2025-03-22 17:00:00
When I first started my career as a junior software developer, my team and I were tasked with optimizing the onboarding flow for a well-known website in Germany. We ran a lot of A/B tests to determine how we could increase the completion rate of the onboarding process and also encourage users to become more active on the platform.
At first, I really liked A/B testing. If you’re unfamiliar with A/B testing, the concept is pretty straightforward: you come up with an idea to improve an existing user experience, then divide your users into two groups (or more). One group (Group A) gets the original experience, and the other group (Group B) gets the new version. You run the test until enough users participate, and then analyze the results. For example, if Group B’s onboarding completion rate is 15% higher than Group A’s, you might decide the new version is better and roll out that version to all users.
When you think about it, it makes sense. You base decisions on data, and since you’re testing on only half of the users, you’re taking less risk. If things go wrong during the test, you can hold rolling out the new experience to everyone. Product managers and team leads can also measure their performance by showing how much they contributed to improving the product. It’s a win-win for everyone. And even if things go south later, you can always say, “But we did an A/B test and didn’t see any decrease,” so you’re off the hook for any negative outcomes.
But as I gained more experience and ran more A/B tests, I began to realize something. Relying too heavily on numbers and tests can cause you to lose sight of the bigger picture—the overall user experience. Instead of solving real user problems, the focus becomes about optimizing metrics and chasing numbers. The quality of the experience takes a backseat, and decisions are driven more by data than by understanding how the product truly serves its users.
If you’re not familiar with the term “Enshittification,” here’s a definition from Wikipedia:
Enshittification, also known as crapification and platform decay, is the term used to describe the pattern in which online products and services decline in quality over time. Initially, vendors create high-quality offerings to attract users, then they degrade those offerings to better serve business customers, and finally degrade their services to users and business customers to maximize profits for shareholders.
Let me give you an example. Spotify began as a music streaming service. Over time, they added podcasts and audiobooks to the platform. Users who originally used Spotify just to listen to music began to notice that the app was becoming harder to navigate. They were constantly exposed to podcast or audiobook recommendations, and finding music became more difficult as the UI got cluttered.
Of course, Spotify does A/B testing, just like many other tech companies. The issue here is that when these changes were made, Spotify likely measured metrics like user engagement—how much time people spent in the app and how many actions they took. Naturally, if you make it harder for users to find their music, they might spend more time searching for it. So, the teams behind the changes could easily claim that the home screen redesign and the introduction of podcasts and audiobooks didn’t negatively impact engagement. In reality, even if it became more difficult to find the music you wanted, you’d still listen to it. These changes were rolled out to all users, but they didn’t measure things like frustration or the overall user experience. Since some users enjoyed the podcasts and audiobooks, the team could show positive results and claim success. And as a result, some of them likely got promoted and moved on to other projects.
I’ve witnessed similar changes with products I’ve worked on. For instance, I worked on a product that helped users track their packages (like shipped, out for delivery, etc.). The app didn’t have live tracking, the feature where you can see your package on a map in real-time. But the growth team decided to tweak the notification copy and include “live tracking” in the message. They ran an A/B test and saw an increase in app openings (big surprise there). They also checked if this led to a drop in the number of users enabling notifications. When they saw no decrease in notifications, they took it as a sign that the change was successful, without considering that people still wanted to know where their package was, even if the live tracking feature didn’t actually exist. They used A/B testing to boost their numbers without considering the long-term consequences. Some team members likely got promoted, users were frustrated by the lack of live tracking, and the overall experience worsened.
When I first realized what the team was working on, I reached out to them and shared my concern. I told them that the changes they were making were wrong and would degrade the overall user experience. They disagreed with me, pointing to their data, while I had no numbers to back up my intuition. Yet, deep down, I knew these changes would create a negative experience with long-term consequences that couldn’t be captured through A/B testing.
Once people discover how to use A/B testing to justify their decisions, they’ll continue doing so. This is where A/B testing can give confidence to people who lack a solid understanding of user experience or design. When you challenge them on the negative impact of a decision, they can simply point to the results of A/B tests and dismiss any concerns, claiming they don’t see any issues.
The same individuals often start to use A/B testing in ways that focus on improving metrics, not addressing real user problems. For example, rather than solving core user pain points, they might suggest something like changing the button color to see if it has an impact on click rates. Even though you know this idea is flawed, the decision-maker can argue that you can’t be sure until it’s tested.
So, your entire team ends up working on experiments and adjustments that may not solve actual user issues but are designed to boost certain metrics. In the end, you may see a slight increase in button clicks, and the change gets rolled out. However, users begin to complain that the app’s interface is becoming harder to use, and they can’t find the features they once relied on. In many cases, since the person responsible for the decision has moved on to a different team or a higher position, they don’t revisit or reverse the changes. Alternatively, if there are new A/B tests on the horizon, they may just keep pushing forward with the changes, never addressing the real problems users are facing.
Thanks to A/B testing, it’s easy for people to showcase their success, making it easier for them to climb the corporate ladder. However, as they rise to decision-making positions, they often continue pushing the same data-driven approach without considering the broader user experience. Over time, this leads to the entshittification of products—where quality takes a backseat to short-term metrics.
In contrast, the most successful companies in tech have historically relied on strong design instincts, intuition, and a deep understanding of user needs rather than just data. As we continue to develop new products, it’s crucial that we strike a balance—using data to inform decisions, but never losing sight of the bigger picture: creating intuitive, user-centered experiences. Only by prioritizing true quality over shallow metrics can we prevent our favorite tools and platforms from falling into the trap of enshittification.
2025-03-16 15:50:00
In 2009, when I was 15, an Apple Premium Reseller opened in my hometown. Before that, I didn’t really know much about Apple. I had heard of it a few times, but nobody in my circle owned an Apple product. The main reason for that was the high price of their products. At that time, Apple was mostly known for Macs, not iPhones, since Apple wasn’t selling iPhones in Turkey yet. That’s when my fascination with Apple began.
When I first visited the store and tried out the MacBook, I was amazed. It was the first time I saw a laptop made of aluminum. There were also features I had never seen before, like the glowing Apple logo when you used it, battery indicator lights visible without opening the laptop by pressing a small button, a blinking light on the front that pulsed like breathing to show the MacBook was in sleep mode, and the green light next to the camera. All of these features were new to me, and I became curious to learn more about Apple and the person behind these innovations.
I started reading everything I could find online about Apple, even though there wasn’t much available in Turkish at the time. Apple wasn’t very popular in Turkey back then, and it was mostly known within industry circles. The brand didn’t really gain widespread attention until the iPhone became a hit. Eventually, I moved on to books, and that’s when I discovered Inside Steve’s Brain by Leander Kahney. My obsession shifted from Apple to Steve Jobs, especially after reading stories like how Apple bought its own CNC machines and created custom solutions to make those tiny holes in the aluminum that displayed the battery level. The level of detail and the millions spent on such small yet beautiful features was something I had never imagined.
As any teenager would, my admiration for Steve quickly turned into an obsession, and he became my idol. I bought my first pair of New Balance 990 sneakers, the exact same stonewashed Levi’s 501 jeans, and a black turtleneck sweater. I didn’t wear this outfit all the time, but whenever I did, I felt like Steve. But I didn’t stop there. I began listening to The Beatles and Bob Dylan, and read Steve Jobs’ favorite books, like Autobiography of a Yogi and The Innovator’s Dilemma. With my teenage mindset, I thought that by mimicking his style, music, and reading choices, I could become like him—the greatest innovator of our time.
