
Advice for US entrepreneurs who move to Europe - jkaljundi
http://english.martinvarsavsky.net/entrepreneurship/advice-for-us-entrepreneurs-who-move-to-europe.html
======
jordinl
Funny how he refers to Europe as a whole country...

> "Not only are forced severance pay packages a problem because most start ups
> fail and they still have to pay them but also because start ups are
> constantly trying out people and the concept of trying out people is very
> costly in Europe"

I've been an unpaid intern in UK. My first full-time job in Spain clearly
stated that I was on trial for the first three months and after that they
didn't have an obligation to hire me... Oh, if this guy wanted to try
different people, he could hire them as freelancers.

> "In Spain, France, Italy, health care is free."

No, it's not. People are taxed...

> "You could argue that it is healthy to take sick days but unfortunately what
> happens here is that patients ask doctors medical justifications for paid
> job absences"

Probably there are a few cases like this. I don't see this guy complaining
about how low salaries are in Spain.

> "In Europe there is a general belief that work is punishment and that the
> role of government is to protect people from overworking"

No there's not... People want to work and they want to have a life. I've
worked in Spain, and the impression you get from the employers is that you
have to thank them for giving you a job, in my job in US they thank me for
being there and make sure I'm happy.

> "So there are many rules that make it hard to work the 12 hours per day that
> a start up may need in its initial months"

Yeah right. My manager in Spain used to tell us that we were in a project with
a fixed deadline that had to be met, so if we had to work extra time including
weekend we would...

> "To work hard, to work long hours, is actually illegal in Europe"

What does working hard have to do with working long hours?

~~~
anonymous
He also doesn't seem to understand that there are labour contracts and civil
contracts. The former are the heavily regulated kind, the latter are like US
contracts - you can put whatever you like in them. So it's entirely possible,
if you wish, to draft a contract saying Person will work for 6 months at
startup A in order to produce result X and unless they turn out incompetent
(or the company goes under, etc), they'll be offered a labour contract.

Whether anybody would feel comfortable signing such a thing though, is a
different matter.

~~~
rmc
This probably depends on the juristiction, but I strongly doubt it's that easy
to get around employee law like that. Often the laws are written to basically
say "Person A is an employee if they do a type of work for pay _etc. etc._ ",
regardless if they have a "labour contract" vs "civil contract".

If it was that easy, then all companies would do it.

------
skrebbel
Even though most of the dismissal comments here are fair and true, I find that
this article contains some true gems:

> _When starting a company in the US, informality rules, we all know the HP
> story that HP was started out of a garage. Now in Europe work is so
> regulated that you can’t start a company out of a garage because you can’t
> legally work in a garage._

> _A friend of mine was fed up with an employee who worked poorly and told him
> that if he didn’t work harder he would fire him. This employee went to see a
> doctor, told the doctor that work depressed him and he was declared a mental
> patient, as a result my entrepreneur friend had to pay him for a year of
> doing nothing._

As a European (Netherlands), I recognize these points very strongly. This is
not just Southern European stuff. It's absolutely ridiculous how easily
angry/unmotivated employees can suck a firm or department dry though sick
leave and whatnot.

That said, there's also

> _In the end what many European employers do is not give out stock options
> and give tiny bonuses. In the end what these laws do is that employers go
> for low fixed compensations and don’t expect outstanding work._

This is so American that it hurts: want people to perform? Put a carrot in
front of their noses. The European approach would be trying to make their work
interesting and the work environment good, so that employees are
_intrinsically_ motivated to do outstanding. Sure, there's many companies that
don't understand this, but then there's real many that do. It is simply not a
strong part of European culture to be motivated by money, primarily.

~~~
james4k
Stock options give employees a sense of ownership and responsibility in the
company, which is a powerful thing.

~~~
skrebbel
I don't know why people downvoted you.

I understand the point behind stock options, I just daresay that the reasoning
is a bad cultural fit for most of Europe. I know too little about American
culture to be sure here, but this line of reasoning gives me the impression
that many Americans start a company or join a startup in order to get rich.

