14 ms·
It's paradoxical that entrepreneurship is less of a thing in the EU than in the US. After all, Europeans can afford a lot more risk than Americans. There's a st
by yoran 5y ago
It's paradoxical that entrepreneurship is less of a thing in the EU than in the US. After all, Europeans can afford a lot more risk than Americans. There's a strong safety net in the form of social security. Health insurance is not tied to your employer. European university graduates don't start with lives with several $100k in debt, while having gotten an education of similar quality. Maybe the culture is shifting?
- deleted 5y ago[deleted]
- marmaduke 5y agoAt least for France, there is less to recommend doing a startup than in the US. The social security regime is worse (than for others eg employees, govt workers), the tax schemes are complex and penalizing at the low end, and the amount a company has to pay an employee is near double what the employee sees in the bank, because near half goes to support the social security net. I’ve been here a decade and wouldn’t start one, even after doing autoentrepreneur unless it was the only choice.
- sokoloff 5y agoIf you’re stuck in France, could you not start a company anyway and only hire remote workers from outside of France?
- vkou 5y ago> and the amount a company has to pay an employee is near double what the employee sees in the bank, because near half goes to support the social security net In dollar values, in the US, that same amount will go to pay for health insurance and benefits and social security and medicare taxes. Combined with lower wages, and your overall payroll expenses will still be much lower in France. There aren't a lot of senior engineers making north of $300,000 USD/year in France. But there are a lot in SV.
- andreyk 5y agoI'd guess a lot of it is cultural - I believe much of Europe also has a far less workaholic culture than the US, with more emphasis on living life and whatnot. And I'm sure there are other factors (France's labor laws presumably make things harder, although that's a barely informed guess on my part).
- zemvpferreira 5y agoThere is no paradox, only innocence. Did you know here in Portugal company directors used to be personally liable for social security payments for a business's employees in case of bankruptcy, until the end of their former contract? That meant for every engineer you hire, you might easily be on the hook for 10K with the government in case you go under. Try failing fast with that. America was built in part by swindlers and robber-barons in a system who let them get away with it by design. In many of Europe's different legislations, failure in the bankruptcy way has/had serious consequences for the business person responsible. Play fast and loose with your responsibilities like you might in the US, confident that the corporate veil will bail you as long as you don't do anything criminal, and you might find yourself staring down the barrel of a loaded fiscal gun.
- TTPrograms 5y agoIf this perspective of "startup failure is a deep moral sin insufficiently penalized by the government" is common in Europe then the lack of entrepreneurship is not very surprising.
- vletal 5y agoLtds are a common thing all around the world and work as you'd expect. What OP mentions seems to be specific to Portuguese law.
- PostOnce 5y agoRunning a bankrupt ltd means a lot of serious consequences in a lot of countries... like not being allowed to run another one for a long time.
- zemvpferreira 5y agoYou'd be surprised. If I'm not mistaken in some central European countries you could be sentenced to jail time after bankruptcy up to the 2000s. My point is precisely that ltds exist but are not the same world-wide. People (like myself) raised on American business folklore can be in for very rude awakenings when things start going badly.
- duped 5y agoFramed another way, perhaps the existence of strong social safety nets is evidence of cultures that discourage behavior and ideologies that encourage entrepreneurship. Even in the United States the conditions for a startup ecosystem to thrive are localized mostly to California, both financially and culturally. Risk intolerance and shortness of ambition is pervasive in our society too, just that a few historical factors have allowed for a business counterculture to thrive in parts of it.
- csa 5y ago> Even in the United States the conditions for a startup ecosystem to thrive are localized mostly to California, both financially and culturally. I largely agree with this, and I (mostly) love California for many of these traits. That said, I think startup ecosystem 2.0 will be centered around Austin. It will look very different than the California startup scene, but it will be just as transformative (if not moreso) imho.
- 908B64B197 5y ago> That said, I think startup ecosystem 2.0 will be centered around Austin. It will look very different than the California startup scene, but it will be just as transformative (if not moreso) imho. I've heard that before. "look at X, it's the Next Silicon Valley". Every time, it was someone trying to sell me something [0] and every time the correct move has been to keep investments in the Valley. Maybe this time it'll be different. [0] https://en.wikipedia.org/wiki/List_of_technology_centers https://en.wikipedia.org/wiki/List_of_technology_centers
- csa 5y ago> I've heard that before. "look at X, it's the Next Silicon Valley". Yeah. I don’t think it will be the next Silicon Valley. I do think it will be the center of startup ecosystem 2.0. I personally think the biggest difference in startup ecosystem 2.0 will be the lack of Silicon Valley-style VCs. Whatever money is used to fuel the fly wheel will have a fundamentally different approach to investing, at least in the beginning. I’m not sure what your investments are, but if SV works for you, then stick with it. The startup ecosystem 2.0 probably will not be a good fit for you or them.
