Kevin Garber: [00:03] This week on the "It's a Monkey" podcast.

Petra Zlatevska: [00:05] Because you have this Mittelstand, there're those old family-run businesses down...

Kevin: [00:10] Like Faber-Castell, right?

Petra: [00:11] Faber-Castell, they're not stock listed. A lot of the board members, or even the Porsche family, who bought out Volkswagen, that family is also reclusive, it's a family-run board, so essentially they've brought in some experts onto this board, but they for themselves are still running the company that was set up by the grandfather or the great-grandfather some 200 years ago. It's quite unique to Germany.

[00:36] You've maybe then got what we're talking about too, let's say, start-ups or smaller business, moms and dad type businesses, and they run on, perhaps, what we might be more familiar with here in Australia, some kind of like a PTY.

[00:49] They are the three structures that you would see, depending on the nature of the business.

[00:54] [background music]

Kevin: [01:03] Good evening. Hello, good afternoon, good morning wherever you are in the world. My name is Kevin Garber. It is Wednesday. We're recording this podcast on Wednesday, the 15th of March. We usually Periscope it, but we're not Periscoping it today. You're probably listening to it on Friday, the 17th of March.

[01:20] My name is Kevin Garber, I am the CEO of ManageFlitter. This is episode 85 of It's a Monkey podcast where we talk about everything relating to tech, start-ups, the tech economy, and all those exciting bits and pieces.

[01:35] As usual, I have with me, my co-host, Kate Frappell, who's the Design Lead at ManageFlitter. Kate, thank you so much for joining us.

Kate Frappell: [01:43] It's good to be back.

Kevin: [01:44] Coming up later on the show, we have an interview with Petra Zlatevska who is a writer, lecturer, and creative professional in Berlin. Petra reached out to us. She said she's based in Berlin, she's actually an Australian, and she would like to share with us some of the activities and the lay of the land in the Berlin tech scene.

[02:08] She popped into the studio and we spoke with her a little bit about the Berlin tech scene which was really quite interesting. We chatted a lot about Silicon Valley, New York, Sydney, even Tel Aviv, places like that.

[02:19] We haven't touched on the Berlin tech scene, so we'll be talking a little bit about that later on in the show, so stick with us.

[02:28] We're going to get to the tech news shortly as we usually do, but before then, we've actually had a start-up minute come in. We're just going to go to that and we'll be back in half a minute.

Reggie Milligan: [02:41] My name's Reggie Milligan, and I'm a co-founder at Mantry, The Modern Man's Pantry, which is We do a food subscription business tailored to guys, sending six different products every two months, maybe the best barbecue sauce from Alabama or the best salami from Vermont.

[03:02] I love listening to podcast, especially like It's a Monkey. I think that one of the best quotes I ever heard as a founder is that you always learn more listening to other entrepreneurs' experiences than any how-to book, so this podcast and others are a great way for me to learn.

[03:20] I appreciate the opportunity. You can check us out. Again, it's Mantry, It's a great place to find the best undiscovered food makers in America. Thank you.

Kevin: [03:35] The start-up minute is a segment. If you're a small company, a new company and you'd like to get some promotion and you listen to this podcast, send us an audio file between, I don't know, 15 to 25 seconds long. Tell us a little bit about yourself, and importantly, it's free.

[03:53] I've had a few people email me and say, "Do we have to pay to get on the podcast?" No, this is free. It's our little way of giving back to the community. We'll put your details on the show notes. You'll get that all important link to your company.

[04:06] It's absolutely free. All it takes is 20 seconds of your time. You can send it through to us and there is no cost. Yeah, just feel free to send away.

[04:16] Kate, as usual, before we get into the tech news, how's Snapchat's price doing? How's Snap's price doing? Have you followed that at all?

Kate: [04:25] No, I can't say I've remembered. I can look it up now. They estimated it's going to fall down to about 19.

Kevin: [04:32] That's 20. It's sold vastly off its highs of 28, and then it came down to 24, but of course it's listed at 17. We chatted about that, by the way, in our previous week's podcast where we also spoke with Anil Dash who is the CEO of Fog Creek Software. I love that conversation.

[04:51] Anil is such a fantastically smart guy. He even worked for one of the working groups for the Obama administration in advising them on digital and social. If you've missed that, go back to episode 84. You can get all that previous episode at

[05:08] Yeah, Snap's been drifting downwards. It's now at 20.58. Maybe, it will get low enough and it would be a good time to buy.

[05:18] Anyway, we speak about Snap in the last week's podcast. This week's podcast tech news some interesting news out of Intel, which of course now Intel runs most of the personal computers -- Macs, PCs -- all the chips inside the PCs are Intel chips.

[05:37] Interestingly, they don't dominate in the mobile market, where another company called Qualcomm actually dominates in that market. It's quite competitive there.

[05:48] News that came out of Intel in Israel, the last few days, is that Intel is to buy Israel's Mobileye for $20 billion. Sorry, that's Australian dollars...for $15 billion, which is a huge amount. Mobileye is listed on the New York Stock Exchange. It was worth about $10 billion, so they paid a nice premium for it.

[06:12] What's so interesting about the story is actually the technology behind Mobileye. Mobileye was founded in 1999 by academics. It's a technology that's in the self-driving car and truck space. I think their first product was to help trucks or cars identify pedestrians on the side of the road.

[06:35] There's some fascinating videos that show the use of this technology that had flagged...if you're driving, you're looking straight ahead. Your field of view is quite focused, so you actually miss a lot of activity on the side of the road.

