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So why does Europe have such hard time popping new software ventures like the US? Is it market fragmentation? Languages? Is it capital allocation related proble

So why does Europe have such hard time popping new software ventures like the US? Is it market fragmentation? Languages? Is it capital allocation related problems? I feel that the ability to bootstrap projects in all the large EU countries is way harder than the US, or smaller euro ones (like the Netherlands or Estonia). In Spain for example, the cost of something similar of an LLC is way higher than in the US, not to mention that you have to pay almost 400€/month (at minimum) just for owning the company as Social Security fee, even if I'm also working for someone else paying my social security through my salary. It's a huge burden if you're in my situation, which is having an average salary, not a lot of savings and you don't have a family that bails you out. Also, this listing lacks a few more that I listed here: https://iagovar.com/mapas/european-web-hosting-alternatives https://iagovar.com/mapas/european-web-hosting-alternatives

JumpCrisscross 5y ago
Cost of incorporating; cost of hiring and firing (this is a big one); and fragmented market in terms of policy, culture and language. Capital availability, until recently, but I don't think that's an issue anymore.
estaseuropano 5y ago
Someone else already said acquisitions but the other half of the answer is finance. The US has the most rich and ruthless financial system in the world, with gigantic flows with comparatively little oversight. There's simply enough built up to finance eternal unicorns.
unionpivo 5y ago
Because we don't want them. Ok I perhaps misspoke because we would want them, if they came without costs. And by cost I mean law and regulatory environment necessary for such companies. In EU generally speaking law is in favor of the people (individuals) a lot more than in USA (there are huge exceptions to this like defamations (or anything to do with banks), but I still believe its true.). There are stories about EU fining USA corporations and how that is unfair. But they fine local ones as well, so breaking things (as in breaking/ignoring law ) and moving fast ends up with law breaking you long before you are successful enough that you can shrug it off. It's not hard to start business in EU, but it's hard to get hokey stick growth. There are plenty of small to mid level companies in EU that pay well to founders and it's employers. But if you are trying to get hokey stick growth, EU is not optimal, so why even bother starting there since you can go straight to USA most of the time ? And honestly speaking if we would have to import American style laws/ regulatory environment in order to get them here, I would rather choose not to have them
cultofmetatron 5y ago
probably because software engineers don't get paid nearly as much as in the US. Also, there's less of an entrepreneurial mindset in europe. DO a good job, get paid, work life balance. Very different set of goals from america
- adventured 5y ago
  You're oddly being downvoted for that. Not being paid nearly as highly in tech in general, detracts from how much money is in the ecosystem for doing start-ups. If you can sock back a retirement working for big tech for 10-12 years (counting equity), it frees you up massively to do whatever you like, whether funding as an angel, or self-funding your own start-ups. It's not uncommon for people you know in tech in Silicon Valley to pitch in on early small funding rounds if you've started something new and are rounding up some early funds. Multiply that wide process by the scale of the US tech industry - at the small and large ends - and all the wealth that has been created in it over the past 30 years. 1.3 million software developers with a median salary of $110,000 is a lot of money just from the software developer worker bees every year (save N% per year of that pile, now it's available for investment in one form or another; and that's ignoring the equity value they're yielding).
- tormeh 5y ago
  Europeans are a lot worse at capitalism, in general, than Americans. Partly because we're not required to be. Western Europeans are more or less born into a massive insurance scheme that will bail you out whenever the going gets tough. This is mostly good, IMO, but not without cost.
  - nivenkos 5y ago
    What insurance scheme exactly? Public housing is a nightmare in all of Europe, and being homeless is as much a risk as in the US.
elric 5y ago
For many, Big Government is probably a big part of it here in Belgium. The public sector is so big that many software engineers can spend their entire career as overpaid government contractors.
- test0account 5y ago
  56% of GDP in public spending in no rush to become more efficient. In fact, quite the contrary. Compare this with the cut throat competition in Sillicon Valley or the international arena. That's how you end up with non existent tech offerings in Europe.
  - legulere 5y ago
    The amount spent does not say anything about efficiency if you don't consider what is provided with that money. Lack of free healthcare and education are some of the biggest complaints about the US after all. Europe is also doing pretty well in several fields and you don't explain at all how tech in particular is affected by public spending.
    - test0account 5y ago
      56% of GDP amounts to around 20k euro per person and year Would you rather get the public health and education, or keep the 20k euro and find a solution for yourself? I reckon that my health expenditures are 1000 per year, and I am self-taught, so I don't need the government for anything. What we need is to make the public services Opt-in/Opt-out, so people who find it competitive like yourself can keep enjoying it.
      - raphaelj 5y ago
        Well, you will pay these 20k only the 40-ish years you'll work, while you'll pay your US health care insurance until you die. The average American pays more for healthcare over their live than the average European, and the outcomes are objectively worse. Also, EU governments provide retirement benefits while the US's doesn't. This is the main expenditure for these governments. Not saying that your argument has not some truth in it, but it's definitively wrong in the case of healthcare.
s_dev 5y ago
>So why does Europe have such hard time popping new software ventures like the US? The US has a very mature and developed tech VC scene. Where's Europes isn't as mature. Also clustering is a thing -- why didn't Silicon Valley happen in New York either -- many of the conditions were there just like California but it didn't materialize and Europe was simply a mess in the aftermath of WWII there weren't going to be many tech revolutions taking place there. In fact ironically enough there was such a congregation of talent in Berlin in the 1930s that some have predicted a second "Renaissance" was inevitable were it not for WWII.
