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My impression on the U.S. startup world has been "either you go (very) big or you die/fail". In Germany, in contrast, it is perfectly fine for a startup to earn

by x3ro 12y ago

My impression on the U.S. startup world has been "either you go (very) big or you die/fail". In Germany, in contrast, it is perfectly fine for a startup to earn a million or less a year, and never even aspire to earn billions, as long as it pays the bills and you employ some people. Thus I conclude that it is "harder" to fail if your expectations are not unrealistically high. Also, as Tomte has pointed out, company bankruptcy does not equal personal bankruptcy. On the other hand, I only know the U.S. startup world from what I've read, so I might be totally off there. So please correct me if I'm wrong.

dragonwriter 12y ago
I think "startup" may be being used differently in those two context. Its fine in the US for a small business to not seek explosive growth and to have a steady, reasonable income and employ some people -- but that's not usually called a "startup" (around here, the term "lifestyle business" gets thrown around sometimes.) "Startup" is generally used for something that is (or seeks to be) VC funded based on a vision of investors realizing immense gains in an eventual acquisition or IPO. It sounds like its quite likely what you are calling "startup" in Germany and what is called "startup" in some US-centric contexts (like HN) are not really the same category, and that the former is broader than the latter more than what is acceptable in Germany being different.
- pearkes 12y ago
  Agree, see my parent comment where I mention Mittelstand.
dragontamer 12y ago
West Coast startups tend to have this "Big or Bust" mindset. East Coast startups can be content to grow more organically. Its New York financing vs Silicon Valley financing. Remember that Hacker News is based on YCombinator: a West Coast incubator. You'll probably never hear about the tons of small scale restaurants, small government contractors (I've seen teams of 10 or less), and one-off donut shops. But they're relatively common in the East Coast. There's a "MicroBrew Beer" restaurant every block in some areas. Its a bit different on the East Coast. There are tons of business owners that I know of, but all of them are quite small businesses. My High School math teacher owned a franchise restaurant, another high school teacher owned a potato chip company, my cousin owns a Pho shop, my uncle owns a private Sports-Medicine practice (finances are run by his wife). A lot of blue collar work (like HVAC, Roof Repair, and other household tasks) are done by contractors or small businesses. None of these businesses plan to strike it big. Its more about day-to-day operations and basic work. Naturally, you'll see more "Big or Bust" methodologies around YCombinator. The small organic growth of the East Coast startups don't really make news and are frankly... very mundane and boring.
- brazzy 12y ago
  Another somewhat different case in point: Bloomberg L.P., started with a $10m personal investment, took no more than 30% outside investment (which was eventually bought back) and grew to a $8b business over the course of 30 years. "lifestyle business", really?
  - apaprocki 12y ago
    ~$8b yearly revenue -- the business would be worth substantially more. 30 years is a long time, though. I'm curious now to find out how many years in it took to have a $1b valuation.
- moonlighter 12y ago
  YCombinator originated from the East Coast (Boston/Cambridge, MA).
moonlighter 12y ago
"it is perfectly fine for a startup to earn a million or less a year, and never even aspire to earn billions, as long as it pays the bills". That's basically the concept of Micropreneurs and Solopreneurs here; also not to take VC funding (at least not until much later) and instead either bootstrap or crowd-fund. It's not as glamorous or much talked about as the Silicon Valley startup scene, but it definitely exists here, too. For example, http://imgur.com http://imgur.com started out that way: http://thisweekinstartups.com/imgur-alan-schaaf-andreessen-horowitz/ http://thisweekinstartups.com/imgur-alan-schaaf-andreessen-h...
pearkes 12y ago
There's a specific term for those compartively small but succesful businesses in Germany. "Mittelstand". It's cited as being a huge source of strength for the German economy, seems to be similar to what Americans might call a "lifestyle" business. You see lifestyle businesses portrayed as "settling for less" in American media, whereas Mittelstand has a very positive connotation in Germany. http://en.wikipedia.org/wiki/Mittelstand http://en.wikipedia.org/wiki/Mittelstand
- dragonwriter 12y ago
  > You see lifestyle businesses portrayed as "settling for less" in American media I only see it portrayed as "settling for less" in American media focussed on serving the executive/investor/startup-founder groups as their target market. Stable small businesses are pretty much treated as icons of the national culture on a level with baseball and apple pie and set up on a pedestal everywhere else in American media and culture.
  - pearkes 12y ago
    I totally agree. Just certain factions of the media make that portrayal.

