Why Can’t Europe Do Tech?
bloomberg.com
bloomberg.com
Here's some relevant data points:
1) I have contacted over 400 service providers in multiple sectors to provide services to the startup.
* Yes that's not a typo. 400 companies have been emailed, then called. I don't mind picking up the phone and talking to someone.
2) Of the 12 service providers that were selected, only 1 company is from the UK. All others are from the US.
3) All of the EU companies that were contacted, I later found out were either:-
- Lacking in terms of functionality compared to the US competitors.
- Had no roadmaps or no visibility of when they would reach parity with US competitors.
- Were much more expensive than US competitors.
- Many EU companies had no US focus and more focused in EU, ME and Africa.
4) Of the US companies that I selected. I had interacted initially with the EU offices. Being in the UK, their systems always forwarded the contact form to the EU/UK office.
The sales individuals located in the EU office were always SUB PAR!
- They didn't know their product as well as they could have.
- Simply made up bullshit in order to backup their claim that the functionality that I required was not possible. Even though I knew it was.
- As soon as they realised that I was a startup, they were not interested in the sales lead.
- In some circumstances, I knew the industry, regulatory issues and their competitors better than they did.
- One further point. I remember contacting Skrill's London office and then speaking to an Italian woman and her shouting at me with respect to their functionality. She didn't know the product and was telling me that a certain feature was not available. The more I described to her that it was possible. The louder she got. Despite it being on their website.
- I have many emails from UK/EU individuals informing me that they can't do [functionality X] because of regulations/etc. However, other companies were able to do it perfectly fine. Again, this boils down to the employees of the company not knowing their product/industry.
- I won't mention who said this. It's a well known US service provider to SaaS companies. When I was speaking to a UK sales manager. I outlined what the startup was doing. The sales person informed me that there would be NO WAY that I would be able to get my first 100 users. To quote him: "You won't get 100 users". Needless to say, the conversation didn't last long.
5) What's worse than all this? Every single German company that I have spoken to were not startup friendly in the least. In fact, every single German company would tell me that I had no chance of success and that I should go and do something else.
Here's a typical exchange:
Me: Hi, I am interested in your product offering and would like to know if [X functionality] is available and what you pricing is.
Them: What is your current turnover.
Me: I'm a startup.
Them: Please come back to us when you are doing 7 figures a year. Good bye!
6) The difference with US companies.
- Knew the product inside and out. Knew their competitors and could inform me how they were better than [competitor X].
- In many circumstances. Once I had spoken to the initial sales employee or they had read my email and PDF attachment of the startup. I was immediately forwarded to the Sales VP and they wanted my business. Instead of pitching my startup to the service provider. They were pitching their company to me.
- In many circumstances, there was a program to help startups get off the ground. There would always be a requirement to be part of an accelerator or be VC backed. In my case, this was always waived.
- A few times, the sales employee commented that this was obviously a "billion dollar" startup and that they wanted to be part of it. That is, be a partner service provider. The more revenue that I generated, the more they would generate as well!
- In all cases, they were startup friendly. Being a startup with 0 in revenue and 0 sales and months away from launch. No problem in discussing their product with me.
- In some cases, where a service provider could not help. Due to missing functionality or regulatory issue. Would even forward me to a contact in a competitor that could help!
- In a couple of times. Would even offer their own development team to build some tech that I mentioned I was having issues with. For FREE! Gratis! Of course, I always declined, but I thought was very nice of them.
There's probably more positive items, but I can't think of more right now.
The bottom line is. I now only deal with US companies and when I send an email out. I always append the preference to deal with US sales teams.
The outlook and behavior of US companies is vastly different than EU companies:
- More positive outlook.
- More willing to work with startups.
- Acknowledge that, the better the client does, the more revenue they will earn. (yes this point is lost with EU companies)
Disclaimer: I'm a solo technical founder. I'm bootstrapping the company with just $1,000 (on purpose). I am not getting any FFF funding nor any VC funding as well.
I’ve met so many people that simply don’t care because they have zero fear of losing their job as anything other than redundancy which will include often a nice settlement is simply unlikely for anything short of criminal negligence.
I'm looking for a business problem to solve. From your needs/research, would you have any suggestions on what I could tackle? My email is marius@juvmed.com
Appreciate your feedback.
