Germans don’t do tech startups – more access to capital might change that

The successful ones, like Dubsmash, leave for the US after a while.

If I, as a German, was to create a startup in Europe today, I’d do so in London.

Not saying as a consumer i do not prefer EU privacy laws, I do, but it will be hard to compete on a global scale being handcuffed in a lot of these smaller areas. (privacy, language barriers, taxes, salaries etc)

Blaming GDPR for everything is another stupid trend I detest. I’ve inplemented a lot of stuff related to it and it’s definitely not what it gets pictured as.

At the end of the day it speaks more of the zeitgeist among Quartz’s “high-earning readers”.

Which precludes much of what is worth trying. The problem is that this attitude severely limits the potential upside.

This is one of the classic misunderstandings of European entrepreneurs and investors.

In finance - things with low risk, tend to produce low yield. This is generally well established because there are a lot of 'eyes on the info'. For example, we can calculate how much it costs to extract a new shallow water Oil find. Most of the variables are known.

Though it's not so clear in early-stage, the rule will still apply because the easy hanging fruit generally will be culled when there are intelligent actors.

So - you need to take on risk. Otherwise, you're probably not attacking a big opportunity.

European VC's usually come out of the world of finance - in fact, VC is considered a part of 'Private Equity'. In PE or big funds, they invest in one or many companies, and expect x% return. Some more, some less.

In PE, if a company were to go bankrupt, it would wipe out the portfolio profits. Imagine if Warren Buffet put money in CN Rail and it turfed.Bad.

But in VC - you get 9 fails and 1 home run. The fails are hard to swallow but they are an inherent part of the system.

Culturally, Europeans especially Germans are not good with that kind of failure. It can be seen as a permanent mark on one's competency and status. In Austria, up until recently, a CEO who put his company bankrupt could face criminal charges.

All of this makes sense in a culture of high standards and expectations, coupled with social solidarity of workers (i.e. you but us out of jobs, you pay!).

European LP's are not used to losing their money. European workers are not used to equity, to losing their jobs, to total instability.

European BigCo's often do not recognize value in startups. The culture in Europe is very protocol and status oriented - you're 'value' is a function of the prestige and power of the entity you represent. Ramshackle, scruffy coders showing you 'you can do something amazing' is just less potent an opportunity than it is in the US.

And of course, the exit opportunities are not there.

And then so many other systematic issues like the fact almost nobody will learn to speak German, immigration etc. etc.. - all of this makes it that much harder.

Much of what I am saying is stereotypical of course, but it's real enough.

I think Europe should take their disadvantages and turn them into advantages and use their 'longer scope of vision' to do value creating things.

Europe is good at getting people together and going 'big projects' that have a long term view. Like CERN. And EU treaties.

I can see some very powerful things concerning money - European countries are smaller and more nimble. Sweden does some cool stuff. What if a Swedish Crown corporation enabled a digital currency that could be used globally? Because of the integrity of the institution, and the fact that it's backed possibly by a 'real economy' - it could be a very powerful export. Much in the same way if you make 'jet fighters' you don't just go and sell them you need your countries diplomatic corps to work with you.

EDF in France (Energy) is tied closely to government, and that kind of stuff - i.e. nuclear, generally needs some hefty scale.

But also expect that many of the gains in such situations will be socialized, and maybe not come in the form of crazy billionaire status for founders.

* Lack of capital

There is just much less VC available, even if normalized for the difference in size.

I know the VC scene a little bit in Germany. Total monkeys.

* Lack of attitude

Germans are much more hierarchical. Both in science and entrepreneurship I found the American personality much more suited.

* Lack of vision

You will find money in Germany for a personalized cereal/granola mix shipment service (was just an exapmple, but in fact I think it exits) but if you are into a disruptive technology they will balk. Both have different risks but both also have different pay-offs.

Edit: Reasons given due to the downvote

When it comes to european languages, we are at least an order of magnitude better in understanding natural language and delivery speed(from start to production) than these big companies. But oh boy how many times EU companies pick one of these big players over us and fail. Today we have a range of HUGE clients, half of them who has even failed with a competitor. We have a really good story to sell. Still it is impossible to convince 1 of 2 companies to go with us first. They really want to fail hard before giving us a chance. I just can't understand why it is like this. The trust in US companies with a strong name over decades is really huge here in EU.

That's a startup?! It was some dodgy scheme set up by infamous brothers, hysterically taken over by eBay within first couple of months of its existence.

And in southern Europe I am lucky to be able to speak most languages, as anyone beyond a certain age hardly speaks any word of English, specially outside the major cities.

Which is indeed a challenge, on the other side is also something quite rich, as most traveling Europeans tend to speak fluently three languages on average.

https://www.ebay.de/

??

Nonsense. Here in Berlin, €60k would only be competitive for an engineer with maybe 2-3 years experience.

Good senior people can (and should) get €85k - €90k. If you're in Berlin, and want to be pointed in the direction of companies who pay that, hit me up.

VPEng / CTO / Director-level roles are now €100K minimum in Berlin, and often significantly above.

I love how hyperbolic statements like this get bought and sold like truth. It's not even close to being the most difficult tax system in the world.

Source: https://data.worldbank.org/indicator/IC.TAX.DURS?year_high_d...

> highly qualified foreigners have to learn German

For startups or tech positions? No, they don't.

