

Lack of Entrepreneurial Culture Seen as Europe’s Biggest Obstacle - FrojoS
http://blogs.wsj.com/tech-europe/2011/06/01/lack-of-entrepreneurial-culture-seen-as-europes-biggest-obstacle/?mod=google_news_blog

======
ovi256
This is a classic example of "if only more people would be like us, the world
would be better!". Sure enough, the experts are all entrepreneurs and
investors.

Well, in this particular case, they may very well be right. But things like
this really bother me: "traditional engineering-driven approach to business,
with its emphasis on perfection, longevity, pride in ingenuity and culture of
deep-thinking put the country at a competitive disadvantage in the fast-moving
new economy". Really ? That's all he had to say about what made Germany an
economic powerhouse on par only with Japan ? Oh, what we need then are more
social media experts, I'm sure, to drive value creation through synergistic
customer discovery. I'm pretty sure he's beating on a strawman here.

Also, the last piece of candy: 'The so called “poor countries,” such as
Brazil, have this hunger. They are going to catch up on us.'

And how is that a bad thing ? Good for them.

~~~
coliveira
Americans don't like to talk about it, but they should better learn how
emulate Europe rather than the opposite. The USA is nowadays more similar to
Europe than to new developing economies. While Europe hasn't the high growth
it once had, they know how to maintain an economy that retains prosperity for
most of its people.

~~~
jerf
In the global race to have the worst economy, Europe (as a whole) currently
has a significant edge over the US, although the US is certainly running the
race with gusto. There's serious talk of having to break the EU up over the
economic crisis it is having. The traditional "US should be more like Europe"
rhetoric should be packed away in storage for a while, conditions are not ripe
for it.

~~~
jbooth
Most of the European problems right now are problems that the US just plain
cannot have -- Greece, Spain and Italy running up huge debts because they have
the credibility of the eurozone without any of the responsibility.

America's different, we're one country.

Those problems aside, we could do a lot worse than modeling europe, way less
gas usage, higher health insurance coverage, 2 months of vacation a year.
Sounds a lot more stable to me.

~~~
anamax
> Those problems aside, we could do a lot worse than modeling europe, way less
> gas usage, higher health insurance coverage, 2 months of vacation a year.
> Sounds a lot more stable to me.

And roughly half the gdp/person of the US.

The US govt already collects about as much (per person) in taxes as European
govts. (It collects significantly more than Canada and, iirc, slightly less
than France.) Yet, no one would seriously argue that we get anywhere near the
same level of benefit for that spending.

As long as the US govt is that inefficient, it's absurd to suggest giving it
more money.

~~~
jbooth
We should copy some stuff from their tax code, too. As you said, they're not
collecting significantly more than us, they just have a way simpler rate.
Netherlands was explained to me as "25% up to 100k, 50% on income over that".
That's fair, simple and actually a lower rate for the vast majority of people.
Our system is a bloated mess in comparison.

Not saying that automatically everything done by Europe is better than
everything done in the US.. but mindless rah rah just leads to myopia. Let's
steal good ideas where we can.

~~~
anamax
> We should copy some stuff from their tax code, too. As you said, they're not
> collecting significantly more than us, they just have a way simpler rate.

Actually, I didn't say anything about how taxes are collected.

However, I will point out that even when the US had significantly higher
rates, the feds never managed to collect more than 22% of GDP in taxes and
even those two years were "unstable", in that folks adjusted their behavior.

The sustainable maximum appears to be around 21%, and even that isn't possible
during a recession.

> Netherlands was explained to me as "25% up to 100k, 50% on income over
> that". That's fair, simple and actually a lower rate for the vast majority
> of people.

No, it's not a lower rate for "the vast majority". It's actually a
significantly higher rate for the vast majority.

Most employed folks in the US don't pay income taxes. They pay SS, which has
very progressive payback, so it's actually a good "investment" for folks who
don't pay income taxes. They also pay medicare, but again, their benefits
outweigh their costs.

So, 25% (up to 100k) would be a huge increase for most Americans. 50% is
higher than the current highest marginal rate, so anyone paying it would also
see an increase.

I don't remember where the 30% bracket kicks in, but if it's less than 100k,
maybe there are some folks who'd pay less under your scheme, but they're not
anywhere near a majority.