[06:50] Some of their first technology was to flag you if there was something on the pavement that could be a threat, whether it's someone standing still or someone walking.

[07:00] They have evolved their technology over the years right on through to the self-driving technology, and companies like BMW and General Motors all use Mobileye's technology. Intel is really behind in this technology and they want to get into the technology side of cars. They're leapfrogging it by buying Mobileye.

[07:22] What's quite interesting about Mobileye's technology is you can retrofit some of this technology, meaning that if your car doesn't come with this technology -- or your truck, because trucking's a huge industry as well for this side of things -- of course, trucks are on the road a lot longer or more frequently than most cars.

[07:40] A lot of the safety technology is very important for trucks and you can retrofit some of this technology. It doesn't have to be factory-fitted. Really interesting tech behind this. Intel obviously is taking a long-term view that this is going to be a big deal and decided to purchase the entire company.

Kate: [08:00] Yeah. They were falling behind in the autonomous driving space. By 2030, they are saying the market for autonomous cars will be around $70 billion.

Kevin: [08:11] Actually, Mike Cannon-Brookes, one of the founders of Atlassian, was on record at a tech conference or business conference a few weeks ago saying that the Australian government is really sticking their head in the sand with the impact that self-driving cars and autonomous vehicles are going to have on the economy.

[08:28] Of course, transport is one of the biggest employers in the world. The impact of autonomous vehicles is going to be very high on people that work in that field. Of course, from a safety factor, it's fantastic. There are so many avoidable, unfortunately, pedestrian deaths, car crashes.

[08:48] That technology will absolutely, no doubt, prevent a huge amount of them.

Kate: [08:54] Definitely. One of the features Mobileye can do as well as they can break for you, they can warn of lane departure and also control your speed.

Kevin: [09:04] If you've got some of those cruise control features, if it picks up something, like an animal about to run across the road...

Kate: [09:12] Slows down.

Kevin: [09:13] it slows down for you. There's a famous video of Tesla. Tesla also has an autopilot feature.

Kate: [09:20] Interestingly, Mobileye had a falling-out with Tesla over that very feature.

Kevin: [09:23] I saw that. That'll be interesting. I haven't read the details of that. A lot of these very smart people, they're very opinionated, and passionate is the word I'm looking for. It's healthy for the industry that some of these leading people are debating.

[09:39] There's a Tesla example where a Tesla vehicle saw a crash before the driver saw the crash ahead of him. Those few seconds that the Tesla braked before the driver could brake meant that he didn't go into the back of this vehicle that was about to crash. The Tesla saw that the vehicle in front was about to crash, worked that out, braked, and gave just that much extra time.

[10:07] This technology is fantastic. Intel's going to be in there and Intel's soon going to be in all of our cars as long as all of our PCs, so it will be interesting to see.

Kate: [10:17] They are fighting with Qualcomm.

Kevin: [10:19] Yeah, and this competition is good for everyone. That's the great thing.

[10:24] The second news item this week is Bitcoin, Blockchain. As you know, it's one of my pet interests. Bitcoin's been in the news this week for a couple of reasons, and been in the news last week for a couple of reasons.

[10:40] I'm excited to say I've actually dragged into the studio because he is a local, Tim Lea who is the author of, "Down The Rabbit Hole," a book about the Blockchain. If you're on Periscope, Tim's going to actually hold it up and you can...

[10:53] The camera is there. [laughs] You can actually see the book. I've dragged in Tim to comment about what's been going on with Bitcoin, just set the scene. Bitcoin past the price of gold last week for the first time, of a $1,000 plus, US, whatever that was.

[11:11] On Friday, an ETF, which is an index type fund which in the US, the SEC knocked it back and said this Bitcoin ETF fund...They're not going to allow this ETF fund through, and then the Bitcoin price crashed. It has recovered, so there is a lot of interesting bits and pieces.

[11:31] Tim, tell us what's going on with Bitcoin.

Tim Lea: [11:34] Where do you start? I guess, the first thing I've got to say, this is not investment advice, just for clear clarity for everybody's point of view. I think Bitcoin is gaining so much traction, and it's gaining traction for a number of different reasons.

[11:51] Number one. It's representing digital gold. For example, when Brexit happened, it rose by 15 percent. When Donald Trump got in, it rose by 4.5 percent. It's got that safe harbor capacity.

[12:07] Equally, it's being used by a number of different jurisdictions for various reasons for which there are global economic forces at play. For example, in Venezuela, the inflation rate is completely out of control, and as a result, the currency is just devaluing every single day.

[12:27] It means that people want somewhere safe to actually put their local currency.

Kevin: [12:33] Sorry to interrupt you there. The irony is that Bitcoin is not controlled by anyone and is providing safe harbor. I think this goes to the actual point of Blockchain, that this is the power of it. It's decentralized, but it's robust in terms of its trust.

Tim: [12:56] Bitcoin, because it is decentralized, it's essentially owned by the community itself. There is no government that is backing it. There is no centralized massive multinational corporation behind it. Nobody owns it.

[13:11] It is slightly weird that this is just an entry on a ledger, and each of those entries on a ledger is now worth close to $1,250.

Kevin: [13:19] Tell us specifically what happened last week, especially in relation to the ETF SEC decision.

Tim: [13:25] The Winklevoss brothers, who are of Facebook fame, had put an application in, and it's been going on for about four years now, where they were looking towards providing a regulated structure to actually invest in Bitcoin.

[13:41] Because the biggest challenge is if you try to invest in Bitcoin, you've got to have a wallet, you've got to set it up, you've got to look up to your private key. There is the software all over the Internet trying to find people's personal private keys on their computers. It's high risk.

