Europe Is Struggling to Foster a Startup Culture
on.wsj.com
on.wsj.com
I am an engaged computer gamer and we Germans have many successful e-sport stars, E-Sports are not officially recognized in Germany.
Same goes for startups, I can list you 20 Industry leading Game startups and multiple hundred exceptional well doing tech startups in Germany.
Whatever people think about you does not matter as long as you have a great product to sell.
Also the author has a slight notion of american exceptionalism, that something works in the USA is by no means a measurement to go by and say: "Hey you should do this also, it will be working great!" Some detailed research about markets, employees, laws and how to adapt them would do every European government better than simply trying to copy America.
https://www.linkedin.com/pulse/73-most-valuable-startups-ear...
This is a list of start-ups(in private control) with value over $1 billion. 73 companies in total , 6 are European , and 15 are Asian.
EDIT: one possibility is that European are suffering a similar problem to that of the Israelis - even though they have great tech/product , they just sell earlier. BTW in Israel(which most agree has a strong start-up ecosystem/culture) it's mainly because they're lacking in certain scaling skills(but they're learning) + and to some extent they try to minimize risk.
Still this kind of analysis is very weak for two reasons. Most countries aren't as company friendly as the USA. A discussion about whether Billionares should pay taxes would be unimaginable in most most European countries.
Also America has a strong customer base by default with 320 American citizens and the other 900 Million Nativ speakers, who can easily buy products made for the American market (Especially in the Tech area).
Also those kind of graphs usually get smaller, the higher you go.
One should compare the total amount of startups and divide by citizens, the findings will be a better tool for comparison.
Those were 320 Million Americans and 900 Million englisch speakers, not native speakers.
As for capital for scaling European startups, it is definitely lacking. There's barely capital for seed and early rounds. Maybe in 50 years, after dozens of successful exits will make more people into angels and VCs.
I would hope that spirit left traces in your cultures.
You shouldn't need to remove the base your country is building on successfully, in order to support new ideas.
"failing is looked down upon". In which f-ing corner of the country? How the hell do you think our tiny country has become so completely disproportionately successful? Because we don't take risks? Because we were to afraid to just set sail and see what happens? Bullshit.
We're the champions of fucking failing. We're the only big soccer nation never to win the World Cup, yet we celebrate our heroes for trying and failing.
Failing is not a bad or shameful thing in Dutch culture. This is just a meme that's being repeated inside a small bubble of people that worship American startup culture and use it as an excuse.
(Edit: the only slightly valid excuse is that bankruptcy in NL can be a bit of a pain in the ass.)
Maybe working for known companies hold cachet for young professionals and people looking for jobs look for that approval.
So true. On the other hand, it is said (not a proverb, but a tendency in the feeling) that if you start a business, you have to become very rich faster than prosecution finds you out.
> http://www.gesetze-im-internet.de/milog/__22.html
The main exception is if the internship is required for finishing or beginning a degree course or done while a degree course (but read the text of the law yourself for the remaining exceptions).
This was criticized a lot when the law adopted, since there can be good reasons to do an internship even after finishing university even if it is paid really badly (say, as a reference).
For the UK there's pretty good guides online, and gov.uk has some useful information for Britain. But I know (assume?) the process is quite different in Germany.
Any juicy examples you could tell us about?
If you sell physical goods and you put it in a box or wrapper, which you do because shipping, you need to have a membership with one of many private recycling firms that are part of one of the overarching systems (green dot, resy etc.). You never send anything to this company, this company never does anything directly for you. They only ask you once a year to tell them how many tons of cardboard, plastic, and metal you used to package your goods. Then you pay them according to that amount. If you are below a certain amount you pay a minimum fee.*
New regulations and changes are also a major pain:
One of the newer things is that you can't use google analytics on your webshop. If you want to use it it can only be anonymized, you need to state some legal BS in your terms and conditions and you need to make a direct contract with google in order for it to be legal...
The button that finally seals the deal has to have a specific text on which the lawyers are still fighting which of the options actually is legal to use.
For each of those you could receive a legal notice from anyone that is remotely competing (read: any other business) with a heap of legal fees attached that could put you out of business.
* Fun Fact: There's already a recycling surcharge on all the boxes you buy. The customer also pays for the recycling of his waste.
That recycling thing is a nice little rent-seeking operation, and the other stuff is just typical economy-crippling bureaucratic bullshit.
I guess you've escaped Germany by now?
What Europe needs is a better way to keep the talent at home.
So, at the risk of being extremely antagonistic with this, the solution is for us as societies to start caring less about the less fortunate and give more to the "job creators" like it's done in the USA.
Then we'll be able to compete on a level ground.
Taxes: here in Germany you pay 19% VAT on all transactions. Then, income tax, which quickly reaches 42%, then solidarity tax, basically almost half of your earnings evaporate
Language: it's tough to address a decently large market, the biggest market (German speaking) is about 100M people, that's 4 times less than the USA market
You can easily see that those 2 points quickly add up and create "corollary" problems. With those taxes + social security, to give a strong employee a strong salary you go towards a cost of +150k. To pay that much to employees you would need a big market to address to get revenues, but the market is small-ish, or you might look for VC money, but people with money are too scattered across too many languages and countries.