The article assumes that "doing tech" needs to be something like a facebook or google and sell customer data like there is no tomorrow.
It's a bit different around here, we like it that way.
Europe can do tech but they don't really make it an important target. Also many of the good people in tech choose to go Silicon Valley (which is now ~60% foreigners) so this depletes the pool of EU talent. The bigger SV gets, the harder it is for person in tech to resist the temptation to go, and for local EU startups to find the proper resources.
And the EU doesn't yet act like a single body with a unified strategy when it comes to developing the tech sector, unlike the US or China. It's hard to mount an offence against an already established leader when everybody is pulling in another direction.
But the US has the correct kind of free speech which is the only civil right any good American requires.
What are you thinking of here exactly?
In the US, the FCC recently made it possible for ISPs to sell data on browsing behaviour from their clients to anyone that pays.
Neither is perfect, but they are worlds apart in this respect.
1) Privacy from government snooping
a) targeted/with court order (sort of, as in many cases in the EU this does not actually require a court order. Quite a few states just give police the authority to do this by themselves with little to no oversight). Perhaps this should be called "lawful intercept" or perhaps non-mass surveillance.
US: privacy held up: https://en.wikipedia.org/wiki/Fifth_Amendment_to_the_United_...
EU: no privacy: https://en.wikipedia.org/wiki/Key_disclosure_law#Legislation...
b) without
US: no privacy https://en.wikipedia.org/wiki/Mass_surveillance_in_the_Unite...
EU: no privacy https://en.wikipedia.org/wiki/Mass_surveillance#Germany https://en.wikipedia.org/wiki/Mass_surveillance#United_Kingd... etc ...
2) privacy in the sense of forcing companies to drop personal data
US: complex, and varies from state to state, in most cases you should be able to get it deleted https://uk.practicallaw.thomsonreuters.com/6-502-0467?transi...
EU: also complex, but generalized: https://en.wikipedia.org/wiki/General_Data_Protection_Regula...
Relating to debts:
US: standardized, and regulated
EU: complete and total chaos
So, I would say that the situation is not quite so clear cut. In terms of your rights to prevent state spying on you, clearly the US provides superior tools to it's citizens. In fact the EU is worryingly bad. In the private sector it would be fair to say the EU is superior, except when it comes to information about debts, where again the US is superior.
Doesn't seem to me to be such a clear-cut situation. But perhaps I'm wrong. Why do you think one is superior to the other ? If you're falsely accused of something, I assure you the US is far superior. If you want your mcDo to stop sending you email, you're going to find the EU is superior. Of course, spam was mostly illegal before the GPDR, and I suspect that nothing will change in practice.
Yes, this is what is implied. Why would you think otherwise? Funny that building big corporations is frowned upon or even outright vilified by so many.
May be this is what is wrong with Europe; no more ambition to do big things.
Big tech companies can do so much more than tiny businesses. Granted, there are some things that small companies can do better especially when it requires huge risk taking, but overall, why would any small company not want to get bigger(as big as it can get)? Isn't that the point of being in business?!
Ding ding ding: this is the answer: those safety nets are also a cage.
Disclaimer: have started many businesses around the world, including the US and Europe. Europeans don't proceed to the glory and glamor of US startups because they have to deal with government bureaucracy, and alas such bureaucracy is contagious. The moment you wade into the grant-getting territory, you become a grant-getter. Grant-getters are anathema to technology-creators and other forms of society-changers.
If you're referring to the safety net that you get government money after you get unemployed, that's to ensure that you don't become homeless or get lured into crime. It has reinforcement to get you back to work ASAP.
Which happens, quite a lot more in Europe than it ever did in the USA. Americans seem to like to keep their jobs - Europeans couldn't care less.
Its okay with me - the point has been made.
For reference, I've worked at a couple of EU startups, and we didn't get any grants. It's not like you just get money for incorporating.
Of course there are also many non-gov-funded startups. However 1) it is demoralizing to see them getting millions in handouts while you struggle to sell a product and 2) they keep many talented employees trapped in deadend-companies.
Speaking as someone from Europe...
I don't have any first hand experience, but when browsing HN or Reddit, developer salaries above $150k seem to be the norm [1], not the "one in a million people" exception. As you may know, such salaries are unheard in Europe. It seems to me that becoming financially independent in the US is a matter of years [2], not decades. Sometimes it really makes me depressed. Also you seem to overestimate the safety nets. Putting 3-4 months of US paychecks away in a savings account will put you ahead of any safety net in Europe.
