I've been trying to build deep tech startups in Germany for 6 years. I managed to sell the first one I built to a US company (for a very small amount of money) and started afresh after taking a break as an employee.
Right now I'm at the point of giving up again because it's so damn hard to find customers here. In my opinion, for deep tech startups the problem is not primarily access to capital but access to customers, as the corporate culture is extremely hostile towards startups. Large corporations are very risk-averse and most of them won't ever consider buying a product from an unproven startup. The ones that want to work with startups often have started their own incubators where they try out ideas by hiring teams and building startups that they fully control (50 % shares belong to the parent company from the beginning).
Also, from my experience getting seed funding becomes harder the more experienced you are here: If you just finished university it's easy to get a so-called EXIST grant, which will pay a little more than 100.000 € to fund a team of three people for a year. That's how most (or at least many) of the successful startups get funded here. The thing is, if you have been working for 5 years or more you will be ineligible for that program, and your options for getting seed money are very restricted. This is weird as people with industry experience usually have a much better chance at building something relevant and successful than a recent university graduate with no business experience. They have a much harder time finding money though.
There are counterexamples and very successful deep tech startups of course, I just think we could have many more of those if we had a system that actually encouraged and helped people to build these companies.
I can understand that many people decide against it, especially when you're a good technician / engineer you can earn much more in industry and there's very little to gain by leaving your position.
There is just much less VC available, even if normalized for the difference in size.
I know the VC scene a little bit in Germany. Total monkeys.
* Lack of attitude
Germans are much more hierarchical. Both in science and entrepreneurship I found the American personality much more suited.
* Lack of vision
You will find money in Germany for a personalized cereal/granola mix shipment service (was just an exapmple, but in fact I think it exits) but if you are into a disruptive technology they will balk. Both have different risks but both also have different pay-offs.
Your cereal mix service is called Mymüsli. During the time I investigated funding options I was considering to enter a business plan contest. The information given by everyone was that only inovative tech start-ups would be considered. One of the runner ups in the end was a service that allowed you to by food from local farmers, limited to one metropolitan area.
I have my doubts that the general start-up ecosystemin germany knows what they are doing.
I‘d have been eligible for EXIST, but that program is a bad joke. 100k for 3 persons for one year before tax? C‘mon. That is financial sucide, if you’re in tech these days.
Yeah, and than you have to pass a panel deciding whether your "idea" is innovative enough. It reminded me more of a game of buzzword bingo than a viable investment procedure. As your not allowed to incorporate before enter EXIST it is just a waste of time. Not to mention that it all depends on how well you are connected at your university, and if government funds are available.
I'd say the chances of getting a grant are very good, back in the day the success rate was around 50 % and you could apply up to three times (to my knowledge), which made it highly likely that you'd get the money if you were persevering. It's true that you have to choose a good university as the quality of the provided coaching and mentorship varies wildly. I can recommend LMU & TU Munich as well as TU Berlin or one of the other well-known technical universities (e.g. RWTH Aachen), to my knowledge they have very good programs. You don't need connections at your university either, you just need to convince a professor to support your application, which they are often happy to do as it counts towards the amount of funding they raised, which is a relevant metric to them.
If you can get that money it's really an excellent opportunity and will help you to get further funding, as I said before I just find it sad that nothing comparable exists for experienced people from industry.
I tried a while back. Not being at one of the universities you mentioned ,I would have been an extension from TU Munich. Funds where hard to come by at that time (right after the elections, so no governmant, no government budget, no EXIST funds). In the end, I talked to all relevant profs at my university, they talked to the giys at TUM, and the feed-back was "no need to tey, your idea is not innovative enough. Try a bank or bet your house."
Also the expected time line was around 6 months to get into the program, so for me it would have just been a colosal waste of time.
EDIT: While coaching is anive thing, it is access to follow-up funding that matters. At let's be honest in that regard YC is different league all together. And if you don't need funding beyond 100k you really could have used bank in the first place.
It's not much money but absolutely sufficient to cover expenses and focus on building your startup. It paid 2500 € / month in income per person back in the day, and until recently the money was considered tax-free (as a scholarship) so it corresponded to a gross salary of about 50.000 € (without social security or retirement of course, so subtract 300 € per month for that). Now it's no longer considered tax-free but they increased the amount a bit in response, I'd say you will get 2.000 € in net income per month if you have a PhD (people with a Master or Bachelor degree get 500 € or 1000 € less, respectively). It's still not a tech salary but a living wage, and actually similar to what many people in non-tech jobs earn working full-time.
On top of that the program pays about 50k (?) for additional expenses, which you can use to e.g. rent an office, hire freelancers or cover legal costs.
For comparision, YC gives you 150k for a team of usually 2-3 people, and living expenses in SV are way higher than in Germany. So I wouldn't consider it a "bad joke" personally. Also, while the tutoring is not as good as YC some universities (especially TU Munich / LMU Munich and TU Berlin) provide really excellent mentoring, so I'd say overall it is a great program.
I'm just bummed out that nothing comparable exists for people with longer industry/work experience.
Consider, for a moment, you have a great idea and a couple of friends to start a company. You have no money. Is 100k to give it a shot "suicide"? Of course not. If you're at the right time in your life, this is an excellent opportunity. Not everywhere has $4k/mo rents and $10 coffees.
Doing a startup is usually a financial mistake, that's why it's risky. I founded a startup in Germany and got a similar amount of seed funding of 150k for 2 founders and spread that money over a team of 5 living on a minimum salary. For me that was a risk i was willing to take to pursue my dream and I don't regret it despite not making it in the end.
Everybody complains about taxes but I don't think that's the most important factor tbh
Whenever someone discusses corp. taxes in the US and incorporation it seems it's full of gotchas, corner cases and traps. Not to mention every state having its own legislation as well.
Taxes might be higher outside of the US (but then again, they're taxes: no profit, no taxes) but they're not necessarily more complex (though Germany ones are probably not the easiest tbh).
Startups exist in more tax complex countries. You can't buy culture, customers and financing, the rest is doable.
I don't know the exact situation in Germany or US, but in Italy, the "no profit, no taxes" is definitely not true. Depending on the company type you registered, there's a significant cost to just keep the ability to run the company to _do_ business in the first place.
By experience, the dead cost of the smallest company you can run is between 5-15k per year. It might not seem much, but I've heard here on HN over and over how to grow a side/passive income, and there's basically no way to do this here. The moment you want to start a side business, the fixed minimal cost is sunk, so unless you start making a significant sum from the start you're just losing money that eats into your primary income. And there's no legal way to do the business below that. That's not how I understood people in the US do this sort of passive income. It sounds like "no money = no tax", but this is not true here. You often have to pay taxes in advance on the projected income of the next year, even if you never had a business first: the projection is based on god-knows-what market estimates you have no control over.
The market segmentation, language barrier and tax situation in EU is a huge burden. If you're working on a niche product you want to start with a wide basin of users, at least as large as the EU block. Sounds stupid to start in a single country. It's doable, but don't expect to start with a small capital, and typically not with the wannabe-VC we have here in the EU. The 100k for 3ppl/year is not a joke.. a "100k-300k" ballpark is very common for startups here. I'd consider that just for marketing, or even then. With this money you basically cannot do anything serious, just considering how hard is to penetrate the market.
I've yet to see something in the likes of Stripe in the EU. And a decent replacement for Paypal for smaller setups. I'd love to have candidates here. Accepting money is cumbersome if you're small. This is sad.
Workforce is a problem. But not because of talent. The extra regulation here implies a strong commitment when hiring. This forces companies to grow very cautiously. You cannot resize the workforce to match the load. If you grow too much, you may doom the company at the first financial difficulty. This causes a lot of sub-contractual work to be done, with a significant decrease in quality and cohesion. Not to mention, this line of working is being limited more and more over time - I was working as an entrepreneur in the beginning of my career but I cannot do that anymore and have to be regularly employed. I could have started something from scratch much more easily 15 years ago compared to now just due to regulations.
If you are based in Italy and operate the company from there, you will still have to pay the Italian taxes. But yeah at least you should have easier accounting and no running costs.
It is still in the EU, so there is no resson why you wouldn't incorporate in, say, Estonia and be based out of, say, Berlin. You would still have to pay taxes in Germany.
Government support is, as far as I can tell, not a deciding factor in SV. In setting up an start-up friendly ecosystem it can definitely help, France is good example for that.
Germans absolutely do tech startups, in fact they’ve been on the forefront of building tech companies that mirror Silicon Valley, but in German.
There’s been a German eBay, PayPal and Facebook.
Europe doesn’t really do major companies though, and part of that is certainly a lack of demand to go global from capital investors, but there are other parts as well. Like language and regulation.
I went to harzen for holiday this summer, very retro I know, and almost no one spoke English. In fact I had bigger luck with Danish than I had with English because they see so many Danish tourists. I’m not sure Americans can really understand how big the language and cultural barriers are from creating global companies when you’re de-attached from the Anglo-Saxon world.
I think the reason that a lot of European startups that made it to the global scence came from Scandinavia, is exactly because we’re so attached to American culture that’s it’s almost second nature to us. Sure we don’t understand American individualism, not really, but we’re all brought up watching American tv-shows and movies, hell American politics and economics sometimes take up more news space than our own national news...
The rest of Europe isn’t like that, so while Germany had its own eBay, that made its founders billionaires, no one outside of Germany has ever heard about it. Except for maybe eBay who couldn’t enter the market.
Usually when I go around in Eastern Europe I have an easier way trying to speak German than English.
And in southern Europe I am lucky to be able to speak most languages, as anyone beyond a certain age hardly speaks any word of English, specially outside the major cities.
Which is indeed a challenge, on the other side is also something quite rich, as most traveling Europeans tend to speak fluently three languages on average.
As a southern European I'm very happy about this situation. I don't want my country to be like the Scandinavian countries, the GP summed it up pretty well. Everybody knows English and American culture is literally swallowing the local culture. I'm happy with my language and my culture, thank you.
>Usually when I go around in Eastern Europe I have an easier way trying to speak German than English.
