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Comment by cheptsov | Hacker News Reader

I’m living in Europe, I'm deeply disappointed by the current situation. The problems run much deeper than just regulations; they extend far beyond politics.

1. VCs outright avoid investing in deep tech, with only rare exceptions.

2. Founders overwhelmingly choose to build small, sustainable companies, steering clear of big tech.

3. Employees consistently prefer consulting jobs and value vacation days over equity.

4. The bureaucracy startups face when incorporating or raising funds is staggering (Germany, I'm looking at you).

While this may seem beneficial from a social perspective, it creates the worst possible environment for tech startups. I have immense respect for the few European startups that manage to survive and thrive despite these obstacles.

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Fair enough. Unless I misunderstood your point it sounds like, what you guys have right now is good for people and their lives. Isn't that the entire point of life? I can see why general population might support it, while us techies would be pushing for deregulation and less of work-life balance. So my understanding of these articles is "it might be bad in a long term!", but Europe is still big enough market for all these companies eventually bend over backwards to get access to it.

Again, really no skin in the game, as I don't live there and I only have limited amount of perspective, which comes from my European resident non-techie friends.

Europe is an amazing place, which is why I moved here in the first place. But for techies, it can be pretty challenging. The issue isn't with the techies themselves, though. The problem is that the environment here holds back big tech, making Europe heavily dependent on the US.

The mistake is making oneself dependent on big tech in the first place.

I think a lot of the complaining on HN comes from the engineers themselves. "Ugh," they say, "We have to write all of this boring code to comply with regulations, rather than writing exciting features!" I see it a little differently. As someone who's spent a good part of the last 6-8 years working on GDPR and DMA compliance projects, the way I look at it is: "We are finally making our product better for users, working on privacy improvements that our companies have opposed until it was forced on them." EU-led regulation has been a great engineering opportunity and a product forcing-function.

> what you guys have right now is good for people and their lives

Let's see how long it lasts, Europe's economy is terrible and their people are significantly poorer. I don't think their current welfare state is sustainable without tax revenue from large businesses. Eventually every European citizen will be a waiter, hotel staff, or a tour guide.

how is europe's economy terrible? by what metric? considering that the EU still has a very large part of the global economy, especially compared to its population and size.

Also, the tech industry is not the only part of the economy. large parts of the EU are absolutely massive in terms of industrial machinery and scientific companies.

People on HN always seem to forget that a lot of money can be made by making something very high end which solves a specific problem, no matter if it is sexy or not.

Maybe terrible is too strong but the trajectory is not great: https://www.euronews.com/business/2024/07/25/germanys-busine...?

well, lets not forget what happened since the start of 2022...

the invasion of ukraine has a major impact on the european economy, but that has very little to do with the article in question...

40 years ago Europe (without former Warsaw Pact countries) accounted for 25% of global trade. These days it's ~12% and dropping. Since 2008 there is no meaningful GDP growth (1-2%) whereas US and China exploded in that time. India is on track to surpass EU by 2050. All that will be left is a large open-air museum.

India, a country with 1.4 billion people and growing, overtaking the EU with 0.44 billion people in 26 years (!) isn’t the flex you think it is.

It's not about flexing, it's about the diminishing importance of EU in the world. It doesn't matter if EU still has a better GDP PPP if India ends up with a bigger GDP overall as you are only as important as you have in the bank internationally. Competing for resources would then flip in favor of India; EU burning bridges with Russia sending it to China's orbit will likely accelerate the process as well.

Of course the influence of the EU will diminish over time, because they are currently very strong. It would be very weird if the Asian countries wouldn’t catch up, which automatically lets the EU have a smaller proportion of global trade. Guess what, at some point, India and china will also overtake the US. Is that shocking to you? That’s just what happens when absolutely massive countries catch up to everyone else.

US has fewer inhabitants than EU (342M vs 449M) yet keeps up with China economically in absolute terms.

And you think they will manage to keep up in the future? You don’t think china will be 1.5x the US in 26 years?

The point is that since 2008 US was able to keep up with rapidly expanding China whereas EU stood still. We are discussing future of EU here.

In what way was the US able to keep up with china? The GDP chart google shows has a factor of 3.2 for 2008 and 1.4 for 2022 when comparing the US to china. If you seriously think the EU falling back behind china is a EU problem, I don’t know what to tell you. It might happen at a different speed but it’s only a matter of time before china takes over the US.

Yeah, but the pie did not remain the same and Europe's slice shrunk. Some parts of the pie just grew faster. It doesn't mean Europe went backwards

Now imagine we are talking about companies: "We grew just our competitors grew 4x as much as we did." - that would be a prime candidate for an acquisition or being labeled a "zombie company" in a few years due to exponential growth effects.

That’s exactly what happens to every large company. At some point, growth is limited. You think google grows as fast as Kagi? Should google be concerned because kagi managed to 10x their users in the past year (made up figure, you get the point) and they didn’t?

You have a weird definition of “terrible”. How much EU taxes are being paid by Apple, Meta, Google, etc?

We pay more than enough taxes in Europe.

We do, but Apple, Meta, and Google don't.

I thought that tech companies working in Europe take advantage of Irish/Dutch laws and skip taxes almost entirely. Is that outdated?