As I grew older and started university, improving my English, I continued to learn more about Steve Jobs. I read more about him and watched his interviews with Walt Mossberg. With the rise of the iPhone and his death from cancer, there were more resources available. That was when he transitioned from being my idol to becoming a mentor. I no longer wanted to be like him; I simply wanted to learn how to create great products. After all, there could only be one Steve Jobs. So, I focused more on the things he did and said, rather than on who he was.
I stopped wearing Levi’s because I wasn’t happy with the quality, and I didn’t really like blue jeans anymore. I switched to black jeans. I’ve continued wearing New Balance 990 sneakers because they are the most comfortable shoes I’ve ever worn, especially with my flat feet. I also realized that, while I liked some of his music, Bob Dylan wasn’t quite to my taste. However, I kept listening to The Beatles because their energy matched mine perfectly.
At the same time, it became harder to understand who Steve Jobs truly was. The media mostly focused on his negative side, especially after he co-founded Apple—things like how he fired people in elevators or abandoned his daughter. They ignored his work with Pixar and NeXT, and how he returned to Apple to save it from bankruptcy. Instead, they focused on his drama-filled moments because that was what attracted views and clicks, while his innovative work seemed like the “boring” part. Luckily, if you really wanted to understand the real Steve Jobs, there were still resources like folklore.org, written by Andy Hertzfeld, someone who worked directly with him on the Macintosh. Unfortunately, most people only knew him through the media’s portrayal of his flaws, which didn’t reflect the transformed person who made Apple the biggest company on the planet. Every time I brought him up in conversation, people would cut me off, dismissing him as an asshole.
Despite everything, my passion for learning how to create great products by studying Steve Jobs never stopped. At the same time, as I closely followed the tech industry and especially the startup world, I began to notice a common pattern: many people seemed to be imitating Steve Jobs. Because I had read and watched so much about him, it became easy for me to identify these individuals and their behaviors. Especially after the hit TV series Silicon Valley aired on HBO, I realized I wasn’t alone in noticing this trend. The show addressed what I now call Steve Jobs Syndrome perfectly.
If you follow the tech industry and the people leading major tech companies, you’ll quickly realize that many of them try to imitate Steve Jobs, hoping to replicate his success. For example, the reason Mark Zuckerberg wore the same simple outfit for so long—until his recent style change—was that he was mimicking Steve Jobs. I often wished he had focused on imitating other aspects of Steve’s approach, rather than just the outfit. But Mark Zuckerberg isn’t alone. In Hatching Twitter by Nick Bilton, you’ll read that Jack Dorsey, when he was at Twitter, changed his outfit to match Steve Jobs’, listened to The Beatles, and even used the same phrases Jobs used in interviews. They were like my teenage self, but they were fully grown adults doing this.
Of course, the outfit wasn’t the only part of Steve Jobs that people in the tech industry were imitating. They were also copying his presentation style, some even traveled to India to replicate Steve’s experience. They would often claim their startups were going to change the world, acting and speaking like visionaries, even if their companies weren’t yet profitable. The media played along, constantly searching for the next Steve Jobs. Was Jack Dorsey the next Steve Jobs? Or Elon Musk? Or Elizabeth Holmes?
Luckily, the media stopped searching after Jack Dorsey failed to make Twitter profitable, Elizabeth Holmes was sentenced to 11 years for fraud, and Elon Musk went through his own controversies. But despite all that, CEOs in the tech industry never stopped suffering from Steve Jobs Syndrome.
If you’ve worked at a big tech company or a startup, there’s a good chance your CEO might be exhibiting signs of Steve Jobs Syndrome, similar to the people I mentioned earlier. If you’re still not sure, here’s a quick checklist to help you identify it. If your CEO:
Then, there’s a high chance your CEO is suffering from Steve Jobs Syndrome.
What’s interesting is that none of these behaviors are directly related to Steve Jobs himself. Yet, the media somehow associated these things with him. Take micromanaging, for example. If you truly understand Steve Jobs, you’d know he was obsessed with every detail of a product. He didn’t micromanage people; he paid attention to details. He didn’t tell people exactly what to do—he shared his opinions on how the product should work. Sometimes he was wrong, but he admitted it. Jobs himself said this in interviews, and people who worked with him have shared similar accounts. But the media often portrayed him as a dictator. Then, tech CEOs see this portrayal and think, “If Steve was like that and created great products, I should do the same.” This mindset can still be seen in the startup ecosystem today, as reflected in essays like Founder Mode by Paul Graham, one of the most prominent figures in the startup world.
Steve Jobs didn’t even want to allow developers to create apps for the iPhone initially. He didn’t follow trends—he simply focused on where the industry was heading, like the rise of graphical user interfaces and touchscreens. If you listened to Steve’s diet recommendations, you’d probably end up malnourished today. Jobs didn’t jump from one interview to the next—most of his interviews were with Walt Mossberg or Kara Swisher. He didn’t use social media, and he even told President Obama’s secretary that Obama should call him directly if he wanted to meet. Politically, Jobs wasn’t focused on tax credits or Apple contracts. His main concern was advocating for policies that would allow international students in the U.S. to stay and work after graduation by getting a green card, rather than being bogged down by visa issues.
Steve Jobs didn’t aim to create a cult around himself, but around Apple and its products. After all, does anyone even know where he’s buried?
These are just a few insights that come from deeply understanding Steve Jobs. Unfortunately, many people prefer to rely on the easy-to-access, media-fed version of him. I’m not writing this post to glorify Steve Jobs, but to raise awareness about tech CEOs who exhibit what I call Steve Jobs Syndrome. While it’s natural to be inspired by someone so influential, it’s crucial to remember that imitating his persona or approach without understanding the deeper principles behind his success can lead to missteps. Steve Jobs wasn’t a blueprint for success; he was a unique individual with a vision and a relentless drive to create great products. Instead of trying to copy his every move, we should focus on the values that made him successful. By doing so, we can learn from his legacy without falling into the trap of “Steve Jobs Syndrome.” There’s much to be learned from his approach to product creation—but that’s a topic for another blog post.
2025-03-02 19:00:00
As someone working towards financial independence, I regularly review my expenses and look for ways to reduce them without sacrificing my quality of life, especially the recurring ones. Sometimes I switch to a cheaper internet provider during Black Friday, or find ways to lower my electricity bill.
But there’s one expense that takes up a large portion of my monthly budget that I can’t control: my rent. I’m sure I’m not the only one in this situation. A common rule is that you shouldn’t spend more than a third of your salary on rent. I believe this applies to most of you reading this. Unfortunately, for some people, rent can take up half of their salary.
I live in an apartment owned by a company that has more than 3.000 flats in Hamburg. Their business model is simple: instead of building new homes, they buy old flats in popular neighborhoods, renovate them, and raise the rent. Even though there are some rent control rules in Hamburg, there’s not much protection when it comes to rent hikes between tenants after a renovation, even if I’m paying 50% more than the average rent in my neighborhood.
