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Germans don’t do tech startups – more access to capital might change that

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Re: Germans don’t do tech startups – more access to capital might change that

#111

Post by mk89 »

andor wrote: post #104
mk89 wrote: post #30

The mindset in SV is to fail fast - yes, with all the consequences for the investors. That's why investing in startups is a high risk investment. And that's also why the cautious way of doing business in Europe doesn't help with the startup economy. Being too cautious prevents from taking high risks. I interviewed several times with startups proud of not having any funding behind. Very nice. Still, my question is...…

Failing fast is done to reduce risk. The quicker a company fails with an idea, i.e. discovers that there is no market fit, the fewer money was wasted on it. The remaining budget can be used to try other ideas. The big company model, where something unproven is developed for a long time by a large team, is substantially more risky. Only when they go live after "finishing" their product they might discover that nobody…

You are right!

I only saw this from the perspective of the investor that gives money and "hopes" it will work.

This doesn't contradict the fact, though, that in Europe the "big plan" tends to work for a simple reason: there are already deals (if it's a b2b) or the product doesn't innovate and it's based on something already working elsewhere.

Obviously this prevents innovation.

Re: Germans don’t do tech startups – more access to capital might change that

#112

Post by mk89 »

hnkf wrote: post #94
mk89 wrote: post #30

The mindset in SV is to fail fast - yes, with all the consequences for the investors. That's why investing in startups is a high risk investment. And that's also why the cautious way of doing business in Europe doesn't help with the startup economy. Being too cautious prevents from taking high risks. I interviewed several times with startups proud of not having any funding behind. Very nice. Still, my question is...…

This is precisely why I despise startup culture. What about the risk for the workers and your customers? What are the grand innovations you think Europe couldn’t produce because we’re more careful?

Workers know what they are getting into.

Customers know what they are buying.

It's an ecosystem that lives on its own.

Could you think of Google made in Europe? In Germany, in France, or in Italy?

It's no wonder that many Europeans tend to go and live in the USA for that reason.

Re: Germans don’t do tech startups – more access to capital might change that

#113

Post by bogomipz »

I have a question. Are there any German laws or regulations that prohibit using startups from using stock options as part of total compensation? I thought I remembered hearing something about this once, namely that it wasn't possible in the same way it was possible in the US. Is there any truth to that?

Re: Germans don’t do tech startups – more access to capital might change that

#114

Post by jlangenauer »

bogomipz wrote: post #113

I have a question. Are there any German laws or regulations that prohibit using startups from using stock options as part of total compensation? I thought I remembered hearing something about this once, namely that it wasn't possible in the same way it was possible in the US. Is there any truth to that?

Nope, equity is pretty common here as part of comp packages.

Re: Germans don’t do tech startups – more access to capital might change that

#115

Post by s3nnyy »

jashmatthews wrote: post #101
baxtr wrote: post #39

Earlier quoted context omitted.

I have to disagree. We don’t do tech startup like in the US or China. Yes, we do have a lot of great B2B industrial startups. But ask yourself this questions: as a developers where would you want to work? In the US that’s easy to answer, Google, MS, Apple, amazon. Where do you want to work in Germany? Which tech company provides the opportunity to earn a lot of money while working on really interesting topics at a la…

> Where do you want to work in Germany? Which tech company provides the opportunity to earn a lot of money while working on really interesting topics at a large scale? Global companies have massively increased their presence here. Google has a huge presence in Munich, notably including a chunk of the V8 developers. Apple has a large hardware team in Munich. Amazon Berlin is aggressively hiring for developers to work…

I still don't get why Germany is underpaying engineers. After taxes, a cleaning lady in Switzerland can earn more than an engineer in Germany. Net salaries in Zürich are the only ones in Europe that match Bay Area level. (Living costs are lower than you think, see my blogpost titled "Nine reasons why I moved to Switzerland to work in tech", which I wrote after I emigrated from Germany: https://bit.ly/2GNlJcA) So why should top notch talent move to Germany, if they can move to Norway, the Netherlands or Switzerland where they earn double or triple?