- MomoXenosaga 5y ago
  You can look at the two world wars as an elaborate suicide attempt of Europe which resulted in handing over the world to the US. It's quite depressing really.
mytailorisrich 5y ago
British limited companies are probably among the simplest and cheapest to incorporate and manage in the world but, well, the UK is no longer in the EU... I have never understood why countries slap so much red tape and so many fees on this. The UK has got it right, IMHO: make it as cheap and simple as possible, there are only upsides [Edit: for society/the state] to people starting up a business.
- sgjohnson 5y ago
  Yup, costs £12 to incorporate, and it can be done entirely online. Then £12 a year to maintain. The last time I incorporated a company in the UK it took a grand total of 35 minutes from start to actually having an incorporated company.
- Barrin92 5y ago
  >there are only upsides to people starting up a business. that is not true at all. The majority of business ventures fail and a lot of small businesses aren't productive, and at the end of the day someone needs to pick the tab up. Even Thiel used to say, don't start a business until you have a very good reason to. What you actually want is to incentivize the kind of people to start a business who have a high chance of driving innovation and bringing about large, productive firms, you don't really want an army of self-employed people with low capital formation in a developed country.
  - _-david-_ 5y ago
    >at the end of the day someone needs to pick the tab up Only if they have debt. Some companies never take on debt and then fail.
    - sgjohnson 5y ago
      And that would be a non-issue, because the lender would be taking a calculated risk. Businesses of all size go bankrupt all the time.
  - mytailorisrich 5y ago
macco 5y ago
I think the biggest problem is the small home market / fragmented market. While the EU has a very well integrated market for industry goods, for services (where I would include software) the market is less than perfect. The language barrier is the biggest strangle for EU software entrepreneurship / platform business in my opinion. The second-biggest obstacle imho is funding. If you want to grow really fast, it is hard to get enough money. Third, I would rank ecosystem in general, besides money. I think over regulation is not as bad as it is often said. All developed countries have regulations in place, some more some less.
- baxtr 5y ago
  I think this has been debunked? Just look at Sweden as an counter example or Israel. I believe it’s just the lack of massive capital and the power law of VC investments. Start 1000s companies with smart people and a tiny fraction will get insanely big. We’re starting to see this in Europe too now.
  - passerby1 5y ago
    Hiring SE in Sweden takes minimum 6 months. Take into account a Union to deal with. It's probably too complex for some startups. Does it make Sweden a good example for starting a company or bad one? On the other hand, people in Sweden are positive about hiring (and sometimes being hired as a) freelancer. But that's not a company, right?
  - mcv 5y ago
    If Sweden and Israel are good counter examples, maybe there's something to that language barrier after all; Sweden and Israel are both countries with an excellent command of English.
- ars 5y ago
  > I think the biggest problem is the small home market / fragmented market. That doesn't explain why Israel doesn't have this problem, they have an even smaller home market. They just sell internationally.
skratlo 5y ago
> So why does Europe have such hard time popping new software ventures So what makes you think that "popping new software ventures" is a good thing for society? Isn't there enough software already? The problem is the mediocre quality of it, and decline (hello Adobe). Popping new software ventures is hardly a solution.
- HPsquared 5y ago
  New ventures is a solution for decline of old ones. The circle of life... It's a necessity, in fact. Cells need to divide and renew, organisms need to reproduce. Companies are the same.
- cblconfederate 5y ago
  This is not even debateable. Software is eating the world and there's still a lot to eat. Europe won't be selling leather bags for much longer. The fact that it excluded itself from the future of the internet is a crime for the future generations.
jacquesm 5y ago
It doesn't. The problem is that anything that begins to show promise gets acquired by a US company before long. Europe works fine as an incubator.
- Jonanin 5y ago
  This isn’t really a plausible root cause. These companies in the U.S. that are supposedly acquiring everyone (and they aren’t: there are record numbers of unacquired unicorns and IPOs recently) were small once too. That just begs the question: How did the U.S. get all the large acquirers in the first place?
  - bryanrasmussen 5y ago
    because the internet got big in the U.S first and thus there were more companies being started over there and some of the companies started over there ended up the big ones? in short, because time exists and effects all else in our reality.
  - native_samples 5y ago
    I've talked to entrepreneurs about this over the years and even met a professor whose entire field of study (at that time) was why Europe/rest of world doesn't produce tech firms at the same rate as the USA. He had two explanations that seemed plausible: 1. The USA has a culture of granting equity to early employees. Equity grants are highly motivating. Such grants are expected and standardized. Rest of the world doesn't. Even as late as 2006, the Zürich tax authorities were needing extra time and special procedures to figure out what to do about Googler's equity and stock grants because a US firm setting up shop there was the first time they'd had to deal with this kind of compensation structure. Evidence: one of the very few tech firms to get big in Europe (ARM) did grant equity to early employees. 