[1] Yes, i know, cost of living in places like NYC or SF are not comparable to major European cities, but even when factoring higher costs of living, becoming a millionaire seems rather doable.
[2] If you don't spend your money lavishly.
This income exists in the UK for contractors.
$150k/year is a day-rate of approximately £500/day if you take four weeks off per year. This is slightly higher than the median but reasonably achievable (more so in London).
It's the opposite. It allows unlimited immigration from the EU. The people voted against that it's true, but the government ignored the referendum and implemented a local worker preference instead. But with unemployment very low anyway, it is easy to argue you could not find a Swiss person to do the work, so this is effectively the same as doing nothing.
The 7000 contingency limit clause for EU citizens has been triggered, and we know how the last referendum went. Foreigners are a burning topic. Try getting a B-permit from outside of Switzerland; it’s akin to winning the lottery. Whoever got in, got in. The way is shut, and the Swiss keep it.
I agree that immigration is a hot topic. However I'm not sure what difference more referendums will make if the government feels free to ignore them. Perhaps they'll have a change of heart.
Getting yearly fixed term contracts on £500 a day is also not easy even with the former.
You also lose your pension contribution which in the UK can be upto 25% of your salary (I’m on 24), ISA, insurance protection against dismissal with no cause and many other things that employers provide.
Contracting isn’t a solution it’s worse than at will employment and the OP is right outside of a few cases the salary in Europe is pitiful and the safety net does not cover anything really it only ensures that there is almost no social mobility upwards.
Europe despite having the world’s largest social redistribution event aka WW2 is still the mother of all old money and isn’t changing because outside those who in the US would become billionaires it’s nearly impossible to become financially independent in Europe as a salaried employee and even as a sole trader.
I'd like to see an in-depth comparison which includes things such as taxation. I often see rent being mentioned in these comparisons. Cost of living is just one minor aspect. QoL is yet another, and more subjective. If you knew what my healthcare costs are and what I get out of it (or well, in the past), I am pretty confident that a lot of Americans would prefer that, except for a rich happy few. It isn't as if private healthcare doesn't have any incentive, or is always high quality. Example [1]
And even cost of living is difficult to compare. If you go to a US shop, pretty much always the price doesn't include sales tax. If you go to a EU shop, if the product is targeted for consumers the default price has to include the sales tax. I find the former -like the imperial system- not practical at best, and deceiving at worst. The latter is just a matter of seeing it from the customer's PoV though yeah it might lead to lower sales on the long run it leads to more happy customers.
If I look at my governmental retirement projections, although i have been working and paying into it since age 20 it's depressing how little inflation adjusted retirement money I'll receive, although I earn a good tech-salary for our region.
Same with healthcare, in my city, Frankfurt/Germany, it's very hard to find a cardiologist that accepts patients that are publicly insured and even then the wait times can be scary for this type of situation. Hospitals have started rejecting patients that want to circumvent this by going to the emergency room.
The biggest issue for me is one of age-restriction. I'm fairly certain that my possibilities to earn this much more elsewhere will shrink over time and then I won't have a comparable cushion my US counterpart could have built, although we do the same thing. That is the equation that keeps me up at night at the moment.
https://www.youtube.com/watch?v=LCg9htpWf0A
For example. A few searches yields plenty of recent movies about large amounts of homeless. But more specifically, if you go to Amsterdam, Brussels or Paris by train you will have no trouble whatsoever finding lots of homeless people. Granted, Amsterdam has a few, Brussels a pretty sizeable lot and Paris has tens of thousands at least.
In each of those cities, by the way, homeless are persecuted by the local police, and nothing ever seems to make any difference. Knowing the inclination of Dutch people (protestant, or to put it more bluntly "it's their own fault, obviously"), I don't envy the Dutch ones.
And whilst the poor people in the Netherlands live in extremely shabby apartment blocks riddled with crime rather than trailer parks, other than that there is little difference : garbage everywhere. Many youth gangs that have no option but to turn to crime and prey on their own community. Immigrants being the large majority of those people.