My impression is that this is an uncommon motivation in much of Europe. All
(few) successful European enterpreneus that I know (including the founder of
my current employer) started a firm for other reasons, typically independence,
creating the ideal workplace, or the wish to create some dream product.

Stock options give you the opportunity to get rich, but they don't give you
any actual say in what the company does until it goes public. In other words,
while it may help motivate employees to make the company a _financial_
success, I can't see how stock options help encourage employees to contribute
to a nice workplace environment, having interesting work for yourself and your
colleagues, and general workplace happiness.

Now, at the risk of mixing "European culture" and "my opinion" a bit, and I
may sound like a softie here, but I just don't think that getting big fast is
the only measure to company success.

I think that a small but stable company that's a great place to work at may in
well be more considered successful than a company that goes to a massive IPO
in two years of work stress, little sleep and broken love relationships.

------
Svip
I am not a fan of how he uses 'Europe' when he often means Spain and France.
He clearly lacks an experience with Nordic countries (i.e. Scandinavia +
Finland and Iceland), because a lot of what he says does not apply here.

Working overtime is perfectly legal in Denmark for instance, if the employees
prefer it (forcing them can be illegal). The reason is that in Denmark (and
other Nordic countries), labour regulations are not enforced by law, but by
negotiations between the employees (unions) and employers.

Denmark doesn't even have a minimum wage law, for instance!

Also here; it is not incredibly difficult to fire people. But as an employer,
you need a good reason, or the courts will side with the employee and it'll
cost you dearly. The advantage of this system is that it makes employers more
keen on hiring people, because in the trial period (usually first 3 months),
firing people is more easy than usual.

European countries are very different, and Americans seem to forget that. He
does mention that they are, but it seems that _even to him_ he doesn't realise
the actual difference.

~~~
Svip
Also the thing about lawyers being cheap is accurate, but this is because in
Europe (except the UK and Ireland), we use a Civil Law system, whereas the US
(whom borrowed it from the UK) uses a Common Law system.

The basic difference is that in a Civil Law system 'the law is the law'; court
rules cannot change law practice. In addition, you cannot use previous court
decisions to argue in a court of law. You can use them as guidelines, but
nothing more.

This means that it is quite easy for most people to understand how the law
works; just look at the law text and the text's comments (which are also
important when interpreting the law, i.e. understanding what the intent with
the law is).

~~~
raverbashing
Well, actually, in practice it's the other way round

Because then the law (text) is usually more complicated, and the bureaucracy
adds complexity to it.

~~~
krzyk
But you don't have to have a list of all the previous verdicts, just the law
book.

~~~
raverbashing
I'm really not sure what's the state of the art on verdict libraries is (or
how it was done before), but as always I suppose most impacting results are
more divulged.

But believe me "just the law book" is not as easy as it sounds.

------
Xylakant
There's some light and some shadow in this article. I can't tell about
southern europe, but most of this does not apply in germany - even the parts
that are specifically about germany. There are recommendations about how a
work-place should look like but they are mostly common sense [1] and not
mandated by law, at least not in the IT Business. There is a law about
workplace safety [2] but that's like 12 pages long and enforces very basic
limits: You must have toilets, sufficient lighting, sufficient heating and the
escape routes must not be blocked. If you feel like you can use your garage or
your living room.

Bonus payments are no problem at all either. If you feel like paying a bonus,
pay it. If you want to have a written formula, write it down in a contract -
but then you need to pay it if the employee qualifies.

If your employee pretends to be sick, send him to the public health officer.
If he isn't sick it's an immediate firing offense. Even verbally threatening
to go on sick leave is an immediate firing offense.

Severance packages are not mandated. You can have them in a contract, but the
default is no severance package. It's still somewhat harder to fire someone
than in the USA since you need an actual reason to do so. "She's irresistible"
won't do. [3] It's pretty common to have 3-6 month probation period in a
contract where both parties can terminate the contract on short notice.