Everyone who knows English has already left. I'm not sure how much it's worth to other people but for me knowing English has been a ~x50 income multiplier.
Maybe alando which was basically a blatant copy of ebay and quickly acquired by ebay? But this was a long time ago.
German PayPal? Not that I know of. The banks are helplessly trying now after many years but they aren't even able to match what PayPal provides let alone being innovative.
That's a startup?! It was some dodgy scheme set up by infamous brothers, hysterically taken over by eBay within first couple of months of its existence.
I am working for startup in Norway that has seen extreme growth in just 2 years. We are in the chatbot/virtual assistance space and our biggest competitors are big multi-billions US companies.
When it comes to european languages, we are at least an order of magnitude better in understanding natural language and delivery speed(from start to production) than these big companies. But oh boy how many times EU companies pick one of these big players over us and fail. Today we have a range of HUGE clients, half of them who has even failed with a competitor. We have a really good story to sell. Still it is impossible to convince 1 of 2 companies to go with us first. They really want to fail hard before giving us a chance. I just can't understand why it is like this. The trust in US companies with a strong name over decades is really huge here in EU.
Me too. I've heard an observation from a Belgian customer: Once a Belgian customer has signed a contract with a supplier, they're married, and will put up with all kinds of shitty product. Presumably, I speculate, because cancelling the contract is seen as an admission of failure for the buyer. Completely crazy. Entire countries never cancelling no matter how shitty the product turns out to be.
Sounds a bit like IBM back in the day. There's an anecdote that you never got fired as a manger for choosing an IBM product/ solution. It's the safe choice, no one could really fault you for going with it, even if it didn't meet all your reqts.
We do have tech startups here in Germany, and quite a few of them. It's just that they tend to be funded differently, and with less of the wild valuation-speculation that goes on in the US. I'm not sure that's a bad thing.
As a corollary, the article cites European data protection law (in the context of not being able to collect usage data to improve the product) as a barrier to building startups which ... is also very wrong. You can (legally! Ethically! GDPR-compliantly!) collect all sorts of data with which to improve your product. I've seen it done, I've done it myself.
There are a lot of people here, German and non-German alike, trying to furiously recreate the SV way of doing things, as if that's the only way to build a strong tech industry. To me that's both uninteresting (why replicate the same model everywhere?) and bad business (not all markets are the same, and that's not a bad thing). Maybe people would be more successfully adapting to the local context. It's certainly working for a handful of startup incubators I know in Berlin.
meanwhile there is not a single tech startup from germany worth talking about, but yeah sure not everyone has to do it the SV way of doing things, like actually being successful
I’ve lived in Berlin for some years. What I‘ve seen from most of the startup scene there was that people are more collecting memories than building businesses. The predominant mindset was like „we don’t want to take over the world and we will most likely fail anyway“.
The successful ones, like Dubsmash, leave for the US after a while.
If I, as a German, was to create a startup in Europe today, I’d do so in London.
I would humbly submit that your sample size is too small. Even just the Rocket Internet output is a pretty good indicator of the size and diversity of successful startups tsrgetting the German market specifically (and thus with no incentive to move out to the US).
I‘ve worked at a major company that is more or less controlled by Rocket and my direct neighbor was the Germany-CEO of one of their successfuller ventures, so I think I have a rather good picture of Rocket. However, I think they have not met expectations. They have not become huge, and are just doing okay, what I consider as a failure, given their goals.
I am German and co-founded a start-up in berlin. After it failed, one of my co-founders and me tried again - this time in London. Boy, what a difference.
Seed funding, tech talent, tax situation, and lawyers to help you start your company - all on a better level. Yes, living was more expensive, but we actually enjoyed that - it put pressure on us and everyone working with us.
We had a highly successful exit in less than a year.
I have to disagree. We don’t do tech startup like in the US or China. Yes, we do have a lot of great B2B industrial startups. But ask yourself this questions: as a developers where would you want to work? In the US that’s easy to answer, Google, MS, Apple, amazon. Where do you want to work in Germany? Which tech company provides the opportunity to earn a lot of money while working on really interesting topics at a large scale? That’s one reason the big US companies have offices here, to attract the talent.
“In the US that’s easy to answer, Google, MS, Apple, amazon. ”
That’s a dangerous thing though to push as a one-stop solution I think. There is huge advantages to work for one of these companies, but the drawbacks are also there, and they’re definitely not made for everyone
Well it worked for us in the car space. As engineer coming from university it is clear where you want to work in Germany: Mercedes, BMW, Porsche, Audi, great places to start a career.
Because most graduates would rather work in a safe job at one of those large companies than do anything actually challenging at a more risky place. I know engineers who work at several of those companies, and it's the same kind of of overly bureaucratic, conservative corporate culture that is dominated by middle managers who are primarily preoccupied by not making any mistakes they could be held accountable for everywhere.
Furthermore, there are a lot of jobs that are being filled with engineers that don't really require an engineer. A good friend of mine is currently working for one of those companies, and his job mainly consists of building spreadsheets with risk models that are then passed on to, and mostly ignored by, the sales force. Needless to say, he's probably going to switch careers in the next few months.
For some people that is enough as long as they get paid at the end of the month, but if you actually want to do something, these companies are not the place for that.
I worked in Bay Area for 6 years and never wanted to work for Google. Amazon? That’s a terrible place to work at.
Instead, I worked for seed stage startups with ambitious missions such as changing the world. Even some crazy ideas can get funding in US because today’s angels are used to be engineers of yesterday.
Germany is not there yet. The market here needs to evolve years to get there. For example, if I could get my startup funded and successfully exit, then the next generation startups could have better angel options as I’d be willing to invest in startups with crazy & ambitious goals.
> Where do you want to work in Germany? Which tech company provides the opportunity to earn a lot of money while working on really interesting topics at a large scale?
Global companies have massively increased their presence here.
Google has a huge presence in Munich, notably including a chunk of the V8 developers. Apple has a large hardware team in Munich. Amazon Berlin is aggressively hiring for developers to work on AWS. If you're after SF style salaries go work for Google Zürich and take home €200k.
I still don't get why Germany is underpaying engineers. After taxes, a cleaning lady in Switzerland can earn more than an engineer in Germany. Net salaries in Zürich are the only ones in Europe that match Bay Area level. (Living costs are lower than you think, see my blogpost titled "Nine reasons why I moved to Switzerland to work in tech", which I wrote after I emigrated from Germany: https://bit.ly/2GNlJcA) So why should top notch talent move to Germany, if they can move to Norway, the Netherlands or Switzerland where they earn double or triple?
What I hear from recruitment firms is that "mediocre engineers move to Berlin and great ones to Zurich". Also, GetYourGuide has their core backend engineering staff still in Zurich, but marketing and sales in Berlin. One of the founders writes that in machine learning, artificial intelligence, and complex data analysis, there are more talents in Switzerland than in Berlin: https://www.handelszeitung.ch/unternehmen/getyourguide-chef-...
Switzerland is even more founder/investor-friendly than the US. Example: Capital gain tax is 0%, that means, if you start a company, and sell it (=shares usually surgue in value), you don't pay taxes on this gain. Also, no capital gain taxes need to be paid, if you buy a publicly listed stock/ETF and hold it for more than 6 months. (More in another thing I wrote: "Switzerland: How buying real-estate can kill you financially and reasons to go for stocks instead" - https://bit.ly/2xIe8ri). Despite the legal infrastructure, we still lack the "American" mentality to become a startup place, but for small businesses it's much better here than in Germany:
A friend of me once said: "Germany is a rich country of poor people". The system in Germany hates small businesses / freelancers and is optimized for conglomerates like Siemens or BMW. If you open a company, you immediately drown in red-tape and upfront taxes. As a comparison, in Switzerland you can just start issuing invoices without a tax-code or anything. Only after you reach a certain threshold, you need to have to inform the authorities during the same tax-year. Also after that, things are very reasonable and easy.
My tech recruitment firm generates "normal revenue" and I still haven't gotten a tax-consultant because I can do taxes myself. If I have a question, I call the tax authorities and they help me / give "free advice", which shocks my German entrepreneur friends. There, the tax-authorities treat them as criminals, no support is given and one is triple-checked thoroughly that no taxes are evaded, which, of course, happens anyway especially because taxes are damn high. If you make median wage, it's 45%. In Switzerland median wage is taxed at ~17%. Also, tax-authorities treat taxpayers like clients, whom one is grateful to. That reflects in the simplicity of the tax code: In Germany, if you go for dinner with clients, you need to subtract and can't deduct the part from the bill which you consumed; in Switzerland, you just deduct the whole bill.
(Content marketing from here: If you are European and you want to move here, shoot me an email to iwan@coderfit.com. I am well-connected in the local tech scene because I match programmers with jobs for a living.)
I am sorry that you see it in this way. I am just trying to be helpful by explaining what I experience here and also pointing to my small business, which is tech recruitment related. I added a few points and marked the end as "content marketing" to make things more clear.
... So why should top notch talent move to Germany, if they can
move to Norway, the Netherlands or Switzerland where they earn
double or triple? ...
Salaries for software devs in The Netherlands aren't really great. Probably worse or the same level as (most of) Germany. Taxes are a huge burden, though expats get a 30% tax exempt ruling [0] for a couple of years.
I wouldn't recommend moving to The Netherlands for the salaries. But there might be other reasons to move there.
I just left The Netherlands, working from Thailand now and while I earn about half of what I earned in The Netherlands as a freelance dev, I probably save more money in the long run due to lower (practically non-existant) taxation [1] and just a general lower cost of living (especially on the Thai countryside, where I live with my GF and daughter).
Oh, I also only work 4 days a week now instead of 5, so better quality of living.
I estimate that in The Netherlands my basic cost of living was probably around 2500 EUR a month (mortgage, food, insurance, commuting), but in Thailand for the 3 of us it's around 1000 EUR or so (we built a house here, so no housing costs).
P.S.: I don't work for a Thai company, I work remotely (currently for a US client) through my Seychelles offshore company [2].