> Let's steal good ideas where we can.

I agree, but until we "steal" the good ideas related to efficient govt
spending, better taxation is a disaster.

~~~
jbooth
Yeah, you played the old familiar canard of "I'm going to advocate for the
government to do things less efficiently and then bitch about how inefficient
they are". Par for the course for republicans.

Personally, I'd be in favor of a simplified tax rate with a flat/progressive
system that doesn't have an encyclopedia built into it. You might be in favor
of a slightly different version of that non-encyclopedia but we're basically
on the same side. Rush Limbaugh is trying to divide us -- who's side is he on?

EDIT: btw, most people with under 100k of income in the US pay significantly
more than 25%, closer to 40%. Do you think they should pay more? Or less?

~~~
anamax
> Yeah, you played the old familiar canard of "I'm going to advocate for the
> government to do things less efficiently and then bitch about how
> inefficient they are".

No, I didn't. I wrote that the US govt should be more efficient.

> btw, most people with under 100k of income in the US pay significantly more
> than 25%, closer to 40%.

That's not true. See <http://www.taxbrackets2011.com/> . Singles with AGIs
between $83-173k pay 28% marginal. The 25% bracket (for singles) starts at
$34k.

No, you don't get to count SS. As I explained, SS is a forced savings plan
with a rather good return for folks who don't max out, which happens over
$100k. (They're subsidized by folks who do max out.) You can argue medicare,
but it's <4%.

~~~
jbooth
What? Of course SS and Medicare count. They're taxes. Europeans get pension
plans too, and they have universal healthcare, and those services are included
in the taxes that europeans pay.

You just argued "If I take the tax rate, and subtract 15%, I get 28%". That's
ridiculous.

And, nobody in SS is subsidized by anyone -- those who max out don't pay any
more beyond the max.

~~~
anamax
> What? Of course SS and Medicare count. They're taxes.

I pay the City of San Jose for garbage services - is that a tax? Of course
not.

SS isn't a tax because the benefits are (roughly) in proportion to what you
pay?

> And, nobody in SS is subsidized by anyone -- those who max out don't pay any
> more beyond the max.

Do you really misunderstand this or are you just being annoying?

For low-income/low-contribution folks, the ROI for their SS "contributions" is
positive. The ROI for high-income/high-contribution folks is negative. The
positive return for the low-income folks is the money that the high-income
folks lose.

On the off-chance that you think that SS problems can be solved by removing
the cap, I'll explain why SS advocates introduced it. They wanted a system
that had popular support and didn't encourage organized opposition. For
popular support, they wanted to cap payouts. To avoid organized opposition,
they wanted roughly proportional payouts.

If you want uncapped contributions, do you want uncapped payouts? If so, you
get to explain why Ross Perot gets $300k/year. If not, you get to defend a
program that is a significant tax on folks who are very good at fighting
taxes.

~~~
jbooth
Ok, well go do some accounting on the dutch government, figure what % of their
tax take goes to pensions and medical stuff, deduct that from their tax take
and you can get back to me with an apples-to-apples comparison. Since those
aren't really taxes.

I didn't say anything about uncapping SS. And I know my history, thanks.

------
zwieback
When I was growing up in Germany I remember hearing this exact same complaint
about lack of entrepreneurship a good 30 years ago. My dad, who is a solid
state physicist, was a kind of cheerleader for modern technology and was
exasperated how companies were not adopting and adapting more quickly. His
predictions that the economy was going to go down the tubes while the rest of
the world pulled away still ring in my ears.

Yet here we are and looking around my neighborhood in Oregon I see VWs,
Audi's, Mercedes and Porsches, our dishwasher is a Bosch and any serious
Oregonian owns a Stihl chainsaw.

While I agree that a shocking number of young Germans (and likely other
Europeans) are looking for the security of a "Beamter" (civil servant) job,
there are definite pros to the German system and I think to keep the balance
maybe it's not so bad we have countries with different systems.

Here in the USA almost everyone is an amateur at almost everything we do and
that breeds excellence from a few but also a lot of shoddy work. In Germany
it's the opposite, the general skill level in industry, science and even
culture is relatively high but there are few international standouts.

I think software and software entrepreneurship is particularly well suited to
the American system.

Interestingly, in my work as an embedded systems engineer there are a lot of
German companies offering development tools (Keil and Hitex come to mind) and
other specialty hardware. Not everyone has to develop the next Groupon or
Facebook, there are a lot of other possibilities.

