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The European Startup Scene is Still Broken (medium.com)
34 points by jreacher on Nov 15, 2015 | hide | past | web | favorite | 78 comments

> Funding gaps remain larger in Europe than in the US.

Well, of course. Engineers in the US take home five-figure sums each month, which explains why there are so many startups largely funded by ex-Google/Apple/MS/FB employees.

In Germany, wages are so low, and taxes and rent so high, that you have to be either fucking good or fucking rich via inheritance to save enough money for your own startup.

Not to mention that failure is expected and financed in the US startup culture, whereas in Europe you can't even get a small loan without putting your car/house/... as collateral, and you will get shunned for failure. Therefore, many capable people (have to) choose not to enter the start-up world.

Thats not really the problem though startups aren't paying engineers a lot in the beginning so thats comparing two different things.

While it's true that the funding gaps remail larger in Europe than in the US it's still the wrong question to ask.

The real question is why the funding gaps are there to begin with. I would claim 4 major reasons.

1. Disconnect between the needs of the European politicians and those of European startups.

2. Europe has no Silicon Valley or New York.

3. European startups ask for permission instead of forgiveness.

4. The EU seems to be fixing the problems that the startups could fix.

In other words a lot of the problems in Europe is the EU.

Go back 40-50 years and plenty of fortune 500 companies were European.

I am exploring it in more depth in this essay:


> 3. European startups ask for permission instead of forgiveness.

Well, because everything else will destroy your reputation and company socially and legally for all eternity.

Say that to ex Uber and Airbnb plus a host of the other companies.

Well, Uber is taking a heavy beating in Europe (and thanks to our regulations, taxi service never has been as bad as in the US, so the market for "better taxis" isn't as large to begin with), and AirBnB already bows to regulator's pressure all over the world.

Thats not the point though.

The point is that they are the leader not a European company because they take that battle.

You can't disrupt most fields only by pure technology. A lot of the disruption is legislation.

Well, disruption is just not necessary. Uber competitors existed in Europe before Uber even did.

AirBnB is literally doing what people in Europe had done for decades, just with a neat web listing.

Uber competitors didn't exist in Europe before Uber did. You are talking about actual "sharing economy" like the french carsharing service but thats a very different thing.

Airbnb didn't really exist either you are talking about things like Novosol that functioned as a middle man apartment renter.

1. Uber competitors existed – although those were usually financed by the Taxi companies.

2. AirBnB competitors existed in the way that you could rent your apartment to others via such services. Renting out private apartments was standard for decades and centuries even.

Taxi companies are regulated which means there was there is a limit to how many taxi drivers are allowed. Uber doesn't have such a limit and is thus undermining the market. Uber is planning on replacing all drivers with automated cars, how many taxi companies you think are working on that right now?

What you are talking about is car-sharing which is something Uber also does but not what they do mostly.

With regards to Airbnb. If airbnb ish companies existed before why didn't they then outcompete airbnb? Why is Airbnb fighting fights and not European rentals.

Anyway we are getting away from the main point which is that american companies dare take up a fight with legislation very few european companies if any do that. Because of reasons I mention in the essay. Tesla, LendingClub, KickStarter and so many others have had to find ways through the legislation system.

US companies just have a better culture for challenging incumbents and legislation. A much richer culture for lobbying and so on.

The thing is that both Uber and AirBNB are harmful companies, and EU legislation hasn't quite dealt with them yet. But it will.

Thats an ideological opinion, one you are not alone with. However it has nothing to do with the discussion we are having.

Well, the argument is that we don’t need that kind of lobbying, because that kind of restrictive legislature doesn’t exist.

Anyone can start a service to drive other people around for money where I am as long as they have an appropriate drivers license and insurance, there’s no limit on how many drivers there are.

Uber only has to fight legislation because they want to get around the insurance.

Hum, maybe that's true where you live, but as another EU citizen, I can tell you it's not true everywhere - around here, there was no on-demand service beyond taxis, which are limited to a certain number of licenses. And as far as I know, the same is true in Madrid and Paris.

Thats a wrong argument then given that the legislation is in fact in place to hinder too many drivers to flood the market. And so to get into the taxi market is very hard and politically controlled.

In most European countries european insurance isn't really a problem.

Ironically your view on this is proving my point by mixing your political view with what the discussion is about.