I was recommending NL exactly because of the 30% tax exemption for 8 (!) years for foreigners who move to NL to work in tech and other "in demand" fields, which results in a very nice after-tax salaray. Without that, you're right, NL isn't that interesting financially.
We have a few, but a bunch of "mittleständische IT firma"/"Enterprise" manager dudes are just founding new sub-companies so they can call their old crap start-up.
Exactly, I've worked in 3 companies in Germany that you might call startups without venture capital. I think it is also a cultural issue, with investors and founders alike. Its like, a small company with an independent revenue stream and a small but reliable customer base is worth more than artificially (VC-)inflated companies, that might make it... one day... maybe.
A colleague from sales told me an anecdote once, that she is not going to use the word 'Startup' again during sales pitches and general customer interaction. I worked in publishing at that time and customers in this sector tend to be more conservative and long term planning than in other sectors. Essentially they feared that the company might not exist anymore in 2 years to come, because of {acquisition, restructuring, bankruptcy} or some other reason.
Appearantly beeing a 'Startup' seems to be associated instability and unreliability in some circles -- wich again is part of these 'cultural issues' wich I was talking about in the previous post.
I think this is unrelated to being self funded or being in the A, B or C round.
It's more about the fact that any new cool young company can disappear soon, if there is no business. And this happens both if investors give you money or if you simply don't make enough money. That's the way it is...
Eventually, if the business doesn't work well, it doesn't work well...
It's also somehow the reason that nobody got ever fired for hiring ibm or whatever the saying says...
Well, I am a german and i'd argue we'd need to do it the SV way to have the same kind of global success stories. Sure your small german startup can be GDPR compliant and find it's niche, but making products of massive global scale is inherently harder here than it is in the US because of a number of things, only one of which is data privacy.
Not saying as a consumer i do not prefer EU privacy laws, I do, but it will be hard to compete on a global scale being handcuffed in a lot of these smaller areas. (privacy, language barriers, taxes, salaries etc)
This may come as a surprise but most big companies are just making everything GDPR compliant for all users because it's easier and it's not like the restrictions you need to put in place affect data quality too much
The article is wrong on many levels, you’re right. As a Berlin-based developer I’m not sure where they’re getting their facts.
Blaming GDPR for everything is another stupid trend I detest. I’ve inplemented a lot of stuff related to it and it’s definitely not what it gets pictured as.
At the end of the day it speaks more of the zeitgeist among Quartz’s “high-earning readers”.
>Blaming GDPR for everything is another stupid trend I detest. I’ve inplemented a lot of stuff related to it and it’s definitely not what it gets pictured as.
Every law that remotely hinders the purist form of the free market is detested in Anglo media is seems. People have no problem hailing Amazon as a tech wonder and celebrate Bezos as the richest man alive. But how about minimum wage and proper working conditions in their warehouses?
'ah should get a better job then'. They are 'at will' employed.
Just because a law restricts business doesn't mean it's bad.
Thank you! It’s easy to forget many of the “safety nets” we enjoy in Europe stem from socialist-style welfare policies that our forerunners fought for.
> Blaming GDPR for everything is another stupid trend I detest.
From what I noticed, it's mostly coming from the U.S. where every piece of regulation is seen as "government impending businesses that create jobs", including regulation against polluting etc. I am not sure how actual citizens feel, I suspect not as strongly against deregulation as the press make it seem, but they're definitely a lot more against it than in the EU.
" less of the wild valuation-speculation. I'm not sure that's a bad thing."
This is one of the classic misunderstandings of European entrepreneurs and investors.
In finance - things with low risk, tend to produce low yield. This is generally well established because there are a lot of 'eyes on the info'. For example, we can calculate how much it costs to extract a new shallow water Oil find. Most of the variables are known.
Though it's not so clear in early-stage, the rule will still apply because the easy hanging fruit generally will be culled when there are intelligent actors.
So - you need to take on risk. Otherwise, you're probably not attacking a big opportunity.
European VC's usually come out of the world of finance - in fact, VC is considered a part of 'Private Equity'. In PE or big funds, they invest in one or many companies, and expect x% return. Some more, some less.
In PE, if a company were to go bankrupt, it would wipe out the portfolio profits. Imagine if Warren Buffet put money in CN Rail and it turfed.Bad.
But in VC - you get 9 fails and 1 home run. The fails are hard to swallow but they are an inherent part of the system.
Culturally, Europeans especially Germans are not good with that kind of failure. It can be seen as a permanent mark on one's competency and status. In Austria, up until recently, a CEO who put his company bankrupt could face criminal charges.
All of this makes sense in a culture of high standards and expectations, coupled with social solidarity of workers (i.e. you but us out of jobs, you pay!).
European LP's are not used to losing their money. European workers are not used to equity, to losing their jobs, to total instability.
European BigCo's often do not recognize value in startups. The culture in Europe is very protocol and status oriented - you're 'value' is a function of the prestige and power of the entity you represent. Ramshackle, scruffy coders showing you 'you can do something amazing' is just less potent an opportunity than it is in the US.
And of course, the exit opportunities are not there.
And then so many other systematic issues like the fact almost nobody will learn to speak German, immigration etc. etc.. - all of this makes it that much harder.
Much of what I am saying is stereotypical of course, but it's real enough.
I think Europe should take their disadvantages and turn them into advantages and use their 'longer scope of vision' to do value creating things.
Europe is good at getting people together and going 'big projects' that have a long term view. Like CERN. And EU treaties.
I can see some very powerful things concerning money - European countries are smaller and more nimble. Sweden does some cool stuff. What if a Swedish Crown corporation enabled a digital currency that could be used globally? Because of the integrity of the institution, and the fact that it's backed possibly by a 'real economy' - it could be a very powerful export. Much in the same way if you make 'jet fighters' you don't just go and sell them you need your countries diplomatic corps to work with you.
EDF in France (Energy) is tied closely to government, and that kind of stuff - i.e. nuclear, generally needs some hefty scale.
But also expect that many of the gains in such situations will be socialized, and maybe not come in the form of crazy billionaire status for founders.
I moved to Berlin recently and started making a list of “cool” startups and venture capital firms in my public notebook. It can be a reference for people who are curious about the ecosystem here:
Their big idea was to copy every idea in markets where the original company hadn't expanded yet.
It might not be the greatest technical achievement, but it certainly paid off for them, demonstrating that execution is more important than being the first to have an idea.
By "execution" you mean a wasp nest of POs, PMs, MBAs, friends'-friends and lawyers standing over and yelling at engineers and developers imported from Eastern Europe and India?
I haven't. Where are you from? I live in Southern Europe and I have never heard of them. I looked at their website and everything is stupidly expensive.
well I'm from germany but zalando grew so big in europe (too big I think actually).
I mean they have such an aggressive marketing, even in southern regions from europe, I've seen some zalando stuff even in spain (Costa Brava, maybe because some parts there are "germanized").
The shipment and courier services are not that reliable in many places, many Europeans still buy clothes on Chinese/Vietnamese/local markets. There are really few people who buy branded clothes > 100 EUR per item while most retailers aim almost exclusively at them. Weird strategy of reaching to or convincing clients from other EU countries just by hiring some teenage anorectic tattooed models and influencers. Yeah, I can totally imagine someone from outside of Berlin never hearing of Zalando.
I read this article a few days ago with three different ways of funding a startup in Germany, namely (1) crowdfunding/crowdinvesting, (2) business angels, and (3) wealth families (family offices).
It's because they don't need to. Startups often include difficult and intense work environment. For exactly what? Better than average compensation discussion is frowned upon in Germany. There is ramphant latent descrimination against people from other countries. Which German company has a foreign born CEO?
In US, Google and Microsoft have foreign born CEOs.
This is my own experience, so downvoting is only silencing a voice.
> Startups often include difficult and intense work environment
Compared to the USA? Lol, you have no clue. The standard for a software engineer in SV is to take drugs to work 12 hours a day 6 days a week, pay a fucking high rent living with 4 other people and if he's foreigner and freshly arrived, he has to suck his boss' cock everyday because they might take away his visa sponsorship and put him into troubles.
In Berlin most people I know work less than 8 hours a day, can afford to have their own apartment at their first or second job and save enough money and energy to go travel somewhere every 3 months. Because you know, we have 30 days of holidays per year.
The only way to get any startup to work in EU is by importing immigrants and they'll work hard on their own and compensating them appropriately and making sure they can reach top ranks in a company otherwise no one will ne motivated to work hard.
Germany has infrastructure. Taxes are not that bad.
Any country which will accept foreigners with open heart and give them opportunities will have plenty of startups.
There are still clubs in Germany which do not accept people of color.
> Compared to the USA? Lol, you have no clue. The standard for a software engineer in SV is to take drugs to work 12 hours a day 6 days a week
Completely false, the standard is more like 35 hour work weeks with "work from home" one day a week. Judging from the fact that you know how people work in Berlin I'm going to guess you have no personal experience with SV work culture and have only read some horror stories that are not at all representative of what work is like for the average software engineer in SV.
"Sanjay Brahmawar is Chief Executive Officer of Software AG, ..."
"He is a citizen of the world, born in India, and having worked and lived in England, Finland, Belgium, Holland, and Germany. An avid cyclist and runner, Brahmawar currently resides in Darmstadt, Germany."
“Germans don’t do tech startups” is obviously clickbait but it’s equally obvious that Germany can’t compete with SF when it comes to startups. As a Dutch founder of Germany based scaleup Transloadit.com I’d say taxes and workforce-legislation are more prohibitive than a lack of funding (tho it may also be a problem for others as clearly there’s less going around). I realize why taxes and protection of the workforce are necessary and am happy to live in a country that sands down some sharper edges of capitalism, but when you are just starting out, it’s overwhelming the amount of money you can’t allocate for more growth, and the commitment/risk that comes with having people on the payroll. Even though we have work, and money to spend on having that done, going that route is like the last resort because it’s so scary (maybe there isn’t money/work next year, what if they become sick, it could just ruin the company). Not even talking about resources needed to get acquainted and comply with the rules. So currently we try to work with freelance/invoicing as much as possible, but that comes with its own set of legal constraints and high costs. Feels a bit like driving with the emergency brake on. If somehow the government could have a special set of lightweight rules for folks just starting out, I think you’d see more startups flourish.
