Factors that act(ed) as drag on the European tech/startup scene(addxorrol.blogspot.com)
addxorrol.blogspot.com
Factors that act(ed) as drag on the European tech/startup scene
http://addxorrol.blogspot.com/2023/12/a-list-of-factors-that-acted-as-drag-on.html
116 comments
To the cultural point I'd add one. I'm an American who worked in Europe in the 2003-2004 era for an American company managing European developers. There was a very strong feeling - as in much stronger than I'd ever experienced in the US - that for a successful career, one had to get out of programming into management. From European upper management types, I had the strong feeling that they considered programmers to be glorified typists. Except at American companies, pay for developers was abysmal comparative to the US.
I've been bought out by a French company twice in my career and worked closely with developers in Paris for years, and at least in my experience, this is still very much the case. There wasn't a track for senior IC and at the time I was a Principal Engineer who had reported directly to my (exited) company's CTO. I was used to pretty much free range, being treated as equals to the front line management.
Paris managers didn't know what to do with me, why this keyboard jockey kept requesting meetings and taking on projects. One manager treated me like I was lost and even tried to add me to his Jira board. After quite a few conflicts I finally asked for a title change. Boom, instant cred, no more weird issues.
Super generalization of course, but my experience was harsh and blatant. I could tell a lot more stories to back it up mainly because I thought it was so odd.
Paris managers didn't know what to do with me, why this keyboard jockey kept requesting meetings and taking on projects. One manager treated me like I was lost and even tried to add me to his Jira board. After quite a few conflicts I finally asked for a title change. Boom, instant cred, no more weird issues.
Super generalization of course, but my experience was harsh and blatant. I could tell a lot more stories to back it up mainly because I thought it was so odd.
No surprise to me. France is the most top-down country in the world. The org chart is everything over there.
Yes, absolutely, there are no other parts of the world notoriously known for their hierarchies and formalities being very important; France has got the title, for sure.
Yes.
And as anything, there are exceptions, in particular in smaller and newer companies. Otherwise architects, DBAs and security experts seem to have an easier time to carve a niche in their shape and be paid enough without the managerial part.
And as anything, there are exceptions, in particular in smaller and newer companies. Otherwise architects, DBAs and security experts seem to have an easier time to carve a niche in their shape and be paid enough without the managerial part.
And of course the opposite - a manager wanting to sit in on technical discussions and architecture reviews is considered weird :-)
Right. This is an aspect I'd forgotten about. When I first arrived, the developers thought is was really weird for me to not only sit in, but have some pretty strong opinions about the subjects under discussion. They got used to it pretty quickly, but my upper managers didn't know what to think about it.
Huh? If people are having a technical discussion or architecture decision.. it seems totally reasonable for an EM to want to be involved and aware of what is going on. That's not weird. The best managers I've ever had are aware of technical details at a high level decision POV
You're told in no uncertain terms that it's not what you're paid for. You can do it "for fun", but it won't help on your evals even if your contribution to the discussion was critical (well, hopefully it still helps if thanks to that your project doesn't derail), and will be negative to you if you prioritized it over other "manegerial" taks.
That's one reason we sometimes saw managers just leave for a startup where nobody gives a shit about titles.
That's one reason we sometimes saw managers just leave for a startup where nobody gives a shit about titles.
This is still the case and all the money is sucked by the management that is growing faster than the developers and just stratifies slowly. Another important point is the one of countries want to control a domain before even beeing big players in it. Look at LLMs and the recent European legislation. This mean that not only companies will be chilled from starting anything, but that the people that could have made that possible will just go elsewhere. In some European countries there is also a caste system where you need to be coming from a specific kind of school (or in some companies a single school usually the same as the C-suite is coming from) to even be considered as hireable. Starting and maintaining a company is also extremely difficult in some European countries where the paperwork, tax and permit burden is just incredible compared to the U.S.
I worked as a programmer in Spain (my homeland) between 2008 and 2014. My yearly salary was 16k euros, putting me in the bottom 25% of earners, or just about the poverty line. Considering the american market, people have a hard time believing I used to live paycheck to paycheck working as a programmer. Anything tech related used to be a "nerd" job and I got paid less than my friends working as mechanics or policemen. In fact I didn't learn programmers were supposed to get paid big bucks until embarrassingly late.
Luckily in the last few years this has changed, in part thanks to Covid and remote work. At least now software engineers can get paid a decent income, which makes working in tech in the EU more bearable.
Luckily in the last few years this has changed, in part thanks to Covid and remote work. At least now software engineers can get paid a decent income, which makes working in tech in the EU more bearable.
I am European, and I wish this was not true, but you are so right. It happens everywhere, SMEs, mittelstands, corporations...
Even at top EU universities, in many fields, most professors are managers that despise technical know how!
I have worked at several US universities, and this was not the case. Plus hierarchies were much flatter. Social structures here in the EU make lots of innovation surprisingly hard.
Even at top EU universities, in many fields, most professors are managers that despise technical know how!
I have worked at several US universities, and this was not the case. Plus hierarchies were much flatter. Social structures here in the EU make lots of innovation surprisingly hard.
Dutch here and I completely agree with this observation. Culturally being an engineer in Europe is not "high status" and also not high paying.
TLDR: companies and culture actively stimulate young engineers to move "upwards" (which in EU culture means: becoming a manager) while at the same time coming up with press releases on how they can't find engineers locally.
It seems to me like an entirely self-manufactured problem.
Also the fact that large companies such as ASML and Philips form illegal cartels to keep salary levels down (while importing as much labour from abroad as legally possible) doesn't help to stimulate people to remain an engineer.
Then there's companies like Philips who actively patent troll (or steals IP from) every local start-up they can find or convince to share more info.
TLDR: companies and culture actively stimulate young engineers to move "upwards" (which in EU culture means: becoming a manager) while at the same time coming up with press releases on how they can't find engineers locally.
It seems to me like an entirely self-manufactured problem.
Also the fact that large companies such as ASML and Philips form illegal cartels to keep salary levels down (while importing as much labour from abroad as legally possible) doesn't help to stimulate people to remain an engineer.
Then there's companies like Philips who actively patent troll (or steals IP from) every local start-up they can find or convince to share more info.
American that naturalized after moving to the Netherlands here and I can confirm.
Also, poorly performing engineers will sometimes be promoted into management roles to get them away from the code. Now the incompetent guy in the team is your boss.
I would also add that if companies attempt to give technology specialists higher salaries they will often run into problems with their financial auditors claiming a lack of market conformity.
Also, poorly performing engineers will sometimes be promoted into management roles to get them away from the code. Now the incompetent guy in the team is your boss.
I would also add that if companies attempt to give technology specialists higher salaries they will often run into problems with their financial auditors claiming a lack of market conformity.