~~~
jerf
I am reminded of the concept of differential advantage. It's OK for the US to
be entrepreneurial and for Germany to have a lot of craft-focused artisans who
can take technology and refine it unto the nth degree. The world is richer for
having the both.

It's part of the reason I think a lot of people over the decades(/centuries)
who call for the US to be more a clone of Europe are calling for a really bad
idea; it's more than just OK for there to actually be different types of
countries, but they actually support each other and make each side wealthier.
Diversity, _real_ diversity involving significant differences, is good.

~~~
FrojoS
THIS

I think the American system is more for me. But I'm happy there is both.
Unfortunately there is also a trend in Germany to become more American.

------
mhd
Why does everything need to be just like Silicon Valley? Everything being like
Wall Street certainly didn't help either.

I especially laughed at the line that perfectionism and proper engineering are
bad for startups. This explains a lot. (Yes, when it comes to selling stuff
that doesn't work and you don't need in the first place, Europe has a lot to
learn. _Every_ service-based industry does better in the US.)

Meanwhile, the amount of companies founded per year is on a steady rise, so
there is a entrepreneurial movement, it's just different. Not saying that
either approach is perfect, don't get me wrong. It's just that I don't get
those "Europe is worse because it doesn't have companies like Facebook"
articles.

Neither Europe nor the US has lots sweat shops with Asian conditions, are we
both now hopelessly behind this and should mend our ways?

~~~
marknutter
A lack of perfectionism does not mean a lack of quality. There's such a thing
as trying to be too perfect and missing out on a market opportunity.

~~~
mhd
Just like the presence of perfectionism and engineering doesn't mean that
people are sitting on "unfinished" products for decades. Never mind that the
US has some pretty awesome engineering itself and that the average quality of
German startup software isn't any better.

Basically, the speaker was just throwing some cliches into the room, whether
they fit or not. He might as well have said that Germans don't get anything
done because they spend so much time to listen to the Hoff.

------
jdietrich
My favourite company in the world is a German engineering firm called Rohloff.
Their motto is "No slogans, just facts" and their business is really just a
single product - a beautifully engineered internal gearbox for bicycles called
the Speedhub, that costs €1000 and lasts 100,000km.

Rohloff make a product as finely engineered as any swiss watch, but in doing
so create an anti-consumerist product. Their product is built to last forever
and usually does. While their Japanese, American and Italian competitors
battle to create ever more fragile "racing" components and strive for ever
increasing levels of built-in obsolescence, Rohloff obstinately refuse to make
anything the most durable and reliable product.

If we measure the wellbeing of society purely in terms of GDP, Rohloff are a
disaster; But the only way for Rohloff to improve profitability would be for
them to throw their customers under the bus. There is nothing left to improve
in a Rohloff Speedhub - it is for all practical purposes perfect. Any possible
"improvement" would benefit the marketers, not the customer.

I prefer Mercedes and BMW to Cadillac and Lincoln. I would rather see my
country emulate Germany than America.

~~~
marknutter
I hope Rohloff is aware of the irony that "No slogans, just facts" is a
slogan.

While I admire companies who make products that last forever, most people
aren't that interested in spending a ton of money on something that will last
forever. If you're sure you're going to be using your bike for 70+ years,
$1000 isn't a bad investment. If you're like most people, you probably bike
once every few months, if that, and the cheap US/Chinese/Japanese products are
probably fine.

It's not fair to compare companies that are competing on price with companies
that are competing on quality. For most people, "ok" and "cheap" are good
enough.

~~~
cromulent
> It's not fair to compare companies that are competing on price with
> companies that are competing on quality.

For this particular consumer, in the marketplace, it's fair enough :)

And if it's unfair, bad luck.

