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Why Is Europe Failing to Create More $1B Startups?

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Re: Why Is Europe Failing to Create More $1B Startups?

#211

Post by pluma »

bitL wrote: post #99

There is no Delaware. Taxes are paid regardless of whether the company hits $1M revenue or not, salary taxes are high, health/social insurance is mandatory and paid for the most part by the employer, there is a minimal salary, extensive bureaucracy and you can't sign away most of your rights if necessary for company survival. Moreover, some countries impose rules which make starting up with little to no money impossi…

> some countries impose rules which make starting up with little to no money impossible

You mean the € 25k required to found a German LLC (GmbH)? As of a few years ago it's possible to found one with a single euro as long as you use a certain fixed percentage of the profits to built the company's capital (the company remains "UG (haftungsbeschränkt)" until you accumulate the € 25k, then you can transform it into a "proper" GmbH).

The paperwork involved (including notary and lawyer/accountant fees) still mean you should have about € 2k disposable before you incorporate, though -- not to mention the ~ € 500 you may accidentally pay scammers if you're not careful.

That said, Facebook and similar startups couldn't have started in Germany simply because of German privacy laws. At least once a week I hear of a new US product or start up that simply wouldn't pass basic privacy checks in Germany.

Re: Why Is Europe Failing to Create More $1B Startups?

#212

Post by pluma »

robk wrote: post #192
briandear wrote: post #137

Earlier quoted context omitted.

You could incorporate offshore but good luck getting a local bank account or even an offshore one. To do anything in France you have to be incorporated in France and pay French taxes.

Typically you'd create the topco in the UK or offshore and create an operating company in France for that purpose.

And now you've just increased your administrative overhead and costs. Tax evasion tends to be pretty expensive unless you can afford it.

Re: Why Is Europe Failing to Create More $1B Startups?

#213

Post by threatofrain »

dheera wrote: post #202
dheera wrote: post #190

Earlier quoted context omitted.

This is irrelevant to the fact that a very large market and testing ground exists today among the Chinese-speaking and Chinese-cultural population, both inside and outside China. Most successful startups in post-2000 China are largely privately owned. While they are indeed subject to regulatory constraints, needing to work together with the government is largely a constraint to survive, not a reason for success. Thei…

@threatofrain You are correct in that without proper local connections your foreign business will die in China. I'm not disputing that. My point is completely orthogonal; I'm simply saying that regardless of how business is done in either USA or China, each has its own massive market testing ground that speaks a single language, each has its own reasonably homogeneous culture and each has its own reasonably homogeneo…

If you're saying that initial market size and uniformity is a big factor behind Silicon Valley-esque places (a large gathering of investor money and tech workers), then I agree with that point.

I think that protectionism disallows existing giants from carving up large slices of a market. Having to compete against the tactics of big giants is a capricious barrier to market, and probably not a good nurturer of innovation.

Had many countries severely gimped or barred Google / Microsoft from entering their country, while funding internal alternatives, the world might look very different.

Re: Why Is Europe Failing to Create More $1B Startups?

#214

Post by exelius »

Silhouette wrote: post #193
exelius wrote: post #167

Earlier quoted context omitted.

IMO the EU is too protective of its economy to allow the kind of innovation Silicon Valley is famous for. The EU has a default assumption of "you have to prove that this will not be harmful before you can do it" where the US has a default assumption of "someone else has to prove that this will be harmful before we will stop you". The important part is that this burden of proof in the US is not placed on a company at…

Something like Uber could never have come out of Europe. A large company that is breaking the law while competing with regulated taxis and remaining unregulated themselves? That would never fly in the EU, This is a feature, not a bug. We do tend to regulate some areas more in Europe than the US, but from various on-line discussions about Uber in recent months, I have come to the conclusion that the original problem t…

> This is a feature, not a bug.

I actually don't disagree with you; but my original point is that the US actively prioritizes giving companies space to operate without government intervention over protecting the rights of its citizens.

It generally makes the US a worse place to live, but a better place to start a business.

> Also, I don't know where you got the idea that in the EU you need to prove what you're doing is not harmful or illegal before you can do it, but you're completely wrong.

Maybe poorly worded, but in the US the prevailing attitude is that it's better to ask for forgiveness than for permission. Because our government is generally underfunded (domestically anyway), it doesn't usually go out looking for problems anyway. So you can often get away with disregarding regulations as long as you don't make too much noise while doing it. And even if you get caught, you hire lawyers to negotiate the penalty down to 10% of what it would normally have been.

Re: Why Is Europe Failing to Create More $1B Startups?