> I would also add that if companies attempt to give technology specialists higher salaries they will often run into problems with their financial auditors claiming a lack of market conformity.
That used to be the case in the US too, a perhaps still is. In the early 80s I was hired while still a student at the equivalent of today’s FAANG rate for a mid career developer.
At some point I learned that my hire had to be approved by the board of directors because they had put in place strict rules about who qualified for what kind of salary.
There weren’t a lot of AI developers back in those days (this was before the 80s AI Winter), so that’s what it cost. And I had more than a year’s salary worth of hardware anyway, another thing that’s changed dramatically since then.
I wish I could say this for every job I’ve had, but: at least in this case they did get their money’s worth.
That used to be the case in the US too, a perhaps still is. In the early 80s I was hired while still a student at the equivalent of today’s FAANG rate for a mid career developer.
At some point I learned that my hire had to be approved by the board of directors because they had put in place strict rules about who qualified for what kind of salary.
There weren’t a lot of AI developers back in those days (this was before the 80s AI Winter), so that’s what it cost. And I had more than a year’s salary worth of hardware anyway, another thing that’s changed dramatically since then.
I wish I could say this for every job I’ve had, but: at least in this case they did get their money’s worth.
I'm currently an American who might move to the Netherlands if my interview goes well enough. The projected salary that I'll have is 105k euros. Reading around, this seems like a relatively okay rate given cost of living. I'll be leaving a decent amount of money on the table from my current job but I'm relatively young and want to use the opportunity to be in Europe for a two to five years before returning to the states.
Is there anything about your personal experience in the Netherlands as an American engineer that you could share?
Is there anything about your personal experience in the Netherlands as an American engineer that you could share?
> Also, poorly performing engineers will sometimes be promoted into management roles to get them away from the code.
I recall that being popularized as the "Dilbert Principle", a more cynical take on the "Peter Principle". (That said, the creator of Dilbert has... gone weird in the last 30 years, so I'd be careful of seeking any organizational wisdom there.)
I recall that being popularized as the "Dilbert Principle", a more cynical take on the "Peter Principle". (That said, the creator of Dilbert has... gone weird in the last 30 years, so I'd be careful of seeking any organizational wisdom there.)
Granted that was 20 years ago, many orgs offer IC tracks now. Pay is still lower compared to US based roles.
Same goes for Australia, where I studied and worked in the mid-2000s. The expectation was to work for a few years with the intention to move into management.
Same goes for Australia, where I studied and worked in the mid-2000s. The expectation was to work for a few years with the intention to move into management.
Welp, there you have it...
The beatings will continue until wages improve.
The beatings will continue until wages improve.
Yep, as an anecdote. My dad was working for 35 years at a "tech company" here in Europe. When he went into pension all his coworkers told me what an unusual thing this was (kind of warning me that I shouldn't try to do the same haha). It is incredibly hard to make a technical career here.
> at American companies, pay for developers was abysmal comparative to the US.
something went wrong here with comparison...
something went wrong here with comparison...
To clarify, except at American companies (in Europe), pay for developers (in Europe) was abysmal compared to pay for developers in the U.S. (irrespective of ownership).
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Good list, but as a european in SV I’ll share my $0.02:
I’d distinguish “how SV started” from “why it persists”; there are some excellent histories of the genesis of SV and what perhaps few understand is that it wasn’t an organic accident but a very deliberate effort by DARPA to forster this environment of easy funding. Without this SV would still be orchards.
Of course why it still endures despite the eternal “SV is over” proclamations are everything he lists.
In France, initiatives are very often top-down - bureaucrats invent a project and try to rally organizations. Even when it works, it’s almost alway useless and fizzles.
In Denmark I saw more SV mentally but the economic and tax climate is such the big rewards are heavily neutered.
I’d distinguish “how SV started” from “why it persists”; there are some excellent histories of the genesis of SV and what perhaps few understand is that it wasn’t an organic accident but a very deliberate effort by DARPA to forster this environment of easy funding. Without this SV would still be orchards.
Of course why it still endures despite the eternal “SV is over” proclamations are everything he lists.
In France, initiatives are very often top-down - bureaucrats invent a project and try to rally organizations. Even when it works, it’s almost alway useless and fizzles.
In Denmark I saw more SV mentally but the economic and tax climate is such the big rewards are heavily neutered.
>In France, initiatives are very often top-down - bureaucrats invent a project and try to rally organizations. Even when it works, it’s almost alway useless
If you do this in the us you get Shockley -> Fairchild -> Intel OR Engineering Research Associates/Univac -> Control Data Corporation -> Cray Research
If you put a bunch of smart people together, and manage them like shit, they will go start their own company in the US.
If you do this in the us you get Shockley -> Fairchild -> Intel OR Engineering Research Associates/Univac -> Control Data Corporation -> Cray Research
If you put a bunch of smart people together, and manage them like shit, they will go start their own company in the US.
I think many of the listed factor are, in fact, advantages.
For example, the cultural differences - the author forgets that most europeans speak two or more foreign languages. Thanks to the EU frame legislation offering products and services across borders is not only feasible, but quite painless compared to the challenges you'd face trying to setup shop in just any foreign nation.
When it comes to labor laws and privacy, they're practically invisible as long as you Do The Right Thing.
For example, the cultural differences - the author forgets that most europeans speak two or more foreign languages. Thanks to the EU frame legislation offering products and services across borders is not only feasible, but quite painless compared to the challenges you'd face trying to setup shop in just any foreign nation.
When it comes to labor laws and privacy, they're practically invisible as long as you Do The Right Thing.
Your point about languages and cross border regulations may be true, but is doubly so for the United States. In some (narrow sense) the US is like a highly devolved EU - you have 50 different countries but they all speak the same language (not even really different dialects), use the same currency and largely have the same legal requirements for technology firms.
Yeah that was kind of my point - there is no significant friction to expand as a business across the EU.
That's clearly not true. To take just one example, US states all exempt small businesses from dealing with sales tax until they cross a threshold even for foreign businesses. EU does not meaning that if you make even one single sale of even a very cheap thing to a single German or Spanish, you are expected to actually fill out VAT returns in Germany and Spain, regardless of where your company is actually located. Of course this is impossible as they are all in languages you don't speak at minimum, so some countries provide what they call a "mini one stop shop" where for a fee the local government will fill out the tax returns for you. But not everyone selling to Europe has access to such "MOSS" offices, and naturally they don't work for free.
There are also insane rules for working out which country gets to claim a sale. Including for example what to do in cases like someone buying something whilst on a boat.
Obvious solutions like thresholding are not interesting to the EU. Brussels doesn't really care about startups and sees them as a curiosity. If they can extract another few billion from Google or Amazon at the cost of sacrificing millions of startups-to-be across the continent, they will do it in an eyeblink.
