After the Slowdown, Programmers Became the Busiest People in Europe | Maybe Europe Has the Answer ②

Almost every city that hopes startups will revive it runs into the same problem: talent.

Without its more than 1.6 million programmers, Europe would look even quieter than it does.

On Adalbertstrasse in Berlin, Clue, a company that makes a period-tracking app for women, has just moved into a new home. By half past five in the evening the 400-square-meter office is nearly empty — except for the programmers. "We only have to make sure we're working between 10:00 and 16:30," says Lisa Kennelly, Clue's marketing director. "But not the programmers. They may work late into the night. Sometimes it's like being a writer, you know — writing code at night is more inspiring."

At the food delivery company FoodPanda, the programmers start filing out around seven. The next day was the start of a three-day public holiday in Germany, and apart from customer service they were the last group in the office to leave. Most people had begun packing up around four in the afternoon.

Only the programmers look as busy as their peers outside Europe. They put in 10 to 12 hours a day, usually with two or three screens in front of them: one holds a code editor, another usually shows Slack or Trello, the collaboration tools most popular at startups. Because their hands never leave the keyboard, a mechanical keyboard usually sits on the desk. Some raise their laptop and monitor on stands; others work standing up.

Even with hours that long, almost every startup still thinks the supply of programmers cannot keep up with what it wants to build.

To make testing easier, Clue's newly fitted-out office sets aside a room as a testing lab. Test phones are lined up on a solid-wood rack where any programmer can grab one, "just like in an Apple Store," Kennelly says.

As a way to raise efficiency, that works well enough. What really matters, though, is finding a way to hire more programmers — these startup teams are always a few good ones short, or at least they all think so. On the Berlin job site BerlinStartupJobs, the top category is perennially developers, with nearly twice as many open positions as the runner-up, marketing.

"We're short a programmer" is true everywhere. According to figures from the mobile app trade group The App Association (ACT), the United States has more than 220,000 open programming jobs. Across Europe, a digital economy report from the EU says demand for roughly 800,000 programmers will go unmet by 2020.

Those vacancies show a Europe that has slowed down trying to use startups and technology exports to fix what the financial crisis left behind: stalled growth, the decline of its big manufacturers, and years of rising unemployment.

"Programmers have become part of the local economy," Jonathan Godfrey, ACT's vice president of public affairs, says in a research report.

Let the Programmers Decide

Europe has no world technology hub on the scale of Silicon Valley, but it is not short of programmers. According to 2014 figures from the research firm IDC, Europe, the Middle East and Africa account for 39% of the world's programmers, about 4.29 million of them.

Everyone in Europe also agrees on one thing: hiring programmers is not easy. Silicon Valley is poaching from Europe in bulk, and the bigger startups offer more competitive terms. So Honeypot, a Berlin site for recruiting programmers, opens its listings to countries outside Europe as well; 30% of the programmers who sign up come from beyond Europe, a good many of them from Brazil, India and Egypt. "We want to put the decision in the programmers' hands — because demand is bigger than supply," says founder and CEO Kaya Taner.

The rapid growth of tech startups like Clue over the past two years has drawn more programmers to move here, but the local supply is not necessarily growing as fast as the startups are — much the same as in China. In London, Berlin and Amsterdam, cities known for their startups, you can find clusters of them in every district: incubators, accelerators, co-working spaces, even the cafés on the street all have people working for startups. In the first quarter of 2016, capital going into European startups hit a record. Over the past year, venture funding for European startups grew 60%.

A few Berlin startups have already grown up: the e-commerce platform Zalando SE, the mapping app Here, the incubator Rocket Internet, the food delivery company Delivery Hero. When Zalando listed in October 2014, it was Europe's largest technology IPO (initial public offering) since 2000.

One fact peculiar to Europe: over the past year European startups took in more venture money, but more than half of it came in early-stage rounds below US$5 million. No giant startup valued in the tens of billions of dollars, like Uber or Airbnb, has appeared yet. Europe currently has only 47 "unicorns" worth more than US$1 billion, with an average valuation of US$2.8 billion. According to European Unicorns 2016, a report from the British investment bank GP Bullhound, European unicorns are not valued as highly as American ones: they trade at about 18 times revenue, against an average of 46 times revenue for American unicorns.

