
Skip Silicon Valley: Why Smart Startups Start In Europe - kiyanforoughi
http://www.forbes.com/sites/avidlarizadeh/2013/06/26/skip-silicon-valley-why-smart-startups-start-in-europe/
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guylhem
Yes VC is less abundant, but if your plan is absolutely dependant on VC, maybe
something is wrong.

In Europe, you get other valuable things, like a vibrant place, health
coverage, etc. I'd put Canada in the same bag.

IMHO, the ideal plan is a fully owned company (ala O'Reilly) which pays for
its own growth. You'll still be able to find outside investment later- except
_you_ will make the terms, instead of getting pennies.

Call me selfish (and that's a compliment to me :-), but I'd prefer the money
to be in my pocket than in the VC pocket.

~~~
joonix
But if you're not European you're not going to get health coverage in Europe.
To be honest, health coverage isn't a major concern for 20-something hackers
who sit in front of computers all day.

I'd also spend a good bit of time studying the tax code of any country I start
a business in. Some countries, like Australia, tax capital gains at the same
rate as income, which is bad news for anyone who put sweat and tears into a
startup for years. You'll get punished when you take a nice exit.

~~~
davidjgraph
In England the health system is free to everyone, the private health insurance
buys you very little.

~~~
jpadkins
If I get a travel visa to England, I can get free cancer treatment?

~~~
davidjgraph
If you are entitled to live and work in England, you are entitled to free
healthcare. Since the subject is about running a startup in London, you'd have
to have those entitlements. This isn't a discussion about visiting England as
a tourist.

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prostoalex
Counter-point:
[http://english.martinvarsavsky.net/entrepreneurship/advice-f...](http://english.martinvarsavsky.net/entrepreneurship/advice-
for-us-entrepreneurs-who-move-to-europe.html)

"Another legal obligation that is very common in Europe and unheard of in the
USA is state-mandated severance pay packages. This is a direct impediment to
start ups, the reason being that most start ups fail and in the USA there is
an understanding of this. In the USA employees demand stock options as upside
should the start up succeed knowing that there will be no severance package
should the start up fail. But I have yet to find a place in Europe where
employees or governments truly understand this. Not only are forced severance
pay packages a problem because most start ups fail and they still have to pay
them, but also because start ups are constantly trying out people and the
concept of trying out people is very costly in Europe. In some countries like
France, forced severance packages of people who have been with you say only
half a year can be as high as double their earnings during that time. For most
Europeans stock options are considered a scam to pay them less."

~~~
potatolicious
> _" For most Europeans stock options are considered a scam to pay them
> less."_

I agree with your overall thesis, but bear in mind that in the US stock
options _are_ frequently used as a reason to pay people less.

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lbarrow
I can't get past the first paragraph of this article. Anyone who kicks off
their argument with three sentences of continuous name-dropping is not worth
listening to.

~~~
Peroni
As a London based entrepreneur, I found the pretext to the article hilarious.
Why would a Stanford educated, Silicon Valley pro even consider a backwood
like little ol' London?

/s

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RivieraKid
I'm European, but I think that the U.S. is (sadly) definitely better for
startups, for an obvious reason - huge market. Expanding to other European
countries requires lot of work and energy (different laws, language, culture
etc.). In the US, no such friction exists. Another thing is workforce
mobility, it's lower in Europe (because of laws, language, culture).

Lack of VC is not the core issue IMHO, I guess it's just the consequence of
smaller markets. Biger markets = bigger VC money.

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rdl
I don't get the logic of trying to do something difficult (starting a
business) while intentionally choosing to do things which make it even harder
(starting in small countries in Europe which don't have a domestic market,
without decent VC, and in a hellishly expensive city to boot (London).)

If I were, say, Czech, I'd seriously consider doing stuff in the Czech
Republic for a while, if I could bootstrap, then raise capital globally (maybe
with a small office in the US if that helped). But I sure wouldn't go from the
US as a USAian to Europe to start something unless it was inherently a
European-local business.

~~~
rdouble
Fashion startups have fared better in Europe than in the USA.

The "whales" in that industry are wives of financiers, sheikhs and commodities
barons, along with celebrities. The next best group to sell to are the
financiers, sheikhs, and commodities barons themselves. The globalized Patrick
Bateman. All of these groups are well represented in Europe, especially
London.

The next tier down in customer is the highly urbanized 20-34 year old. Due to
the constraints of urban living when this group has extra cash they tend to
buy $400 bags and shoes, rather than put it into a car or mortgage payment.
There are far more people in this group located in Europe and Asia than there
are in the USA.

It probably doesn't make sense to start many other sorts of online business in
London, but fashion is an exception.

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lhnz
I'm currently bootstrapping a startup in London [0].

The problem for technical people creating startups in Europe isn't just lack
of capital. It's risk-adverseness and occasionally classism. Unless you're
creating a pure internet startup you will need to work with other businesses
and your first issue is in convincing them to take a risk on you; if you've
not got an MBA from x University, some friends in the industry and a couple of
entrepreneurship awards it's only harder to do this.

The other ways up are really silly. Incubators that want you to social proof
yourself with a number of popular advisors, etc. Also known as "You have to be
in to get in." Or the weird government schemes that will give you a nice loan
to pay-off, or the very dodgy-looking startup schools which want you to pay a
fee to have them parrot obvious advice at you "Be Lean! Be Agile! Fill Out
This Canvas!" The only important things are the right connections and an
opportunity to prove yourself and what's there is often about legitimising the
institution above giving the player an opportunity to legitimise themselves.

But, as with all things, just because something's difficult doesn't mean you
shouldn't try. Better to try, fail and learn than to continue as a bystander.

[0] [http://getawayapp.co](http://getawayapp.co)

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pinaceae
You can't scale a typical startup in Europe.

If you rely on pageviews alone, maybe, but your audience then is English
anyhow, as local language stuff just doesn't bring enough eyeballs.

If you rely on selling shit, then any US startup has a homogenous market of
313 million people, one legal framework and (roughly) one tax framework. In
Europe? You're quite literally fucked.

A startup, by definition, is supposed to grow quickly. Which is inherently
harder in Europe. Not starting in the US is quite frankly asinine.

/European myself, working for US startup, moving to US