And so instead of European companies disrupting the American market you we have American companies disrupting the European.

There is no regulation at all regarding the amount of drivers where I am.

You need a drivers license of type P (same as bus drivers, chauffeurs, etc) and you need insurance, and you can start driving. It’s literally that simple, and we could have a million drivers by tomorrow and it would be legal.

And Uber isn’t disrupting anything in Germany. They’re just one cheap company under many, others of which provide better service.

You need medallions for things like taxi stands and hailing people off the street so it's just not true what you say.

Anyway your ideological view is getting in the way of the point of this discussion.

It wasn't a german company that created uber, wasn't a german company that created airbnb it wasn't even an european on and that is the problem.

> You need medallions for things like taxi stands and hailing people off the street so it's just not true what you say.

That’s not even part of the discussion, as uber isn’t trying to change that.

Fact is, uber isn’t disrupting anything.

Fact is, there were uber-competitors in Europe like mytaxi, some of which even existed before uber did. Exactly same business model.

The issue isn’t that these companies never get started in europe – because they do – the issue is that these companies expand slower than their US competitors, and therefore lose in this extremely volatile market.

But if the market crashes, these companies can continue to exist, while many of their US competitors would crash, too.

Uber is trying to change the rules that you have to have a license to be able to drive taxi. Thats the part you are missing here. Its not about the technology its about the legislation.

They dont just expand slower they get bought by american companies not the other way around that is part of the problem which is what this whole discussion is about.

There is nothing to back up your claim that they are more resistant to a down market. How many European social networks are left? How many European transportation companies are in the US? The list is long of american companies dominating the markets in the EU not the other way around.

That is the core of this discussion no matter your obvious ideological reasoning.

> There is nothing to back up your claim that they are more resistant to a down market. How many European social networks are left? How many European transportation companies are in the US? The list is long of american companies dominating the markets in the EU not the other way around.

Great, so companies based on making billions of losses a year were able to buy competitors that had to make profits.

That is more a sign for Silicon Valley being yet another investment bubble instead of a sign for SV somehow being "better"

Again you are confusing your political/ideological views with what this discussion is about.

I am pretty critical of ubers methods but thats not what we are discussing here. Uber is just one example out of many american companies that challenges legislation to disrupt an industry. European companies don't do that and thats one of the reasons why there are no European uber, airbnb etc.

You can think thats a good thing but thats not what we are discussing here.

>The EU seems to be fixing the problems that the startups could fix.

and then

>In other words a lot of the problems in Europe is the EU.

Are the EU fixing or creating problems?

EDIT: okay, I'm reading the essay. Maybe they are creating problems for the creation of startups, but solving problems for the population.

It's a problem that the EU (read politicians) are fixing a lot of the problems that startups could have been fixing instead.

I.e. it's a bad idea that the EU is not trusting private enterprise more than they are.

The population needs private jobs not necessarily cucumbers being the right size or cookie laws :)

But sure you could make that argument, mine is that it has consequences that I am not sure is to the benefit of the population in the end.

> 4. The EU seems to be fixing the problems that the startups could fix.

For example?

Taxis. When I hop into a German cab and want to be driven home, it always costs me the same amount (plus/minus variable waiting times), cab drivers generally don't fuck you over with the routes, the cabs are in perfect technological and optical conditions (BOTH are mandated and controlled by the government)...

And what’s the issue with that?

I’d argue it’s even better than Uber, as in this case the whole profit is locally spent. In contrast to uber, where it lands overseas in private pockets.

You are confusing your political views with what the discussion is about.

It's not whether it's right or wrong that this exist. It's about WHY European startups have such a hard time building really big companies in this field.

That's an interesting point. I wonder if the reason why startup culture thrives so much is because a lot of the VC's/Investors are ex-engineers who made their wealth from their own companies... and there is a better understanding in SV of what it takes to succeed (and how to handle failure).

Super strange for me to read that.

I'm freelancing web-dev in Berlin and I was always thinking that you work 24/7 in US for the same amount of money.

Here I enjoy a heart-of-the-city-center apartment for 800 Euro ( ~60 sq.m. ), beer for one euro, cheap health insurance and yes of course higher taxes.

On the same hand :D I'm working around 5-7 hours per day ( RescueTime tracked ) and definitely don't pick up my phone when it's saturday or sunday ( anyway nobody calls at that time for work ).


