
Why It’s Hard for Startups to Create Wealth in Europe - pseudolus
https://www.bloomberg.com/news/features/2019-10-02/why-it-s-so-hard-for-entrepreneurs-to-get-really-rich-in-europe
======
bjackman
Partly as a result of stock options in European companies, I'm the wealthiest
person I know my age. So I feel I'm easily justified in saying this article
reads like a ridiculous whinge and/or propaganda piece. The tax I've payed on
stock income is totally inline with what I'd expect for income in general.
This article is trying to suggest that equity incentives are somehow
especially and unfairly (!) singled out by European tax schemes but I don't
see any meaningful argument to support that. If you want to make the arguments
made by this article, IMO you have to first make the general argument that
taxing wealthy people heavily is a bad thing.

In short: this article is a "too much tax" whinge masquerading as a piece of
economic/business insight.

~~~
seibelj
Europe has none of the largest tech companies. The large ones that do exist
were founded a long time ago, like SAP. Their startup pipeline is weak and IMO
it’s all because of government policies, as there are huge numbers of highly
talented people in Europe.

[https://en.m.wikipedia.org/wiki/List_of_largest_technology_c...](https://en.m.wikipedia.org/wiki/List_of_largest_technology_companies_by_revenue)

~~~
bitL
A typical EU startup:

\- hey, we are startup, we can't pay you much, is that OK?

\- well, we can't really compensate you with stock options, those are for
founders

\- oh no, your opinion doesn't matter, bosses are always right

\- yes, you'll work crazy hours but we can only pay you for 40

In other words, EU startups have no mechanism in place to reward early
employees that build the company from the scratch, it's all about making co-
founders famous/wealthy. It's already bad in the US, imagine EU is 10x worse.

~~~
hav
What? No! Where are you getting your information from?

Having worked with a multitude of startups over the years I can say that none
of them have behaved in this way in the Nordics.

~~~
bitL
Did you get a competitive salary or ~1% of share of the company as an early
employee? If not, you were used. The aforementioned is a typical Berlin
startup. A favorite of mine is when a company tries to pay you with debt, i.e.
instead of being just a developer, you become a banker for your future boss'
idea. I wish I were joking...

~~~
ben_w
Last time I was job hunting, one of the Berlin startups was offering €58k (iOS
developer). Is that competitive? I find it hard to judge.

~~~
watt
Last time is when? In 2019 the median seems to be 65k-70k, and 70k-75k is
possible.

~~~
jashmatthews
75k at a seed stage companies. Day rates are €1200 and total comp for real
senior developers at established companies is €100k+

“Nobody in Berlin earns over €65k” should be a dead meme by now. Salaries are
continuing to rise

------
Mvandenbergh
This is a dumb article, let me count the reasons why:

Startups do not create wealth "in the US". They create wealth in a very small
number of place within the US. Is there a link within the US between startup
wealth created and tax policy? Given that California has a state capital gains
tax and a state income tax. I'm waiting for the startup boom to move out of
California to many of the states with neither. Any day now.

SV's dominance of venture funded startups is totally sui generis. It cannot be
the case that this activity is totally centred in one place within the US and
simultaneously that broad comparisons between "The US" and "Europe" (which is
an even broader category) can be made by SV vs "Europe" without first making
those comparisons between SV and the rest of the United States.

Literally in the article: "Likewise, a handful of countries hew to the
American approach on compensation; Britain, Italy, Portugal, and,
interestingly enough, France, tax options as capital gains when they’re cashed
in."

Ok, great. Is this why the hubs of tech startup activity are in Lisbon and
Rome? They interviewed a German guy because there actually are tech startups
in Berlin. If this theory is correct then there should be some kind of link
apparent between capital gains tax policy and startup activity.

------
tormeh
The problems startups in Europe face are not really startup problems, but
service sector problems. The single market is well integrated when it comes to
goods, but not at all integrated when it comes to services. Any company
offering services in multiple EU countries will have to deal with a maze of
regulation. This makes it hard to scale. Software companies rely on scale to
achieve profitability, so EU software companies have it tough.

There are additional problems with capital markets, but this is partly also a
consequence of differing national legislation. Europe has astoundingly many
stock markets. Most brokers won't even give you access to half. EU capital
markets would be much more robust if the EU only had two (significant ones),
like the US.

In a survey that The Economist looked at, EU companies aren't really very
worried about language or culture. It's all the different national regulations
that are the problem.