What I hear from recruitment firms is that "mediocre engineers move to Berlin and great ones to Zurich". Also, GetYourGuide has their core backend engineering staff still in Zurich, but marketing and sales in Berlin. One of the founders writes that in machine learning, artificial intelligence, and complex data analysis, there are more talents in Switzerland than in Berlin: https://www.handelszeitung.ch/unternehmen/getyourguide-chef-...

Switzerland is even more founder/investor-friendly than the US. Example: Capital gain tax is 0%, that means, if you start a company, and sell it (=shares usually surgue in value), you don't pay taxes on this gain. Also, no capital gain taxes need to be paid, if you buy a publicly listed stock/ETF and hold it for more than 6 months. (More in another thing I wrote: "Switzerland: How buying real-estate can kill you financially and reasons to go for stocks instead" - https://bit.ly/2xIe8ri). Despite the legal infrastructure, we still lack the "American" mentality to become a startup place, but for small businesses it's much better here than in Germany:

A friend of me once said: "Germany is a rich country of poor people". The system in Germany hates small businesses / freelancers and is optimized for conglomerates like Siemens or BMW. If you open a company, you immediately drown in red-tape and upfront taxes. As a comparison, in Switzerland you can just start issuing invoices without a tax-code or anything. Only after you reach a certain threshold, you need to have to inform the authorities during the same tax-year. Also after that, things are very reasonable and easy. My tech recruitment firm generates "normal revenue" and I still haven't gotten a tax-consultant because I can do taxes myself. If I have a question, I call the tax authorities and they help me / give "free advice", which shocks my German entrepreneur friends. There, the tax-authorities treat them as criminals, no support is given and one is triple-checked thoroughly that no taxes are evaded, which, of course, happens anyway especially because taxes are damn high. If you make median wage, it's 45%. In Switzerland median wage is taxed at ~17%. Also, tax-authorities treat taxpayers like clients, whom one is grateful to. That reflects in the simplicity of the tax code: In Germany, if you go for dinner with clients, you need to subtract and can't deduct the part from the bill which you consumed; in Switzerland, you just deduct the whole bill.

(Content marketing from here: If you are European and you want to move here, shoot me an email to iwan@coderfit.com. I am well-connected in the local tech scene because I match programmers with jobs for a living.)

Re: Germans don’t do tech startups – more access to capital might change that

#116

Post by earthnail »

Jdam wrote: post #19
_petronius wrote: post #5

We do have tech startups here in Germany, and quite a few of them. It's just that they tend to be funded differently, and with less of the wild valuation-speculation that goes on in the US. I'm not sure that's a bad thing. As a corollary, the article cites European data protection law (in the context of not being able to collect usage data to improve the product) as a barrier to building startups which ... is also ve…

I’ve lived in Berlin for some years. What I‘ve seen from most of the startup scene there was that people are more collecting memories than building businesses. The predominant mindset was like „we don’t want to take over the world and we will most likely fail anyway“. The successful ones, like Dubsmash, leave for the US after a while. If I, as a German, was to create a startup in Europe today, I’d do so in London.

I am German and co-founded a start-up in berlin. After it failed, one of my co-founders and me tried again - this time in London. Boy, what a difference.

Seed funding, tech talent, tax situation, and lawyers to help you start your company - all on a better level. Yes, living was more expensive, but we actually enjoyed that - it put pressure on us and everyone working with us.

We had a highly successful exit in less than a year.

Re: Germans don’t do tech startups – more access to capital might change that

#117

Post by mirko22 »

mk89 wrote: post #112
hnkf wrote: post #94

Earlier quoted context omitted.

This is precisely why I despise startup culture. What about the risk for the workers and your customers? What are the grand innovations you think Europe couldn’t produce because we’re more careful?