While there certainly are some employers that will want /tolerate you to work 60h/week for a whole year, this is very much illegal in Germany, for example. Standard employee contracts also mandate you to get permission from your employer for any side jobs, so consulting for 20h/week may not be that easy to do.

Indeed. My employer would perhaps not tolerate me having a second paid job since that could be seen as taking away from my limited concentration or rest time.

Something being possible doesn't necessarily mean it's not a problem. Nobody is saying it is impossible to have a startup in Europe -- there are startups in Europe, of course it is possible. The issue is that having a startup in Europe is far harder to start and harder to scale which means there are far less startups in Europe and to have a successful startup is a higher bar.

If this still isn't clear, you can try comparing it to being a female tech founder in the 00s. It was possible and some people did it - but it was very challenging and there were more roadblocks making it difficult to succeed. Changing the culture a bit has already had an effect on this in the last couple years. Changing the European startup culture could create great gains there too.

It's neither allowed to work during your vacation in any way (certainly not during the three weeks mandatory one) nor to work longer than 48 hours a week if you are not a manager (a real, not only on paper).

It's basic Maslow's Hierarchy of Needs. You aren't gonna create the next big breakthrough if you're struggling to put food on the table.

Yes. Your head has limited bandwidth. Europe manages to fill your head with issues from the Victorian era, leaving no room for "luxurious" thought.

I'm french, and I even wonder if kickstarter is a decent opportunity for me. I'm not sure it is in term of finance law.

France is pretty protectionist, and labor laws are also pretty tight.

Maybe my personality is an issue, and maybe it's because I don't have a degree nor experience, but as someone who is able to read and write C, C++, java, PHP, when I hear that IT is a booming sector across the globe, I just can't believe I'm still unemployed.

If you failed at school but went to programming classes and like programming, if you're not part of the top tier class of people who went to an engineering school, or managed to get through university, you're not employable.

It's sad because I always hear that you don't need a degree to have a programming job. Well in france it's not really the case.

Recently I even failed some government funded 1 year school program, where people learned programming (most of them never wrote code). I learned nothing, and the jury was patronizing and condescending for some reason which made me fail and not have this degree.

Meanwhile, the pharma company I went to, which is doing molecular research for cancer treatments, was pretty happy about my intership.

I guess something might be wrong with my attitude too, but I'm sure I know why countries like America have more success with IT, it is because they are liberal, and france is clearly not. I like france, but IT here is not so awesome.

Speaking as an employer (not in France though). What do you have to show me that you are capable? I place next to no value on formal education. But it will get you a foot in the door if you have no actual work experience. It at least tells me you can commit to something, even if it sucks (like most formal CS education).

What I do care about is what you've worked on. If you have any personal projects to show me.

No education, no projects that you have worked on tells me nothing about you. If there are 10 candidates waiting, you have very little chance of being picked.

Someone with a history of open source contributions would be at the top of our candidate list.

I have some downloadable exes on my website http://zonas.free.fr

Also bitbucket.com/jokoon/eio and github.com/jokoon/eio

Not really bright, but when I hear the "booming IT sector", I'm a little skeptic.

Please keep in mind I'm just trying to give you advice on how other employers might view you.

Your github/bitbucket just looks like bunch purposeless code. I presume it's your game?

If I were to make a judgement from looking at that. My impression would be that you might have a hard time being motivated for the work I would give you. You were not motivated enough to finish school. In your spare time you're working on a game, which is something beginners tend to start with.

There are a bunch of projects that are highly active and welcoming to contributors. Projects like servo or atom.io

Also try to keep your reddit and similar profiles private. You can give an employer too much of an intimate view.

> If I were to make a judgement from looking at that.

I'm reading anyway

> You were not motivated enough to finish school.

You might not know what the school system is like in france, and you don't know me either, so don't jump to conclusions.

> on how other employers might view you

You seem like a PR person, and I don't really like it. I has its importance, but I don't think it matters to me or should matter to my existence.

> You can give an employer too much of an intimate view

I got nothing to hide, I like to be honest. Points up for creepiness. If an employer wants to be politically correct, it's his problem.

Employers have to chose who to hire based on 1h interviews; how do you expect them to do that without jumping to conclusions?