There are also insane rules for working out which country gets to claim a sale. Including for example what to do in cases like someone buying something whilst on a boat.
Obvious solutions like thresholding are not interesting to the EU. Brussels doesn't really care about startups and sees them as a curiosity. If they can extract another few billion from Google or Amazon at the cost of sacrificing millions of startups-to-be across the continent, they will do it in an eyeblink.
> Brussels doesn't really care about startups and sees them as a curiosity.
I think Brussels can be blame for a lot of things but not about NOT wanting to harmonize laws. But the main problem here is that countries dont really want a federation. So Brussels cannot do too much to help startups with taxes. I suspect the problem you so accurately describe with VAT is not that Brussels did not wanted a simple solution but countries insisting to own their own piece of that share according with their own VAT level. Focus here on the words “their own”.
Europe IMO as European citizen is very diverse so they all want somehow to keep everything they have in their own country the same while also making it together. That is hard task. Was hard when globalization spirit was high and it is almost impossible now when we go more into individualism.
I think Brussels can be blame for a lot of things but not about NOT wanting to harmonize laws. But the main problem here is that countries dont really want a federation. So Brussels cannot do too much to help startups with taxes. I suspect the problem you so accurately describe with VAT is not that Brussels did not wanted a simple solution but countries insisting to own their own piece of that share according with their own VAT level. Focus here on the words “their own”.
Europe IMO as European citizen is very diverse so they all want somehow to keep everything they have in their own country the same while also making it together. That is hard task. Was hard when globalization spirit was high and it is almost impossible now when we go more into individualism.
> For example, the cultural differences
This makes the first 300M market harder and the next 300M easier.
This makes the first 300M market harder and the next 300M easier.
It's a shame because Europe seems to have top notch compsci research. It's not like there's not talent there.
> in the US, you build a product and you tap into a market of 340m people
For better or worse, California is changing this around privacy regulation. It already did it for car emissions. Well-crafted rules can drive industries to change. Poorly-crafted ones can scare them away.
For better or worse, California is changing this around privacy regulation. It already did it for car emissions. Well-crafted rules can drive industries to change. Poorly-crafted ones can scare them away.
This is the first I’ve heard the point that it’s hard to give employees equity at EU-based startups.
- If you’ve worked in tech in the EU, can you share examples of this affecting you?
- Does this also extend to US companies that want to give equity to EU-based employees?
- If you’ve worked in tech in the EU, can you share examples of this affecting you?
- Does this also extend to US companies that want to give equity to EU-based employees?
Yes it's famously problematic. It's got better with time partly due to US based firms coming in and blanket offering lots of employees they hire there equity so tax authorities were forced to figure out their policies, but for example when I joined a US FAANG from a European country in 2006 I was warned that the tax authorities might question the equity because they weren't really familiar with stock options.
Mostly the issues are therefore related to strange tax rulings that would lead to bankruptcy in some cases. It's not unique to the EU, the USA also has some edge cases where people can be bankrupted by tax bills on money they never received.
Mostly the issues are therefore related to strange tax rulings that would lead to bankruptcy in some cases. It's not unique to the EU, the USA also has some edge cases where people can be bankrupted by tax bills on money they never received.
People outside of the SV bubble aren't swayed by the equity nonsense and prefer to be paid actual cash.
When I sold my first company even the receptionist (in her sixties and divorced) was able to pay off her mortgage and retire.
There’s no guarantee but it happens more than you would think.
There’s no guarantee but it happens more than you would think.
The main issue in the article is that the author assumes that those factors "drag" EU startups, but as others pointed out, there are fundamental differences in values, cultures, and principles between those places.
> - If you’ve worked in tech in the EU, can you share examples of this affecting you?
As I have worked in both ecosystems, some things that I have on top of my mind are:
1) The taxation on unrealized stock options: For me, it's the worst. Roughly speaking, if you have stock options, you have to pay for the appreciation of that stock, even if it is an illiquid asset. And since in Europe we do not have some clear equivalent of 409A, it's a no-go to pay for something that has no intrinsic value.
2) Salaries: Since companies cannot pay with SO, some of them use some synthetic mechanisms like phantom stocks or virtual stock options, but all of them have a small issue: The returns are not so great, maybe 1.05x-1.10x. It's better to be in a big company with a great upfront salary than to run for something that will not provide even a 20% downpayment on a house.
3) Low payment with no learning: People underestimate this aspect, but for me, startups are an environment to deliver and learn at the same time with some cap on the salary. In the US, this is not something controversial, but here in Europe, I know startups where the average developer cannot even choose to work on a Linux workstation and most of the founders have little knowledge of how
4) Talent density: The tech diversity in talent is great here, and it's awesome to work in a multicultural environment, but the problem is that, at least in some places in central Europe, the talent density is not as great as some places in the USA, especially in cultures where the least denominator reigns in terms of accelerating and fostering talents. It's more or less the Procustes bed: if you're short, they will stretch you out; if you're big, they will cut your legs.
5) Talent culture: This is a big difference that I see in comparison with the US. Most of the founders in US see developers as expensive talent but they fundamentally understand that without
6) Low probability of exit; more likely to go and be acquired: Self-explanatory: no one will run to build something that will end up acquired by some other tech company in central/western Europe or have a very low probability of exit. I saw cases where a scaleup was just afloat and meanwhile, the founder and the executive team were enjoying the nice things in Europe while underpaying people with illiquid, non-valuable stock
7) A secondary market is non-existent; most of the contracts do not have the right of first refusal. Once you have this illiquid asset/liability in your hands, it's almost impossible to get rid of it. Due to the cap-table structure here in Europe, there is no culture of selling shares outside.
> - If you’ve worked in tech in the EU, can you share examples of this affecting you?
As I have worked in both ecosystems, some things that I have on top of my mind are:
1) The taxation on unrealized stock options: For me, it's the worst. Roughly speaking, if you have stock options, you have to pay for the appreciation of that stock, even if it is an illiquid asset. And since in Europe we do not have some clear equivalent of 409A, it's a no-go to pay for something that has no intrinsic value.
2) Salaries: Since companies cannot pay with SO, some of them use some synthetic mechanisms like phantom stocks or virtual stock options, but all of them have a small issue: The returns are not so great, maybe 1.05x-1.10x. It's better to be in a big company with a great upfront salary than to run for something that will not provide even a 20% downpayment on a house.