Some might ask why I don’t just move. Well, when you’re trying to rent a place and there’s a long line of people applying, it can take anywhere from three months to even a couple of years to find something that works. Others might suggest moving to a different city, but that’s not an easy choice if you enjoy your life where you are and have friends around you. The only remaining option, then, is to buy a property.
When looking at homeownership rates in OECD countries, Germany stands out for having a much lower rate compared to others. In fact, only 41.8% of Germans own their homes, and in some areas, this rate drops even further to just 20.1%.
One reason for this lower homeownership rate could be cultural. Germans generally have a strong aversion to taking on debt. The word for debt in German, “Schuld,” also translates to “guilt,” which suggests that borrowing money might be seen as something undesirable or morally wrong in the culture. This perception may explain why many Germans shy away from taking out mortgages, especially considering the long repayment periods, which can stretch up to 30 years.
Another factor influencing lower homeownership rates, particularly in cities like Hamburg, could be the city’s historical role as a major port. In the past, sailors with disposable income often bought property because they spent so much of their time at sea. Additionally, Hamburg has a large number of wealthy residents who view homeownership as a smart investment. This leaves fewer opportunities for the average person to buy a home.
Of course, these are just theories, but the fact remains that for many Germans, owning a home is not a viable option for reducing long-term expenses. This brings me to consider alternative solutions where the government could play a role in changing the current situation and making homeownership more accessible for a larger portion of the population.
While homeownership rates are relatively low in Germany, there are other countries where homeownership rates are high, and some even offer near-“free” opportunities for citizens to own homes. These examples show how governments can design policies that promote homeownership and economic stability.
Despite its small size—just 700 square kilometers—Singapore has become an economic powerhouse, largely due to its strategic government policies. With a population of 6 million, giving land directly to citizens isn’t feasible, but the government has successfully implemented policies to encourage homeownership.
The Housing Development Board (HDB) plays a central role in this success. It builds affordable homes and offers subsidies, low-interest mortgages, and financial support to cover any deficits. Additionally, Singapore’s mandatory savings system, called the Central Provident Fund (CPF), helps citizens save for home purchases. Policies like land value capture ensure that land prices remain stable, even though land is limited.
Thanks to these policies, 90% of Singaporeans own their homes today, which stands as a powerful testament to the effectiveness of these government strategies in fostering personal wealth, economic growth, and social stability.
In several small towns across Italy, vacant homes are being sold for just €1 as part of an initiative designed to revitalize rural areas that have experienced population decline. This program aims to attract new homeowners, stimulate local economies, and preserve Italy’s rich cultural heritage. However, the catch is that these homes typically require substantial renovations, with costs ranging from €20,000 to €50,000. Buyers must submit renovation plans within one year of purchase and complete the renovations within three years. Additionally, there are legal fees, renovation guarantees, and other specific requirements that buyers must meet.
While Singapore and Italy offer interesting examples of increasing homeownership, their solutions are not universally applicable. Singapore’s success is partially due to its smaller population and efficient use of limited land, which makes its model less adaptable to larger countries with different demographics. Italy’s program, while innovative, may not suit individuals who are unwilling to invest in substantial renovations or prefer urban living over rural relocation. By examining these cases, we gain insight into the various ways to promote home and land ownership—and the unique challenges each solution faces.
The idea of giving land to citizens isn’t new. Throughout history, many have tried to implement this concept, but for various reasons, these efforts often failed. In most cases, those who attempted to give away land for free ended up facing significant challenges, with little success in addressing the underlying inequalities. These historical examples offer valuable lessons on the complexities of land redistribution and the political forces that often prevent it from succeeding.
While reading SPQR by Mary Beard, I came across a story about a politician in ancient Rome that intrigued me. In 133 BCE, Tiberius Gracchus proposed a reform to give land from the state to Roman citizens, particularly the poor and veterans. His goal was to tackle growing economic inequality and the concentration of land in the hands of wealthy elites. Gracchus believed that land redistribution could restore balance and offer opportunities to those who had been left behind by Rome’s increasing wealth disparity.
Unfortunately, his proposal was met with fierce resistance from the ruling class. Tiberius was ultimately killed in a violent altercation, beaten to death with a chair leg in the Senate. His brother, Gaius Gracchus, tried to continue his work but also met a tragic end, despite managing to distribute some land. The failure of the Gracchi brothers’ reforms marked a turning point in Roman history, signaling the beginning of the decline of the Roman Republic, as political power became increasingly consolidated among the elites.
In another book, The Empire of Cotton by Sven Beckert, I was surprised to learn that, after the Civil War and the emancipation of enslaved people, there was no comprehensive reform to grant them true economic freedom. After years of working without ownership, what could formerly enslaved people do with their newfound freedom? Capital, specifically land, was needed to achieve economic independence. Without land, they were left with little means to sustain themselves and build wealth.
Interestingly, I later learned from the Apple TV+ series Manhunt, which focused on Abraham Lincoln’s assassination, that there was actually a plan to provide land to newly freed African Americans. In 1865, land was being distributed to some freed people as part of an initiative called “40 acres and a mule.” However, after Lincoln was assassinated, President Johnson reversed this policy and took back the land. The backlash from plantation owners, who feared losing their labor force, played a crucial role in this decision. They complained that if freed African Americans were given land, they would no longer work on the plantations.
Had Lincoln not been assassinated, it’s possible that the economic landscape for African Americans could have been very different. Unfortunately, after Johnson’s reversal, efforts to distribute land to African Americans have been limited, and those that did occur were largely ineffective. This failure to provide land or economic opportunity to former slaves has had lasting consequences, contributing to the entrenched racial and economic inequalities that persist in the United States.
Another example comes from my home country, Turkey. After World War II, discussions about land redistribution to farmers were actively debated within the Republican People’s Party (CHP), the only political party in power at the time. Many saw land reform as a crucial step to improve the economic conditions of rural farmers and reduce inequality. However, landowners within the CHP, who controlled large estates, strongly opposed the proposed legislation. They feared that the reform would diminish their wealth and power.
In response to the opposition from the landowning class, these influential members were expelled from the CHP and went on to form the Democrat Party (DP), a political force that aimed to block the land reform. The DP gained significant popularity and eventually won elections, forming the government. Despite the passing of the land redistribution law, it was so heavily altered by the new government that it failed to achieve its original goals. Instead of the widespread redistribution of land, the reform was diluted, and many farmers saw little benefit.
As a result, the CHP has never regained the same level of support and has never been able to govern the country on its own since then. The failure of land reform in Turkey not only impacted the rural farmers it was supposed to help but also had lasting political ramifications, shifting the balance of power in the country.
These examples—spanning from ancient Rome to the Reconstruction era in the United States, and even into modern Turkey—highlight the persistent challenges of implementing land redistribution. Despite the good intentions behind these efforts, the concentration of power among landowners, political elites, and other influential groups has often led to their failure. However, these historical attempts offer valuable lessons about the complexities of land distribution and the barriers that must be overcome for such reforms to succeed.
Given these lessons, I believe it is now time to approach the idea of giving land to citizens with a more modern perspective. This is where I propose the concept of Universal Basic Land—a solution for countries with large amounts of unused land to tackle inequality, provide economic freedom, and fulfill a basic human need.