One view holds that Europe's scattered small markets are why startups here struggle to reach scale. Andrus Ansip, a vice-president of the European Commission, made that argument at a mobile conference in Brussels last month: Europe still has no single giant market of 500 million users. Ansip worries about this because the EU's digital single market is his job.

On the whole, though, things are moving in the right direction.

Europe has shown real resolve. At the least, it has not tried to tie today's tech-startup centers to the old heartlands of manufacturing and force them to digest that inheritance. In Germany, Berlin has become the alternative to settled industrial and financial cities like Munich, Frankfurt and Hamburg. It has only become a startup hub in the past 10 to 15 years, which also means most of the country's ideas and technical skill now gather there.

Berlin is home to foreigners from 190 countries; these more than 600,000 immigrants already make up 18% of the city's population. The largest groups come from Poland, Turkey and Russia.

In these "new cities," small startups worry less about the future and about big companies. "The road map for technology is led by a few big companies — Google, Facebook, Alibaba — and what we do is adapt ourselves to those platforms," says Victor Knaap, founder of the Dutch digital creative company Media Monks.

Adapting to those platforms is what makes technical staff so important. The programmer has become the one role a startup cannot do without.

Clue has 36 people, more than half of them on the product and engineering teams. When it was founded five years ago, the first employee after the married couple who started it was an iOS developer. Not until Kennelly arrived from Silicon Valley two and a half years ago did Clue have anyone dedicated to marketing, content and growth.

FoodPanda has bought 11 food delivery platforms, which helped it expand quickly into 35 countries and regions. The test it applied when paying heavily for them was "a great platform with good technology," plus the ability to get it into a new market fast.

Even manufacturers can no longer keep clear of programmers. Almost every Nordic furniture maker put up a website at the very start — the earliest perhaps 10 years ago. Reform, a kitchen-cabinet company based in Copenhagen, believes it has to look more like an internet company to interest investors, "because they are used to the fast-changing numbers of IT companies." So its programmers are doing what they can to smooth out how customers pick a design online.

How Do Programmers Work?

There is little difference between the programmers you meet at the mobile app company Blinkist and the ones taking outsourced work at the co-working space Betahaus. Most won't use the keyboard the company hands out; they bring the mechanical keyboard and mouse they are used to. Between Berlin and San Francisco there is not much difference either.

But one thing is changing: more programmers are going freelance.

Ko.lek.tiv is a Polish technology outsourcing firm. Three of its four people are programmers; the fourth handles design, marketing, promotion and client contact. Those programmers can serve several clients at once, a temporary patch for the shortage of programmers on the market. "We don't make our own product at all, we just work for clients — from user experience and software all the way to the marketing afterwards," Michal Kanila says.

Kanila and his friends founded ko·lek·tiv in Poland. Six months ago they decided to open an office in Berlin. "Because the city is growing so fast, there should be plenty of clients for us here." For the past four months Kanila has shuttled weekly between Berlin and Poland, and he has finally moved here.

In Berlin the place Kanila goes most is Betahaus, where he rents a desk and also looks for clients. "There are a lot of potential clients here. Look around — so many people need help." At the breakfast event Betahaus holds every Wednesday, Kanila is about the most eager person in the room.

Another Betahaus regular is David Bayly, silver-haired with a full beard. He is 68, and his career as a programmer began in 1972. After stints as CTO and CEO at several companies, he came from Australia to Berlin a year ago to work as a freelance programmer, while still consulting for his last employer. Bayly lives on the other side of the city, but every Wednesday he comes to Betahaus for the breakfast.

A Japanese programmer had been sitting at Betahaus writing code since a little after eight that morning. He takes outsourced work too, and soon after the event ended he decided to rent a desk and start working there.

Technical people from elsewhere have helped European cities grow their startups. Honeypot counted the CTOs at 58 Berlin startups and found that 60% were not German. Seven percent came from the United States, and their reputation for being better at using technology to build a company is not empty: the companies those CTOs work at account for 34% of the group's combined market value. The least experienced among them has four years of work behind him; the average is 12.

