Not that comfortable with Tencent starting to acquire up so many European digital companies. I'm not sure profit is their only motivation here.
I feel like in a decade us Europeans will be sitting around wondering why we sold off promising startups to China like we did US tech companies the previous decade.
>> I'm not sure profit is their only motivation here.
Not disagreeing or trying to get capital P political, just giggled a bit at "not profit" being the ominous factor. "Only in it for the profit" is now, perhaps, the devil we know.
More seriously, I get the point you are making. I don't know what I think of it all, honestly. There could be arguments in both directions. Maybe I'm overly considering the current crisis in Ukraine, but doesn't having holdings in the west disincentivize conflict and rifts? At some point along a conflict ladder, foreign assets get seized.
Maybe it's good to be exchanging hostages. I suppose it's just ambiguous/arguable what counts as who's hostage.
I'm not sure what distinction you think you're making. They bought a lump of the company at whatever valuation and that's termed an "investment". However my point is that I don't suspect they're strictly after a return on investment here.
>I'm not sure what distinction you think you're making. They bought a lump of the company at whatever valuation and that's termed an "investment". However my point is that I don't suspect they're strictly after a return on investment here.
The distinction is that "acquire" means controlling interest. Investing $497 million when the valuation is over $1 billion means... (doing the math) ... Tencent has less than 50% ownership. At this point, Tencent only has an investment and not a controlling interest. Therefore, Tencent did not acquire Scalapay (yet).
This isn't being pedantic about semantics. Instead, it's being very clear about who controls Scalapay based on how much ownership percentage was purchased.
Another example of the difference... in 1997 when Microsoft invested $150 million in Apple, it did not purchase enough ownership % to consider it an acquisition. The $150m is a lot of money but MS didn't acquire Apple with that transaction. (https://www.google.com/search?q=microsoft+invests+%24150+mil...)
EDIT reply to: >Valuation has nothing to do with controlling interest. They are unrelated.
Setting aside a multi-class stock arrangement with 10x voting rights which would be unusual for non-public company at this early stage because it requires approval by the previous investors & founders, the post-money valuation is mathematically related to the ownership percentage purchased -- and therefore determines if there's a controlling interest.
> Investing $497 million when the valuation is over $1 billion means... (doing the math) ... Tencent has less than 50% ownership
Technically, no. You can acquire control of a $100bn company for $1 if the shareholder agreement says so. Votes and dollars don’t have to correlate, particularly in Italy.
> Investing $497 million when the valuation is over $1 billion means... (doing the math) ... Tencent has less than 50% ownership.
> This isn't being pedantic about semantics.
You are quite simply wrong. Valuation has nothing to do with controlling interest. They are unrelated. A company can have 100 shares, each worth $1, and be valued at $2,000,000,000.
It's technically possible. You can imagine a company with exactly 100 shares, and a contract that allows the company a right to buy any share put up for sale pre-IPO for $1. Then all 100 shares are "worth" a dollar, even if the price in the market without that clause would be $20MM. That would correspond to a $2 billion valuation.
A company is worth what people are willing to pay for it's shares. The share price is not the same as valuation, which can be seen in the example above. It can also be seen with what is commonly called value investing, which is used by possibly millions of people, purchasing shares where the book value is greater than the trading value.
> company is worth what people are willing to pay for it's shares
If you say a company’s shares are “worth” $1 per share, you imply that’s what people are willing to pay for it. If you’re playing with the word “worth,” it’s your incumbency to explain that deviance from the common use.
Par value is a legal term. Book value is an (increasingly anachronistic) accounting term; actually, several terms, since GAAP book is separate from IASB or Chinese book, but I digress. Each of which are separate from market value, which is also various; consider a public stock: does one take the bid or the offer or the mid market tick? At Noon or the closing or a VWAP?
Companies play with their headline valuation. In this you are correct. But they’re playing with the ambiguity that stumbles you.
You agreed with my comment elsewhere. Please stop with strawman restatements and arguing for the sake of arguing.
> Technically, no. You can acquire control of a $100bn company for $1 if the shareholder agreement says so. Votes and dollars don’t have to correlate, particularly in Italy. [1]
If people are willing to buy shares only at $1/share and there are 100 shares, then the company is valued at $100. It may previously have been valued at $2M!
In the case of pre-public companies, where there is not a robust, liquid market in shares of the company, it can be difficult to figure out what the valuation of the company is. In that case, we often revert to the most recent time when lots of shares were sold, and what they were sold for. In the hypothetical scenario you refer to, this is a bad approximation.