[13:54] Basically, Bitcoin is taking out the banks. That means that we become our own bank, and so it presents a lot of challenges. It doesn't make it easy to hold Bitcoin. They were going to be the custodians of people's money, in terms of we'll take care of all that stuff, you just invest your money and we will invest it in Bitcoin.

Kevin: [14:13] Why did they call it an ETF fund? Essentially, an index fund, as far as I understand, it is you are buying a group of securities. How does it work that it's a Bitcoin ETF?

Tim: [14:25] It's fundamentally that they peg everything to the Bitcoin price, so they'll trade in and out of it. They'll trade the ups and the downs, and they'll manage that process. Essentially, from my understanding, and I wasn't planning to be a user because obviously I've got Bitcoin myself, but essentially, it meant that you didn't have to get involved in the deep tech.

[14:47] Ultimately to get into Bitcoin, and they would manage that process and they'll take management fees out of the top end.

Kevin: [14:55] That's what the industry's desperately been trying to do, is to abstract a level on top of the technology, to actually make it simpler and easier to deal with Bitcoin because it's still very early Internet 1994 days.

Tim: [15:12] Exactly. There was an investment bank that put an analysis out, and they estimated that around $300 million worth of assets would go into this fund in the first week. That's how powerful this potential ETF was going to be.

Kevin: [15:37] It's an idea. I mean, Blockchain, Bitcoin, crypto-currency, it's an idea that's just aching to be born.

Tim: [15:44] Completely, there is a lot of latent demand for it. The overall issue was that the Bitcoin price had actually factored in the fact that the decision was going to be coming up. It's the age old thing. In any form of trading, it's you buy the rumor, you sell the news.

[16:02] That's the age old way in which things work. You buy the rumor which was happening a couple of weeks ago, and then you just...I personally kept a very, very close eye on the futures market that was in place. You can actually buy a contract to either support the decision, or go against the decision.

[16:20] The market was saying it was going to be between 29 and 44 percent chance of it succeeding. Armed with that, the [inaudible] last week, I actually sold half my Bitcoin into US dollars and converted the rest into alternative currencies expecting that if it actually went down, I wouldn't...

[16:39] The market futures were saying it could well go down. As it happens as soon as the decision was made, it fell by 15 percent in about 10 minutes.

Kevin: [16:47] Interesting, it's nearly back up to where it was.

Tim: [16:49] It's nearly back up again. The thing that that shows is the underlying strength, and the underlying fundamental strength of Bitcoin. I guess there are three core reasons behind that. One, digital gold, which as we alluded to earlier, is the idea that in difficult situations, people resort to a comfortable environment like gold, traditionally.

[17:13] When Brexit happened, Bitcoin rose by 15 percent. When Donald Trump got in, it rose by 4.5 percent. That's one side.

[17:19] The second side is that it's being seen as a reserve currency for the crypto-currency space. For example, there are around 620 different crypto-currency coins in the marketplace at the moment.

[17:32] There are lots of what is called generally an initial coin offering, but I don't want to dwell too heavily on that right now, but there are parties that are creating crypto-currency coins. Those are available to buy and to sell in the market.

[17:48] To get into those coins, you have to go typically via Bitcoin.

Kevin: [17:52] Right, it's the gateway.

Tim: [17:54] It's becoming a reserve currency if you like.

Kevin: [17:57] The US dollars of crypto-currency.

Tim: [17:59] Exactly, right. You've got the other side where there are geo political forces going on right now, like in Venezuela where the inflation rate is completely out of control, people do not want to have their money in the local currency because it's going to devalue every single day.

[18:13] They've got very heavy currency controls in place for traditional currencies like the US dollar and that type of thing. This mirrors what happened in Argentina from 2012 to '14, where Bitcoin became the currency of choice in terms of getting money out of Argentina.

[18:32] At that time, for example, in Argentina, they were charging 35 percent surcharge on credit cards for any external purchases bought in the US.

Kevin: [18:41] Someone making a lot of money. [laughs]

Tim: [18:46] They actually had to trade, this is in Argentina, via organizations called Quibus. They were on the gray market. Illegal but recognized that it was going on. This has actually been happening also in China. China have actually imposed currency control restrictions.

[19:06] Generally speaking, and I forget the exact number because it does tend to vary slightly, but it's around $50,000, is all you can actually export out of China.

Kevin: [19:16] It's amazing on a philosophical level that in society everything wants to be free. Information wants to be free, currency wants to be free. Everything wants to be unencumbered.

Tim: [19:25] It wants to find its own natural level, wants to find its own natural route.

Kevin: [19:30] Of course, the SEC...sorry to interrupt you...but the SEC's biggest issue was that, right? They said that one of the reasons they're not letting it through is because no one controls it.

Tim: [19:40] That's it, and the crypto-currency markets are highly unregulated. Well, they're unregulated, and so you get a lot of manipulation going on. People push the price up, they push it down. You get pumps and dumps which typically exist in the equities market, and are totally illegal in the equity markets.

[19:57] In crypto-currency, it's a very gray area because nobody's actually really tested the test case. The prices get manipulated. If you've got an unregulated currency in an unregulated market, the SEC are going to find it incredibly hard to regulate.

[20:15] That's the pragmatism behind corporate and regulation getting behind this type of structure. It will change over time once the regulation begins to be seen, I think, in the crypto-currency space in general.

