been present in Berlin for almost a year now, exploring the ecosystem and working with local entrepreneurs.
3/ From a startup point of view, Germany is a paradox. On the one hand, it is currently standing out as the strongest economy in Europe.
4/ On the other hand, there are hardly any signs of Germany succeeding in tech with a scale comparable to the US, China, and Israel.
5/ The origins of the German economic strength date back to 1948, when Ludwig Erhard decided to bail out German business assets.
6/ (While wiping out paper money for private savers—an extraordinary decision that would be impracticable today.)
7/ Erhard's fateful decision contributed to much of German industry still being owned by families rather than outside investors.
8/ It inspired a unique corporate culture in which, as once remarked by legendary hedge fund manager Julian Robertson, ...
9/ German managers “can not care less about return on equity". Due to the large German banks’ shareholding interest in corporations and.
10/ ...the unique role of trade unions and industry associations, Germany keeps on imposing a long-term view of corporate management.
11/ It all explains the unique, clear, strong strategic positioning of the German economy, which rests on three pillars.
12/ Pillar #1: German added value is all about exports (cars, chemical products, machine tools), which requires competitiveness.
13/ Pillar #2: Competitiveness depends on (i) fair competition (which brings the prices down), (ii) monetary stability, (iii) low wages.
14/ Pillar #3: Such pressure would be unbearable if it were not for the incredible level of corporatism in every part of the economy.
15/ Indeed many institutions in the German economy contribute to making life easier for low-paid workers. A few examples: ...