- TTPrograms 5y ago1) Less upside for entrepreneurs/investors/early employees due to tax policy, 2) greater hiring/firing friction due to stronger employee protections, 3) greater fixed operating costs/overhead all around due to increased incorporation costs/bureaucratic requirements. I don't think these things are necessarily negative, but in a world with competition between markets with high incorporation friction and low incorporation friction you'd expect entrepreneurship to concentrate in lower friction markets.
- jbay808 5y agoI can't speak for Europe, just for Canada, but I assume that a similar dynamic might exist. "Less upside" for successful founders due to taxes is frequently cited but I seriously doubt it. Instead, less risk appetite in the investment community is far more likely. Investors offer less money, with far more strings attached, and so founders move to the US to seek better investment terms. Taxes are a distant afterthought.
- TTPrograms 5y agoIf taxes affect upside for investors (especially in large gain outcomes) then it would definitely reduce rational risk appetite. Say it's rational for some untaxed investor to take a chance on 1% on no less than $10M return. If after taxes somewhere that turns into a $5M outcome then you would need a 2% chance for equivalent expected value.
- jorblumesea 5y agoEurope has very progressive policies on some level, but also very regressive or unfriendly policies for business owners. Classic example is bankruptcy. In the US, chapter 11 is done as an almost routine "get me out of debt". This was impossible in Europe until very recently (EU Restructuring Directive, July 2021 was the deadline to implement). Personal bankruptcy is another good example where Europe just has no equivalent.
- flir 5y agoIn the UK personal bankruptcy costs £680 and is normally discharged after twelve months. Is the US less onerous than that?
- b20000 5y agoin europe, you cannot file for personal bankrupcy. you will be stuck with debt forever.
- Hglgrd 5y agoThis isn't true. For example, France and Germany both have a complete personal bankruptcy legislation
- b20000 5y agothat they have the legislation doesn’t matter. the question is whether you can file and get rid of all debt, and recover fully within a reasonable timeframe of a few years.
- kall 5y agoI don‘t think that is the case across the board. I‘ve certainly heard of Privatinsolvenz. But you might not be able to claim this for business related debts (which should be covered by your limited liability cooperation in theory)?
- b20000 5y agomaybe in germany it is different.
- robin_reala 5y agoThat’s categorically not true. For example, in the UK you can file for bankruptcy[1] and in Sweden you can apply through Kronofogden to have personal debts cancelled after a supervised three year period. [1] https://www.gov.uk/bankruptcy https://www.gov.uk/bankruptcy
- whizzter 5y agoSlight correction, In Sweden you can apply for "debt-sanitation" from Kronofogden, it requires you to pay all earned money above an level called "existential minimum" for _5_ years (ie you'll live as a really "poor person"). After that point in time all the old debts are cleared off (although you might still be stuck with bad credit scores).
- ArtRichards 5y agoIn general, as an individual entrepreneur/'business owner'/selbstandiger in germany, and also in the US, its neigh impossible in Germany to perform your own accounting/tax filings; and the idea of an LLC is very difficult to obtain (see how companies like Starbucks structure their limited liability with an 'AG & Co. KG') Combine this with the lack of 'safety net' for someone who owns the business (you dont qualify the same as if you were a regular non participatory employee) and the lack of angel funding/froth in general... its not as simple as you may imagine, especially for non citizens. Its possible, but its not as simple :) Edit typo
- jashmatthews 5y agoPaying private health insurance and pension is, inalmost all cases, better for an internationally mobile founder anyway!
- jacquesm 5y agoIf you push enough people off a cliff some of them will learn to swim. If you don't push people off a cliff only those that think they'll be able to swim may jump.
