7 ms·

Europe’s Other Crisis: A Digital Recession

41 points by philippnagel 11y ago

trymas 11y ago
Not about article itself, but design of the website made me consider if it's worth reading. Fixed header and footer takes 25% of my screen's space and distracts greatly. If my screen would be somewhat smaller (e.g. 11-12'), first graph would barely fit in between header and footer.
sbt 11y ago
HBS - Sullying the Harvard name since 1908
mtgx 11y ago
> By many measures, the UK is ahead of the others in terms of its digital foundations and sophistication; for example, the proportion of retail in the U.K. penetrated by B2C e-commerce is nearly twice the European average and higher than even in the U.S. UK has been doing well compared to others mainly because it's a fully English speaking country and the US already has a history with UK (sort of speak). It's natural for US companies to establish headquarters in "Europe" in UK first, before any other country. Personally, I do hope US companies consider countries where leadership doesn't favor so strongly mass surveillance and censorship, but either way it has little to do with policies and laws. The language barrier is a huge problem for an "EU single market". As the young generations grow-up with the English-speaking Internet, it will be less of a problem, but right now the language barrier is very much real.
- kuschku 11y ago
  And even in Germany, for the first time ever, the IT business is the largest business. Car manufacturing is down to #2.
  - _up 11y ago
    How do they get the numbers. Are Banks that offer online Banking IT businesses? And everyone with a commercial website too?
    - kuschku 11y ago
      No, they especially do not count stuff like online banking, but companies that directly sell or provide IT solutions, including software vendors, SaaS companies, Hosters, Internet Exchanges, etc. This includes T-Systems, SAP, Hetzner, DE-CIX, etc. I do not know if they counted smaller startups like Soundcloud.
      - germanier 11y ago
        Could you provide a link (German is fine)? I couldn't find something like that in the few minutes I searched.
        kuschku 11y ago
        It was something one of my professors showed in a lecture, and I can't find it right now on mobile (especially as I am busy printing a letter, buying stamps, etc to send the livecoding guys a C&D), but you might find some numbers on the BitKom site.
- dublinclontarf 11y ago
  Ireland?
makeitstop 11y ago
I'm so tired of this bullshit right wing propaganda. It's been going on for decades, and always uses the same formula: 1) Europe (a non-existent as a nation, even purely geographically it's blurry) is in crisis/dying/crumbling. Optional addition: because socialism. 2) The solution is to be like the glorious USA.
- Malarkey73 11y ago
  Yes the "digital evolution index" does sound a nebulous rag-tag list of stuff that the sponsors MasterCard and DataCash would like govermnets to implement or remove for them. A complex issue no doubt - but I can't stand opinions dressed as "sciencey" research.
- mojuba 11y ago
  I've noticed that "bad news" about Europe as a rule pop up ahead of a weakening dollar. Just an observation. It's just these "news" are getting more and more ludicrous over time.
- mavdi 11y ago
  If you bury your head in sand that's exactly what you'll think. Try getting out of Europe more often and see what the rest of the world achieves in a year and then you'll come to the same conclusion. Even in case of already advanced countries like Japan, in certain sectors, they are years if not decades ahead of Europe.
  - spacecowboy_lon 11y ago
    Japan is not a good example as it lags in many other areas Plumbing for one
  - m_fayer 11y ago
    As the op said, there is no "Europe" and talking about it as if there's a single entity is, to European ears, quite ignorant. Practically the only thing Italy has in common with Poland has in common with France has in common with Holland is that they're all very generally liberal democracies. Otherwise, on the spectra of backwater-to-scifi, honest-to-corrupt, socialist-to-capitalist, religious-to-secular, nationalist-to-egalitarian, dynamic-to-sclerotic, authoritarian-to-permissive, you will find everything in every permutation, somewhere. I get that the US is big and diverse and dynamic. But the EU is far bigger (population wise) and far more culturally / economically / politically diverse.
gingerlime 11y ago