~~~
rajataghi
Where can I find this survey by The Economist?

------
raxxorrax
There are startups in Europe, but the founders are mostly older people on
their second run instead of young people getting an opportunity.

There are EU subsidies for established corporations to extend their business,
while younger people have a hard time to get capital. You can easily start a
small food shop if you can manage initial investments, but don't expect to get
into many industries.

There are not many niches left and the population isn't one that can easily be
filled with enthusiasm, especially related to tech.

I think we would need to loose some established corps to create space where
new ideas can flourish. At least that is how it feels in Europe. America is
probably more attractive for people to start a business.

Additional to that you have a lot of costs, especially if you are in need of
employees.

Edit: I don't even think the sole focus on startups is healthy for an economy.
It is desperately needed in Europe, since traditional industry will be
subjected to a lot of changes in the future, but very few people profit from
these. They are often just a vehicle for larger corps to just buy innovation.

~~~
lawlorino
> There are startups in Europe, but the founders are mostly older people on
> their second run instead of young people getting an opportunity.

Not trying to come off as nit-picky here, but source on that?

~~~
throwaway744678
It is wrong from my experience (at least in France). A bit of truth: companies
funded by older people succeed (ie. don't die after 2 years) more frequently,
but that's about it.

------
fock
I'm not sure how one generates wealth by just pumping reserve bank cash
through startup founds into very localized communities inflating prices. If
you have a job, a home, food and can put aside a little cash after all
expenses necessary for a comfortable living, I'm not sure how you get any
wealthier by having the cash to wreak havoc with the local housing economy.

------
Roark66
One of the main barriers for early-on ramen-stage startups in many EU
countries are compulsory "social, pension and health" insurance and minimal
pay rules. Thankfully the health part is not a big component - usually around
$100 per person per month if you pay yourself the minimum salary required by
the law, but for example in Poland the minimum for other "insurances" is
between $150 and $500 depending on if your startup qualifies for various
discounts. You have to pay that per owner or employee regardless if you make
any money or not.

~~~
stochastic_monk
That sounds much less onerous than paying for your employees' healthcare in
the United States.

~~~
pfortuny
In Spain it is essentially 30% of the salary (for standard salaries). Say the
minimum is at least like 300€ (and you are not going to start a startup with
1000€ salaries.

Edit: that is: you have to pay the salary and, apart, 30% of that amount to
the soc sec.

~~~
benhurmarcel
However in Spain you get an engineer for half the before-taxes salary compared
to the US. Even if you add 30% it's still a lot cheaper.

Cost isn't the reason.

~~~
jen20
Depending on where in the US, even half is pushing it in most of Europe. For
juniors, probably 20% of the cost of the US is more reasonable - especially in
the 'startup land' of the Bay Area for example.

------
walkingolof
suspect that stock options is mostly about paying people less, rather than
distributing wealth like the article seems to push, the fact that you earn
less means less taxes, so stock options, playing the devils advocate, means in
most cases less for everyone except those few founders that make it big.....

~~~
mc32
Stock options are a vestige if the first dot-com boom. Candidates saw the
likes of Netscape and other contemporaries and wanted a piece of that.
Companies obliged. It cost them little, allowed them to dangle vapor money as
enticement and most everyone likes it.

~~~
umeshunni
Eh, stock options have been around since Microsoft IPOed in the 80s.

~~~
mc32
You’re right, but I think the dot-com boom bore many IPOs in a relatively
short time making many Joe and Jill Blow employees financially secure thus
creating a mythos around it and consequently became the in-thing for employers
and employees.

------
vincent-toups
Startups don't create wealth, they concentrate it. Cooperatives are a much
better wealth producing arrangement but they don't make a few people very
rich.