If a company has, for example, liquid assets worth several million dollars, no liabilities that need to be paid off, but someone is willing to sell the company for $100, then that's a dumb valuation, but it's still the valuation.
no, they very explicitly co-lead the round with Willoughby Capital and the participation from Tiger Global, Gangwal, Moore Capital, Deimos, and Fasanara Capital.
Buying something to own/control it and investing in something for an expected future return are very, very, extremely different things and even more so in this context.
Both formally (terms and conditions signed by all the parties involved, and there are many here and it's Series B, the clauses regarding equity, control, debt, exits and so forth) and practically.
One down round later and investor preference shares+rights means Tencent, and effectively China, owns. It sounds like revenue (profit) is nowhere near these levels, so long time for that to change.
For all consequential purposes, their huge preference means they already do. You can bet there is strong language where Tencent (China) can veto big decisions, and hold that over the teams head for smaller ones.
Would it be good if profit was their only motivation? IMO the main problem with this is precisely that it ends up sending control of profits abroad. Of course, that's true with any multinational company. Anything else beyond profiteering can always be reversed by simply taking back control of the company in the worst case. Ownership is always with the grace of governments.
> Would it be good if profit was their only motivation?
yes, because the profit in the future would be priced into this sale today - presumably owned by italian.
This means the funds could be reinvested in a different company today - a new start up perhaps - which creates more profit in the future.
The problem with buying control for more than just profit (or regardless of profit) is that those who are buying control is seeking to control more than just commercial interest. If an unfriendly gov't were to instruct such holders to perform certain tasks, they would comply.
I think the preference is that the acquiring companies aren’t subject to extrajudicial influence by their governments where one might be cautious of Chinese or Russian ownership because their governments have embeds in these companies.
So it’s usually safer to have a Korean, Japanese, W European or Anglophone company take a stake. Obviously, all companies have some ties with their governments but the difference is degree and independence as well as a non-rubber stamping judiciary. Revolving doors can be an issue but it’s much less an issue than actual gov officials embedded in companies.
> Anything else beyond profiteering can always be reversed by simply taking back control of the company in the worst case. Ownership is always with the grace of governments.
Lol. You think it would be so simple for Italy to take control of a Chinese owned company? You think they could just do that at the snap of their fingers, with no repercussions?
I think it depends where the actual operations were. If most of the staff and physical assets were European based then absolutely. China pretty much already do this with companies operating in China.
If you tax away capital formation (or vote for people who do it) it's useless to wonder why European entrepreneurs take foreign capital. Most of them outright emigrate anyway so you don't even get to notice it.
> I feel like in a decade us Europeans will be sitting around wondering why we sold off promising startups to China like we did US tech companies the previous decade.
While what you're saying is true, might it be a brilliant time to sell a chunk to Tencent? If you believe that China is likely to invade Taiwan soon, and western countries will respond by freezing any Chinese assets overseas (see: Russia/Ukraine), might this be a great way to pocket cash and then have the equity revert back to you in a few months?
That said, Tencent seems to own a chunk of most important private tech companies and most mid-level game companies.
Chinese companies are a bit nationalist, and they definitely have some internal actors from the CCP there for purposes of oversight, and in a pinch can very easily have their arms twisted - but - they are just companies wanting to make money really.
Tencent is just Tencent. They will follow internal censorship laws, but it's likely just a matter of moderation much the way FB does it, but with different parameters, and taking some direction from the state. My guess is that for the most part Chinese companies are fine with it. For products they control outside the country my estimation is that it's censored in a completely different way, much more liberally, but some things might get scrubbed.
Of course investing in a company is different than owning it (i.e. >50%) and it's very different if it's based in China vs. a European company.
China has huge trade surplus. What this means, is that we send them USD/EUR for 'stuff'.
Eventually, they have to use those USD/EUR for 'something'. What are they going to buy? Well - stocks, real estate, companies etc..
It's actually rational for EU/USD to sell them things at hugely inflated price tags, it's a nice way to bring the cash back in on good terms.
If they are cash-flush, then they might just be looking to protect their money as much as anything.
In most cases, it's unlikely that having a Chinese investor will make a huge difference in terms of anything happening out of China. It's unlikely the could or would make censorship demands on anything happening outside of China, that said, if they gain control, it's a bit of a different story.
I think the lack of unicorns in Europe has a lot more to do with the regulation culture and lack of ecosystem around starting new companies than with the US or China acquiring them away before they have the chance to fully bloom. You can see this even within Europe. Lots more unicorns in the UK than in Italy for exmaple.
