The Digital-Mittelstand is the other way

Almost ten years ago, I joined a Berlin startup wide-eyed and eager to "make an impact." Last year, I watched a former colleague, a brilliant product marketing manager, quit her job for a second time after another burnout. Between these moments lies a decade of shaping products for venture-backed startups, consulting giants, and innovation labs of corporate monoliths. During that period, I witnessed first hand absurd corporate politics, empty wealth promises from equity, burnout-inducing grind, and a lot of wasted potential. All taught me the same lesson: the tech industry’s obsession with scale is broken.

Today, I’m chasing a different vision: the Digital-Mittelstand—a model blending craftsmanship with digital innovation. Inspired by Germany’s tradition of high-value SMEs, with a digital twist. It’s not a retreat from ambition, but a redefinition: mastery over growth, longevity over scale, profitability over prestige. Here’s why:

1. Autonomy and craftsmanship make me thrive. I want to build tools that last, not features designed to please investors.
2. Freedom matters more than vanity metrics. Wealth, for me, means security to work from a Tuscan village or a Lisbon co-working space—untethered from investors whims (remember when remote was all the rage?) or irresponsible "strategic realignments" (aka "mass layoffs").
3. Resilience comes from networks, not monoliths. A society powered by small, interconnected teams weathers storms better than one reliant on brittle giants.

This isn’t idealism, it’s a viable blueprint and the signs are already there.

A cascade of disillusionment for the ambitious

Traditional corporate careers: rent-seeking & political theater

The corporate ladder once promised stability, but today it rewards rent-seeking and political maneuvering over impact:

• Rent-seeking in practice: Middle managers hoard resources to justify budgets, while executives lobby regulators for favorable policies (e.g., taxi licensing monopolies) instead of innovating. They extract value without creating it.
• Organizational politics over merit: A 2024 MIT study found 68% of promotions in Fortune 500 firms hinge on alliances, not performance. Imagine a junior developer’s idea (e.g., cost-saving algorithm) stolen by a manager seeking favor—eroding trust and loyalty (as in the Staffbase example).
• Outcomes:
  • High market impact, low human impact: Products reach millions, but teams drown in bureaucracy.
  • Stability? Only until you’re deemed “too expensive” post-45.
  • The “good stuff”: Pension plans and titles—if you survive the political gauntlet.

Startups: the false promise of freedom

Startups sold us rebellion against corporate decay. Instead, they became burnout factories with rigged equity lotteries. Wether you are an employee or a founder, the following holds:

• The Good:
  • Accelerated learning: You will build in 2 months things that would take two years in other contexts.
  • Local impact: Your productivity directly shapes your team’s success—until the pivot.
• The Bad:
  • Empty wealth promises: Startups will not make you rich. Even after multiple rounds of funding (already a "select few"), you get liquidation preferences, overly ambitions performance targets post acquisitions and taxes. Making a payout >1M€ is not garanteed. They exist, but counting on it is akin to gambling.
  • Exploited "missionaries": founders looking for employees susceptible to be dedicated to a vague mission as an excuse to pay them less and guilt-trip them into working more.
  • Rent-seeking 2.0: Venture capital distorts incentives. Founders chase the latest trend ("cloud", "Web3", "AI") to please investors, not users, in a modern “regulatory capture” where VCs, not governments, dictate artificial rules.
• Burnout grind: When you need to grow 4x year over year, it gets in your head. You end up celebrating “hustle” while normalizing panic attacks.

Big tech: corporate cosplay

Big Tech promised utopian campuses and purpose—now it’s just corporatism with better snacks:

• The Good:
  • Big salaries: Engineers earn €150k+ to optimize ad algorithms.
  • Snacks: snacks.
• The Bad:
  • Innovation theater: Large tech companies often prioritize optics over impact—a phenomenon Harvard Business School Professor Gary Pisano calls "innovation theater", where splashy initiatives like hackathons mask systemic inertia. A leaked 2023 Meta memo revealed executives reallocating engineers to "strategic priorities" (often tied to leadership pet projects) while sunsetting 14 tools in development. This aligns with anonymous employee reports from Google and Microsoft, where engineers describe resource battles over "executive-sponsored moonshots" that sideline user-centric work. While exact failure rates are elusive, the pattern is clear: organizational politics frequently trump merit in tech’s resource wars.
• Convergence to mediocrity: Hiring freezes, ageism, and layoffs mirror 1980s auto giants. Even perks like remote work vanish as C-suites chase stock bumps.
• The Irony: They’ve become what they disrupted—rent-seekers lobbying Brussels to crush DMA regulations.

Another model is emerging

Small Teams, Outsized Impact

During those ten years, three moments reshaped my thinking:

1. Reading It Doesn’t Have to Be Crazy at Work by Basecamp’s founders. Their rejection of the noise and grind coming with growth-at-all-costs felt radical and obvious.
2. Discovering that Linear (25 engineers) and Bluesky (13 engineers) had such small teams. Whatsapp could make things work with 50 engineers for 900 million users. They proved you could build world-class products without blitzscaling:
   • Linear culture serves 10,000+ companies (including OpenAI, Brex, Vercel...).
   • Bluesky scaled to 30M users with a cross-platform codebase maintained by 12 developers and increasing by 0.6 users per second as of writing this article (source).
3. Stumbling a few weeks ago on the Digital-Mittelstand concept in an article from Mert Bulan. You have never heard of most Mittlestand, but many of them are world-class in their respective niches. No one heard of Wickert (200 employees) but in 2020 they were instrumental for worldwide vaccine production. They were one of the few companies capable of manufacturing parts 10 times thinner than a human hair.

