EU startups fail because their press refuses to hype them up
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European culture operates differently, and the startup model doesn't translate seamlessly to this continent for a variety of reasons. I've explored this in depth on my blog, with a particular focus on Germany: https://mertbulan.com/2025/02/24/we-dont-need-startups-we-ne...
Europeans use Airbnb. Trying to to say he was trying to "apply the American mindset to the European market" as a bad thing doesn't really hold water here when the American product literally won.
Yes, the kind of companies historically started in Europe are very culturally different to startups. The point being made is that really for no good reason, Europe does not culturally support the existence of startups and is often actively hostile towards them.
The solution being "just don't do startups in Europe" is like, ok sure I guess you can do that, but it doesn't actually address the problem that was presented: cultural incompatibility and unwillingness to change.
Another part of the American mindset. Not all the companies are trying to win here in Europe. Some believe that companies can co-exist. They can serve different groups of people. Not all of them are pushing for getting more market share or jumping into different industries like Airbnb is doing now.
Companies are trying to win in Europe and competition is as fierce as anywhere. What "some" do is a moot point. You'll always find "some" people/companies behaving in a certain way wherever you go.
Yes, some companies aren’t trying to “win”, but what about the companies that are trying to “win”?
It sounds like you’re implying they simply shouldn’t exist in Europe.
You are right... Unless the alternative is all Europeans using an US company for that.
In the sense that Mittelstand is more than just SMEs, I don't think it ever really existed here. There's no cultural fascination with being a middle business or having a family-owned business. A similar word ("middenstand") was used a lot, but it referred to shops only. In American TLA-speak: SMEs with a D2C model. The term "middenstand" died a slow death in the last 25 years. It's rarely used nowadays.
Good riddance too. The whole term reaks of limited social mobility. In Dutch "stand" has a much stronger feudal vibe than "klasse".
Notwithstanding all the physical audio equipment manufacturers in Germany, there are loads of them producing quite high quality gear.
Not going to work in an innovative digital economy. We can see how resilient Mittelstand is by the current wave of bankruptcies and the general state of economy.
As far startups go it has much less to do with culture or hype but with the fact that Europe even with the single market has far more localized and ring fenced markets than the US.
So you end up with smaller overall markets with a well dug in established competition.
For further comparison direct sales incurred by US press is insignificant internationally next to Hollywood,and one can argue the CIA does more-better commerce hype than DoC itself
The problem is that to become a mittelstand, company must survive early growth phase, and the OP tweet correctly notices that such possibility is severely hampered both by EU and USA media. To continue my example - "we have Valve at home"(c) i.e. for example EU has CDPR with it's GoodOldGames (GoG) store. Yeah, it also went a bit wide in past years, but not because of lack of trying to be specialized. And they still retain that specialization mostly. But they are far far away from the Steam, and I now suspect the marketing playing a key part in it.
tl;dr - authors message "Germany should focus on developing the Digital-Mittelstand" is wrong. It is wrongly formulated. It's like saying "country should focus on developing successful companies". Yeah, no shit Sherlock, but before that every successful company must somehow be created and grow.
Or, alternatively, we can replace every Mittelstand word in the incentives part of the article and all of the sentences would be true:
STARTUP, however, can leverage remote work to further reduce costs. Employees could live in small towns, enjoy lower living expenses, and maintain a high quality of life thanks to Germany’s good transportation infrastructure. Remote work also translates into lower personnel costs, typically the largest expense for any startup. By tapping into these advantages, STARTUP could achieve both profitability and sustainability without compromising employee well-being.
If you’re already sold on the STARTUP concept, let’s explore the potential products they can create. There’s a wide range of possibilities: (a list of typical software industries)
Rather than pouring large grants into startups with the hope of generating returns for shareholders, the German government should consider introducing tailored incentives to foster the development of STARTUP.
Salary Grants - (applicable to startups? of course)
Simplify Bureaucracy and Regulations - (same)
Expand VAT Exemptions - (same)
English Language Support - (same)
etc. etc.
How many tiny US startups have been successful in EU markets?
I'm from Norway, we're ~5 million people here. You're not going to have a ton of users, and hence employees, before having to study other countries' rules and regulations. Some of which might not be available in English, and we all know how great it is to use automatic translation for that.