3) Low payment with no learning: People underestimate this aspect, but for me, startups are an environment to deliver and learn at the same time with some cap on the salary. In the US, this is not something controversial, but here in Europe, I know startups where the average developer cannot even choose to work on a Linux workstation and most of the founders have little knowledge of how
4) Talent density: The tech diversity in talent is great here, and it's awesome to work in a multicultural environment, but the problem is that, at least in some places in central Europe, the talent density is not as great as some places in the USA, especially in cultures where the least denominator reigns in terms of accelerating and fostering talents. It's more or less the Procustes bed: if you're short, they will stretch you out; if you're big, they will cut your legs.
5) Talent culture: This is a big difference that I see in comparison with the US. Most of the founders in US see developers as expensive talent but they fundamentally understand that without
6) Low probability of exit; more likely to go and be acquired: Self-explanatory: no one will run to build something that will end up acquired by some other tech company in central/western Europe or have a very low probability of exit. I saw cases where a scaleup was just afloat and meanwhile, the founder and the executive team were enjoying the nice things in Europe while underpaying people with illiquid, non-valuable stock
7) A secondary market is non-existent; most of the contracts do not have the right of first refusal. Once you have this illiquid asset/liability in your hands, it's almost impossible to get rid of it. Due to the cap-table structure here in Europe, there is no culture of selling shares outside.
A lot of these are very different across countries
> I know startups where the average developer cannot even choose to work on a Linux workstation
That is more a company issue than country issue. And yes some do use Linux (but I think today the default is MacOS for a lot of startups)
> I know startups where the average developer cannot even choose to work on a Linux workstation
That is more a company issue than country issue. And yes some do use Linux (but I think today the default is MacOS for a lot of startups)
Sure GDPR sucked for adtech, I was working for an EU adtech company when it came through, it took a year or two to ween the BAs and bidders off their addiction to the previously finely detailed user tracking.
But GDPR encapsulates rights consumers deserve.
But GDPR encapsulates rights consumers deserve.
These days you can ever hear folks asking questions like "do we really need to collect that" or "can we make it so we never have to process this bit of information" which, in retrospect, should have been the default for the tech industry.
Designed in America
Made in China
Regulated in EuropeGlobalization in a nutshell.
I think this list misses the biggest reason of them all. Europe is very culturally different from the US. There is no European dream and Europeans do not, as a rule, desire to move beyond their station in life. The culture is obsessed with appearing rich, but does not value actually having money. Money is somthing you are born into, not something you try to make. The aristocracy still quietly runs the show and the technocrats know better than the dirty populists. The culture does not value the kind of bullshit that makes hype cycles and gold rushes. Moonshots are the kind of high risk endeavors best left to the people who actually went there.
The flip side of this is that instead of being obsessed with success , dreams and money, Europeans focus on the human and how best to live, which explains all the attempts to legislate a better world rather than build it.
Live in Europe, invest in America.
The flip side of this is that instead of being obsessed with success , dreams and money, Europeans focus on the human and how best to live, which explains all the attempts to legislate a better world rather than build it.
Live in Europe, invest in America.
Despite these factors, the US has actually less social mobility than many European nations e.g.
https://www.weforum.org/agenda/2020/01/these-are-the-10-coun...
When wealth is inceasingly locked up in dynastic families, they will try and control the legislature and economic system to maintain their privilege and stifle innovation from upstarts. This is the problem Europe traditionally has struggled with, and it is saddening to the the US fall into this trap.
So while Europe has a lot to learn, the US is not exactly trending in the right direction. Perhaps this is why much of the current generation of VC is hype-driven, pump-and-dump schemes and attempts to create monopolies rather than genuine, long-term innovation.
https://www.weforum.org/agenda/2020/01/these-are-the-10-coun...
When wealth is inceasingly locked up in dynastic families, they will try and control the legislature and economic system to maintain their privilege and stifle innovation from upstarts. This is the problem Europe traditionally has struggled with, and it is saddening to the the US fall into this trap.
So while Europe has a lot to learn, the US is not exactly trending in the right direction. Perhaps this is why much of the current generation of VC is hype-driven, pump-and-dump schemes and attempts to create monopolies rather than genuine, long-term innovation.
The ranking the article links has the US below the nordic/germanic countries, but above most latin/eastern countries. As a European-American, that squares with my experience.
https://www3.weforum.org/docs/Global_Social_Mobility_Report....
raw data to save others the copy pasting i did into a spreadsheet:
{"Denmark": 85.2, "Finland": 83.6, "Norway": 83.6, "Sweden": 83.5, "Iceland": 82.7, "Netherlands": 82.4, "Switzerland": 82.1, "Austria": 80.1, "Belgium": 80.1, "Luxembourg": 79.8, "Germany": 78.8, "France": 76.7, "Slovenia": 76.4, "Ireland": 75, "Malta": 75, "Czech Republic": 74.7, "UK": 74.4, "Estonia": 73.5, "Portugal": 72, "Lithuania": 70.5, "USA": 70.4, "Spain": 70, "R Cyprus": 69.4, "Poland": 69.1, "Latvia": 69, "Slovakia": 68.5, "Italy": 67.4, "Croatia": 66.7, "Hungary": 65.8, "Bulgaria": 63.8, "Romania": 63.1, "Greece": 59.8 }
https://www3.weforum.org/docs/Global_Social_Mobility_Report....
raw data to save others the copy pasting i did into a spreadsheet:
{"Denmark": 85.2, "Finland": 83.6, "Norway": 83.6, "Sweden": 83.5, "Iceland": 82.7, "Netherlands": 82.4, "Switzerland": 82.1, "Austria": 80.1, "Belgium": 80.1, "Luxembourg": 79.8, "Germany": 78.8, "France": 76.7, "Slovenia": 76.4, "Ireland": 75, "Malta": 75, "Czech Republic": 74.7, "UK": 74.4, "Estonia": 73.5, "Portugal": 72, "Lithuania": 70.5, "USA": 70.4, "Spain": 70, "R Cyprus": 69.4, "Poland": 69.1, "Latvia": 69, "Slovakia": 68.5, "Italy": 67.4, "Croatia": 66.7, "Hungary": 65.8, "Bulgaria": 63.8, "Romania": 63.1, "Greece": 59.8 }
Those are income-based and the quoted generational figures look at mobility from poor to median, not median (or above median) to rich.
I would like to see these figures for wealth. I have a hard time believing it’s easier to climb from the top 20% to top 1% of wealth in any European country vs the US or China. Wealth is a more consequential measure of socioeconomic status than income anyway.
I would like to see these figures for wealth. I have a hard time believing it’s easier to climb from the top 20% to top 1% of wealth in any European country vs the US or China. Wealth is a more consequential measure of socioeconomic status than income anyway.
At a guess wealth is _probably_ quite a lot worse - average American wealth is very high (~ $551k), but the median American wealth is quite bad (~ 107k, on par with Spain or Italy. Whereas median British wealth is $151k and in Canada it's $131k.