[20:29] They're getting whiffs of it with China now forcing the exchanges to increase their anti-money laundering, and know your customer type of regimes in terms of getting money into Bitcoin and back into Yuan or US dollars, whatever it might be.

[20:47] All these things are driving interest in the overall space. I mean, I can transfer money from one of the exchanges in the States to Australia in half an hour and it's cleared.

Kevin: [21:05] I actually paid someone, a contractor that we have working for us in Eastern Europe, and I researched all the options and Bitcoin was the easiest. Not only was it the easiest, but it was the cheapest. Some of the remittance services charge up to 10 percent.

Tim: [21:22] This is the crazy thing. I've done a lot of presentations and speeches at various conferences. One of the things I always talk about especially here in Australia, I'll use Australia because that's where we're based at the moment. I've got money in the UK, all right?

[21:36] Now, it's quicker for me to fly to the UK, go to my bank in the UK, draw the money out, fly back, and I will get the money quicker here than going via the banking system. Via Bitcoin and crypto-currencies, generally speaking, in an hour, it's cleared and it will cost you cents, instead of the banks charging you 50 bucks plus 2.5 to 4.5 percent below the exchange rate.

Kevin: [21:59] As long as the trust is there, which is what the banks are offering us, as long as that part is genuine trust, you don't have a Mt. Gox situation where people lose their wallets and things like that. Anyway, Tim Lea, we unfortunately don't have much more time today.

[22:16] We're going to have you regularly on the show, because I think the Blockchain space is the next...

Tim: [22:23] It's the next. It's going to be bigger than the Internet. It will do for money what the Internet did to media.

Kevin: [22:27] Essentially, as it's been described, well, at least Bitcoin has been described as programmable money, which makes a whole lot of sense especially with the new digital environment, Blockchain is the distributed system of trust. It makes a whole lot of sense with all these intermediaries.

[22:42] If you're listening to this podcast, and especially if you're someone going into university or something like that, Bitcoin, Blockchain is really a hot area.

Tim: [22:50] I will say just one thing if I may, my final thing. Out of China, there is a company called Wangcheng, big industrial car company. Generally, they do a lot of other things. They announced in September last year, a $30 billion fund over seven years to fund smart cities, which is Blockchain and Internet of things.

[23:14] If you consider, the whole of the venture capital market last year was around $60 billion, this is just one company in China that is seeing the potential. That's why the Blockchain just is not going away.

Kevin: [23:28] I believe the Chinese government is behind a lot of the Bitcoin mining, right?

Tim: [23:32] Yeah.

Kevin: [23:34] Or no one knows? It's speculation.

Tim: [23:38] There can be a lot of speculation. There are mining groups, between 70 and 80 percent of all Bitcoins are mined in China because of the cheap electricity.

Kevin: [23:46] In the early days of the Internet, when jurisdiction seemed complex, there were the same issues. People were wondering about what happens if you view content that's illegal in Australia, but the servers are in Russia. How do we deal with all of this?

[24:02] We've managed to deal with it, and quite well I think, in fact. I think the benefits are just way too big. We're going to have you back on the...

Tim: [24:13] I'd be very pleased to come back. I'm a total evangelist, and obviously if anybody is really interested in learning more, the book is on Amazon Kindle. It's called, Down The Rabbit Hole, Discover The Power Of The Blockchain.

Kevin: [24:25] We'll put links on the show notes. I've got a copy of Tim's book, and I've actually read Tim's articles, I bump into them on Quora.

[24:33] If you're interested in Bitcoin and Blockchain, and wondering why we sit here so excited like two young boys, go have a look at Tim's articles on Quora. He explains some of this technology fantastic.

[24:47] Kate my co-host, and producer, and right-hand person, have a look at Tim's articles on Quora. It's a great place to start, because it can be a little bit tricky to get into. Thanks for joining us. Bitcoin, we're going to follow it with interest, and let's have you back in a couple of months and talk about new...

[25:06] [crosstalk]

Tim: [25:06] Thanks for the invite, and appreciate Kate as well.

Kevin: [25:05] That's Tim Lea, author of Down The Rabbit Hole. Great book about the Blockchain. We'll put show notes, and thanks, Tim.

Dave Zoradi: [25:16] Hi, my name is Dave Zoradi. I am the customer support specialist here at ManageFlitter. ManageFlitter is a tool that helps you work faster and smarter on Twitter. With ManageFlitter, you can clean up and grow your Twitter account.

[25:28] You also get access to useful Twitter analytics, social content scheduling, and much more. Go to and start your free trial today.

Kevin: [25:38] You're back with It's a Monkey podcast. We talk about everything relating to tech, start-ups, entrepreneurship. Start-up ecosystems is one of the things that I'm interested in, we obviously chat to a lot of people in the US, two of the big start-up ecosystems there, San Francisco and New York.

[25:57] We've chatted to people obviously in Sydney, even in South Africa, Israel. One of the start-up ecosystems that we actually haven't spoken about, which is quite a significant start-up ecosystem for reasons we'll discover shortly, is Berlin in Germany.

[26:15] I'm happy to say I've actually got someone who lives in Berlin involved in a start-up ecosystem. Petra Zlatevska...I think I might have, after all my practicing, I think I got that wrong, right? [laughs]

Petra: [26:29] It was pretty close.

Kevin: [26:30] Zlatevska, who is a Berlin-based writer, lecturer, and communications professional, is with us in the studio. Thanks so much for joining us.

Petra: [26:41] Thanks for having me, Kevin. It's great to be here.

Kevin: [26:44] When I think of Berlin start-up ecosystem, the first thing that comes to mind is Spotify. Their HQ is in Berlin, right?

