As Berlin’s overhyped Amen fails, time to take stock

Amen, one of Berlin’s most-hyped startups, has been acquired by a less-hyped, but vastly more successful, startup from the same city, Thus ends Amen’s dream of building a vast reputational database out of entirely binary opinions –- people could rate pretty much anything as an “Amen” or a “Hell No!” with nothing in between.
Amen, don’t forget, was one of the handful of Berlin startups that attracted investment – and a big publicity boost – from Hollywood’s Ashton Kutcher. Another was “Airbnb for activities” Gidsy, another well-intentioned outfit that failed to really fly, and that also got rescued by another Berlin startup (GetYourGuide in that case). Kutcher also invested in SoundCloud –- a clear winner.
The Kutcher connection helped shine the world’s startup spotlight squarely on Berlin. Now two of the relevant outfits have gone under. But, as far as I’m concerned, this is far from bad news. I’ll explain why in a moment, but first let’s perform a brief post-mortem on Amen.
Amen founders Felix Petersen, Caitlin Winner and Florian Weber

Amen? Hell No.

I won’t pretend I ever thought Amen’s hipsterish model was a practical idea. As I said a year and a half ago when the last tranche of funding came in, the binary mechanism was fun but a bit dumb. What’s worse, I imagine it resulted in bad data.
There’s a reason surveys and most other opinion-gathering mechanisms offer a 1-5 or 1-10 spectrum, and that’s the fact that most things in life aren’t a straightforward Amen or Hell No. When it comes to actually recommending things to people, as Amen tried to do with its unsuccessful Thanks spinoff/pivot, you don’t want to only offer the feedback of rabid fans or haters; you want to aggregate and reflect the considered opinions of your user base.
I also think Amen made a mistake by focusing as heavily as they did on iOS(s aapl). While Android(s goog) does require a significant amount of development effort, it’s simply become a more popular mobile operating system. And, when aggregating opinion is your game, you want as wide a spectrum of people feeding into that system as possible.
That said, I can see why, a sort of Pandora for music videos, bought Amen. Amen did have smart engineers – one of the founders, Florian Weber, was Twitter’s first engineer back in the day – and can now tap that talent to make its platform more social (apparently “Pinterest for videos” is the aim). Being in-your-face engaging (at least for a while) was never Amen’s problem.

Berlin rising

So, with the hype surrounding Amen and Gidsy having come to nought, what are we left with here in the German capital? A lot, as it happens:

  • Soundcloud completely owns its space – YouTube for audio – and is now setting up the brand relations infrastructure that will help it make money.
  • Academic/scientific social network ResearchGate took a $35 million Series C round this year, with none other than Bill Gates being a participant. ResearchGate doesn’t own its field SoundCloud-style, but it does now dominate it.
  • Social gaming house Wooga is one of the top companies in its space, with its latest iOS game, Jelly Splash, seeing more than a million downloads in the 6 days following its launch. Wooga is also starting to become a games publishing outfit, partnering with other developers. That said, mobile gaming is a fickle world, so Wooga will need to stay on its toes.
  • It ain’t pretty, but there is probably no company in the world that can rival Rocket Internet for execution on a global scale. The e-commerce and financial services clone shop’s ability to attract cash makes up for its lack of originality – last month it pulled in half a billion dollars in funding.

Those are the most high-profile successes. They’re also companies, Rocket arguably excepted, that seem to have the long term in mind: it would be overly simplistic to say this was all down to Germany’s Mittelstand mentality – find a niche and build a sustainable business dominating it — but I daresay it plays a part. Step down a tier and you’ll also find a range of companies such as 6Wunderkinder gradually taking over their chosen fields (task management in the case of 6Wunderkinder and its Wunderlist app).
They’re a very diverse bunch, too: B2C, B2B, cloud, they’re all here. And funding continues to roll in — Marco Boerries’s NumberFour, which builds apps for small businesses, recently raked in $38 million.

The wait for big exits

I also hear that many of the top Berlin startups have received and turned down acquisition offers, opting instead to build a longstanding business. So what about those big exits that supposedly validate a scene?
Woman holding wad of European euro money cash notes
That is certainly something Berlin has lacked in the current cycle, at least in quantifiable terms. Rocket successfully sold its clone, Betreut, to last year, but we don’t know the terms. Nor do we know the terms for the sale of music-streamers Aupeo to Panasonic Automotive earlier this year. The Betreut sale was probably quite hefty; Aupeo probably less so, but not a rescue deal in the vein of Gidsy and Amen.
It’s worth remembering that most of the companies dominating the Berlin scene have only received serious funding in the last couple of years, so people shouldn’t be too impatient about the exit thing. But if I had to stick my finger in the air and make a couple of predictions, I think someone such as Google or Yahoo(s yhoo) will buy mobile photo firm EyeEm for its data-wrangling skills, and OpenStreetMap outfit Skobbler may help a player such as Facebook(s fb) match Google’s recent Waze buy on the navigation front.

Death is part of life

The death of companies such as Amen and Gidsy, therefore, should not be seen as a negative sign for the Berlin ecosystem. Far from it. These are companies that probably received a little too much attention, but that helped boost a local scene that now boasts significant successes, and that will doubtless deliver many more.
Without wishing to criticize the Berlin scene as such, there is a tendency for people here to have overly emotional responses to failure – perhaps it’s a European thing. So from that perspective, moving past relatively high-profile failures and celebrating what’s left will be a very healthy thing for the ecosystem.
It’s the flipside to the big exits that will come at one point or another. People will need to learn the right lessons from those, too.