Also, don't confuse honesty with aggressiveness. The interviewer will never get to know you, they'll only get a glimpse; it's not dishonest to make a deliberate decision about what you'll show them.

I read your parent posts and nodded in agreement, wondering if maybe I should ask for your resume. IT around here really has a lack of smart people that can keep things running. Then I read this. Whoops, dodged that one.

So what I should change my mind about my opinions? I could say the same about your comment "Phew, dodged that one".

If you really think you're going to know me by reading my internet comments, well, that might be your problem too.

No, you should not change your mind on your opinions. You should however keep your opinions to yourself or give up on "l'ascenceur social". Pick one.

(And also, read between the lines. People are dropping heavy hints in their responses to you.)

So, someone who is studying compsci and maintaining an FLOSS project would be at the top of your list?

Well, sadly that doesn’t help finding a student job that I can do in parallel to studying :/

It's not even America, look around you: Germany has great opportunities for people with developing knowledge, Netherlands, England, Ireland... On the other hand I know France is in that situation, as well as Spain, Italy...

But a part of it is definitely your attitude; move around, search for your options.

This comes from a Spaniard that dropped out of college, has lived in France (I worked for Renault, FFS), Holland and, for the last 10 years, in Ireland. And I wouldn't change a thing.

> But a part of it is definitely your attitude; move around, search for your options.

I'm part of the population who are considered poor in france. I don't have resources to "move around", I'm on welfare, and currently can't move out of my girlfriend apartment because I don't have enough resources to get a new home, nobody will risk renting to me. Both parents are broke. I live in one of the most unemployed region of france.

I might have an attitude, but I have explored options, and they're not so good. Maybe I should take risks, and maybe I'm not inventive. I've had many interviews, and none hired me.

Not hiding my desperate situation is creeping up on my moral, but I think I would be open to any decent suggestion that don't involve me being at risk of turning homeless.

If you've got an internet connection and a computer you can develop on, you can try starting as a freelance developer on one of the many websites like elance or guru etc.

In the beginning you'll have to work for little money and not-great projects to compete with lots of people from poorer countries, but as you start adding completed projects and good feedbacks to your profile, you can go up the ladder and, probably find better opportunities - either by starting to work regularly for some of your online employers, or moving somewhere else.

Assuming you're willing to relocate, have you tried remote interviews? Nowadays the first round can be done over video-conference, and even if you need to go to their offices for the final interview, many companies are willing to pay for the trip.

danmaz74's advice is good too; if you pick a niche tech that you know well, you can make 50-60€/hour on fixed-fee jobs, though you might only get two or three per month initially.

In many parts of the US, including Silicon Valley, experience and demonstration of competency is valued much more than education when it comes to software. Consequently, everything is about getting that initial experience, education just makes that first step easier. From there you can bootstrap yourself into almost any position in the software world through demonstration of capability and most employers will take you seriously.

What makes this more difficult in Europe is that they often discount any amount of experience without what they view as the appropriate education.

There is a simple formula in the US that countless developers have used for bootstrapping a career without education or experience: work for a bottom-feeder consulting shop. The job will generally be awful and have terrible pay, but because of that it makes it easy for someone with talent and work ethic to really stand out. In a year or two, plenty of much better companies will hire you on the basis of your experience. Wash, rinse, repeat. As far as I can tell, this doesn't work in Europe.

It does work in UK. I've applied to many positions in the last 5 years or so and not even once the education was brought up in any significant way. Skills/experience is what counts and smart employers know that.

UK is not really europe, it's also pretty liberal compared to the rest of europe, especially compared to france.

In Germany it does, too, though. I know many people in Germany and Austria in IT who have no formal education.

Even in America it's difficult to get a job with no CS degree and no experience. Actually it can be tricky to get a job with just a degree and no experience.

I got an English degree and then spent the first several years building Drupal websites on contract. Eventually I built up enough business experience to pursue more sophisticated work.

Contributing to Open Source is great too, in that there's no barrier to entry except your ability to work on a team and write sufficient quality code. Employers will still want to see some traded-code-for-money type experience on your resume though, so it's best to bite the bullet and find some lowball consultancy work.

I'm pretty curious if there actually are open source projects that are in need of beginners.

> except your ability to work on a team

Whell I'm bad at playing politics. I don't see why teamwork should be important for an open source project.

