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Comment by SOMA_BOFH | Hacker News Reader

have you tried to start a company there?

Why should society optimize for how easy it is to start a business?

Because if you don't you'll end up with fewer businesses, which will concentrate wealth, which has documented negative effects on society.

The article, most people here, and the reality disagrees with that. The point is that all the giants are elsewhere.

Case in point as mentioned elsewhere: we actually have ISP competition here.

and as a result of this, you're more innovative how...?

I’m not claiming we are more innovative as a result.

As a result we have much better mobile plans for example. Every time I see a Ting ad I marvel at how expensive their plans are, and then they compare that to the likes of Verizon…

So in ISP world, EU has better offerings than most of US, though US had a good 2020 when it comes to download speeds: https://fairinternetreport.com/research/usa-vs-europe-intern...

However, upload speeds are still a joke in the US - I can’t buy more than 35mbps up, period. That comes with 1gbps down (in reality that’s never stable, so more like 800-900mbps). At previous home I had options of two providers with one offering symmetrical 1gbps fiber - that’s fairly rare in US.

Costs are another issue - US ~$61 per month, OECD average is ~$37: https://www.broadbandsearch.net/blog/internet-costs-compared...

Now this is mostly services innovation, not telecom tech itself, but still has very tangible benefits to consumers and barriers to operating a business.

In reality there is some lag until effects are seen. Europe's economy has been huge very recently, and it's still significant, but the trend is that it's significance is shrinking as it can't keep up with American and Asian growth

I agree but this isn't a done deal. The potential is there and there is no reason why it shouldn't be able to compete.

You'll end up with fewer businesses, but the ones that won't get started are the ones people aren't really willing to put effort in to starting. You'll only really lose the easy "fill in a form and off you go" businesses. I don't imagine that's much of a loss. If someone has an idea, and a real drive to start, then they can start pretty much anywhere, even if it isn't super simple to register a company. So, really, making it easy to start a business just filters out the people who aren't especially passionate. The rest will battle through (and complain about the red tape while they do.)

And let's face it - the sort of businesses that HN readers want to start up are rarely that simple. Most people here are dealing with equity, vesting, cliffs, angel investors, VC money, cross-state and international taxation etc. We're not put off by something being a bit harder. Why should other people be?

So, while you're right that there might be fewer businesses, the EU doesn't actually stop people starting if they really want to.

It's also worth pointing out that if someone is falling at the hurdle of just registering and starting a company then the chance of success is very low. There are going to be much harder challenges ahead even where company formation is complicated.

It's also worth noting that some parts of the EU make it a lot easier to start even than the US. Estonia's e-residency programme makes it incredibly easy to register for limited citizenship and start a digital business based there.

The major problem in EU is not really starting the companies. Most countries have ways to incorporate by filing a form and sending an email or two.

The problem though is financing, French investors for example are really stingy and you won’t get somebody to just throw a few millions at you to see if you succeed.

France has decided to build the “French Silicon Valley” multiple times by grouping schools and companies together, providing facilities and so on. But it always fails because there is no VC money pool.

If you start a company here, better think about profitability from the get go.

This is the core: enough smart folk, enough ideas etc but people here sit on their money. EU investors invest in sure things and sure things are just not FAANGS when they start out. The appetite for risk is close to 0. You can see this when getting into EU incubators who try to mimic HN: they are absolutely waiting for that thing to happen where they are sure they will have ROI at which moment you can just walk to a bank or to a much better investor. This slows things down but mostly kills them entirely.

> EU investors invest in sure things

Which is mostly real-estate

> French investors for example are really stingy and you won’t get somebody to just throw a few millions at you to see if you succeed

Isn't that...normal? Where did the attitude come from - that startups are somehow entitled to funding worth of several lifetime median incomes, for their half-baked business ideas that are unlikely to ever turn profit? That if the country doesn't shower the founders with angel investor money just for showing up, they are somehow unreasonably risk-averse and stingy.

As an example - Docker, arguably the most influential software of the past decade, was developed in France. HN has derided French investors for not investing in it, leading to the company relocation to US. Afaik, Docker is still burning money, with no end in sight, and will continue to do so indefinitely unless a buyout at ridiculous valuation happens. Looks like...the stingy French investors were right after all...

