This is basically failure in European startup ecosystem that companies needs to go SF, but good for Y Combinator and SF that they can attract best talent.
What are these?
> There's also nothing stopping them from making that bank account the least attractive bank account you've ever heard of
Why would they want to? What do they actually risk?
> restricting you to just a few machines in a restricted geographical area.
Officially area-specific or just through the specific kind of machines accepting specific kind of cards being absent outside of it? I've heard of the unreasonably complicated system of types of cards in Germany: normal debit, "electronic cash" etc.
You can't open an account like this if you already have an account. You can't pick the bank either. You're obliged to go to your last bank for this type of account. The price is fixed at the same level as the normal accounts. You can even have this account if you're homeless and don't have an address. Typical requests are done via support organisations rather than yourself, but it is is possible to do it yourself as well.
At least in the Dutch situation I don't see them introducing deliberately unattractive pricing or conditions once you have the bank account. There is a burden to open one though.
That said, I don't think bankruptcy would usually result in being account-less. More likely, you can't get a credit card, mortgage or other consumer loans, which can be inconvenient. Personal bankruptcy (as opposed to an LLC imploding) also likely means a few years of handing over all your income above minimum wage to the government in exchange for nullifying your outstanding debt. (Note that the Netherlands mostly runs on debit cards, and that most people don't have a credit card).
> What are these?
"Basiskonto nach § 31 Zahlungskontengesetz" [1], and tell them that you are aware that the regulator BaFin has a specific process in place for complaints about banks who refuse an application for a basic account [2]
> > There's also nothing stopping them from making that bank account the least attractive bank account you've ever heard of
> Why would they want to? What do they actually risk?
My theory is that it has to do with outdated technology in the German banking sector that implies that it's actually impossible for them to make absolutely sure through technology that your account can't end up in overdraft.
> > restricting you to just a few machines in a restricted geographical area.
> Officially area-specific or just through the specific kind of machines accepting specific kind of cards being absent outside of it? I've heard of the unreasonably complicated system of types of cards in Germany: normal debit, "electronic cash" etc.
The reasons are a bit difficult. In Germany there is the "Sparkasse", which is a network of small banks local to municipalities and where the municipalities have large ownership stakes (so it's weirdly-state-owned). They are legally separate but share a backoffice. Last time I did research on this the situation was this: The Sparkasse-network has more than twice as many ATM-machines than all the other banks (like Commerzbank, Deutsche Bank, foreign banks) combined. A normal bank account at one of the branches of Sparkasse will give you access to their whole network. But a basic bank account will only give you access to the ATM machines by that specific branch, which ends up being highly restrictive geographically. If you get a normal bank account from, say, Commerzbank, you can use the entire network of non-Sparkasse-ATMs, i.e. use all Commerzbank-machines countrywide, plus all Deutsche Bank machines, etc. But if you get a basic account, they'll restrict you to just the machines by Commerzbank, which are few and far between, but, at least that would give you some semblance of country-wide coverage. ...long story short, life really sucks with a basic bank account, even if you don't want/need credit.
[1] http://www.gesetze-im-internet.de/zkg/ZKG.pdf
[2] https://www.bafin.de/SharedDocs/Downloads/DE/Formular/dl_fo_...
But I can see not being able to get any credit though, if the European or country-local equivalent of a credit score is not good enough.
Is this just hearsay? It seems extreme, even for French levels of bureaucracy.
This means that if you get rejected as a client by enough banks you can go to the Banque de France and they will select a bank that is then obligated to provide you with an account.
Considering the insane amount of funds France will literally gift you just for opening a startup there, I find that very surprising. You have to be good at paper pushing and speak the language however. That much is true.
A good friend is doing it now and it's not like he's swimming in cash though.
France cares a lot about French and its honestly an issue many time (and I say this as a French person). Things are changing slowly, but anybody serious about moving / opening a business in France should be serious about learning French. You would be astonished by the number of engineer, investor, and in general any business person, who have an awful level in any other language than French...
You won't be banned from starting a business from a single bankruptcy, but if it happens multiple times and/or creditors end up losing significant money over it, you can be barred from starting a business for two years.
I don't think these rules often directly prohibit a promising entrepeneur from starting a business, but it's pretty obvious that the whole culture provides a strong chilling effect.
I understand being banned from <<starting a new business>> after failing repeatedly. A bit extreme, but ok, it makes sense a bit. But he was saying he was banned from <<getting a bank account>> due to that.
It is extremely unlikely that you won't be able to get a simple checking/deposit account at a commercial bank just because you went bankrupt.
On the top of that, regulation in the EU is much worse than in the US. This does not help either.
Isn't that just another way of saying "quality of life"?
The article is about how Europeans, that live in that "safe and secured society", are creating more startups than before.
>>"On the top of that, regulation in the EU is much worse than in the US. This does not help either. "
If you check those start-ups you can see that most of them are joining Y-combinator but they stay in Europe. So, also the opposite of what you are implying.