> Whell I'm bad at playing politics. I don't see why teamwork should be important for an open source project.

Well, mostly because you often get issues where you, as a team, have to make a decision.

Do we decide to support this specific feature, even if it increases our maintenance cost by a lot?

> I'm pretty curious if there actually are open source projects that are in need of beginners.

There are many projects. A good way to start is by trying to fix some tiny things that annoy you personally, use your changes yourself, and try to get them merged. This is useful as (a) probably others had the same issues, and (b) you have already tested the changes somewhat by that point.

It would help not to think about teamwork as "playing politics".

A degree carries much weight in London. Developers with negligible coding skills and a degree sail past those with skills and experience but no degree. It's quite bizarre. I guess the companies who hire that way don't know any different, and no one can be accused of taking a silly risk if something doesn't pan out.

The title of this article is an understatement. I'm a startup founder in Europe and we've been treading water for a year. How is a company supposed to get off the ground if nobody has a hand that is able to be reached out to any of us.

The government made it easier for startups to get loans from the bank. But they did it the same disastrous way as the housing market crash started. You can get a loan, the government takes a lot of the risk away from the bank. But you still have to pay it all back. All that means is that people are getting loans who shouldn't.

There isn't even a path through immigration. You're much more likely to be able to stay in Europe if you get a job. Otherwise they just won't let you in.

There aren't any investors here. When we look for investors, we have paid for tickets into large conferences and met leaders, owners, of Venture Capital organisations. There is a point where commonly they tell you after jumping through their hoops they do not have money. They say, we can give you 20k€ for x amount of equity where x is a two digit number. Everywhere you turn there are vultures, preying on startups. I get grilled by people promising to hook me up with investors all the time. People wearing business suits and trolling tech meetups only 5k€ for their help! They know people. Paid upfront.

Taxes are higher if you own your own company than if you simply have a job somewhere. Every single thing works against you. If a year ago we were able to hit the market we had 0 competitors, now we have 2.

You can get a loan, [...]. But you still have to pay it all back.

Nooooo! Really? You've got to be kidding me!

So basically you don't want to create a profitable company, but living the cool "startup life" while getting a basic income from the state?

That's... not how we usually see startups.

You missed the point. In order to explain the point I need to repeat myself, as I went out of my way to explain the point in my original post. When loans are given out to people who shouldn't be getting loans, you bankrupt more of those people than you help.

I believe London has co-opted (in the Naomi Klein sense) the US startup scene. We do all the superficial activity: incubators, pitches, hackathons, and so on, but it is driven by government initiatives and established businesses.

- There are many copies of the US startup accelerators, but the people running them do not seem to have the same level of experience and connections as in the US.

- Much of the activity is due to business students, both at bachelors level and MBA, who are somehow "trained" in "entrepreneurship". They "win" startup pitch competitions based on some slides and sales forecasts, then troll CS departments, alumni mailing lists and tech meetups looking for coders. I know this is an old stereotype (and that business skills are critical too) but it is very true here.

- The government is often heavily involved. I wouldn't call myself a libertarian, but I think we would be better off without cringeworthy gov initiatives like "tech city", state-funded startups (https://interact.innovateuk.org/) and university entrepreneurship schemes that look a lot like a way to boost new grad employment figures.

It all feels like a pale imitation of the US tech industry. Obviously there is some bias in terms of the US companies we hear about, but most people are thinking very small here.

A few years ago a friend and I coded up an idea we had over a few weekends. It was more complex than a straight CRUD app and had some nice visualisations, but nothing too crazy. We met several "startup advisors" through our contacts and at meetups. Every time we finished describing our idea, people would ask us if we were having any luck "finding programmers" to implement it.

I've long considered London to be nothing more than a giant PR exercise. Of course the prime minister is an ex-PR guy, so a connection wouldn't be surprising. I'm not sure it delivers on the image it projects in any respect. Except the new trains that have started on some lines - nice to have room to breathe when you're stuck on a track waiting for a signal failure. Even the new double decker busses with the aero fronts. What's the real difference? Nothing. In fact the new appearance doesn't even last beyond the front of the bus which is what people see when it approaches - the rear of the busses is unchanged. So we don't have impressive new busses, we have busses that look, upon first glance, from a specific angle, as though they are. Everything is careful illusion. People buy into perception. Look! We have silicon roundabout! Seriously?