~~~
crazygringo
Any successful (profitable) business creates wealth, by definition.

(Technicality: as long as costs aren't being externalized e.g. as
environmental pollution, fraud, etc.)

Whether a company is a cooperative or not has zero to do with how much wealth
is being produced, only with how it's distributed.

Don't conflate production with distribution -- they're different things and
have very little to do with each other.

Wealth production depends on product-market fit, ensuring costs are less than
revenue, and business model.

Wealth distribution has nothing to do with that whatsoever -- it's simply the
mechanism for profit sharing.

~~~
vincent-toups
I rather pointedly refuse to call the accumulation of capital in the hands of
a small group of people "wealth". The fact that we use that notion of wealth
as an index of how our societies are doing is part of the problem we have at
the moment.

If you want to get technical, I'd suggest we scale the notion of wealth by the
marginal utility of the additional capital given to an individual. Wealth is
giving a person living paycheck to paycheck enough money to have leisure spend
time with their kids.

Giving a billionaire another million dollars isn't wealth. They don't give a
fuck about it except in the most abstract, brain-sick, anti-social sort of
way.

~~~
edouard-harris
Wealth isn't identical with money, or with capital accumulation. If you create
an app that lets 1000 people do something they couldn't do before (or that
lets 1000 people do with ease something they could only do with difficulty
before), then you have created wealth for those 1000 people.

~~~
vincent-toups
I don't disagree with this, of course. Some startups do create some valuable
services for people. But society would be better off if those services were
owned by the people using them and the surplus value was going to more people
rather than a few investors.

~~~
bpt3
Why would the users of the service be the appropriate people to benefit from
its creation, instead of the creators?

~~~
vincent-toups
Ideally they would be one and the same, but the short answers is because more
even distribution of money and power in a society is a good in itself (from my
point of view). And because large amounts of wealth in the hands of small
individuals is useless and even bad.

~~~
bpt3
I have created and supported products I have no ability to use because I'm not
a large enterprise, and I don't think I'm particularly unique. Because of
that, I disagree that producers and users of a product would ideally be one in
the same. If organizations are required to perform all development and support
in-house, specialization will be difficult if not impossible, and innovation
and improvement will slow significantly.

Wealth and power distributions are relative, and if you're saying that moving
towards a more even distribution from where we are now would be a good thing,
I agree. However, I don't think a perfectly even distribution is desirable or
even possible.

Also, large amounts of wealth in the hands of a small number of individuals is
far from useless (it's not buried underground or stored in a vault), and
whether it's bad or not depends on the context.

------
nikanj
EU doesn’t have FAANG who hoover up startups. Not nearly as many ”Our great
journey”-posts get made.

~~~
yardie
The EU has traditional MNCs like Bouygues, Orange, or SFR who identify these
startups as threats and neutralize them through legislation or acquisition.

~~~
CaptainZapp
The broadband competition in most of Europe seems much, much healthier than in
basically all of the US.

Speed is higher, prices are significantly cheaper and in a lot of countries
fiber to home is widely available.

Those traditional carriers (which I note are all French and you forgot to
mention Free, which pretty much kicked their collective asses) don't seem to
do much to thottle that. Do they?

------
smitshah0014
The United States is a winner take all economy, especially when it comes to
startups. It's easy to see the big success while ignoring the large cemetery
of failed ones. I can bet that more startups that tried to spur innovation by
providing stock options to their employees have failed then succeeded even in
the US where the tax laws are comparatively better.

------
noego
The main problem seems to be that startup employees are being asked to pay
taxes simply to exercise their options, even though the stock they now own is
extremely illiquid. This problem exists here in America too. The best solution
in both countries would be for employees to be taxed only for cash
income/dividends, or when there is a liquidity event such as IPO or
acquisition.