~~~
marknutter
Let me rephrase: it doesn't make any sense to compare a company that's
competing on price with a company that's competing on value. They are both
filling different niches in the marketplace.

~~~
cromulent
Thanks, but I think that just confuses me more. To me, value is directly
related to price.

From my perspective it makes sense to compare companies in order that I
understand the differences between them. I would have to try hard not to
compare them.

Sorry, I'm not trying to be obtuse.

In relation to the point about Rohloff as a metaphor for the Germany vs
America emulation, I think the comparison would be quite useful.

------
franze
ok, as i'm currently starting my business in austria (that's in europe) i want
to add my 2c.

the biggest obstacle is that the government won't go out of your way.

1\. i could start my company now

2\. but it would be stupid, as i would miss out on the
"unternehmensgründerförderung" (start up support)

3\. for getting "unternehmensgründerförderung" you have to attend a sh#tload
of courses (for about 2 months) which tell you nothing about starting a
business, but a lot of "what you have to do so that you don't get into trouble
with the government later"

3.1. and they tell you a sh#tload of things about things you have to do to get
a 'unternehmensgründungs' grant for your business

3.2. during that period your business is forbidden to earn money

4\. as soon as you start your startup you have at least half a month of work
outlined on what you now have to do to please your government

5\. even if your company would just exists for 1 minute, you will get herrases
by the government and insurance companies for the next 3 years.

oh, and every time the government discusses that fact that there are not
enough new companies, they talk about another 'development program' (a.k.a.
grant) which you then get educated about, if you want to or not.

sometimes i think i'm becoming an anarchist, an entrepreneur-anarchist.

~~~
zenspunk
So, Europe needs less regulation on the low-end of town (small businesses) to
increase international competitiveness, and the US needs more regulation on
the high-end of town (big business) to decrease corruption and prevent anti-
competitive practices.

Would it be fair to say that?

~~~
marknutter
Small businesses decrease corruption and anti-competitive practices in large
businesses.

------
fbnt
Absolutely spot on. It's not lack of funds or the absence of a proper
ecosystem, it's a huge cultural gap.

The whole school system is fundamentally broken. Since elementary school to
the very last stages of university education I've been told to study, work
hard and eventually, with time, gain access to some big and famous corporate
in a responsability position, get a lifelong contract, settle down and enjoy
life. That should have been my professional life goal.

Entrpreunership isn't even remotely considered. It's like it was 'none of my
business', as companies were somehow a father-son 'inheritance'. Add to that a
very entrpreunership-adverse legislation (for an LLC equivalent in Italy you
need a 20K deposit upfront and you'll be paying, at the end of the day, more
than 50% of your profits in taxes) and you've got a recipe for disaster.

Also, the public opinion seems to have no or little interest in the matter,
and the situation looks dreadfully stagnant.

Fortunately, there are sparks of cultural changes lately, especially with the
younger folks, but it's a change that won't happen overnight for sure.

~~~
leyfa
_Fortunately, there are sparks of cultural changes lately, especially with the
younger folks, but it's a change that won't happen overnight for sure._

I would like to contribute my personal data point on this. I'm a student in a
smallish Dutch town at a university that's mostly focused on
economics/business and medicine.

It feels like there's a considerate entrepreneurial spirit among the students
here. Many seem to wish to found a startup and there are some there doesn't
seem to be the mentioned aversion against success and making it big. From what
I can tell, most of this is (still) just hot air, meaning that people have big
ideas but don't dare start working on them. On the other hand, this might also
be due to the lack of a bigger engineering or CS department with more people
that can actually build something.

Maybe this is the beginning of a change of culture. I wonder if students in
bigger tech-universities have similar experiences.

~~~
FrojoS
My personal data point is also, that most people who are interested in
startups, including those who do them, are buisnes guys. And we do have three
big tech university here in Munich. I know plenty exceptions but overall this
is what I see.

------
maxxxxx
"Germany’s approach, which Mr. Davidson said typically starts with acquiring a
deep understanding of the problem before making the decision to act was
exactly the opposite of the culture he saw both in his home country of Israel
and in America."

They should appreciate different approaches instead of calling them a
"problem". It's ridiculous to tell the Germans to become more like America or
Israel. The German strategy has its problems and so does America's.

------
dmitri1981
> the panel decried Europe’s lack of hunger

A somewhat inadvertent turn of phrase that may well be telling you more than
expected about the situation in Europe.

------
keiferski
_. Making money, he said, was not seen as a good thing to do. “The culture is
changing, but it will take time.”_

There's your marketing problem. If being an entrepreneur was only about making
money, I wouldn't want my culture to encourage it either. They should focus
less on materialism and more on making a difference and creating jobs.