Petra: [26:53] Yes, that's correct. They're on the banks of the river that's located around the [inaudible] precinct.

Kevin: [26:59] In Silicon Valley, and particularly in Israel as well, I hear a lot about the Berlin tech ecosystem, but I think a lot of Australians don't know much about the Berlin tech ecosystem. Give us little bit of the lay of the land. How it relates to San Francisco, New York, Sydney.

Petra: [27:28] I guess the first thing to mention to all the listeners is that Berlin is not really Germany, and that's because of its history. Going back to the time that it was a real hub for artists and creative people even back before the Second World War.

[27:44] We know that the history since that period of time meant that there was an east and a west part. What tended to happen was, during the time of the city being this island in the middle of the former East German Republic was this hub of creativity, this hub of activity.

[28:01] People tend to say that first came the artists, then came the musicians, and the DJs, and then we had in West Berlin during the time of the '70s, obviously David Bowie and Iggy Pop. Also, it's good to remember that in the east, there was a lot happening with the arts and music.

[28:16] Obviously, back then, there was no business. Everything had been destroyed in the war, so it's important to know that most of the industry was centered around Munich in the automotive industry, and around the Black Forest where you had the growth of these Mittelstand which are family run-businesses which have under 200 employees.

[28:36] That's where most of the economic drivers were coming from. Once we had reunification, then we had this explosion of art, music. The city was together, but there was lots of these undiscovered pockets.

[28:50] Rent was cheap, and I could probably say that in the mid '90s to late '90s when a lot of the up and coming entrepreneurs...I guess the first wave were British, Scandinavian, and a lot of them in the property sector.

[29:06] When we come to the early 2000s to mid 2000s, we have the growth of Rocket Internet, which was set-up by three brothers, the Samwer brothers. They started their whole operations in Berlin. That's just by way of background.

[29:22] That's it's different to San Francisco's Silicon Valley, or what we would have seen and experienced in London. History is one thing, but also the way that business operates. There is no stock exchange in Berlin. It's a city where you've got a chance to fail, but you've also got time to succeed.

[29:43] That distinguishes it from these other cities. People don't feel stressed.

Kevin: [29:48] The people in Berlin, what percentage are non-Germans, versus people from everywhere else, approximately?

Petra: [29:55] Approximately, well, the statistics are constantly changing around that, but at the moment, I think in terms of professional migrants...You've got to also distinguish, there is a lot of people who came out to Berlin during the 1970s, and they were these [inaudible], so they were blue collar workers.

[30:11] We're talking purely about professional migrants who've come out, let's, say in the last 5 to 10 years. My last statistic on that was maybe 100,000 to 150,000 are coming into the city.

Kevin: [30:27] Out of a city of how many?

Petra: [30:28] The current population of Berlin is just on four million.

Kevin: [30:31] It's still pretty small.

Petra: [30:33] Yeah, it's not huge, and that's the thing. The talent pool is there, and these are people who are coming from Silicon Valley. They're coming from New York, also from around London in the wake of Brexit, Scandinavia, and actually the biggest influx of professional people from the start-up and digital communities are coming from Tel Aviv.

Kevin: [30:55] I believe that. I've spent a bit of time in Israel, and the Israelis love Berlin. They just love Berlin. I think, it's close, it's cheap, and it doesn't have that intensity because of the political situation. Israel is very intense, and I think it's got -- from what I've heard, I've never been to Berlin -- a more creative intensity than a political intensity.

Petra: [31:16] Absolutely, I mean it is the seat of government, so different to San Francisco where, obviously, everything happens in Washington in terms of politics. That's always been how Berlin even was before the capitol was [inaudible] in West Germany.

[31:31] Now that everything has been reunified, you've got this collision of all these creative business, government forces coming together. It is not so streamlined and organized as everyone would think. It is slightly chaotic, but that is the secret to its success, I think.

Kevin: [31:48] Many Australians there?

Petra: [31:51] There is a sizable community. I know a few in the start-up world, and in media.

Kevin: [31:58] I think in the DJ world as well, right?

Petra: [32:00] In the DJ, there is quite a few in the music scene. For example, there's...I don't know, I mean this is not really electronic music but the head of the Intendant or the creative director of one of the opera houses, is Barrie Kosky, who originally came, he's Australian, but from Melbourne.

[32:18] We are very present group and cohort. We've come a little bit later than the British, or Americans, or Scandinavian professionals.

Kevin: [32:28] It's a long way for us to go. It's a big difference going from Tel Aviv to Berlin, I think going from Sydney to Berlin. Sydney to Berlin is a commitment. [laughs]

Petra: [32:39] It's a commitment. Interestingly, most of the people in creative tech and start-up tend to come from Melbourne.

[32:46] You do have that access, and then when you meet someone from Sydney, such as me, or there's a couple other people, you think, "Oh, how did we all end up here? Why are we here, why are we here and how do we not end up in London?" for example, which is where the typical Sydney, London access takes place.

Kevin: [33:05] If you're listening to us on the podcast on Periscope, I'm chatting to Petra Zlatevska, who's a Berlin-based writer, lecturer, and communications professional who grew up in Sydney. Talk us through the number of languages that you speak.

Petra: [33:19] Well, I suppose, I've always been a language buff. I studied French as a part of my joint degree here in Sydney. That was when I studied law. I was able to study for a year in Switzerland. I kept up with my French there.

[33:35] The real reason for going to Berlin was in the wake of the whole GFC, my husband and I decided it was time to make a change. Arriving upon Berlin, I actually was forced to do a German language course as a part of my residency requirements.

