
Ask HN: Why Does the European Tech Industry Have Such a B2B Focus? - CM30
Compared to say, offering a product or service directly to customers&#x2F;users? Because from what I&#x27;ve seen over here, the vast majority of tech companies  seem to be obssessed with delivering work for corporate clients or attempting to be the next Moz rather than offering a service for average Joes. You don&#x27;t see many Uber&#x2F;Airbnb&#x2F;Facebook&#x2F;Twitter&#x2F;Apple&#x2F;whatever type deals aimed at normal people.<p>So why is this? I did hear at one startup event (from a VC) that UK investors were hesitant to back user facing companies like their US counterparts, but that can&#x27;t be all the reason, right?<p>Why are European tech companies so much more interested in being B2B businesses?
======
jacques_chester
I'd suggest that the vast bulk of software is written for inhouse use and B2B
use, not consumer use. The impression you have would boil down to sample bias.

This is simply a reflection of the "structure of production": for any given
consumer product, there is a _vast_ graph of exchanges and transformations
that lead to it. Most of the inventory and money is not passing between
consumers and consumer companies. It is in the structure of production.

Consider: manufacturing is not instantaneous. Primary resource production is
not instantaneous. Transportation is not instantaneous. Tertiary services are
not instantaneous. Per Little's Law, average items in a system = average
throughput * average item latency. The consumer market is the throughput. The
structure of production represents a _multiple_ of the consumer market.

The reason we overweight consumer brands is because they are consumer brands.
Within each industry and niche, everyone knows who the leading firms are. But
outside the niche, nobody knows that a) the firms exist or b) that _the niche_
exists.

But _all_ of us are in the consumer market, so we _all_ know about consumer
brands (they literally make it their business to ensure this is so).

 _Every_ journalist can write about a consumer brand. _Every_ reader can read
about the consumer brand. So on sheer volume, consumer brands are vastly
overrepresented in the media relative to their total share of the economy.

So even a relatively small lead in consumer-facing firms will seem much larger
than it actually is. B2B is a _massive_ segment in the US software market. But
it's the invisible dark matter of our industry: it constitutes almost all of
the mass in the software universe, but few folks realise it's there unless
it's pointed out.

~~~
chibg10
> So even a relatively small lead in consumer-facing firms will seem much
> larger than it actually is.

No? Leading consumer brands _are_ a lot bigger than B2B brands for the most
part because B2C in the aggregate economy has to be bigger than B2B (in $) and
because B2B is a more fragmented and specialized market than B2C (i.e. harder
to gain large market share). Just look at the biggest tech companies by market
cap/valuation: Apple (B2C), Amazon (mixed, debatable), Google (B2C-designed
products), Microsoft (mixed, more B2B), Facebook (B2C-designed products),
Alibaba (B2C), Tencent (B2C), Oracle (B2B), IBM (B2B), Netflix (B2C), Uber
(B2C), Baidu (B2C). You don't find a pure B2B company until Oracle, which is
~20% the size of the Apple.

This makes sense as well. The ultimate source of private sector profit comes
from selling to the consumer. There's no point of a B2B company if there are
no businesses selling to consumers (ignoring governments). If the B2B space is
bigger than B2C, businesses would, on aggregate, be buying more from other
businesses that they would be selling to consumers. In other words, they'd be
losing money and such a system wouldn't sustainable for long. Of course, we're
focusing on tech, and tech is a subsegment of the overall economy, etc., so
it's possible that tech as a sector is more B2B than B2C... but this a
question that will have to answered with data, not assertions.

~~~
e12e
> Just look at the biggest tech companies by market cap/valuation: Apple
> (B2C), Amazon (mixed, debatable), Google (B2C-designed products), Microsoft
> (mixed, more B2B), Facebook (B2C-designed products), Alibaba (B2C), Tencent
> (B2C), Oracle (B2B), IBM (B2B), Netflix (B2C), Uber (B2C), Baidu (B2C). You
> don't find a pure B2B company until Oracle, which is ~20% the size of the
> Apple.