These examples share a DNA:

• Honing the craft: achieving excellence to become a market leader, and never stop refining it.
• Deep work over growth hacks: focusing on creating value, not extracting it.
• Profitability as freedom: Reinvesting earnings, not chasing VC milestones.

The digital world is the limit of the traditional mittelstand

The Mittelstand refers to Germany's small and medium-sized enterprises (SMEs) that focus on niche markets, prioritize quality and innovation, and often remain family-owned. These businesses are known for their long-term vision, resilience, and deep expertise in their fields.

But they have limits when it comes to creating goods and services in the digital :

1. Lack of digital strategy: Many Mittelstand companies struggle with inadequate digital strategy and infrastructure, hindering their ability to fully embrace digital transformation (source). This includes issues with internet connectivity and the adoption of advanced digital tools necessary for competing in the digital economy.
2. Skills shortage: Traditional Mittelstand firms often face challenges in attracting and retaining digitally skilled talent (source). The lack of personnel with the necessary digital competencies makes it difficult for these companies to implement and manage new technologies effectively.
3. Resistance to change: A significant portion of Mittelstand companies is stuck in old practices. This resistance to change, often stemming from a "persisting 'old industry' mentality," impedes their ability to adapt to the rapidly evolving digital landscape and develop innovative digital products or services.

The digital mittelstand opportunity

Now is the best time to start working on one:

• Tooling: AI-powered platforms and low-code/no-code tools have democratized innovation, enabling small teams to build sophisticated digital products without massive engineering resources. For instance, tools like Cursor or v0 allow entrepreneurs to prototype and launch applications quickly.
• People: The recent wave of layoffs in Big Tech and startups has created a pool of highly skilled professionals eager for more meaningful work. These individuals bring expertise honed in high-pressure environments but are now seeking opportunities aligned with craftsmanship and autonomy.
• Market: Consumers are increasingly drawn to 'slow tech' (products that prioritize quality and user experience over rapid scaling) and reject ad-supported & dark-pattern stuffed apps. Big tech is like fast-food chains and we want fine dining.

Building the Digital-Mittelstand: what it takes

Choosing the Right Battles

Not every problem needs a unicorn. Focus on:

• Niche markets: Focus on underserved segments where specialized knowledge creates a competitive advantage. For example, develop software for artisanal cheese makers or create a platform for rare book collectors. Market will be too small to ever create a unicorn, but big enough for a lean team to become wealthy and useful.
• Zero-marginal-cost products: Develop digital solutions that can scale effortlessly once created. This could include SaaS tools, mobile apps, or digital content that can be replicated infinitely without additional costs. The knowledge acquired in big tech and startups will be put to good use.
• High-quality, sustainable offerings: Create products or services that prioritize longevity and excellence over rapid growth. This aligns with the Mittelstand philosophy of being a market leader through continuous refinement and innovation.

Starting frugally

If you can't get VC funding, you need to be smarter. There are multiple ways to experiment

1. Employee side project : Leverage your current role to fund your side project while testing ideas in a low-risk environment. For example, use evenings or weekends to develop an MVP (minimum viable product) while maintaining financial stability.
2. Freelancer flexibility : Freelancing part-time allows you to earn income while dedicating focused hours to your project. Platforms like Upwork or Toptal can help you find flexible gigs that align with your expertise.
3. Unemployement benefits: If you've been laid off, consider using unemployment benefits as a runway to build your business. This approach requires disciplined time management and an accelerated timeline for launching before benefits expire.

The emergence of solopreneurs shows that there is something to be done. Platforms like Gumroad or Shopify have enabled individuals to build profitable businesses with minimal overhead. These solo entrepreneurs often leverage their specific expertise to create niche products, embodying the Digital-Mittelstand spirit on an individual scale

Cultivating Craftsmanship

Seek talent who value mastery over résumé padding:

• Bluesky’s engineers include former founders passionate about decentralization—not ex-Big Tech hires. "For instance, Jay Graber, Bluesky's CEO, was previously a key contributor to decentralized software, showcasing a commitment to decentralization over traditional corporate ambitions.
• Germany’s Mittelstand prioritizes apprenticeships over fancy degrees. Companies invest heavily in dual education programs, combining hands-on apprenticeships with academic training to cultivate highly skilled workers who often stay with the company for decades. More sustainable than replacing all juniors with AI.
• Encourage continuous learning and skill development. In the Digital-Mittelstand model, team members should be passionate about honing their craft, whether it's coding, design, or customer service. This commitment to excellence is what allows small teams to compete with larger corporations

Reimagining ambition

The Digital-Mittelstand isn’t anti-growth—it’s anti-waste. Let’s celebrate:

• Craftspeople who take pride in their work and continuously refine their skills.
• Small teams that can move quickly and adapt to changes in the market.
• Exceptional products that solve real problems and create lasting value for customers.
• Sustainable businesses that prioritize long-term success over short-term gains

The Digital-Mittelstand offers an alternative path for ambitious creators who value mastery over scale and sustainability over short-term gains. By embracing this model, we can redefine success in tech.