6 ms·

It's interesting he's jumping straight to "moonshots". Not a lot of companies come out of Europe, and I don't get the impression that's due to a lack of ambitio

It's interesting he's jumping straight to "moonshots". Not a lot of companies come out of Europe, and I don't get the impression that's due to a lack of ambitious ideas. Rather, it's really hard to start a company in Europe – the tolerance for risk just isn't there (legally or otherwise).

sveme 6y ago
I believe it‘s rather an issue with the size of the market. It‘s just so much easier to internationalize when you are already the dominant player in the world‘s largest market, the US. Scales matter, see China.
- d_silin 6y ago
  EU is not a small market, but lack of unified culture/language is a bit of limitation.
  - skohan 6y ago
    I see no reason a web-based product of European origin could not succeed in the US or Chinese markets. TikTok for example has done phenomenally in western markets despite the large cultural differences the development team likely has from many of their users.
    - solarkraft 6y ago
      I see 2 (but am not sure how problematic they really are on a larger scale): The GDPR and upcoming upload filters/required user identification due to the copyright reform.
      - skohan 6y ago
        Would those affect a european-based company hosting and serving users in the US or Asia? US-based companies face the same challenges when trying to reach European customers, so this is an equal playing field as far as I can tell.
        konschubert 6y ago
        I think it’s very hard to launch a product in a foreign market without validating it in a domestic market first.
    - ben_w 6y ago
      Indeed, Skype is an example of this.
- yholio 6y ago
  The EU fought hard to create a single market, but the language, cultural and market fragmentation is still strong. It exists to some degree in the US (see for example Tesla's plight with protectionist dealership laws). But at least you don't need completely separate marketing, product branding and distribution in each state. If support and language is an issue, the complexity of EU business explodes. The linguistic bureaucracy of the EU Parliament is a good example, it makes the whole process 4x more expensive and cumbersome.
  - konschubert 6y ago
    Language is still an incredible barrier between cultures.
  - renewiltord 6y ago
    The single market implementation is completely bogus. That's not anyone's fault. It's just that laws that restrict are contravariant against the interface. So European Parliament decides that everyone should have something that meets at least something, so everyone has a piece that meets that something and then more in whichever way they like. But that makes the interface useless to build against. So you meet the German version and the French version and then let all the rinkydink economies like Greece just use those. US laws leave a lot less to the imagination, they are hyper-constrained in general, and there's a large body of work on how to bypass them. Like, Romania may use GDPR to hunt down journalists and company bosses but you know California won't use CCPA that way, so you're cool.
raverbashing 6y ago
Well it seems that's the reason why he's targeting the moonshots. It isn't too hard (thankfully) to get finance for a moderately viable idea.
skohan 6y ago
As someone who has worked in both US and German-based startup, I agree that risk tolerance is a huge factor. Everyone from VC's to employees here seem to be way more hesitant to invest in an idea which hasn't been proven elsewhere in some form. That's a pretty bad recipe for moonshots, which by nature need to break the mold a bit. People are also much more risk averse in terms of business model. For instance, the idea of loss-leading to gain market-share will play much better in the US than Germany, where it seems people would rather settle for modest revenue but stay in the black the whole time. Another factor is the concept of work and work-life balance. In Germany holidays are sacred, and you won't generally find people putting in tons of overtime to get a product off the ground. That's great when you're a worker, but it does mean a slower pace than I saw in the US.
- heavenlyblue 6y ago
  > In Germany holidays are sacred, and you won't generally find people putting in tons of overtime to get a product off the ground Hmh. That’s only 10% slower if you assume Americans never take holidays (which is probably not true at all). I don’t really believe startupers work as much as they claim to however, because you are usually useless at 16 hours a day for a month. How much did it take Elon Musk to go callig people pedos of working heavy hours and sleeping in the office?
  - skohan 6y ago
    It's not about the hours as much as the attitude toward work. The pace of work is just slower in general in Germany in my experience: when there's a conflict between a deadline and capacity in Germany, the deadline gets pushed. In US, capacity gets increased. Don't get me wrong, I think the German way of working is way healthier and more sustainable, but everything has a trade-off, and the leave-it-all-on-the-table mentality of American startups seems more conducive to getting an innovative project with difficult technical problems off the ground in my experience.
    - username90 6y ago
      Sweden manage to create quite a lot while keeping above average European worker protections. We say that having lots of protections makes people more willing to take risk since worst case they will have to live on state aid for a while. Likely Daniel Ek want to make the other European countries as good at creating successful companies as Sweden is.
diggan 6y ago
> Rather, it's really hard to start a company in Europe As always, depends on where. Sweden has (or used to, at least before) basically a website where you can create a company, and it's mostly free to start the company as an individual (at least the basic form) so you can't really complain that it's hard. In Spain, it's also relatively easy, just have to go sign some papers (and depending on company type, invest some money into it), but it's hardly "really hard". Not sure about the rest of Europe, but can't imagine it's a lot harder than these two examples (counter examples incoming surely). Although, if you with "it's really hard to start a company" mean "it's really hard as a unknown startup to raise funds from VCs", then yes, European investors do way more due diligence and are more risk averse, compared to US investors. But there are more things than startups :)
