Comment by mixmax | Hacker News Reader

Comment by mixmax | Hacker News Reader

This sounds eerily similar to the so-called startupscene in Denmark.

The events revolve around bankers, bureaucrats, lawyers and consultants trying to make a buck off the entrepreneurs. This is an evil spiral since nobody knows what the heck they're talking about, and drain the few startups of the money and resources they've got. The result is that there are very few startups that succeed, thus fuelling more of the same bullshit with the state giving grants to entrepreneurship events and programs that are promtly sweeped up by aforementioned consultants and lawyers.

And the state keeps pouring money into the black hole not understanding why the new Google doesn't emerge.

Two years ago Ernst and Young's highly publizised entrepreneur of the year in Denmark managed to give the first prize to a company which two days after the event was exposed as one of the biggest frauds in Danish history. A few years earlier the prize was given to a company with 500 employees that was founded in 1956.

I stopped going to these events years ago - they're a total waste of time.

It's a structural problem - if there aren't any successful entrepreneurs there's noone to turn for for guidance, no capable investors and no role models. Which of course leads to even less successful entrepreneurs.

Maybe this is a European problem?

Maybe this is a European problem?

I think so. Some Europeans don't like to be thrown into the "Europe" pot ("but we're so diverse!") but it seems we're pretty united on this point of entrepreneurial un-culture. All across the continent, business plans, consulting companies, etc. are mistaken for entrepreneurialism. Everywhere I look, governments think the solution is throwing ever more complex grant programmes and sponsored bullshit events at the problem. The established players and the lawyers egg them on of course, as they're only the ones who can afford to benefit from all this stuff.

Personally, I think the best thing the government could do is to get the hell out of my face. I'm discriminated against (in Austria) for healthcare compared to the employed and the unemployed. (I have to pay for insurance and social security whether I made any money that quarter or not; I then have to pay 20% of my healthcare bills. Employees pay a percentage of their monthly salary and nothing else; of course they also get paid sick leave) I pay more income tax (employee bonuses are taxed at 6% - my lowest tax rate is 36.5%; it's tradition, and in some cases law, for employees to get 2 months' salary as a bonus). I'm forced into paid membership of useless interest groups which are just extensions of the political parties.

Sure, I could try to apply for grants. Except for startups the main expense is the cost of living of founders (most of which turns out to be taxes...). And guess what, that's not considered a valid expense for tax relief. Plus, the grant wouldn't cover the lawyers' fees anyway, let alone the amount of time I'd spend chasing after it.

Hiring people is super difficult and very expensive for startups. Most seem to employ their staff as perpetual freelancers because the rules (and taxes) are so arcane. I'd guess that doesn't exactly make them attractive to potential hires, so you're losing out on talent.

It's better in the UK to a degree. (shame about the weather...) The bureaucracy is much less (there's a reason UK Limited Companies are popular in the rest of the EU). Still, at my (UK) university, we still had all the bullshit business plan competitions. But they seem to have those at Harvard, too...

As I said on the blog comments too, I would argue this is much more wide spread than just Europe. Take many Asian countries. A lot of governments are trying to artificially create entrepreneur driven markets / spaces with diverse levels of success. As I said today to a friend, it's not about the money, but about where you allocate it. And to do that, you need people that truly understand the problem, not outsiders with nothing more to do but to play "investor".

I'm quite willing to believe it; I just didn't mention it as I have zero exposure to the situation in Asia.

I doubt the investment situation will improve until those who succeed aren't (effectively) chased out of the country for one reason or another before they do succeed. I'm pretty sure you need a home-grown feedback loop.

It's better in the UK to a degree. (shame about the weather...

Maybe worth trying out Portugal. (nice weather) and

Except for startups the main expense is the cost of living of founders (most of which turns out to be taxes...).

Portugal has a new tax regime for non-habitual tax residents. Which is a a flat tax rate of 20%. You can apply for the regime if you have not lived in Portugal for the last 5 years, and your job consists of a high-value-added activity of a scientific, technological or artistic nature. And the benefit lasts for 10 years. See: http://www.ibc-madeira.com/Tax_Regime_for_Non-habitual_Resid...

The main expense is the cost of living of founders

The cost of living in Portugal is lower than that of the UK, or Austria.

The funny thing about business plan competitions is how often the "failures" turn out to be massive successes. The one I know of best is Raising Cane's chicken fingers. The business plan was given a C- and then the founders went fishing in Alaska to make the money for the downpayment.

http://en.wikipedia.org/wiki/Raising_Canes_Chicken_Fingers

I was once told (in 1987) that the business plan for FedEx had been developed for a class, and it got a C because the professor believed nobody needed overnight delivery.

Obligatory snopes link: http://www.snopes.com/business/origins/fedex.asp

Summary: The rough idea of using centralized switching for parcel routing was in a paper for a class, but not much else.

Key quote: "in a 2002 interview Smith acknowledged that "I don't really remember what grade I got. I probably didn't get a very good one, though, because it wasn't a well-thought-out paper.""

Thanks.

If you're right that it's a cultural thing of the investors, what keeps American VC's from going and investing in European startups? (That's an honest question.)

Mostly distance. To manage your portfolio, most of the times you need to do introductions, personal meetings, lunches, etc. That's hard when u have an ocean in between. That being said, each day that goes by there are more US investors setting up shop in EU, which is appreciated :) I wonder though, who runs those shops, Americans or Europeans.

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