Universal Basic Land (UBL) is an innovative concept that extends the idea of Universal Basic Income (UBI) to land ownership. For those unfamiliar with UBI, it is the concept of providing a set amount of money to every citizen in a country, regardless of their economic status. While UBI focuses on providing individuals with a guaranteed income to support their basic needs, UBL would provide people with access to land, giving them the freedom to determine how to use it. This could include building a home, starting a farm, or running a business. The idea behind UBL is to offer individuals the flexibility to create their ideal living and working spaces, instead of assuming that everyone wants to own a home. This concept acknowledges the diverse needs and desires people have when it comes to land use.
For UBL to work effectively, land distribution must be carefully planned to avoid the creation of isolated, underserved areas. If not managed properly, people could end up owning land in rural locations with few services or opportunities, much like the situation seen in some parts of Italy, where individuals live in remote areas with little access to the amenities and infrastructure of urban centers. To prevent this, UBL land should be spread across regions that are connected and accessible. This way, people can choose land for various purposes, such as housing, commerce, or agriculture, while still benefiting from being part of a well-developed community. For instance, someone might choose a plot for residential use, while another person might opt for land to open a business. This mix of land purposes would foster vibrant communities with necessary services, such as cafes, restaurants, and stores, all while local farming ensures a sustainable food supply.
In addition to well-planned land distribution, UBL also requires a strong transportation infrastructure. The success of UBL hinges on ensuring that new towns or communities are well-connected to one another and to larger cities. People should be able to travel easily between towns, whether for work, education, or leisure, without being dependent on owning a car. Accessible public transportation would make living in a UBL community both practical and sustainable, reducing the financial burden of car ownership and encouraging mobility.
Another key element of UBL is the ability for people to trade their land if their needs or preferences change. For example, someone who initially chose land for farming may later decide that they want to build a home as their family grows. A flexible marketplace for land transactions would allow people to buy, sell, or swap land. However, it’s important that each person can only own one piece of UBL land to prevent individuals or corporations from hoarding land. This ensures that UBL remains a tool for equitable land distribution and helps maintain a more balanced, fair system.
Of course, a potential concern with UBL is the capital required to develop the land. Whether it’s for building a house, establishing a farm, or starting a business, significant investment is often needed. To address this, financial tools such as loans or credit could play a vital role. After acquiring the land, individuals could use it as collateral to secure funding for development. Alternatively, they could choose to lease their land to others, generating income while retaining ownership. While this financial aspect of UBL would require careful consideration, it presents a valuable solution to ensure that landowners can access the resources they need to make the most of their land.
In conclusion, Universal Basic Land could offer a transformative approach to land ownership and use, empowering individuals with more freedom and opportunities. With careful planning and the right financial tools, UBL has the potential to create thriving, interconnected communities where people can shape their futures based on their unique needs and aspirations.
When the topic of income inequality, social unrest, and the rise in productivity is brought up, Universal Basic Income is often suggested as a potential solution. Proponents argue that UBI could alleviate various societal issues by providing people with a financial safety net, allowing them to live more comfortably and focus less on basic survival.
However, one of the most common concerns about UBI is the risk of inflation. If everyone suddenly has access to more money, the prices of goods and services, including rent, could rise, potentially nullifying the benefits of receiving a basic income. I share this concern, but what worries me more is that UBI might not truly address income inequality. A large portion of the money people receive would likely end up going to landlords and financial institutions, as individuals use their UBI to pay rent or mortgages. In essence, this would funnel wealth into the hands of the already wealthy, leaving the core issue of economic disparity unresolved.
In contrast, Universal Basic Land could offer a more impactful solution. If people were given access to land, the dynamics would shift. Instead of paying rent or a mortgage, individuals could use the land to build a house or start a business, gradually increasing their wealth. Over time, the land could appreciate in value, allowing individuals to build equity. Additionally, by investing in the land and developing it, people could generate income from their efforts. The government would still collect taxes on spending, but rather than going directly to landlords or banks, the money would circulate within local communities, supporting broader economic growth and helping to address wealth inequality more effectively.
Another concern often raised with UBI is the potential for people to stop working altogether. While the goal of UBI is to provide financial freedom, there’s a fear that it might discourage people from pursuing work, especially for jobs that are essential but not particularly desirable. Universal Basic Land, on the other hand, would still require people to work, though perhaps on their own terms. While they might not have to work as much as they do now, they would still need to invest effort into developing their land, whether it’s constructing a home, cultivating crops, or starting a small business. Even if they build a home, there would still be ongoing expenses—like food, utilities, and personal interests—that would require some form of income.
For these reasons, I believe Universal Basic Land is a more sustainable and equitable solution than Universal Basic Income. By providing people with land, we empower them to create wealth and stability on their own terms, while reducing the concentration of wealth in the hands of landlords and banks. It encourages personal responsibility and development, all while addressing some of the systemic issues tied to income inequality.
If you’ve ever taken a look at a map of Germany with statistical data, you might have noticed the ongoing divide between East and West Germany. Even after decades of reunification, there are still significant disparities in economic indicators like homeownership rates, unemployment, and overall prosperity. The eastern part of the country tends to fare worse in these areas, with economic challenges more pronounced. This is why I believe that East Germany could be the perfect place to test the concept of Universal Basic Land.
East Germany offers several advantages for this kind of initiative. First, there is a substantial amount of unused land, especially in rural areas where the population density is lower. Much of this land remains underdeveloped, offering an opportunity to revitalize these regions by giving people the tools to create their own futures. By offering free land to people living in East Germany, the government could empower individuals to build homes, start businesses, or develop agricultural projects. These activities would not only help reduce unemployment but could also lead to a thriving local economy.
By testing Universal Basic Land in East Germany, we could see firsthand how giving individuals ownership of land leads to greater prosperity. Over time, this initiative could serve as a model for other regions or countries facing similar challenges, showing that land ownership—not just income—can be a key factor in improving economic well-being and reducing inequality.
2025-02-24 15:00:00
Label it a cargo cult or something else, but countless nations strive to replicate the magic of Silicon Valley. The typical approach involves politicians designating a city and branding it as the “Silicon Valley of [Country Name].” They establish technology parks, offer financial incentives, and hope for the emergence of trillion-dollar enterprises. Yet, no country has succeeded in creating its own Silicon Valley. Why? Either these leaders fail to grasp the nuances of what made Silicon Valley what it is, or they lack a deep understanding of their own nation’s cultural fabric.
From my perspective, after a decade of closely observing the tech industry and studying the success stories from the Valley, I can confidently state that Silicon Valley cannot be cloned elsewhere. The reason is simple: Silicon Valley isn’t merely a hub of companies, tax breaks, and venture capital—it’s a unique ecosystem driven by culture. It’s a magnet for individuals from diverse backgrounds united by one shared ambition: make a dent in the universe. These people, drawn by the dream of joining the elusive three-comma club, relocate there and pour everything they have into making it happen. While many fail, the presence of so many success stories inspires them to believe they can be next.
In Germany, the cultural landscape is strikingly different. Few people are driven by the ambition to “change the world”—perhaps because they feel they’ve already contributed their share as a nation. Wealth and its public display aren’t as celebrated here, which is why it’s difficult to name a prominent German billionaire off the top of your head without checking the internet.
