These days things are diluted to an extent. May be due to overall effects of globalization and people just moving on due to cultural dead ends.
That said, entrepreneurship isn’t the sole path to innovation. Germany has a solid history of non-entrepreneur value finding.
[1] http://www.privatinsolvenz-hilfe.org/en/german-bankruptcy-la...
Most entrepreneurs have leveraged their personal finances at some point. I personally remember running payroll off a personal credit card in a particularly tough quarter. That route is prohibitively risky in most European countries.
> it is much rarer than in the US
That is the point. There is reduced risk taking in Europe. Many entrepreneurs’ successes are preceded by failures of varying magnitude. The American system’s willingness to forgive and forget creates lots of problems, but it also fosters an innovative culture that is comfortable with risk taking.
I'd say this is risky everywhere and regardless of the fact that personal bankruptcy is a thing in the US. Heck, running big debts on credit cards is a pretty unique US thing, because usually the limits are either little and/or the interest rate is prohibitive.
I agree the risk taking is smaller in Europe, but if you need a loan go talk to your bank, putting a debt in a credit card is a stupid idea period even in the US.
This isn't just risk aversion, it's really that the tiny changce of being a billionaire doesn't really appeal to me more than a solid chance of just building a business and having a healthy work/life balance the whole way.
Nothing to be about "startups" means you have to have things that "scale" or hope for exponential growth or being able to sell the company, or even some new or impressive tech. To me it literally means "a young company bootstrapped with a small amount of cash, hoping to grow".
E.g. wikipedia
"startups refer to new businesses that intend to grow large beyond the solo founder"
I don't mind that definition. But I also wouldn't call my company not a startup if it doesn't want VC funding or doesn't hope to grow more than linearly/organically.
European laws, regulations, and investor culture are all setup in ways that hurt startups.
Airbnb gave me plenty of RSUs while I worked in Berlin. No problem.
The Berlin startups with their shit together also know how to use UK (now Irish) Limited companies, which have no issues with offering options to employees.
That being said, Berlin start-ups have a tendency to complain a lot. If they wanted, they could make a lot of things work.
To my knowledge no equivalent setup exists under German tax law.
And in case you assume the shares are going to be worthless, just sell to cover taxes when they vest. No harm to your bottom line. And a potential upside.
But there IS a process. AFAIK there is no such thing in many European jurisdictions, like Germany.
> And in case you assume the shares are going to be worthless, just sell to cover taxes when they vest.
...how? Sell to whom? On what market? I think you’re missing the point. These are pre-IPO shares with explicit sale restrictions that prevent you from selling.
Not offering options because you're employees have to pay income tax on all the value rather than capital gains tax on most of the value is ridiculous.
The American approach is simple: no sale, no profit, no tax. If Europe wants their own Silicon Valley, they need to adopt similar startup-friendly tax laws.
For example:
> Horizon 2020 is the biggest EU Research and Innovation programme ever with nearly €80 billion of funding available over 7 years (2014 to 2020) – in addition to the private investment that this money will attract. It promises more breakthroughs, discoveries and world-firsts by taking great ideas from the lab to the market.
Horizon is much bigger than ITER, and like the DoD it covers a wide range of R&D areas with industrial collaboration, and says what its main areas of interest are.
But it has funded lots of small companies doing R&D, which I thought was the subtopic here comparing with DoD funding, which also involves lots of paper and fantastic reports...
Honestly, if they want a solid challenge, here's one: get a unicorn tech company public over the next decade for each major EU nation.
Essentially reverse what happened during and after WW2, when the anti semitism caused Germany and then mainland Europe to lose all the amazing talent to the US.
There is no European university system. There’s a French one, a German one etc. They all pay much, much worse than their US equivalent because they’re substantially poorer than the US. Remember, if Germany was a US state it would be poorer than every state but Mississippi. And this probably understates the difference. By average household consumption the US is $10,000 ahead of Switzerland, number 2 after Hong Kong. The money to massively increase research spending isn’t there.
[0] https://www.macrotrends.net/countries/DEU/germany/gdp-per-ca...
[1] https://en.wikipedia.org/wiki/List_of_states_and_territories...
https://en.wikipedia.org/wiki/List_of_U.S._states_and_territ...