The part where he's right is extra work. The law is pretty strict here: 8
hours a day is the normal maximum, 10 hours a day for a limited time, maximum
of 60 hours a week. There must be a 10 hour break between end of work and
beginning on the next day. You can break those limits in emergencies, but you
need a qualified reason. That sounds pretty harsh, but it's reasonable. It
protects the employees on one side, but why would I want them to work more
than 8 hours a day on a regular schedule when productivity drops sharp after
8, maximum 10 hours. We can do crunch time for a couple of weeks, but after
that it just doesn't pay of. 12 hours a day are neither healthy for the
employee nor for the startup. A team of zombies just doesn't perform. So I'm
very little bothered by that law. Germany seems to be doing just fine
productivity wise.

[1] The monitor should be placed parallel to the window to reduce reflections,
the chair and the table must be adjustable in height, ... [2]
[http://www.gesetze-im-
internet.de/bundesrecht/arbst_ttv_2004...](http://www.gesetze-im-
internet.de/bundesrecht/arbst_ttv_2004/gesamt.pdf) [3]
[http://edition.cnn.com/2012/12/22/us/iowa-irresistible-
worke...](http://edition.cnn.com/2012/12/22/us/iowa-irresistible-
worker/index.html?iref=allsearch)

~~~
yummyfajitas
_It protects the employees on one side, but why would I want them to work more
than 8 hours a day on a regular schedule when productivity drops sharp after
8, maximum 10 hours._

Do you have any modern (i.e., post 1940) evidence for this? What little
empirical evidence I've seen suggests 60 hours is optimal. (But what little
evidence there is applies to industrial fields, and likely doesn't generalize
to knowledge work.)

[http://www.overcomingbias.com/2011/12/work-hour-
skepticism.h...](http://www.overcomingbias.com/2011/12/work-hour-
skepticism.html)

[http://www.overcomingbias.com/2011/12/construction-
peak-60hr...](http://www.overcomingbias.com/2011/12/construction-
peak-60hrwk.html)

~~~
dalke
The usual model of the effectiveness of overtime in software is described in
detail at <http://www.stevemcconnell.com/rdvolot.htm> . Most of the direct
references are not from experiment but based on observations of effective work
environments.

You linked to a claim for skepticism, but did not mention the the extensive
counter-examples from the first commenter, at least as it applies to some
subfields of work. The quote I find most persuasive is: "The best data on
sustained intellectual activity comes from financially independent authors.
While completing a novel famous authors tend to write only for 4 hr during the
morning, leaving the rest of the day for rest and recuperation."

That is a strong suggestion that 4 hours of creative work is about the daily
limit. Why is this not a sufficient counter-argument for a broad "60 hour is
optimal" recommendation? After all, a self-supporting author has good economic
inventive to create more works, but this puts a limit of 28 hours per week on
creative work.

Your second link is based on the Nov. 2001 newsletter of "a national firm of
Construction Consultants and Claims Specialists, assisting owners and
contractors in achieving profitable and trouble-free construction projects",
and not, say, a peer-reviewed journal or research organization. The
newsletters most recent citation is from 1992, so a bit over 20 years old,
instead of a bit over 60 that you are disdainful about.

Can you find anything more recent, and research-oriented, which provides
better evidence for your "60 hours is optimal" suggestion? In your analysis,
please note, as the newsletter points out, that "The fatigue resulting from a
daily two-hour commute is considered similar to a daily increase of two
working hours.", so you can't look at a 40 hour work-week in the City of
London and assume that that's the only factor to consider, if the commute
takes an hour each way. (The newsletter highlights this because in some
construction jobs the crew is housed on-site, so there is no commute, which
makes the direct interpretation of the chart results difficult.)

Because the overcomingbias.com references didn't include more recent, and more
academic/research oriented papers, I suspect both it and you did insufficient
research.

In any case, I don't think you understand the math of the evidence that you
report. The contracting job numbers say that it's better to hire 1.25x people,
who work 40 hours per week, than it is to hire 1x people who work 60 hours per
week. Assuming the cost per hour are equal - which it often is for hourly
construction work - then the first gives the company more productivity for the
same cost.