However, if you’ve ever used a product marked “Made in Germany,” you’ll understand what German culture truly values: mastery of a craft and uncompromising quality. You won’t find many Germans willing to sacrifice their health or personal milestones—like the birth of a child—for work, or to forgo their well-earned vacation in Mallorca. They’re not the kind to release half-baked products and patch issues later, nor are they likely to push for higher prices just to fatten shareholders’ returns. The average German—apart from those who’ve left the country and morphed into “tech bros”—isn’t particularly moved by shareholder value, especially when the Basic Law of Germany begins with “Human dignity shall be inviolable.” The entire culture fundamentally opposes many hallmarks of the typical startup ethos.
This cultural divergence also explains why it’s difficult to name successful German startups on par with Airbnb, Uber, or Stripe—let alone tech giants like Google, Facebook, or Amazon. And there’s little indication that this will change anytime soon.
If you’re unfamiliar with Mittelstand, it refers to small and medium-sized enterprises (SMEs) in Germany. While there’s no formal definition, these companies typically have fewer than 500 employees and annual revenues under 50 million Euro. What sets Mittelstand apart from SMEs in other countries, however, is their laser-sharp focus on a single niche, in which they excel. A significant portion of their income comes from exporting high-quality goods. This specialization and export-driven model makes Mittelstand businesses exceptionally resilient and stable, even during economic turbulence. By catering to super-specific markets with few competitors worldwide, demand for their products remains steady, no matter the economic climate.
If you’ve ever worked with Mittelstand companies, you’ll know that many have a long queue of customers waiting for their products. It’s not uncommon to wait months—or even years—for an order. Yet customers are willing to wait because they know these businesses either produce the best quality or are the only ones making the product at all. This dedication to quality and niche expertise explains why Mittelstand accounts for around 30% of Germany’s exports.
The challenge, however, is that Mittelstand companies primarily focus on physical goods. Unlike major tech giants, they can’t enjoy the massive profit margins of producing digital products with zero marginal costs. This reliance on physical goods contributes to the widening GDP gap between Germany and the U.S. Yet German policymakers have done little to close the gap. Instead, they’re either trying to replicate Silicon Valley’s playbook or pivoting their attention to renewable energy. The former won’t work due to Germany’s cultural differences, and while renewable energy is a worthwhile pursuit, it won’t generate the high profits that come with digital innovation.
That’s why I believe a new approach is needed—a concept I call the “Digital-Mittelstand.”
While startups often begin with a focus on creating a minimum viable product (MVP), they tend to evolve into growth-hungry, investment-driven machines. Consider Spotify: it started as a music streaming service but has since expanded into podcasts and audiobooks. Netflix, synonymous with video streaming, has now ventured into gaming. This expansive growth strategy stands in stark contrast to Mittelstand’s ethos, which centers on focus, mastery, and sustainability. Mittelstand companies prioritize doing one thing exceptionally well, guided by a core ideology of longevity and conservative, long-term financial planning.
Most startups are built with the goal of either being acquired by a tech giant or going public. Mittelstand, however, aims to create lasting value for customers and employees—not shareholders. Startups also demand extreme dedication, often expecting employees to work 60–80 hours a week with little regard for work-life balance. In Mittelstand, employee well-being is a priority, encouraging a healthier balance between work and personal life. Even in today’s highly competitive AI industry, the startup world thrives on cutthroat competition. Mittelstand, by contrast, operates in niche markets with limited competition due to their specialized products.
Given these cultural and structural differences, I believe the traditional startup model won’t work in Germany. Instead of chasing a Silicon Valley model that no other country has successfully replicated, Germany should focus on developing the Digital-Mittelstand. This concept seamlessly aligns with both the German cultural ethos and the digital economy.
Creating a digital product doesn’t require massive capital investment—a small team of a designer and a developer can be enough to launch something meaningful. With fewer employees, companies can prioritize long-term goals, refine their product iteratively, and maintain lean operational costs. Once the product gains traction, the zero-marginal-cost nature of digital products allows them to scale without incurring significant additional expenses. Unlike startups that prioritize rapid growth or shareholder appeasement, Digital-Mittelstand companies can focus on work-life balance. If they generate enough revenue to cover expenses and fund leisure activities, that’s often sufficient for many Germans—a stark contrast to the high-pressure growth culture of Silicon Valley.
This model also aligns perfectly with Germany’s geographic and cultural diversity. Consider Germany’s population distribution compared to Turkey, for example. Both countries have similar populations (around 85 million), but even Gaziantep—my hometown and the sixth-largest city in Turkey—has a higher population (2.2 million) than Hamburg, the second most populous city (1.8 million) in Germany. This balanced distribution, which mirrors the Mittelstand’s industry diversification, contributes to Germany’s economic resilience. In contrast, the most populous city in Turkey, Istanbul’s dominance of Turkey’s economy (30% of the GDP) creates a single point of failure, especially with the looming risk of a major earthquake. A similar risk exists in highly centralized economies like London’s (25%).
Many Mittelstand employees live in small cities near their companies’ facilities. Digital-Mittelstand, however, can leverage remote work to further reduce costs. Employees could live in small towns, enjoy lower living expenses, and maintain a high quality of life thanks to Germany’s good transportation infrastructure. Remote work also translates into lower personnel costs, typically the largest expense for any startup. By tapping into these advantages, Digital-Mittelstand could achieve both profitability and sustainability without compromising employee well-being.
If you’re already sold on the Digital-Mittelstand concept, let’s explore the potential products they can create. There’s a wide range of possibilities:
These are just a few examples, and many can be classified under Software as a Service (SaaS). While these products don’t require massive capital investments, they do rely heavily on expertise. By focusing on niche markets and high-quality offerings, Digital-Mittelstand companies can carve out profitable, sustainable businesses. With minimal competition and zero-marginal-cost scalability, this model offers a long-term, balanced approach to growth and innovation.
It wouldn’t be fair to end this discussion without offering concrete suggestions for the government. Rather than pouring large grants into startups with the hope of generating returns for shareholders, the German government should consider introducing tailored incentives to foster the development of Digital-Mittelstand.
Germany has a wealth of talent—top-tier programmers, designers, and digital experts—many of whom currently work for startups or traditional corporations. A government program could provide salary grants based on experience, allowing these individuals to dedicate time to developing a digital product without compromising their quality of life or financial stability. For example, an experienced software developer with eight years of experience could receive a grant equivalent to their annual salary. Since about 42% of that money would return to the government or social system via taxes, the risk is partially mitigated. Unlike startups, where a large portion of funds often ends up spent on advertising with tech giants like Google and Facebook. If the product begins generating revenue within a year, the grant could be extended for another couple of years to help reinvest in further development.
Startups often bleed money on legal and accounting fees due to the complex regulatory landscape. The government could reduce this burden by creating a single, user-friendly portal where Digital-Mittelstand companies can register, report revenues, and record expenses. This system should provide clear explanations of what qualifies as an expense to minimize confusion and unnecessary compliance costs. Additionally, Digital-Mittelstand companies should be exempt from certain regulations until they cross a specified revenue threshold, allowing them to focus on product development rather than navigating red tape.
Currently, small businesses (Kleinunternehmen) in Germany enjoy a VAT exemption up to 22.000€ in revenue. This threshold should be raised to 100.000€ for Digital-Mittelstand businesses. A higher exemption limit would allow these companies to either offer competitive pricing or increase profit margins, enabling them to reinvest in their long-term goals.