Google and Facebook are advertising companies - literally b2b?

~~~
navalsaini
Not quite. They just monetise in the manner. The core value-proposition is
very much b2c in both above cases.

------
DrNuke
Family businesses since markets inception 2k years ago and small-to-medium
businesses in the late 20th century were the norm everywhere in Europe, that’s
also why the EU started well as a common market. It is going tits up right now
exactly because surrendering its roots to the US neo-liberist approach has
killed the middle class. Many thousand businesses moving €500k/year and using
money locally is much better for local communities than 5 unicorns moving
€50b/year, draining that money out to fiscal havens and employing a few elite
thousands people with millions left unemployed and getting more and more
angry.

~~~
friedman23
This comment is out of touch with the current economic reality in the US.
Unemployment is the lowest it has been in decades and _real_ wages are rising.
Meanwhile emerging markets all around the world are crumbling.

Is there always a segment of the population that believe the economic
apocalypse is about to happen (or in this case happening)? If you want me to
believe your doom and gloom try providing actual statistics that back up your
assertions instead of vague hand wavings.

> Many thousand businesses moving €500k/year and using money locally is much
> better for local communities than 5 unicorns moving €50b/year

Do you have a citation for this claim? Also why should we be helping "local
communities" and not simply helping people?

~~~
coldtea
> _This comment is out of touch with the current economic reality in the US.
> Unemployment is the lowest it has been in decades and real wages are
> rising._

That's because those things are increasingly more creatively measured to paint
a nice picture.

For example today any crap job regardless of quality/wages/precariousness etc
is measured as "unemployment", whereas in the past you could have the same
number of jobs but they would be much more solid (the "company man" and so on.
Heck, a GM factory worker in the 50s could buy a house and raise 2 kids
earning the only income in his family).

People who given up looking for work, because they can't find any, are also
not counted, while still unemployed and struggling to make ends meet.

"The stock market, for example, has completely recovered from the financial
crisis, and then some. Stocks are now worth almost 60 percent more than when
the crisis began in 2007, according to a inflation-adjusted measure from
Moody’s Analytics. But wealthy households own the bulk of stocks. Most
Americans are much more dependent on their houses. That’s why the net worth of
the median household is still about 20 percent lower than it was in early
2007. When television commentators drone on about the Dow, they’re not talking
about a good measure of most people’s wealth.

The unemployment rate has also become less meaningful than it once was. In
recent decades, the number of idle working-age adults has surged. They are not
working, not looking for work, not going to school and not taking care of
children. Many of them would like to work, but they can’t find a decent-paying
job and have given up looking. They are not counted in the official
unemployment rate."

[https://www.nytimes.com/2018/09/14/opinion/columnists/great-...](https://www.nytimes.com/2018/09/14/opinion/columnists/great-
recession-economy-gdp.html)

> _Do you have a citation for this claim? Also why should we be helping "local
> communities" and not simply helping people?_

For one, because tax havens (where that money go instead of local communities,
e.g. Apple's Ireland's cash stock) aren't "people".

Second because those local communities where the business is located are what
should thrive first and foremost. You can't help "people" without first
helping yourself.

~~~
friedman23
>That's because those things are increasingly more creatively measured to
paint a nice picture.

They are measured the same way they always have been

>For example today any crap job regardless of quality/wages/precariousness etc
is measured as "unemployment", whereas in the past you could have the same
number of jobs but they would be much more solid (the "company man" and so on.
Heck, a GM factory worker in the 50s could buy a house and raise 2 kids
earning the only income in his family).

Oh this talking point again. Never mind the two world wars that made it all
possible

>People who given up looking for work, because they can't find any, are also
not counted, while still unemployed and struggling to make ends meet.

You are aware that there are multiple unemployment statistics that are tracked
and that discouraged workers are included in some of them? Nobody is
purposefully ignoring discouraged workers they are just not relevant to the
market because they aren't participating in it.

>For one, because tax havens (where that money go instead of local
communities, e.g. Apple's Ireland's cash stock) aren't "people".