What is the distribution of Eastern vs Western Europeans in the sample?
==Denmark== Gamerpay , Female Invest , Zoios
==Estonia== Membo
==France== Whaly , Carbonfact , Numary , Café , Hera , Crew , PaletteHQ
==Finland== Kapacity.io
==Germany== Snowboard Software , Moving Parts , QOA , HeyCharge
==Ireland== Luminate Medical , Noloco , Protex AI
==Netherlands= Quest , Orderli , Echoes HQ
==Poland== Enso
==Romania== Archbee
==Spain== Solarmente , Payflow , Arengu
==Switzerland== Pabio , Adaptyv Biosystems
==UK== Appollo , Shopscribe , Digistain , Abatable , Heimdal , StudyStream , Teamspace , Genei , Sitenna , Onfolk , SigmaOS
==USA== Beau , Iona Mind , Synder , Awesomic
USA and Anglosphere in general is HUGE. China is HUGE. The closest thing to that in the EU is DACH (Germany, Austria, Switzerland), about 100 million rich people speaking the same language.
But precisely Germany is a fairly technologically conservative country with median age close to 46, where people are much less keen on new technology than in, say, Estonia; ironically, the fact that older systems work reliably reduces the drive to adopt new ones.
And smaller markets like Estonian or Danish one will not provide you with as much growth opportunity.
eBay was also a spectacular failure because they disregarded local competition.
Something like a food delivery corp. on the other hand must know precisely what to expect from which holidays etc. There is a fairly successful Czech startup called Rohlík that expanded to Hungary, Austria and Germany, but every added country is a challenge.
https://techcrunch.com/2021/06/30/rohlik-raises-119m-at-a-1-...
BTW Translation is probably cheaper than support. Customers will often demand support in their native language.
See this article:
https://www.pulshr.pl/wywiad/arkadiusz-krupicz-wspolzalozyci...
It is more complicated than that for things moderately complex.
Shareholder value is only nice if you're a significant shareholder, and it is disproportionately nice to those shareholders at the cost of others, when lobbying overtakes regulation.
My diesel jetta would like a word with you and your picky-choosy.
Just kidding, America cracked down and forced VW to buy it back with a penalty kicker.
Point is - these sorts of arguments are silly.
I think you live in a different region.
https://corporateeurope.org/sites/default/files/a_spoonful_o...
https://corporateeurope.org/en/pressreleases/2016/07/food-lo...
https://www.livestrong.com/article/464851-why-is-high-fructo...
https://ec.europa.eu/health/sites/default/files/nutrition_ph...
Worse as in better for consumers and citizens, but more costly for companies that can't do exactly what they want?
Theoretically if you want to build an electronic product and sell one (1) unit of it in the EU you need to give it the full works of CE compliance. I don't believe UL/FCC are quite so onerous? And certainly this doesn't apply to random items in unmarked packages from China.
So it seems it's not that clear cut that you need it (and it can be self assessed). But yeah, if it's an electronic device that plugs into the wall or connects to WiFi probably yes - or at least the modules that do that)
Safe and secure unlike... California? The founders of US startups are already in very advantageous positions in life. In fact that security helps with taking business risks which is the opposite of what you're claiming.
Not sure what is your point here, you brush off a lot of the real nuances of the problem to throw an overgeneralising jab onto 27 different cultures...
https://www.economist.com/business/2021/08/14/one-way-to-mak...
And I'm certain it's not the reason SV creates more startups. The real reason is that this is where startups were invented, so for historical reasons the concentration of capital and talent is extremely high.
What exactly do you think "startup" means? To me, the word just means a new small business. Such things have been around for centuries, before the USA even existed never mind SV. That's true even if you take startup to mean specifically those taking large outside capital with a goal to grow large quickly (which I don't think is necessary, a bootstrapped startup is still a startup IMO).
I'm using the word in the Paul Graham sense, new companies that aim for really fast growth.
And yeah, that also sort of existed before SV but I think you actually know what I mean.
Now "successful" European startups want in on the money.
YC's "most successful startups" routinely lose hundreds of millions of dollars every year: https://news.ycombinator.com/item?id=27485360
The YC data is clear about one thing: if you remove the need to travel to the US , a lot more europeans flock to YC. We 've become a terribly sclerotic continent and it's very visible now. I believe things will get a lot better after we hit rock bottom.
And that money is mostly a complete waste. EU money comes with so many strings and baggage that you are either big enough and have the resources to deal with it (and thus you don't actually need it), or you are small and make it your entire business model to live off EU funds and not produce anything of value ever.
I have found the strings to be bureaucratic, not material, which has turned many small european businesses to paperwork factories.
Aren't successful companies supposed to, you know, earn money and turn a profit? Or is superiority is strictly in the amount of money thrown at unbelievably unprofitable companies?
I feel we could use a little more easy capital in double-digit million € range, but retain or even improve the friction above low triple-digit million €. Basically: experimentation is good. Unchecked growth from zero to multinational behemoth is not always so good.
