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German companies are beginning to recognise Berlin as a hot spot for technology innovation, thanks to the substantial number of up-and-coming startup companies that call the capital city their home.

After the fall of the Berlin Wall in 1989, fashion, music, art and entrepreneurs began to rebuild the city, and it is still known for its relaxed lifestyle and Bohemian culture, which provides a cheap foundation for small businesses looking for a European connection to both the East and West.

While technology startups such as SoundCloud are becoming popular outside the city, the rest of the world is starting to sit up and take notice, including large corporations who are setting up offices at the heart of the innovation.

Both the German railway company, Deutsche bahn, and one of the largest European publishers, Axel Springer, are using startups in their businesses today, as well as the acclaimed Berlin Philharmonic Orchestra.

Deutsche bahn The German railway company, Deutche Bahn is realising the power of working with startup technology companies to produce more innovative and agile products. Matthias Patz, business development and innovation manager of Deutche Bahn, says his connection with the startup world has helped create this new way of working. Patz has been familiar with the Berlin accelerator Betahaus since its inception and, thanks to his entrepreneur-roots, he has bought a startup mindset and environment into the large corporation. Read more about Berlin and technology startups What’s so hot about Berlin for startups?

Berlin: A hotbed of European technology startups

Startup profile: Novoda Patz is responsible for in-house IT at Deutche Bahn and is encouraging as many employees as possible to work from Betahaus to experience the startup culture first hand. “I want our employees to experience a totally different working experience,” he says. Deutche Bahn is headquartered in Berlin, with a quarter of its ICT offering in Frankfurt. Over the last nine months, 50 developers and marketers from the company have gone to work in Betahaus, but Patz wants to increase this number. “People are used to working in an office environment with their colleagues,” he says. “But Betahaus has a totally different working environment, you need to mingle with the other startups and it’s disrupting their day-to-day habits.” He admits Deutche Bahn is not known as the most innovative of companies. And as a large corporation, it is known for efficiency and knowing its customer – but it is not as good at innovation and trying out new things. He says startups are at ease with taking risks and they change and disrupt markets when developing innovative technology – which is not what large corporations do. “Deutche Bahn has the market power to reach a million people, where a startup doesn’t,” he adds. “We can take ideas from startups and bring it to a higher level.” While working with startups, Deutche Bahn has experimented with ticketing machine technology and hand gestures as well as augmented reality through the likes of Google Glass. “We try out new technologies, and look at how we can make our processes more efficient, or use a totally new product.” Patz says the company worked with one startup on a product because its existing suppliers were not as flexible in the short term. “It’s a good opportunity for startups to prove they can work with large corporations and get a project done quicker.” Patz says other big companies in Berlin have started internal startup incubator programmes to incorporate startups into the company, but he is not convinced this is the best way. “At Deutche Bahn, we haven’t decided yet the best way to interact,” he says. “Whether to internalise or externalise, that’s something we still need to learn.”