Poorer is debatable. Ppl in eu usually can afford going to a hospital or going to school/uni- for us it isn't that straightforward

And saying eventually everyone will cater to tourism is peak us ignorance. The tourism sector in eu is fairly small, even in the (over) touristic italy. Just the fact you mentioned this leads me to think you are an ignorant american that likes how people suffer from being poor and being exploited by big corpos...

Comfortable stagnation is not a stable state for a society.

from a personal and social perspective, I see nothing wrong with it. In fact, even in the EU we still ahve a lot of BS startups. We imo need more sustainable businesses, that value actual societal value/value to consumers or businesses over growth and shareholder value.

This seems like a very socialistic perspective to me, which might not align well with big tech and innovation. I suggest re-reading "Atlas Shrugged" for this topic.

It doesn't sound at all like the workers owning the means of production.

>I suggest re-reading "Atlas Shrugged" for this topic.

Ah yes, that's the problem. We all need to read and subscribe to the ideology of Ayn Rand, then we'd understand and everything would be better!

We should definitely take the word of an infamous welfare queen (Ayn Rand) on how to run society, indeed

not an argument

Neither is recommending a piece of fiction.

Wait, these are problems? Other than #4 they all sound like good things.

A working base that values vacation days over equity doesn’t sound like a place I’d want to start a business.

And I’m not the only one. Many companies don’t hire in Europe because it’s too risky to get a dud employee that you can’t fire without having to pay their salary for the next 6 months.

I find it the other way- lots of contracting roles in europe coming from US/Switzerland. There are also many roles coming from different eu countries to other eu countries. In other words it doesn't seem to have such a big impact

> Many companies don’t hire in Europe because it’s too risky to get a dud employee that you can’t fire without having to pay their salary for the next 6 months.

That's what trial periods are for, within the first 1-12 months (depending on position and sector) you can very easily get rid of employees. That's when you're supposed to evaluate their performance and fit.

And if they don't do their job afterwards you reprimand them and they can then be fired for cause if you have actual causes.

Germany's position in context is at least understandable: the Mittelstand is a force to be reckoned with, and that entire segment of Germany's trade system is extremely averse to risk. (It's also a lot of other things, part of which can be witnessed by hopping the border to Switzerland and reading through the platform for their self-proclaimed "Partei des Mittelstandes.")

The real fundamental issue is VCs, which as you pointed out, are far more adventurous in America.

Unfortunately true, but one can also think that it’s a consequence and not the root cause. Why VC should invest if the environment isn’t supportive? A vicious circle :)

to give a different perspective,

why are VC's somehow the cause of "tech industry"? this seems like a very US perspective on tech in general.

Also, VC's in the US have another large advantage. Very, very cheap money because the status of the US dollar as a reserve currency compared to the euro and other currencies.

> why are VC's somehow the cause of "tech industry"

Who else will give private capital for what is purely an idea?

Not Banks giving a business loan - they will demand interest at the current interest rate.

Not Private Equity - they only move private capital into public companies or late stage private companies

Not Hedge Funds - they only deploy capital into public markets

Not Growth Funds - they only deploy capital into late stage companies

The only funds that will deploy private capital into early stage companies are Angel Investors and VC Funds.

> this seems like a very US perspective on tech in general

Israel, India, China, UK, Russia (pre-2022), Ukraine (pre-2022), and ASEAN all developed a VC scene similar to the American scene.

Yet mainland West European investors are nowhere near as dynamic.

If the Western European market was more dynamic, Spotify would not have moved to NYC, Ghodsi would have founded Databricks in Stockholm instead of San Francisco, and Datadog would have remained a purely French company instead of moving most of hiring from Product Leadership to HR to the US a decade ago.

While you can mention ASML, the only reason ASML/Phillips even has EUV IP is because the US Government gave it to them instead of Canon or Nikon due to anti-trust reasons in the early 2000s and can very easily revoke IP access if prodded.

> Very, very cheap money because the status of the US dollar as a reserve currency compared to the euro and other currencies

Then why do high interest rate Israel, India, and China continue to have fairly robust VC scenes despite having high interest rates and currency controls and/or relatively illiquid currency markets?

The reality is "cheap money" as in interest rates don't really matter for early stage funding. Indtutional investors always leave some money on the side for VC funding as a diversification tool.

The difference is American, Israeli, Indian, Chinese, and ASEAN institutional investors will try to fund local VCs to build a local ecosystem, but Western European ones will just hand that money to an American, Israeli, Indian, or Chinese VC instead.

The VCs ask you to relocate to the bay area if you want money. People go where the money is.

On the contrary, I see the VC influence on American tech has been incredibly destructive. No one builds companies or products or services to last. Everyone is only in it for the quick buck. Basically every service provided by big tech has turned into a chase to cover it with ads and seek as much rent as possible while never actually improving anything. The state of software has gone downhill precipitously in the past decade and it’s only getting worse as VCs gain more and more control over the entire economy from housing to education to financial services to insurance.

"... seek as much rent as possible ..." I think this is sorely understated in the context of understanding Europe's regulatory environment vis-à-vis American big tech companies or targeted advertising-supported (read: personal data mining) software startups.

We need to remember that Europe is the continent that gave us extractive colonialism. A player always knows their own game.

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