[33:54] The government paid for that, or subsidized it to a great degree. The German came really at a much later stage in my life, and I'd never had a love affair with German. I was always a French buff, but purely out of practicality, I had to study German once there.

[34:10] I've got to say, also, another thing that people may not realize is coming to Berlin, yes, everyone speaks fantastic English and there is this melting pot of Scandinavians, Italians, Israelis, Australians. If you want to have that success in getting a deal done, maybe securing funding for your new business or venture, is to have German language skills.

[34:36] To be able to run a meeting, you just get so much more authenticity and legitimacy to what you're proposing.

Kevin: [34:42] You've just scared away every single Australian who was getting excited about going and starting a start-up in Berlin.

Petra: [34:49] If someone had told me this eight years ago, I would have and I'm glad I took that language course right at the beginning of the time of starting out my new career there. I would just encourage anyone who is seriously considering a move to Berlin to enroll in a language course first.

[35:07] Don't get tempted to put it off until later because you'll find that, yes, everyone speaks great English, but the real good deals are done when someone can trust you, and we know that language and communication is the first point of establishing that trust.

Kevin: [35:20] You know what I always say, and especially in the tech industry, the epicenter of the tech industry is, obviously, technology, and engineering, and computer programming, and AWS, and servers. What I always say, even to the team here at ManageFlitter, we're not a technology business, we're a people business.

[35:40] Every business is a people business. Especially if you're seeking funding or you're building out relationships, everything is relationships, everything is people.

[35:50] People love doing business with people that they like, and they absolutely can trust, and language is a big one. It makes sense. When I came to Australia 20 years ago, I spent quite a bit of time observing Australians. Not in...[laughs]

Petra: [36:09] With a note-book down when you're in park, under the tree?

Kevin: [36:11] Close though, I'd be at parties. I would listen to the slang they used. I would watch their body language, because it is very misleading that South Africa and Australia...when you're at South Africa, you think, "Oh so similar, we like the same sports, we drink, barbecue. Oh, it's just the geography is different."

[36:28] It's actually not...the subtleties, culture...Even from city to city, even in Australia, between Sydney and Melbourne, the culture nuances are different.

[36:37] You can't always put a finger on it. That's what's so lovely about traveling is. Every place has got its different feel. Tell us about the angel investing scene, the funding scene there. Is it very active?

[36:56] Sydney has evolved hugely over the last couple of years, where it's compounding every year. It feels like it, and this is probably not a stat, but it feels like it's almost doubling every 18 months, the amount of funds for new businesses, both from angel investors and from early stage VCs. What's it like in Berlin?

Petra: [37:17] One of the most recent statistics that I have is that, let's say, a decade ago, there was probably a handful of start-ups there. You had your Twitter, Skype was there, and then we've recently seen Spotify.

[37:29] At the end of 2015, there was a report released that stated there was over 2,000 new start-ups, specifically, 2,500 new start-ups. Those, between them, had secured over €2.4 billion in venture capital. That's more than London, and Paris, and Stockholm combined.

Kevin: [37:50] That's one year?

Petra: [37:50] That was at the end of 2015. Amongst that cohort of 2,500 new start-ups, I don't have the exact spread, but the figure was put at €2.4 billion into that sector by the end of 2015.

Kevin: [38:04] How much Australian approximately?

Petra: [38:06] At the current exchange rate...Kate, you've got a calculator?

[38:10] [laughter]

Petra: [38:10] I don't have my math's hat on at the moment, so let's stick with that figure.

[38:16] That represents, to put it into another statistic, only nine percent of what start-ups and new businesses in Silicon Valley were taking. It's not a huge amount, and as we said before, Berlin, as a city, is quite small. It almost feels like a large village at that four million mark.

Kevin: [38:36] That's about the same size as Sydney, right? Sydney is about four million.

Petra: [38:40] Is it?

Kevin: [38:41] Yeah.

Petra: [38:41] Yeah, [inaudible], I thought Sydney had a little bit more.

Kevin: [38:43] Sydney and Melbourne are both about four million.

Petra: [38:45] In that way, another distinguishing feature about what happens in Berlin is that they've got a very strong regional economic development, the Investitionsbank bank, so this bank that also invests into new businesses and start-ups, and that's government run.

Kevin: [39:00] Good luck with doing that here.

Petra: [39:01] I was just going to say it's, maybe, a bit of a legacy of that social welfare, looking out for people. That's a government funded bank, but it's got a board, and it's run like a private bank. You've got this development of crowdvesting, which I'm not sure how big that is in Australia.

Kevin: [39:20] It hasn't really hit off.

Petra: [39:22] Hasn't hit off, yeah.

Kevin: [39:22] I know in Europe and in London, it seems to be...That's when the average Joe and Jane in the street can invest, similar to a Kickstarter campaign but you actually walk away with a little bit of equity, right?

Petra: [39:38] Correct, you have a share in that business. One example of that business was this huge hotel that started up on the north, the Baltic Sea, the North coast of Germany, not far from Hamburg, and that business was started through crowdvesting.

[39:52] The CEO and the team of founders essentially had the average Joe, or as they would be called in Germany, the Helmut or the Helga, investing into that business. It's taken off from there, once they got a lot of positive press on that model.

[40:08] You've got Kickstarter, then there's another German home based, home created similar crowd-funding campaign, Startnext. That's their little version.

[40:24] There's a few different ways. A lot of people are not really comfortable borrowing from family and friends, whereas, perhaps, in Australia, people who are in the start-up world are happy to go and door knock, and ask families, friends, neighbors.