But once you remove sterotypes, what makes you think it's easier to climb to the top in America?
But once you remove sterotypes, what makes you think it's easier to climb to the top in America?
You're still focusing on median which I think is a valid measure on its own but not wholly representative of mobility at all. I'm personally very biased, but I think social mobility is most important between upper-middle (usually the most educated and hard-working) and upper-classes because that's where the most value creation happens, and personally I think that it's much more motivating to have a chance to become very wealthy than it is to increase your income by $10k
> But once you remove sterotypes, what makes you think it's easier to climb to the top in America?
We have lower marginal income taxes, self-funded retirements, and proportionately less capital tied up in generational assets like buildings. My impression of the EU is that most of the upper class and upper-middle class are land/building/family business inheritors, whereas in the US equity in large businesses take a larger share of the upper/upper-middle class asssets.
> But once you remove sterotypes, what makes you think it's easier to climb to the top in America?
We have lower marginal income taxes, self-funded retirements, and proportionately less capital tied up in generational assets like buildings. My impression of the EU is that most of the upper class and upper-middle class are land/building/family business inheritors, whereas in the US equity in large businesses take a larger share of the upper/upper-middle class asssets.
I'd be interested to see a comparison of the median wealth by age bracket.
You don’t understand social mobility, it does not imply what you think it does. It primarily reflects the smallness of a country and wage compression. Countries that are neither small nor have wage compression, such as the US, will always show poorly by that metric.
You can, in absolute terms, dramatically increase your income in a country like the US and still be less “socially mobile” than a small income increase in a poorer country. People care about dramatically increasing their income much more than they care about being “socially mobile”. If you care about individual prosperity, social mobility is at best a secondary measure of success.
This isn’t a new phenomenon, the EU still struggles to produce genuinely innovative companies.
You can, in absolute terms, dramatically increase your income in a country like the US and still be less “socially mobile” than a small income increase in a poorer country. People care about dramatically increasing their income much more than they care about being “socially mobile”. If you care about individual prosperity, social mobility is at best a secondary measure of success.
This isn’t a new phenomenon, the EU still struggles to produce genuinely innovative companies.
The US has seen decreasing social mobility in past decades. So this isn't just the US vs European countries, it's the US vs itself.
https://www.weforum.org/agenda/2020/09/social-mobility-upwar...
https://www.weforum.org/agenda/2020/09/social-mobility-upwar...
The reality is that “social mobility” is a term of art in economics that measures something few ordinary people care about. People mostly care about economic mobility, which is strong in the US. People want the to be better off financially, not more socially mobile. These are not the same thing. You can readily increase your earnings by large amounts without being socially mobile.
The notion that people prefer to be “socially mobile” but poorer isn’t backed by a lot of evidence. People like more money, as a general rule.
Appealing to “social mobility” is something people with money do.
The notion that people prefer to be “socially mobile” but poorer isn’t backed by a lot of evidence. People like more money, as a general rule.
Appealing to “social mobility” is something people with money do.
Social mobility is literally only about money today, not too many opportunities to become a noble anymore.
And no you cannot "readily increase your earnings." The best indicator for a person's future earnings are still the parents wealth. There are outliers but basically social and economic success are largely inherited.
The people that don't realise this are nearly always the ones that grew up with a silver spoon and feel like they "worked hard" for what they have, when in reality most of their opportunities were open to them because of their social circle.
The people that don't realise this are nearly always the ones that grew up with a silver spoon and feel like they "worked hard" for what they have, when in reality most of their opportunities were open to them because of their social circle.
First you say that I don't understand "social mobility", now you are saying people don't care about social mobility...I mean, at least pick a lane.
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Whats missing:
Employment law: US makes hiring and firing much easier. Ramp up, ramp down, get rid of a bad employee as needed. Not that easy in EU
Intersection of culture and stock: In SV, its all about skin in the game. Its an incentive to skip vacations, and work late. When you have the notion of a massive pay day it can be motivating. I dont know many folks from the EU who skip vacations...
China tried to just make working insane hours a rule (996 culture). It did not give them the desired results.
Employment law: US makes hiring and firing much easier. Ramp up, ramp down, get rid of a bad employee as needed. Not that easy in EU
Intersection of culture and stock: In SV, its all about skin in the game. Its an incentive to skip vacations, and work late. When you have the notion of a massive pay day it can be motivating. I dont know many folks from the EU who skip vacations...
China tried to just make working insane hours a rule (996 culture). It did not give them the desired results.
You mean in the US it's easier to exploit people?
This reply sums up the EU's root cause problem in a nutshell: it is still a much more left wing and socialist culture than America. You can see it in the article, where the author is at pains to stress that he's definitely not one of those awful barbaric libertarians even as he lists the reasons that Europe is getting relatively poorer. He doesn't even remember to mention the stark differences in labor laws! It can also be seen in the prevalence of wealth or sometimes they're called solidarity taxes, which interact so badly with large startup valuations.
When something as basic as allowing company owners to control the size of their own workforce is immediately and mindlessly attacked as "exploitation", it is clear why Europe isn't going to catch up anytime soon to the USA. There isn't even a discussion of the tradeoffs here, it's just immediately cast in purely moral terms as an unmitigated evil.
And as someone who lives there, I worry that Europe's aggressive hostility towards US culture and business practices will eventually cause the US giants to stop hiring people here. It is already causing products to not launch. If you're a talented programmer then working for the Americans is far better than working for European companies, and so a part of why Europe struggles to create challenger startups is simply that big US firms hire all the best people at much higher salaries and much better conditions than European firms, ensuring they struggle to catch up. Unfortunately if the US firms go, we won't suddenly see Europe become Americanized, instead it will just go the same way as eastern Europe did in the 20th century and get progressively poorer whilst the appointed leadership tells themselves how moral and virtuous they are for "protecting" the workers against those terrible people to the west.
When something as basic as allowing company owners to control the size of their own workforce is immediately and mindlessly attacked as "exploitation", it is clear why Europe isn't going to catch up anytime soon to the USA. There isn't even a discussion of the tradeoffs here, it's just immediately cast in purely moral terms as an unmitigated evil.
And as someone who lives there, I worry that Europe's aggressive hostility towards US culture and business practices will eventually cause the US giants to stop hiring people here. It is already causing products to not launch. If you're a talented programmer then working for the Americans is far better than working for European companies, and so a part of why Europe struggles to create challenger startups is simply that big US firms hire all the best people at much higher salaries and much better conditions than European firms, ensuring they struggle to catch up. Unfortunately if the US firms go, we won't suddenly see Europe become Americanized, instead it will just go the same way as eastern Europe did in the 20th century and get progressively poorer whilst the appointed leadership tells themselves how moral and virtuous they are for "protecting" the workers against those terrible people to the west.