It has problems. If you have an idea that will take you a year to develop with 10 people, you need one million up front (simplifying a lot). But if the investors only give you 250k, they you need to spend time working on getting that missing 750k which will dilute your focus from the product you actually want to build. But the initial investor will still want that product.

I definitely think that there is some middle ground to find between not being able to rise money for any project, and being able to get 100M funding for a juicer.

If they stingy French investors have invested then into Docker, which now you say is posed for "a buyout at ridiculous valuation"? Yes sounds like they missed out big.

> If you start a company here, better think about profitability from the get go.

How is this a bad thing? Compare this requirement to, say, Uber, who has been losing billions, and has used investor money to engage in price dumping to corner the market.

There are tech startups and then there are "burn cash by subsidizing the 10% using VC money" startups. Uber is the latter and imo the role of the investor is to be able to distinguish which one is which.

However there is a case when you need money to actually do things, e.g.: pay employees, run clinical trials, rent or build up production capacity. If you don't have initial funds then you will be bogged down by doing contract work to hopefully fund your idea one day. It will slow you down and also quite possibly tangle you in support contracts in products you don't actually want to maintain.

> There are tech startups and then there are "burn cash by subsidizing the 10% using VC money"

My feeling is that the absolute vast majority of tech startups in the US are of the second kind.

> However there is a case when you need money to actually do things, e.g.: pay employees, run clinical trials, rent or build up production capacity. If you don't have initial funds

This has always been the case. Until unlimited US money perverted the incentives to become "waste billions to corner the market by barely legal means" or "wasted billions until someone buys you".

> My feeling is that the absolute vast majority of tech startups in the US are of the second kind.

Let's take a look at YC companies, which is representative to the kind of startups we're talking about here. Do you think the majority of them get the funding to burn and subsidize the 10%?

Yes, let's take a look: https://www.ycombinator.com/topcompanies/

Doordash losses: 204 million in 2018, 667 million in 2019, 461 million in 2020. 1.2 billion dollars in losses over three years. [1]

Cruise: Hard to find any data (the name doesn't help). Raised billions while producing zilch. Was acquired by GM, and is now generating only losses to the tune of 200-300 million dollars per quarter. That is, losses of around 1 billion dollars per year [2]

Instacart: Doesn't publish profitability (suprised Fry face). Had it's first profitable year in 7 years in 2020. In 2019 lost 300 million dollars. Previous data unavailable.

Should I go on?

Even the proftable darlings are usually profitable if you look at them right.

AirBnB: up and down, up and down. Sometimes down with losses up to 674 million dollars a year: [4]

Dropbox: became profitable only last year. Prior to that? Well, losses up to 484 million dollars of losses per year [5]

And so on.

The vast majority is fuelled by litrerally endless investor money with only two modes of operation: corner the market (that is, outlive other competitors who don't have such an unlimited amount of money) or get sold.

[1] https://www.businessofapps.com/data/doordash-statistics/

[2] https://www.statista.com/statistics/1077077/gm-cruise-operat...

[3] https://www.businessofapps.com/data/instacart-statistics/

[4] https://craft.co/airbnb/metrics

[5] https://craft.co/dropbox/metrics

> only really lose the easy "fill in a form and off you go" businesses. I don't imagine that's much of a loss

Sounds like you could easily justify soviet bureaucracy with that logic.

> It's also worth pointing out that if someone is falling at the hurdle of just registering and starting a company then the chance of success is very low

You're not wrong about this specifically. But why would I open in a difficult country if I can open in an easy country?

Every cost causes a difference at the margin. Businesses are fragile when small. And most of these costs are just economic dead weight, ridiculous paper proof of work schemes where all you're really proving is that you've wasted a certain amount of time and money.

If I were to identify one big flaw, it would be that EU governments don't recognize that small businesses can't do regulatory compliance as much, so they should be exempted. Or you get no small business formation that can turn into large businesses.

There's usually a certain amount of exemptions already. Things like not requiring audits for companies below certain turnover etc.

The cost/effort of running a tiny deadbeat company in Europe can be very marginal (I run one). That's how all plumbers and carpenters and car mechanics run their businesses: if they can you can too.

Don't they recognize that, with somewhat perverse consequences? I remember reading there is a cliff in compliance in France where if you hit 50 employees additional regulations kick in, so companies are motivated to stay at 49.

