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Comment by mschuster91 | Hacker News Reader

One thing that the US definitely are better at than Germany is accepting failure.

Failure in the US is expected in the startup world, whereas you'll often not even get a fucking cellphone contract once you went broke in Germany. For years.

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My impression on the U.S. startup world has been "either you go (very) big or you die/fail". In Germany, in contrast, it is perfectly fine for a startup to earn a million or less a year, and never even aspire to earn billions, as long as it pays the bills and you employ some people. Thus I conclude that it is "harder" to fail if your expectations are not unrealistically high. Also, as Tomte has pointed out, company bankruptcy does not equal personal bankruptcy.

On the other hand, I only know the U.S. startup world from what I've read, so I might be totally off there. So please correct me if I'm wrong.

I think "startup" may be being used differently in those two context. Its fine in the US for a small business to not seek explosive growth and to have a steady, reasonable income and employ some people -- but that's not usually called a "startup" (around here, the term "lifestyle business" gets thrown around sometimes.)

"Startup" is generally used for something that is (or seeks to be) VC funded based on a vision of investors realizing immense gains in an eventual acquisition or IPO.

It sounds like its quite likely what you are calling "startup" in Germany and what is called "startup" in some US-centric contexts (like HN) are not really the same category, and that the former is broader than the latter more than what is acceptable in Germany being different.

Agree, see my parent comment where I mention Mittelstand.

West Coast startups tend to have this "Big or Bust" mindset. East Coast startups can be content to grow more organically.

Its New York financing vs Silicon Valley financing. Remember that Hacker News is based on YCombinator: a West Coast incubator.

You'll probably never hear about the tons of small scale restaurants, small government contractors (I've seen teams of 10 or less), and one-off donut shops. But they're relatively common in the East Coast. There's a "MicroBrew Beer" restaurant every block in some areas.

Its a bit different on the East Coast. There are tons of business owners that I know of, but all of them are quite small businesses. My High School math teacher owned a franchise restaurant, another high school teacher owned a potato chip company, my cousin owns a Pho shop, my uncle owns a private Sports-Medicine practice (finances are run by his wife). A lot of blue collar work (like HVAC, Roof Repair, and other household tasks) are done by contractors or small businesses.

None of these businesses plan to strike it big. Its more about day-to-day operations and basic work.

Naturally, you'll see more "Big or Bust" methodologies around YCombinator. The small organic growth of the East Coast startups don't really make news and are frankly... very mundane and boring.

Another somewhat different case in point: Bloomberg L.P., started with a $10m personal investment, took no more than 30% outside investment (which was eventually bought back) and grew to a $8b business over the course of 30 years. "lifestyle business", really?

~$8b yearly revenue -- the business would be worth substantially more. 30 years is a long time, though. I'm curious now to find out how many years in it took to have a $1b valuation.

YCombinator originated from the East Coast (Boston/Cambridge, MA).

"it is perfectly fine for a startup to earn a million or less a year, and never even aspire to earn billions, as long as it pays the bills". That's basically the concept of Micropreneurs and Solopreneurs here; also not to take VC funding (at least not until much later) and instead either bootstrap or crowd-fund. It's not as glamorous or much talked about as the Silicon Valley startup scene, but it definitely exists here, too. For example, http://imgur.com started out that way: http://thisweekinstartups.com/imgur-alan-schaaf-andreessen-h...

There's a specific term for those compartively small but succesful businesses in Germany. "Mittelstand".

It's cited as being a huge source of strength for the German economy, seems to be similar to what Americans might call a "lifestyle" business. You see lifestyle businesses portrayed as "settling for less" in American media, whereas Mittelstand has a very positive connotation in Germany.

http://en.wikipedia.org/wiki/Mittelstand

> You see lifestyle businesses portrayed as "settling for less" in American media

I only see it portrayed as "settling for less" in American media focussed on serving the executive/investor/startup-founder groups as their target market.

Stable small businesses are pretty much treated as icons of the national culture on a level with baseball and apple pie and set up on a pedestal everywhere else in American media and culture.

I totally agree. Just certain factions of the media make that portrayal.