I highly recommend doing away with the lower capital-gains tax entirely and
treating investment income the same as labor income. However, it seems
ridiculous to ask someone to pay taxes when they literally don't have the
money to do so.

~~~
Matticus_Rex
How does it make sense to treat investment income the same as labor income?
I've already been taxed on the investment amount, and I get no rebate if I
lose my investments.

~~~
noego
You've already been taxed on the investment principal. Not the returns that
you're getting on the investment. By your logic, the capital-gains-tax should
be eliminated entirely because its double taxation, which is a ridiculous
idea.

~~~
Matticus_Rex
Why is that ridiculous? Investment is a _good_ thing -- it should be
_encouraged_.

~~~
noego
Is labor not a good thing that should be encouraged?

~~~
Matticus_Rex
Yes, but if you think getting rid of capital gains would be ridiculous, you're
probably not interested in reducing income taxes.

~~~
noego
We're conflating different things here. The point we're discussing is that
investment-income should be treated the same as labor-income. From your last
comment, you presumably agree that labor is also a good thing that should be
encouraged, so I don't see why investment-income should be taxed so much lower
than labor-income.

~~~
Matticus_Rex
Risk.

------
jamisteven
I would also add that things are just well, easier in the States, at least
compared to Germany / Switzerland. The amount of paperwork alone makes it a
non-starter for most.

~~~
_Wintermute
I recently moved to France, even relatively simple things such as renting an
apartment require ridiculous amounts of paperwork compared to the UK. I can't
imagine starting a business here.

~~~
baud147258
I just started renting flat in France and the amount of paper I had to give
wasn't particularly bad (id copy, copy of three pay slips and proof of home
insurance, which I did in two day over the phone and by internet)

~~~
mytailorisrich
Also, these are not legal requirements but requirements of landlords (apart
from ID, perhaps), and they tend to be similar in France and the UK.

But when it comes to setting up a company France is nightmarish compared to
the UK, which has one of the simplest, quickest, and cheapest systems around.

~~~
baud147258
I was just commenting on the renting a flat part. I've never set a company in
France

------
DrScientist
The premise of the article seems to say that if you get your pay in stock
options then you should pay less tax than if you get it in salary.

I don't see why there needs to be any difference.

In my experience of UK startups, the decisive difference with the US
counterparts was simply the amount of money that could be raised on the back
of essentially the same company - as much as 10 times in the US.

Having 10x the money in the bank is a massive advantage.

The US markets are also better at recycling assets if companies fail.

None of this requires employees to dodge tax.

------
stuaxo
It's hard not to be cynical when seeing the term "create wealth" when startups
are often about intermediation and rent seeking, if anything wealth
extraction.

~~~
journalctl
Yeah. I mean, if we want to get technical, governments and banks create
wealth; startups just come along and hemorrhage VC money.

------
Rainymood
>European consumers and lawmakers here have long decried outsize paydays as
unfair and vulgar. A few years ago the Dutch capped bonuses for bankers, money
managers, and other financial professionals at 20% of their base salaries.

Well, yeah, because they gamble with _other people 's money_. Prop traders
still make a big buck here in the Netherlands. (Dutch here)

------
Plasmoid2000ad
This seems a bit spurious.

I don't see many companies offering the same level of Stock options in Europe
as in US, before tax. It seems to me more like companies generally pay less in
Europe, before tax. Surely in that environment, reducing tax on Stock options
would encourage companies to offer less?

~~~
bsaul
I think US companies pay more because there's more competition to try to
attract talents, and because there's more money in the tech ecosystem in
general.

Lowering tax on stock option may help the tech european ecosystem in general
to grow, and, hopefully, increase salaries after proof would be made that some
employees create a lot of value.

------
mschuster91
The biggest problem is that there is no "dumb money" floating around - or at
least not nearly in the same amount as in the US. Where there isn't any
venture capital available if you're not copying a US-proven business model
(this is the modus operandi of Rocket Internet), there cannot be the creation
of SV-style startups.

What Europe _does_ have however (and especially Germany) is a healthy
"Mittelstand" \- small-ish companies that don't have exponential growth
figures but nevertheless are world-leading in their respective niche.

For those complaining about "muh the taxes / wage costs are so yuge!!!",
compare which benefits these taxes provide and what the US simply does not
have (think of a proper social security and healthcare system or public
transportation, for example).