My point was that say India had 44 Unicorns in 2021, 10 in 2020 , 9 in 2019 totalling to a 88 Unicorns till now. So I was expecting higher for a EU economy.
> US tech companies use their power to censor some boobs and nipples, China will use their power in much more horrible ways.
That is a hopefully just naive (uninformed?) statement. US tech companies use their power already for censoring political parties/views, sell security/espionage technology to dictatorships/authoritarian governments, have invented dopamine exploiting dark patterns to keep their users captive, have a natural tendency for growing into a monopoly, lobby/threaten governments against the public interest and a lot more.
That's one thing. Chinese companies can't be seen as different from the government. You can blame the US for a lot of things, but it doesn't come close to the atrocities the Chinese government commits on a daily basis.
What China did doesn't even come close to the amount of atrocities, interferences in foreign politics, unwarranted wars caused only by the imperialist mindset of the US.
Please, read. There is so much to learn that it would probably take years for someone to learn in detail everything the US (and the other western powers, -the "good" guys-) have done.
Your citations are honest. But past performance doesn’t guarantee the future. It just informs it.
Most of America’s worst was in its post-War and imperialist eras. China is entering its own imperialist era.
If you’re upset about American meddling in Italian politics through the 1960s, you’ve surely seen who’s been bankrolling the current crop. In Italy, in the Philippines and elsewhere.
I understand your sentiment. And US has made a big mess in many places no doubt.
Yet please understand the view on individual rights in China is non-existent. Take for instance Guantanamo bay is child's play compared to treatment of:
- Falun Gong, they organ harvested their followers and sold their organs on the black market
- Entire Muslim population in Re-education camps + chemical sterilization
- Tibet as a people, country and culture is systematically being eradicated by a very well thought out strategy
And many more things happening.
And the imperial games the US played last 30 years. China is playing now, they have secretly taken over many African countries.
And if it wasn't for the military power of the US China would be much more blatant in taking over countries. Wether we like it or not, we need the US as a super power to balance out the others.
Chinese companies can't be seen as different from their government, US companies can't be seen as different from their advertisers.
The Chinese ones are arguably worse right now, but that's due to a difference in current attitudes of their censors, not because one of them is somehow free from pressure.
The difference is that the Chinese government can apply pressure via violence and arbitrary enforcement of laws, whereas advertisers can...decide to take their money elsewhere. Which is worse and more likely to lead to abuse?
Let me remind you that the country with the highest percentage of imprisoned people is USA, not China. “Incomparable atrocities” is mostly just US state propaganda.
Way to read that. And way for them to phrase it. The White House is trying to combat disinformation, not conservative outlets. It seems obvious but sadly most of the disinformation comes from conservative outlets.
Going to the homepage of that website though, it is clear what their narrative is:
> Trudeau’s Canadian Fascism Is a Bigger Threat to America Than Putin
I've been using TikTok for a while and is that claim based or anything? I've been fed cat videos and unless that is now subliminal communist propaganda I have to say Chinese firms and American firms seem to have only one goal, which is to get me to click on more stuff
given that the party is seemingly trying to dismantle them to the best of their ability I'm inclined to think even they agree
Any reason to believe it’s not the same as when you install any other app and grant it various permissions? Or are you insinuating that TikTok is exploiting the platforms and getting data it shouldn’t have access to?
It's more that it's possibly ending up in the hands of the Chinese government. Not that it's good when it ends up in the hands of Google, but that's less of a national security concern.
Congratulations Scalapay! IMHO Italy has a significant startup advantages, thanks to plentiful infrastructure in the cities, a dynamic culture that combines creativity and processes, and a sizeable economy.
I recently visited Milan-Florence-Rome and these feel to me very much like the startup scene in San Francisco in the mid-1990s, ready to grow fast and big. I believe the missing ingredient is more VC startup ecosystem help, from incubators through Series A. If you're interested in this area, I'd love to connect because I see opportunities to grow the talent and money in Italy instead of having it leave for London & NYC.
Honestly our insane taxation is holding us back. My salary is embarassing, but it's not even the company's fault, I'm costing my company ~2.5x what I make. The job market is perma-bearish and has been so since before I was even born.
Taxes are a problem but the work culture is also an issue. I tried to setup shop in Italy last year and it was... a mess. People not joining calls, broken English, a very concerning lack of trust in general from job candidates. I was offering market or higher than market wages. I ended up hiring more in our base in Krakow. It's getting harder to find people in Krakow but the work culture is on another level and English good across the board. Net IT salaries in Poland are more or less comparable to Italian ones, the overall cost difference is max ~20% for senior roles, so yeah taxes, but not enough to explain the "hold back" honestly.