The only way that 60 hours per week is optimal for the company is if the
workers are paid constant rates no matter how much they work per day, or if it
wasn't possible to hire 25% more workers (e.g., because of the size of the
site, or number of hours available to work). But that's not good incentive to
get people to work longer hours, is it.

So I don't understand how you drew your conclusion that 60 hours is optimal.

Here are some of the more recent (post-1940s) papers on this topic, quoting
from the CDC, which is one of the top Google hits for this topic, at
[http://www.cdc.gov/niosh/topics/workschedules/abstracts/daws...](http://www.cdc.gov/niosh/topics/workschedules/abstracts/dawson.html)
:

> Few studies have directly investigated the financial consequences of long
> working hours. For example, in a study on white-collar jobs, performance
> decreased by as much as 20% when 60 or more weekly hours are worked
> (Nevison, 1992). Data from 18 manufacturing industries in the U.S. show that
> a 10% increase in overtime resulted, on average, in a 2.4% decrease in
> productivity measured by hourly output ( Shepard and Clifton, 2000). High
> overtime levels can cause poor employee morale, which can affect
> productivity and absenteeism. For example, Circadian showed that 31% of
> extended hours operations that have extremely high overtime hours (25% or
> greater) also had poor morale, compared to only 13% of companies with low or
> normal overtime (Kerin, 2003). Long working hours and overtime contribute to
> increased worker fatigue and safety problems. For example, the average cost
> of workers compensation claimed per individual at extended hours facilities
> that reported severe fatigue problems was considerably higher ($4,037) than
> at facilities that report moderate ($2,240), minor ($981) or no ($276)
> fatigue problems (Figure 4) (Kerin, 2004).

Note that productivity is only one of the factors. Health costs, impact on
family life, and accident claims are others (though the last can be included
in the productivity numbers, as they seem to be for the construction numbers).

The Shepard and Clifton paper uses post-1940s data, and would be a better
reference than the newsletter. I'm not paying for access to the full paper.
You?

Again, don't misinterpret the 2.4% decrease from 40- to 60-hours-per-week to
say that working 60 hours is better for the company than 40. If the employees
are paid per hour, than it's better to hire more people than it is to have the
same people work overtime. (Again, ignoring secondary effects; perhaps the
factory isn't large enough for 25% more people.) Plus, the employees will have
better morale, and bad morale decreases productivity.

Another, more modern review (and definitely better than a company newsletter)
is "Working Long Hours: A Review of the Evidence, Volume 1" (2003), from the
Institute for Employment Studies in the UK (
[http://webarchive.nationalarchives.gov.uk/+/http://www.dti.g...](http://webarchive.nationalarchives.gov.uk/+/http://www.dti.gov.uk/er/emar/errs16vol1.pdf)
). It references "Bienefeld (1972) who observed that major reductions in hours
in British economic history preceded rather than followed peaks of
productivity growth", though "this evidence may disputed." Still, I find
nothing in there which gives strength to your "60 hours is optimal"
suggestion. If anything, most of the research is aimed at determining if 35 is
a more optimal number than 40.

Based on your termination of our previous exchange on the similarity of
employment to a monopoly, I'm not surprised that your analysis seems weak.
Your math seems wrong and your citations poor. (BTW, in that monopoly thread
I've cited several economics papers which explore the model I outlined, and
the developers of that model received the 2010 Nobel Prize in economics. I've
also cited several papers which use the factors that you say you've never seen
in economics models. This supports my belief that your analysis seems weak.)

~~~
yummyfajitas
I should have been more clear - I meant for the phrases "what little empirical
evidence I've seen" and "likely doesn't generalize to knowledge work" to
indicate my lack of confidence in the little data I've seen. (Not to mention
the fact that my entire post was just a question, together with links one
discussion of a little bit of data.)

I'll take a look at your CDC links and see if they answer my question.

Incidentally, my apologies for not responding to your reply to me - I didn't
notice it on Christmas afternoon and I just logged on today. I'll take a
glance at what you wrote.

------
RyanZAG
I don't live in a country with the kind of employee protection rules as in
Germany, but the article still comes off as a rant against employee
protections.

Can't afford to treat your employees like humans? Want to give them big
bonuses and then fire them the following year so they can't pay the mortgage
on that house they put a deposit down on with that bonus? Don't want to shell
out a bit of money on decent offices, and rather shove them in some little
basement somewhere?

None of this is required for a startup. You can actually treat your employees
as human regardless of the stage of your business - especially considering
that this guy can easily afford this stuff.