2. USA is a large internal free market and this is a big deal. ARM is a descendent of a computer company called Acorn. In the 1980s the UK was able to hold its own against US tech companies, in fact, Acorn RISC machines were in some ways technologically quite superior to the the US machines. I remember when I was a little kid, the teachers were constantly asking me to fix the school computers in various ways. The Acorn machines simply did not break, ever (well, maybe there were occasional issues with the printers). They were also easy to use and had a consistent UI, some great apps. Feeling kinda nostalgic to remember them really. The IBM PCs were just broken dreck that the schools put up with because they got them cheap via some subsidized scheme and had some unique apps, and Macs were nowhere to be seen. Within a decade that situation had reversed and the Acorns were being pulled out. Why? Well, Acorn hit financial problems, partly because they were unable to sell into Europe due to bureaucracy and paperwork, and partly due to a failed attempt to expand into the USA, stymied partly by the same problems. The US firms didn't face this problem because of the ease of interstate commerce, so they were able to get big enough quickly enough that they could invest more into their tech and also hire the big legal/logistics teams necessary to move into foreign markets. The complexity of this is a large fixed cost, but the size you can get to before you have to tackle it isn't. So, Acorn died off and ARM ended up taking on the low end microcontroller market. ARM grew quietly, getting big enough in a boring market that it could sell and hire internationally, and then the smartphone revolution hit and it grew very quickly. Why was it able to grow so quickly? Partly because by then it'd reached a size where it could do things like ... hire chip design teams in the USA. The UK is a country with 1/5th the population, after all.
KoftaBob 5y ago
I'd guess that the biggest factor is their Venture Capital firms are way more risk averse. The US in general has a more entrepreneurial culture, and therefore a bigger risk appetite.
TacticalCoder 5y ago
Taxes and bureaucracy. It is beyond insanity. And should you succeed in France/Belgium/Spain you'd be seen as the evil capitalist responsible for all that is wrong in the EU. The whole mentality is rotten. The EU has one big software company and it's... SAP. SAP is a drop in the bucket compared to the big US or Chinese tech firms (I don't think SAP is worth even 1/10th of any GNAFAM). But there's worse: I think SAP's market cap is worth basically as much as the next 50 or next 100 (or maybe basically all the others) EU software companies. Something crazy like that. So one successful software company (thankfully we have Germany in the EU and SAP if, of course, German). It's a failure whose level of failure cannot be understated. A complete, total and utter failure.
open-source-ux 5y ago
This has been discussed before. Although the EU is a marketplace of 27 countries, it is not a digitally homogeneous marketplace. Adoption and acceptance of digital tools varies by country. Language is also important - the tech giants localise their apps and tools. But many software companies in larger European countries (France, Germany, Italy, Spain, UK etc) concentrate on their home country first before they focus on international reach. That makes sense. However, in smaller countries, where the software market is also smaller, software companies have a more international outlook (i.e. eyeing the US market). Even when there are local apps available, many small businesses (and larger ones) will stick with services from big, well-known tech companies. Why? I guess because of inertia, or simply because those products feel safe and familiar. Where are the pan-European equivalents to eBay, Etsy, KickStarter, AirBnB, Shopify, AbeBooks, etc? Europeans use these services entensively. You'll probably find local equilavents in each European country, but they are not pan-European or global in scope.
- cblconfederate 5y ago
  if anything the opposite should be true: A small homogeneous market with a language barrier is a great testing ground where a new product can grow and then become global. Facebook started in harvard, and some EU fintech startups are doing well in Sweden, i hear. Global expansion is not an issue; every american company can easily reach the whole of EU. And there are many many european startups whose main market is america. Unless you mean that, products are so tailored to their home market that they don't have global appeal.
MomoXenosaga 5y ago
The reason is that EU is an open economy that is not even TRYING to become independent. China knew that America will try to crush them. It's a real, literal, life or death situation for them to come up with a Chinese Google. They have pumped trillions into the tech industry over decades.
zerkten 5y ago
The costs you list are dwarfed if a company scales to any reasonable size and by that point they have enough of a team to consider moving elsewhere in the EU to better manage them. In fact, moving to the US might open up as an opportunity which some people take. The biggest problem is funding due to the risk aversion of EU institutions and limited alternative sources. You have to be incredibly qualified to acquire the funding need to drive a startup forward in the way that happens in the US. This ranges from the small angel investors through to the first series of VC funding. In the EU, if you are a business like a biotech or pharma you may be able to navigate this because those are well trodden paths with high risk adversity baked in. A software company has many unknowns, so you encounter problems with expectations. You can't fail in the EU because you only have one shot and won't get back again with another company/idea. In reality, it's very likely you'll stumble a lot initially and won't have the leeway that you have in the US. If you compared bankruptcy on both sides of the Atlantic you'd notice similar patterns.
- spaniard89277 5y ago
  I know those costs are nothing when a business grow, but having low barriers of entry means a lot more people trying.
  - zerkten 5y ago
    I can understand having setup a company inside an EU country, but the lesson I got as a developer is that I need to think bigger if you want to have a sustainable business. You can build and validate startup ideas very cheaply by either using budget hosting, or trials of cloud products. EU companies often have to go down the path of consulting part-time, or building the product for one customer who covers most costs with the goal of extracting V2 as a general product. Developers can have a very idea idea of cost management and what is valuable. They may be either blowing their employer's money on inefficient AWS solutions, or they are building their own k8s cluster on cheap VPSes because they felt that the managed solutions were expensive. It's an easy trap to fall into. You need to have a balance that is sustainable and productive. It was much easier to understand the whole space when we were building on LAMP or Ruby-on-Rails than it is now. It's best to have a partner who is very business-savvy to help with navigating these options. If you only look at it from the tech perspective you'll fail quickly.
Puts 5y ago
I would turn that question around. How have the US become this hub for tech-companies? Probably culture and momentum. The same reason a small country like Sweden managed to become the third-largest music exporter in the world. And also European companies are moving to the US to start and/or grow their businesses there. Why is Spotify even listed on the NY stock exchange?