Providing full English-language support for the Digital-Mittelstand system would make it easier for those already working in Germany to start their own businesses. It would also attract international talent to move to Germany for this opportunity. These individuals could first gain local experience by working for traditional companies. Thanks to the Blue Card visa for highly skilled workers, they can obtain permanent residency after about two years, allowing them to launch their own Digital-Mittelstand ventures. This would help traditional companies find talent and digitize their operations while encouraging more entrepreneurial risk-taking in Germany, as those relocating from abroad are often more willing to take risks.
With the federal election in Germany now complete and a new government set to take office, I hope this post reaches those in positions of power. I hope they’ll consider this approach, focusing on what makes Germany the third-largest economy while maintaining a great work-life balance, rather than attempting to replicate Silicon Valley.
Of course, despite what the title suggests, I’m not entirely dismissing the startup concept. There’s still a need for companies that require significant capital and rapid growth. However, I firmly believe that Digital-Mittelstand should be the government’s main focus. Some of these companies might even grow to become the digital equivalents of tomorrow’s Siemens, Bosch, or Zeiss.
2025-01-26 22:50:00
It happened on the afternoon of May 4th. A message from a colleague—who has since become a good friend—popped up on my screen, urging me to check my emails. When I opened my inbox, there it was: an email from the COO. The email announced an impending company-wide layoff and mentioned that, within a few minutes, I’d receive another email letting me know whether I was impacted. A short while later, the second email arrived. I was among those affected—along with most of my team.
The situation felt surreal. One by one, my colleagues posted in our team chat, confirming they’d been impacted too. Before our accounts were locked, we quickly jumped on a call. We had just 30 minutes to have one final conversation as a team, to say our goodbyes. It was a bittersweet moment, sharing those last words with people I’d worked so closely with.
It was difficult to process what was happening. Just ten months earlier, the company had gone through another round of layoffs. And at the beginning of the year, during the company’s kick-off event, the president assured us there wouldn’t be any more layoffs. They even said the company was performing well financially. So, why was this happening?
Looking back, my colleagues and I were not entirely surprised by the layoff. There were several warning signs that hinted something was coming. I want to share these signs so you can be better prepared if you ever face a similar situation.
One of the earliest indicators was the sudden cancellation of team events. When I heard from other teams that their off-site events were canceled without any clear explanation, it immediately raised red flags. These cancellations often signal that the company is going to announce something about the team structure and doesn’t want you to be with your team in the same place. This is because one of your teammates—or you—might be impacted, and you’d need to cancel flights, hotels, etc. To avoid dealing with these logistical issues, the company preemptively cancels the event.
Some employees at the company received notifications about packages scheduled to arrive at their homes. This happens because services like DHL notify you through their app when a package is on the way. If your company requires you to return your work equipment, like a laptop, after being laid off, they often arrange for these shipping boxes to be delivered in advance. If you unexpectedly see a notification about a package from your company’s IT provider, it’s a strong sign that a layoff is imminent—and you may be impacted.
The absence of a clear vision from leadership is one of the most common signs of an impending layoff. During off-site or kick-off events, you might notice that leaders seem unsure of the company’s direction. When this lack of clarity is followed by team restructuring, and then another restructuring just a few months later, it becomes evident that the leadership is struggling to find focus. Ultimately, this cycle often ends with a layoff, accompanied by yet another round of restructuring for those who remain.
Another sign is the appearance of unexpected, vague meetings on your calendar. These meetings are marked as “important” with no clear agenda, and attendance is mandatory. If this happens, it’s often a precursor to a layoff announcement. Public companies, in particular, may choose to send layoff notices via email to align the timing with when they notify investors.
If your company is publicly traded, layoffs are frequently announced in conjunction with quarterly earnings reports. This can be especially stressful because, leading up to every financial results announcement, employees may anxiously wait to see if layoffs will accompany the news. If no layoffs are announced, you know you’re safe—for at least one more quarter.
When I looked back on my time at the company and all the things I had accomplished, I was surprised to be impacted by the layoffs. It wasn’t because I thought I was better than others—it was because I believed I was doing more than what was expected of me. However, during a layoff, it seems that who you are and what you do doesn’t matter. In most cases, the decision is made by people who don’t even know you. This realization made me question the concept of work, which is part of the reason I’m writing this blog post.
I was hired as a Backend Developer. When I joined my team, I noticed a project that needed a developer to implement the client-side feature in React Native. Although I had no prior experience with React Native, I had worked with React before, so I volunteered for the task. I shipped the feature without any issues, received positive feedback from my team and lead, and eventually, my title was changed to Developer, making me a full-stack developer.
In some instances, I worked on projects independently, always aligning with my team and ensuring my work was reviewed. I would implement the backend first and then move on to the client-side. This was my expected role, and in performance reviews, I was consistently rated as a high performer. Yet, I was always doing more than what was expected of me.
Sometimes, I worked on small features I thought would enhance the app. These features might not have been used by many, but they provided significant value to heavy users. Occasionally, I shipped these under the radar. I created dashboards to measure the impact of my team’s work, helping us focus on features that would bring the most value to users. I also built proof-of-concept features based on user requests to show leadership how easily they could be implemented, advocating for their prioritization. Additionally, I participated in hackdays, creating projects to showcase innovative ideas.
On several occasions, I was selected for special projects outside my team. These projects often came directly from the CEO, and I was chosen because I constantly wanted to do more for the company and our users. For some of these projects, I worked more than eight hours a day, including weekends. A few of these initiatives were mentioned in financial reports, praised by the CEO during all-hands meetings, or retweeted multiple times by the CEO on Twitter.
Over time, I gained the attention of senior management in my business unit, which consisted of about 400 people. I began directly interacting with the VP of Product and the VP of Engineering, both of whom were four or five levels above me. Occasionally, the VP of Product would message me directly to ask if a feature was feasible to implement. Later, the VP of Engineering started scheduling regular one-on-one meetings with me, which was highly uncommon. During these calls, he told me multiple times that if I continued working at this level, I could quickly climb the ladder to become a Staff Developer. He wasn’t the only one saying this to me.
Beyond my immediate role, I also sought ways to contribute to the broader company. Whenever a new tool was introduced, I would explore it, write detailed articles about my findings, and share them to help other teams use the tool more effectively.
I referred many friends and former colleagues to the company because I believed in its mission. If I recall correctly, I referred over ten people, four of whom received offers, and three were ultimately hired. I also encouraged many others to consider joining the company.
I even initiated discussions about translating our website into Turkish to support the many customers we had in Turkey. A few weeks before the layoff announcement, I was helping a team working on this project find a Turkish-speaking content designer because they noticed my willingness to assist.
Additionally, I tried to convince friends who were CTOs at major e-commerce companies to migrate their websites to our platform. Whenever I received job offers from e-commerce companies on LinkedIn, I used those opportunities to promote our platform instead. I passed along leads to the sales team and later noticed that one of those companies had indeed moved to our platform.
I’m not sharing all of this to brag but to highlight that, in the end, none of it mattered. On the day I announced I had been laid off, I received numerous messages from colleagues, even those I hadn’t worked with directly, telling me that I had inspired and motivated them. While those messages were heartwarming, they didn’t change the reality: to the company, I was just a row in an Excel sheet.
