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> When you talk to most EU business owners, even in tech, the limiting factor isn't regulations. This being the #1 reason is such a tired trope. Okay, what is

> When you talk to most EU business owners, even in tech, the limiting factor isn't regulations. This being the #1 reason is such a tired trope. Okay, what is the limiting factor? Because when I talk to EU business owners (admittedly, very few) - they point to lack of big EU capital markets, which is directly downstream of the policy environment. And when I talk to top EU human capital, they all point to the lack of competitive wages. There's a real difficulty in allocating capital to talented humans. And, at least in Southern Europe, the income tax schedule is so aggressive it's hard to justify continuing working in many of these countries if you are highly talented. Like, if you can tell me what the induced operator norm from l_2 -> l_2 is - probably you should come to the US and work at a biglab and make bank. What can you do in Portugal, Italy, Spain, etc.?? > Pieter Levels is at the end of the day an influencer, not a serious founder. Sure, agreed. I think it is a complete misreading to point to protectionism as the reason for Chinese success, but having a big unified domestic market for consumers along with massive saving rates and capital controls probably does help.

KaiserPro 1y ago
Money. Why work in the "europoor" countries when you can go to america and earn megabucks.
- miohtama 1y ago
  That's capital markets and the lack of capital markets is because of not having business friendly environment. Consumer protections strong, pro business not so much. Companies like Spotify go to the US to IPO.
  - berkes 1y ago
    > Consumer protections strong, pro business not so much. That's not the reason the EU has no unified capital market. The reason is that member states are reluctant to hand over control and power to EU. Just look at e.g. Eurobonds and the shitshow around that. Especially the rise of populist anti-EU parties all over, are causing this. Ironically, the parties that "freedom lovers" like Musk are funding and pushing, are the ones causing the EU to not function as a single capital market and "not having a business friendly environment".
  - deaux 1y ago
    Are you saying that the other 199 non-US countries in the world all have a business unfriendly environment, since every one of them besides China has practically the same amount of software VC funding compared to the US? All of these purported EU-specific reasons completely ignore that things are the same elsewhere. It's the US that is the outlier.
actionfromafar 1y ago
One fairly large factor is that even though English is much more common today, you just can't operate (depending on the product of course) in many countries without having customer support, documentation etc in the local language.
deaux 1y ago
> I think it is a complete misreading to point to protectionism as the reason for Chinese success, but having a big unified domestic market for consumers along with massive saving rates and capital controls probably does help. Capital controls are protectionist measures, but anyway, no. > Okay, what is the limiting factor? Let's look at which countries have a significant local software industry compared to population size. - China - US - Korea - You can argue for Japan and India but that's already starting to stretch. - Yup, effectively no where else. Even in an "out of the way" place like Myanmar everyone uses Meta, with a nice little genocide to show for it. Sure, in Vietnam they use Zalo, and other places have a few other local players. But most of the famous US tech apps are dominant. Is the EU the outlier here? No. Everywhere else US tech dominates. Meta, Netflix, Apple, Google, Uber, Spotify, Microsoft, Match Group, Paypal, Amazon, and on and on. They don't just dominate the EU, they dominate the world. Except for the countries I named above, where at least some of the markets that US big tech competes in, instead have bigger local players. And even there, guess what? Their market share is almost 1:1 linearly correlated to the degree of protectionism in those countries, all the way from China, then Korea, then India/Japan, and then everywhere else! Who woulda thought! Why does Korea have much less US tech dominance than, say, Germany? Despite German companies theoretically having a big advantage: the German public is 100x more privacy conscious than the Korean one, and much less trusting of US companies. I can tell you that it's not less regulations; Korea's GDPR is much more onerous than the EU's and so are investment regulations. On every single regulatory