Oh and if you talk to them you will immediately find out, especially in the Netherlands : if you actually use the social safety net, you have to submit to the government "running your life". That "help" the government provides seems to have more than a few people who abuse the power they have (to, for instance, take away child care, or any children, require you to undergo psychological internment or take away your unemployment insurance). There's no end of complaints about that, especially in the Netherlands (less, but certainly present in Brussels and less in Paris).
Brussels and paris have homeless tent cities (maybe Amsterdam has them too, I don't know. Not in the inner city it seems. Both brussels and Paris have them in the inner city.
So there seem to be plenty of ways to "fall through" the social safety net in Europe. And this is the situation in the richest, most prosperous parts of Europe. There can be little doubt that the situation in Romania, for example, is far worse.
(European here) I don't care about being financially dependent on the state, because the state is not my enemy. The state gave me healthcare, the state gave me a free education, the state takes care of stuff. I don't care about "freedom".
Pointing to failed scenarios and saying x failed therefore y will fail is "stupid". You must examine why x failed and make sure you don't include this element when trying to do y. It is an iterative process.
One thing is for sure. If government employees don't have good intentions, the government will be ineffective. Therefore trust in government and willingness to see government as a force for good, willingness to work in a system that does good for its citizens, is imperative to having a good system.
Good intentions do result in success
Therefore trust in government
I believe they are related because it is harder for people to develop trust in government if the good intentions of government workers and the governmental system in general is not apparent.
Conversely it is difficult to have a large pool of well intentioned potential governmental employees if a large portion of citizens have been brought up to think that the government is evil. These citizens are much more likely to try to exploit government positions than to treat them with the responsibility for the people that they require.
Social services in Europe aren’t uniform either they vary greatly between states and between cities and regions within states, food, housing and transportation is much more expensive, the availability of benefits is often overblown with the only caveat being universal health care which isn’t that different for people who cannot afford it in the US if we are all honest at this point and for the middle classes private medical insurance is still the way to go for most member states.
Whoever thinks that Europe is some socialist welfare dream state is quite wrong about it. Being poor in Europe is quite bad and I’m not sure it’s actually any better than being poor in the US.
And the lack of social mobility for the middle classes as well as the suppression of personal agency as far as financial independence goes might blow back and blow back hard.
Europe has a big problem with government income as more than 50% of it comes from taxes which means that any crisis and any issue with the tax base tends to ripple much harder over here and as far as retirement goes then it’s quite likely that most people like myself won’t be able to retire despite paying very high amounts into the retirement fund because the government keeps raising the retirement age and there is no guarantee of that our funds would even be available to us.
This is the reason why I’m currently looking for a way to completely privatize my entire retirement savings plan, I work hard I earn very well and I deposit 24% into retirement with zero guarantee of seeing anything beyond the bare minimum when I finally will be allowed to retire which at this point is probjected to be at 75-77.
So sorry fuck that I rather take more risk and be able to retire at say 50 than having to work my ass off until I can see my 80s around the corner with no guarantee of getting anything remotely close to what I put in because sharing is caring.
> Putting 3-4 months of US paychecks away in a savings account will put you ahead of any safety net in Europe.
My parents had 3 kids through 5 years of University (tuition + living expenses), this was all paid by the state. Back of envelope math values it at $450k, but in the US tuition fees are much higher.
That is the common trope but the truth is there is no other option. There are whole countries which are destined to end up as tourist destinations.
The article is spot on: imagine two startups, one in Barcelona and another in Boston, developing a very similar product. The first one raises €2M, the second one $50M. Which one is going to beat the other to market?
Yes, there are other factors; work/life balance, heterogeneous markets/languages, collaboration vs competition mindset, etc. But here in Europe we also have workaholics that give 200% to their startup and launch internationally. And without cash injections, which are a by-product of ecosystem maturity, they will always lose against their USA competitors.
Disclaimer: am European founder in seed stage
Also which one has a domestic market with a single language of 325 million people.
There are, according to the graphics, "4 startups per million people in Paris". There are 2.2 million habitants in Paris (source: https://en.wikipedia.org/wiki/Demographics_of_Paris), and we have hundreds if not thousands of startups (source: http://www.techonmap.fr/). The numbers don't match.