Im sorry where are the exploited tech workers in the US?
Then there is this gem from the article:
> In many European countries, running a limited liability construct into insolvency effectively bans you from running another one in the foreseeable future. The mentality of "start a company in your 20s, and if you fail, you can either try again or get a job" wasn't a thing. So we are operating from a risk-averse base, due to a labor market with then-sluggish job creation and strong incumbent effects.
Then there is this gem from the article:
> In many European countries, running a limited liability construct into insolvency effectively bans you from running another one in the foreseeable future. The mentality of "start a company in your 20s, and if you fail, you can either try again or get a job" wasn't a thing. So we are operating from a risk-averse base, due to a labor market with then-sluggish job creation and strong incumbent effects.
The fact that the parent comment believes people would overwork themselves if you provide the right "incentive" (translation: bully them into an economic situation that makes them want to keep their job or else...).
Not taking vacation, working overtime etc are all signs of unhealthy work environment. It's not something to cherish, it's something that tells you your business is need of adjustment.
Not taking vacation, working overtime etc are all signs of unhealthy work environment. It's not something to cherish, it's something that tells you your business is need of adjustment.
>>> Not taking vacation, working overtime etc are all signs of unhealthy work environment.
If I worked in a factory, sure. IF I own my business, if I have a stake in what is going on then NO, none of these things are a sign of "unhealthy". I want to be rich and I want to punch the clock will forever be antithetical as long as there is someone more ambitious than someone else.
If I worked in a factory, sure. IF I own my business, if I have a stake in what is going on then NO, none of these things are a sign of "unhealthy". I want to be rich and I want to punch the clock will forever be antithetical as long as there is someone more ambitious than someone else.
Ambition has nothing to do with how you treat the people you hire to work for you. The point is, you can both be rich and work a normal work day.
> The point is, you can both be rich and work a normal work day.
No, not really. Show me a successful tech venture in the last 20 years where they did 40 hour work weeks and made it. I will show you dozens that didn't.
If you hire people that only want to do 40 hours a week. I hire people and give them stake in the company, and less pay. I have more runway, lower costs, higher productivity...
The arbitrage between time/work/pay/stake that im offering appeals to subset of people. Those who understand delayed gratification, and make the right bets (or enough of them) have a fairly good chance of coming out on top vs the competitors.
No, not really. Show me a successful tech venture in the last 20 years where they did 40 hour work weeks and made it. I will show you dozens that didn't.
If you hire people that only want to do 40 hours a week. I hire people and give them stake in the company, and less pay. I have more runway, lower costs, higher productivity...
The arbitrage between time/work/pay/stake that im offering appeals to subset of people. Those who understand delayed gratification, and make the right bets (or enough of them) have a fairly good chance of coming out on top vs the competitors.
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I've read all the comments and looks like no one has mentioned this, but as someone who worked a total of ~25 years, on both continents (10+15 years), I have the following observation, and it really is a simple one:
American hardware/software engineers work really, really hard, compared to their European counterparts.
Given identical goals, same level of funding, same underlying tech, and similar market size, a US startup will almost always be more successful then its European counterpart, simply because of the difference of total amount of work done in a given month/year.
I've worked with outstanding people in both continents. Top-notch, impressive engineers. I can easily say, the output of my US colleagues were significantly higher.
American hardware/software engineers work really, really hard, compared to their European counterparts.
Given identical goals, same level of funding, same underlying tech, and similar market size, a US startup will almost always be more successful then its European counterpart, simply because of the difference of total amount of work done in a given month/year.
I've worked with outstanding people in both continents. Top-notch, impressive engineers. I can easily say, the output of my US colleagues were significantly higher.
Less experience overall (5+5 years), but I strongly agree. I think the main reason for this are the incentives, which halvarflake mentioned briefly in his post.. if you can directly affect valuation of your company (which in turn directly drives your own net worth through ISOs/RSUs etc), working hard actually becomes fun and rewarding. Take that away and a 10-3, 4 weekdays, 60+ days vacation, work life balance kind-of-job starts looking a whole lot more appealing in comparison.
Yes and now compare to Asia... one of TSMC's complaints about how hard it is to run a top-tier fab in the USA is that Americans don't work as hard as Taiwanese people do. So compare Taiwan to Europe and imagine the gap!
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Like most articles on this topic, this one makes the implicit assumption that Europe not having grown huge tech corporations that rule over people's lives is a problem, rather than an accomplishment.
Kind of like assuming that there must be something wrong with urban planning in Paris or Berlin, because there aren't any skyscrapers in those cities.
The first and foremost purpose of a state is to enable (all of) its people to live safe, prosperous, and dignified lives. Europe is light years ahead of the United States in that regard. Until proven otherwise, I treat every cultural and regulatory difference between the two places as a contributing factor to that, rather than an obstacle to be overcome. The US is a nightmarish country to live in, unless of course your wealth is significantly above average.
Kind of like assuming that there must be something wrong with urban planning in Paris or Berlin, because there aren't any skyscrapers in those cities.
The first and foremost purpose of a state is to enable (all of) its people to live safe, prosperous, and dignified lives. Europe is light years ahead of the United States in that regard. Until proven otherwise, I treat every cultural and regulatory difference between the two places as a contributing factor to that, rather than an obstacle to be overcome. The US is a nightmarish country to live in, unless of course your wealth is significantly above average.
> Europe is light years ahead of the United States in that regard.
The available data doesn't support your conclusions:
> Until proven otherwise, I treat every cultural and regulatory difference between the two places as a contributing factor to that, rather than an obstacle to be overcome. The US is a nightmarish country to live in, unless of course your wealth is significantly above average.
Their richest country is slightly richer than our poorest state, even if comparing GDP per capita.
> Kind of like assuming that there must be something wrong with urban planning in Paris or Berlin, because there aren't any skyscrapers in those cities.
Skyscrapers are expansive, while Europe growth over the last 20 years has been only a fraction of ours.
> The US is a nightmarish country to live in, unless of course your wealth is significantly above average.
Then why do we have a net immigration from Europe, instead of a net emigration?
What extra evidence do you need to recognize that poorer countries, with fewer opportunities than we have, less infrastructure (skyscaper...), and an active immigration to the US are maybe not good places to live?
People voting with their feet is the only indicator I'd trust.
The available data doesn't support your conclusions:
> Until proven otherwise, I treat every cultural and regulatory difference between the two places as a contributing factor to that, rather than an obstacle to be overcome. The US is a nightmarish country to live in, unless of course your wealth is significantly above average.
Their richest country is slightly richer than our poorest state, even if comparing GDP per capita.
> Kind of like assuming that there must be something wrong with urban planning in Paris or Berlin, because there aren't any skyscrapers in those cities.