There are quite a few hurdles for small businesses and young startups in Europe to do business online: * registration of a limited company is not that simple in some countries. UK is relatively easy, but in Germany you need to invest at least 25,000 EUR just to get started. Half of it upfront. Not to mention notary fees and other red tape. * VAT is a huge pain since 2015, especially for digital goods and services. Look up VAT MOSS aka #vatmess * language - if you want to cater to a wider audience, localization is still a major aspect and costs a lot in terms of development, content, support etc * employment rules are usually much more strict. This is generally positive for employed individuals, but when it comes to a small business trying to work with freelancers (or freelancers themselves), they are massive hurdles. I'm familiar with IR35 in the UK, but there's pretty much the same thing here in Germany without having a fancy name... I'm pretty sure similar rules apply in other EU countries as well, but have no actual knowledge about other countries. Source: being a small fish entrepreneur in Israel, UK and Germany. EDIT I should also add currency support. Whilst the EUR covers a fair number of countries, there are still exceptions...
- pyvpx 11y ago
  I incorporated in Berlin with 1500EUR. I got a shelf corporation, with the documents translated to English so I didn't need an official interpreter @ 150EUR per hour, and the notar costs included. Granted it isn't a GmbH but a UG, so I imagine for some industries that wont work; but for a boutique consulting firm it's been excellent. VAT is a mess, though. definitely. but then you hire an accountant and you get VAT + all that other tax stuff "abstracted" away for a very reasonable cost.
  - kawera 11y ago
    I want to incorporate in Germany too and am researching the topic right now. Did you use an online incorporation service. If so, could you share a few pointers?
    - pyvpx 11y ago
      there are cheaper ways to go about it, but I used Foratis and cannot speak higher of their service and product. My partner also formed her own UG but used firma.de, hired a certified but inexpensive official translator, and it took nearly four months from start to finish. Note that Foratis does not do the VAT registration for you, like some other shelf corporation providers. I didn't realize this and it became a minor pain. Whatever you do, budget for a competent Steuerberater. DIY is nearly impossible unless you have strong German skills, and even my native business owner friends don't DIY when it comes to Finanzamt dealings :)
entropyneur 11y ago
We incorporated our startup in the Netherlands because that's where one of the founders lived. It took a couple of months of sending various documents back and forth and required 18K EUR in cash (recoverable) as well as some non-trivial expenses for various fees. Fast forward a few years, we sold our app and liquidated the company. The amount we received in cash before income tax is less than half of what was paid to us. I feel like I was working for the Dutch government this whole time. Obviously not happening again.
- roel_v 11y ago
  Then you weren't informed/advised properly, because it's possible much easier and cheaper, especially for digital goods suppliers. But yes, if you naively follow the simple interpretation of the law and/or what the website of the tax office says, you'll get shafted.
hobo_mark 11y ago
Isn't this what Estonia is trying to solve with their e-residency initiative?
xchaotic 11y ago
The graph on HBR is a bit weird. Czech and Slovakia are just next to each other geographically (used to be same country), Czech are pretty far in terms of getting things done digitally and yet they are classed as rapidly receding, Slovakia is in the "slowly advancing" category. I'm sure there are minute differences between those countries but as vast as the graph portrays...
rajadigopula 11y ago
Yet the UK PM is keen on making things much tougher for digital startups - http://uk.businessinsider.com/immigration-cuts-will-hurt-uk-tech-sector-2015-10 http://uk.businessinsider.com/immigration-cuts-will-hurt-uk-...
dandare 11y ago
4 websites deeper I finally found at least an outline of what are they actually measuring: "Our data and insights are calculated and measured utilizing four drivers. Digital Economy Driver - Demand Demand: covers consumer income and demographics as well as internet usage. Digital Economy Driver - Supply Supply: focuses on technology and infrastructure and whether or not they can support digital commerce and transactions. Digital Economy Driver - Institutions Institutions: accounts for government policy and access to trade. Digital Economy Driver - Innovation Innovation: rates the environment for creating startups and the overall competitive landscape."
arcosdev 11y ago
The index's criteria... ...high levels of digital development are attractive to global businesses and investors and that their digital ecosystems are positioned to nurture start ups and internet businesses that can compete globally ...is so nebulous and silly how could anyone take this seriously?