That is true not only of Germany, but of many (most?) European countries. In Poland, if your company goes bankrupt, the social stigma will be with you for years.

In Denmark it depends on the legal structure of your business. Personal debts are much harder to discharge in bankruptcy than in the U.S., and cause much longer-lasting trouble. But it's fairly easy to set up a limited-liability company, and in that case your personal finances are insulated from what happens to the business, like in the U.S. For example if an ApS you were owner of went bankrupt, it wouldn't impact your personal credit, and you wouldn't be personally responsible for the debt. As a result it's quite common for even low-turnover one-person freelance businesses to be incorporated as an ApS rather than performed as a sole proprietor (roughly like the use of LLCs in the United States).

At the same time way more startups funding in Denmark are based on loans not investments and sometimes you have to personally vouch for that :)

I was surprised to learn that, even with the restrictions on bankruptcy declaration about 10 years ago, the US still makes it very very easy to declare bankruptcy, as compared with other first-world countries.

Same in the Netherlands. However, if the bankruptcy of the company is found to be the result of blatant mismanagement, the creditors can go after the owners personal possessions.

There is no stigma attached to an entrepreneur who's company goes bankrupt, but the personal bankruptcy is a sign of failure.

One thing is the formalities of a bankruptcy, which like most business formalities in Denmark are pretty simple to deal with - another is the social stigma. It's anecdotal, but I'd say that such a stigma definitely exists in Denmark.

That's only partially true about Poland. Your bankrupt company brings stigma only in case you performed some shady stuff, e.g. cheated on taxes or treated workers bad. From my experience I know that it's super hard to do business in Poland, because of specific mindset of my fellow Poles. Trying to make a startup and failing won't actually leave you with stigma.

That's probably the reason why most Polish founders are in Berlin.

Do you have a source to support this claim?

Up until recently I have heard no talk about Polish startups at all, but I always encounter programmers with a Polish background (to subsume a lot of circumstances surrounding nationality or ethnicity) in Berlin or the German scene in general. "Most" may not be correct, but it sure sounds nice :-)

Same in Asian countries like Japan and Korea and China. I think pretty much US is the only place where FAILURE IS AN OPTION.

Failure with a startup and going broke are two different things. And I'd argue that the consequences of being broke are worse in the US than in Germany.

Failure is not so much of an economical than a social problem in Germany. If you fail only once, you will always be the guy/girl with the idiotic idea that didn't work out. Of course, anybody could've told you that! If you succeed you will face a lot of jealousy. This leads to a culture where following your dream will earn you so much negative reactions that it's really hard to sustain.

This is quite an important point. As a German-expat in the US I marvel at the flexibility and "let's just do it and see what will happen" mentality that welcomes risk and embraces failure in the pursuit of some wild idea. In most cases these ideas turn out to be fruitless but sometimes - against all odds - they lead to amazing results.

Maybe if you personally go bankrupt. If your startup company goes bankrupt, I highly doubt it.

The point is how you incorporate your startup. If you do it as Einzelunternehmer/GbR to avoid having to raise 25k € just for providing the base capital, then you're fully liable for anything that happens with your personal assets.

Now you have e.g. a data breach, or your entire inventory goes down in a flood/fire/accident and you're not properly insured (most private insurances will not cover your business assets, even if your business is in your home), you're out of luck.

And as we're speaking of capital: in the Valley, you basically have to have a good business plan, a sales pitch and a bit of luck and you'll be bathed in cash (at least, this is my impression of reading here). In Germany, no luck obtaining a larger credit or startup financing as long as you don't put up your house or car as collateral.

(first paragraph)

That's why we now have the "small limited" company (Mini-GmbH or UG). You can start a company with limited liability with just a few bucks^H Euros.

The problem with the UG is that it, too, doesn't have the creditworthiness of a "real" GmbH - and we're back at square one, no viable way of getting capital except by putting up personal property as collateral.

So the real problem is not that it's not possible to have cheap company with liability protection, which UG suits perfectly, but being able to borrow money / get investment for a company worth 0€. Those are two totally different things.

Suggestion: consider a UK or Ireland limited company. This should be transparent, as per EU freedom of commerce rules, and doesn't have the minimum capital requirement.

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