With a massive corporate density and labor pool, why is it so hard for Frankfurt startups to build teams?
Beyond the difficulty of getting the capital to build your company, a central challenge for the Frankfurt startups is the eternal search for top notch talent.
In the Hessen state, Dr. Thomas Funke, co-Director of Frankfurt’s new startup hub Tech Quartier reports to Geektime that there are 350 professors teaching IT studies to over 13,000 students. Local institutions like Goethe University and the Technical University of Darmstadt are able to provide a large percentage of the technical workforce, while others come from outside the region, bringing with them the skills needed to help build up the ecosystem.
With these kinds of numbers, one would believe that the startups in town would have their pick of the litter. Well, the answer would seem to be a little bit more complicated than that.
First the good news. In comparison with scenes like Berlin that has a denser startup community, Frankfurt companies are said to have a less competitive atmosphere from which to do their hiring. The city is generally considered to be a good place to live. While not as cheap as Berlin, it has excellent infrastructure, a wide range of internationals that call it home, and is centrally located. Secondly, the heavy concentration of big companies in the area means that they should be able to pull in people with experience in the industry, both as developers and on the business side.
Funke tells Geektime highlighting the dearth of information sharing about the sector, “There is talent here, but they don’t know about startups.”
Despite the fact that a reported 90% of Germans work in either SMBs or other smaller organizations, general knowledge about entrepreneurship is pretty low, a fact that Funke and TQ’s Managing Director Dr. Sebastian Schaefer are working hard to change with their course. Funke says that the corporations are able to offer workers high salaries and an easy path that many find appealing and safer.
So how do the startups compete for good employees if they cannot match the pay?
“There are always companies that can pay more. However there you are only building small gears in a large corporate. But if you are working in a small fintech startup, then you are creating something new. We provide them chance that they will never get at a large corporate.”
He makes the point that there are plenty of programmers who work at the big corporates, but that he does not necessarily want those folks since they are generally less creative, preferring to simply come and do their work like any old 9-to-5.
Reiner hones in on an important point here. What makes startups powerful is not their ability to simply perform business tasks, but to innovate and go beyond what is expected. This is true when it comes to building new technology or turning old concepts on their head. The team members who are able to do this are actually special and not everyone with a degree in computer science is right for this type of role. Somebody who has spent eight years at a corporate tech office may have talent and experience, but is probably not right for a startup hire.
Going a step further, he believes that the industry should rethink how it hires. He is always on the lookout for good talent, even when he does not necessarily have a specific project for which to bring that person on. At Ginmon, “They always have work to do and don’t want to miss out on good talent since it is hard to come by the really good ones.”
Generating more of this good quality talent needs to come from attracting foreigners to Frankfurt, educating more people about the value of startups, and also taking a more pragmatic approach to qualifications. He thinks that Germans can be more pragmatic in how they make hires.
“You don’t need five years of university study to do a lot of the tech jobs. If we wait for everyone to study, then we will only be caught up in five years,” Reiner says, while noting that as the culture is now, you do need a degree to get a job.
As an alternative path, he looks to intensive short-term boot camp programs like HackReactor that teach people how to become professional coders in 12 weeks. If the German companies were willing to promote and accept people who have taken this route over a conventional 5-year degree, Reiner thinks it could do a lot of good at giving a shot of adrenaline to the local tech scene.
On the business side, Reiner says that he faces a similar issue. Finding the non-technical staff who in his case know finance and business, but do not want to get bogged down in the corporate life of an investment banker, is also a challenge. Here too he has what to offer them, providing a chance to be creative in a positive sense.
Reiner says of young business professionals that, “They see us as the future and the only thing that makes sense. They see the traditional industry as falling short.”
The talent pool that he has found the most success with he says are students who have done internships and understand they want a non-traditional path.
“They are not burned by the traditional industry,” explaining that for those who have already spent a few years working up through a corporation, “It’s hard to give up on the higher lifestyle. [They] are burnt out, and lack the motivation to change the world.”
Funny enough, he tells Geektime that he has found investment bankers to actually be very risk adverse when it comes to their own finances, often too hesitant to step off the path into the rockier world of startups. These are the same people who spend their days coming up with outrageous schemes with other people’s money but are too timid to put their own skin in the game.
The way forward
While financial incentives will certainly play their part, the role of education and evangelizing will likely be just as important in getting more young people interested in startups as a career path.
Without drinking the Kool-Aid that far too many in this industry have found themselves guilty of, there is something truly exciting about being able to build a product that you actually believe in and not feeling like a cog in some massive corporate machine.
TQ’s Schaefer and Funke are working to help build this excitement, teaching a course at Goethe University on entrepreneurship. Taught as both an in-class course and streamed online, they reach out weekly to 600 students, of whom 400 have registered to take the exam.
Having sat in on this course for an evening, you see that there is an increased interest of young people who are looking for something different. This semester brought 600, and the next is sure to have something similar or more.
Educating these young people on the fact that they have a wealth of options to choose from, and that startups should be high on their list is the first step.
The process may be slow at first, but this is how you start a revolution.