The mindset in SV is to fail fast - yes, with all the consequences for the investors. That's why investing in startups is a high risk investment. And that's also why the cautious way of doing business in Europe doesn't help with the startup economy. Being too cautious prevents from taking high risks.
I interviewed several times with startups proud of not having any funding behind. Very nice. Still, my question is... Who cares? The main difference is that in the USA money is constantly being invested, there is a lot of debt but that's the way to innovate. In Europe on the other hand, if you fail, or if you make debts you better hide yourself.
I agree. The way to run startups and maybe to some extend tech companies in general seems not that compatible to the German mind set. Every industry Germany is or was internationally successful in rewards you for being precise, optimizing a lot and generally investing a lot of time. It's pretty much the opposite of the fail fast approach where you quickly cobble something together, throw it at the wall and hope it sticks, if it does, you start to think about everything else.
(Inb4 counter-examples. Yes this is oversimplified, exaggerated, stereotyped)
This is precisely why I despise startup culture. What about the risk for the workers and your customers? What are the grand innovations you think Europe couldn’t produce because we’re more careful?
Lots of US people in Europe, true. Doing software? I really really doubt it. Or they left for personal motivations.
Leaving US for a developer is like leaving Ferrari for an automobile engineer. You can't top that. Anything else is a step backwards in terms of technology, unless you go to work for some institution - I see the university of Zürich is really advanced, for example.
Also, the topic was about innovation, capital, etc. I would prefer not to go too much off topic.
> Could you think of Google made in Europe? In Germany, in France, or in Italy?
Some of the biggest companies in the world are from Europe. All of them started as small companies. So, yeah, Google made in Europe is possible. Tech is not a special snowflake industry with other rules than everyone else.
Google made in Europe is possible, facts so far say otherwise, though. If you can mention one or two companies like that, it'd be great.
Also, some of the biggest companies in the world are European, that's true. However, they are all but software companies (except for SAP, a b2b company). In Europe we are among the best in pharmaceuticals, cars, chemicals, etc. Sadly enough, software is nothing Europe is ahead with. The reason? In my opinion the fact that software is not tangible and innovation with software is a high risk business - often not scientific or rational. You need to try it out. Go and propose something like Snapchat to a European investor. The application for me is nonsense, I myself can't still see how it works, but it's valued billions. Did it have a business plan? Maybe. However I really doubt that it was 200 pages long.
That's not something that the no-debt-at-all European mindset can deal with. I think it's partially cultural and partially historical. A sort of perfectionism that doesn't leave space to failure mixed with a world where corporations and lobbies are super protected and no matter what, they are always the winners and the way to do business.
WhatsApp took 2-3 years before it became a standard messaging app. You can't always foresee it. It just happens. Others failed. Now everyone uses WhatsApp.
Failing fast is done to reduce risk. The quicker a company fails with an idea, i.e. discovers that there is no market fit, the fewer money was wasted on it. The remaining budget can be used to try other ideas.
The big company model, where something unproven is developed for a long time by a large team, is substantially more risky. Only when they go live after "finishing" their product they might discover that nobody wants it.
Anybody trying to innovate will fail at one point or another, because not all bets play out. So the key is to make the bets as small as possible and therefore "fail" as quickly as possible.
I only saw this from the perspective of the investor that gives money and "hopes" it will work.
This doesn't contradict the fact, though, that in Europe the "big plan" tends to work for a simple reason: there are already deals (if it's a b2b) or the product doesn't innovate and it's based on something already working elsewhere.
I like this response the best. Silicon Valley is an extremely expensive place to start a business. But, if you have the right idea and people, the Valley will give you everything you need to scale. If you don’t, your business will fail quickly because you won’t be able to pay the enormously expensive rent and engineers. And even if you can, they’ll leave if they don’t believe in your idea, because there are so many other places to go change the world at.
Starting a business somewhere else is fine. It won’t be so fast though.
Oh and just a footnote but IMHO Canada produces excellent technology and engineers, but its tech companies are far too coddled by the SRED tax credit, which should be scrapped to enable faster failure.
A startup can get up 65% or so if it’s engineering salaries back every year as a refundable tax credit on qualifying R&D...
I don't know enough about Canada. I think many countries produce very smart engineers. I mean, Redis was created by some Italian guys , akka was created by some Swedish guys, and I think Scala was created by the technical University in Zürich.
I will never question the high level of smart people in Europe or in any other country in this world.
It's just sad that such places don't change the way of doing business, because it's their own fault if they are lagging behind. Then Macron comes with the French WhatsApp...
I entirely agree with your point about global technical talent. Most of the top 40 or 50 countries have plenty of it.
I've been reading discussions like this thread for more than two decades, since the early days of the boom in the 1990s. I think the mistake being frequently made in this thread and every other thread, is the premise that you can replicate the super context that the US and China represent. I don't believe there is anything realistically that Germany, France, Britain, Russia, et al. can do to recreate what those two uber markets have going for them. It is impossible to do it.
The focus is always on things like funding, taxes, regulations, cultural aversions to risk, and so on. It doesn't matter. In the time a German start-up with identical funding is working on grinding its way through 40 different countries in Europe (most with 1/4 to 1/2 the spending power of consumers in the US) to match the economics of the US market, the US peer already owns the US market, and is assaulting the global market from its position of strength. The US company can then spend abnormal sums of capital on prying away each individual market in Europe, country by country, thanks to that US haven. It instantly puts the European competitor/s on their heels, and discourages investors. The US is by a large margin the most lucrative, accessible, big market on the planet (and you almost automatically get another large market with it, via Canada); if a competitor locks that up, you've got a problem in which you'll never be safe from them using the US market as a springboard to perpetually assault your European position. It becomes a strategy of divide and conquer then.
Europe - the EU specifically - has two choices. Blockade foreign competition ala China (no guarantee that will work out well, it may lead to stagnation and brain drain, along with foreign market restriction tit-for-tat). Or complete the full integration of the EU and push for language, regulatory and cultural consolidation (that will never happen).
If you're an individual company, you have another option: get a big part of the US market early on. Spotify did this (and as others have noted, Swedish companies seem to be quite adept at it thanks to the wide adoption of English and understanding of US culture there). If they hadn't, they'd be back on their heels right now as Apple Music rapidly gets larger (Apple Music would have all of the US market and would be pressing that much harder on Spotify now).
Atlassian as another example, would be a far smaller company without their piece of the US market. They'd be a trivial takeover target for someone else, as Australia + New Zealand would never provide enough of a base of scale to compete toe to toe with the giants.
The US market is why Shopify is worth $17 billion and growing so fast. Had they just focused on Canada, a US competitor would wipe them out and or acquire them on the cheap. They had to get the US market or else. With that US springboard in place, used properly, they can go get the world, using the US as an immense funding engine for expansion. Out of that market capture they'll have accomplished 10x growth, from $100m in sales to $1b, in less than five years. Getting that sales snowball to roll downhill in the US, is one of the cheapest forms of expansion funding there is, once it goes, it goes.
> In the time a German start-up with identical funding is working on grinding its way through 40 different countries in Europe (most with 1/4 to 1/2 the spending power of consumers in the US) to match the economics of the US market, the US peer already owns the US market, and is assaulting the global market from its position of strength
I don't get this - why everyone assumes that European (say German) startup will start with a painstaking conqest of the European market and only then move to the US? It seems to make much more sense to choose US as your second country, over say France or UK.
> Australia + New Zealand would never provide enough of a base of scale to compete toe to toe with the giants.
Counterpoint: Xero did exactly this. They're a $5B SaaS company almost entirely off the ANZ SMB market, which is their base to attack Quickbooks and MYOB internationally.
In Germany most start-ups are self-funded with maximum personal risk. That means that you only fail once, after that you'll never be able to recover from bankruptcy only to do your next thing. As Germans are not known to be risk taking folks it's understandable why there are slim chances for the next Silicon Valley in Germany. It's all about risk and risk taking. Tweak those parameters economy-wise, then we talk about bold entrepreneurship.
I doubt that is true, do you have numbers for this claim? I see many companies founding limited structures (UG or GmbH) to have avoid maximum personal risk. It can be done with just 1€ of capital.
You still need liability capital for a GmbH (e.g. LLC) which most start-ups just don't have. They start off single or as a GbR with a second or more partners, and then eventually change the company liability type to GmbH, when they generated the capital needed. A real start-up doesn't have to be a GmbH at all. In fact about 2/3 are single start-ups in Germany with maximum personal risk, not even GbR which is only 8%. The rest are GmbH with 30% which also counts start-ups with a bigger company as backer.
What is true though, a UG (e.g. Ltd), is an alternative to GmbH in terms of liability and capital. The 1 euro capital is a joke, imho. Because no sane credit institute would lend you money when they see your tiny liability investment. However, it is possible to make your business legal and profitable, and then borrow some money. But, honestly, starting with literally nothing is like starting a new game at maximum difficulty and perma-death, and who does that in RL?
Startups need immigrants.
Germany only accept immigrants from EU, not from China or India which produce cheapest empoyees offering max value.
One key difference is that Startups lack fund.
So either:
1. Funding be made more generous by offering tax advantages to invesitors
2. Or, biggest expense are employees, so we need employees accepting a dream stock unit and very low wage, so we can hire more of them.
But I've talked with German employees, literally, none of them will accept more money for more work. There is very strong emphasis on work life balance unlike US. So only way to overcome this issue is to get larger funding and that's smth government needs to fix.
I'm Australian, and it was easy to get my Blue Card, and more recently my permanent residency in Germany. Compared to the nightmare of dealing with the UK Home Office, moving to Germany was a breeze.