There are two hard problems though:
1. At the lower end, it's very hard to distinguish a legit experimentation from a scam. We already have too many fly-by-night small businesses preying on the population. I'm not sure how to fuel more legit startups without making the latter problem worse - as we can tell from the EU grants, adding more strings tends to kill good businesses faster than bad ones.
2. At the upper end, big corporations are geopolitical weapons. Nations and blocs like EU are always in conflict with others; currently, it's mostly economical warfare. This means that any country or bloc tends to be happy if they can spawn a billion-dollar company.
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[0] - Where by "useful innovation" I mean one that's ultimately yielding a net positive value for the society, and is not purely a business model innovation like it's common with so many hot tech companies these days.
> 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.
Yes that is the business model and business is good. As opposed to EU which is a wasteland where nothing grows. Lots of businesses are built to be sold to larger businesses. It makes sense and there is nothing wrong with this model. As for investing in money losing enterprises, so what? If investors are willing to do it let them.
Not necessarily. A "wasteland where nothing grows" is obviously bad, but... there's a reason we don't let nature to optimize crops for growth, nor do we do it ourselves. We grow crops for food. We literally care about the fruits of their labor. And so is with businesses - the social value of a business is in the prosperity it creates for the people.
The SV growth model, at the extreme, is overfitting the "growth -> acquisition" path - often creating negative value for the society, by disrupting an existing market with an offering that's too good to be true, subsidized by infinite investor money, and then leaving a gaping void after burning out or getting acquired. This would be like a crop plant that first releases poison into the soil, killing competing crop species, then sucks out all nutrients and dies without producing edible fruit. It's not something you'd like to grow on your field either.
Endlessly burning through infinite cash isn't a good business model. And it ultimately results in a significantly worse wasteland than the perceived wasteland of Europe.
Where in Europe you have lots of companies in lots of different markets, in the US you have continuous price dumping that drives away any and all competition (unless that competition has more infinite money), and preys on people.
For example, the explosive growth of gig economy is the direct result of this "good business model". And who woulda thunk it, but predators like Doordash are predictably a "YC Top Company".
In Europe you have lots of companies in lots of limited local markets unable to grow out of them because they have no funding options available to them.
First, you have to compare EU today with US of the 00s when there were actual new ideas in the market and profitable companies. The current US startup market may have been taken over by grubby marketers who market themselves as entrepreneurs, they may be buying their way to user growth, and may fail, but it doesnt matter. Because the big guys have cornered and monopolized every fundamental infrastructure , are already bringing in tons and tons of cash, and basically guarantee the cash flow towards that ecosystem ... forever. Whatever money is burnt in AWS ends up back in the same SV ecosystem. That's sustainable.
Now, take for example the EU's H2020 system that funds partnerships between academia and industry. There are a lot of fancy proposals in there, with fancy names and fancy-sounding tech. And most of them deliver exactly what they describe in the proposal. If you look closely, most of the projects are minimum and viable, but they are not products. And when the project ends, there isn't a push to continue the project if the partners don't want to, even the bureaucrat in charge of it may be a different person at that time. While on the other hand , a VC acts as a permanent point of reference who has long-term-interest and investment in seeing the idea bear fruit.
You do realize that most of the innovation the US pride itself about was in fact directly funded by the state through DARPA, the NSF, NASA and military contracts: Fairchild Semiconductor, the internet, Google, Space X, Moderna...
Actually I do think it's very relevant to point that most of the most valuable US innovations were state funded as a reply to someone asserting the absolute superiority of private VC funding. The USA is very interventionist for a country promoting free markets as close to a religion.
I am not entirely sure what this has to do with Europe however.
Show me any subsidy in the EU that supports a business losing 500 million dollars a year for 10 years.
> We 've become a terribly sclerotic continent
No. The US has become reckless with money, and the concept of a successful business has been entirely substituted by "but this unbelievably unprofitable company with no chance of ever earning money has an imaginary market cap of 50 billion dollars".
That assumes that those startups get investment from outside YC , which is not what i m talking about. Also, the EU just approved a giant stimulus package which will be used to support a lot of failing companies, just take a look at the air carrier subsidies around the continent.
It's true that US is subsidizing unsustainable businesses, probably in the hopes that something good will come out of them regardless. But that doesnt change the fact europe is repelling entrepreneurs.
Yes, they do. And that's the main difference between the EU and the US. Especially with YC startups expect to get significant investments after the incubator.
> Also, the EU just approved a giant stimulus package which will be used to support a lot of failing companies
You do realize there have been two years of pandemic?
> But that doesnt change the fact europe is repelling entrepreneurs.
What's your definition of entrepreneurs? A company that always loses money "in the hopes that something good will come out of them"?
The EU is a complex multi-lingual multi-cultural market unlike the uniform US market flooded with unlimited investor money. All of the "successful" incubators, investors, startups would fail miserably here, outside their near-ideal conditions.
Most won't even bother. And YC is not the only way to get funds (not even in the US)