fleddr 5y ago
It's capital. We simply don't have it, or it's not allocated to tech. All these silly fees you mention are marginal. It would actually be much cheaper to hire devs from Europe, so cost is not the issue at all. It is simply a lack of capital altogether. Nor is there the risk taking that is required. Europe has no VC.
marginalia_nu 5y ago
I can only speak for myself, but I find the amount of legal red tape you need to deal with incredibly discouraging. I'll much rather build and run software for free in my spare time than start a business since the latter would mean having to spend dozens of hours every week dealing with all manner of bureaucracy. I have the capacity and funds to start a business, but I just don't think it's worth the hassle.
- Puts 5y ago
  I have a hard time to see how Europe would be any more bureaucratic then the US. Working for a European company that do business with American companies every now and then I can say that the contracts lengths and the legal staffing is a factor of ten higher every time we try to deal with an American customer. Heck involving lawyers just to sign standard contracts is not even something we have to do with European customers generally.
  - sharikous 5y ago
    That's not a good example at all. You have to compare starting a company in the US (as a US citizen) vs starting a company in the EU (as an European). Doing international business is always difficult and the additional hassle when you deal with American customers says absolutely nothing about the overhead of starting a domestic company.
    - 6510 5y ago
      In NL, a single example would be the urencriterium (hours criterion). Ill simplify it a bit but it involves 2 criteria: 1) You spend at least 1225 hours on your business. 2) If you've been an entrepreneur for the last 5 years you must spend more time on your business than your job. If you meet it you get various tax discounts that I wont attempt to describe here. (or pay extra if you don't, depends how you look at it) Thus the reality is that you run from left to right with your attention chopped up over 1000 things simultaneously while in theory you have to write down all time spend on each business related activity. Almost everything counts as long as you document it. If the description is to generic it is rejected. Of course there are exceptions too! In the [corona] period 1 January 2021 tot 1 Juli 2021, if you were unable to do work, you may count 24 hours per week. It might be attractive to write things down anyway as it might add up to more than 24. Now [say] some former employer asks you to do some work for a few months. He wants to pay you a salary as usual but you prefer freelance while the work is unrelated to your company. Do you start an extra company for it???? Will you fail to make enough hours cleaning your office and organizing your desktop??? How much will it cost you if you don't reach the magic 1225 number??? Or say the business is a moderate success, some money comes in, you might be able to survive, the feature set is complete and you ran out of bugs to fix. How spend your time now? You want to get a job but if you spend more time doing that it costs money.
dmitriid 5y ago
> So why does Europe have such hard time popping new software ventures like the US? Because people in Europe still largely believe that a business should be an actual business. You know, operating and bringing profit. Unlike the US where nearly every single "unicorn" can lose billions of dollars a year for over a decade, never see a profit, and still be lauded as a successful business.
- chrisseaton 5y ago
  Yeah those people earning half a million at Uber in the US are the real fools here, right? /s
  - dmitriid 5y ago
    I never said anything about people working at Uber. However, Uber as a company has so far lost over 20 billion dollars and only turned a profit once. Yup. A very successful and sustainable business.
    - chrisseaton 5y ago
      > only turned a profit once I don’t understand - what do you think is the problem with this? What exactly is wrong there? They aren’t spending your money, or tax payer money. They’re doing nothing but pumping money into workers’ hands and the economy, creating thousands of skilled jobs. It’s currently a massive wealth-redistribution system. Why are you sarcastically turning your nose up at it, based on some accounting metric, that doesn’t even involve or effect you? Why don’t we want this in Europe?
      - dmitriid 5y ago
        > They’re doing nothing but pumping money into workers’ hands and the economy They are not really pumping that money into workers and economy given how they don't want to spend any money on drivers. > Why are you sarcastically turning your nose up at it, based on some accounting metric It's not "some accounting metric". The measure of a successful business is whether it can support itself. And not if it can siphon unlimited investor money for a decade. > Why don’t we want this in Europe? Because those 20 billion dollars are better spent on actual businesses.
killerjoe22 5y ago
Another thing - most european companies will reduce your salary and treat you as a slave if you are working as a contractor outside the EU (since no one can punish them that way). I can confirm that an ex FB guy who went full-remote digital nomad style earlier this year and wanted to move as a senior developer for a French startup simply because he loves their idea (and it'd be easier for him due to timezones while he stays in Thailand/Cambodia) and guess what they did? They offered him less than half as compared to an actual junior position, even though they received milkions in funding, and the reason? He lives in a "cheap" place therefore he doesn't need a high salary anymore, who cares of his expertise, it's not going to be "fair" towards the other workers in the company.
nkmnz 5y ago
You could look into Estonian e-residency for setting up a company outside of Spain. You’re usually still taxable in your country of residence within the EU, so it’s not a tax avoidance scheme, but it might change your personal insurance status? Just an idea, those 400€ sound awful…
jokethrowaway 5y ago
Money. The US had way more wealth compared to Europe, thanks to unbridled capitalism in the past centuries and not hosting a World War. That wealth trickle down and converted in various shapes until the current VC class.
- CRConrad 5y ago
  > and not hosting a World War. Two.
giorgioz 5y ago
Language is a big barrier. With my first startup waiterio.com we had to build a lot of custom tools to narrow the linguistic gap. I'm turning one of the tools into a public SaaS: https://www.polyblog.io https://www.polyblog.io helps you build multi-language blogs.

