Germany's economy is characterised by decentralisation and small and middle-sized family business, the so called Mittelstand. Germany is home to a significant portion of the world's 'hidden champions'[1], which as the name suggests, largely fly under the radar of the consumer focussed start up sector.
Startups mostly profit from access to homogenous large consumer markets and extreme clusters. Neither has ever been the goal of German economic development, largely because it's incompatible with the sort of cultural values German's consider important.
>I thought being Europe's strongest economy would help.
I don't think that reducing a country or an econonomy to a single metric (here: gdp, I guess?) is the right approach; we are looking at very complicated systems here. One thing that makes Germany unique is its Mittelstand-phenomena [0].
Historically, innovation isn't driven by wealth, but by pressure, see: times of war, or the US' "make it big or die"-mentality.
Germans are very well off: cabs in every village are high-end mercedes models (suggesting that the entire society is rich), and social security is simply unmatched globally (afaik, no other country pays you 400eur+rent until you find a job, no matter how many years it takes).
Growing up in this environment, I never felt incentivized to come up with ways to become super-rich (which is the idea behind being an entrepeneur, isn't it?). Theres just no point to that hustle if you can live a really decent life working a normal job.
Sure, there is some class struggle (and there always was), but generally speaking, people just don't need to "make it" on their own - opposed to the US, where status is everything)
> Historically, innovation isn't driven by wealth, but by pressure, see: times of war, or the US' "make it big or die"-mentality.
It's driven by both. New hypotheses get generated in times relative wealth, when people can afford not to default to the availability bias of ideas that exist already.
Pressure for success results in the selection of the more optimal hypotheses available to put into action. Much of the science and tinkering that led to wartime technology used in the world wars, for example, was done during non-war time.
If you place too much on the side of survival pressure, you will be over optimized for the short term, and likely generate fewer innovations.
