
Europe Is Struggling to Foster a Startup Culture - peterkrieg
http://on.wsj.com/1FvEGtI
======
Radle
While it is true that a startup culture is very valuable in the IT-section,
it's not that true that one needs a startup culture.

I am an engaged computer gamer and we Germans have many successful e-sport
stars, E-Sports are not officially recognized in Germany.

Same goes for startups, I can list you 20 Industry leading Game startups and
multiple hundred exceptional well doing tech startups in Germany.

Whatever people think about you does not matter as long as you have a great
product to sell.

Also the author has a slight notion of american exceptionalism, that something
works in the USA is by no means a measurement to go by and say: "Hey you
should do this also, it will be working great!" Some detailed research about
markets, employees, laws and how to adapt them would do every European
government better than simply trying to copy America.

~~~
minthd
Here's another data point supporting the claim that Europe's start-up
ecosystem is weak:

[https://www.linkedin.com/pulse/73-most-valuable-startups-
ear...](https://www.linkedin.com/pulse/73-most-valuable-startups-earth-dennis-
k-berman)

This is a list of start-ups(in private control) with value over $1 billion. 73
companies in total , 6 are European , and 15 are Asian.

EDIT: one possibility is that European are suffering a similar problem to that
of the Israelis - even though they have great tech/product , they just sell
earlier. BTW in Israel(which most agree has a strong start-up
ecosystem/culture) it's mainly because they're lacking in certain scaling
skills(but they're learning) + and to some extent they try to minimize risk.

~~~
Radle
I once looked at the companies google purchased and saw many German and Israel
tech companies being acquired by google. This sounds plausible.

Still this kind of analysis is very weak for two reasons. Most countries
aren't as company friendly as the USA. A discussion about whether Billionares
should pay taxes would be unimaginable in most most European countries.

Also America has a strong customer base by default with 320 American citizens
and the other 900 Million Nativ speakers, who can easily buy products made for
the American market (Especially in the Tech area).

Also those kind of graphs usually get smaller, the higher you go.

One should compare the total amount of startups and divide by citizens, the
findings will be a better tool for comparison.

~~~
Radle
whoops...

Those were 320 Million Americans and 900 Million englisch speakers, not native
speakers.

------
upstandingdude
Although there are many start-ups in Berlin it's pretty tough to navigate all
the laws and regulations and more often than not it involves money. So when
you try to start a garage business you will discover obstacle after obstacle.
It is pretty hard to "just try" a business idea because with all the crap you
have to do and pay it HAS to work. I still after 5 years discover some
regulations that I completely missed and I always hope that there's no big one
hiding behind the bushes. There is a saying in Germany: if you own a business
you got one foot in prison.

~~~
bozoclownn
Latest complicated regulation: 'Mindestlohn' and interns.

~~~
chkerth
Even though Mindestlohn does not apply to interns, who stay up to 3 months, it
is still a bad thing for startups.

~~~
wolfgke
Mindestlohn also applies to interns:

> [http://www.gesetze-im-internet.de/milog/__22.html](http://www.gesetze-im-
> internet.de/milog/__22.html)

The main exception is if the internship is required for finishing or beginning
a degree course or done while a degree course (but read the text of the law
yourself for the remaining exceptions).

This was criticized a lot when the law adopted, since there can be good
reasons to do an internship even after finishing university even if it is paid
really badly (say, as a reference).

------
amix
The major problem is that some of the best Europeans leave to US to start or
join startup companies (e.g. Stripe). And if you look at the best US companies
you will typically see a large amounts of Europeans in them. So Europeans are
very capable of starting and joining startups - they just don't do it in
Europe.

What Europe needs is a better way to keep the talent at home.

~~~
VeejayRampay
We know how to keep the talent at home. The simple solution is to pay them
more money (which people tend to crave). But because most European countries
have more social security cushion, we tend to pay more taxes. This makes it
difficult to compete for companies in say France, Germany, Sweden, etc.

So, at the risk of being extremely antagonistic with this, the solution is for
us as societies to start caring less about the less fortunate and give more to
the "job creators" like it's done in the USA.

Then we'll be able to compete on a level ground.