JumpCrisscross 5y ago

Cost of incorporating; cost of hiring and firing (this is a big one); and fragmented market in terms of policy, culture and language. Capital availability, until recently, but I don't think that's an issue anymore.

estaseuropano 5y ago

Someone else already said acquisitions but the other half of the answer is finance. The US has the most rich and ruthless financial system in the world, with gigantic flows with comparatively little oversight. There's simply enough built up to finance eternal unicorns.

unionpivo 5y ago

Because we don't want them. Ok I perhaps misspoke because we would want them, if they came without costs. And by cost I mean law and regulatory environment necessary for such companies. In EU generally speaking law is in favor of the people (individuals) a lot more than in USA (there are huge exceptions to this like defamations (or anything to do with banks), but I still believe its true.). There are stories about EU fining USA corporations and how that is unfair. But they fine local ones as well, so breaking things (as in breaking/ignoring law ) and moving fast ends up with law breaking you long before you are successful enough that you can shrug it off. It's not hard to start business in EU, but it's hard to get hokey stick growth. There are plenty of small to mid level companies in EU that pay well to founders and it's employers. But if you are trying to get hokey stick growth, EU is not optimal, so why even bother starting there since you can go straight to USA most of the time ? And honestly speaking if we would have to import American style laws/ regulatory environment in order to get them here, I would rather choose not to have them

cultofmetatron 5y ago

probably because software engineers don't get paid nearly as much as in the US. Also, there's less of an entrepreneurial mindset in europe. DO a good job, get paid, work life balance. Very different set of goals from america

adventured 5y ago
You're oddly being downvoted for that. Not being paid nearly as highly in tech in general, detracts from how much money is in the ecosystem for doing start-ups. If you can sock back a retirement working for big tech for 10-12 years (counting equity), it frees you up massively to do whatever you like, whether funding as an angel, or self-funding your own start-ups. It's not uncommon for people you know in tech in Silicon Valley to pitch in on early small funding rounds if you've started something new and are rounding up some early funds. Multiply that wide process by the scale of the US tech industry - at the small and large ends - and all the wealth that has been created in it over the past 30 years. 1.3 million software developers with a median salary of $110,000 is a lot of money just from the software developer worker bees every year (save N% per year of that pile, now it's available for investment in one form or another; and that's ignoring the equity value they're yielding).
tormeh 5y ago
Europeans are a lot worse at capitalism, in general, than Americans. Partly because we're not required to be. Western Europeans are more or less born into a massive insurance scheme that will bail you out whenever the going gets tough. This is mostly good, IMO, but not without cost.
- nivenkos 5y ago
  What insurance scheme exactly? Public housing is a nightmare in all of Europe, and being homeless is as much a risk as in the US.

elric 5y ago

For many, Big Government is probably a big part of it here in Belgium. The public sector is so big that many software engineers can spend their entire career as overpaid government contractors.

test0account 5y ago
56% of GDP in public spending in no rush to become more efficient. In fact, quite the contrary. Compare this with the cut throat competition in Sillicon Valley or the international arena. That's how you end up with non existent tech offerings in Europe.
- legulere 5y ago
  The amount spent does not say anything about efficiency if you don't consider what is provided with that money. Lack of free healthcare and education are some of the biggest complaints about the US after all. Europe is also doing pretty well in several fields and you don't explain at all how tech in particular is affected by public spending.
  - test0account 5y ago
    56% of GDP amounts to around 20k euro per person and year Would you rather get the public health and education, or keep the 20k euro and find a solution for yourself? I reckon that my health expenditures are 1000 per year, and I am self-taught, so I don't need the government for anything. What we need is to make the public services Opt-in/Opt-out, so people who find it competitive like yourself can keep enjoying it.
    - raphaelj 5y ago
      Well, you will pay these 20k only the 40-ish years you'll work, while you'll pay your US health care insurance until you die. The average American pays more for healthcare over their live than the average European, and the outcomes are objectively worse. Also, EU governments provide retirement benefits while the US's doesn't. This is the main expenditure for these governments. Not saying that your argument has not some truth in it, but it's definitively wrong in the case of healthcare.

s_dev 5y ago

>So why does Europe have such hard time popping new software ventures like the US? The US has a very mature and developed tech VC scene. Where's Europes isn't as mature. Also clustering is a thing -- why didn't Silicon Valley happen in New York either -- many of the conditions were there just like California but it didn't materialize and Europe was simply a mess in the aftermath of WWII there weren't going to be many tech revolutions taking place there. In fact ironically enough there was such a congregation of talent in Berlin in the 1930s that some have predicted a second "Renaissance" was inevitable were it not for WWII.