We had <10 employees when our company branched out into the Nordic countries. Complying to rules and regulations has been a constant struggle, and I suspect impossible if not for the fact that we're a B2B shop, as B2C is much more regulated.
That said, I'm not disagreeing with the main point of the post. I think we and our media could take more pride in local software.
The weird thing is that for physical goods, and especially food here in Norway, I feel like there already is this patriotism OP finds lacking in software.
I think the OP on X gets it right. It for sure is a marketing problem. The media machine in Europe is most likely fractured by languages. So take Norway. Sure we have our fair share of tech blogs/news/etc. but all are in Norwegian. Which cool for the local market, but outside that it's not the language that others are speaking. Where as the US publish in their native language, which so happens to be something most people speak globally.
I'm not suggesting that the local tech journalism is doing it wrong. But what is lacking is some kind of large European tech journalism, or heck even all the smaller ones writing about each other's cool new startups.
Yes, even when tech media in europe would want to hype the original OP startup, they are not that influential in general. I follow tech news daily but all of them are U.S. media, there is nothing comparable here.
> Take excessive regulations for instance, which gets mentioned all the time. If they were such a hindrance to startups, why would American startups succeed in Europe - like Airbnb in our case - and European startups not? We all face the same regulations
Nope, they don't. US companies in Europe generally don't care about EU regulations. Even if we skim over privacy, AirBnB succeeded in Europe despite there being laws preventing short lets in many municipalities.
They care as much or as little as European companies.
When you're trying to make it in business you should not spend too much time trying to comply with all possible regulations. Focus on growing the business and avoid serious and costly breaches.
I still remember a business course in university (in Europe) during which the lecturer told us: "By law you must file this whatever every year but the penalty for not doing so is cheaper than spending time doing it so don't bother". Very direct and frank but that's how it is.
I'm not sure why my comment was flagged, so I'll add the link to the evidence here: https://democrats-judiciary.house.gov/uploadedfiles/2025.02....
My point is that in the US, you don't have to follow the law. If you're rich enough, you are the law.
Why do we need startups?
Why do we need so much that the thought of wrapping the mentality of a whole society around it comes to mind before questioning its legitimacy in a certain context? So serial startup-making can be executed like chain smoking. What are the big benefits that this very form and specific brand of organization type deserves special treatment, other formations or no formations, single persons, departments in a keep-going company, co-ops, semi-chaotic group of enthusiast, or whatever will never ever produce without absorbing proper startup mentality to the core of the society?
I am sceptic, yes, not least because I was in a startup of a serial startuper where half of the efforts were spent on being a proper startup. How startupers do, how they act, what they do in what stage, what is the proper procedure for being a startup? There is even television series that was used as reference. Remaining efforts went into other detals, one among those was product development. Asking another startup founder about where he sees the company in 5 years the answer was 'Sold!' without a second of hesitation. I was phrasing wrong, I assumed I was asking about the product roadmap that happened to be made in the formal setting of this organization, but that was not in the focus of the minds apparently.
Americans can have an inflated positivistic style pulled on when they want to anyways, to be enthusiastic for the sake of enthusiasm, in selective situations, easily shifted to and away from anything. I wouldn't rely on that too much, but especially wouldn't use as reference for transforming a different society that may be a bit more repelling with the same thing of all things.
These are different skill sets, and developing competency in both generally takes a long time focusing on each. That takes a lot of time and willingness.
For example, I co-own a business with two other people. When we started out, we did have the benefit of at least one of us having some amount of education and experience in business areas like corporate structure and financial accounting.
We still contemplated a structure (specifically an S-Corp) which would have created headaches down the road. It was tempting at the time because it would have been simpler at the time, but we spent weeks going back and forth. We went with a C-Corp and it turned out that future-us was really glad we took the time.
It’s definitely true that you should focus on what you’re good at, but when you start a business you’re going to have to focus on new things that you may have never had to think about before. If you wish to do well you need to care about those things too.
Europe: "You are my friend, so your success makes me look like a failure, and your failure makes me look like a success"
Tangentially, it’s why I don’t think authoritarian reactionary stuff will “take” here for any length of time. The instant Americans figure out it’s anything more than a stylistic performative way to “own” the other side — the instant they are actually told what to do — it is over.
As a European that has spent a significant amount of time over the last 5 years in America this has been a cultural learning for me.