~~~
falsedan
Yeah, if government regulations loosened to allow easier access to riskier
investments by inexperienced investors or predatory VCs, there would be a lot
more stock-based renumeration. Who cares about paying tax on the income
generated by the difference between strike & fair market value if the grant
also comes with a cash bonus exactly equal to the tax burden (and its income
tax)?

EU banks have massive IT organisations and budgets so can afford to pay
through the nose for contractor day rates. That's the ticket for frontline
grunt wealth, and also the source of a lot of the risk-adverse 'bankist'
mindset in a lot of experienced tech workers.

~~~
mschuster91
> Yeah, if government regulations loosened to allow easier access to riskier
> investments by inexperienced investors or predatory VCs, there would be a
> lot more stock-based renumeration.

No, if government regulations were loosened even more there would be exactly
one thing and that is even more people ripped off by unscrupulous or outright
criminal bankers. There's a reason why such terms as "accredited investor"
exist.

> EU banks have massive IT organisations and budgets so can afford to pay
> through the nose for contractor day rates.

The only reason their budgets are so massive is that they are historically
locked in mainframes and code untouched since the 70s, and people who (still)
do COBOL etc. can command these high rates. Fixing up the cruft would require
investments so high that the day rates for contractors _pale_ and many banks
attempting to do IT overhauls have paid billions to inevitably fail.

Banking IT is one hell of a shitfest, which I wouldn't dare to touch with a
ten feet pole alone from a technological POV - the fact that IT and their
needs are generally laughed at over the industry only confirms my position.
Fintechs are different, but have their own issues - funding, data protection,
questionable ethical decisions, reactions to security issues...

------
purple_ducks
The original (author's) title of the article was "Why It’s So Hard for
Entrepreneurs to Get Really Rich in Europe" [0].

[0] [https://muckrack.com/ed-robinson/articles](https://muckrack.com/ed-
robinson/articles)

------
bryanrasmussen
Actually I've considered setting up a company again in Denmark, but really I'm
screwed. They've closed down the Danish IVS (the version of a limited
liability company) so basically if you want to have a startup you are
basically limited to these company types
[https://www.companyformationdenmark.com/types-of-
companies-i...](https://www.companyformationdenmark.com/types-of-companies-in-
denmark) none of which really match what people need to do when running a
startup.

But still there is a lot of crap to read about how the government wants to
support startups. I don't get it, why lie, it's obvious you don't want to.

------
gumby
> Unlike Silicon Valley, where equity incentive plans have become as
> ubiquitous as foosball tables and midday yoga sessions

It's funny what captures peoples' attention: equity option incentive has been
pretty much table stakes in the valley since the early 80s (at least...likely
longer) while making work look more like a playground really only took off
relatively recently (last 20 years).

And some of the taxes discussed (taxable gains on exercise) have the same
implementation in the US (though the rates are different). The real difference
is the qualification of ISOs.

~~~
walshemj
Its more about Germany than the EU - Guess why London is so popular for
startups.

------
montogeek
Real title of the article is in the URL.

~~~
baud147258
why it's so hard for entrepreneurs to get really rich in Europe

way closer to the actual content of the article.

------
planetzero
It's hard because as you grow, you need to pay out lots of taxes, an
aggressive amount benefits to employees, and in many parts of Europe,
negotiate with unions (which includes all of the above and more).

All of this money goes out to other things instead of growing your business.
The end result is very large companies (usually with an HQ in another part of
the world) and governments that create all of the jobs.

This is exactly what happens in many of Scandinavian countries.

~~~
M2Ys4U
In other words: You have to pay for the negative externalities you create
(taxes) and pay your employees a fair wage (by negotiating with unions).

What's the problem with that?

------
rasz
Extract. The words author was looking for were "extract wealth".