MomoXenosaga 5y ago
You can look at the two world wars as an elaborate suicide attempt of Europe which resulted in handing over the world to the US. It's quite depressing really.

mytailorisrich 5y ago

British limited companies are probably among the simplest and cheapest to incorporate and manage in the world but, well, the UK is no longer in the EU... I have never understood why countries slap so much red tape and so many fees on this. The UK has got it right, IMHO: make it as cheap and simple as possible, there are only upsides [Edit: for society/the state] to people starting up a business.

sgjohnson 5y ago
Yup, costs £12 to incorporate, and it can be done entirely online. Then £12 a year to maintain. The last time I incorporated a company in the UK it took a grand total of 35 minutes from start to actually having an incorporated company.
Barrin92 5y ago
>there are only upsides to people starting up a business. that is not true at all. The majority of business ventures fail and a lot of small businesses aren't productive, and at the end of the day someone needs to pick the tab up. Even Thiel used to say, don't start a business until you have a very good reason to. What you actually want is to incentivize the kind of people to start a business who have a high chance of driving innovation and bringing about large, productive firms, you don't really want an army of self-employed people with low capital formation in a developed country.
- _-david-_ 5y ago
  >at the end of the day someone needs to pick the tab up Only if they have debt. Some companies never take on debt and then fail.
  - sgjohnson 5y ago
    And that would be a non-issue, because the lender would be taking a calculated risk. Businesses of all size go bankrupt all the time.
- mytailorisrich 5y ago

macco 5y ago

I think the biggest problem is the small home market / fragmented market. While the EU has a very well integrated market for industry goods, for services (where I would include software) the market is less than perfect. The language barrier is the biggest strangle for EU software entrepreneurship / platform business in my opinion. The second-biggest obstacle imho is funding. If you want to grow really fast, it is hard to get enough money. Third, I would rank ecosystem in general, besides money. I think over regulation is not as bad as it is often said. All developed countries have regulations in place, some more some less.

baxtr 5y ago
I think this has been debunked? Just look at Sweden as an counter example or Israel. I believe it’s just the lack of massive capital and the power law of VC investments. Start 1000s companies with smart people and a tiny fraction will get insanely big. We’re starting to see this in Europe too now.
- passerby1 5y ago
  Hiring SE in Sweden takes minimum 6 months. Take into account a Union to deal with. It's probably too complex for some startups. Does it make Sweden a good example for starting a company or bad one? On the other hand, people in Sweden are positive about hiring (and sometimes being hired as a) freelancer. But that's not a company, right?
- mcv 5y ago
  If Sweden and Israel are good counter examples, maybe there's something to that language barrier after all; Sweden and Israel are both countries with an excellent command of English.
ars 5y ago
> I think the biggest problem is the small home market / fragmented market. That doesn't explain why Israel doesn't have this problem, they have an even smaller home market. They just sell internationally.

skratlo 5y ago

> So why does Europe have such hard time popping new software ventures So what makes you think that "popping new software ventures" is a good thing for society? Isn't there enough software already? The problem is the mediocre quality of it, and decline (hello Adobe). Popping new software ventures is hardly a solution.

HPsquared 5y ago
New ventures is a solution for decline of old ones. The circle of life... It's a necessity, in fact. Cells need to divide and renew, organisms need to reproduce. Companies are the same.
cblconfederate 5y ago
This is not even debateable. Software is eating the world and there's still a lot to eat. Europe won't be selling leather bags for much longer. The fact that it excluded itself from the future of the internet is a crime for the future generations.

jacquesm 5y ago

It doesn't. The problem is that anything that begins to show promise gets acquired by a US company before long. Europe works fine as an incubator.

Jonanin 5y ago
This isn’t really a plausible root cause. These companies in the U.S. that are supposedly acquiring everyone (and they aren’t: there are record numbers of unacquired unicorns and IPOs recently) were small once too. That just begs the question: How did the U.S. get all the large acquirers in the first place?
- bryanrasmussen 5y ago
  because the internet got big in the U.S first and thus there were more companies being started over there and some of the companies started over there ended up the big ones? in short, because time exists and effects all else in our reality.
- native_samples 5y ago
  I've talked to entrepreneurs about this over the years and even met a professor whose entire field of study (at that time) was why Europe/rest of world doesn't produce tech firms at the same rate as the USA. He had two explanations that seemed plausible: 1. The USA has a culture of granting equity to early employees. Equity grants are highly motivating. Such grants are expected and standardized. Rest of the world doesn't. Even as late as 2006, the Zürich tax authorities were needing extra time and special procedures to figure out what to do about Googler's equity and stock grants because a US firm setting up shop there was the first time they'd had to deal with this kind of compensation structure. Evidence: one of the very few tech firms to get big in Europe (ARM) did grant equity to early employees. 2. USA is a large internal free market and this is a big deal. ARM is a descendent of a computer company called Acorn. In the 1980s the UK was able to hold its own against US tech companies, in fact, Acorn RISC machines were in some ways technologically quite superior to the the US machines. I remember when I was a little kid, the teachers were constantly asking me to fix the school computers in various ways. The Acorn machines simply did not break, ever (well, maybe there were occasional issues with the printers). They were also easy to use and had a consistent UI, some great apps. Feeling kinda nostalgic to remember them really. The IBM PCs were just broken dreck that the schools put up with because they got them cheap via some subsidized scheme and had some unique apps, and Macs were nowhere to be seen. Within a decade that situation had reversed and the Acorns were being pulled out. Why? Well, Acorn hit financial problems, partly because they were unable to sell into Europe due to bureaucracy and paperwork, and partly due to a failed attempt to expand into the USA, stymied partly by the same problems. The US firms didn't face this problem because of the ease of interstate commerce, so they were able to get big enough quickly enough that they could invest more into their tech and also hire the big legal/logistics teams necessary to move into foreign markets. The complexity of this is a large fixed cost, but the size you can get to before you have to tackle it isn't. So, Acorn died off and ARM ended up taking on the low end microcontroller market. ARM grew quietly, getting big enough in a boring market that it could sell and hire internationally, and then the smartphone revolution hit and it grew very quickly. Why was it able to grow so quickly? Partly because by then it'd reached a size where it could do things like ... hire chip design teams in the USA. The UK is a country with 1/5th the population, after all.