He is not and has never been broadly popular beyond his cult of personality. He's just been pitted against an opposition party that is a moribund gerontocracy utterly unwilling or unable to field likable candidates, and the US electoral system is structurally a two-party oligopoly that makes it impossible for anyone else to disrupt this situation.
That's how it looks to me, but it's not necessarily reflected in the statistics:
https://worldpopulationreview.com/country-rankings/social-mo...
Canada is, for example, supposedly more mobile than the US, yet when I look at Canada I see a country with absolutely insane real estate prices (relative to median income) in most major cities (worse than most of the US outside SF and maybe NYC) and much lower salaries for professional jobs like engineering. I really wonder how that comes up as having better mobility. It might be harder to end up in the gutter in Canada, but it also seems like it's much harder to rise above working to middle class due to high housing costs, high taxes, and structurally low salaries.
Maybe someone from Canada or Europe can correct me -- if salaries are so much lower and costs are high, how can someone accumulate enough wealth to accomplish class mobility for themselves or their children?
Don't get me wrong -- I think some things are better in Europe. I think the parliamentary system is mostly better than our winner take all two-party duopoly tire fire, for example.
History and the study of Volksgeists shows that's almost impossible without any major revolutionary event.
The status quo Europeans have had for centuries was their lives being at the mercy of some higher monarchic power, be it emperors, kings, lords, etc, then revolutionary communists, fascists, dictators, etc, and post-WW2 at the mercy of the social welfare state to handle everything for you. There was never a period our relatively recent history where we could just do whatever we wanted, without the ruling powers interfering some way or dictating the rules till the next regime change, and so the Volksgeist inherited and passed on that status quo across generations, kind of like Plato's cave, or like a fish in the water. That's why many Europeans who felt held back or persecuted by the status quo fled to the US decades/centuries ago.
This is totally opposite to the American way of life since 1776 where the state was mostly hands-off to leave you alone and would not help you out, nor get in your way, you'd live or die based on your own individual actions. I realize this is different today for Americans, with the government having way more taxes, regulations and social services than in 1776, but the original Volksgeist around minimalist government, individualism, personal freedom and self-responsibility still prevails.
So people can say "we need to change" all they want, but the reality is that's never gonna happen, Europeans aren't gonna become Americans and Americans aren't gonna become Europeans, the cultural inertia is too powerful, and you can't fight against the stream.
My point is, it can be easy to become economically successful like China when you're a large country with massive human capital and don't give a fuck about democracy, slavery, human abuse and welfare, regulations, etc. and prioritize money at all cost. It's how most empires became empires.
Plenty of business people actually like the high level corruption because it can make doing business easier for them: no red tape, no long wait times, just bribe a some politician and all your paperwork is approved instantly, then it's smooth sailing. That's how China became rich despite corruption.
What you don't want is the Africa style corruption where every single peon and government worker from the top to the bottom, from the president to the policeman on the street, wants a bribe from you every 5 minutes for random reasons they make up. This way nothing ever gets done and the country stays perpetually poor.
What the article doesn't point out is that this is deeply ingrained not just among companies but among customers, too, and it's one of the many culture shocks I've seen my colleagues who move between US and EU markets experience.
If a European customer (adjusting for geographical variation, Europe is pretty big and diverse) runs into some weird issue and they call tech support, there's a very good chance that you've already lost them. It doesn't matter if tech support was super helpful, remedied things right away, and the customer support experience was top notch. The perception is that if they had tech support to un-break it, someone not only cut corners, but didn't even cut them very well, and now they wasted their time, too.
This isn't "just a cultural thing", it's ingrained because of how customers themselves do business, too (which makes it especially difficult to deal with in a B2B setting). The whole chain of commercial relations and norms is structured in such a way that depending on a "move fast and break things" platform is a very, very bad idea.
This is one of the most frequent things I had to explain in review meetings, and it went both ways:
- People who moved from US to EU markets didn't understand why customers had nothing but good words to say about customer support and then didn't renew contracts citing quality issues
- People who moved from EU to US markets going nuts over product release timelines getting aggressively slashed not so much because the feature sheet was too thin but because they thought there was no way to get those features tested enough
It was your company. If you knew the press in the US was better, /why didn't you expand to the US/? /Why didn't you raise money in the US?/ Companies are ultimately transnational, the market for capital, talent, and eyeballs is global, and if you weren't getting what you wanted from the European press, why didn't you go after the American press?