What do you think happens to money in those tax havens? Do you think they
convert it all into gold coins and lock it into a scrooge mcduck style vault?
It's reinvested, they purchase treasuries with it, they do research and
development with it. Governments then use that money to build roads and pay
employees. Those employees then go and eat out and buy cars.

~~~
coldtea
> _They are measured the same way they always have been_

As I explained in the very next paragraph the creativity is in determining
which people are in the workforce and which are not. Measuring the "same way
they always have been" when work today is unlike it has "always has been" is
like measuring inflation by the cost of commonly bought 1940s items.

> _Oh this talking point again. Never mind the two world wars that made it all
> possible_

A fact doesn't change based on what made it possible.

> _You are aware that there are multiple unemployment statistics that are
> tracked and that discouraged workers are included in some of them? Nobody is
> purposefully ignoring discouraged workers they are just not relevant to the
> market because they aren 't participating in it._

You're aware that the officially circulating numbers (U3 et all) don't show
the impact of the problem by a very large margin? And that those people who
"are just not relevant to the market" still need to put food on the table, pay
rents, and pay medical bills...

> _What do you think happens to money in those tax havens?_

It gets further removed from the communities that fostered the companies that
made it and their control, and on to the company's (or private owner's)
discretion.

------
bwb
Europe is also a lot more fractured than the USA in terms of culture and
languages and laws. Something that works in Germany is much harder to make
work in France as opposed to Texas/Cali.

~~~
gcatalfamo
This. In addition, an American startup has a starting potential consumer
market of 300mil people speaking the same language, facing the same laws,
government, customs.

That's an easier starting point, while the average European country has less
than 60. (Germany has 80)

~~~
giobox
> Facing the same laws, government, customs

Except the US is a federal system, so one can argue that rather than facing
the same law, you actually have 51 legal systems (states + federal government)
and 51 different legislatures - most certainly not universally the “same
government”.

As another commenter pointed out, this rears it’s head for US startups all the
time, with many different sales tax implementations, drug policy (marijuana
legaliszation) etc etc. Even while at work the law varies enormously - my
paternity leave rights as a father in California are vastly different than
many other states.

The US isn’t as obviously simpler than the EU than one might expect in this
regard, ~28 legal systems (if we ignore pseudo-federal arrangements like the
U.K. etc) with a common core of business law established via EU statute, not
100 miles away from the common body of federal legislation found throughout
the 50 states.

Cultural, language and custom differences can certainly be argued to be
simpler in the US though.

~~~
adventured
> one can argue that rather than facing the same law, you actually have 51
> legal systems (states + federal government) and 51 different legislatures -
> most certainly not universally the “same government”.

That's not remotely close to being accurate.

If I start an image sharing service, an Instagram, and I'm based in Ohio, I
have extremely few considerations about the state governments of Alabama,
Florida, Maine or Arizona as it pertains to launching and operating the
service.

For most Internet businesses, you can tilt up a start-up tomorrow morning and
access all 50 states and never give a single thought to the individual states.
If there's a regulatory issue, it's usually only going to be an issue later
with scale.

It's radically easier to launch across the whole of the US than it is the four
dozen countries in Europe, or 28 countries of the EU. It's not close to
comparable. You do not deal with 51 legal systems to launch start-ups in the
US, unless you're operating in a very narrow set of industries with very high
amounts of regulations (and even in that case, you're still not dealing with
51 different legal systems, there's overlap and commonality in regulations
state to state).

~~~
giobox
> that’s not remotely close to being accurate

I’d argue it’s damn close to a statement of fact rather than an opinion; there
are 51 legal systems and legislatures at work here whether one likes the fact
or not - that one State’s statute is not enforceable in another is prima facie
evidence of this. Whilst the impact of this is of course variable, there are
concrete examples of the issues that can arise. Heck even the income tax we
pay as citizens isn’t the same accross all states.

~~~
charlesdm
However, you don't have 25+ different languages

------
hef19898
I'm not tu sure regarding the start up scene in particular, and thus can only
provide my 5 cents on European business culture in general.