Finding them, and persuading them to move to a city outside Silicon Valley, is not easy. Kaya Taner ran into exactly this while he was CEO of the mobile advertising company AppLift. A startup's head of HR, or its founder, has to send thousands of messages on LinkedIn in person before getting any reply. And "when you send the invitation, you don't know whether he's looking for a job, what salary he expects, or whether he'd be willing to move to Hamburg or Berlin for a company."

Taner then founded Honeypot in Berlin. More than 30% of the programmers registered on it now come from outside Europe, and it counts as one of the buzzier companies of the moment. The name works on two levels. Literally, the honeypot is the pool of programming talent. But it also carries a meaning only programmers catch: a honeypot is a security technique, a carefully built decoy system that lures hackers into attacking it.

Because demand far outruns supply, programmers at every level are wanted. "Senior or junior doesn't matter," Taner says. The 125 companies registered on Honeypot run from 10 people to 1,000, as varied in size as startups are.

Every year more European cities have the same need. Honeypot's business started in Berlin and spread to Hamburg, Munich, Amsterdam and other cities. It has also rented an office on a street corner and added a free visa-support service for programmers from outside the EU. The 17 talent specialists there can answer almost any question an immigrating programmer has.

Where Do the Programmers Come From?

Everyone is looking for a different way to fix the talent shortage. Almost every city that hopes startups will revive it runs into this problem.

StartupAmsterdam is a non-governmental public body belonging to the city of Amsterdam, set up a year and a half ago with money from the city government, large companies and Amsterdam Marketing.

On its website StartupAmsterdam lists 15 ways to strengthen the city's "startup ecosystem," and talent is the first of them. One is for the government to help startups with work visas and to offer tax breaks for bringing in talent. "The Netherlands is a small country. Our startups can't possibly hire enough people locally; we need to attract engineers from abroad," says Josephine Meijer, who runs marketing and communications at StartupAmsterdam.

That is not the only approach. Over the past year the five-person team has also set up a fund to push coding into primary and secondary school curricula. "We're preparing for ten years from now," Meijer says. The European Commission is doing something similar: since 2013 it has run Europe Code Week to promote coding. Fifteen countries now include programming in their basic school curriculum.

These courses will not turn everyone into a programmer, but one thing is clear: in ordinary jobs, knowing a little code counts in your favor. European Commission figures show that by 2020 vacancies in information and communications will reach 825,000. Digital skills have worked their way into all sorts of traditional jobs: accounting, nursing, medicine, architecture, the arts and engineering all now call for some IT ability.

Organizations that teach coding have sprung up across Europe. Code Dojo, Makers Academy and Founders & Coders were among the first. Some of these bootcamps are online courses; others have to be taught in person. After nine weeks to three months, a student comes away with some coding skill, or becomes a programmer. Don Ritzen runs the Berlin operation of the Silicon Valley accelerator TechStars; before that he founded the bootcamp Makers Academy. He told QDaily that plenty of people in Europe hold computer degrees, and that these short courses give a way in to people who want to start a company.

Le Wagon is a three-year-old coding school. In those three years it has opened campuses in 14 European cities. A month ago its jobs program went live, to help its own students find work at startups.

The brothers Boris and Romain Paillard founded Le Wagon in Paris. When the first cohort began, coding bootcamps in Europe were nowhere near as hot as in America. Unlike the American ones, Le Wagon trains people who sit somewhere between programmer and creative — people who hope a coding course will get them into the technology industry, turn a product from concept into something real, and let them start a company.

Le Wagon's Amsterdam campus has just finished a graduation demo day. Twenty-six students split into seven groups and built seven products, among them a service platform for companies looking to hire Ruby programmers, and a social app that pairs startup employees for coffee dates. Local media, incubators and representatives of a few startups were invited; the students will very likely join their networks later, and on the day their job was to ask a question or offer a comment after each presentation.

After a short introduction from the host, members of the seven teams took turns on stage to show their prototypes. In three to five minutes each had to make clear where the idea came from, who it was for and what need it met. Some products were websites, others phone apps. It looked exactly like the pitches you see in startup cafés from people hunting for investment — even though these were graduation projects from three months of coding class.