~~~
Svip
I also don't buy the notion that Europeans are generally resentful towards
entrepreneurs.

~~~
davidw
A ... well, I'm not going to get specific, as he's probably not too hard to
locate via facebook or something, but a person I know through my wife was
ranting about how all entrepreneurs are dishonest thieves at dinner the other
day. Granted, this was an after-a-few-bottles-of-wine chat at the table, not a
serious, reasoned opinion from someone who I do respect, but still, it's not
an uncommon opinion here in Italy.

~~~
danmaz74
Unfortunately, this is often true here in Italy: The main reason, imho, is
that rules are often so difficult to follow that selection is working against
the more honest entrepreneurs...

~~~
davidw
Exactly. One of the first people many Italians think of when they hear
'entrepreneur' is Berlusconi, whose 'big idea' wasn't something new or clever
or otherwise particularly innovative, but a sneaky way around the state
television monopoly. I think it's an example that shows both sides of the
coin: the oppressive state, and the "entrepreneur" being not an innovator, but
someone good at bending the rules. So yeah, that's probably where that comes
from, but it's a vicious circle, because people look down on those who _are_
doing something new and creative as well.

~~~
danmaz74
It definitely is a vicious circle. There are for sure many other effects at
work, but I'm pretty sure that this is one of the most important ones - and
one which is incredibly difficult to break, because moralists and "furbi" (sly
ones) both work to keep things as they are :(

------
neumann_alfred
_"the problem with this is that it is harder to convince a group of Europeans
that they are out to conquer the world in their field. It is cultural."_

It's called World War I and II, and having learned a thing or two. "Conquering
the world" in itself is a phrase only an utter brute would think, much less
actually brag about.

Why can you not get to know the world, and cooperate with it? What are you
scared of? Why not be a peer amongst peers, who but a coward would want to be
owner? Keep the crap that makes your country crap in that country kthx.. there
is no point in moving to the EU if you're not going to actually learn from it.

~~~
rmc
As well as some wars, there is also a long history of imperialism and actually
trying to take over the world.

~~~
neumann_alfred
Which is my point exactly. I didn't say Europe is "better", if anything it was
more savage; but that had high costs and many lessons. The US still thinks you
can dominate the world and get away with it. Well nuh-uh.

------
rickmb
What strikes me about this article is the utter lack of _understanding_.

It is a highly subjective, very politicized and ideologically tainted
description without any kind of understanding, and some of the attempts at
interpretation of cultural and legal differences are either plain wrong or
deliberately misrepresented.

It's an anti-European rant, nothing more. Here's a great gem for example:

 _"To work hard, to work long hours, is actually illegal in Europe."_

Seriously.

~~~
james4k
You say that, but when I was working in the Netherlands, my colleagues and I
were repeatedly told that we could not stay to work in the office past normal
working hours. Even with impending deadlines that for the life of the company
could not be moved, which is why we were working the long hours in the first
place. To put it in perspective, at one point we were even told to work from
home if needed, but to not tell them about it. I truly don't think there is
any cultural misinterpretation there, this was pure legal paranoia. At least
on this particular issue you pointed out.

~~~
growse
Just because you once had a job where your employer told you the law said a
particular thing, doesn't mean the law _actually_ says that particular thing.