KoftaBob 5y ago

I'd guess that the biggest factor is their Venture Capital firms are way more risk averse. The US in general has a more entrepreneurial culture, and therefore a bigger risk appetite.

TacticalCoder 5y ago

Taxes and bureaucracy. It is beyond insanity. And should you succeed in France/Belgium/Spain you'd be seen as the evil capitalist responsible for all that is wrong in the EU. The whole mentality is rotten. The EU has one big software company and it's... SAP. SAP is a drop in the bucket compared to the big US or Chinese tech firms (I don't think SAP is worth even 1/10th of any GNAFAM). But there's worse: I think SAP's market cap is worth basically as much as the next 50 or next 100 (or maybe basically all the others) EU software companies. Something crazy like that. So one successful software company (thankfully we have Germany in the EU and SAP if, of course, German). It's a failure whose level of failure cannot be understated. A complete, total and utter failure.

open-source-ux 5y ago

This has been discussed before. Although the EU is a marketplace of 27 countries, it is not a digitally homogeneous marketplace. Adoption and acceptance of digital tools varies by country. Language is also important - the tech giants localise their apps and tools. But many software companies in larger European countries (France, Germany, Italy, Spain, UK etc) concentrate on their home country first before they focus on international reach. That makes sense. However, in smaller countries, where the software market is also smaller, software companies have a more international outlook (i.e. eyeing the US market). Even when there are local apps available, many small businesses (and larger ones) will stick with services from big, well-known tech companies. Why? I guess because of inertia, or simply because those products feel safe and familiar. Where are the pan-European equivalents to eBay, Etsy, KickStarter, AirBnB, Shopify, AbeBooks, etc? Europeans use these services entensively. You'll probably find local equilavents in each European country, but they are not pan-European or global in scope.

cblconfederate 5y ago
if anything the opposite should be true: A small homogeneous market with a language barrier is a great testing ground where a new product can grow and then become global. Facebook started in harvard, and some EU fintech startups are doing well in Sweden, i hear. Global expansion is not an issue; every american company can easily reach the whole of EU. And there are many many european startups whose main market is america. Unless you mean that, products are so tailored to their home market that they don't have global appeal.

MomoXenosaga 5y ago

The reason is that EU is an open economy that is not even TRYING to become independent. China knew that America will try to crush them. It's a real, literal, life or death situation for them to come up with a Chinese Google. They have pumped trillions into the tech industry over decades.

zerkten 5y ago

The costs you list are dwarfed if a company scales to any reasonable size and by that point they have enough of a team to consider moving elsewhere in the EU to better manage them. In fact, moving to the US might open up as an opportunity which some people take. The biggest problem is funding due to the risk aversion of EU institutions and limited alternative sources. You have to be incredibly qualified to acquire the funding need to drive a startup forward in the way that happens in the US. This ranges from the small angel investors through to the first series of VC funding. In the EU, if you are a business like a biotech or pharma you may be able to navigate this because those are well trodden paths with high risk adversity baked in. A software company has many unknowns, so you encounter problems with expectations. You can't fail in the EU because you only have one shot and won't get back again with another company/idea. In reality, it's very likely you'll stumble a lot initially and won't have the leeway that you have in the US. If you compared bankruptcy on both sides of the Atlantic you'd notice similar patterns.

spaniard89277 5y ago
I know those costs are nothing when a business grow, but having low barriers of entry means a lot more people trying.
- zerkten 5y ago
  I can understand having setup a company inside an EU country, but the lesson I got as a developer is that I need to think bigger if you want to have a sustainable business. You can build and validate startup ideas very cheaply by either using budget hosting, or trials of cloud products. EU companies often have to go down the path of consulting part-time, or building the product for one customer who covers most costs with the goal of extracting V2 as a general product. Developers can have a very idea idea of cost management and what is valuable. They may be either blowing their employer's money on inefficient AWS solutions, or they are building their own k8s cluster on cheap VPSes because they felt that the managed solutions were expensive. It's an easy trap to fall into. You need to have a balance that is sustainable and productive. It was much easier to understand the whole space when we were building on LAMP or Ruby-on-Rails than it is now. It's best to have a partner who is very business-savvy to help with navigating these options. If you only look at it from the tech perspective you'll fail quickly.