Skyscrapers are expansive, while Europe growth over the last 20 years has been only a fraction of ours.
> The US is a nightmarish country to live in, unless of course your wealth is significantly above average.
Then why do we have a net immigration from Europe, instead of a net emigration?
What extra evidence do you need to recognize that poorer countries, with fewer opportunities than we have, less infrastructure (skyscaper...), and an active immigration to the US are maybe not good places to live?
People voting with their feet is the only indicator I'd trust.
> Their richest country is slightly richer than our poorest state, even if comparing GDP per capita.
I consider such economic figures to be at best a very loose correlate to quality of life, and thus essentially irrelevant.
> Then why do we have a net immigration from Europe, instead of a net emigration?
Because the vast majority of Americans have no idea how much better life can be in Europe, especially for average people.
> What extra evidence do you need to recognize that poorer countries, with fewer opportunities than we have, less infrastructure (skyscaper...), and an active immigration to the US are maybe not good places to live?
I don't need any external evidence. I have personal experience living in both places.
I consider such economic figures to be at best a very loose correlate to quality of life, and thus essentially irrelevant.
> Then why do we have a net immigration from Europe, instead of a net emigration?
Because the vast majority of Americans have no idea how much better life can be in Europe, especially for average people.
> What extra evidence do you need to recognize that poorer countries, with fewer opportunities than we have, less infrastructure (skyscaper...), and an active immigration to the US are maybe not good places to live?
I don't need any external evidence. I have personal experience living in both places.
> I consider such economic figures to be at best a very loose correlate to quality of life, and thus essentially irrelevant.
I don't know any better proxy. The correlation may be loose, but there isn't any better or simpler alternative.
>Because the vast majority of Americans have no idea how much better life can be in Europe, especially for average people.
For fun vacations? Yes, because it's cheap, like Mexico.
Good living and working conditions? No, we have it better. The "average people" care they can grab some cheap yet tasty food at anytime, have objects they order delivered quickly for cheap, work some not-too-awful job during the day to save for their children, and sleep safe at night, far from wars.
The unemployment rate in Europe is concerning: even with a generous social safety net, people may grow unhappy if they can't find meaning in life.
I'm not concerned about Europeans who can post on HN (they may be in the top percentiles of their country) I'm concerned about those who can't, and can't even have the American dream.
> I don't need any external evidence. I have personal experience living in both places.
Then It's a good thing you don't need external evidence, because it all goes against your personal anecdotal experience!
I don't know any better proxy. The correlation may be loose, but there isn't any better or simpler alternative.
>Because the vast majority of Americans have no idea how much better life can be in Europe, especially for average people.
For fun vacations? Yes, because it's cheap, like Mexico.
Good living and working conditions? No, we have it better. The "average people" care they can grab some cheap yet tasty food at anytime, have objects they order delivered quickly for cheap, work some not-too-awful job during the day to save for their children, and sleep safe at night, far from wars.
The unemployment rate in Europe is concerning: even with a generous social safety net, people may grow unhappy if they can't find meaning in life.
I'm not concerned about Europeans who can post on HN (they may be in the top percentiles of their country) I'm concerned about those who can't, and can't even have the American dream.
> I don't need any external evidence. I have personal experience living in both places.
Then It's a good thing you don't need external evidence, because it all goes against your personal anecdotal experience!
>of a state is to enable (all of) its people to live safe, prosperous, and dignified lives.
And for that one must be innovative, open for new things. The world ows you shit..
Ps: in my experience eastern Europe does significantly better in software because the old company aristocracy did not entrenched like that..
And for that one must be innovative, open for new things. The world ows you shit..
Ps: in my experience eastern Europe does significantly better in software because the old company aristocracy did not entrenched like that..
> And for that one must be innovative, open for new things.
Nonsense. Innovation has nothing to do with "safe, prosperous, and dignified lives". In fact, I'd argue that it is often an obstacle to those things.
> The world ows you shit..
That's a great way to highlight the difference between Europe and the US: The idea that "the world" (i.e., society and the state) does owe a lot to each individual is pretty fundamental to European thought. In the US, it's live or die, nobody owes you anything.
Nonsense. Innovation has nothing to do with "safe, prosperous, and dignified lives". In fact, I'd argue that it is often an obstacle to those things.
> The world ows you shit..
That's a great way to highlight the difference between Europe and the US: The idea that "the world" (i.e., society and the state) does owe a lot to each individual is pretty fundamental to European thought. In the US, it's live or die, nobody owes you anything.
I meant competing societys and systems of government. One little continental peninsula is not the world.
No reserve currency status is what lies at the root imho. Hard to compete with free money.
Also, in this climate regulation and local market heterogenity create specific local niches in which many startups can initially thrive.
Also, in this climate regulation and local market heterogenity create specific local niches in which many startups can initially thrive.
That's a fairly weak excuse, IMO. Neither Singapore and Israel has a dominant currency, and yet both far, far outperform EU countries of similar size.
The problem is cultural and, as a result, the regulatory environment.
The problem is cultural and, as a result, the regulatory environment.
> Neither Singapore and Israel has a dominant currency, and yet both far, far outperform EU countries of similar siz
Can't really speak to Singapore, but Israel gets way more funding than basically any country in the EU. Now, a bunch of that is because it's had more successful startups and have been doing it longer, but some of it is extremely large investments in the country from US VCs.
Can't really speak to Singapore, but Israel gets way more funding than basically any country in the EU. Now, a bunch of that is because it's had more successful startups and have been doing it longer, but some of it is extremely large investments in the country from US VCs.
It's part of a VC's job to go where investments pay off. Israeli startup investments have had an excellent ROI in aggregate, so of course foreign VCs go there.
In contrast, the EU's regulatory environment is extremely difficult for startups. I have multiple entrepreneurial French and German friends who have told me their businesses (which they started while living in here in E. Asia) would have been impossible to do in their home countries without significant starting capital.
In fact, three of them incorporated in Singapore, despite living elsewhere. Forming a US business via Stripe Atlas or Firstbase is also common and relatively painless, especially if it's an LLC.
In contrast, the EU's regulatory environment is extremely difficult for startups. I have multiple entrepreneurial French and German friends who have told me their businesses (which they started while living in here in E. Asia) would have been impossible to do in their home countries without significant starting capital.
In fact, three of them incorporated in Singapore, despite living elsewhere. Forming a US business via Stripe Atlas or Firstbase is also common and relatively painless, especially if it's an LLC.
Singapore is hardware focused, not easily transposed to the US. Israel's niche is defense and surveillance. Given Israel's extreme ties to the US, it is convenient to have these outside of the judiciary but basically under US agency.
I’d say brain drain is the root problem. It’s hard to build a competitive ecosystem when the most ambitious and skilled people move away. From Europe, they move to the US. From within the US, they move to one of a few cities, most notably San Francisco.