But beyond that, my thought is that although you probably have fewer super rich people in DC, you also have way fewer poor people. So the average is going to be higher than even SV.
Plus, the types of jobs in DC proper (so we’re not talking about the extended Maryland and Virginia suburbs) are almost entirely professional/government. It’s also a very expensive place to live.
Some companies in the US are terrible at getting rid of bad workers- too many cracks for them to fall through. Some, however, are known for paying high salaries and letting anyone go who doesn't live up to them.
Is that really the case? I would have naively assumed the typical (median) startup path is something like hire, hire, hire, go-bankrupt? And the successful ones more like hire, hire, hire, hire, hire, go-public?
Easy firing doesn't seem relevant to either of those?
Hiring is riskier, and therefore slower. There are 2 sides to it of course, on one hand employees are much more protected from losing their jobs, but on the other one innovation and fast access to jobs is also slower.
Also, it is not only about firing. Hiring is also slower because of all the paperwork that needs to happen. For example, in Spain you cannot just hire someone. You need to draft out a contract, cover every possible detail related to the work that the person will be doing, etc. it is just slower in general.
This brings me back to my min point though: employment at will.
Why would European developers allow themselves to be shafted out of millions of dollars by staying in Europe?
The UK left the EU on 31 January. It is now in a “transition period” where it follows EU rules and trade is the same. But it is out of the EU. If you’re going to make factual corrections please check your facts.
One of the main ones is that national policies around employee equity vary throughout Europe and are often severely disadvantageous (particularly Spain and Germany). Lots of European entrepreneurs are calling on policy makers to both normalize this within the EU, as well as making the policies competitive (e.g., [1]).
Of course that statement misses some of the “why not < state in the US >”. The tax treatment in other states is the same, and several have similarly employee friendly policies. If anything, Seattle has become a clear rival to San Francisco, and has restrictive employee policies with regards to non competes (c.f., Microsoft used to sue high profile transfers to Google, Amazon sues ~everyone who leaves AWS, etc.).
I think the combo of those things suggest that it comes down to density and freedom of movement. Silicon Valley leapfrogged other places thanks to Shockley => various forks => Intel, Apple and others offering serious equity (the Boston scene didn’t keep up on this front). That fed on itself over and over again, leading to persistence. Seattle is now a powerhouse as a legacy of Microsoft and then Amazon, and all the folks that have come out of it.
By contrast, Europe has only had a broad single market for ~30 years. But it’s still super fragmented both in terms of laws and some would argue more importantly by language. 45 years ago when Apple and Microsoft were founded, they were able to hire any engineer in the US (and beyond) that spoke English. By contrast, most European companies were highly national with fairly minimal migration between countries.
Europe is closer now to the conditions of the initial Silicon Valley setup (freedom of movement, access to knowledge, everyone speaks a common language), but its decades behind in terms of a history of successes. I believe that the companies spawned from Spotify employees, and so on will spread throughout the European startup scene. But it still takes time.
tl;dr: Europe still has some structural barriers, and just a much “younger” startup scene.
Edit: plus it’s always important to remember that post WW2, most of Europe was spending its time recovering from the war.
I would also add that employee perception about the value of equity vs salary varies across countries in Europe. High stable salaries could be preferred over equity in good welfare states with employee-favorable legislation where firing people is harder (Germany & France for example).
I think the firing people thing is good to point out, but many startups end up not needing to fire individuals: they just go out of business :).
It seems that there are some massive sources of wealth for tech companies, such as search, social networks, and e-commerce companies. In Europe, these have all been supplanted by Google, Facebook, and Amazon respectively.
In China, on the other hand, these companies were free to grow and establish their own nexuses of tech talent. As a result, China is the closest to having the Silicon Valley of <x>.
Perhaps Europe should take a page from China's (and the US now, I suppose) playbook?
>losing access to every major OS overnight
That wouldn't really be in America's interest would it?
1) The California employee rights, which allow an employee to resign and start a new company in the same area. Boston doesn't have an IT industry because of their onerous non-competes, even though DEC and Wang were located there.
2) European nations often have onerous pension requirements that must be met even before hiring a new employee.
3) Silicon Valley has willing investors.
4) Governments across the world prefer dealing with large entities because of the overhead in dealing with multiple companies, so without the right startup culture, new companies just won't happen.