This is a really damaging take. In any area imaginable, a low barrier to entry has been proven to breed more people on the high end of skill and commitment. There's nothing wrong with folks who don't want to deal with dehumanizing red tape.

> concentrate wealth

Kind of like AT&T, Alphabet, Comcast and Disney?

Not to invoke whataboutism, but wealth concentration is as much of an issue in the US, if not more.

Most millionaires aren't from/based in the US? I feel like European red tape mediates the concentration of wealth somewhat compared to the US

Why wouldn't you? The number of EU professionals I've worked with here in the uk over the years is surprising to me, they all left their home countries because their prospects where limited by their governments with over zealous interference in business. Living in a business friendly country has obvious benefits: jobs and money

1. Because new companies create jobs.

2. People with jobs pay taxes. As do the companies themselves.

3. Taxes pay for social safety net?

You make it sound like having ease to start companies leads to a better social security net. Easier to start companies -> more companies -> more taxes -> safety net.

Sounds credible in theory, but the reality is that despite it being harder in the EU than the US to start a company, the safety net is much stronger in the EU. So there must be something wrong in that theory.

I never made that claim at all.

What I claimed is without jobs and companies (economic activity) you cant collect taxes which pay for social safety nets.

Am I wrong? Or is there magic fairy dust to pay for a social safety net I don’t know about?

No, you did not claim that. You said that the reason "society optimize for how easy it is to start a business" is that "new companies create jobs" which leads to the safety net.

That implies that making it easier top start a business is a requirement for the safety net; after all, you wrote that funding for the safety net is the reason creating companies should be made easy.

It follows that wherever there is funding for a safety net, businesses are easy to start. So how come that in Europe businesses are -allegedly- so hard to start, but there is a strong social safety net?

TL;DR: Europe is proof that it's possible to have a certain level of regulation to business while still having enough successful businesses to fund a strong social safety net.

Because societies that promote innovation have higher quality of life and bless the entire world with technological advancement, while their own population benefits from lower prices, more goods, productivity growth, more jobs, more opportunity, and more fairness.

It's strange how quick people are to condemn monopolies and yet in the same breath insist that starting businesses is not a social good. Of course it's a social good, how do you think competition happens other than by starting businesses?

> societies that promote innovation have higher quality of life

Does the US have a higher quality of life than Germany, France or the Netherlands?

I agree that innovation is important and societies should promote it, but -imho- not at the cost of consumer & employee protection.

I would like to see US answers to this but in the US your quality of life is fantastic if you are rich and then it degrades fast: in NL it is good to great for all. So I can pick bleeding hard work in a lottery to maybe be someone or I can do whatever I like and have most of those same perks. Where is the choice here?

> in the US your quality of life is fantastic if you are rich

I would argue almost everywhere in the world quality of life is fantastic if you are rich. What is the huge difference between living in a gated community in California to doing it in Thailand?

That in Thailand that would cost almost nothing. And personally, it is much nicer on probably almost everything besides the small issue that the country is completely owned by the military. But yes, you are right: rich is also better in NL. But it is not 1000x better: it is just better. Subjective of course; if you enjoy driving McLarens into trees then rich is a lot better.

I have the feeling, and again, I do not live there so I cannot be sure (and can you be even if you live there?) But from books, docus and US friends, the difference is not 1000x even. It is just another world. That is simply not true here.

I guess it is a matter of taste if you can stomach that inequality. I walked (yes, strange EU thing where one uses legs instead of wheels) through some part of Fort Lauderdale and it looked like a bloody war zone. I could not live in a country that permits that. Your have poor here but that is exclusively mentally challenged(or what is the current PC term?) People who get help but always fall back, and very few of them. I recognize the vagrants in my home city from decades ago: still the same people: they have a state provided house and get help but it does not help. You cannot fix that. But rows of addicts turned criminals lining the streets in tents and worse. In the richest country on earth. Rich people should be ashamed that happens on their doorstep. They can and should fix it today.

> I walked (yes, strange EU thing where one uses legs instead of wheels) through some part of Fort Lauderdale and it looked like a bloody war zone. I could not live in a country that permits that.

Your snarky comment is just pretentious cherry-picking. I can walk you through some neighborhoods in France, Sweden and the UK where you'd also wouldn't want to live.