First, Europe is not, historically, the center of consumerism. Most smaller
companies, the famous Gean Mittelstand for example, which is usually run by
the founder focuses on corporate customers (apart from small electrician and
construction companies and the like). So the whole infrastructure and
financing through banks is comfortable with these companies. I could imagine
this spreads even to VCs to a certain degree.

Second, at least in Germany, we don't have a great failure culture.
Esentially, you fail once and you are burned. Unless you are well conected in
the corporate and political spheres. Which again makes launching B2B endevours
less risky.

In the end that means that B2B become somewhat a strength of European
companies. But that is juat my opinion.

As one counter example to the above, Germans did come up with Flixbus.

~~~
ItsMe000001
Not _quite_ on topic but I would like to share it because I'm curious (not
sure what to expect, just testing the global mind):

When I lived in the US I was employed so I can't compare, but when I founded a
small business together with a friend banks (yes, plural) were only willing to
"Lend" us exactly the money we already had, and that is a general policy for
them when "lending" to small new businesses. It means, we had about 100k - so
if we gave them the 100k and put it into a no-withdrawals account they would
lend us 100k. Okay.

Yes, I get it, "tax reasons". This is just silly. First, you have plenty to
write off at the start anyway, second, if you are worrid about paying a lot of
taxes it means you are making a lot of money. I actually don't mind paying
taxes at all (I _do_ mind the many fees many organizations want from my new
company, from GEZ for public TV to IHK - none of which do anything for me,
unlike the state as a whole, plus taxes are coupled with income, those many
fees are not). The _main point_ is that you only get the money that you
already have anyway.

~~~
hef19898
Welcome to Germany... I thought for the majority of last year to try it and
found my own company.

Financing was the main reason I didn't, besides the fact that I reallsy suck
at sales. Banks wanted basically everything I had to cover the initial
purchasing of goods with the goods itself not being sufficient. Public
funding, in the scope of increasing the number of young comapnies, fell short
because my idea was not inovative enougj. Never mind the a start-up selling
locally sourced vegetables via app was inovative enough for them... And I
didn't want CV founding to gwt the initial cash flow issues solved. So here I
am, employed again.

~~~
maxxxxx
If you suck at sales then financing is not your problem. There are plenty of
successful companies in Germany.

~~~
hef19898
Well, let's put that way. If I would have gotten some positive signs regarding
financing I would have looked for some one for the sales part. I know, kind of
backwarsa thinking. So being employed in the end turned out to be not such bad
idea. At least I can say I tried, so no regrets from my side.

~~~
maxxxxx
I am in the same position. I have tried entrepreneurship a few times but in
the end it came down to me not being good at sales. I think hiring someone for
sales doesn't work. Either do it yourself or partner with someone who can
sell.

~~~
hef19898
Partnering woupd have been the preferred way solution. Throwing your whole
professional future in the ring requires a real level of trust, I just didn't
trust the potential candidate enough...

It feels good to be not alone in that situation, so!

------
auganov
There just isn't much innovation going on in Europe. Consumer goods are hyper
global - the best wins. B2B is more nuanced, locality matters. Plus so many
playing the grant game (which only works for B2B).

That said there are enough success stories to know that you absolutely can do
it in Europe. It's really more about how few are even trying rather than how
impossible it is.

~~~
louisswiss
> There just isn't much innovation going on in Europe.

Wow.

I'd argue the opposite is true. There's a lot of innovation going on in Europe
- but a) it takes a long time for 'innovation' to filter through to the
consumer, and b) successful consumer companies tend to win on brand, not tech.

The big problem in Europe (vs US) IMO is the risk tolerance of VCs, capital
available, valuations, and large market size.

I personally know quite a few founders who started consumer tech companies in
Europe and quickly moved at least part of their operations to the US as soon
as they were ready to scale.