aspect, German software startups have it easier. But they were never protected. US tech was allowed to waltz in, dump their products - that's what they did, it's hilarious how now China "dumping" EVs and solar is suddenly an issue when it's exactly the strategy that US tech continues to this day; the AI companies are doing it right now! And the Korean companies were protected. Both by the rules burden, that local companies had to deal with too, along with intentional protectionism. When it comes to solar and EVs, we all understand that a foreign country dumping their goods kills local industry. It's the exact same with software. But then half of HN has millions on the bank exactly thanks to the above - this is where all those fat SV salaries have come from - so I do get the lack of desire to understand it.
- panick21_ 1y ago
  Are the solar panels and EVs 'dumped' or are they just actually cheaper to produce? I would argue its the latter. Sure there is some state investment in the supply chain, so it is in Europe. Sure the are EV subsidies and green energy subsidies, but so does Europe have them. Fundamentally BYD cars are cheaper because China has localized the complete supply Chain or has very good raw materials import and local refinement capability. BYD invested themselves and spend 20-25 years vertically integrating while European companies put out huge dividend and miss major technology trends. The EV market in China was hyper competitive with a huge number of competitors and the subsidies were strategically phased out to turn the industry competitive rather then relaying on protection. The idea that China has enough money do 'dump' products in literally ever sector that people accuse it of 'dumping' AND at the same time have enough money for massive infrastructure programs at home seems like coping to me.
sofixa 1y ago
> Okay, what is the limiting factor A few. A big part is that the EU is a collection of countries that (with very few exceptions) have different languages and laws. For a company to serve Spain and France, for instance, it would need to translate everything, hire local lawyers and customer support agents. Considering the much smaller size of the countries (biggest one is 70 million vs 330 million in the US), the opportunity for "unlimited" growth is limited. This also rebounds in the fact that when an American company makes it big, they have the resources to flood other EU markets and be cheaper/better than the local competition due to economies of scale and money based on their big successful US market. A French company making it big is still small compared to a US equivalent. Then, there's the capital markets, no denying that. The money being thrown around the US is like nowhere else on the planet. Some of it definitely a bubble / unrealistic, but that doesn't matter. But in part it's because of the size of the total potential market that this is justified. Education / national mythology also plays a part, I think (this is pure conjecture now). In the US, the "American Dream", "everyone can make it" etc is heavily ingrained. It propagates through the world with the help of Hollywood and other American cultural exports. In most EU countries, there isn't such a heavy emphasis on independence and "pulling yourself up by your bootstraps". "Hustle culture" isn't a thing. So for most people, it isn't something that comes naturally to them to start a company and work 100 hour weeks to be big and rich and successful and famous. That's not to say there aren't such people, I went to 42 and have been to Station F and know some people in that universe. A decent proportion of my classmates wanted to make their startup and make it big, and some did end up starting their own companies.
- carlosjobim 1y ago
  > Considering the much smaller size of the countries (biggest one is 70 million vs 330 million in the US), the opportunity for "unlimited" growth is limited. If you manage to get 10 million customers, your business is already successful on a gigantic scale, and you should have all the know-how in taking on the world. The success of other people is rarely the reason why you are failing in your own life. Start somewhere, do something. > The money being thrown around the US is like nowhere else on the planet. That's true and it's awesome. In Europe money is only thrown to real estate owners and any enterprising people with a dream are cordially invited to fucking forget about it, shut up, and fall back in line. Even if they already have a proven track record. They take their idea to the United States and are treated incredibly well in comparison. Even if their business will only be a niche business with limited reach, like 99% of businesses.