Also, learning German at a conversational level is not impossible. (But it seems a lot of people in Berlin coast by without even knowing basic German)

i have 5 years experience and already earn that much. our most senior staff gets their low 6 figures + bonus. what most dont see is, that additionally to those numbers, your employer pays their share of your healthcare and social security. thats probably another 15% or more. you get at least 20 vacation days. most of the time its around 30. they cant just fire you because you got sick. and in case you get fired, there is a social security net to catch you.

yeah, from an US view it might look like a bad place and i would appreciate lower taxes. on the other hand: my mom is fighting cancer sind 1999. in the US i would already be bankrupt or my mom would be dead. or both

High income taxes are a problem. But that's not a problem for founders since their profits are hidden in the increased value of the company. It's a topic for the employees. They have elected parties that redistribute income. It's their choice how they want to spend their income. If you compare wages between Germany and USA then those taxes haven't made German labor more expensive than US labor. People don't have to earn as much as possible right away because they don't face nothing should they ever become handicapped.

> * the most difficult tax system in the world. even freelancers have to use accountant services, because most people will not be able to pay taxes properly without it.

Nothing strange about it. When I was self-emoloyed in the UK, I also had to use services of an accountant.

> * high taxes - 42% income tax + Solidaritätszuschlag 5.5% = 47.5%; for corporations it's ~30%.

Taxes are high but, for example, Belgium has higher taxes. In the UK I was also hitting 38%. Corporate tax in the UK was back then 20% with 10% tax on dividends, Germany is expensive but not the most expensive.

> * A LOT of buerocracy. I can't even send an email to tax authorities in my area, because they only accept paper letters but nothing else.

Where do you live. No problem with Finanzamt in NRW and RLP communicating over email. Germans do almost everything on paper but things can snd are done over phone and email.

> * highly qualified foreigners have to learn German and it's quite difficult language.

No, they don‘t. It depends who your clients are. I live in NRW and barely speak German. Not proud of it, learning. Just an observation. For sure it‘s easier with the language knowledge.

> * the market in Germany is much smaller comparing to USA. If you want to target EU, then you have to support a lot of different languages, date/time formats, regulations and laws etc.

I am not sure what you mean by that. I just invoice people in different countries. Nothing to do with dates, languages, formats.

> * recently the EU introduced a lot of additional regulations for internet companies (GDPR, new copyright directives that require checking uploaded files, etc...).

Personal preference. I prefer this over another facebook or google.

> * weather is not that appealing as in the valley. > * the difference in salaries between regular developers and rockstars is very low. So there is zero motivation to become one.

Fun fact, a graduate in Atlanta gets ~90k/year. Zero experience, barely left university.

> * low salaries for software engineers. The most of senior software developers will earn 50.000 - 60.000 EURO anually and after paying taxes it's only ~2.600 EURO per month (3.000 USD)

This number seems to be common everywhere in the EU. Different currencies but overall the same value.

> * poor internet connection in a lot of places / poor connection speed - almost any country is better in this regard

Oh yes. This is so common in Germany. When I read how easy it is to get fibre in India, I cringe.

(Inb4 counter-examples. Yes this is oversimplified, exaggerated, stereotyped)

The big company model, where something unproven is developed for a long time by a large team, is substantially more risky. Only when they go live after "finishing" their product they might discover that nobody wants it.

Anybody trying to innovate will fail at one point or another, because not all bets play out. So the key is to make the bets as small as possible and therefore "fail" as quickly as possible.

Starting a business somewhere else is fine. It won’t be so fast though.

By the way debt financing is quite uncommon for startups in the US. It's almost all equity.

Whenever someone discusses corp. taxes in the US and incorporation it seems it's full of gotchas, corner cases and traps. Not to mention every state having its own legislation as well.

Taxes might be higher outside of the US (but then again, they're taxes: no profit, no taxes) but they're not necessarily more complex (though Germany ones are probably not the easiest tbh).

Startups exist in more tax complex countries. You can't buy culture, customers and financing, the rest is doable.

Government support is, as far as I can tell, not a deciding factor in SV. In setting up an start-up friendly ecosystem it can definitely help, France is good example for that.

There are very few big ideas that investors in Germany would pour money into.

Come to think of it, with the safety net that is provided in most developed European countries (e.g. Sweden, Norway) one would think that there'd be more innovations (normalized by metrics like population, etc.) generated there than say, the USA but I doubt that is the case here without having any numbers or proof. Is it the scale that matters most or what am I missing?

Overall, I for one wouldn't still trade strong labor laws with being the most innovative place but I do still hope for a better middle ground for everyone.

So also a lot of employees won't take stock options over a bigger pay.

I also think most developers are not in the mood to live like people in SF do - just barely scraping by after accomodation and food. Most people here want to live a good life on their "developer salary" which is already pretty good for Germany in the most cases.

I'm Australian, and it was easy to get my Blue Card, and more recently my permanent residency in Germany. Compared to the nightmare of dealing with the UK Home Office, moving to Germany was a breeze.

(For those who don't know: if you have a 4-year degree, and can get a job-offer that pays €48K or above, you can easily get a Blue Card, which lets you work in Germany. Keep that job, and after 21 months, you can get a Niederlassungserlaubnis (permanent residency) with B2-level German, or after 33-months with rudimentary German. It's an amazing deal.)

"William R. "Bill" McDermott is an American businessman and the CEO of the technology company SAP SE" [1]

[1] https://en.wikipedia.org/wiki/Bill_McDermott

Compared to the USA? Lol, you have no clue. The standard for a software engineer in SV is to take drugs to work 12 hours a day 6 days a week, pay a fucking high rent living with 4 other people and if he's foreigner and freshly arrived, he has to suck his boss' cock everyday because they might take away his visa sponsorship and put him into troubles.

In Berlin most people I know work less than 8 hours a day, can afford to have their own apartment at their first or second job and save enough money and energy to go travel somewhere every 3 months. Because you know, we have 30 days of holidays per year.