(For those who don't know: if you have a 4-year degree, and can get a job-offer that pays €48K or above, you can easily get a Blue Card, which lets you work in Germany. Keep that job, and after 21 months, you can get a Niederlassungserlaubnis (permanent residency) with B2-level German, or after 33-months with rudimentary German. It's an amazing deal.)
Why is not there a middle ground between hire-and-fire-quick vs very strong/rigid labor laws that would give more optimized/successful end results for most involved than either of the two extreme points would generate? On one hand, I certainly would not want what's happened to e.g. Telltale employees who recently got laid off abruptly with no severance packages to happen to any of my friends/family. On the other hand, if you want a pool of opportunities of strong growth to co-exist within your economy, you gotta relax and give some room for those of us who are or want to be innovative.
Come to think of it, with the safety net that is provided in most developed European countries (e.g. Sweden, Norway) one would think that there'd be more innovations (normalized by metrics like population, etc.) generated there than say, the USA but I doubt that is the case here without having any numbers or proof. Is it the scale that matters most or what am I missing?
Overall, I for one wouldn't still trade strong labor laws with being the most innovative place but I do still hope for a better middle ground for everyone.
Germany has trial periods for employees. If you put in the contract you can terminate the contract without reason for up to 6 months. It goes both ways. Employees can leave with almost no notice during the same period.
If amount/size of labor laws are inversely proportional to startup quality/quantity, how come a state with the most has more success than states with less? Because it's not the reason anymore than any other difference.
Germany has a lot of drawbacks to be the next silicon valley:
* the most difficult tax system in the world. even freelancers have to use accountant services, because most people will not be able to pay taxes properly without it.
* high taxes - 42% income tax + Solidaritätszuschlag 5.5% = 47.5%; for corporations it's ~30%.
* A LOT of buerocracy. I can't even send an email to tax authorities in my area, because they only accept paper letters but nothing else.
* highly qualified foreigners have to learn German and it's quite difficult language.
* the market in Germany is much smaller comparing to USA. If you want to target EU, then you have to support a lot of different languages, date/time formats, regulations and laws etc.
* recently the EU introduced a lot of additional regulations for internet companies (GDPR, new copyright directives that require checking uploaded files, etc...).
* weather is not that appealing as in the valley.
* the difference in salaries between regular developers and rockstars is very low. So there is zero motivation to become one.
* low salaries for software engineers. The most of senior software developers will earn 50.000 - 60.000 EURO anually and after paying taxes it's only ~2.600 EURO per month (3.000 USD)
* poor internet connection in a lot of places / poor connection speed - almost any country is better in this regard
> low salaries for software engineers. The most of senior software developers will earn 50.000 - 60.000 EURO anually and after paying taxes it's only ~2.600 EURO per month (3.000 USD)
i have 5 years experience and already earn that much. our most senior staff gets their low 6 figures + bonus. what most dont see is, that additionally to those numbers, your employer pays their share of your healthcare and social security. thats probably another 15% or more.
you get at least 20 vacation days. most of the time its around 30.
they cant just fire you because you got sick.
and in case you get fired, there is a social security net to catch you.
yeah, from an US view it might look like a bad place and i would appreciate lower taxes. on the other hand: my mom is fighting cancer sind 1999. in the US i would already be bankrupt or my mom would be dead. or both
For startups, taxes for corporations don't matter. You only pay taxes on profits. If you are living off venture capital, then you have none. If you are self-funding with organic growth then you have to make sure that you spend all your profits on growth which you should do anyway. Once you have matured, you can still restructure the company like Apple or Google and turn into an Irish or Estonian company. That's the advantage of the EU.
High income taxes are a problem. But that's not a problem for founders since their profits are hidden in the increased value of the company. It's a topic for the employees. They have elected parties that redistribute income. It's their choice how they want to spend their income. If you compare wages between Germany and USA then those taxes haven't made German labor more expensive than US labor. People don't have to earn as much as possible right away because they don't face nothing should they ever become handicapped.
> If you are self-funding with organic growth then you have to make sure that you spend all your profits on growth which you should do anyway
In my case I have a mortgage and kids. To make sure we get by, with the high profit tax, there needs to be enough profit left, ergo, I’m not investing as much in the company to leave enough for the government and my family to consume.
I’m sure there are enough people who can get by with very little, and what you say makes sense. Just doesn’t apply to all, and that means on the country scale: smaller pool of people that are willing, and less money going back into growing companies.
That's why you find constellations where a wife owns a company and the husband is the manager or vice versa. The manager gets a regular salary onto which he pays regular income taxes. That way, the income doesn't touch the profit tax. It should be the same if your company has various shareholders.
> low salaries for software engineers. The most of senior software developers will earn 50.000 - 60.000 EURO anually and after paying taxes it's only ~2.600 EURO per month (3.000 USD)
Nonsense. Here in Berlin, €60k would only be competitive for an engineer with maybe 2-3 years experience.
Good senior people can (and should) get €85k - €90k. If you're in Berlin, and want to be pointed in the direction of companies who pay that, hit me up.
VPEng / CTO / Director-level roles are now €100K minimum in Berlin, and often significantly above.
This ^. I see a lot of people are tricked by their companies to get them to come to Berlin. Then the companies get them believing that a 60k salary is generous for someone with loads of experience.
Once you get here, you realize that a lot of companies pay much more than that and you've been taken advantage from.
Few comments on this, I live and work in Germany as Freiberufler for last couple of years or so.
> * the most difficult tax system in the world. even freelancers have to use accountant services, because most people will not be able to pay taxes properly without it.
Nothing strange about it. When I was self-emoloyed in the UK, I also had to use services of an accountant.
> * high taxes - 42% income tax + Solidaritätszuschlag 5.5% = 47.5%; for corporations it's ~30%.
Taxes are high but, for example, Belgium has higher taxes. In the UK I was also hitting 38%. Corporate tax in the UK was back then 20% with 10% tax on dividends, Germany is expensive but not the most expensive.
> * A LOT of buerocracy. I can't even send an email to tax authorities in my area, because they only accept paper letters but nothing else.
Where do you live. No problem with Finanzamt in NRW and RLP communicating over email. Germans do almost everything on paper but things can snd are done over phone and email.
> * highly qualified foreigners have to learn German and it's quite difficult language.
No, they don‘t. It depends who your clients are. I live in NRW and barely speak German. Not proud of it, learning. Just an observation. For sure it‘s easier with the language knowledge.
> * the market in Germany is much smaller comparing to USA. If you want to target EU, then you have to support a lot of different languages, date/time formats, regulations and laws etc.
I am not sure what you mean by that. I just invoice people in different countries. Nothing to do with dates, languages, formats.
> * recently the EU introduced a lot of additional regulations for internet companies (GDPR, new copyright directives that require checking uploaded files, etc...).
Personal preference. I prefer this over another facebook or google.
> * weather is not that appealing as in the valley.
> * the difference in salaries between regular developers and rockstars is very low. So there is zero motivation to become one.
Fun fact, a graduate in Atlanta gets ~90k/year. Zero experience, barely left university.
> * low salaries for software engineers. The most of senior software developers will earn 50.000 - 60.000 EURO anually and after paying taxes it's only ~2.600 EURO per month (3.000 USD)
This number seems to be common everywhere in the EU. Different currencies but overall the same value.
> * poor internet connection in a lot of places / poor connection speed - almost any country is better in this regard
Oh yes. This is so common in Germany. When I read how easy it is to get fibre in India, I cringe.
Do you know why it's just not a priority? It's in the current coalition's agreement, but they just don't seem to get around to working on it, for example.
No, I have no idea. It's especially ridiculous since every unemployed person could be offered a job since digging trenches is something that everybody can do. It's a perfect economic stimulus for any country.
Not mentioned in the article is that the EU is made up of many smaller markets that each demand a lot of customization. The Bay Area has instant access to 300 million consumers before anyone is dealing languages, currencies, etc.
B2C is more successful in the EU because barriers relating to foreign vendors are less significant to businesses as consumers.
I have a question. Are there any German laws or regulations that prohibit using startups from using stock options as part of total compensation? I thought I remembered hearing something about this once, namely that it wasn't possible in the same way it was possible in the US. Is there any truth to that?
I think the mentality in general is a lot more conservative, financially speaking.
So also a lot of employees won't take stock options over a bigger pay.
I also think most developers are not in the mood to live like people in SF do - just barely scraping by after accomodation and food. Most people here want to live a good life on their "developer salary" which is already pretty good for Germany in the most cases.
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[ 5.0 ms ] story [ 214 ms ] threadRight now I'm at the point of giving up again because it's so damn hard to find customers here. In my opinion, for deep tech startups the problem is not primarily access to capital but access to customers, as the corporate culture is extremely hostile towards startups. Large corporations are very risk-averse and most of them won't ever consider buying a product from an unproven startup. The ones that want to work with startups often have started their own incubators where they try out ideas by hiring teams and building startups that they fully control (50 % shares belong to the parent company from the beginning).
Also, from my experience getting seed funding becomes harder the more experienced you are here: If you just finished university it's easy to get a so-called EXIST grant, which will pay a little more than 100.000 € to fund a team of three people for a year. That's how most (or at least many) of the successful startups get funded here. The thing is, if you have been working for 5 years or more you will be ineligible for that program, and your options for getting seed money are very restricted. This is weird as people with industry experience usually have a much better chance at building something relevant and successful than a recent university graduate with no business experience. They have a much harder time finding money though.
There are counterexamples and very successful deep tech startups of course, I just think we could have many more of those if we had a system that actually encouraged and helped people to build these companies.
I can understand that many people decide against it, especially when you're a good technician / engineer you can earn much more in industry and there's very little to gain by leaving your position.
* Lack of capital
There is just much less VC available, even if normalized for the difference in size.
I know the VC scene a little bit in Germany. Total monkeys.
* Lack of attitude
Germans are much more hierarchical. Both in science and entrepreneurship I found the American personality much more suited.
* Lack of vision
You will find money in Germany for a personalized cereal/granola mix shipment service (was just an exapmple, but in fact I think it exits) but if you are into a disruptive technology they will balk. Both have different risks but both also have different pay-offs.