- renewiltord 6y ago
  Sure, but that's not it. I can pay a hundred bucks and start in California but that's not the end of it. I'd have to pay franchise tax till the end of time, I have to pay SF tax on that, then I have to pay Prop C. If I were in LA, I'd have to pay city tax and county tax. Just keeping all the taxes straight would cause me to kill myself before I start in California. Everyone knows you incorporate in Delaware. It's like that. I don't know what sort of laws you guys have there but just the paperwork is going to kill me, probably. And then any time you want to do anything, the paperwork will kill you, the regulators will be on your case, and all that. And that's the way Europeans like it. It's culturally normal there to be like "Oh, well why do you think you should be allowed to do that". For instance, they would say "Maybe it isn't right that a company can just target ads to people without a comprehensive affirmative opt-in" and that would be the dominant view. "Maybe some guy in a garage shouldn't be allowed to hold a million people's personal data". There's a trade-off there: you don't get tracked but you don't get Google. And that's fair, but it means no business models that rely on things like that which count on low transaction costs can't happen, and lots of unicorns count on that.
  - diggan 6y ago
    > It's like that. I don't know what sort of laws you guys have there but just the paperwork is going to kill me, probably. And then any time you want to do anything, the paperwork will kill you, the regulators will be on your case, and all that. And that's the way Europeans like it. It's culturally normal there to be like "Oh, well why do you think you should be allowed to do that". Come on, really? It's hardly that much paperwork. Sure, it sucks, but compared to building a business, filling out paperwork doesn't come close to being the hardest thing. Sounds like what you describe here is that it's more paperwork in the US than in the European countries I'm familiar with, so kind of goes against what you're arguing here. > And that's the way Europeans like it. It's culturally normal there to be like "Oh, well why do you think you should be allowed to do that". I'm not sure where you are from, but I hardly get the feeling you're "European". Throwing blanket statements like "that's the way Europeans like it" is impossible, it's a huge and diverse area, so you can't generalize like that. Plenty of people here wants things to improve/change and depending on the location, you're right or wrong. Rules in Sweden are seen as "must follow" while rules in Spain is mostly seen as "advised to follow but if you must, do what you want, as long as you don't harm others".
jillesvangurp 6y ago
Creating companies is indeed a bureaucratic nightmare in Germany (where I currently live); but its doable if you need it done. It's easier in e.g. Finland, Sweden, Estonia (which actually have produced some nice startups like Spotify, Skype, etc.). IMHO given the relatively small populations, places like that are actually remarkably successful when it comes to startups and technology companies. Finland has a mere 5 million people. I mean, Nokia for whom I used to work came from that tiny country and dominated the smart phone market for a while. However, the real issues are more related to securing investments and funding and the inevitable process of having to shut down a company in case it fails. Which with a startup is more likely to happen than not. Failing fast is hard in a legal system that is purposely designed to make this hard. It's also risky. You take a personal risk when you start a company and when a company can't pay its bills, it's the managing directors who are on the line with their personal capital. Limited liability is not so limited in Germany and it prevents companies from taking risks. There are all sorts of tricks to prevent that from escalating of course but they all involve the use of accountants, lawyers, and other middle men that are costly. And given that it is hard to raise seed capital in Germany, very little gets off the ground here. Berlin where I live is a bit unusual in the sense that despite all this, there are loads of startups here and a density of capital and talent that is hard to find elsewhere in Europe. I always joke that this is despite the German government rather than because of their policies. It's basically a weird side-effect of the place being pretty much bankrupt. Local government here is basically just moving paper around and tends to be very hands-off because they have no budget for basically anything; including going after pesky startups taking liberties with the rules and regulations. Everything in this country is regulated to death but Berlin seems to be reasonably relaxed and informal. For better or worse, people just showed up here from all over the world and started doing stuff after the wall came down. Lately, big German corporations that are trying to look hip are opening startup accelerators all over Berlin. Like all of them: Bosch, Siemens, VW/Porsche, etc. all are present here. Silicon Valley also moved in: MS, Apple, Tesla, Google, etc. all have offices here. And of course Tesla is building a Giga factory.
stkdump 6y ago
> Not a lot of companies come out of Europe Thats not true. Many companies are in Europe, much more than in the US: https://www.nationmaster.com/country-info/stats/Economy/Micro/Small-and-medium-enterprises/Number/Per-capita https://www.nationmaster.com/country-info/stats/Economy/Micr... In Europe we have more companies of all sizes instead of accumulating into few mega-companies. But that has nothing to do with risk tolerance.
- barry-cotter 6y ago
  Bigger companies are more efficient and more profitable on average though. You kind of have to be to grow. Fewer companies, but more efficient and profitable are more productive and lead to a higher tax take which can be used for all the things the government is good at, providing services we want to be universal and transfer payments.