Puts 5y ago

I would turn that question around. How have the US become this hub for tech-companies? Probably culture and momentum. The same reason a small country like Sweden managed to become the third-largest music exporter in the world. And also European companies are moving to the US to start and/or grow their businesses there. Why is Spotify even listed on the NY stock exchange?

fleddr 5y ago

It's capital. We simply don't have it, or it's not allocated to tech. All these silly fees you mention are marginal. It would actually be much cheaper to hire devs from Europe, so cost is not the issue at all. It is simply a lack of capital altogether. Nor is there the risk taking that is required. Europe has no VC.

marginalia_nu 5y ago

I can only speak for myself, but I find the amount of legal red tape you need to deal with incredibly discouraging. I'll much rather build and run software for free in my spare time than start a business since the latter would mean having to spend dozens of hours every week dealing with all manner of bureaucracy. I have the capacity and funds to start a business, but I just don't think it's worth the hassle.

Puts 5y ago
I have a hard time to see how Europe would be any more bureaucratic then the US. Working for a European company that do business with American companies every now and then I can say that the contracts lengths and the legal staffing is a factor of ten higher every time we try to deal with an American customer. Heck involving lawyers just to sign standard contracts is not even something we have to do with European customers generally.
- sharikous 5y ago
  That's not a good example at all. You have to compare starting a company in the US (as a US citizen) vs starting a company in the EU (as an European). Doing international business is always difficult and the additional hassle when you deal with American customers says absolutely nothing about the overhead of starting a domestic company.
  - 6510 5y ago
    In NL, a single example would be the urencriterium (hours criterion). Ill simplify it a bit but it involves 2 criteria: 1) You spend at least 1225 hours on your business. 2) If you've been an entrepreneur for the last 5 years you must spend more time on your business than your job. If you meet it you get various tax discounts that I wont attempt to describe here. (or pay extra if you don't, depends how you look at it) Thus the reality is that you run from left to right with your attention chopped up over 1000 things simultaneously while in theory you have to write down all time spend on each business related activity. Almost everything counts as long as you document it. If the description is to generic it is rejected. Of course there are exceptions too! In the [corona] period 1 January 2021 tot 1 Juli 2021, if you were unable to do work, you may count 24 hours per week. It might be attractive to write things down anyway as it might add up to more than 24. Now [say] some former employer asks you to do some work for a few months. He wants to pay you a salary as usual but you prefer freelance while the work is unrelated to your company. Do you start an extra company for it???? Will you fail to make enough hours cleaning your office and organizing your desktop??? How much will it cost you if you don't reach the magic 1225 number??? Or say the business is a moderate success, some money comes in, you might be able to survive, the feature set is complete and you ran out of bugs to fix. How spend your time now? You want to get a job but if you spend more time doing that it costs money.

dmitriid 5y ago

> So why does Europe have such hard time popping new software ventures like the US? Because people in Europe still largely believe that a business should be an actual business. You know, operating and bringing profit. Unlike the US where nearly every single "unicorn" can lose billions of dollars a year for over a decade, never see a profit, and still be lauded as a successful business.

chrisseaton 5y ago
Yeah those people earning half a million at Uber in the US are the real fools here, right? /s
- dmitriid 5y ago
  I never said anything about people working at Uber. However, Uber as a company has so far lost over 20 billion dollars and only turned a profit once. Yup. A very successful and sustainable business.
  - chrisseaton 5y ago
    > only turned a profit once I don’t understand - what do you think is the problem with this? What exactly is wrong there? They aren’t spending your money, or tax payer money. They’re doing nothing but pumping money into workers’ hands and the economy, creating thousands of skilled jobs. It’s currently a massive wealth-redistribution system. Why are you sarcastically turning your nose up at it, based on some accounting metric, that doesn’t even involve or effect you? Why don’t we want this in Europe?
    - dmitriid 5y ago
      > They’re doing nothing but pumping money into workers’ hands and the economy They are not really pumping that money into workers and economy given how they don't want to spend any money on drivers. > Why are you sarcastically turning your nose up at it, based on some accounting metric It's not "some accounting metric". The measure of a successful business is whether it can support itself. And not if it can siphon unlimited investor money for a decade. > Why don’t we want this in Europe? Because those 20 billion dollars are better spent on actual businesses.

killerjoe22 5y ago

Another thing - most european companies will reduce your salary and treat you as a slave if you are working as a contractor outside the EU (since no one can punish them that way). I can confirm that an ex FB guy who went full-remote digital nomad style earlier this year and wanted to move as a senior developer for a French startup simply because he loves their idea (and it'd be easier for him due to timezones while he stays in Thailand/Cambodia) and guess what they did? They offered him less than half as compared to an actual junior position, even though they received milkions in funding, and the reason? He lives in a "cheap" place therefore he doesn't need a high salary anymore, who cares of his expertise, it's not going to be "fair" towards the other workers in the company.

nkmnz 5y ago

You could look into Estonian e-residency for setting up a company outside of Spain. You’re usually still taxable in your country of residence within the EU, so it’s not a tax avoidance scheme, but it might change your personal insurance status? Just an idea, those 400€ sound awful…

jokethrowaway 5y ago

Money. The US had way more wealth compared to Europe, thanks to unbridled capitalism in the past centuries and not hosting a World War. That wealth trickle down and converted in various shapes until the current VC class.

CRConrad 5y ago
> and not hosting a World War. Two.

giorgioz 5y ago

Language is a big barrier. With my first startup waiterio.com we had to build a lot of custom tools to narrow the linguistic gap. I'm turning one of the tools into a public SaaS: https://www.polyblog.io https://www.polyblog.io helps you build multi-language blogs.