#215

Post by pluma »

andreamazz wrote: post #72
kavabean wrote: post #70

I wonder if the following could be relevant. 1. In my experience, Europeans are less dominated by the "newer is better" desire to constantly get the latest gadget/technology. I wonder if others agree. 2. European money appears to be more dominated by old money / aristocracy and that these people like to invest within that network. Engineers are less likely to be part of the aristocracy and are treated more like commo…

As far as gadget goes, "newer is better" is a dominant factor in Europe too. The problem lays in the enterprise world. One time a client told me "you call this Visual Basic application old, but it's not. It's consolidated". Can't argue with that logic. As for the second point, you're right on the money. I can't count the amount of engineers that make less than 25/30k€ here.

It's 2015 and I'm happy I finally have clients that let me set the baseline of Internet Explorer support to IE 8. Not long ago I still had to support IE 6.

I have no idea how American start ups can get away with demanding users live on the bleeding edge but apparently cultures can be very different.

Re: Why Is Europe Failing to Create More $1B Startups?

#216

Post by petercooper »

ThomPete wrote: post #210
petercooper wrote: post #209

Combine lots of languages with lots of regulatory areas and you end up with numerous smaller communities. Add this to Metcalfe's Law and you have disproportionately smaller opportunities for company size when social effects are important (as they are to most Internet-based unicorns, though not to companies Europe does do well at - like car companies and manufacturing, say). Mathematically, say one network with size 1…

Yes but historically Europe have had much more success with creating large companies so the question is what changed? Historically the EU used to be much more divided which is exactly why the harmonization process seems to have such a paradoxial result.

I might be wrong but I think it's because the sorts of companies that become "unicorns" nowadays are more dependent on cultural, language or social network aspects (Snapchat, Facebook, Airbnb, Pinterest) than manufacturing, drug, or oil companies ever were (all areas Europe has excelled in).

If biotech or robotics ever take off in a huge bubbly way, I imagine we'll see a much larger of Europe unicorns coming to the table as those areas play to European strengths again.

Re: Why Is Europe Failing to Create More $1B Startups?

#217

Post by xacaxulu »

andreamazz wrote: post #56

Unicorns? Ha! It's hard to survive, let alone be successful. No investors, convoluted laws, high taxes and complete lack of startup mentality. I'm a cofounder of an italian startup, and the road is on an unbearably steep slope. The bureaucracy is insane, the cost of running a small business is daunting. Other companies refuse to work with you because in their eyes you're a scrub (I heard so many times bullshit like "…

That's why I always get pumped when I think about @antirez killing it building Redis from Sicilia!

Re: Why Is Europe Failing to Create More $1B Startups?

#218

Post by walshemj »

switch007 wrote: post #195
KaiserPro wrote: post #160

Earlier quoted context omitted.

There is one currency, there are no import taxes, VAT is per country. (assuming EEC) This ofcourse assume that you are operating in one country and providing goods to another. Employment is another issue. Thats almost the same as in the US(excluding employment). The issue of low taxes is frankly utter bollocks, yes the US's taxes might be lower but so is your life expectancy, and productivity. The main issue with sta…

There are 11 currencies in the European Union.

not any more - there are few sensible hold outs

Re: Why Is Europe Failing to Create More $1B Startups?

#219

Post by pluma »

timonv wrote: post #75
kavabean wrote: post #70

I wonder if the following could be relevant. 1. In my experience, Europeans are less dominated by the "newer is better" desire to constantly get the latest gadget/technology. I wonder if others agree. 2. European money appears to be more dominated by old money / aristocracy and that these people like to invest within that network. Engineers are less likely to be part of the aristocracy and are treated more like commo…

It's not a single country. There's different ideas, ideologies and beliefs all around. Conservative Dutch versus conservative Italian is quite different. > 2. European money appears to be more dominated by old money / aristocracy and that these people like to invest within that network. Engineers are less likely to be part of the aristocracy and are treated more like commodities than the enabling superstar athletes t…

Here in Germany a lot of the public debate is still about "new media". The Internet largely gets thrown in a single bin with telco and TV. The most well-known startups are in e-commerce.

Good luck founding GitHub in 2008 Germany.

Re: Why Is Europe Failing to Create More $1B Startups?

#220

Post by xacaxulu »

Asbostos wrote: post #16

He mentions the multiple languages. I don't understand why Europeans stick to their local languages when they all know English anyway. Are they trying to keep foreigners out? Surely they realize there's a huge social cost of having your own minority language. This problem exists in China too but most people recognize the need to learn the standard Mandarin so they're largely bilingual. Dialect at home and Mandarin ta…

^ This is the most american thing I've seen all day, and earlier I saw a Chevy with an eagle and the US Flag painted all over it with a rifle on the inside. (not uncommon in North Carolina)
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