~~~
wutbrodo
I'm not opposed to this view, since I don't really know the European tech
market very well, but can you give me some examples to understand better? I'm
sure in some absolute sense there is "a lot" of innovation in the European
tech industry, but my uninformed impression was that, in the context of US
tech innovation, it's fairly minimal.

~~~
louisswiss
Check out Barrin92's answer (above/below my original comment) for some
examples.

I'm no expert on how you'd measure tech innovation. Perhaps patents - but US
patents are much easier to get and much more easily awarded than in the EU, so
probably not a great indicator of innovation (especially considering that more
patent applications were filed in China in 2016 than the rest of the world
combined).

Elite research universities might be a good indicator. I haven't got the
rankings to hand, but am willing to stand corrected that the EU is _at least_
on a par with the US in that regard.

Consumer banking is probably one area where 'tech innovation' has been much
more widely embraced in Europe than in the US. Is that the kind of thing you
meant?

If not, perhaps you could give me some examples of technical innovation which
is common in the US and rare/lacking in Europe?

------
krn
European tech industry is B2B focused, because it has no single consumer
market, like the US. By the time a startup becomes a success in Spain, its
copies will be already launched by somebody in France and Germany. In consumer
fintech, for instance, UK has Monzo, Germany has N26, and Poland has mBank.
Currenly, Flixbus is a major exception to this rule, because it managed to
conquer almost the entire EEA long-distance bus market in 5 years, and has
just entered the US. Revolut is trying to do the same in fintech.

~~~
expertentipp
National economies are very hermetic and their regulations are foreign-hostile
(xenophobic?), it's impossible to enter and smoothly operate without some high
level "green light", e.g. Polish/Czech direct banks like Fio, mBank, Inteligo
couple of years ago were much ahead of what banks in e.g. Germany, UK, or
Italy were offering to their individual consumers but had zero chance of
launching in these countries. Furniture production in Poland is significant
but to sell internationally they're basically submitted to IKEA. Screw those
who were selling the "capital has no nationality" mantra in post-Communist
countries during the 90s-00s. Flixbus? They spread all over EU with no new
value created - the coaches are driving the same as they have always been,
quality unchanged, if anything they look like some predatory business sucking
in everything into their franchising model.

~~~
krn
> Flixbus? They spread all over EU with no added value created

That's not true. The added value to the passenger is that he can now travel
across the entire Europe using a single ticketing system and a unified bus
standard, saving a lot of time and hassle. But I agree, that it made a
competition almost impossible. Flixbus competes not with other bus companies,
but with trains and flights: in terms of price, time, and comfort. Sometimes
in wins, sometimes it loses.

~~~
dagw
_Flixbus competes not with other bus companies_

I guess that depends a lot on the market. Because certainly in Sweden Flixbus
absolutely competes with the existing bus companies.

~~~
krn
I was talking about international routes in Europe[1]. But at least in Germany
and Poland (after acquiring Polskibus), Flixbus also controls above 90% market
share for bus routes within the country.

[1] [https://global.flixbus.com/bus-routes](https://global.flixbus.com/bus-
routes)

------
caseysoftware
I think it's primarily due to mindset.

With a B2B business, you see more revenue earlier. That revenue then goes on
to fund the next stage, product, market, whatever. In B2C businesses, it takes
quite a bit more effort to become profitable and you're likely to scale long
before that point.

If you're in an ecosystem that is used to making bets on B2C companies (not
just investors but founders, leadership, and employees), you know and have
lived this difference and plan accordingly. If your ecosystem has less venture
capital and less people who have lived that, you need cashflow sooner and
something resembling profitability earlier.

* I worked for a London-based startup that moved to the US midway through it's life.

(While this thread is about Europe, the same distinction applies for SF vs US
Midwest ecosystems.)

------
rapsey
The US has two advantages:

\- Access to huge amounts of capital that can support businesses that focus on
consumers for a good period of time before they start worrying about profit.

\- A large domestic consumer market. Europe is fragmented.

~~~
checkyoursudo
I have no idea one way or the other, but I wonder how less fragmented the US
market is? For some things, sure, an extremely common language and some other
things etc etc.