So Small, So Slow — Why Is Europe So Appealing?

Just as a small company usually wants people who can fill several roles at once, a rising startup hub takes pride in being many things at once.

"You can't find this kind of diversity anywhere else" — almost every programmer who settles in Berlin, and every startup that puts its headquarters there, says some version of it.

FoodPanda is a German company, but its business got going in Asia four years ago. Once it had a firm foothold in Singapore, Indonesia and other markets, the question that mattered was how to pull a set of separate local businesses together inside one multinational.

One decision by CEO and co-founder Ralf Wenzel was to build a new technology center in Berlin to handle back-end development of the delivery system, while the Hong Kong center takes the work that faces the market directly. "Asian programmers work hard too, of course, from morning to night... Berlin is a technology hub. It's easier to find technical people, engineers and creative workers here. We moved some of these functions back to Berlin to help us land better in new markets," he says. In FoodPanda's Berlin office, 250 employees come from 51 different countries — a miniature of the city itself. Berlin is home to foreigners from 190 countries, and those 600,000-plus immigrants already make up 18% of its population.

The cost of living draws talent too. Berlin's has doubled or tripled over the past five years, yet it is still a third to a half of Silicon Valley's or London's. "In central Berlin, 700 euros will rent you an apartment; in San Francisco the same apartment might cost three or four times that." The catch is that a Silicon Valley programmer earns twice what one in Berlin does.

For anyone thinking about starting a family, Europe's small cities, which have no shortage of jobs of their own, still look like a good choice. FoodPanda's Ralf Wenzel believes it: "We're not seeing more people flow to Silicon Valley — we've drawn plenty of people from America. Programmers from Eastern Europe, the United States and Asia have come to us."

Probably for similar reasons, big American companies are setting up research centers across Europe to tap programmers who are still fairly cheap but work just as hard — instead of moving them all to the United States.

Starting this October, Europe's first Apple iOS academy will open at the University of Naples Federico II in Italy. The program runs two semesters: the first is mostly iOS development, the second adds app design and startup coaching. Students' final projects will go on sale in Apple's App Store.

"Europe has gathered many of the most creative developers, and we want to help the next generation of Italian entrepreneurs get the skills they need to succeed," Apple CEO Tim Cook said in a statement. Apple has created 1.4 million jobs across Europe, 1.2 million of them developers who make their living from the App Store.

DeepMind, Google's artificial intelligence company, has just hired 250 AI engineers in London, and a week ago the AI lab moved into Google's new London headquarters. Google acquired DeepMind in January 2014 and has since shifted its AI research center there.

Earlier this year Microsoft bought the third-party keyboard company SwiftKey for US$230 million. Founded in London in 2008, SwiftKey once tuned a keyboard for Stephen Hawking, and its software is now installed on more than 300 million phones worldwide. Before that, Microsoft paid US$200 million for Wunderlist, the German productivity app.

In March, after Berlin and London, Amazon picked Madrid for its third European research center. Sited on a busy stretch of the city's well-known Paseo de la Castellana, it will be Amazon's largest and most advanced technology center outside the United States.

Carmakers such as Mercedes-Benz and BMW have spent recent years working to make themselves more like internet companies. Telecom operators such as KPN of the Netherlands, France's Bouygues Telecom and Swisscom are rolling out the internet of things and 5G networks. Traditional manufacturers like Philips have begun turning their whole business toward internet services. All of them need more programmers than they used to.

The arrival of these large companies — not all of them local — may well put some life back into a rather bleak Europe. More important, the jobs pull talent into one place, and that is what makes it feel alive.

It has also, of course, sharpened the competition for talent all over again. Holger Seim, founder and CEO of the book-summary app Blinkist, says the company is still hiring. Like most startups that got going in Berlin, Blinkist posts its openings on BerlinStartupJobs and leans on its own network to find the right people.

That is not easy: "The reason hiring is hard now is that some Berlin startups have already grown very big. They've taken a large batch of people off the market, and that leaves very little room for the rest."

Cover image from VisualHunt