~~~
rjaco31
What's the point of being competitive if you throw your quality of life away
to obtain it?

~~~
VeejayRampay
Exactly my point. It's all about the kind of society you want for yourselves
and others. The number of homeless people in North American cities is always a
dire reminder that there is a societal cost to deregulation and making life
easier for the business bootstrappers. Every other choice you can make for
your people as a politician is always a double-edged sword anyway, I'm not
knocking the pro-business approach here, it's just that I would choose more
taxes every time because I've seen the benefits first hand.

------
kfk
At least for me, there are 2 main problems: taxes and language.

Taxes: here in Germany you pay 19% VAT on all transactions. Then, income tax,
which quickly reaches 42%, then solidarity tax, basically almost half of your
earnings evaporate

Language: it's tough to address a decently large market, the biggest market
(German speaking) is about 100M people, that's 4 times less than the USA
market

You can easily see that those 2 points quickly add up and create "corollary"
problems. With those taxes + social security, to give a strong employee a
strong salary you go towards a cost of +150k. To pay that much to employees
you would need a big market to address to get revenues, but the market is
small-ish, or you might look for VC money, but people with money are too
scattered across too many languages and countries.

------
felixjmorgan
I think we're doing alright in London? Pop over to Silicon Roundabout and
every bar man will want to tell you about his App. There's start-ups and
incubators everywhere. The one thing we don't have the same structure of is
VCs - the US kills us there. It's growing though, and the government is really
pushing to grow it further.

~~~
neverminder
Slightly OT: what would be best places in Silicon Roundabout to hang out for a
software engineer who's thinking about (but not quite ready yet) of starting
his own gig? Google Campus closes at the same time I finish work in The City,
it's a bit of a shame.

~~~
thruflo
I'd hop on meetup.com -- most of the tech / startup events are around
Shoreditch. Things like 3beards, open coffee (tot ct rd way), don't pitch me
bro, etc.

Or see what's on at tech hub, innovation warehouse, etc.

------
backtoyoujim
Is this really a problem ?

I was under the impression that the vast majority of start-ups 1. fail or 2.
require employees to expend huge effort while the lion's share of the revenue
gain is made by the C-level officers.

Why would an European labor force want to expose itself to the "start-up"
platform ?

~~~
omouse
The idea is that you let a million flowers of innovation bloom. You shouldn't
_need_ VCs to pursue your ideas and it's usually recommended (Joel Spolsky,
Philip Greenspun, Jason Fried and DHH etc. recommend against it).

It should be better in Europe because of the safety net and limited work
hours; sure it's easier to be comfortable, but it's also easier to take some
time off and work on a cool idea that doesn't have to be a revenue generator.

~~~
backtoyoujim
But the safety net requires companies to absorb the risk that start-ups pass
on to the work force.

How would a small company get around the cost of doing business where labor is
actually valued?

------
SEJeff
Tell that to the many startups in Berlin, where it is cheap to live and there
are a lot of great tech companies. Berlin is like the Los Angeles (aka
cultural melting pot) of much of Europe.

~~~
smcl
I think London has a better reputation as a cultural melting pot really

~~~
SEJeff
And unlike Berlin, it is very expensive to live and work. That being said I <3
both, but think Berlin is a much better place for startup culture.

~~~
neverminder
I would have to agree about Berlin (I'm in London), if not the language I'd be
there already.

------
joepvd
OT, but the only times I've encountered the word "foster", it is in the
context of the European Commission, specifically in the context of what they
want to achieve with grants.