However, having traveled around a lot of the US, and a good portion of EU, my
instinct is that the US is pretty fragmented too when it comes to a whole lot
of things.

Regional cultural differences in the US can be really strong. Though maybe
that doesn't affect markets as much as EU with probably more diverse cultures
and certainly more diversity of languages.

Anyway, really interesting to think about! Maybe I'll research it sometime.

~~~
rapsey
> but I wonder how less fragmented the US market is?

Far far less. Different languages mean the large majority of a countries
population is largely culturally isolated from its neighbors. No one watches a
pan-european news channel, read a pan-european newspaper or browse a pan-
european website. They don't exist.

Different way of doing business, different mindsets, different world view,
different media systems, different politics and different economic markets and
conditions.

~~~
bausshf
This.

Netflix is a good example of how it's very different.

The price of Netflix may be totally different in every country in Europe,
because the cost of living etc. is different.

In the US the price of Netflix is the same regardless of what state you live
in.

That's just a small example.

Yes each state has different regulations, taxing etc. too, but overall they're
mostly the same.

In Europe everything is different, the cost of living, the language, the
culture etc. and thus you cannot have a product with the same price in every
European country (Well you can, but most likely you wouldn't!)

------
mlinksva
One difference is that US regulation (on intrmediary liability, privacy, and
copyright) has been much more favorable to consumer platforms than has EU
regulation over the last few decades.
[http://law.emory.edu/elj/_documents/volumes/63/3/articles/ch...](http://law.emory.edu/elj/_documents/volumes/63/3/articles/chander.pdf)
is a good summary.

------
arthurrichards
It's simple. Fragmentation of the consumer market (languages, habits, economic
values) leads to a rough ride up for B2C unicorns. Look at Spotify and
Soundcloud, Skype, UStream... Whereas the current state in business due to the
family owned businesses is one of fear. They don't have the resources to
innovate internally, and the prevaling technical sophistication of the
available labor force along with the disincentivised compensation plans for
engineers means its hard for them to build solutions on their own. Building a
B2B in europe just makes more sense from a founder perspective. Consider that
in Berlin a couple years ago a pretty popular recruiting firm found that 85%
of startup CTO's or VP Engineering's were Americans. I myself am a US expat,
currently founding my second B2B business in Europe. A common truism is that
european (german) investors say: do not tell me how much you will make. Tell
me how much you will spend.

------
wprapido
You were given many great answers. Largely it boils down to aversion risk, and
a lack of access to cheap VC money. Also, the market is not big enough. You
really can't replicate most things that work in Sweden in France, or Germany-
Ireland. As such, focusing on B2B just makes much more sense. Don't mind that
Europe is not a heavy consumerist society. Actually, as of the past decade or
two, a huge chunk of Europe entered the post-money era, where people tend to
own less, spend on personal growth, and live more frugal. Ad revenue (that
keeps many B2C businesses afloat) in Europe is not nearly as high. Even
AdWords in Europe compared to the States are cents to dollars.

------
adotjdotr
Because in Europe no one has made money from consumer facing businesses.

European investors are all ex-banking / private equity spread sheet modelling
morons who do not understand risk capital and are looking for risk free bets.

When you have this lens u eschew anything that can harm you holding onto your
career. That is why.

B2B businesses have a very clear path to revenue / margin / profit.

A B2C business is effectively a punt, yes a punt, US VCs arent some sort of
fucking oracles. If you look at the analysis Social Capital did for who backed
the biggest co's at the series a level its effectively spread evenly so there
is no "science" here.

~~~
jacquesm
What a load of crap.

There are tens of thousands of money making consumer facing businesses, the
division - in my practice - between b2b and b2c is roughly 50/50.

What the USA has that Europe does not have is a huge advantage in terms of one
language and currency to be able to address 300M+ people, and if you just look
at the language you can add another 45M or so. That's impossible to compete
with for anything with network effects or a market to launch a product in.