Where are you seeing that?
https://www.epo.org/news-issues/news/2017/20170307.html
Europe's potential in terms of innovation and technology is also highlighted by the number of European patent applications filed relative to a country's population. Switzerland again topped the ranking in 2016, with 892 applications per million inhabitants. Second and third place went to the Netherlands (405) and Sweden (360), followed by Denmark (334) and Finland (331). The first non-European country was again Japan in ninth place (166), which was above the EU average of 122.
If these USA, inflated valuations cause me, as the developer, to receive inflated salaries, I am perfectly happy with that.
Not Tech (Bloomberg): making software and machines used to build billions of units across hundreds of sectors per year, and also building billions of units across hundreds of sectors per year, developing new t̶e̶c̶h̶n̶o̶l̶o̶g̶i̶e̶s̶ things (since this isn't tech) and spending god-knows-how-many billions on R&D and so on.
Why can't Bloomberg do real research?
Things like machines which manufacture machines for instance.
a good friend of mine works at a glass blowing company which makes beer bottles, the machines used to create bottlecaps at an insane rate are apparantly dominated by a german manufacturer. (this factory produces over 15mil bottles a day).
producing 15 million bottle caps in a single 24h shift is hard, producing stuff this quickly at suchs a scale is a hard problem to fix.
But tech is everywhere and there are huge amounts of billion /100s of M dollars companies you never heard off anywhere in (at least developed) world. In my small town (~ 300k of people) there are at least three pure tech companies that were build from nothing to 1B of valuation and I am sure you can point finger anywhere on map and it is going to be same.
Because they can't find as much funding in Europe as in US.
That’s about it.
One of the major factors is the environment and building the culture. Many of US tech success companies are founded or driven by European(and Asian) expats.
So there is nothing wrong about Europeans themselves. It is rather the environment.
That is why Berlin is doing a better job because they could make a better environment comparing to most of the European cities.
Europe is not paying enough attention to how they are lacking there, considering how tech is going to play a crucial role in industries and the future economy.
Europeans are also really busy with the political mess that US is building around them (ex. Middle East, Russia, Immigrants coming from conflict zones) and for a society that is just recovered after WW, that means not being prepared to accept expats as it used to be in last few decades for Silicon Valley. Therefore they don't have diversity factor which is one of the biggest advantages for Silicon Valley.
1. A large city or metropolitan area with high quality of life according to nerds and their preferences
2. excellent universities or career opportunities, so young gifted people are motivated to move there from 1000s of miles away
3. Capital availability (Venture capital, private equity, unspent cash looking for investment)
Most European Cities fail to provide all 3, and even then these conditions are not sufficient to build a successful hightech startup.
Most large cities do 1 right.
The thing is, investors around here are either small or risk averse and indeed hiring is harder.
We have lots of small startups and most of those are financed with the founders' own money, in stark contrast to venture capital in the States.
Silicon Valley has such a concentration because of climate and infrastructure. Climate is mild year round and the weather great. This, coupled with venture capital and plentiful job opportunities draws more qualified people.
Unfortunately only a handful of countries in Europe, like Spain and Portugal have that kind of weather, the rest is frigid temperatures during Winters and sweltering heat during Summers. Although Spain has started to pick up momentum in tech startups, it's still at the beginning and the economy there will require at least two more decades to pick up. Then there is Switzerland, a tech startup paradise, but startup companies there are focused on solving scientific problems and fintech.
One of the major differences between Silicon Valley and the European mentality is this: we don't have enough venture capitalists and those that we do have aren't the kind that would invest in companies like "Facebook" or ones that don't have a solid business model to begin with. On top of that, the founders don't want to just get rich overnight, they want their company to be sustainable at least until they're 65 and beyond, and they want the decision making power that a startup under venture capitalists wouldn't have.
In summary: a difference of mentality, and different goals, since the standard of living in Europe is much higher, focus is on different priorities.
From sibling comments, I see there's a lot of content with the way of life in Europe, so I guess there's that too. I don't see it myself.
EDIT: Well, that isn't the sole reason, but it is a reason the gap may become wider. The GDPR is a compromise I -as European- am more than happy with.
The world borders are becoming thinner and thinner (de facto there are no borders between first world countries at all). The companies (especially huge tech) employ and operate internationally for years.
Even though the head quarters might be based in a specific country, it's not fair to call the company American or European.
They are either too conservative or too liberal.
So they don't do much really new or drown in chaos.
But well, being a founder probably needs extreme traits.
What a sick society.