~~~
patrickk
_"They should focus less on materialism and more on making a difference and
creating jobs."_

Making a difference? Creating jobs? If I was a business owner (I hope to be
someday), the last thing I would be concerned with is job creation. As the old
adage goes, "overhead walks on two legs" i.e. wages are a major cost for a
business.

My first concern would be positive cash flow, then ramen profitability. Then
perhaps getting funded, and only then, job creation.

Making money should the the sole goal of any business, then afterwards you can
worry about making a difference, and employing people. Any other focus and you
aren't going to make a difference or create jobs, because you will be out of
business.

EDIT: amended last sentence

~~~
keiferski
I am talking about the marketing (or culture) of entrepreneurship. I.E. what
the article is about. Not actual business principles. Spreadsheets and bottom
lines aren't going to convince anyone to make the jump.

------
cph1
"...Germany’s traditional engineering-driven approach to business, with its
emphasis on perfection, longevity, pride in ingenuity and culture of deep-
thinking..."

I fail to see how those things are negative. As a matter of fact, I wish more
entrepreneurs would adopt this kind of thinking: Being proud of your craft and
your product.

Sure, you need to be able to make decisions, but there is also something to be
said for making quality products instead of going for execution speed over
quality.

Quality-driven thinking is part of what makes Germany one of the largest
economies in the world - despite the fact that it is much less populous than
other big economies like the US, Japan, and China.

------
rianjs
I have no comment on whether Europe needs to be more like Silicon Valley, but
my gut feeling is that it doesn't. That being said, Europe isn't nearly as
friendly to failure as the US is. Bankruptcy laws in the EU are waaaaaay more
onerous than they are in the US.

The question of whether this is a chicken and egg problem WRT European culture
is up for debate.

tl;dr: Cultures are different. News at 11.

------
spdy
The biggest problem is that we dont have "easy money" in europe and there is
no real tech hub like the valley around here.

Investors want to know upfront how you plan to make money and phrases like "we
will figure this out later" wont help you if you need to raise money.

If this sort of thinking changes maybe we will see more billion dollar
companies in europe.

------
cph1
I see a lot of "Europe is like this, Europe is like that" comments here... I
wish people would realize that in terms of culture and legislation the various
European countries are wildly different. The difference between Southern and
Northern Europe is massive (think USA - Mexico), and even between countries
that are near each other geographically there are quite big differences (think
USA - Canada).

Those differences aren't a bad thing in any way and don't mean that we can't
be united in some sense - but please just realize that saying that "Europe is
like this and that" is like saying "North America is like this and that".

------
Maro
I'm an entrepreneur in E.Europe. Biggest obstacle is lack of markets, lack of
capital. For most tech products like websites and software, the best (and
first) market is the US. I used to think that the Internet can bridge this
gap, after all, you don't need physical proximity to sell digital goods, but I
was wrong. In most cases you need physical/cultural proximity to build your
tech business.

------
mahrain
One contributing factor here in the Netherlands is a huge lack of the type of
investors I read about on this site. If you want to start a business here,
there are two options, either go to the bank and get a personal loan with
loads of interest, or depend on "triple-F-financing": friends, fools and
family.

Only in internet startups that have international appeal do you find a little
bit of startup funding, but these investors are hardly ever Dutch firms.

------
forkandwait
Note the rhetoric " ... seen as Europe's Biggest Obstacle": by using the
passive and an authoritative tone, the WSJ tries to make it seem that there
this idea comes from nowhere, and is a universal truth without being attached
to real people politicking to make the world the world into what they want
(umm, low taxes and regulation for us, thank you). Making seemingly universal
statements is one of the best tricks to hiding partisan interests (and the
left does this just as often as the right).

I would bet money that if you gave a poll, more Europeans would want to move
AWAY from a "entrepeneurial culture" (whatever that means) than toward it. For
the average working Fritz and Hannah it would mean giving up social services,
safety, free education, and excellent vacations.

~~~
marknutter
Without a healthy economy, social services, safety, free education, and
excellent vacations will eventually go away. I think it's a universal truth
that everyone wants a good economy, regardless of whether you're a socialist
or a capitalist.