There are some structural things which make things more difficult than if you're living in SF, LA, or NYC--I'd argue more strongly it's the lack of pension funds investing as LPs in funds which results in less overall money in the ecosystem--but there's a LOT of the US which is not those places, and I would strongly argue that it's easier to be a startup in Berlin or Paris than in Chicago or Dallas.
My impression is US VC startups are not trying to sell anything to customers or break even, it’s a game of hype and future potential from inception to very late in the game. Basically, you don’t even have a business model until you’ve passed through all the rounds and even longer. Instead, you’re working towards finding and validating PMF, often with free or subsidized products to capture markets before even thinking about ROI. All while appearing successful since the VC money keeps flowing, essentially driving the car while the company is changing tyres. In the last decade, had anyone tried to optimize for profit or dividends in the startup world?
OTOH my impression of EU startups are addressing an existing validated need (such as CRMs, booking systems etc). While I do think it’s also culturally more risk- and novelty averse, in terms of capital access you just can’t afford anywhere near the length and size of the runway.
https://alexdanco.com/2021/01/11/why-the-canadian-tech-scene...
It’s much easier for an established player to replicate the success elsewhere, despite of over-regulation. Just see how successful are US firms in India, but it will be mistake to not fault Indian bureaucracy and regulation for the lack of its own set of high-tech companies. So I would take Airbnb's success in EU with a grain of salt.
In US, you can start a LLC, get a bank account, a tax ID, all within a few days. The process is completely online. Taxes? A single form for the whole year when you’re starting out. Hiring and laying off employees is relatively easy. How many European countries can claim the same?
In Poland, for example it's remarkably similar. I had an LLC, bank account and EU VAT ID without leaving my home.
Hiring gets a little bit more tricky because we like having accessible health care and don't like throwing people under the bus so you have a notice time of anywhere from 2 weeks to 3 months depending how long that particular person has been your employee.
Taxes? You pay once/month but even then you most likely have an accountant handling that for you.
That simplicity changes drastically once you're a newly arrived immigrant into an EU country, with some countries being much worse than others, see France for example.
There is a much bigger resistance to change and to new things in Europe and iften the first reaction is indeed to shoot down new ideas.
Anyway I also don't believe it's that, but the fact that there is 30 different cultures, regulations, markets, whereas in the US there are one big market that speaks the same language.
Startup in the garage or attic:
US:American dream. EU: My cousin create a website in his attic for €20
When still starting, using a university email address:
US: credibility. EU: doesn’t even have a domain! How can it be anything
Limited liability company vs sole proprietor:
US: Not so smart. EU: company means credibility so let’s not risk working with him, eventhough in terms of claimsof, it’s unlimited without an LLC
People often say that Americans are all show and no content. The opposite is true. They look for value and story. The “show” is in the polished quality of consumer (and small business) products.
I think this assumption is wrong. By the time a “startup” in the US expands into Europe they are really not a “startup” anymore. They have a proven business model in the US and have raised 100Ms. So succeeding in Europe is not a fair comparison. When Airbnb expanded into Europe in 2011 they had raised 120m and acquired a company in Germany to kickstart the expansion.
Why do startups fail without it
"EU startups fail because their press refuses to hype them up"
Would non-EU startups fail if the press ("journalists") did not "hype them up"
The popular ones I can think of from the top of my head are Spotify, Klarna, DeepL, Vinted and TeamViewer.
> Contrary to popular belief, they don't do it in a stupid way by just banning competition. Those cases are actually very rare and only occur if the companies in question violate Chinese law in pretty egregious ways.
> Most of the time it's the exact contrary: they welcome foreign companies and competition, but create conditions where local alternatives can thrive alongside them, giving Chinese users and businesses legitimate options to choose domestic champions.
They are correct, that is contrary to popular belief, to the point I question if this author is wrong. Living in a country for 8 years does not an expert make. My understanding is foreign companies are “welcomed” in, so long as they give heavy ownership to Chinese citizens/companies, are ok with stolen IP, and are fine doing whatever the government tells them to do (like giving them full access to the data centers, which are required to be in China).