------
Myrmornis
It seems like the author didn't understand the landscape. Isn't their
description of Germany basically consistent with the US (e.g. California)?

> When employees in Germany exercise options, they have to pay income tax on
> the difference between the fair market value and the strike price, and that
> rate runs from 14% to 47.5%. They also have to pay a 25% capital-gains tax
> on additional profits when they sell their shares.

And their description of the US is misleading. One always has to pay tax at
exercise, just like in Germany.

> In contrast, American employees typically pay a 0% to 20% rate on capital
> gains when options are redeemed, though they may have to pay additional
> levies when they’re exercised, depending on the timing and the type of
> equity incentive program.

~~~
marcinzm
Doesn't exercising an option in the US count against Alternative Minimum Tax
but not regular taxes? And doesn't AMT have an exemption amount so you don't
pay taxes if you're below it?

edit: Also, does the fair market value in Germany "undervalue" startups the
same way the 409A valuation does in the US? If not then that would increase
the taxable amount by a lot and also lowers the upside since it increases the
strike price.

~~~
Myrmornis
> Doesn't exercising an option in the US count against Alternative Minimum Tax
> but not regular taxes? And doesn't AMT have an exemption amount so you don't
> pay taxes if you're below it?

Not in my experience. Basically it ends up that the difference between
exercise and strike is taxed as income.

------
voqv
The stock option feat is moot, but the fear of "experimentation and inevitable
failures" is a major thing and very frustrating, especially when looking for
customers as a startup.

------
DollarGuru
Are there any real statistics of founders that have had to migrate to the US
to attract talent with stock options?

------
jasiek
It would have been a lot easier if everyone in Europe spoke the same language,
like they do in the US+Canada.

~~~
Nux
Everybody will speak English eventually, but the divisions transcend mere
language. But hey, that's ok.

------
beecat
Correction: Title should read "Why It's Hard for Startups to Excise Wealth
From Europe."

------
claudeganon
As someone unfamiliar with European regulations, would cooperative enterprises
encounter the same barriers?

~~~
Roark66
Co-ops in EU (at least in my country) have presidents chosen by vote. What is
the point of starting a company if you can be voted out of the top position at
any time?

~~~
TazeTSchnitzel
To create something interesting together rather than just focussing on self-
enrichmemt?

~~~
harry8
You don't get to do that if you're "voted out" aka fired from the company you
created to do the interesting thing, likely the interesting thing will fail to
happen as well. So...

~~~
TazeTSchnitzel
Why are you so suspicious of your collaborators?

------
vfc1
Paperwork is just an excuse, the issue is cultural. People in Europe are
simply less entrepreneurial than in the US, maybe because the employer-
employee relationship comes with more perks, like several weeks of vacation so
people take less risks.

It's considered risky to start a company and generally not that well looked
upon, when compared to staying as an employee all your life and getting a
higher position in a company, even though your revenue would probably be
lower.

There is much more social status associated to being a higher level employee
than to being an owner of a small to medium sized company.

Paperwork is not a problem, a few phone calls and meetings and its done. You
can start a company with the help of your accountant in Europe, the accountant
will take care of everything. The accountant will schedule the appointment
with the notary, do all the paperwork, etc.

Developer freelances are asked nowadays to have their own limited
responsibility company, that can be used later for an online enterprise as
well, that's what I did.

There is even an option of paying a very small amount and setting up a quick
limited responsibility unipersonal company, that then can graduate to a
regular company later on.

There are of course other factors, but I think 90 to 95% is purely cultural.

~~~
CathedralBorrow
I like HN for insightful, often critical, commentary but I have to admit I'm
getting pretty tired of these quick dismissals based on anecdotes and gut-
feeling.