Workers know what they are getting into. Customers know what they are buying. It's an ecosystem that lives on its own. Could you think of Google made in Europe? In Germany, in France, or in Italy? It's no wonder that many Europeans tend to go and live in the USA for that reason.

That’s very presumptuous, there is loads of US people in Europe too...

And you could argue if Google was startup back then or not. I would say not.

Re: Germans don’t do tech startups – more access to capital might change that

#118

Post by this_user »

baxtr wrote: post #53
thatfrenchguy wrote: post #47

Earlier quoted context omitted.

“In the US that’s easy to answer, Google, MS, Apple, amazon. ” That’s a dangerous thing though to push as a one-stop solution I think. There is huge advantages to work for one of these companies, but the drawbacks are also there, and they’re definitely not made for everyone

Well it worked for us in the car space. As engineer coming from university it is clear where you want to work in Germany: Mercedes, BMW, Porsche, Audi, great places to start a career.

Because most graduates would rather work in a safe job at one of those large companies than do anything actually challenging at a more risky place. I know engineers who work at several of those companies, and it's the same kind of of overly bureaucratic, conservative corporate culture that is dominated by middle managers who are primarily preoccupied by not making any mistakes they could be held accountable for everywhere.

Furthermore, there are a lot of jobs that are being filled with engineers that don't really require an engineer. A good friend of mine is currently working for one of those companies, and his job mainly consists of building spreadsheets with risk models that are then passed on to, and mostly ignored by, the sales force. Needless to say, he's probably going to switch careers in the next few months.

For some people that is enough as long as they get paid at the end of the month, but if you actually want to do something, these companies are not the place for that.

Re: Germans don’t do tech startups – more access to capital might change that

#119

Post by fatterypt »

jlangenauer wrote: post #89
zenovision wrote: post #81

Germany has a lot of drawbacks to be the next silicon valley: * the most difficult tax system in the world. even freelancers have to use accountant services, because most people will not be able to pay taxes properly without it. * high taxes - 42% income tax + Solidaritätszuschlag 5.5% = 47.5%; for corporations it's ~30%. * A LOT of buerocracy. I can't even send an email to tax authorities in my area, because they on…

> low salaries for software engineers. The most of senior software developers will earn 50.000 - 60.000 EURO anually and after paying taxes it's only ~2.600 EURO per month (3.000 USD) Nonsense. Here in Berlin, €60k would only be competitive for an engineer with maybe 2-3 years experience. Good senior people can (and should) get €85k - €90k. If you're in Berlin, and want to be pointed in the direction of companies who…

This ^. I see a lot of people are tricked by their companies to get them to come to Berlin. Then the companies get them believing that a 60k salary is generous for someone with loads of experience.

Once you get here, you realize that a lot of companies pay much more than that and you've been taken advantage from.

Re: Germans don’t do tech startups – more access to capital might change that

#120

Post by baxtr »

s3nnyy wrote: post #115
jashmatthews wrote: post #101

Earlier quoted context omitted.

> Where do you want to work in Germany? Which tech company provides the opportunity to earn a lot of money while working on really interesting topics at a large scale? Global companies have massively increased their presence here. Google has a huge presence in Munich, notably including a chunk of the V8 developers. Apple has a large hardware team in Munich. Amazon Berlin is aggressively hiring for developers to work…

I still don't get why Germany is underpaying engineers. After taxes, a cleaning lady in Switzerland can earn more than an engineer in Germany. Net salaries in Zürich are the only ones in Europe that match Bay Area level. (Living costs are lower than you think, see my blogpost titled "Nine reasons why I moved to Switzerland to work in tech", which I wrote after I emigrated from Germany: https://bit.ly/2GNlJcA ) So why…

I’m not sure your comment adds any value to the discussion. It seems to be intended purely as advertisement

EDIT: it seems as if you edited your post heavily to add the notion of “content”

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