Is the press responsible for the bad performance? I don't think so. (source: I worked in startups in EU, UK and US, I started two companies in EU and UK, one failed).
I think the underlying problem is the anti-work attitude of people. Most people don't want to work hard, they don't have any ambition. And this attitude is normal in Soviet Union 2.0, a society where you get beaten down by taxes if you try to climb up the ladder and regulations make sure your company gets stopped before it's too large. The US is objectively better in this regard, but it's getting worse every year. Luckily there is a lot more capital from the past keeping the startup scene afloat. Will it survive another 20-40 years or will the next Silicon Valley be in China?
Anyway the general lack of ambition in EU means that the composition in an EU startup is completely different between US and UE. While you can find real gems in US startups, in EU you find your typical average corporate employee - but less skilled or more junior.
People in EU startups are just people who couldn't grab a job anywhere else. They're not hoping to make it big because there is no capital to have life changing exits and the government will get most of the profits anyway.
Leaders and managers in US are also considerably better than in the EU. Many countries in EU never had a decent entrepreneurial class. Building those skills will take decades.
Switzerland as an example is quite a bit higher in that metric. But it is known for a rather conservative economic approach overall. Favoring stability, predictability and quality over velocity and big payoffs.
Perhaps it's a good thing that there are different models and cultures.
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> At first, when I created the company and before Airbnb was even a thing, I used to pitch the company to the media and the general response I would get was almost one of contempt, as in "why would I belittle myself to write about your startup? And furthermore, who would be stupid enough to stay in an apartment when there are hotels? You guys have no future..."
> And then Airbnb got launched and the American media started their thing, hyping the company like it was the greatest innovation since sliced bread, like they were national heroes, giving them hundreds of millions in free publicity.
> That's when European media started to take notice. Not of us, god forbid, but of Airbnb. The concept was promoted by Silicon Valley, see... so now it was valid.
> So I went back to pitch HouseTrip to European media. This time around I was met with a different kind of contempt: "So you guys are like Airbnb? Why would we cover a European copycat when we can just write about the real American original?" Luckily I'm not violent but lets say those moments really tested my civility
> All in all, we arrived in the absolutely grotesque situation where, despite Airbnb not having yet set foot in Europe, they were already a cultural phenomenon there, promoted by European media, for free, when the European original - yours truly - had to spend millions on paid marketing (mostly to Google and Facebook, American companies) to achieve a small fraction of the brand recognition.
> So there you have it, the dirty little secret behind Europe's lag. We're essentially witnessing a "colonization of the minds" whereby Europe has structurally internalized its technological inferiority, celebrating American startups while dismissing its own homegrown companies.
It's a long post, this was just the relevant snippet, i suggest people read it, they get into more detail regarding US/EU/China startup scene
And this article is directionally correct in the sense that Europe has internalized a sense of inferiority and will hype up American companies.
But the culprits he talks about are shaky at best:
> Take excessive regulations for instance, which gets mentioned all the time. If they were such a hindrance to startups, why would American startups succeed in Europe - like Airbnb in our case - and European startups not? We all face the same regulations
This is just wrong. Yes, the regulations are the same. No, the burden relative to company resources isn't the same. A company with billions in the bank has options most EU startups don't:
1. Pay a battalion-sized compliance team 2. Ignore the law, pay the fines when they come, continue to ignore the law 3. Get into years-long, drawn-out legal battles while changing nothing
Yes, we face the same regulations. No, they don't have the same impact. It's sort of like a person who inherited millions saying "Cost of living isn't a problem, we all face the same housing costs".
> Or take fragmented markets. Same question: how could US startups successfully conquer these fragmented EU markets when European startups can't?
Same thing. Localization, local entities and complying with local regulations are a lot easier when you can throw a couple million at it. Meanwhile a startup can barely comply with all of one country's regulations.
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You can criticize overregulation, the fact that EU grants almost always arrive at incumbents that can afford lobbyists (the old money class), etc.
But I think "the media" plays the tiniest part in this. Traditional media has been in decline for 20 years.
If anything, yes, we need a shift in cultural narrative, away from internalized inferiority. But the idea that some gatekeeper at a newspaper changed the trajectory at a startup I think is wrong.
Besides, this reads a bit like "Who has the idea first should get all the money", which is rarely how things work.