Or see what's on at tech hub, innovation warehouse, etc.
I was under the impression that the vast majority of start-ups 1. fail or 2. require employees to expend huge effort while the lion's share of the revenue gain is made by the C-level officers.
Why would an European labor force want to expose itself to the "start-up" platform ?
It should be better in Europe because of the safety net and limited work hours; sure it's easier to be comfortable, but it's also easier to take some time off and work on a cool idea that doesn't have to be a revenue generator.
How would a small company get around the cost of doing business where labor is actually valued?
Is it my limited exposure to English, or has the European Commission appropriated this word, and has by the way infected WSJ to use it?
"Fostering a X culture" is a common phrase outside of the EC.
The only major thing we're lacking in Europe is venture capital.
All the other cultural differences (which aren't "European" but vary wildly from country to country), are red herrings Americans and European self-haters like to emphasize. But in reality we a) learned to work with them a long time ago, otherwise we would never have been economically successful, and b) those differences are strengths as well as weaknesses in equal measure.
Yes, the lack of a barrier-free "single market" is also a bit of a pain, but the biggest issue here is language and culture, not laws and regulations, and that's not going to change any time soon. So there's no point on dwelling on it, it's like complaining that the climate in Norway isn't suited for growing bananas.
In reality there are lively start-up scenes all over Europe, with more than enough entrepreneurs willing to take risks, more than enough smart people with innovative ideas, and more than enough people willing to work for them.
The one and only thing that is truly missing is funding, funding and funding. The investment culture is the only place where there is a suffocating risk-averse attitude.
(And most of those anecdotes about how stuffy and risk-averse European culture is are bullshit outliers. I can dig up a ton of totally true anecdotes about the US and make American culture look completely fucking insane. It has nothing to do with the day to day reality of living and doing business on either continent.)
I can't speak from experience in regards to hardware startups, I've just made a handful of one-off boards, but after reading Bunnie's blog in regards to his trips to China and such, the importance of location near it becomes apparent.
But we do have WEEE and CE regulations which make selling small-batch electronics a huge pain. I'm very impressed that Arduino managed it, and Pi had a last-minute CE approval near-disaster.
I came up with this card game (Ambition) out there: https://docs.google.com/document/d/1S7lsZKzHuuhoTb2Wj_L3zrhH...
Here is an explanation of French law: http://www.quora.com/Is-it-true-that-its-impossible-to-fire-...
As it says in the first comment, it almost becomes easier to try to get the person to quit with 6 month severance than go through all the hoops that you need to go through to actually fire someone.
Also, the sleazy tech company alternative (to severance) of PIPing the employee for 2-3 months is more expensive than severance, because of the effects on morale to force the manager to run a kangaroo court and the team to deal with a walking-dead employee who's probably pissing on morale intentionally (I would).
France (and, more generally, Europe) has its problems but that is not even on the top 20. Social class fatalism is more of a problem, and that's reinforced by the fact that (unlike in the U.S.) it's very hard to get even moderately wealthy by working. Programmers and lawyers and doctors make less than here, and costs of living are higher, which means that born social class imposes a ceiling. European countries are far better places than the U.S. for the poor and working class, but the middle-class people who want to rise further tend to come here. This is even worse in parts of Asia, where the idea that you can get rich by working is laughable.
For a marginal startup founded on a Mastercard and only tenuously on the right side of the border between life and death six months of severance is not a rounding error.
If you're funding your startup using your MasterCard you shouldn't have any employees besides yourself.
2. Feel free to ignore #1, it's your life, but don't hire employees if your "funding" is a personal credit card. Really, don't. You're all kinds of not ready to be responsible for other peoples' income.
3. If you really can't afford a 6-month severance, then pull connections and give an amazing reference so he'll take that as his severance. Let him represent himself as employed, pay him during the gap, and have him line up a better job than the one he has already. Don't have the connections to place someone out on terms that he'll accept? Then how the fuck are you ever going to get funding or a first client? Take the message and hang up the phone.
All it takes for people like Europeans to move to a place like America is to believe in the dream. It doesn't really have to be real.
Now watch a European disagree with me just to be contrarian.
Firstly, inner-European differences are almost by definition smaller than, say, those between Europeans and Asians. Of course there are still cultural differences between Greeks and Irish. But to deny similarities is equally misguided.
Secondly, these differences are getting smaller and smaller. Timothy G. Ash calls it "The Easyjet Generation": young university students, used to cheap airline travel, are creating a unified European culture. I know young people from almost every European country and I feel more connected to them to, say, my 50-year old working class neighbours.
I'm sure you do, in certain ways. But, for example, perhaps some of your friends have 50-year old neighbours, who work in a lower paid job, and yet it would simply never occur to them that they were a different "class" and therefore not to be associated with. That's part of your culture.
.. and vice versa, I'm sure, which is why some of them are voting for anti-Europe parties.
To say that the differences are smaller is one thing. To call them one culture is an entirely other.