~~~
namdnay
Following your argument, it is "asinine" to create a startup in the USA, when
China has a homogenous market of 1.3 billion people... There are markets,
there are opportunities, there are startups. Each locale has advantages and
disadvantages.

~~~
pinaceae
ahh, but not all of those 1.3bn are a part of the economy that can be targeted
by a web startup. you need internet access, demand and cash on hand.

but yes, outside of software, China is exactly for those reasons a great
market (BMW sells more cars there than outside of China). however, it is hard
to scale out of China, as the language kills you. once they embrace english,
those web startups will start killing, no doubt.

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davidw
It's a fashion company. Europe probably makes sense for fashion.

~~~
kken
wut? Have you ever been to europe?

~~~
davidw
Yes, I live in Italy, where they do the Milan fashion week stuff. Not
something that interests me at all, but Milan & Paris are pretty hard to beat
for fashion.

~~~
kken
Ok, I understand your bias then. But even Italy has some tech startups.

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calinet6
"to build our fashion ecommerce start-up"

Well there's your reason. IMO it's important (or at least a factor) to be
close to your domain. London or NYC or Los Angeles are your choices if you
want to be part of the fashion community.

This article is applying that generally, when it's just a specific market
choice.

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kintamanimatt
For most software-based startups it comes down to a few things:

* Ease of hiring (remote workers increase the pool of available talent)

* Infrastructure (including availability of payment solutions, ease of setting up a business, etc)

* Access to finance (which may not be necessary if bootstrapping, or bank loans are available, which is especially promising in the UK with the Enterprise Finance Guarantee)

Unless you're VC-hungry there aren't really that many barriers to creating and
running a successful company in the EU. Perhaps the biggest drawback to Europe
is the culture, which is less startup friendly and slightly more risk adverse
compared to startup-centric locations in the US.

~~~
MetaCosm
"Slightly more risk adverse" is a vast understatement, and goes hand in hand
with the culture problem. The near permanent branding of anyone who has failed
in a business venture is horrifying from an American perspective. A lot of
American business success stories had failed businesses in their past.

Beyond that, another major bullet point is:

* Ease of firing (inability to fire creates an inability to hire, you get trapped with terrible employees)

~~~
kintamanimatt
Couldn't agree more regarding the attitude towards failure! There's little
acceptance of the idea that failure is a learning experience and multiple
attempts are required to be successful. But, I think culturally it's
improving, slowly. Tell someone you're an entrepreneur and working on a
startup however, and it's a strange stifled reaction that's usually
encountered.

Firing someone isn't as difficult as you'd imagine. There are a few more
hoops, but at least in the UK it's not really all that difficult and it's not
like you're permanently stuck with a bad employee. Plus, this is why trial
periods exist!

------
Peroni
To get a true perspective on the startup/tech scene in London then the next HN
London meetup should be top of your agenda -
[http://www.meetup.com/HNLondon/events/125382282/](http://www.meetup.com/HNLondon/events/125382282/)

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calinet6
s/Europe/Boston/

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PanickedOmlette
Sadly, there are too little VC's and angels in Europe. If you take a look at a
startup map of Vienna (or most major cities), you are gonna cry. The biggest
"startup" is dict.cc...yeah.

That's why I am considering moving to CA after I get my degree. Though I am
not sure yet.

~~~
kken
That is an odd conclusion. Vienna is a nice city, but even for European terms
it is not exactly a hotbed of innovation and start ups. Try Berlin, London.

~~~
PanickedOmlette
Yeah, I'll maybe go to Berlin in the end. Still, it seems everything is
happening in the US. But what do I know :)

~~~
kami8845
Fellow Austrian here. I was in your exact boat about 6 months ago. Startup
"scene" in Vienna is sad. Immigrating into the US is hard so I looked at
Berlin and London.

For now I'm living in London. I considered Berlin, but I think the English
practice here is invaluable. My English was already quite good when I came
here, but it's improved LOADS. Also there's much more going on in general
(culturally, socially), and there's more and bigger startups here (e.g.
compare HN Who's hiring / startup city rankings).