Layoffs were uncommon when I started working, and being a developer felt like an incredibly safe job. In most professions, the unspoken rule was simple: if you performed well and the company was financially stable, your job was secure.
But today, companies are announcing layoffs alongside record-breaking financial results. You work hard, focus on impactful projects, and receive praise from your lead—only to find yourself let go by someone who likely doesn’t even know you exist. It feels as though the trust between companies and employees is now broken. Companies, it seems, are either unaware of this shift or unwilling to address it. And frankly, I’m not sure how they could fix it.
What’s particularly strange is that the layoffs predominantly affect individual contributors—the people who have little say in deciding the company’s direction. These are the team members closest to the users, the ones who spend hours planning how to improve the product. But after those plans are made, leadership often swoops in and redirects efforts toward entirely different goals. You trust their judgment, work on their priorities, and deliver on time. Then, when the arbitrary goals they set aren’t met, the company decides to cut staff. Those who made the poor decisions remain, and some are even promoted, while the people carrying out the work are let go. It feels surreal—like an episode from Silicon Valley—but this is how big companies operate.
I’m not alone in feeling this way. Many friends and ex-colleagues who’ve been laid off in recent years share similar experiences. They’ve lost trust in their employers. They believe their efforts won’t matter in the long run and anticipate being part of the next layoff cycle. As a result, they only do what’s strictly required to avoid a performance improvement plan. No one goes above and beyond anymore; no one takes initiative to improve things. Why? Because it doesn’t matter. They’ve seen firsthand that it changes nothing.
For those like me who’ve experienced layoffs, work has become just that—work. You do what’s assigned, and if your company squanders your potential or forces you to waste time on unnecessary projects, you simply stop caring. You collect your paycheck at the end of the month, and that’s it. This is the new modern work: no more striving to be 40% better every year.
Since I was working for a German entity of a company, I want to address a common myth about job security in Germany. Many people believe that it’s nearly impossible to be fired in Germany. While this is partially true for individuals who have completed their probation period, it doesn’t hold up in the context of layoffs. If a company decides to lay off, for instance, 40 employees, German law doesn’t prevent this. Instead, the law enforces a social scoring system to determine who is affected, prioritizing the protection of the most vulnerable employees, such as those with children. In this sense, when it comes to layoffs, the difference between Germany and the US is minimal.
When I talk to friends who were laid off in recent years, we often reflect on what we could have done differently. Here are some of the lessons we’ve learned:
You’ve probably noticed that I didn’t mention the name of the company I was laid off from. That’s because I believe it’s irrelevant. Everything I’ve shared reflects the current state of the tech industry. It might differ at very small companies, but once you work at a company with more than 100 employees, you’ll likely encounter many of the same patterns I’ve described.
I’ve wanted to write about this topic for a long time, but it’s been difficult to find the energy. The subject itself is a deep disappointment for me, and every time I reflect on layoffs, it makes me profoundly sad. It’s a stark reminder of how companies treat workers as disposable. Before you join, they go to great lengths to make you feel valued and excited to accept their offer. You meet multiple people, and some even offer signing bonuses. But when layoffs come, you’re reduced to a name on a list. During the exit interview, a random person from the company reads a prepared script and can’t answer your questions. The HR team that once worked to make you feel valued doesn’t even conduct an actual conversation with you. That random person becomes the last connection you have to a company you spent years at.
The layoff fundamentally changed how I perceive work now. I don’t think that I’ll be the same person again.
2024-05-05 17:30:00
Last summer, I got a letter from German Pension Insurance about my pension. It had lots of details about what me and my employer paid in, how much pension I could expect, and when I could retire earliest. They even gave some guesses about my future pension based on different inflation rates. It was surprising to see that I could retire in 2061 when I’m 67.
I do like my job, but I also like the thought of having the freedom to choose how I spend my time. If you weren’t born rich, you either wait till 67 to retire or make a plan to retire early.
The FIRE (Financial Independence, Retire Early) movement aims for financial independence and early retirement. You save money each month and invest it in low-cost, low-risk ETFs until you reach your goal. Then, you can retire early and live off your investments. It’s a straightforward idea.
This movement isn’t about being cheap or not enjoying life until retirement. It’s about being smart with your spending, making a solid financial plan so you can retire early and do what you want. You don’t need to make a lot of money; it’s about how much you save and when and how you want to retire, as there are different ways to retire early in the FIRE movement.
Steps to retire early in the FIRE movement are quite straightforward. You aim to have 25 times your yearly expenses saved up. Once you reach this amount in your investment account, you can withdraw 4% annually to cover your living expenses without having to work. So, the first step is to know your yearly spending.
You can use budgeting apps or simply create a spreadsheet like the one below:
| Date | Store | Item | Amount | Category |
|---|---|---|---|---|
| 01/01/2018 | Landlord | Rent | 720€ | Rent |
| 02/01/2018 | REWE | Groceries | 26€ | Groceries |
| 03/01/2018 | Greenplanet Energy | Electricity | 37€ | Utilities |
| 04/01/2018 | Apple | AirPods Pro | 200€ | Shopping |
| … | … | … | … | … |
Each weekend, add your transactions to the sheet. At the end of the month, create a table showing the sum of each category:
| Category | Total |
|---|---|
| Rent | 720€ |
| Groceries | 143€ |
| Utilities | 120€ |
| … | … |
| Total | 1.600€ |
Repeat this for 12 months, then create a final page for an overview:
| Month | Total | Rent | Utilities | Groceries | Restaurant | … |
|---|---|---|---|---|---|---|
| January | 1.600€ | 720€ | 120€ | 143€ | 100€ | … |
| February | 1.800€ | 720€ | 120€ | 243€ | 200€ | … |
| … | … | … | … | … | … | … |
| December | 1.600€ | 720€ | 120€ | 143€ | 100€ | … |
Lastly, create a table showing total and average spending for each category:
| Total | Rent | Utilities | Groceries | Restaurant | … | |
|---|---|---|---|---|---|---|
| Total | 17.000€ | 9.000€ | 1200€ | 2.400€ | 1.000€ | … |
| Average | 1.500€ | 750€ | 100€ | 200€ | 84€ | … |
This simple sheet gives a clear picture of your monthly spending. With this overview, you can identify areas to cut back and save. For instance, a friend realized he was spending too much on food delivery and limited themselves to 100€ per month. You can do the same.
Setting up your emergency fund is crucial in the FIRE movement’s long-term planning. While early retirement might not happen overnight, with a good saving rate, you can definitely retire before hitting 67. Since we’re in it for the long haul, we don’t want to dip into our investments for sudden expenses. That’s why an emergency fund is essential.
Typically, the rule of thumb for this fund is around 3 to 6 times your monthly expenses. So, if you spend around 1.500€ monthly, having 9.000€ stashed away is a wise move. In Germany, there’s a bit more safety net compared to other places like the US, thanks to unemployment insurance. If you unexpectedly lose your job, you can rely on unemployment benefits for a year. But if that’s not enough to cover your expenses, you might dip into your emergency fund.
When I first set up my emergency fund, I saved up 6 times my monthly expenses. Later on, I upped it to 12 times just for extra security.