- whizzter 5y agoLike others mention, while you might not be on the hook for huge hospital bills there are other parts of the safety net that are more or less denied to you. Myself I ran into "problems" when it came to parental leave, parents in Sweden usually gets a combined 480 days of parental leave, of which about 360 are at 80% of your income levels. Problem is that if you (like me) plan on bootstrapping something then you're not taking out salary during that period, so even if you paid a lot of money in taxes the year before you still get marked down as a zero-earner if you plan to take time off with your kids. Luckily the Swedish govt realized that this hurts things in the long term so they actually relaxed the rules in this area so you can retain your previous income levels for 3 years if you want to take advantage of parental leave. (Not entirely sure if they fixed this if you get sick though, regular employees that get sick can retain most of their income for a while but not entirely sure if these 3 years startup grace period applies when getting sick)
- otikik 5y agoMy not-very researched take: entrepreneurship is a game played mostly by people from already wealthy families. Since the % of wealthy people in the US is higher, and their rich are richer, you get more "initially rich" entrepreneurs.
- Axsuul 5y agoInteresting take but how do you explain almost half of all companies being founded by immigrants or their children?
- otikik 5y agoAre those poor immigrants, or rich immigrants?
- vkou 5y agoA lot more than half of Americans, if they were born in another country, would not be allowed to immigrate to the US under modern immigration policies. Most immigrants have to undergo an extremely strong selection filter, before they are allowed in. It would be truly surprising if they weren't more successful on a per-capita basis.
- brailsafe 5y agoIf I didn't have a ton of debt, I'd probably need a particularly intense desire for material wealth or financial independence in order to drive me into business. I don't currently have a ton of debt, just a bit, and I'd like to get rid of it, but beyond that I'm not terribly interested in the bullshit products and crap most people spend all their money on. Therefore, money itself isn't motivating enough to sacrifice so much for it. Likewise, arguments about changing the world are hollow at best most of the time, and overall those claims by previous companies have arguably worsened the world more than helped it.
- leobg 5y agoI‘d argue that it‘s not a paradox . It‘s actually the same thing: People in Europe seem to be more focused on what is deemed „safe“. Parents don‘t want their kids to become „entrepreneurs“ - they want them to find a „safe job“. I‘m sure that many parents in the U.S. want that, too, for their children. But the U.S. is a country that was founded by immigrants. By people who, in the very founding of the country, broke with old traditions and with the „normal way“ of doing things. Another commenter mentioned that many startups seem to be headed by immigrants, or that many of the „big guys“ in Silicon Valley started out as such (PayPal Mafia, Google guys, WhatsApp...). It‘s the same thing: You need to break with tradition to become an entrepreneur. So, in a sense, you need to be standing a little „outside“ of the society in which you are moving. People who visit Europe from the U.S. often notice that Europeans tend to seem less open to random encounters with strangers, and that they tend to hang out in tight-nit social groups. This is, of course, a generalization. But having lived both in Germany and in California I see this as an accurate description. And I would argue that it‘s a lot harder to do a startup when you‘re inside a tight-knit social circle, where you have to explain yourself, where you face embarrassment if you fail, and where people might say „Who do you think you are, founding your own company?“. It‘s a lot easier to do that if you, as Steve Jobs once famously said, have freed yourself from the concept that you must do what you are told, and should not bump into the walls too much (i.e. the „rules“ according to which society claims to work). After all, a real startup is an entity designed to break some of those rules, and to replace them with new ones. Also, it seems to me that Europeans and Americans (especially Californians, East Coasters and Austiners) differ in where they seek salvation from their problems: In Europe, I would argue, it is still very much more the politicians and the state. And I do not think this is the case as much in those areas of the U.S.. Again, the observations of a better social security net on the one hand and a lagging behind in entrepreneurship seem to me not to be a contradiction, but two sides of the same thing. That idea that you can fix what you see as broken by doing a startup is slowly becoming a lot more mainstream in Europe, for sure. But, I think, for Europeans this is more a learned behavior, something inspired by what they see in Silicon Valley and in entrepreneurship shows as „Dragon‘s Den“, whereas in the U.S., it‘s always been a way of life and a philosophy for at least some substantial part of the population. Do not forget, also, that many countries in Europe were dictatorships just two generations before. In Germany, half of the country lived in socialism up until my parent‘s generation. In such an environment, you do not raise your kids to take risks, to put yourself in the spotlight, or to change the lives of others. And these values of „being safe“ and „fitting in“, they filter down, from grandparents, to parents, to children. It takes generations for them to die out. So there‘s that, too.