I've worked long weeks before without any issue between myself and my employer
(in the UK). Most people I converse with/encounter would probably say the same
thing. All the EU working time directive
(<http://en.wikipedia.org/wiki/Working_Time_Directive>) says is that an
employer can't _force_ you to work more than 48 hours a week. If you want to
work 23.5 hour days, 7 days a week, and an employer who's willing to pay for
that, knock yourself out.

~~~
Xylakant
Not in germany. The law mandates ab absolute maximum of 10 hours a day, 10
hours break between shifts and max 60 hours a week unless there's some case of
emergency. These already are the extended hours, that are only possible if the
overtime can be taken off within a reasonable timeframe. The regular work-
hours are 6 days of 8 hours. The employer is legally responsible that these
limits are enforced.

~~~
growse
Did not know. Stand corrected. Seems this is UK-only. Wonder if there's a
difference between a worker being salaried vs paid per hour?

~~~
Xylakant
No. There's a difference between employed workers where the regulations apply
and freelancers that can actually do whatever they want. Actually if my
employee were to accept a side-job he'd have to report it to me so that I can
check he's not going over the 60 hours limit.

Interesting enough some companies start to recognize that long hours don't get
them as much value as they thought. I know of a case where a pretty large
enterprise customer has a "max 8 hours a day" clause for subcontractors and
freelancers.

------
skreech
Article is ridden with errors, mostly based on a faulty premise. Europe is not
a country. Europe isn't even the EU.

Laws, regulations, attitudes and tax rates vary widely. If you want to do a
startup in Europe, choose a country first and then read up.

~~~
objclxt
I would tend to agree: one of the biggest mistakes he makes is assuming EU
wide directives are applied equally. The UK, for example, negotiated a clause
meaning employers can have employees opt-out of the working time directive
(which governs the number of hours in a week employees can work).

~~~
rmc
UK employees can opt out of part of the working time directive, the 48 hrs max
working week ban. But other parts still apply, like minimum holidays per year

------
martinvars
I stand by my comment that I could not start a company in the garage of my
father in law in Mulheim an der Ruhr. Many of those commenting here should see
how companies get started in USA. And yes kudos to Germany for its changes in
recent years. Other European countries should follow its lead. But lets
remember one thing, a deregulated work environment in USA has led to engineers
getting paid 2 or 3 times as much and that does not include stock options
taxed at capital gains rates.

~~~
GFischer
That is true, however the article did come off as very strong criticism, some
of it unwarranted (I thought your criticism of severance was too strong).

Looking forward to hearing your keynote at Punta Tech :)

~~~
GFischer
Correction, it seems Martin's not speaking at Punta Tech this year, I still
hope he attends.

------
GFischer
"state mandated severance pay packages... a direct attack to start ups"

While it's true that many startups fail, I wouldn't go so far as to say
severance pay is an attack. You can fire someone with two weeks notice in
Spain, paying 33 days of severance for every year paid (used to be 45). AND
take home salaries are usually lower.

What is done in practice, to compare worker compensations across countries, is
to factor that into the salary equations, it means that workers are a lot more
expensive than what the take home salaries might imply, but consider:

Employee A at an US startup has a take home salary of US$ 75.000 will cost US$
100.000 or so to the employer per year.

Employee B at a Spanish startup has a take home salary of US$ 56.000 (43.000
euros), and it will cost US$ 100.000 or so to the employer per year :) ,
factoring in severance, healthcare, social security and other benefits.

As jordinl and others stated, most European countries have a three-month trial
period for employees as well (edit: and it can be renewed, making the
hypothetical 6-months-in non-performer as easy to fire as in the US).

So, an European employee is usually NOT more expensive than an U.S. employee,
it requires different considerations (and setting aside money for severance &
stuff). It probably is a lot more bureaucratic, but that's it (on the other
hand, there are a lot less lawsuits). If the reason for moving into Europe was
cheaper salaries, bad luck, but if the reason was an unexplored market, it
should work out.

Edit: I do agree that there are some strong laws against beginning your
startup in a garage, but the physical location shouldn't be a problem.

About starting a new company: you can buy a pre-made company for 150 euros in
Madrid, and probably the rest of Europe, with most of the paperwork solved for
you. There are plenty of programs for helping new startups get off the ground
(depends on the country, some are more progressive like Finland)