Once you’ve decided on the amount for your emergency fund, it’s smart to choose a savings account with a high-interest rate, so your fund doesn’t lose value against inflation. I personally recommend Trade Republic for this, as they offer 4% interest on savings. That’s where I keep my emergency fund. You can check it out here.
Calculating how much you need to retire early is pretty straightforward. Once you know your yearly expenses, you just multiply that by 25. That gives you your FIRE goal. Once you hit that number, you’re ready to retire. After retiring, you withdraw 4% of your portfolio yearly to maintain your lifestyle without reducing your standard of living.
Let’s say your monthly expenses are 1.500€, which means your yearly expenses (1.500€ x 12) are 18.000€. Multiply that by 25, and your FIRE goal would be 450.000€.
The number might seem daunting, but by saving monthly and investing in your portfolio, you leverage compound interest. For instance, if you’re earning 40.000€ annually as a recent graduate at 24, your monthly take-home pay might be 2.200€ after taxes. If you save 700€ per month and invest it in a common ETF like the S&P 500, which yields 10% annually, by the time you’re 44, you’d have 481.000€ in your investment account. That means you could retire 23 years earlier than the pension system allows.
As you progress in your career, you’ll likely earn more, allowing you to invest more and possibly retire even before turning 40. However, life circumstances can change. Maybe you move to a city with higher living costs, or you start a family, altering your expenses. In such cases, you might need to recalculate. But understanding the main idea—managing spending, saving wisely, and maintaining your lifestyle—can help you retire much earlier than relying solely on the pension system.
The key is to start early. That’s why I mentioned a 24-year-old example. Some parents even set up investment accounts for their newborns, depositing 100€ monthly. By the time the child turns 18, there could be 55.000€ in the account, thanks to compound interest. This money could fund education, buy a car, or even travel the world before university. It may sound unbelievable, but it underscores the power of compound interest. (Here’s a compound interest calculator if you want to try a similar calculation.)
Most folks I know who are into the FIRE Movement prefer investing in ETFs. An ETF is like a basket of stocks from various companies and sometimes countries. Common ETFs include All-World ETFs, Emerging Markets ETFs, and the S&P 500 ETF. These ETFs hold stocks from all over, including emerging markets like China, India, Taiwan, Brazil, or from the S&P 500 index in the US. Warren Buffet often suggests investing in the S&P 500, but many of my friends opt for a mix, like 70% All-World and 30% Emerging Markets, to diversify beyond just the US market. ETFs are generally less risky than crypto or individual stocks since they spread your investment across hundreds or thousands of stocks. However, if you choose more diversified ETFs, your returns may be lower.
Your portfolio depends on your preferences. You can explore the “booglehead” approach, considering your age and risk tolerance to decide on your portfolio. Currently, my portfolio looks like this:
My portfolio might seem a bit risky because both the S&P 500 and All-World ETFs include Apple. If something happens to Apple, my portfolio value could drop significantly. As I get older, I might sell my Apple stocks and invest more in All-World and Emerging Markets to balance my risk. Some folks find ETFs risky and prefer investing in bonds.
The S&P 500 holds the largest portion of my portfolio because historically, it has returned around 10.5% annually. With data spanning a century, I feel secure in this investment, considering it has weathered wars and financial crises. That’s why I don’t advocate day-trading; instead, invest for at least 10-15 years and withdraw only a small percentage.
Simplicity is key in portfolio design. If I were starting now, I might go for a combination of All-World ETFs and Emerging Markets. You can learn more about this topic on boogleheads.org.
Once you’ve decided what to invest in, it’s time to create your investment plan. When I moved to Germany, there weren’t many neo-brokers with English support that offered affordable investing options. So, I opted for DEGIRO. Initially, investing in their core selection ETFs was free, but now it’s 1€ per transaction. The only drawback is you have to handle taxes yourself, but I’ve outlined the process in a blog post. It’s as simple as entering your capital gains into one field on your tax form, but calculating taxes for ETFs that accumulate dividends can be a bit complex.
If I were starting now, I’d likely choose Trade Republic because they handle taxes for you and provide an annual tax report for easy filing.
Once you’ve chosen your broker, decide how you want to invest. For me, when my salary lands in my N26 account, I keep what I need for the month and send the rest to my broker to buy S&P 500 ETFs. It’s that straightforward.
This monthly investing method also employs dollar-cost averaging, removing the need to time the market. Some friends invest quarterly or annually, but I recommend monthly investing to avoid extra money sitting in your bank account, tempting you to spend unnecessarily.
Taxes in Germany can be hefty, with income tax reaching up to 42%. However, capital gains tax is comparatively lower, at 25% plus a 5.5% solidarity surcharge, resulting in an effective tax rate of 26.375%. If your ETFs include at least 50% stocks, like All-World or S&P500, then 30% of your capital gains are exempt from taxes (known as “Teilfreistellung”), bringing down your effective tax rate to 18.46%. Considering this, investing becomes more attractive for those living in Germany.
Additionally, you don’t pay taxes on your first 1.000€ of capital gains each year. So, if your regular dividends total less than 1.000€, you won’t owe any capital income taxes for that year.
Since tax calculations can be complex, I highly recommend using Trade Republic as they handle all tax matters for you.
In this blog post, I’ve described the leanFIRE approach, where you continue working and investing until you reach a sum that covers your expenses. However, there are other types of FIRE that might suit your circumstances better.
fatFIRE: Instead of aiming for just enough to cover expenses, you target higher amounts, ensuring a luxurious lifestyle where money worries are a thing of the past. This usually falls in the range of 3-5 million €, making it quite challenging to achieve.
baristaFIRE: When you hit your financial goal, rather than retiring completely, you take up a job (like being a part-time barista) that covers your expenses and health insurance, allowing you to use your savings for personal pursuits.
avocadoFIRE: If you have specific lifestyle desires, like indulging in avocado toast daily, this type of FIRE is for you. It’s akin to fatFIRE, but with a lower financial goal.
For me, baristaFIRE seems ideal, especially initially. Working around 20 hours per week allows for social interaction, a sense of routine, and covers health insurance costs. I might opt for a role like a bike shop mechanic. Later on, if I feel the need for more freedom, I could transition to leanFIRE.
The choice is personal. Some friends are aiming for fatFIRE to completely eliminate money concerns. Other options may leave you with lingering financial anxieties, despite having enough to cover expenses. With fatFIRE, you’re prepared for any unforeseen changes or challenges that life may throw your way.
I hope this blog post has provided you with a basic understanding of the FIRE movement and how to get started. My aim isn’t to offer financial advice, especially regarding taxes, but rather to offer a path that could lead to early retirement.
In the US, you can invest your pension savings into the ETFs mentioned in this post, potentially growing your retirement funds substantially. Christian Lindner, Germany’s Finance Minister, recently discussed introducing a similar system in Germany called Generationenkapital to shore up the struggling pension system. I’m hopeful that the government will manage to pass the necessary laws to implement this system, easing financial worries for retirees at 67.
One final note, if you want to calculate your leanFIRE goal on your iPhone, I’ve developed a free app called FIREcalc. It allows you to easily determine when you can retire based on your savings. Alternatively, you can use this website for web-based calculations.
Please note that some of the links I’ve shared here are affiliated. If you choose to use any of the services mentioned, I may earn a commission.