Comment by byEngineer | Hacker News Reader

Comment by byEngineer | Hacker News Reader

Parent Full thread

I dont't want to be politically judged by HN audience. But, I will tell you this: don't you see that start-ups and innovation happen around things that are the least regulated by the Government. Things with the least amount of required bureaucracy and compliance to the state regulations?

Peter Schiff - opened hedge fund from his bedroom. He got lucky, worked had, whatever, his investment company is doing pretty good nowadays. But he will tell you one thing - if he wanted to open a brokerage firm from his bedroom today, it would be impossible due to all the regulation imposed on the financial markets. Putting aside that this way the regulation protects established big financial institutions from new competition, this also kills innovation.

What isn't regulated by the Government? Internet start-ups. I can work in my bedroom on a new search engine (currently). Or on mobile app. But try to open brokerage firm.

There is a reason for which still more innovation happens in the USA than in much more heavily regulated EU. Spoke to fashion designer from Paris in New York the other day. He lives in New York. Why? Because to open a fashion shop in Paris requires fee to the government to the tune of 15,000 Euros. Nobody in New York ask him to pay 20,000 usd to the city for the privilege of opening business.

The moment they will start regulating web - the party will be over! What about 10,000 usd fee to open a commercial website? Would you be surprised there is innovation in the web ?

Yes, if you look at something from one angle and don't consider the others you will come to this conclusion. But there is a reason there is regulation in things like finance and health care. It is to protect people. Unfortunately there are people who lack the correct knowledge in certain areas to make smart decisions so we collectively help them through regulation. It also prevents companies from causing harm to people by cutting corners.

I'm not sure what 'fee to the government' for opening a shop in Paris was for but I'm guessing it's a tax. And in many European countries taxes pay for things like free health care and education. Both of these are things which I'm sure that fashion designer took advantage of but now that it's time to pay towards them through taxes he isn't happy?

'The web' doesn't need regulated. But startups in certain industries do. I want to be sure that a health care startup is providing me with safe equipment/drugs/advice and regulation is the only way to do this. Unfortunately the world is full of shitty people who would take advantage of others and ruin lives without it.

Now. I'm not saying loads of regulation is good but your idea that it is all bad isn't correct imo. It's necessary in certain areas. Maybe not in an ideal world, but we don't live in one.

> Nobody in New York ask him to pay 20,000 usd to the city for the privilege of opening business.

Nobody ask for that in Europe either, unless you're interested in heavily regulated industries like energy or banking (and they ask for more than $20,000). But we're talking about small businesses, right?

I don't know if fashion industry is heavily regulated in Paris, but a 15,000-euro fee to the government sounds like a big stretch. They used to require 7,500 euro of starting capital for SARL (a private limited liability company), but it was still your money, not the government's. But it's irrelevant, because the minimum amount changed and it's 1 euro now.

There's still an issue of paying various legal and professional fees before you can start your company. It depends on your needs and type of the company, but according to Doing Business report by the World Bank [1] this cost (represented as a percentage of the country's income per capita; not ideal but good enough) is lower in France and dozen of other European countries than in the United States.

1 - http://www.doingbusiness.org/data/exploretopics/starting-a-b...

Incorporating e.g Delaware in US is below $1k. In Germany starting a GmbH in Germany requires a $25k Euro capital http://de.wikipedia.org/wiki/Stammkapital There is still a lot more regulation in Europe when it comes to operating a business. It is also one of the reasons why I see so many European start-ups here in San Francisco trying to establish early on.

> In Germany starting a GmbH in Germany requires a $25k Euro capital

Since 2008 you can start a derivative called Unternehmergesellschaft which waives the minimum capital. You need to keep 25% of yearly earnings, but it can be rebranded later as GmbH if you raise 25,000 euro capital in said savings. It says right there in the article you've linked:

> Um die deutsche GmbH im internationalen Wettbewerb zu stärken und Neugründungen von Unternehmen zu erleichtern,ist seit dem 1. November 2008 die Gründung von Unternehmergesellschaften (UG) möglich, deren Mindeststammkapital nur mehr 1 € betragen muss. Die UG muss – solange das Stammkapital unter 25.000 € liegt – 25 % des Jahresüberschusses (Gewinn) in eine Rücklage einstellen.

Here's an alternative in English for others who might be interested but might not understand German: http://www.germanlawjournal.com/pdfs/Vol09No09/PDF_Vol_09_No...

And while it might technically cost less than a thousand dollars to incorporate in Delaware, in practice I'd need much more than that - especially if we consider costs of obtaining visa and housing, traveling and living expenses. It's difficult to get money for all of that, especially if you start from nothing. On the other hand I can travel to another country within the EU with favorable regulations (low taxes, low cost of starting a business) without the need for a visa.

>But, I will tell you this: don't you see that start-ups and innovation happen around things that are the least regulated by the Government.

How would you know? Everything is regulated by the government.

Reply on news.ycombinator.com