The work ethic in Italy is … interesting. In my experience, they get their shit done when they say it will be done, not when you say it should be done. They enjoy time with family, and time away from work (when I say enjoy, I mean they will make time for it, even in the middle of an American defined work day). I’ve never had an issue with the Italians I’ve worked with and I’ve truly enjoyed spending time with them.
I think one issue is that market wages (or reasonably higher than market ones) for developers are so low that good talent will simply not be interested in your offer, especially if you are a small company (in which case you can at least play the "job security" card, which I think has a lot of weight here).
Setting up shop or working as a freelancer just pays so much better.
Well, that feels like a gross oversimplification. Other countries have tax brackets not too different from Italy's (eg. Germany), and Italy is not too high in the charts of cost of labour.
Economists would argue that it's a mixture of things: high taxes, low productivity, broken justice system, slow and intricate bureaucracy that does not really work, etc.
I bet that if Italy's economy would be based on high value-added industries (like France and Germany), less people would complain about high taxes.
sorry but I don't buy that much this argument anymore. I'm Italian living in Germany, I see exactly the same kind of issues that are holding back Italy economy (minus endemic organised crime) but still Germany has a far stronger economy.
You have high taxes, slow and intricate bureaucracy (it took more than 3 months to complete the house purchase process in Germany whereas in Italy is far faster), low productivity, tax evasion, etc etc but somewhat Germany works slightly better than Italy that generates far better results in the end.
I'm also an Italian living in Germany and I know what you mean. But I wasn't referring to the myth of Germany productivity, which is debatable.
The argument is not anecdotal, rather it is just based on the numbers (eg. GDP per hour worked, among others).
you're bot not mentioning irregular work and tax evasions. that and the fact that some regions produce a net positive in terms of per-capita gdp while other produce a net negative (a significant net negative).
I don’t know why you guys want to be America so bad. Nobody I personally know that has had the chance to move to the EU has ever returned. Roughly a sample size of 5, but you get the point.
Sample of one: can’t wait for my wife to be done with stuff here, so we can pack our stuff and go back in Europe.
I will leave a salary that I will never even remotely approach in France.
But quality of life… oh man quality of life.
Or education, I don’t want my kids to deal with education here.
When I sat down and did the math I realized moving from northern California to Ireland in 2013 has had a total opportunity cost of something like $1-$2 million, and that's conservative.
There are plenty of things to like about the EU but let's not kid ourselves, America is pretty nice if your goal is to be wealthy (and most people want that, even if they won't admit it).
The Americans the EU would be best for are, for the most part, the ones who can't get a visa.
Summary - if you're "meant" to be rich, i.e. you do what it takes, you'll probably be anywhere in the world. Is life in Europe more interesting, cultured, and sophisticated than living in nyc and vacationing in florida? probably.
It’s also not the general consensus I find by reading peoples experiences across various platforms online. I went to school for a year in Germany and greatly enjoyed it.
Of course I expect a different opinion from the top 3% income tech bro libertarian bent of the HN user base. But I haven’t seen a compelling reason here to think life for the average American is better than it is for someone in the EU.
You're right - for the average American it's worse. But average Americans can't move to the EU, for the most part.
For high earners the EU comes with a jaw-dropping price tag. The effective tax rate on a 200k income in Finland is over 50% for instance. In the US even the _marginal_ tax rate is nowhere near that.
I never looked at the actual rate but I just did my taxes here in the US.
And I was surprised to see that on average I pay almost a net month of salary. ( I pay 10k in 2021 so far, I will get a small return )
While in France, I was paying a month of my salary as well. ( roughly 3k / year )
Listening to French media, I thought I was moving to a tax heaven while going here.
Meh. I kinda pay the same thing.
Except I don’t get any benefit and half my salary needs to be stashed away to important, non négociable futur use. ( while that part is done for me in France automatically though socialized taxes )
I understand why you guy don’t like taxes thought : you really don’t get much back.
Actually, the marginal tax rate on $1M in California is over 50% (37 federal plus 13.3 state).
For 200k (euros), that's $250k or so which is 35% federal (single filer), 9.3% California for 44.3%. (Which I would argue isn't that far off).
It would probably be more useful to compare effective tax rates and what you get for them. In the US, Social Security applies to the first $147k now (so on $250k that's 3.6% effective), but you also get a small retirement income. In Finland, I assume people get services in exchange for those taxes that you might be paying for in the US (e.g., healthcare, childcare, education, and retirement income), so you can't just compare using "what are relative tax rates like?" as a question.