sveme 6y ago

I believe it‘s rather an issue with the size of the market. It‘s just so much easier to internationalize when you are already the dominant player in the world‘s largest market, the US. Scales matter, see China.

d_silin 6y ago
EU is not a small market, but lack of unified culture/language is a bit of limitation.
- skohan 6y ago
  I see no reason a web-based product of European origin could not succeed in the US or Chinese markets. TikTok for example has done phenomenally in western markets despite the large cultural differences the development team likely has from many of their users.
  - solarkraft 6y ago
    I see 2 (but am not sure how problematic they really are on a larger scale): The GDPR and upcoming upload filters/required user identification due to the copyright reform.
    - skohan 6y ago
      Would those affect a european-based company hosting and serving users in the US or Asia? US-based companies face the same challenges when trying to reach European customers, so this is an equal playing field as far as I can tell.
      - konschubert 6y ago
        I think it’s very hard to launch a product in a foreign market without validating it in a domestic market first.
  - ben_w 6y ago
    Indeed, Skype is an example of this.
yholio 6y ago
The EU fought hard to create a single market, but the language, cultural and market fragmentation is still strong. It exists to some degree in the US (see for example Tesla's plight with protectionist dealership laws). But at least you don't need completely separate marketing, product branding and distribution in each state. If support and language is an issue, the complexity of EU business explodes. The linguistic bureaucracy of the EU Parliament is a good example, it makes the whole process 4x more expensive and cumbersome.
- konschubert 6y ago
  Language is still an incredible barrier between cultures.
- renewiltord 6y ago
  The single market implementation is completely bogus. That's not anyone's fault. It's just that laws that restrict are contravariant against the interface. So European Parliament decides that everyone should have something that meets at least something, so everyone has a piece that meets that something and then more in whichever way they like. But that makes the interface useless to build against. So you meet the German version and the French version and then let all the rinkydink economies like Greece just use those. US laws leave a lot less to the imagination, they are hyper-constrained in general, and there's a large body of work on how to bypass them. Like, Romania may use GDPR to hunt down journalists and company bosses but you know California won't use CCPA that way, so you're cool.