Is it my limited exposure to English, or has the European Commission
appropriated this word, and has by the way infected WSJ to use it?

~~~
mryan
In the politest way possible, it is the former. :-)

"Fostering a X culture" is a common phrase outside of the EC.

------
makeitsuckless
Yawn.

The only major thing we're lacking in Europe is venture capital.

All the other cultural differences (which aren't "European" but vary wildly
from country to country), are red herrings Americans and European self-haters
like to emphasize. But in reality we a) learned to work with them a long time
ago, otherwise we would never have been economically successful, and b) those
differences are strengths as well as weaknesses in equal measure.

Yes, the lack of a barrier-free "single market" is also a bit of a pain, but
the biggest issue here is _language and culture_ , not laws and regulations,
and that's not going to change any time soon. So there's no point on dwelling
on it, it's like complaining that the climate in Norway isn't suited for
growing bananas.

In reality there are lively start-up scenes all over Europe, with more than
enough entrepreneurs willing to take risks, more than enough smart people with
innovative ideas, and more than enough people willing to work for them.

The one and only thing that is truly missing is funding, funding and funding.
The investment culture is the only place where there is a suffocating risk-
averse attitude.

(And most of those anecdotes about how stuffy and risk-averse European culture
is are bullshit outliers. I can dig up a ton of totally true anecdotes about
the US and make American culture look completely fucking insane. It has
nothing to do with the day to day reality of living and doing business on
either continent.)

------
Vexs
In regards to hardware startups, I would think Europe should have the leading
edge in comparison to America due to their proximity to China- in America, if
I want to start sourcing parts from china, or go into production, It's a
significant endeavor. If I'm just a hobbyist screwing around at a workbench, I
can pay a huge markup on parts from American vendors, or I can wait 3 weeks to
get the same thing from China.

I can't speak from experience in regards to hardware startups, I've just made
a handful of one-off boards, but after reading Bunnie's blog in regards to his
trips to China and such, the importance of location near it becomes apparent.

~~~
pjc50
"proximity to China"? We're not significantly closer. We get our parts by
ocean or air shipping with roughly the same costs.

But we do have WEEE and CE regulations which make selling small-batch
electronics a huge pain. I'm very impressed that Arduino managed it, and Pi
had a last-minute CE approval near-disaster.

------
cyphunk
On the other hand... who gives a flygin f' about a startup ecosystem? If to
get a strong startup scene I have to live in a society that loves risk (and
loves to tell you that taking it is a character quality)... no thanks. I'll
happily take degrowth instead.

------
Maro
Here in Hungary we have Prezi, Ustream, Logmein, and some smaller startups.

~~~
michaelochurch
I was in Budapest in 2003 and I have to say: the creative energy that was
there seemed to be singular. I hope it's still strong. I don't know if I could
convince my wife to move (it would set back the clock on her U.S. citizenship)
but I'd love to get out there more often.

I came up with this card game (Ambition) out there:
[https://docs.google.com/document/d/1S7lsZKzHuuhoTb2Wj_L3zrhH...](https://docs.google.com/document/d/1S7lsZKzHuuhoTb2Wj_L3zrhHZh5IEKBDf56ExgErv4o/edit)

~~~
Maro
I work at Prezi. We have a lot of expats from the US who come and work here in
Budapest. Prezi is like a patch of SF in beautiful Budapest. If you're
interested, drop me a line :)

------
paulhauggis
Not only culture, but regulations and taxes also effect the ability to create
a startup.

Here is an explanation of French law: [http://www.quora.com/Is-it-true-that-
its-impossible-to-fire-...](http://www.quora.com/Is-it-true-that-its-
impossible-to-fire-someone-in-France)

As it says in the first comment, it almost becomes easier to try to get the
person to quit with 6 month severance than go through all the hoops that you
need to go through to actually fire someone.

~~~
michaelochurch
Six months of severance per fired employee is a rounding error. If you're
doing things right and hiring properly, less than 2% of the people you bring
in should ever be fired anyway. So you're talking about 0.12 months (just 4
days) of salary per employee. Again, a rounding error.

Also, the sleazy tech company alternative (to severance) of PIPing the
employee for 2-3 months is more expensive than severance, because of the
effects on morale to force the manager to run a kangaroo court and the team to
deal with a walking-dead employee who's probably pissing on morale
intentionally (I would).

France (and, more generally, Europe) has its problems but that is not even on
the top 20. Social class fatalism is more of a problem, and that's reinforced
by the fact that (unlike in the U.S.) it's very hard to get even moderately
wealthy by working. Programmers and lawyers and doctors make less than here,
and costs of living are higher, which means that born social class imposes a
ceiling. European countries are far better places than the U.S. for the poor
and working class, but the middle-class people who want to rise further tend
to come here. This is even worse in parts of Asia, where the idea that you can
get rich by working is laughable.