> I know young people from almost every European country and I feel more connected to them to, say, my 50-year old working class neighbours
Yes, I bet you feel very connected to the English-speaking, or German-speaking, or whatever common language-speaking friends you have who have the inclination, interest and time to learn these common languages and to travel to several countries in order to meet new people (not just to go on a vacation and/or "meet new people while getting wasted"). But is that really such a big group that you would call them something relating to a generation? That's a big word to throw around.
You're wrong about him being wrong. He said there's no one European culture, and you even agree with him:
> Of course there are still cultural differences between Greeks and Irish.
Brits, Italians, Polish, Icelandic and Germans clearly form a homogeneous group. A Mexican, New Yorker and Alaskan clearly form another one. And who could disagree that a Chinese, Australian, Indonesian, Indian and Japanese might as well be the same person?
</extreme sarcasm tags>
What the cultural diversity does though, is it makes it harder for startups to serve one big market - that's where US startups have it easier.
Are they "tougher" because of that? I don't think so.
One could say that the EU and its laws embody commonalities across Europe that create the outlines of a culture.
It is easy to make mistakes painting with the broad brush of generalizations, however there are some qualitative patterns which emerge when dealing businesspeople from say Argentina or Japan, but there are always exceptions. (Just be sure to know the expected traditions and test out the other parties to see how cool are they.)
There is no such qulaificiation on what constitutes a culture. You're making the common mistake of thinking that "culture" reffers to some sort of exclusive club, as though you're either in one or another.
Of course there is a European culture, as well as German, French, Britsh, and other national cultures, as well as local city, town, neighborhood, and even unique internal family cultures. It all overlaps for each of us in our own way.
There is almost certainly a human culture as well, we just lack sufficient comparisons to define it properly at the moment.
Edit: a.k.a. occident
IMHO there are more similarities between European countries than between US States.
Whilst cultural differences in the US do undoubtedly exist, in Europe simply travelling a hundred miles can take you across 3 countries with 3 languages and 3 distinct cultures. There's plenty of diversity to be found.
Source? I doubt this. Secularism is quite high in Europe and I think their is also quite a high muslim population.
>> IMHO there are more similarities between European countries than between US States.
I can't believe you actually believe this. Different languages in most European countries. Different customs and traditions. Vastly different tastes in cuisine. Vastly varying levels of wealth/poverty. etc.
I can't believe you actually believe this. Different languages in most European countries. Different customs and traditions. Vastly different tastes in cuisine. Vastly varying levels of wealth/poverty. etc.
Languages, yes. They are different. Cuisine? Not so much. Mediterranean diet is more or less the same across southern Europe. Italians, Greeks and Spanish for example have a diet based on olive oil.
Other similarities. Legislation. Most laws passed from the EU are sooner or later adopted by member states. Sports. Football is prevalent all over Europe. Architecture. Neoclassic movement is all over the place. Music, see how many similarities exist between composers of classical music during centuries. Science, CERN is the largest collaboration of scientists in the world. And the list goes on.
In US if you go from New York to Texas you're in a different universe altogether.
>> 72% of Europeans are Christians.
There are no "Christians" in Europe. You actually have Catholics, Protestants, Orthodoxs and a bunch of others. And those guys have been killing each other for very long time. The "Christianity-Version" of each region is actually a very fundamental property explaining those many differences (political parties, welfare systems, work ethics etc.) in Europe (which you claim don't exist).
Using the link you provided there is also this quote:
>> "Eurostat's Eurobarometer opinion polls showed in 2010 that 49% of EU citizens did not believe in God."
Christianity is kind of a big religion. The Americas (note the 's') could be said to be Christian. So I guess the Americas is one culture. At least Euorope also has the Orthodox branch. Not to mention the muslims in the Balkans.
> IMHO there are more similarities between European countries than between US States.
It genuinly blows my mind that some people actually believe this.
Speaking for my fellow Americans, we're as terrified of being broke as anyone else. (In fact, we have more to fear, because we don't have universal health care.) That said, these kids who become founders straight out of Stanford aren't taking any real risk. They say they are, to justify getting 100 times more equity than their employees, but their backers have enough pull to ensure a "managed outcome" (acqui-hire into a middle-management role) even if the worst should happen.
We are just as risk-averse as Europeans. On both sides of the Atlantic, there are a few people who naturally tend toward creative risk (who are usually socially rejected, there and here) and a much larger set of people who climb the ladder that's put in front of them, follow the rules, and get into positions of power or influence the old-fashioned way (two parts schmoozing, one part birth, two parts luck). The major difference is in the window dressing. In Europe or New York, that ladder tends to be banking or consulting. In Palo Alto, it's programmer or PM to executive to founder to angel investor to VC... but if you go to the right schools, you can skip a couple of the bottom rungs. The actual willingness of the people to take risks isn't any different in one place or the other.
Of course, when it comes to risk attitudes around capital, it's a different environment entirely. Europe is too conservative and cynical for its own good, and California is too optimistic (and thus prone to "capital evaporation" by socially well connected types) and far too trusting of the wrong sorts of people.