Edit: Reasons given due to the downvote
I have my doubts that the general start-up ecosystemin germany knows what they are doing.
If you can get that money it's really an excellent opportunity and will help you to get further funding, as I said before I just find it sad that nothing comparable exists for experienced people from industry.
Also the expected time line was around 6 months to get into the program, so for me it would have just been a colosal waste of time.
EDIT: While coaching is anive thing, it is access to follow-up funding that matters. At let's be honest in that regard YC is different league all together. And if you don't need funding beyond 100k you really could have used bank in the first place.
On top of that the program pays about 50k (?) for additional expenses, which you can use to e.g. rent an office, hire freelancers or cover legal costs.
For comparision, YC gives you 150k for a team of usually 2-3 people, and living expenses in SV are way higher than in Germany. So I wouldn't consider it a "bad joke" personally. Also, while the tutoring is not as good as YC some universities (especially TU Munich / LMU Munich and TU Berlin) provide really excellent mentoring, so I'd say overall it is a great program.
I'm just bummed out that nothing comparable exists for people with longer industry/work experience.
- Government Policies: Taxes and Bureaucracy
- Governmental Policies: Support and Relevance
- Entrepreneurial Education at School Stage
The first is a much bigger issue than missing capital.
[1] https://www.gemconsortium.org/country-profile/64
Whenever someone discusses corp. taxes in the US and incorporation it seems it's full of gotchas, corner cases and traps. Not to mention every state having its own legislation as well.
Taxes might be higher outside of the US (but then again, they're taxes: no profit, no taxes) but they're not necessarily more complex (though Germany ones are probably not the easiest tbh).
Startups exist in more tax complex countries. You can't buy culture, customers and financing, the rest is doable.
By experience, the dead cost of the smallest company you can run is between 5-15k per year. It might not seem much, but I've heard here on HN over and over how to grow a side/passive income, and there's basically no way to do this here. The moment you want to start a side business, the fixed minimal cost is sunk, so unless you start making a significant sum from the start you're just losing money that eats into your primary income. And there's no legal way to do the business below that. That's not how I understood people in the US do this sort of passive income. It sounds like "no money = no tax", but this is not true here. You often have to pay taxes in advance on the projected income of the next year, even if you never had a business first: the projection is based on god-knows-what market estimates you have no control over.
The market segmentation, language barrier and tax situation in EU is a huge burden. If you're working on a niche product you want to start with a wide basin of users, at least as large as the EU block. Sounds stupid to start in a single country. It's doable, but don't expect to start with a small capital, and typically not with the wannabe-VC we have here in the EU. The 100k for 3ppl/year is not a joke.. a "100k-300k" ballpark is very common for startups here. I'd consider that just for marketing, or even then. With this money you basically cannot do anything serious, just considering how hard is to penetrate the market.
I've yet to see something in the likes of Stripe in the EU. And a decent replacement for Paypal for smaller setups. I'd love to have candidates here. Accepting money is cumbersome if you're small. This is sad.
Workforce is a problem. But not because of talent. The extra regulation here implies a strong commitment when hiring. This forces companies to grow very cautiously. You cannot resize the workforce to match the load. If you grow too much, you may doom the company at the first financial difficulty. This causes a lot of sub-contractual work to be done, with a significant decrease in quality and cohesion. Not to mention, this line of working is being limited more and more over time - I was working as an entrepreneur in the beginning of my career but I cannot do that anymore and have to be regularly employed. I could have started something from scratch much more easily 15 years ago compared to now just due to regulations.
I could go on for pages...
Yes, but that's a fixed cost, it's not "taxes". Fixed costs exist in other places as well (though 5k is definitely a lot!)
I agree with the other things in your post, and they worry me as well.
Actually, there is. Register an Irish company. All the paperwork is in English, costs are low, and you can operate across the EU.
Yup. The company is clearly subject to Italian taxes. This all hinges on whether registering a branch is less hassle and cheaper than opening an Srl.
Lots of smaller German startups use either a UK limited or an Irish limited + a German branch.
Government support is, as far as I can tell, not a deciding factor in SV. In setting up an start-up friendly ecosystem it can definitely help, France is good example for that.
There’s been a German eBay, PayPal and Facebook.
Europe doesn’t really do major companies though, and part of that is certainly a lack of demand to go global from capital investors, but there are other parts as well. Like language and regulation.
I went to harzen for holiday this summer, very retro I know, and almost no one spoke English. In fact I had bigger luck with Danish than I had with English because they see so many Danish tourists. I’m not sure Americans can really understand how big the language and cultural barriers are from creating global companies when you’re de-attached from the Anglo-Saxon world.
I think the reason that a lot of European startups that made it to the global scence came from Scandinavia, is exactly because we’re so attached to American culture that’s it’s almost second nature to us. Sure we don’t understand American individualism, not really, but we’re all brought up watching American tv-shows and movies, hell American politics and economics sometimes take up more news space than our own national news...
The rest of Europe isn’t like that, so while Germany had its own eBay, that made its founders billionaires, no one outside of Germany has ever heard about it. Except for maybe eBay who couldn’t enter the market.
And in southern Europe I am lucky to be able to speak most languages, as anyone beyond a certain age hardly speaks any word of English, specially outside the major cities.
Which is indeed a challenge, on the other side is also something quite rich, as most traveling Europeans tend to speak fluently three languages on average.
Everyone who knows English has already left. I'm not sure how much it's worth to other people but for me knowing English has been a ~x50 income multiplier.
German PayPal? Not that I know of. The banks are helplessly trying now after many years but they aren't even able to match what PayPal provides let alone being innovative.
https://www.ebay.de/
??
That's a startup?! It was some dodgy scheme set up by infamous brothers, hysterically taken over by eBay within first couple of months of its existence.
When it comes to european languages, we are at least an order of magnitude better in understanding natural language and delivery speed(from start to production) than these big companies. But oh boy how many times EU companies pick one of these big players over us and fail. Today we have a range of HUGE clients, half of them who has even failed with a competitor. We have a really good story to sell. Still it is impossible to convince 1 of 2 companies to go with us first. They really want to fail hard before giving us a chance. I just can't understand why it is like this. The trust in US companies with a strong name over decades is really huge here in EU.
As a corollary, the article cites European data protection law (in the context of not being able to collect usage data to improve the product) as a barrier to building startups which ... is also very wrong. You can (legally! Ethically! GDPR-compliantly!) collect all sorts of data with which to improve your product. I've seen it done, I've done it myself.
There are a lot of people here, German and non-German alike, trying to furiously recreate the SV way of doing things, as if that's the only way to build a strong tech industry. To me that's both uninteresting (why replicate the same model everywhere?) and bad business (not all markets are the same, and that's not a bad thing). Maybe people would be more successfully adapting to the local context. It's certainly working for a handful of startup incubators I know in Berlin.
lets be honest, there is a huge amount of SV startups that bleed CV money like there is no tomorrow. not to mention the ones that failed.
The successful ones, like Dubsmash, leave for the US after a while.
If I, as a German, was to create a startup in Europe today, I’d do so in London.
The lifestyle entrepreneur is a phenomenon that you can find in the US as well.
If anything, the success of Rocket Internet proves the point that Germany is not good at startups.
Seed funding, tech talent, tax situation, and lawyers to help you start your company - all on a better level. Yes, living was more expensive, but we actually enjoyed that - it put pressure on us and everyone working with us.
We had a highly successful exit in less than a year.
That’s a dangerous thing though to push as a one-stop solution I think. There is huge advantages to work for one of these companies, but the drawbacks are also there, and they’re definitely not made for everyone
meh, working with embedded hard-heads on experimental features for a car segment driven by oligarchs, CEOs, and mafiosos.
https://www.ingenieur.de/karriere/arbeitsleben/arbeitgeber/d...
Furthermore, there are a lot of jobs that are being filled with engineers that don't really require an engineer. A good friend of mine is currently working for one of those companies, and his job mainly consists of building spreadsheets with risk models that are then passed on to, and mostly ignored by, the sales force. Needless to say, he's probably going to switch careers in the next few months.
For some people that is enough as long as they get paid at the end of the month, but if you actually want to do something, these companies are not the place for that.
If you are looking at it that way, you have only one company in Germany which is SAP.
Instead, I worked for seed stage startups with ambitious missions such as changing the world. Even some crazy ideas can get funding in US because today’s angels are used to be engineers of yesterday.
Germany is not there yet. The market here needs to evolve years to get there. For example, if I could get my startup funded and successfully exit, then the next generation startups could have better angel options as I’d be willing to invest in startups with crazy & ambitious goals.
Global companies have massively increased their presence here.
Google has a huge presence in Munich, notably including a chunk of the V8 developers. Apple has a large hardware team in Munich. Amazon Berlin is aggressively hiring for developers to work on AWS. If you're after SF style salaries go work for Google Zürich and take home €200k.
What I hear from recruitment firms is that "mediocre engineers move to Berlin and great ones to Zurich". Also, GetYourGuide has their core backend engineering staff still in Zurich, but marketing and sales in Berlin. One of the founders writes that in machine learning, artificial intelligence, and complex data analysis, there are more talents in Switzerland than in Berlin: https://www.handelszeitung.ch/unternehmen/getyourguide-chef-...