~~~
justincormack
Starting a company is still not that easy in the rest of Europe, eg Belgium
there are capital requirements of EUR18000 to start a company still.

~~~
GFischer
Wow, that's definitely not making it easy for a startup.

------
davidw
On "Europe is not a country". 'Claro que no', but the same reaction every time
to this sort of article gets a bit passe` as well. The author is clearly not
just some bozo that moved to "Europe" a few months ago and is writing up his
first impressions: he built some pretty serious companies here and obviously
knows a thing or two that might be worth considering on its merits, despite
the fact that, yes, things are a bit different in the Lofoten islands than in
Pantelleria.

------
allerratio
> In most of Europe there is no concept of personal bankruptcy

That's wrong. It only takes longer in most european countries. For example in
Germany it takes 6 years.

~~~
Xylakant
I'm not certain about it but I think debts from criminal offenses are not
cleared on personal bankruptcy. Sozialversicherungsbetrug (not paying your
employees social security) and tax evasion are criminal offenses for the
manager of a company so they'd not be cleared. However, if you start up a
company with employees you'd want a limited liability company of some form
anyways, so personal liability only extends to criminal negligence or criminal
offenses. It's still easy enough to get burned and indebted as manager though.

~~~
rmc
_I'm not certain about it but I think debts from criminal offenses are not
cleared on personal bankruptcy_

Not all debts can be cleared by bankruptcy in the USA AFAIK. I don't think you
can clear college tutition fees with bankrupcty.

~~~
Xylakant
Yes, I heard that. The tricky part is that the debts that a failing startup is
most likely to rack up are the ones that later translate into criminal charges
and the manager is personally liable for that.

------
ronaldmannak
I have founded tech startups both in Europe (Holland) and Silicon Valley.
While some details are apparently debatable (judging from the discussion
here), the overall picture seems very accurate. The fear of failure and
personal liability is a huge issue in most European countries. I hate to say
it, but there is a _lot_ European countries can learn from Silicon Valley.

------
carlob
At one point the author complains about 20k of social charges overhead on a
50k job. Then a few lines later he says that it's cool that in Europe you
mostly don't need to pay 800/mo in health insurance.

Those 20k are the equivalent of the health insurance + 401k. The only
difference is that they are mandatory (and IMHO are a much better allocated).

~~~
switch007
The landscape in the UK has changed somewhat in the last 5 years. Some
foreigners like to think when we pay 30% in tax we receive unlimited resources
whenever we retire and the government will tap in to our pot of "savings"
whenever we need medical assistance. This simply isn't true. The "national
insurance" payments don't even cover the cost of the NHS (£96.5 billion in
2010-2011 vs NHS budget for 2011-2012 of £106 billion).

------
venomsnake
Firing is not hard. When my country telecom was privatized and the contract
limited the amount of layoffs they could legally make - they just put every
parasite in his own room with no internet, no pc-s, totally forbidden to use
personal devices and gave them no tasks. They were also under strict
monitoring for misusing the company time(reading on work), phones and being
strict on arrival/departure. The ones that didn't left on their own out of
boredom, soon accumulated enough "sins" to be fired.

~~~
Nursie
In the UK that would be interpreted as 'constructive dismissal' and you could
be spanked pretty hard for that at an employment tribunal. Is it that hard to
get rid of someone within the rules?

~~~
venomsnake
They were under contract to not cut more than 3K jobs per year, but had to get
rid of almost 20K persons.

Saw what constructive dismissal is - how is this making the employee life
unbearable - he is getting full salary for doing nothing and nobody is
harassing him. He is just not allowed to communicate with the rest of the
company.

