Why European startup had to move to USA to fulfill its vision
thenextweb.com
thenextweb.com
In both countries, with the right professional advice, I've had little trouble getting things going.
I just don't think the conventional wisdom that "In Europe it is hard to start a business" holds true.
Freelancing is easy, but actually starting a business is difficult, at least here in Italy.
It costs several thousand Euros, and takes lots of time, and is a fairly rigid entity: if you want to, say, give someone some shares, its going to cost you more thousands of Euros to do so.
In the US, you can spend thousands of dollars creating a business, in lawyer fees, but you can also start an LLC on the cheap, if you're not aiming for a high-growth, VC backed, option-disbursing startup. You are 'free to choose'.
Sounds more like the founders of a travel-related site got enamored with the travel lifestyle, culture, and all that goes with it in NYC. Much like a new CS grad thinks that the valley is the only possible place a startup can work, I imagine that the same holds for travel companies in NYC.
From what I've seen/learned so far (and a native Swede please correct me if I'm wrong) people here seem MUCH more likely to run a lifestyle type of business vs. one that chases VC funding.
What the article does not really say much is that Tripl keeping an office in Stockholm where we do have connections, but we have trouble finding fundings for a large engineering project, we have still not found a new office (co-working space) and we have huge difficulties hiring (mobile and web developers).
I would love to be proven wrong and keep a larger presence in Stockholm, but NYC has proven easier on these three topics so far.
"Why Swedish startup had to leave Sweden to fulfill its vision"
No offense intended to the US (I moved here from Europe and love it) but they probably could have been successful somewhere like London or Berlin, too.
But once you decide to move, you have no reason not to go to the best possible location.
America isn't for everybody, but it is for people who are hungry (metaphorically). Sweden isn't for everybody, but it is for people who want stability.
Does this mean Europe needs to "adapt" to be more like the US? In my opinion, no. Many people are very happy with their lifestyles in Europe. Especially Swedes, no doubt, who rank very high in the so called "Quality of Life" Index. [1]
p.s. Very cool app idea. finding someone who knows travel is much better than trying to sell travel advice. I know this from experience.
[1]- http://nationranking.wordpress.com/2011/03/06/2011-qli/
This is really bad for startups. It would really suck if my crucial employees (and not just female employees) were to vanish for 14 months while continuing to be paid and still have the right (but not the responsibility) to come back at the end of it.
Even if I replace the missing employee, I might be stuck with an extra employee a year down the line, and I'd have less money to pay the replacement with in the meantime.
I'm not gonna tell you it's easy. But it's not as bad as it sounds.
The state takes the biggest hit. The employee does not receive full salary and the employer only pay a small part of that salary.
Swedish blue-chip companies (read: Ericsson, Volvo, H&M, AstraZeneca etc) will typically go above and beyond the standard benefits and provide full salary while the employee is on maternity/paternity leave. But that is a decision they have made themselves, just like large US companies have all sorts of fringe benefits not mandated by law.
There are also morals in play here, you wouldn't join a startup if you are planning to have kids. And besides, most parents would prefer working at a large company while getting kids just because of the risk of a small company.
All in all, the situation is not that bad. I think it's a small price to pay to ensure we have growth in the future workforce :)
And we are talking REAL swedish paternity leaves here of several months/a year, not the american weeks.
I would imagine high taxes and government regulation had something to do with this.
The difference between the countries' investment and startup growth environments goes much deeper and can't be easily summarized by simple political sloganry.
Since you mentioned Nordic countries in general, let's look at Norway:
1) 28% flat tax on income (additional 9% on gross income if you earn between $73,641 - $119,662 and 12% on anything larger than this. 2) VAT on most things you purchase (25%) 3) 1% wealth tax, including your assets. 4) All tax returns are publicized. So everyone knows how much you make. This is a violation of privacy.
source: http://www.davemanuel.com/2009/09/08/the-norwegian-tax-syste...
It's not just corporate taxes that need to be factored in here. If I'm a VC, why would I invest where everything is going to cost 3X or 4X as much.
There also has to be a reason why there is almost no startup scene in Nordic countries. If taxes were great and the government made it really easy for businesses to startup and flourish, VC would be flocking there.
another article: http://www.inc.com/magazine/20110201/in-norway-start-ups-say...
"As a Norwegian, he pays nearly 50 percent of his income to the federal government, along with a substantial additional tax that works out to roughly 1 percent of his total net worth."
"And that's just what he pays directly. Payroll taxes in Norway are double those in the U.S. Sales taxes, at 25 percent, are roughly triple."
This article is filled with reasons why I would never want to start a business here.
By the same logic, no sane VC would invest in a Silicon Valley startup because engineers there are 3-4x more expensive than most other tech hubs.
The Norwegian employee pays a lot of tax, but actually a lot of that money goes to services that directly save money for you (the employer). For example, you don't need to pay for the employee's health insurance, dental care or pension plan, since these are covered by the state.
There also has to be a reason why there is almost no startup scene in Nordic countries.
That's nonsense. By European standards, the startup scene is great at least in Sweden and Finland.
You can get a great plan in the US for around $500-$600/month (an okay plan is considerably less). 30-40%+ more of my income is considerably more than this.
"By the same logic, no sane VC would invest in a Silicon Valley startup because engineers there are 3-4x more expensive than most other tech hubs."
They are more expensive because they are the best talent around.
"That's nonsense. By European standards, the startup scene is great at least in Sweden and Finland."
Compared to what? The statup scene in Michigan is great compared to that of Iowa or Kansas.
In Norway it's over 50% after everything is said and done..and this isn't include the 20% VAT that is paid on almost everything, the 1% "net wealth tax" (which includes real estate, cars, etc), and any other tax you might have to pay.
However, the neighboring Norway has a 1.1% combined wealth tax on income above about $350k. And according to [1] "from the income year 2008 the full market value of shares reg- istered on the stock exchange are in the shareholder’s wealth, whereas unlisted shares are valued based on the company’s taxable wealth".
Other countries that have the wealth tax are France, Switzerland, Liechtenstein, Netherlands and India. Some of them have limits on the wealth tax in place, e.g. in France the amount cannot exceed 50% of annual revenues.
"Taxable wealth is the value of the company's assets reduced by debt, as of 1 January in the assessment year."
This doesn't necessarily mean that the same definition applies at the tax office and/or that it applies to startups, though.
So either you are in USA, where lawyers and accountants deal with SEC requirements everyday; or, you are in Sweden, and have to do things the way Sweden wants you, then, also, do things the way the SEC wants as well. Simply easier and possibly cheaper to be in the USA.