Switzerland is even more founder/investor-friendly than the US. Example: Capital gain tax is 0%, that means, if you start a company, and sell it (=shares usually surgue in value), you don't pay taxes on this gain. Also, no capital gain taxes need to be paid, if you buy a publicly listed stock/ETF and hold it for more than 6 months. (More in another thing I wrote: "Switzerland: How buying real-estate can kill you financially and reasons to go for stocks instead" - https://bit.ly/2xIe8ri). Despite the legal infrastructure, we still lack the "American" mentality to become a startup place, but for small businesses it's much better here than in Germany:
A friend of me once said: "Germany is a rich country of poor people". The system in Germany hates small businesses / freelancers and is optimized for conglomerates like Siemens or BMW. If you open a company, you immediately drown in red-tape and upfront taxes. As a comparison, in Switzerland you can just start issuing invoices without a tax-code or anything. Only after you reach a certain threshold, you need to have to inform the authorities during the same tax-year. Also after that, things are very reasonable and easy. My tech recruitment firm generates "normal revenue" and I still haven't gotten a tax-consultant because I can do taxes myself. If I have a question, I call the tax authorities and they help me / give "free advice", which shocks my German entrepreneur friends. There, the tax-authorities treat them as criminals, no support is given and one is triple-checked thoroughly that no taxes are evaded, which, of course, happens anyway especially because taxes are damn high. If you make median wage, it's 45%. In Switzerland median wage is taxed at ~17%. Also, tax-authorities treat taxpayers like clients, whom one is grateful to. That reflects in the simplicity of the tax code: In Germany, if you go for dinner with clients, you need to subtract and can't deduct the part from the bill which you consumed; in Switzerland, you just deduct the whole bill.
(Content marketing from here: If you are European and you want to move here, shoot me an email to iwan@coderfit.com. I am well-connected in the local tech scene because I match programmers with jobs for a living.)
EDIT: it seems as if you edited your post heavily to add the notion of “content”
I wouldn't recommend moving to The Netherlands for the salaries. But there might be other reasons to move there.
I just left The Netherlands, working from Thailand now and while I earn about half of what I earned in The Netherlands as a freelance dev, I probably save more money in the long run due to lower (practically non-existant) taxation [1] and just a general lower cost of living (especially on the Thai countryside, where I live with my GF and daughter).
Oh, I also only work 4 days a week now instead of 5, so better quality of living.
I estimate that in The Netherlands my basic cost of living was probably around 2500 EUR a month (mortgage, food, insurance, commuting), but in Thailand for the 3 of us it's around 1000 EUR or so (we built a house here, so no housing costs).
P.S.: I don't work for a Thai company, I work remotely (currently for a US client) through my Seychelles offshore company [2].
---
[0]: https://www.expatica.com/nl/finance/Tax-exemption-Dutch-30-p...
[1]: https://www.aesinternational.com/education-centre/taxes-for-...
[2]: https://www.sfm-offshore.com/seychellesoffshorecompany.html
I was recommending NL exactly because of the 30% tax exemption for 8 (!) years for foreigners who move to NL to work in tech and other "in demand" fields, which results in a very nice after-tax salaray. Without that, you're right, NL isn't that interesting financially.
For who? It's probably more satisfying because you are making it without any help. But that's it.
Appearantly beeing a 'Startup' seems to be associated instability and unreliability in some circles -- wich again is part of these 'cultural issues' wich I was talking about in the previous post.
It's more about the fact that any new cool young company can disappear soon, if there is no business. And this happens both if investors give you money or if you simply don't make enough money. That's the way it is...
Eventually, if the business doesn't work well, it doesn't work well...
It's also somehow the reason that nobody got ever fired for hiring ibm or whatever the saying says...
Not saying as a consumer i do not prefer EU privacy laws, I do, but it will be hard to compete on a global scale being handcuffed in a lot of these smaller areas. (privacy, language barriers, taxes, salaries etc)
Which precludes much of what is worth trying. The problem is that this attitude severely limits the potential upside.
Blaming GDPR for everything is another stupid trend I detest. I’ve inplemented a lot of stuff related to it and it’s definitely not what it gets pictured as.
At the end of the day it speaks more of the zeitgeist among Quartz’s “high-earning readers”.
Every law that remotely hinders the purist form of the free market is detested in Anglo media is seems. People have no problem hailing Amazon as a tech wonder and celebrate Bezos as the richest man alive. But how about minimum wage and proper working conditions in their warehouses?
'ah should get a better job then'. They are 'at will' employed.
Just because a law restricts business doesn't mean it's bad.
From what I noticed, it's mostly coming from the U.S. where every piece of regulation is seen as "government impending businesses that create jobs", including regulation against polluting etc. I am not sure how actual citizens feel, I suspect not as strongly against deregulation as the press make it seem, but they're definitely a lot more against it than in the EU.
This is one of the classic misunderstandings of European entrepreneurs and investors.
In finance - things with low risk, tend to produce low yield. This is generally well established because there are a lot of 'eyes on the info'. For example, we can calculate how much it costs to extract a new shallow water Oil find. Most of the variables are known.
Though it's not so clear in early-stage, the rule will still apply because the easy hanging fruit generally will be culled when there are intelligent actors.
So - you need to take on risk. Otherwise, you're probably not attacking a big opportunity.
European VC's usually come out of the world of finance - in fact, VC is considered a part of 'Private Equity'. In PE or big funds, they invest in one or many companies, and expect x% return. Some more, some less.
In PE, if a company were to go bankrupt, it would wipe out the portfolio profits. Imagine if Warren Buffet put money in CN Rail and it turfed.Bad.
But in VC - you get 9 fails and 1 home run. The fails are hard to swallow but they are an inherent part of the system.
Culturally, Europeans especially Germans are not good with that kind of failure. It can be seen as a permanent mark on one's competency and status. In Austria, up until recently, a CEO who put his company bankrupt could face criminal charges.
All of this makes sense in a culture of high standards and expectations, coupled with social solidarity of workers (i.e. you but us out of jobs, you pay!).
European LP's are not used to losing their money. European workers are not used to equity, to losing their jobs, to total instability.
European BigCo's often do not recognize value in startups. The culture in Europe is very protocol and status oriented - you're 'value' is a function of the prestige and power of the entity you represent. Ramshackle, scruffy coders showing you 'you can do something amazing' is just less potent an opportunity than it is in the US.
And of course, the exit opportunities are not there.
And then so many other systematic issues like the fact almost nobody will learn to speak German, immigration etc. etc.. - all of this makes it that much harder.
Much of what I am saying is stereotypical of course, but it's real enough.
I think Europe should take their disadvantages and turn them into advantages and use their 'longer scope of vision' to do value creating things.
Europe is good at getting people together and going 'big projects' that have a long term view. Like CERN. And EU treaties.
I can see some very powerful things concerning money - European countries are smaller and more nimble. Sweden does some cool stuff. What if a Swedish Crown corporation enabled a digital currency that could be used globally? Because of the integrity of the institution, and the fact that it's backed possibly by a 'real economy' - it could be a very powerful export. Much in the same way if you make 'jet fighters' you don't just go and sell them you need your countries diplomatic corps to work with you.
EDF in France (Energy) is tied closely to government, and that kind of stuff - i.e. nuclear, generally needs some hefty scale.
But also expect that many of the gains in such situations will be socialized, and maybe not come in the form of crazy billionaire status for founders.
cool startups: https://github.com/azer/notebook/blob/master/berlin.md#cool-...
venture capital firms: https://github.com/azer/notebook/blob/master/berlin.md#ventu...
PRs are welcome.
There are very few big ideas that investors in Germany would pour money into.
It might not be the greatest technical achievement, but it certainly paid off for them, demonstrating that execution is more important than being the first to have an idea.
http://www.pr.uni-freiburg.de/pm-en/online-magazine/invent-a...
In US, Google and Microsoft have foreign born CEOs.
This is my own experience, so downvoting is only silencing a voice.
Compared to the USA? Lol, you have no clue. The standard for a software engineer in SV is to take drugs to work 12 hours a day 6 days a week, pay a fucking high rent living with 4 other people and if he's foreigner and freshly arrived, he has to suck his boss' cock everyday because they might take away his visa sponsorship and put him into troubles.
In Berlin most people I know work less than 8 hours a day, can afford to have their own apartment at their first or second job and save enough money and energy to go travel somewhere every 3 months. Because you know, we have 30 days of holidays per year.
Please post civilly and substantively, or not at all.
https://news.ycombinator.com/newsguidelines.html
The only way to get any startup to work in EU is by importing immigrants and they'll work hard on their own and compensating them appropriately and making sure they can reach top ranks in a company otherwise no one will ne motivated to work hard.
Germany has infrastructure. Taxes are not that bad.
Any country which will accept foreigners with open heart and give them opportunities will have plenty of startups.
There are still clubs in Germany which do not accept people of color.
Completely false, the standard is more like 35 hour work weeks with "work from home" one day a week. Judging from the fact that you know how people work in Berlin I'm going to guess you have no personal experience with SV work culture and have only read some horror stories that are not at all representative of what work is like for the average software engineer in SV.
"William R. "Bill" McDermott is an American businessman and the CEO of the technology company SAP SE" [1]
[1] https://en.wikipedia.org/wiki/Bill_McDermott
You need examples from countries which are less prosperous than Germany.
Where are Chinese, Indian, Ethopian CEOs of German companies?
"Sanjay Brahmawar is Chief Executive Officer of Software AG, ..."
"He is a citizen of the world, born in India, and having worked and lived in England, Finland, Belgium, Holland, and Germany. An avid cyclist and runner, Brahmawar currently resides in Darmstadt, Germany."
Indian enough?
I interviewed several times with startups proud of not having any funding behind. Very nice. Still, my question is... Who cares? The main difference is that in the USA money is constantly being invested, there is a lot of debt but that's the way to innovate. In Europe on the other hand, if you fail, or if you make debts you better hide yourself.
(Inb4 counter-examples. Yes this is oversimplified, exaggerated, stereotyped)
Customers know what they are buying.
It's an ecosystem that lives on its own.
Could you think of Google made in Europe? In Germany, in France, or in Italy?
It's no wonder that many Europeans tend to go and live in the USA for that reason.
And you could argue if Google was startup back then or not. I would say not.
Lots of US people in Europe, true. Doing software? I really really doubt it. Or they left for personal motivations.
Leaving US for a developer is like leaving Ferrari for an automobile engineer. You can't top that. Anything else is a step backwards in terms of technology, unless you go to work for some institution - I see the university of Zürich is really advanced, for example.
Also, the topic was about innovation, capital, etc. I would prefer not to go too much off topic.
Some of the biggest companies in the world are from Europe. All of them started as small companies. So, yeah, Google made in Europe is possible. Tech is not a special snowflake industry with other rules than everyone else.