"No, X is not the issue at all, the issue is Y because Europeans are like this
and this is why Europeans do things. I know this because I know."

~~~
vfc1
For this subject, it's really just a matter of opinion more than anything.

I think if someone is commenting and has subject matter expertise, they should
mention that ("I'm a doctor and happen to know that ..."), it's better than
having everyone else adding disclaimers to their comments.

In an online comment no expertise is usually assumed, but yes this leads to
stuff like a scientist with decades of experience publishing a study saying
something that people don't want to hear, and then some troll on twitter says
"No it's not" and people run with it because that's what they want to hear.

I think it's the Internet in general, it's not specific of HN.

------
CM30
As someone who lives in Europe, I feel the reasons are partly cultural, partly
due to the business environment here.

For one thing, there is definitely a lack of ambition compared to over in the
States (and likely quite a few other parts of the world). People really
question you if you say you want to run a company, and don't value
entrepreneurial mindsets at all.

So many would be founders will either move away, or give up on their dreams
because of how friends, family and society see them for trying to strike out
on their own. Meanwhile the vast majority of people simply don't care about
anything other than working 9-5 and partying at the weekends. They're not
career driven at all.

And the lack of ambition doesn't end there. It's true of companies too.
Companies here seem to well... suck at marketing compared to their US
counterparts.

They seriously do. They virtually ignore social media marketing, ignore
inbound marketing, struggle with organic SEO, don't see the importance of
creating content to get people to their site/products and seem to be terrified
of actually going out and selling to people. So of course our startups will
struggle; they're not getting their message out there as well as their Silicon
Valley counterparts. They just assume that 'build it and they'll come' works.

(though to be fair, nor are our regional divisions of large companies either.
Nintendo UK has always sucked at marketing compared to the American branch for
much the same reason).

As for the business environment reasons? Well, it's due to two things:

1\. Our investors offering very little money compared to their US counterparts

2\. And investors/funds being terrified of B2C companies

For the former, well compare the money on offer for UK investments to their US
counterparts. Over here, it seems like a few hundred thousand is a 'high'
investment in a startup, whereas over there it's in the millions. Okay,
business TV shows probably aren't a good gauge of anything here, but come
on... when the likes of the Apprentice and Dragon's Den think between £50,000
and £250,000 is a decent reward... well you're not exactly going to get the
next Facebook or Uber or Netflix popping up here.

And you're not gonna get the level of talent here either. Why would a software
engineer work for about £30,000 in a UK startup when US ones will offer then a
few hundred grand a year instead? They wouldn't.

So the rockstars go off to the valley, and the people who stay here tend to be
the less ambitious, less skilled types.

Still, it's not like the most ambitious businesses would get backed here
either. Our VCs are heavily focused on B2B businesses, perhaps because of the
'guaranteed' revenue stream from enterprise markets.

However, it's usually the B2C ones which become the mega breakout hits
everyone knows. Google, Facebook, Uber, Airbnb, etc... they're focused at end
users. That's what big companies tend to be.

But it's also a risk, and apparently one that our investors don't seem to feel
is worth taking. So they ignore what could be the next Facebook or Google in
favour of the next Moz or SEMRush.

So yeah, that's my take on it. We're not ambitious enough here, we're in a
society that seems to frown on striking out on your own, the money that is
available is far lower than in Silicon Valley and our VCs seem scared of
investing in moonshot end consumer focused businesses.

------
yeahigotgoats
simple answer - government

------
meerita
My experience:

\- Really hard and costly to start a new company. \- Really hard to contract
people. Lots of requirements and really costly. \- Lots of silly laws that
don't protect customers data. Things like GDPR popups, etc.

Basically, those 2 points.

------
mnm1
Why should governments forgo tax revenue now to create companies like Amazon
that pay zero taxes later? It makes no sense.

~~~
bartread
They don't pay zero taxes. They pay zero taxes (or close to) in _some
countries_. Understandably those countries aren't happy[1].

However, I can assure you that if you start a company in the UK that turns a
profit, you _will_ pay corporation tax at a rate substantially above 0%.