KaiserPro 1y ago

Money. Why work in the "europoor" countries when you can go to america and earn megabucks.

miohtama 1y ago
That's capital markets and the lack of capital markets is because of not having business friendly environment. Consumer protections strong, pro business not so much. Companies like Spotify go to the US to IPO.
- berkes 1y ago
  > Consumer protections strong, pro business not so much. That's not the reason the EU has no unified capital market. The reason is that member states are reluctant to hand over control and power to EU. Just look at e.g. Eurobonds and the shitshow around that. Especially the rise of populist anti-EU parties all over, are causing this. Ironically, the parties that "freedom lovers" like Musk are funding and pushing, are the ones causing the EU to not function as a single capital market and "not having a business friendly environment".
- deaux 1y ago
  Are you saying that the other 199 non-US countries in the world all have a business unfriendly environment, since every one of them besides China has practically the same amount of software VC funding compared to the US? All of these purported EU-specific reasons completely ignore that things are the same elsewhere. It's the US that is the outlier.

actionfromafar 1y ago

One fairly large factor is that even though English is much more common today, you just can't operate (depending on the product of course) in many countries without having customer support, documentation etc in the local language.

deaux 1y ago

> I think it is a complete misreading to point to protectionism as the reason for Chinese success, but having a big unified domestic market for consumers along with massive saving rates and capital controls probably does help. Capital controls are protectionist measures, but anyway, no. > Okay, what is the limiting factor? Let's look at which countries have a significant local software industry compared to population size. - China - US - Korea - You can argue for Japan and India but that's already starting to stretch. - Yup, effectively no where else. Even in an "out of the way" place like Myanmar everyone uses Meta, with a nice little genocide to show for it. Sure, in Vietnam they use Zalo, and other places have a few other local players. But most of the famous US tech apps are dominant. Is the EU the outlier here? No. Everywhere else US tech dominates. Meta, Netflix, Apple, Google, Uber, Spotify, Microsoft, Match Group, Paypal, Amazon, and on and on. They don't just dominate the EU, they dominate the world. Except for the countries I named above, where at least some of the markets that US big tech competes in, instead have bigger local players. And even there, guess what? Their market share is almost 1:1 linearly correlated to the degree of protectionism in those countries, all the way from China, then Korea, then India/Japan, and then everywhere else! Who woulda thought! Why does Korea have much less US tech dominance than, say, Germany? Despite German companies theoretically having a big advantage: the German public is 100x more privacy conscious than the Korean one, and much less trusting of US companies. I can tell you that it's not less regulations; Korea's GDPR is much more onerous than the EU's and so are investment regulations. On every single regulatory aspect, German software startups have it easier. But they were never protected. US tech was allowed to waltz in, dump their products - that's what they did, it's hilarious how now China "dumping" EVs and solar is suddenly an issue when it's exactly the strategy that US tech continues to this day; the AI companies are doing it right now! And the Korean companies were protected. Both by the rules burden, that local companies had to deal with too, along with intentional protectionism. When it comes to solar and EVs, we all understand that a foreign country dumping their goods kills local industry. It's the exact same with software. But then half of HN has millions on the bank exactly thanks to the above - this is where all those fat SV salaries have come from - so I do get the lack of desire to understand it.

panick21_ 1y ago
Are the solar panels and EVs 'dumped' or are they just actually cheaper to produce? I would argue its the latter. Sure there is some state investment in the supply chain, so it is in Europe. Sure the are EV subsidies and green energy subsidies, but so does Europe have them. Fundamentally BYD cars are cheaper because China has localized the complete supply Chain or has very good raw materials import and local refinement capability. BYD invested themselves and spend 20-25 years vertically integrating while European companies put out huge dividend and miss major technology trends. The EV market in China was hyper competitive with a huge number of competitors and the subsidies were strategically phased out to turn the industry competitive rather then relaying on protection. The idea that China has enough money do 'dump' products in literally ever sector that people accuse it of 'dumping' AND at the same time have enough money for massive infrastructure programs at home seems like coping to me.

sofixa 1y ago

> Okay, what is the limiting factor A few. A big part is that the EU is a collection of countries that (with very few exceptions) have different languages and laws. For a company to serve Spain and France, for instance, it would need to translate everything, hire local lawyers and customer support agents. Considering the much smaller size of the countries (biggest one is 70 million vs 330 million in the US), the opportunity for "unlimited" growth is limited. This also rebounds in the fact that when an American company makes it big, they have the resources to flood other EU markets and be cheaper/better than the local competition due to economies of scale and money based on their big successful US market. A French company making it big is still small compared to a US equivalent. Then, there's the capital markets, no denying that. The money being thrown around the US is like nowhere else on the planet. Some of it definitely a bubble / unrealistic, but that doesn't matter. But in part it's because of the size of the total potential market that this is justified. Education / national mythology also plays a part, I think (this is pure conjecture now). In the US, the "American Dream", "everyone can make it" etc is heavily ingrained. It propagates through the world with the help of Hollywood and other American cultural exports. In most EU countries, there isn't such a heavy emphasis on independence and "pulling yourself up by your bootstraps". "Hustle culture" isn't a thing. So for most people, it isn't something that comes naturally to them to start a company and work 100 hour weeks to be big and rich and successful and famous. That's not to say there aren't such people, I went to 42 and have been to Station F and know some people in that universe. A decent proportion of my classmates wanted to make their startup and make it big, and some did end up starting their own companies.

carlosjobim 1y ago
> Considering the much smaller size of the countries (biggest one is 70 million vs 330 million in the US), the opportunity for "unlimited" growth is limited. If you manage to get 10 million customers, your business is already successful on a gigantic scale, and you should have all the know-how in taking on the world. The success of other people is rarely the reason why you are failing in your own life. Start somewhere, do something. > The money being thrown around the US is like nowhere else on the planet. That's true and it's awesome. In Europe money is only thrown to real estate owners and any enterprising people with a dream are cordially invited to fucking forget about it, shut up, and fall back in line. Even if they already have a proven track record. They take their idea to the United States and are treated incredibly well in comparison. Even if their business will only be a niche business with limited reach, like 99% of businesses.