The snark was only because of the American induced (and we have it here now) driving everywhere, even if it is a few 100m (I have been all across the US many times and people find it weird if you walk anywhere unless you are actually hiking in nature). It cannot be really denied if everyone would do their shopping by foot (meaning you would need to do multiple runs a week) you would be healthier and have better quality of life right? That was the norm here but now people get into their SUVs and drive.

And it is not cherry picking: I know those places too: I do not count the UK as that is another Anglo Saxon country so it seems to copy the US values faster (like Australia where the best city in the world to live apparently, Melbourne, I literally trip over the drug addicts in every street and I go there a lot). And yes, there are places enough I would not want to live but they do not look quite as bad as some things I have seen in the US which were more akin to New Delhi. Maybe I did not travel enough and also not the point; if you are the richest country in the world you simply cannot allow that. In my opinion of course.

I'm in the US. Quality of life is unbelivable if you're rich, great for upper middle class, good for middle class, okay if you're working class, terrible if you're poor.

Of course, all of that is still very much generalization, and I find comparing quality of life in Europe with US is more or less dick measure contest. You try one when there are no fact based arguments to talk about. NHS versus Medicaid, for example, that's could be a good debate.

"Unbelievable" is a strong qualifier. Care to give some examples? Genuinely curious.

The US suffers from de-industrialization as a result of the free trade agreements. That is 100% the cause of the excessive poverty we have vis-a-vis Europe. What's odd is this belief that consumer protection laws are somehow what is keeping Europe from having the same problems. And I don't really see Europe as being on a different development path. Rather, the EU managed to buy time with Eastern Europe coming into the fold creating a source of cheap labor nearby that delayed the migration of industry to China and the resulting mass de-industrialization and growing pockets of poverty that result. But the rot is already there with the industrial decline of Southern Europe and firms migrating production out of Europe, just at a slower rate. You can view Europe as lagging the U.S. in this area also.

Depends on the demographics. Algerians in France or Turks in Germany don't have such a great quality of life, but neither do El Salvadorans in the US. The U.S. is 60% Europe, 25% Latin America, 10% Africa, 5% Asia, and has pretty good quality of life for these demographics. As demographics in Europe change, the EU will see more of the issues it likes to criticize the US for, but the demographic-adjusted quality of life in the U.S. is pretty good.

By what measure though: it is highly subjective and when there is a vote, the US never gets very high. Unlike Canada, Norway, Netherlands.

On this site most people are wealthy, but I think (not sure but I have nothing else than my visits and documentaries), you are really bad off if you are poor in the US. Here that is not really an issue.

A lot of white Europeans in the U.S have a horrible quality of life, Trump would probably not have been elected otherwise.

A lot of French, Italians, Spaniards, and Greeks have horrible quality of life as well. You can go out to some of the more remote parts and be shocked at the living standards in Europe. But they are still higher than the world average, and this also true for the U.S. as well. I think perhaps part of this is the lack of pop-culture coming out of Europe, since scenes from movies/tv showing terrible US ghettos and american countryside decaying towns are watched around the world, but Europe isn't producing entertainment showing czech Roma living in mountains of trash or bored teenagers wandering around French slums or toothless grandmothers in rotting Italian villages. But it's all still there.

You are right. The one big difference though is even a French person living in poverty will get the best cancer treatment the country can give as far as I know. In the U.S he will be left to die if he is not insured.

According to the World Happiness Report for 2020 (which is a well-regarded and well-researched report as far as I know), 9 of the top 10 countries in the world for people's quality of life and well-being are all in the EU. The USA comes in 18th.

https://en.wikipedia.org/wiki/World_Happiness_Report#2020_re...

Switzerland, Norway and New Zealand most definitely are not in the EU.

Switzerland and Norway are in the European Common Market and are very much aligned on all fronts.

Devil's advocate here. They almost all have small populations: Denmark, Sweden, Finland, Norway, Netherlands combined have less people than Spain which isn't that happy. On average I'd gamble the whole EU is about as happy as the U.S

Because 60% of European GDP is government spending, and the place where government gets most of that money is by taxing private businesses (profits & cap gains), their products when sold (VAT and import duties), and their employees when they are paid by said businesses (income tax).

No businesses means no wealth to redistribute which means no safety net.

They are literally the bedrock of the entire system. So yes, society should place massive importance on making it easy for them to operate.

Yeah, took a few hours of work and 1 week for correspondence to clear. Your point?

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