raverbashing 6y ago

Well it seems that's the reason why he's targeting the moonshots. It isn't too hard (thankfully) to get finance for a moderately viable idea.

skohan 6y ago

As someone who has worked in both US and German-based startup, I agree that risk tolerance is a huge factor. Everyone from VC's to employees here seem to be way more hesitant to invest in an idea which hasn't been proven elsewhere in some form. That's a pretty bad recipe for moonshots, which by nature need to break the mold a bit. People are also much more risk averse in terms of business model. For instance, the idea of loss-leading to gain market-share will play much better in the US than Germany, where it seems people would rather settle for modest revenue but stay in the black the whole time. Another factor is the concept of work and work-life balance. In Germany holidays are sacred, and you won't generally find people putting in tons of overtime to get a product off the ground. That's great when you're a worker, but it does mean a slower pace than I saw in the US.

heavenlyblue 6y ago
> In Germany holidays are sacred, and you won't generally find people putting in tons of overtime to get a product off the ground Hmh. That’s only 10% slower if you assume Americans never take holidays (which is probably not true at all). I don’t really believe startupers work as much as they claim to however, because you are usually useless at 16 hours a day for a month. How much did it take Elon Musk to go callig people pedos of working heavy hours and sleeping in the office?
- skohan 6y ago
  It's not about the hours as much as the attitude toward work. The pace of work is just slower in general in Germany in my experience: when there's a conflict between a deadline and capacity in Germany, the deadline gets pushed. In US, capacity gets increased. Don't get me wrong, I think the German way of working is way healthier and more sustainable, but everything has a trade-off, and the leave-it-all-on-the-table mentality of American startups seems more conducive to getting an innovative project with difficult technical problems off the ground in my experience.
  - username90 6y ago
    Sweden manage to create quite a lot while keeping above average European worker protections. We say that having lots of protections makes people more willing to take risk since worst case they will have to live on state aid for a while. Likely Daniel Ek want to make the other European countries as good at creating successful companies as Sweden is.

diggan 6y ago

> Rather, it's really hard to start a company in Europe As always, depends on where. Sweden has (or used to, at least before) basically a website where you can create a company, and it's mostly free to start the company as an individual (at least the basic form) so you can't really complain that it's hard. In Spain, it's also relatively easy, just have to go sign some papers (and depending on company type, invest some money into it), but it's hardly "really hard". Not sure about the rest of Europe, but can't imagine it's a lot harder than these two examples (counter examples incoming surely). Although, if you with "it's really hard to start a company" mean "it's really hard as a unknown startup to raise funds from VCs", then yes, European investors do way more due diligence and are more risk averse, compared to US investors. But there are more things than startups :)

