Sep 07

Cars versus Homes…

If you spend a lot talking to people from other countries, you discover how odd certain things are in your own country.

Statistics always show that fewer Germans live in their own home, as in comparable nations. However, many visitors are amazed by the number of shiny new cars in front of rental appartment buildings.

Now this all may come from German’s inexplicable love of cars and a disintirest in owning the place they live in. This is what I thought until recently. That was when I thought about way the consecutive German governments have handled subsidies and taxes on cars and homes.

The reader from abroad may be excused for believing that governments should not discourage home ownership, and car ownership should at least not be subsidised as we all know about their external costs, that is the negative impact on others, be it noise, traffic or emissions.

However, in Germany things are different:

If you want to buy a home, you have to pay 3,5% tax on the value of the property, this will soon rise to 4,5%. You need to add another (in other markets unheard of) 1,5 % for notarisation and public registry. This 5-6 % cost for every transaction dramatically increases the switching cost. If an employee needs to move for a better job, she can easily lose a year’s salary on these costs. (So much for the often cited lack of flexibility of labour). In costs for maintaining a flat, it is well accepted practise, that if you buy a flat to let, it is much more tax efficient than buying it for yourself.

In cars however, everyone who gets a car as part of his salary package, will need to pay monthly income tax on 1% of it’s list price, so maybe 0,4%. This is usually way less as running your car costs you. In particular, as an employee, your monthly burden is totally independent from the price of gas. One of my friends recently bought a Cayenne with the small gas guzzling engine, because it would have been more expensive for him to pay the higher price of a more efficient diesel car.

The tax is on the list price and will always remain the same, no matter how old the car. You are therefore discouraged to drive a company car for longer than 3 years.
We can therefore call this tax break the German New Car Subsidy. I have several entrepreneur friends, who say that their tax adviser advised them to buy company cars in order to not have to give too much of their profit to the tax man.

In conclusion, it might be that the average German might behave in a totally rational way living in a rented flat and driving a huge car.

Aug 07

How green is your startup?

Although I am part of the web 2.0 startup circus, I have never really come across a discussion on the ethical implications of business. In Germany, there has been B.A.U.M (German Environmental Management Association) for a long time, but not sure where this has made an impact on startups.

Of course, in a startup, you are first and foremost concerned with a very different sustainability: financial sustainability.

But on the way, why not do a quick check. Here is my take on Qype, my company.

I. The good

Our product
Qype enables people to discover what is good in their area, and to connect with people who share similar interests. We do not ship anything, we do not require that you upgrade your hardware every year. it is a service, not a product, therefore we consider ourselves lucky in this aspect. Furthermore, you could say that we do not need to create articifal demand for our service, that we potentially could reduce the need to travel as Qype is a great help to navigate your environment. And, hopefully, we do our share help the local community to reconnect.

Location and style of our office:
We are located in walking distance to Jungfernstieg in Hamburg, which is the cities main hub for public transport. We deliberately chose an office in an old office, which stays cool in the summer without any form of air conditioning. This may mean a bit less insulated in the winter, but I am not even sure about that.

II. Some things we can influence:

  • We now separate paper in our office from the rest of our rubbish
  • In process of switching our electricity provider to a green provider
  • In our kitchen, we changed the lightbulbs to energy saving ones
  • Our fruit (Bananas, the staple for web development) is now being bought from the organic corner of the super market. Drinks have always come in return bottles, which is no special achievement in Germany.
  • We will probably switch our coffee to fair trade, but I still need to ask our local provider about it. At least, providing our own cappucino to our people dramatically reduces the need for paper cups from Coffee shops.
  • Standby Power: This is still an issue with all of us, but maybe blogging about it helps.
  • Office lighting. I need to publish some fotos of this. Here we have the classic dilemma: We have very ugly neon lamps on the ceiling and in an attempt to improve this, we bought uplights last year, which obviously consume much more energy and I suspect the dimmers do so as well. At least we changed the light bulbs in our kitchen to energy saving ones.

III. The ugly

Air Travel
Trying to establish a website with a European footprint, our biggest eco-sin is travel. Air travel between London and Hamburg, mostly. When you want to recruit people and set up business relationships, there is no other way.

Also, our specialist for web concept and design travels from Munich every week.

In both cases, we are trying to reduce air miles by extending the lenght of stay and reducing the frequency.

Our investors insist on monthly board meetings. Having had very frustrating attempts in phone conferences this will to remain issue.

Does any one know of a decent and affordable web based video conference solution? – Should be able to handle 5 participants.