~~~
Daniel_Newby
In the U.S., an employee has the right to do the work they were hired to do,
owing to the need for career development and currency.

~~~
venomsnake
In the US employees also get the right to get a pink slip and move the hell
away. Which is not always the case in Europe. A friend currently had some
trouble firing a very toxic person from his startup.

This is perverse situation where employee rights has gone berserk - in my
country firing is hard because the government prefers not to pay the
unemployment benefits it is obliged to so they always side with the employees
in the private sector.

------
greghinch
Raising money in Europe is also quite difficult for an early stage startup.
European investors are quite risk adverse; it's uncommon to invest in a
company without existing revenues (even if there is a solid plan for revenue
growth in the short term). It ultimately comes down to the perception of
failure: if you start a company and fail, in Europe that's pretty much it for
you, you've been branded a failure personally. Until that changes, the startup
climate in Europe is going to continue to struggle.

------
michaelfeathers
Nice article, at least as a heads up for people. But, there are two areas that
he did not go into. One was possibility of building a business around
relationships with contractors rather than employees. I can imagine there
being laws that would make that hard also. The other is that
maternity/paternity leave is big consideration also. While I think they are
great in many contexts, I've heard from business owners in Northern Europe
that they can be particularly painful for small businesses.

~~~
justincormack
I dont know of any laws making working with contractors hard, so long as you
are not apparently using them to avoid tax. Maternity and paternity are not
usually a problem, obviously if your company is small anything can be a
problem.

~~~
jdkx
In France it is illegal to use contractors where their condition of work are
the same as employees. Specific cases are decided by the court, but basically
the status of contractor can't be used to go around labour laws.

------
arvinjoar
> Europe needs to deregulate companies with less than three years of age, less
> than 20 employees that are not yet profitable.

While I'm in favor of deregulation, conditions like these generally prove to
carry with them a lot of unintended consequences and perverse incentives.

------
Irishsteve
And if you move to Ireland you pay less corporation tax. All the laws stated
exist, but as the author also pointed out. They aren't followed to the letter.

It's only if you start acting the bollox that you need to worry about them.

------
sbierwagen
Note that Varsavsky was born in Argentina, and moved to the US when he was 16.

------
aerique
Wow, this isn't just advice for those moving to Europe but also how European
countries can step up their game and integrate the good ideas from American
culture while avoiding the bad.

~~~
edtechdev
Or the opposite. Most of what I heard in the article about Europe I think was
good, and protected the employees. The guy was mainly complaining about not
getting tax breaks for capital gains and about having to pay more to fire
people. And he didn't even understand the concept of people being motivated by
more than just money.

Perhaps more folks would be more willing to work at startups if they knew they
couldn't be fired at the drop of a hat with no or little severance. I also
think it's good to have a penalty (or risk) for firing folks. People aren't
just a commodity to be disposed of when not needed. Of course it would also be
nice to have universal health care, and a culture that didn't glorify monetary
gain above all else.

~~~
walshemj
well most countries do have breaks for start ups ans at least the Uk doesn't
have the perverse taxing of options that the USA has which can lead to options
that are under water and worthless costing 100,000's

------
tlarkworthy
Great article (I am from UK). Dunno why its attracted so many haters.

~~~
enra
I guess it's because it's talking about "Europe", and focusing on the very
Western Europe. For entrepreneurs or startups, I would consider Berlin,
Nordics or London, based on how internationally accessible they are and for
their startup scene. Also I think telecom industry in general is much more old
fashioned than web, mobile or gaming startups.

For example in Helsinki, probably every startup event / meetup is always in
English, as well all the sites. Also I haven't come across that many legal
hurdles working or hiring for startups. The contracts have been pretty similar
what I have gotten in US startups.

------
jpeg_hero
As an American Entrepreneur I find this article quite insightful.

But from the comments here it does seem to have agitated quite a few European
employees...

~~~
camus
Because most of what is actually said is inaccurate.

------
general_failure
All generalizations including this one are wrong

------
jacoblyles
Europe earns its moniker of "old world".

------
ettitude
Great piece of advice!

------
wilfra
I'd be living on a beach in Italy right now were it not for the visa
situation. Anybody know a way around the 90-day rule for Americans?

~~~
mahesh_rm
I am Italian. I set up a company in Italy and hire you. You set up a company
in California and hire me. We pay each other the same minimum amount of money,
and we are able to live where we want. If this fails, we can always get
married!

~~~
carlob
It might be difficult to get married in Italy if you have the same gender…
blame it on the catholic church!