There is a brain drain because there are little to no opportunities if you are skilled and less skilled people keep trying to push you down the ladder. If you stop people from moving, they will grow discontent and will probably not be working in tech anyway and prefer a more sane environment. I don't think most U.S. people realize how bad, inefficient and crooked the tech scene can be in some countries.
The brain is probably draining because there's more money available, though, linking your answer to the parent's.
How do you explain Russia's success in tech?
Why would it be hard for an american investor with "free money" to invest it in European startups, if there were no other reasons for them to be a worse investment?
They do, and even more so they just outright buy the succesfull ones.
This kind of contradicts your original comment where you claimed that the free money is the reason for this discrepancy. But if american investors would be able to use this free money for american and european startups, then they would compete on common capital market and this difference wouldn't matter.
They are bought and transposed, turning them into succesfull US startups or absorbed into US corporations.
The Euro is a major global reserve currency.
> The Euro is a major global reserve currency.
It really, really isn't. Like, how many Euro bonds can I buy today? Compare to the size of the treasury market. The Euro could certainly be a reserve currency, but a majority of eurozone members don't want the tradeoffs that would come with that.
It really, really isn't. Like, how many Euro bonds can I buy today? Compare to the size of the treasury market. The Euro could certainly be a reserve currency, but a majority of eurozone members don't want the tradeoffs that would come with that.
As true as that is, the Euro has about a 20% market shares of countries' forex reserves, quite literally making it a major reserve currency.
Yeah, I figured that someone would respond stating something like that. It's nowhere near the dollar, but it is a strong number 2 (because people buy lots of stuff from the Eurozone).
Try buying oil in Euros.
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Agree. This whole "EU is too fragmented/too risk averse" rhetoric in my opinion is insufficient to address why other advanced economies (Canada, Australia, NZ, Japan) also had regressions in the competitiveness of their tech sectors like Europe, and why US weaknesses don't seem to hold US businesses back.
In the end, it all boils down to whether you can get the $$$ to build at scale, and US businesses can get the most $$$ because US controls the world reserve currency (cf. Seigniorage). It's not surprising that the start of US outperformance correlates with the beginning of massive QE in 2008.
In the end, it all boils down to whether you can get the $$$ to build at scale, and US businesses can get the most $$$ because US controls the world reserve currency (cf. Seigniorage). It's not surprising that the start of US outperformance correlates with the beginning of massive QE in 2008.
I'm from NZ. It's also risk averse, and a single economy and currency of 5 million people 2100km away from any other economy of note sounds a lot more 'fragmented' than anything in the EU.
The example countries you mentioned also have much smaller populations than EU and USA which may be a different limiting factor.
Japan has a fairly sizeable 130m population. They used to have the world's most advanced tech industry in the 80s/part of the 90s.
Also do not discount Canada. At almost 40m people (comparable to say, Spain), access to US+Mexico market via NAFTA and a historically strong tech sector (Ati, Blackberry etc) you'd expect them to be very strong. However, despite these strengths, today Canada's tech sector pretty much devolved to a nearby location for US companies to temporarily relocate employees that had H1B issues. Canadian-origin tech companies are now basically gone from the big leagues.
Also do not discount Canada. At almost 40m people (comparable to say, Spain), access to US+Mexico market via NAFTA and a historically strong tech sector (Ati, Blackberry etc) you'd expect them to be very strong. However, despite these strengths, today Canada's tech sector pretty much devolved to a nearby location for US companies to temporarily relocate employees that had H1B issues. Canadian-origin tech companies are now basically gone from the big leagues.
In the 80s, the rhetoric was that Japan was going to buy everything. And, if not the most advanced tech industry, a very advanced one.
>
Also, given that this post has a strong resonance with extreme "anti government" and "libertarian" types, please be aware that I am very much on a different area of the political spectrum (centre-left, somewhere where the social democrats used to reside historically in Germany). I am strongly in favor of good and competent regulation to ensure markets function, competition works, and customers are protected.
I think this is a really good thing to add, other than the word "extreme". I see so often, even on HN, that more regulation would be a cure-all. I'm not against regulation either, but there is so much of it in some areas, and the practicalities of proving compliance so onerous, that it slows things down massively. And once your product is certified, procurement of your product is also extremely risk-averse and often department members over-interpret all the regulations they have to follow, also take a vast amount of time and expense to green light a purchase.
Anyway; rant over. I will continue making regulated products because I love the impact.
I think this is a really good thing to add, other than the word "extreme". I see so often, even on HN, that more regulation would be a cure-all. I'm not against regulation either, but there is so much of it in some areas, and the practicalities of proving compliance so onerous, that it slows things down massively. And once your product is certified, procurement of your product is also extremely risk-averse and often department members over-interpret all the regulations they have to follow, also take a vast amount of time and expense to green light a purchase.
Anyway; rant over. I will continue making regulated products because I love the impact.
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1. These are not separate markets. Incorporate in Germany, calculate the added value tax differently, add some i18n to be sure, and that's it. Trade union ftw. Your online SaaS product is pretty much the same everywhere. Where things are getting complicated is different taxes for different types of products; so in general the trade of physical products.
11. A lot of VC funds use the structure of a Kommanditgesellschaft (GmbH & Co KG) because they cannot be taxed once the shareholders move to a different country. This avoids the potential double taxation problem. Gmbh & Co KG > Holding GmbH > Operative GmbH is usually the tax layout. But I agree, it's a burden for startups that cannot afford to waste 80k + legal fees just for the legal setup.
What I like to add to the problems:
- capital is owned by banks, not by tech VCs and neither by tech people that got rich by doing tech stuff in the past. In a state wide competition, the best voted startup was doing an online email phishing presentation for corporates. Place number 2 was a hobby baker that needed a second oven. (Not kidding you, it's _that_ absurd). All startups with actual potential in terms of scalability and impact usually get lost in the first pitch competitions in the lower ranks, and they cannot get up because the regional village bank manager who is part of the jury doesn't know shit about computers or smartphones.
- usually the incentive for lead devs or early engineers to join the startup isn't existing. If you cannot pay a competitive salary (which you can't as a startup) they won't join, or rather go back to their cushy consultancy jobs.
- ...which leads to the next problem. A lot of people abuse startups as a jump in their career path, where their immediate goal is to work for "the big five" which are consultancies like KPMG, Accenture, PwC Global and the like. Those types have grown in size over the last years and the response usually is "I heard this is how to get hired by them..."
- angel investors are a joke here. The offers are as ridiculous as "20% for 50k", because they have no idea how quickly a software dev can make that kind of money while freelancing. And they specifically target early stage startups fresh from university. It's almost a scam scheme.