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A startup doesn't need to be a unicorn

mattgiustwilliamson.substack.com

41–50 of 363 posts

Re: A startup doesn't need to be a unicorn

#41
post #38

Earlier quoted context omitted.

And yet Germany still doesn't seem to have much more startup / entrepreneurial success than any other European country. What gives?

Have you heard of Rocket Internet? It's one of the most successful models in the world. They may avoid the US market and such, but most of the unicorns in Malaysia are backed by Rocket. And most of the people who stay and start their own, backed by YC or whoever, are usually ex-Rocket. They hit 10% growth per week, even at unicorn sizes. I would anecdotally put Germany at #3 globally just for Rocket alone, with US an…

Is there any way to put numbers to this success? As in, by what metric is Germany #3?

Re: A startup doesn't need to be a unicorn

#42
post #37
post #31

Earlier quoted context omitted.

You still need the 25k to register a LLC or whatever the acronym is in Germany, right?

You need 25k€ to register a GmbH, but you can nowadays register a UG which only requires 1€ and can later be converted to a GmbH

Which will cost many thousands in admin per year

Re: A startup doesn't need to be a unicorn

#43
post #30

Here's a model that exists in Germany, which I like: You can present a business plan to the state's investment bank and apply for several financial aides, including: * 1.5 years of universal basic income for you plus up to 2 other people. It's a tiny amount of money, but the point is to free you up to invest your actual time an money into the business. You do not have to pay this back. * up to 20k EUR in "consulting…

These things do work and created a few unicorns here in Malaysia. The catch is that they're usually very bureaucratic as it's public funds, and the more corruption, the more rules there are. Someone might say, come in from New Zealand to get a grant, then the condition becomes "must be 51% locally owned". A conglomerate creates a sister company to get the grant and then it becomes, "parent company must be less than 3…

> These things do work and created a few unicorns here in Malaysia.

Which ones?

Re: A startup doesn't need to be a unicorn

#44
post #33

Someone investing $1M for 10% might better off buy gold or a property. It sounds good for me as a founder, but from investor point of view, this is pointless. Why taking a huge risk for 10%?

Because gold will appreciate reliably to an extent but a company can appreciate in value far exceeding what gold can -- that's the risk/reward trade off.

Re: A startup doesn't need to be a unicorn

#45
post #38

Earlier quoted context omitted.

And yet Germany still doesn't seem to have much more startup / entrepreneurial success than any other European country. What gives?

Have you heard of Rocket Internet? It's one of the most successful models in the world. They may avoid the US market and such, but most of the unicorns in Malaysia are backed by Rocket. And most of the people who stay and start their own, backed by YC or whoever, are usually ex-Rocket. They hit 10% growth per week, even at unicorn sizes. I would anecdotally put Germany at #3 globally just for Rocket alone, with US an…

Isn't Rocket's reputation that they just steal ideas from other startups and create cheap clones of them? Not a terrible business to be in, but not massively inspiring or globally reproducible.

Re: A startup doesn't need to be a unicorn

#47
post #44
post #33

Someone investing $1M for 10% might better off buy gold or a property. It sounds good for me as a founder, but from investor point of view, this is pointless. Why taking a huge risk for 10%?

Because gold will appreciate reliably to an extent but a company can appreciate in value far exceeding what gold can -- that's the risk/reward trade off.

The chances of a startup failing is way higher than gold degrading in price.

Re: A startup doesn't need to be a unicorn

#48

Here's a model that exists in Germany, which I like: You can present a business plan to the state's investment bank and apply for several financial aides, including: * 1.5 years of universal basic income for you plus up to 2 other people. It's a tiny amount of money, but the point is to free you up to invest your actual time an money into the business. You do not have to pay this back. * up to 20k EUR in "consulting…

And yet Germany still doesn't seem to have much more startup / entrepreneurial success than any other European country. What gives?

German bureaucracy is a constant hindrance. Your first year in business is pure compliance work, and waiting for various paper-based processes to complete.

Re: A startup doesn't need to be a unicorn

#49

Earlier quoted context omitted.

What are you looking for in particular? The model is geared towards slow, sustainable growth. And that growth might also not need to exceed a certain level. So you're unlikely to hear about many of them. Not all are in tech or software, many are focused on German-only (or DACH region) research, industrial development, etc. I think that's fine.

Presumably you'd want to see that such initiatives are increasing the number of sustainable businesses created, per capita. Is that the case? --- EDIT: Some quick searching indicates that the startup rate (per capita) in Germany is about 1.1%, while the USA is 1.5%. Not a huge difference, but the USA doesn't have any of those initiatives afaik. Just wondering what actually moves the needle and how to better create a…

> Some quick searching indicates that the startup rate (per capita) in Germany is about 1.1%, while the USA is 1.5%. Not a huge difference, but the USA doesn't have any of those initiatives afaik.

I believe there's differences between east and west Germany, so if you look at the west specifically, the gamp might get a little bit smaller.

Beyond that, Germany doesn't have as much of a startup culture as the USA, which is precisely why we need to incentivise people in a way that others don't.

> Just wondering what actually moves the needle and how to better create a society that is entrepreneurial

Willingness and awareness, where the latter is probably easy to fix but the former is a bit trickier: You need those people who have the ability to pull it off to want it in the first place.

And there I guess it splits into a) the benefits of entreprenaurship b) the benefits of employment and c) the cultural influence on how these are weighed against each other.

So tl;dr: a) make starting a company attractive, b) make employment suck more and c) convince people that independence beats security.

Employment in Germany is definitely a lot cozier than in the US, so unless we want to get rid of that, a) and c) are the options we have. If you want to achieve it without propaganda, then all you can really do is a), and that's what these programmes are already doing.

I think reducing buerocracy and offering good social safety nets so a failing business doesn't translate to a ruined life are the way to go, at least in the short term.

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