41 points by philippnagel 11y ago

Not about article itself, but design of the website made me consider if it's worth reading. Fixed header and footer takes 25% of my screen's space and distracts greatly. If my screen would be somewhat smaller (e.g. 11-12'), first graph would barely fit in between header and footer.

sbt 11y ago

HBS - Sullying the Harvard name since 1908

mtgx 11y ago

> By many measures, the UK is ahead of the others in terms of its digital foundations and sophistication; for example, the proportion of retail in the U.K. penetrated by B2C e-commerce is nearly twice the European average and higher than even in the U.S. UK has been doing well compared to others mainly because it's a fully English speaking country and the US already has a history with UK (sort of speak). It's natural for US companies to establish headquarters in "Europe" in UK first, before any other country. Personally, I do hope US companies consider countries where leadership doesn't favor so strongly mass surveillance and censorship, but either way it has little to do with policies and laws. The language barrier is a huge problem for an "EU single market". As the young generations grow-up with the English-speaking Internet, it will be less of a problem, but right now the language barrier is very much real.

kuschku 11y ago
And even in Germany, for the first time ever, the IT business is the largest business. Car manufacturing is down to #2.
- _up 11y ago
  How do they get the numbers. Are Banks that offer online Banking IT businesses? And everyone with a commercial website too?
  - kuschku 11y ago
    No, they especially do not count stuff like online banking, but companies that directly sell or provide IT solutions, including software vendors, SaaS companies, Hosters, Internet Exchanges, etc. This includes T-Systems, SAP, Hetzner, DE-CIX, etc. I do not know if they counted smaller startups like Soundcloud.
    - germanier 11y ago
      Could you provide a link (German is fine)? I couldn't find something like that in the few minutes I searched.
      - kuschku 11y ago
        It was something one of my professors showed in a lecture, and I can't find it right now on mobile (especially as I am busy printing a letter, buying stamps, etc to send the livecoding guys a C&D), but you might find some numbers on the BitKom site.
dublinclontarf 11y ago
Ireland?

makeitstop 11y ago

I'm so tired of this bullshit right wing propaganda. It's been going on for decades, and always uses the same formula: 1) Europe (a non-existent as a nation, even purely geographically it's blurry) is in crisis/dying/crumbling. Optional addition: because socialism. 2) The solution is to be like the glorious USA.

Malarkey73 11y ago
Yes the "digital evolution index" does sound a nebulous rag-tag list of stuff that the sponsors MasterCard and DataCash would like govermnets to implement or remove for them. A complex issue no doubt - but I can't stand opinions dressed as "sciencey" research.
mojuba 11y ago
I've noticed that "bad news" about Europe as a rule pop up ahead of a weakening dollar. Just an observation. It's just these "news" are getting more and more ludicrous over time.
mavdi 11y ago
If you bury your head in sand that's exactly what you'll think. Try getting out of Europe more often and see what the rest of the world achieves in a year and then you'll come to the same conclusion. Even in case of already advanced countries like Japan, in certain sectors, they are years if not decades ahead of Europe.
- spacecowboy_lon 11y ago
  Japan is not a good example as it lags in many other areas Plumbing for one
- m_fayer 11y ago
  As the op said, there is no "Europe" and talking about it as if there's a single entity is, to European ears, quite ignorant. Practically the only thing Italy has in common with Poland has in common with France has in common with Holland is that they're all very generally liberal democracies. Otherwise, on the spectra of backwater-to-scifi, honest-to-corrupt, socialist-to-capitalist, religious-to-secular, nationalist-to-egalitarian, dynamic-to-sclerotic, authoritarian-to-permissive, you will find everything in every permutation, somewhere. I get that the US is big and diverse and dynamic. But the EU is far bigger (population wise) and far more culturally / economically / politically diverse.