------
bugsy
The criticism of Germany's culture of designing well made products that are an
excellent value is a bit odd. Germany's economy has done much better than most
others during the Great Depression II, and has avoided the problems with
crime, fraud and corruption of the US.

The only reasonable explanation for the article is the author is threatened by
Germany's success and hoping to confuse them by writing an article advocating
they do dumb things instead.

------
richieb
Funny, I worked for two startups in the 90s. Both were started in Paris by
Frenchmen.

------
mtw
I've been there, the worse is the weight of structures and bureaucracies

------
shareme
A question for European readers:

Do you see the culture of the Welfare State as an obstacle to changing culture
to accept that being successful, doing new business ventures is a good thing?

~~~
narag
It's not the Welfare State but bureaucracy and tax greed.

Today I've read a blog post by Jesús Encinar, CEO of idealista.com, the go-to
site for renting and buying real state in Spain. The article is in Spanish,
short summary below):

[http://www.jesusencinar.com/2011/06/10-ideas-concretas-
para-...](http://www.jesusencinar.com/2011/06/10-ideas-concretas-para-que-
haya-mas-startups.html)

"Ten ideas to promote startups in Spain"

\- Limited liability

\- The State shouldn't keep VAT returns for a year.

\- Not overtaxing employee's stock (taxed 47% for employees)

\- Not overtaxing business angels

\- Easy foreign workers recruit

\- Limit the need for licenses for everything.

\- Lower freelancers taxes

\- Lower startup social security burden

\- Remove 1% tax on capital ampliations

\- Stop attacking Internet sector

These are only the titles. Reading the details is depressing. Some of what you
take for granted in the USA is impossible or infeasible here.

The basic idea is that, in order to startup, you must pay tons of taxes and
licenses from the start, even if you're not earning a cent.

~~~
jasiek
I agree with your tax greed argument. In Poland, the state will take any and
every opportunity to increase tax revenues, while doing nothing to cut
expenses. I'm not sure how it works elsewhere in the EU, but here you have to
pay VAT on unpaid invoices as well, effectively making you liable for your
customers' inability to pay. This, coupled with the fact that courts are
inefficient and generally extremely slow in rulings (in the case of delayed
payments), is a sure recipe for disaster.

~~~
narag
Yes the unpaid bills is the same, it's in the article. The problem with the
courts is not, but it indeed happens.

------
vvpan
US workaholics are ruining things for the rest of the world. Cool the hell
off, stop the race.

------
danssig
Honest question: Is WSJ really an HN worthy source anymore?

EDIT: How far are you WSJ fanboys going to downvote me on this? The company is
owned by Rupert Murdock. The same one who owns Fox news. And this article was
rubbish. Am I really the only person surprised to see this here?

------
mephju
I think the reason for Silicon Valley being in the USA and their
entrepeneurial approach is that the USA as a country of immigrants has got
higher concentration of people with ADD. ADD people from Europe migrated into
the USA since people with ADD are more likely to migrate.

Those people are responsible for the culture of impulsivness and creativity in
the USA, kinda like role models. So migration is responsible for the lack of
this kind of entrepeneurial approaches in Europe and responsible for the
surplus of the same in the USA.

Simple, he? What do you think about this theory?

~~~
jquery
I think there is a large truth here, in that Americans have the
entrepreneurial spirit in their blood and in their culture. Most of our
ancestors were highly dissatisfied with the status quo, to the point where
they were willing to travel thousands of miles to a faraway land, back when
that was a much bigger deal than it is today.

But I think this is another discussion entirely.

~~~
FrojoS
Really? I think its spot on. This trend continues to today. As PG has pointed
out in his advocacy for a founder visa [1], about half of vc-backed company
founders are immigrants [2].

[1] <http://www.paulgraham.com/foundervisa.html> [2]
[http://venturebeat.com/2006/11/15/note-to-washington-
about-h...](http://venturebeat.com/2006/11/15/note-to-washington-about-half-
of-vc-backed-company-founders-are-immigrants/)

~~~
mephju
Even the descendants of ADD immigrants are more likely to have ADD themselves.
There is a 30% chance for children to get ADD when 1 parent has got it and 50%
chance when both parents have it.

Therefore percentage of people having ADD should be much higher in America
than anywhere else.