by x3ro 12y ago

dragonwriter 12y ago

I think "startup" may be being used differently in those two context. Its fine in the US for a small business to not seek explosive growth and to have a steady, reasonable income and employ some people -- but that's not usually called a "startup" (around here, the term "lifestyle business" gets thrown around sometimes.) "Startup" is generally used for something that is (or seeks to be) VC funded based on a vision of investors realizing immense gains in an eventual acquisition or IPO. It sounds like its quite likely what you are calling "startup" in Germany and what is called "startup" in some US-centric contexts (like HN) are not really the same category, and that the former is broader than the latter more than what is acceptable in Germany being different.

pearkes 12y ago
Agree, see my parent comment where I mention Mittelstand.

dragontamer 12y ago

West Coast startups tend to have this "Big or Bust" mindset. East Coast startups can be content to grow more organically. Its New York financing vs Silicon Valley financing. Remember that Hacker News is based on YCombinator: a West Coast incubator. You'll probably never hear about the tons of small scale restaurants, small government contractors (I've seen teams of 10 or less), and one-off donut shops. But they're relatively common in the East Coast. There's a "MicroBrew Beer" restaurant every block in some areas. Its a bit different on the East Coast. There are tons of business owners that I know of, but all of them are quite small businesses. My High School math teacher owned a franchise restaurant, another high school teacher owned a potato chip company, my cousin owns a Pho shop, my uncle owns a private Sports-Medicine practice (finances are run by his wife). A lot of blue collar work (like HVAC, Roof Repair, and other household tasks) are done by contractors or small businesses. None of these businesses plan to strike it big. Its more about day-to-day operations and basic work. Naturally, you'll see more "Big or Bust" methodologies around YCombinator. The small organic growth of the East Coast startups don't really make news and are frankly... very mundane and boring.

brazzy 12y ago
Another somewhat different case in point: Bloomberg L.P., started with a $10m personal investment, took no more than 30% outside investment (which was eventually bought back) and grew to a $8b business over the course of 30 years. "lifestyle business", really?
- apaprocki 12y ago
  ~$8b yearly revenue -- the business would be worth substantially more. 30 years is a long time, though. I'm curious now to find out how many years in it took to have a $1b valuation.
moonlighter 12y ago
YCombinator originated from the East Coast (Boston/Cambridge, MA).

moonlighter 12y ago

"it is perfectly fine for a startup to earn a million or less a year, and never even aspire to earn billions, as long as it pays the bills". That's basically the concept of Micropreneurs and Solopreneurs here; also not to take VC funding (at least not until much later) and instead either bootstrap or crowd-fund. It's not as glamorous or much talked about as the Silicon Valley startup scene, but it definitely exists here, too. For example, http://imgur.com http://imgur.com started out that way: http://thisweekinstartups.com/imgur-alan-schaaf-andreessen-horowitz/ http://thisweekinstartups.com/imgur-alan-schaaf-andreessen-h...

pearkes 12y ago

There's a specific term for those compartively small but succesful businesses in Germany. "Mittelstand". It's cited as being a huge source of strength for the German economy, seems to be similar to what Americans might call a "lifestyle" business. You see lifestyle businesses portrayed as "settling for less" in American media, whereas Mittelstand has a very positive connotation in Germany. http://en.wikipedia.org/wiki/Mittelstand http://en.wikipedia.org/wiki/Mittelstand

dragonwriter 12y ago
> You see lifestyle businesses portrayed as "settling for less" in American media I only see it portrayed as "settling for less" in American media focussed on serving the executive/investor/startup-founder groups as their target market. Stable small businesses are pretty much treated as icons of the national culture on a level with baseball and apple pie and set up on a pedestal everywhere else in American media and culture.
- pearkes 12y ago
  I totally agree. Just certain factions of the media make that portrayal.