 _[1] Worth pointing out that this isn 't the only way governments earn tax
money from companies. The less direct route is through salaries. Amazon makes
sales and, out of the money it earns, pays staff, these staff in turn pay
income tax, which increases the tax take of the country in which they live.
For tech companies with higher earning staff (granted Amazon may not be a
great example because they have plenty of staff in lower-paying roles, e.g.,
in warehousing), in the UK those staff are likely to pay higher rate tax. I'm
not saying this makes it OK for Amazon to pay no corporation tax: what I'm
saying is that the tax benefit to a country flows via multiple streams. At the
moment it seems like somebody has dammed one of those streams, but the point
still stands._

~~~
wickedsickeune
Amazon does not pay taxes from salaries. The employees pay taxes from
salaries. Amazon, if you moved to Mars, shouldn't reduce your salary because
you're not paying tax to the UK.

~~~
leetcrew
> Amazon does not pay taxes from salaries.

for the one millionth time, it doesn't actually matter whether you pay income
tax or your employer pays it for you. [0]

if you want to be precise, amazon doesn't pay income tax, but it does have to
pay payroll taxes for each employee, which is proportional to the income they
are paid.

> Amazon, if you moved to Mars, shouldn't reduce your salary because you're
> not paying tax to the UK.

amazon changes payscales based on local COL at all if it's offices. if enough
employees lived in a zero income tax environment to matter, amazon (or any
other large company) would absolutely shift salaries down.

[0]
[https://en.wikipedia.org/wiki/Tax_incidence](https://en.wikipedia.org/wiki/Tax_incidence)

------
thiago_fm
Maybe because the average European is very poor, and the 1% who got money, are
investing abroad?

I moved from Brazil to Germany and I was impressed with how the average german
is poor, meanwhile there are definitely a great deal of families in Europe
that are very rich for centuries, yet, their kids are studying in the US,
founding companies in low-tax countries...

Meanwhile the average european in good european countries pay upward 40%
taxes. The shitty european countries are worse than 3rd world countries as the
youth all move to the strong ones to just be salaryman instead.

To sum up, the problem with lack on entrepreneurship in Europe has nothing to
do with culture, but rather, the lack of money in general.

Anyways, I wish there would be better opportunities, because I've always
wanted to become an entrepreneur. But without any family to support me, but a
family that I need to support, expensive rent prices and so on, it is
something that I can only dream that my future siblings will be able to give
it a try.

For instance, I'm in Europe to save money, as the exchange rate(vs. Brazilian
money) benefits me. So maybe when I'm around 45, in over a decade, I can found
my own business, obviously not in Europe.

Life is hard. Maybe when you are privileged, you fail to see how much people
work hard even to make ends meet. Or even to see their plans. I believe people
in general are very entrepreneurial and take opportunities when they show up
-- it's just that there aren't any. It almost sounds as people are implying
europeans or ? are a set of stupid people, given that they don't take risks or
opportunities. When the reality is different.

For instance, In the US, when you run $1 trillion deficit country without
inflation problems due to your currency being a reserve currency, heavily
inflating capital and making almost the whole world want to be part of this
money extravaganza, draining talent and development from the rest of the
globe, it is very easy to say that the Greek have trouble generating wealth...

~~~
jamesb93
What do you mean when you want to be an entrepreneur? What makes you tick? Do
you want to discover talent, help fund ideas, work on the ground level within
a company? There are plenty of really useful _things_ that have been built in
Europe in and out of tech where you could facilitate in these kinds of roles.
I don't see how you can't be an entrepreneur in the EU, unless an entrepreneur
to you is to have loads of money and to perform vapid pr stunts for the next
fad.

Spotify, Tom Tom, City mapper, runtastic, factorio, World of tanks, transfer
wise, todoist, telegram are all examples of businesses which have emerged from
the European economic region and the EU itself for example.

~~~
thiago_fm
Exactly what I've meant: You don't understand how hard and rare it is, so
somebody can afford to be an entrepreneur. It isn't about running costs of
businesses, but the ability to support yourself and your responsibilities, it
is about being able to run your HOME, while you work until your business take
off.

Just check the background of the people who founded those companies you
enlisted and you will see what I mean. It isn't the average European.

~~~
jamesb93
I hate to break it to you, but anyone who starts a business is not the average
European anyway.