~~~
Mahn
I think at its core this is basically it. We can argue all day about the
differences in culture and mindset, but the most significant advantage the USA
has that the EU cannot effectively replicate (yet) is the access to a large,
homogeneous single language single currency market from the get go.

The more interesting question would be why are Google and Facebook American
and not Chinese or Indian.

~~~
xnyan
In addttion to the other reasons mentioned, the US higher education system
churns out talent sourced here and abroad.

------
expertentipp
developing countries - there are no clients, potential clients have no money,
there are only global outsourcing corporations who are looking over here for
"cheap"

developed countries - dealing with individual consumers is a pain in the neck
- documentation, guarantees, consumer rights, complaints, multiple languages,
requirements research, various app stores which are entirely US based and
controlled, certain transparency as the services portfolio is available
publicly. Why bother with these when one can just sell something to
German/French/British industries or telecoms, relax, hire some engineers, and
implement whatever the minimal acceptable form is? There isn't a problem which
cannot be solved during a "conference" of lawyers and sales people somewhere
on Balearic Islands or in Swiss Alps, or by a brand new BMW discreetly shipped
to a certain address - try solving product/service-related problems in a
similar way when thousands or even millions of customers are looking at your
hands.

Individual consumers are pariahs in Europe.

------
torte
Access to venture capital and/or the effort to get it in the first place. To
European businesses it often seems like it is much easier to raise funds in
the US. Investors also tend to be more conservative here.

B2C businesses traditionally need more funding to scale. Less funding, fewer
B2C businesses. Bootstrapping a B2C business is even harder. B2B just makes
more sense economically.

------
astura
It's been my observation that more businesses are B2B than B2C. Is just you
don't hear about the B2B ones as much.

And in software, the B2B market is just bigger. Consumers buy/use off the
shelf software, businesses can pay you to create custom software. The margins
are lower but the to risks are also lower. It's just nobody talks about the
latter.

~~~
ozim
From my experience B2C has lower margins. Basically you have to give all for
free to get consumer users on board. No one is buying software as a consumer,
consumers buy services mostly. Like ordering pizza, and Takeaway.com is going
big in Europe. They don't sell app, probably they hire some shop for app
development.

Anything in enterprise level costs loads of money. From developer perspective
think about all consulting companies which do body leasing. How much companies
pay for having hands to work is alone insane. Price for custom B2B development
goes really high. Then you have to pay high price or your business is going to
loose money in the future. Where consumers don't care, I am not going to loose
money because I don't have someones app.

~~~
astura
I meant potential for higher margins. For my B2B projects I've done, the
profit was written into the contract (and was usually around 3%), there was no
way to make a larger profit margin, it was agreed upon beforehand and was a
done deal. Whereas with B2C you can have something that goes viral and
suddenly brings in a ton of money.

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samuell
My guess: Taxes. In Sweden at least, roughly half of the money any company
makes, is going to taxes before getting in the hands of the employees, leaving
much less buying power for consumers. Add to that a 25% VAT on anything you
buy, and, yeah.

~~~
Mankaninen
I don't know the percentage B2B vs consumer-focused startups in EU or US so
giving a few examples makes no real sense but Spotify, iZettle, Skype and
Pirate bay are all of swedish origin. And business taxes in Sweden are among
the low ones in OECD. Salary (after tax) is lower than in US but schools and
health care is free so compared to US the living standard is not that bad,
i.e. assuming the original poster assumption is correct, I don't think taxes
is the explanation.

~~~
samuell
What I mean is that businesses, even small companies, will have a lot more
money than any consumer, as any money being paid as wage is decimated to such
a large degree.

Spotify, Skype etc are addressing an international market, so the exact
situation in Sweden wouldn't affect that much, and also I don't know if e.g.
Spotify is even really making that much money yet from customers.

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jbverschoor
Because there is no proper funding in Europe for those kinds of risks.

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shady-lady
Real money vs potential ad money.

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yuhong
I dislike the current debt-based economy (based on extracting more US dollars
from consumers) partly because of this reason. There is a reason why I wrote
the Google DoubleClick Mozilla essay.