gingerlime 11y ago

There are quite a few hurdles for small businesses and young startups in Europe to do business online: * registration of a limited company is not that simple in some countries. UK is relatively easy, but in Germany you need to invest at least 25,000 EUR just to get started. Half of it upfront. Not to mention notary fees and other red tape. * VAT is a huge pain since 2015, especially for digital goods and services. Look up VAT MOSS aka #vatmess * language - if you want to cater to a wider audience, localization is still a major aspect and costs a lot in terms of development, content, support etc * employment rules are usually much more strict. This is generally positive for employed individuals, but when it comes to a small business trying to work with freelancers (or freelancers themselves), they are massive hurdles. I'm familiar with IR35 in the UK, but there's pretty much the same thing here in Germany without having a fancy name... I'm pretty sure similar rules apply in other EU countries as well, but have no actual knowledge about other countries. Source: being a small fish entrepreneur in Israel, UK and Germany. EDIT I should also add currency support. Whilst the EUR covers a fair number of countries, there are still exceptions...

pyvpx 11y ago
I incorporated in Berlin with 1500EUR. I got a shelf corporation, with the documents translated to English so I didn't need an official interpreter @ 150EUR per hour, and the notar costs included. Granted it isn't a GmbH but a UG, so I imagine for some industries that wont work; but for a boutique consulting firm it's been excellent. VAT is a mess, though. definitely. but then you hire an accountant and you get VAT + all that other tax stuff "abstracted" away for a very reasonable cost.
- kawera 11y ago
  I want to incorporate in Germany too and am researching the topic right now. Did you use an online incorporation service. If so, could you share a few pointers?
  - pyvpx 11y ago
    there are cheaper ways to go about it, but I used Foratis and cannot speak higher of their service and product. My partner also formed her own UG but used firma.de, hired a certified but inexpensive official translator, and it took nearly four months from start to finish. Note that Foratis does not do the VAT registration for you, like some other shelf corporation providers. I didn't realize this and it became a minor pain. Whatever you do, budget for a competent Steuerberater. DIY is nearly impossible unless you have strong German skills, and even my native business owner friends don't DIY when it comes to Finanzamt dealings :)

entropyneur 11y ago

We incorporated our startup in the Netherlands because that's where one of the founders lived. It took a couple of months of sending various documents back and forth and required 18K EUR in cash (recoverable) as well as some non-trivial expenses for various fees. Fast forward a few years, we sold our app and liquidated the company. The amount we received in cash before income tax is less than half of what was paid to us. I feel like I was working for the Dutch government this whole time. Obviously not happening again.

roel_v 11y ago
Then you weren't informed/advised properly, because it's possible much easier and cheaper, especially for digital goods suppliers. But yes, if you naively follow the simple interpretation of the law and/or what the website of the tax office says, you'll get shafted.

hobo_mark 11y ago

Isn't this what Estonia is trying to solve with their e-residency initiative?

xchaotic 11y ago

The graph on HBR is a bit weird. Czech and Slovakia are just next to each other geographically (used to be same country), Czech are pretty far in terms of getting things done digitally and yet they are classed as rapidly receding, Slovakia is in the "slowly advancing" category. I'm sure there are minute differences between those countries but as vast as the graph portrays...

rajadigopula 11y ago

Yet the UK PM is keen on making things much tougher for digital startups - http://uk.businessinsider.com/immigration-cuts-will-hurt-uk-tech-sector-2015-10 http://uk.businessinsider.com/immigration-cuts-will-hurt-uk-...

dandare 11y ago

4 websites deeper I finally found at least an outline of what are they actually measuring: "Our data and insights are calculated and measured utilizing four drivers. Digital Economy Driver - Demand Demand: covers consumer income and demographics as well as internet usage. Digital Economy Driver - Supply Supply: focuses on technology and infrastructure and whether or not they can support digital commerce and transactions. Digital Economy Driver - Institutions Institutions: accounts for government policy and access to trade. Digital Economy Driver - Innovation Innovation: rates the environment for creating startups and the overall competitive landscape."

arcosdev 11y ago

The index's criteria... ...high levels of digital development are attractive to global businesses and investors and that their digital ecosystems are positioned to nurture start ups and internet businesses that can compete globally ...is so nebulous and silly how could anyone take this seriously?