~~~
jseliger
_Six months of severance per fired employee is a rounding error_

For a marginal startup founded on a Mastercard and only tenuously on the right
side of the border between life and death six months of severance is not a
rounding error.

~~~
michaelochurch
1\. Don't found a startup on a Mastercard. If you're bootstrapping, pay for it
out of consulting income. Stop believing the HN party line that failure
doesn't have consequences. It can and, for many, it does.

2\. Feel free to ignore #1, it's your life, but don't hire employees if your
"funding" is a personal credit card. Really, don't. You're all kinds of not
ready to be responsible for other peoples' income.

3\. If you really can't afford a 6-month severance, then pull connections and
give an amazing reference so he'll take that as his severance. Let him
represent himself as employed, pay him during the gap, and have him line up a
better job than the one he has already. Don't have the connections to place
someone out on terms that he'll accept? Then how the fuck are you ever going
to get funding or a first client? Take the message and hang up the phone.

~~~
woah
Is this the attitude in France?

~~~
getsat
jbob2000, you are hellbanned.

------
Dewie3
It's funny, I guess, to read about the WSJ referring to _European culture_.
There is no _European culture_ that I know of. Maybe if you look across from
the other side of the ocean, contrast your own culture with Europe as a whole,
you note the differences and contrasts and then conclude that what you are
looking at is tight-knit enough to be called _a culture_. Maybe like someone
travelling from one part of Eurasia to another side, noting how people look
and behave and contrast them with the things that are different to their own,
and then concluding "this is a distinct culture/group".

Now watch a European disagree with me just to be contrarian.

~~~
matt4077
I disagree with yo not to be contrarian, but because you're wrong.

Firstly, inner-European differences are almost by definition smaller than,
say, those between Europeans and Asians. Of course there are still cultural
differences between Greeks and Irish. But to deny similarities is equally
misguided.

Secondly, these differences are getting smaller and smaller. Timothy G. Ash
calls it "The Easyjet Generation": young university students, used to cheap
airline travel, are creating a unified European culture. I know young people
from almost every European country and I feel more connected to them to, say,
my 50-year old working class neighbours.

~~~
Dewie3
> Firstly, inner-European differences are almost by definition smaller than,
> say, those between Europeans and Asians.

To say that the differences are smaller is one thing. To call them _one
culture_ is an entirely other.

> I know young people from almost every European country and I feel more
> connected to them to, say, my 50-year old working class neighbours

Yes, I bet you feel very connected to the English-speaking, or German-
speaking, or whatever common language-speaking friends you have who have the
inclination, interest and time to learn these common languages and to travel
to several countries in order to meet new people (not just to go on a vacation
and/or "meet new people while getting wasted"). But is that really such a big
group that you would call them something relating to a _generation_? That's a
big word to throw around.

------
michaelochurch
The difference isn't that Europeans are risk-averse. It's that, if you come
from a relatively privileged background and have connections in Silicon
Valley, you can launch a startup _without_ taking any real risk.

Speaking for my fellow Americans, we're as terrified of being broke as anyone
else. (In fact, we have more to fear, because we don't have universal health
care.) That said, these kids who become founders straight out of Stanford
aren't taking any real risk. They _say_ they are, to justify getting 100 times
more equity than their employees, but their backers have enough pull to ensure
a "managed outcome" (acqui-hire into a middle-management role) even if the
worst should happen.

We are just as risk-averse as Europeans. On both sides of the Atlantic, there
are a few people who naturally tend toward creative risk (who are usually
socially rejected, there and here) and a much larger set of people who climb
the ladder that's put in front of them, follow the rules, and get into
positions of power or influence the old-fashioned way (two parts schmoozing,
one part birth, two parts luck). The major difference is in the window
dressing. In Europe or New York, that ladder tends to be banking or
consulting. In Palo Alto, it's programmer or PM to executive to founder to
angel investor to VC... but if you go to the right schools, you can skip a
couple of the bottom rungs. The actual willingness of _the people_ to take
risks isn't any different in one place or the other.

Of course, when it comes to risk attitudes around _capital_ , it's a different
environment entirely. Europe is too conservative and cynical for its own good,
and California is too optimistic (and thus prone to "capital evaporation" by
socially well connected types) and far too trusting of the wrong sorts of
people.