renewiltord 6y ago
Sure, but that's not it. I can pay a hundred bucks and start in California but that's not the end of it. I'd have to pay franchise tax till the end of time, I have to pay SF tax on that, then I have to pay Prop C. If I were in LA, I'd have to pay city tax and county tax. Just keeping all the taxes straight would cause me to kill myself before I start in California. Everyone knows you incorporate in Delaware. It's like that. I don't know what sort of laws you guys have there but just the paperwork is going to kill me, probably. And then any time you want to do anything, the paperwork will kill you, the regulators will be on your case, and all that. And that's the way Europeans like it. It's culturally normal there to be like "Oh, well why do you think you should be allowed to do that". For instance, they would say "Maybe it isn't right that a company can just target ads to people without a comprehensive affirmative opt-in" and that would be the dominant view. "Maybe some guy in a garage shouldn't be allowed to hold a million people's personal data". There's a trade-off there: you don't get tracked but you don't get Google. And that's fair, but it means no business models that rely on things like that which count on low transaction costs can't happen, and lots of unicorns count on that.
- diggan 6y ago
  > It's like that. I don't know what sort of laws you guys have there but just the paperwork is going to kill me, probably. And then any time you want to do anything, the paperwork will kill you, the regulators will be on your case, and all that. And that's the way Europeans like it. It's culturally normal there to be like "Oh, well why do you think you should be allowed to do that". Come on, really? It's hardly that much paperwork. Sure, it sucks, but compared to building a business, filling out paperwork doesn't come close to being the hardest thing. Sounds like what you describe here is that it's more paperwork in the US than in the European countries I'm familiar with, so kind of goes against what you're arguing here. > And that's the way Europeans like it. It's culturally normal there to be like "Oh, well why do you think you should be allowed to do that". I'm not sure where you are from, but I hardly get the feeling you're "European". Throwing blanket statements like "that's the way Europeans like it" is impossible, it's a huge and diverse area, so you can't generalize like that. Plenty of people here wants things to improve/change and depending on the location, you're right or wrong. Rules in Sweden are seen as "must follow" while rules in Spain is mostly seen as "advised to follow but if you must, do what you want, as long as you don't harm others".

jillesvangurp 6y ago

Creating companies is indeed a bureaucratic nightmare in Germany (where I currently live); but its doable if you need it done. It's easier in e.g. Finland, Sweden, Estonia (which actually have produced some nice startups like Spotify, Skype, etc.). IMHO given the relatively small populations, places like that are actually remarkably successful when it comes to startups and technology companies. Finland has a mere 5 million people. I mean, Nokia for whom I used to work came from that tiny country and dominated the smart phone market for a while. However, the real issues are more related to securing investments and funding and the inevitable process of having to shut down a company in case it fails. Which with a startup is more likely to happen than not. Failing fast is hard in a legal system that is purposely designed to make this hard. It's also risky. You take a personal risk when you start a company and when a company can't pay its bills, it's the managing directors who are on the line with their personal capital. Limited liability is not so limited in Germany and it prevents companies from taking risks. There are all sorts of tricks to prevent that from escalating of course but they all involve the use of accountants, lawyers, and other middle men that are costly. And given that it is hard to raise seed capital in Germany, very little gets off the ground here. Berlin where I live is a bit unusual in the sense that despite all this, there are loads of startups here and a density of capital and talent that is hard to find elsewhere in Europe. I always joke that this is despite the German government rather than because of their policies. It's basically a weird side-effect of the place being pretty much bankrupt. Local government here is basically just moving paper around and tends to be very hands-off because they have no budget for basically anything; including going after pesky startups taking liberties with the rules and regulations. Everything in this country is regulated to death but Berlin seems to be reasonably relaxed and informal. For better or worse, people just showed up here from all over the world and started doing stuff after the wall came down. Lately, big German corporations that are trying to look hip are opening startup accelerators all over Berlin. Like all of them: Bosch, Siemens, VW/Porsche, etc. all are present here. Silicon Valley also moved in: MS, Apple, Tesla, Google, etc. all have offices here. And of course Tesla is building a Giga factory.

stkdump 6y ago

> Not a lot of companies come out of Europe Thats not true. Many companies are in Europe, much more than in the US: https://www.nationmaster.com/country-info/stats/Economy/Micro/Small-and-medium-enterprises/Number/Per-capita https://www.nationmaster.com/country-info/stats/Economy/Micr... In Europe we have more companies of all sizes instead of accumulating into few mega-companies. But that has nothing to do with risk tolerance.

barry-cotter 6y ago
Bigger companies are more efficient and more profitable on average though. You kind of have to be to grow. Fewer companies, but more efficient and profitable are more productive and lead to a higher tax take which can be used for all the things the government is good at, providing services we want to be universal and transfer payments.