The problem is that even if it is a giant PR exercise, it's still sucking talent away from the Midlands and the North.

There's a somewhat large group of startups here in Birmingham and there is a significant lack of talent (unless you want cookie cutter Microsoft technology developers) and investors. I started my own company to work on a project and I'm contracting at the moment to keep myself going and I still get asked if I want to join someone's startup as their first software engineer.

This reminds me of Australia's startup scene too: it's become something of a "game" with accelerators, advisors, incubators and even stranger things, often lead by people whose business experience (let alone tech startup experience) would be politely described as thin.

It's definitely a case of form without content, and no-one should be surprised if the results from such an ecosystem are less than stellar.

My experience running 2x startups in EU is that while lower salaries (esp Dev) helps at seed stage, in addition to government schemes like SEIS, scaling at SV pace is not possible without SV money. The best product in the world still needs consistent paid PR and advertising to acquire users - even viral growth needs a great social and content team to compete with a SV counterpart. These cannot be scaled cheaply. When the 1st round of EU unicorn founders sell out and start investing - then things will get interesting. Problem is - I don't have faith in many of the EU start ups being touted as unicorns, especially when I compare them to AirBnB, Dropbox, Stripe et al.

Can confirm that these are real problems (Belfast here).

I'd disagree that there's any kind of local bump among Europeans from being in Europe. More often than not, I've found that being based in Europe only serves to put people off, even at home.

I must admit that in the past I've outright skipped over new shiny apps and websites based in Europe (even if I believe in the idea) under the assumption that they'll just get crushed later by a US-based rival anyway, although I try to really give them a fair shake these days and not be an ass about it.

The funding picture here is fairly anemic too, and relies quite heavily on government support. Most European governments have some public funding allocated to building their "own Silicon Valley", but their results from allocating funding is about what you would expect from people not well versed in the industry.

I wrote about this recently as relates to losing Web Summit for silly reasons on Medium (same username). Don't want to direct link as I'm not trying to hijack the thread, people can check it out if they're interested.

Thanks for writing this.

> I must admit that in the past I've outright skipped over new shiny apps and websites based in Europe (even if I believe in the idea) under the assumption that they'll just get crushed later by a US-based rival anyway

And this is one of our big problems in this space.

The problem I have with these kinds of comparisons is that they seem to compare with Silicon Valley and not European countries that overachive in terms of startup like, say, Sweden which isn't very close to SV culturally.

there is no european startup scene* - if you are mark zuckerberg and building something that you intend to scale to every single person on earth, every single person you meet will look at you like you have two heads or something.

europeans write essays like tihs - https://signalvnoise.com/posts/3972-reconsider

that is literally a european essay urging you to reconsider.

* obviously they use the word, they just mean something different by it. i'm cmparing it with s.v.

I find it only positive that there's a European startup scene that tries to do things differently from Silicon Valley.

If you want to do the unicorn chasing thing, it makes sense to go to San Francisco. Places like Berlin, Madrid or Helsinki each need to have something unique to offer; there's no point in being a cheap imitation of the California dream.

Perfect. I think you nailed it. Posts claiming that European startup scene is bad is only looking for unicorn chasing. I just don't think it's a healthy, organic way of building a sustainable company.

I think more startups should stop imitating the SV culture and come up with their own way of doing business.

Well, people often are more okay with slow growth.

If you want explosive, unaffordable worldwide risky growth, Europe might just not be the right place.

>Talent is still localised. The European mobility is still low and employment laws are still strict on non-EU citizens

This may be an acceptable argument for America, but makes no sense for Europe.

I've seen great migration from high-unemployment EU places( Spain, Portugal and Italy) to UK, Germany and Switzerland.

Finding talent in EU is much easier (and cheaper) than in the U.S.

I guess the point is flow of talent from outside Europe. For example, there are significantly more good engineers from Indian, Europe and East Asia moving to Silicon Valley.

What are the factors stopping remote working in start-ups? It seems easier to address these than to force your hires to all move to a single place.

It's not like SV doesn't have any difficulties though (hiring, living costs, copycats etc). The main difference is the depth and failure tolerance of the home market. The number of early adopters is so much higher that it is much easier to take a product off the ground. In Europe you probably have to scale it country by country

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