That’s the same as social security and Medicare “cotisations” except we just call them taxes. There’s also unemployment but I believe it’s by state and comes out of your states income tax, if they have one.
I find the difference between cotisations and taxes meaningful.
Specially in a context where one side of the political spectrum is constantly pushing to reduce the tax burden. Cotisations can be set aside in that discussion ( because, they are not taxes, you are guaranteed to see the money back in a specific and personal way )
Another difference is that French folks rely and plan to use the equivalent of Medicaid more.
Here; my understanding is that it’s a nice bonus.
( I might be wrong )
Very true - the other side to this is it's a _LOT_ harder to get to 200k+ in Europe than in California.
Anyway, I like the EU, but it still is a harder place to build wealth on the whole. Where I am you pay tax on _unrealized_ gains in ETF's (called deemed disposal), CGT is high (33%), and you get much less advantage saving for retirement than in the US.
On the other hand, if I lose my job, unemployment benefits more than cover our monthly expenses if we pare back a bit. Our overhead is low.
If it tells you anything I went back to California to start a company. Then, after someone drove a car in to my wife and the cop lied about her statement and she was lucky not to get a huge bill (it was the first few months of Obamacare before the horrific deductibles came in), AND she took her 1 week of vacation and that was it for the year, we decided to hell with that and moved back to the EU.
The maximum out of pocket expense for 2021 is $17k or so for a family, and even in CA, maximum premiums should be ~$25k per year for a family of 4, maybe closer to $30k if parents are age 55+.
At a million dollars of salary, that is not going to make a difference to anyone, especially because most of the $30k premiums will be paid by employer, so you are left spending $20k out of pocket maximum including your portion of the premiums.
I would just add $15k for a single person / $30k for a family to tax expenses to compare relative taxes for an employer person in US vs EU.
I was trying to give an idea of what horrific deductible would be. Probably less than $5k per year, and out of pocket maximum less than $10k even for a family. Healthcare expenses are not material to employees of tech companies…as long as they remain employees.
> My salary is embarassing, but it's not even the company's fault, I'm costing my company ~2.5x what I make.
That's not horrifically abnormal. A 2x multiplier on salary is considered standard in the US for the cost to an employer. If you make 20% less than a US counterpart, the company is breaking even.
As italian with a direct experience both times with it, I think Tiscali is an order of magnitude better now than when it was a unicorn, maybe these investements require profits so that companies need to cut on quality?
I wasn't aware of that, I was speaking as a user, maybe they're having an hard time to re-conquer customer's trust, but right now their connection is quite stable and fast
depop was funded in Italy, in an Italian incubator/accelerator, and moved the HQ to London a year later after getting seed investment from Italian investors so could be argued to be an Italian unicorn of sort.
But before depop I'm not sure why people keep ignoring/forgetting about YOOX?
The business scenario on their landing page is... take a loan to buy a piece of clothing... Instead of making the clothes cheaper for end consumer, now the consumer can indebt themselves to buy something sold with 5000% markup. Here is your 1 year payment plan for 50ml bottle of Schramani perfumes.
Yes I also believe it's a terrible service no-one should use!
If you can't afford luxury products don't buy them yet!
I made the same critic on swedish startup Klarna:
https://news.ycombinator.com/item?id=28139376
Because we're in a gigantic bubble where money is pouring so massively into so many startups that every metric is completely twisted/reversed, valuations are completely disconnected from reality, and the social validation they get from buzzwords on LinkedIn is more important than actual value delivered.
Yay, hundreds of millions of chinese dollars invested in a brand new italian payment company doing nothing really new... So exciting, so unicorn.
And almost nobody is talking about what Scalapay actually do, not in the article, not in here. How is this payment platform different than the other ones ? What tech are they using ? Is crypto-currency involve ? Do they actually propose apps on android and iOS to do payment for shop owners ? Is it nice to use ? What the point of paying everything in 3 times ? What will they do with 497 millions dollars ? You could create 497 payment companies with that money.
I'm concerned if BNPL practice flourishing because it's quite easy to trigger systemic crisis later on. Also quite ironic Tencent funded them, Ant group was whammed by Chinese Govt because they were promoting BNPL on scale.
>I'm concerned if BNPL practice flourishing because it's quite easy to trigger systemic crisis later on.
Genuine question - how would that work?
BNPL companies tend to have pretty low limits and demand repayment fairly quickly, so I don't think it could lead to a GFC-scale bad debt situation at the very least.
I feel like in a decade us Europeans will be sitting around wondering why we sold off promising startups to China like we did US tech companies the previous decade.