[40:36] I got the feeling and the impression that most people are happy to try to do a Kickstarter campaign, rather than ask their mom and dad for a bit of capital to get things going. Again, it just depends on the nature of what the business is, and whether it's going to be a product or a service.

[40:53] If you're doing an app or some application web based, it varies. That's kind of the landscape, the ecosystem that there is.

Kevin: [41:01] A couple of interesting points, you mentioned earlier in the podcast. Rocket Internet were based in Berlin, or are based in Berlin.

Petra: [41:10] Yes.

Kevin: [41:11] Rocket Internet is a very controversial German company because they very much have piggybacked of other businesses. They copy other businesses essentially and bring it to Europe. It's three brothers involved, isn't it?

Petra: [41:27] They're three brothers, and they're very reclusive. I actually was at a tech conference a few years ago and saw one of the brothers speak at a conference, which was very rare for that to happen.

[41:37] For the listeners, one of the copycat businesses that Rocket Internet had co-replicated was called StudiVZ, which is a direct copy of Facebook. They didn't come into any legal issues with Facebook, and this was going back maybe five to six years ago, and it was only because they were targeting universities in Germany, Austria, and Switzerland, so in that German speaking part of Europe.

[42:05] I think by now the platform is almost dead. It has no competition because everyone has switched over to Facebook. It had a very legitimate base, and because they were only focused on German university students, that's how they tried to have their point of differentiation.

[42:20] They've also established Zalando, which is the copycat of Amazon. This is what they are renowned for, that's their model that they start these businesses. They're happy to call even them copycat themselves. They tailor them more to a German speaking, continental European customer or consumer.

Kevin: [42:37] I think Rocket Internet are a little bit of an outlier. I'm not an expert in German business but I would imagine their approach is not typically German, right?

Petra: [42:46] They are a bit more flamboyant, but as I said, the founders are quite...

Kevin: [42:50] Conservative?

Petra: [42:51] Yes, and don't give much, they don't do much. That in itself is quite typically German, the lack of wanting to be too much out there in the media. That scene is very anglo-American. It's quite aggressive.

Kevin: [43:02] Ostentatious.

Petra: [43:02] A lot of them don't want to be. That's a very typical German character trait. Just reserved, not talking too much about money, or getting ahead of yourself. Just wait for things to happen in the background, and that is a character trait that you would see.

Kevin: [43:18] You've got a bit of a legal background. You studied law. I once read many years ago, a very interesting article about how different German businesses are in general, in terms of their corporate structure, governancy, and approach.

[43:30] We're very familiar with the model that you have, the shareholders. You're under legal obligation to maximize shareholders' interests. The directors are legally accountable for that. The German structure is slightly different typically, isn't it to that?

Petra: [43:55] I guess, it's, again, probably due to history. You've got your typical [inaudible] or the SAP. You've got the automotive industry, and they're all run with that board of governance, or what we recently witnessed with dieselgate in Volkswagen.

[44:08] They do have, of course, that board of directors. There's good governance measures that have to be brought to bear. The other thing though is that what you don't really see, and I mentioned this before, was because you have this Mittelstand, there're those old family-run businesses down...

Kevin: [44:28] Like [inaudible], right?

Petra: [44:29] [inaudible], they're not stock listed. A lot of the board members, or even the Porsche family, who bought out Volkswagen, that family is also reclusive, it's a family-run board, so essentially they've brought in some experts onto this board, but they for themselves are still running the company that was set up by the grandfather or the great-grandfather some 200 years ago. It's quite unique to Germany.

[44:56] You've maybe then got what we're talking about too, let's say, start-ups or smaller business, moms and dad type businesses, and they run on, perhaps, what we might be more familiar with here in Australia, some kind of like a PTY.

[45:11] They are the three structures that you would see, depending on the nature of the business. Generally, you're right. It's not familiar to Australians or even, perhaps, to British people who come to the continent and try to get a foothold in the German market.

[45:28] Simply because it's been so structured, and they do say, when it comes to taxes, that the German tax system is the world's most complicated. You've got business structures and then you've got this very complicated tax system. They almost feed off each other in way.

Kevin: [45:45] Joe, who is listening on Periscope, actually was kind enough to do the translation from €2.5 billion. Joe, throw us that number again. We were trying to convert the amount invested in Berlin start-ups in 2015 is €2.5 billion.

[46:02] We're trying to convert that into US dollars or Australian dollars. Joe threw that up. I'll see if he can. [laughs]

[46:14] If you're listening to us on, watching us on Periscope, special shout-out and thank you to you. My name is Kevin Garber, we're chatting to Petra Zlatevska, who's a Berlin-based writer, lecturer, communications professional, multi-linguist. Do they call those polyglots, or that's something else?

Petra: [46:36] A polyglot is...well, the French tend to say polyglot. That is what a French person...That's the word that they use for someone that speaks more than one or two languages.

Kevin: [46:45] OK, so I got it right. There we go.

Petra: [46:49] It's perfectly correct.

Kevin: [46:49] Terrific. The Israelis are having a big impact on the Berlin tech scene. Israeli start-ups are very well known for having very deep technology. Australian start-ups, a lot of the time, are criticized for being a bit light on the technology, just having an Uber for this or an Uber for that. Israeli tech goes incredibly deep into agritech, fintech.

Petra: [47:18] Life sciences as well.

Kevin: [47:24] Life sciences...

[47:24] [crosstalk]

Kevin: [47:26] On the Berlin side of things, what type...Spotify, which is obviously the music app. This SAP, which is the enterprise, ERP system, which is incredibly well known, what flavor of start-ups is the focal point in Berlin? Any trends or themes?

Petra: [47:56] Maybe, we need to distinguish the apps and those businesses you mentioned. Rocket Internet was, let's say, a home grown business. You've also got these businesses and start-ups that have flourished because of the founder who is not a German or not a Berliner. They've come in from somewhere else.

[48:19] SoundCloud is another perfect example. That was set up, it was a co-venture between a Swedish and a German, and they, from day one, had SoundCloud as...They wanted to make Berlin their HQ.

Kevin: [48:31] That got bought by Twitter? I think SoundCloud...

Petra: [48:33] Possibly.

Kevin: [48:33] or Twitter wanted to buy it.

Petra: [48:35] I think as far as I know, they still haven't sold.

Kevin: [48:39] I think Twitter invested in SoundCloud.

Petra: [48:44] Yeah, so they're the music uploading and sharing platform. Generally, I think it tends to revolve around music and culture. There's another, maybe not such a well-known app, but it was an app that was developed in Berlin to enable gallery and museum buffs to be able to go to any museum or gallery within the city of Berlin.

[49:04] All of the paintings and artworks were preloaded onto this app, and you just have to, depending on where you are, if you're at the Noyes Museum or at one of the photography museums, you could bring up the picture or the photograph and it would give you more information. It was all on that app, whereas, normally you have to go to every single museum and get those annoying headphones.

[49:27] This app alleviated the annoyance of doing that. Genre around music and culture. Food is another big one. Interestingly, some food apps. There was another one created by an Australian,, that matched people in Berlin who're looking for a co-working space.

[49:46] They were able to localize it to where they needed to find the space, where they wanted to be, and what their budget was for a co-working space.

[49:55] Crowds, in terms of office space, it's such a legitimate business to set up a co-working office. One of the big ones that's come out of Israel is called MindSpace, it started in Tel Aviv, and they've had their first German incarnation in Hamburg, and now in Berlin. Essentially, it's just like a hub for entrepreneurs, and there's meeting rooms.

Kevin: [50:19] It's different to WeWork?

Petra: [50:21] Different to WeWork. This one...

Kevin: [50:23] Because WeWork has Israelis behind that as well.

Petra: [50:24] That's true. I think they're in competition. They're going great guns.

Kevin: [50:28] It just opened in Sydney.

Petra: [50:30] Have they? I did see that somewhere. I think another thing to note is it's a legitimate idea and a business to provide this co-sharing, co-working office space, and having a community that you build around that through events and you charge people for their desk or their private office. It's membership rate, so that's in itself.

Kevin: [50:51] When I started my first business, many years ago, and took the leap to get a small office, most stressful experience because it's a fixed cost. Anything that is fixed cost is a fixed cost for three years, right?

[51:03] Anything that is a fixed cost causes stress, because it's something that you can't easily get out of. The co-work space is just wonderful. It's just such a boon to entrepreneurs to be able to go to co-work space. Anything up to six, seven staff probably pays you to be in a co-work space.

Petra: [51:24] Absolutely, and especially in a city like Berlin. It was notorious for having very affordable office rent space, whether in an old factory, very low red tape. You don't have to get an approval to stick in some walls.

[51:39] It was very much do as you like, minimally regulated. That has made it much easier to set up these co-working spaces as legitimate businesses and operate them professionally.

[51:54] In a city like Berlin, where it is quite transient, there's people coming in and out all the time. Deals might be done there, but you might have to sign in Frankfurt or go meet your other investors in Poland.

[52:06] It's a great hub to be there, but you don't have to be permanently locked into a three-year lease, as you just mentioned.

Kevin: [52:13] What's Angela Merkel like? What's the view of Angela Merkel, in general, amongst younger tech entrepreneurs, etc.? Obviously, we hear very selective news about the asylum seeker issue, the migrant issue, and things like that.

[52:31] She's obviously a very smart, bold, capable woman, but what's the feeling towards her? We have no sense of that in Australia of what the people feel, really.

Petra: [52:43] I suppose, because she's a politician, she's not a business expert or an entrepreneur. She's not even the minister for finances.

[52:54] Together with the Australian government, there's been this launch of the German-Australian Advisory Council two years ago. That was set up to promote growth in business and trade between Germany and Australia. She was quite a key driver of that.

[53:09] Specifically for Australia and Germany, part of that reasoning was to share a bit more knowledge, the younger professionals have exchanged programs, make sure that the business and tech world between these two nations are being able to be strengthened.

[53:29] The view of most young people about Merkel is that she's a strong leader, and she's very capable in terms of business. She's obviously very pro-business, but she's also very much there for the little person, which is interesting, considering she's from a center-right Christian party.

[53:47] She's a professional, a real consummate professional. In terms of going out to business, she tries to be on side. She'll go to meetings with big industry boards, but then she'll also be perhaps at the opening of a new factory. She tends to play both hands.

Kevin: [54:06] Petra Zlatevska, thank you so much for joining us.

[54:11] Petra is a Berlin-based writer, lecturer, communications professional, speaks many languages, loyal. Go check out her website. We'll put the link to your Twitter as well as your website. Some people can reach out to you there. Really nice to have a guest in the studio.

[54:26] I believe you're going back to Berlin but you will be back to Sydney in a few months for good, so welcome back and interesting to talk to you and find out a little bit about the tax scene in Berlin.

Petra: [54:37] Thank you, Kevin. It was wonderful to be here.

[54:39] [music]