Also, some of the biggest companies in the world are European, that's true. However, they are all but software companies (except for SAP, a b2b company). In Europe we are among the best in pharmaceuticals, cars, chemicals, etc. Sadly enough, software is nothing Europe is ahead with. The reason? In my opinion the fact that software is not tangible and innovation with software is a high risk business - often not scientific or rational. You need to try it out. Go and propose something like Snapchat to a European investor. The application for me is nonsense, I myself can't still see how it works, but it's valued billions. Did it have a business plan? Maybe. However I really doubt that it was 200 pages long.
That's not something that the no-debt-at-all European mindset can deal with. I think it's partially cultural and partially historical. A sort of perfectionism that doesn't leave space to failure mixed with a world where corporations and lobbies are super protected and no matter what, they are always the winners and the way to do business.
WhatsApp took 2-3 years before it became a standard messaging app. You can't always foresee it. It just happens. Others failed. Now everyone uses WhatsApp.
Ps. I am European.
Funnily, I only know one person who uses WhatsApp.
The big company model, where something unproven is developed for a long time by a large team, is substantially more risky. Only when they go live after "finishing" their product they might discover that nobody wants it.
Anybody trying to innovate will fail at one point or another, because not all bets play out. So the key is to make the bets as small as possible and therefore "fail" as quickly as possible.
I only saw this from the perspective of the investor that gives money and "hopes" it will work.
This doesn't contradict the fact, though, that in Europe the "big plan" tends to work for a simple reason: there are already deals (if it's a b2b) or the product doesn't innovate and it's based on something already working elsewhere.
Obviously this prevents innovation.
Starting a business somewhere else is fine. It won’t be so fast though.
A startup can get up 65% or so if it’s engineering salaries back every year as a refundable tax credit on qualifying R&D...
I will never question the high level of smart people in Europe or in any other country in this world.
It's just sad that such places don't change the way of doing business, because it's their own fault if they are lagging behind. Then Macron comes with the French WhatsApp...
I've been reading discussions like this thread for more than two decades, since the early days of the boom in the 1990s. I think the mistake being frequently made in this thread and every other thread, is the premise that you can replicate the super context that the US and China represent. I don't believe there is anything realistically that Germany, France, Britain, Russia, et al. can do to recreate what those two uber markets have going for them. It is impossible to do it.
The focus is always on things like funding, taxes, regulations, cultural aversions to risk, and so on. It doesn't matter. In the time a German start-up with identical funding is working on grinding its way through 40 different countries in Europe (most with 1/4 to 1/2 the spending power of consumers in the US) to match the economics of the US market, the US peer already owns the US market, and is assaulting the global market from its position of strength. The US company can then spend abnormal sums of capital on prying away each individual market in Europe, country by country, thanks to that US haven. It instantly puts the European competitor/s on their heels, and discourages investors. The US is by a large margin the most lucrative, accessible, big market on the planet (and you almost automatically get another large market with it, via Canada); if a competitor locks that up, you've got a problem in which you'll never be safe from them using the US market as a springboard to perpetually assault your European position. It becomes a strategy of divide and conquer then.
Europe - the EU specifically - has two choices. Blockade foreign competition ala China (no guarantee that will work out well, it may lead to stagnation and brain drain, along with foreign market restriction tit-for-tat). Or complete the full integration of the EU and push for language, regulatory and cultural consolidation (that will never happen).
If you're an individual company, you have another option: get a big part of the US market early on. Spotify did this (and as others have noted, Swedish companies seem to be quite adept at it thanks to the wide adoption of English and understanding of US culture there). If they hadn't, they'd be back on their heels right now as Apple Music rapidly gets larger (Apple Music would have all of the US market and would be pressing that much harder on Spotify now).
Atlassian as another example, would be a far smaller company without their piece of the US market. They'd be a trivial takeover target for someone else, as Australia + New Zealand would never provide enough of a base of scale to compete toe to toe with the giants.
The US market is why Shopify is worth $17 billion and growing so fast. Had they just focused on Canada, a US competitor would wipe them out and or acquire them on the cheap. They had to get the US market or else. With that US springboard in place, used properly, they can go get the world, using the US as an immense funding engine for expansion. Out of that market capture they'll have accomplished 10x growth, from $100m in sales to $1b, in less than five years. Getting that sales snowball to roll downhill in the US, is one of the cheapest forms of expansion funding there is, once it goes, it goes.
I don't get this - why everyone assumes that European (say German) startup will start with a painstaking conqest of the European market and only then move to the US? It seems to make much more sense to choose US as your second country, over say France or UK.
Counterpoint: Xero did exactly this. They're a $5B SaaS company almost entirely off the ANZ SMB market, which is their base to attack Quickbooks and MYOB internationally.
By the way debt financing is quite uncommon for startups in the US. It's almost all equity.
That paper is a bit dated, and in German, but still the general assumption that most start-ups are poor remains true for Europe, not only Germany. https://www.destatis.de/DE/Publikationen/WirtschaftStatistik...
What is true though, a UG (e.g. Ltd), is an alternative to GmbH in terms of liability and capital. The 1 euro capital is a joke, imho. Because no sane credit institute would lend you money when they see your tiny liability investment. However, it is possible to make your business legal and profitable, and then borrow some money. But, honestly, starting with literally nothing is like starting a new game at maximum difficulty and perma-death, and who does that in RL?
One key difference is that Startups lack fund.
So either:
1. Funding be made more generous by offering tax advantages to invesitors
2. Or, biggest expense are employees, so we need employees accepting a dream stock unit and very low wage, so we can hire more of them.
But I've talked with German employees, literally, none of them will accept more money for more work. There is very strong emphasis on work life balance unlike US. So only way to overcome this issue is to get larger funding and that's smth government needs to fix.
That way startup can become more competitive.
I'm Australian, and it was easy to get my Blue Card, and more recently my permanent residency in Germany. Compared to the nightmare of dealing with the UK Home Office, moving to Germany was a breeze.
(For those who don't know: if you have a 4-year degree, and can get a job-offer that pays €48K or above, you can easily get a Blue Card, which lets you work in Germany. Keep that job, and after 21 months, you can get a Niederlassungserlaubnis (permanent residency) with B2-level German, or after 33-months with rudimentary German. It's an amazing deal.)
If you received a prepaid card from online service like Payoneer, highly likely you've consumed services of this startup indirectly.
There is also Dr. Bentz, creator of Bentz Bone which many people in Silicion Valley have used.
Come to think of it, with the safety net that is provided in most developed European countries (e.g. Sweden, Norway) one would think that there'd be more innovations (normalized by metrics like population, etc.) generated there than say, the USA but I doubt that is the case here without having any numbers or proof. Is it the scale that matters most or what am I missing?
Overall, I for one wouldn't still trade strong labor laws with being the most innovative place but I do still hope for a better middle ground for everyone.
* the most difficult tax system in the world. even freelancers have to use accountant services, because most people will not be able to pay taxes properly without it.
* high taxes - 42% income tax + Solidaritätszuschlag 5.5% = 47.5%; for corporations it's ~30%.
* A LOT of buerocracy. I can't even send an email to tax authorities in my area, because they only accept paper letters but nothing else.
* highly qualified foreigners have to learn German and it's quite difficult language.
* the market in Germany is much smaller comparing to USA. If you want to target EU, then you have to support a lot of different languages, date/time formats, regulations and laws etc.
* recently the EU introduced a lot of additional regulations for internet companies (GDPR, new copyright directives that require checking uploaded files, etc...).
* weather is not that appealing as in the valley.
* the difference in salaries between regular developers and rockstars is very low. So there is zero motivation to become one.
* low salaries for software engineers. The most of senior software developers will earn 50.000 - 60.000 EURO anually and after paying taxes it's only ~2.600 EURO per month (3.000 USD)
* poor internet connection in a lot of places / poor connection speed - almost any country is better in this regard
i have 5 years experience and already earn that much. our most senior staff gets their low 6 figures + bonus. what most dont see is, that additionally to those numbers, your employer pays their share of your healthcare and social security. thats probably another 15% or more. you get at least 20 vacation days. most of the time its around 30. they cant just fire you because you got sick. and in case you get fired, there is a social security net to catch you.
yeah, from an US view it might look like a bad place and i would appreciate lower taxes. on the other hand: my mom is fighting cancer sind 1999. in the US i would already be bankrupt or my mom would be dead. or both
High income taxes are a problem. But that's not a problem for founders since their profits are hidden in the increased value of the company. It's a topic for the employees. They have elected parties that redistribute income. It's their choice how they want to spend their income. If you compare wages between Germany and USA then those taxes haven't made German labor more expensive than US labor. People don't have to earn as much as possible right away because they don't face nothing should they ever become handicapped.
In my case I have a mortgage and kids. To make sure we get by, with the high profit tax, there needs to be enough profit left, ergo, I’m not investing as much in the company to leave enough for the government and my family to consume.
I’m sure there are enough people who can get by with very little, and what you say makes sense. Just doesn’t apply to all, and that means on the country scale: smaller pool of people that are willing, and less money going back into growing companies.
Nonsense. Here in Berlin, €60k would only be competitive for an engineer with maybe 2-3 years experience.
Good senior people can (and should) get €85k - €90k. If you're in Berlin, and want to be pointed in the direction of companies who pay that, hit me up.
VPEng / CTO / Director-level roles are now €100K minimum in Berlin, and often significantly above.
Once you get here, you realize that a lot of companies pay much more than that and you've been taken advantage from.
I love how hyperbolic statements like this get bought and sold like truth. It's not even close to being the most difficult tax system in the world.
Source: https://data.worldbank.org/indicator/IC.TAX.DURS?year_high_d...
> highly qualified foreigners have to learn German
For startups or tech positions? No, they don't.
Also, learning German at a conversational level is not impossible. (But it seems a lot of people in Berlin coast by without even knowing basic German)
* A german needs 2x more time for taxes than a UK citizen
* needs 3x more time than a Norway citizen
* needs 4x more time than a Swiss citizen
* 20x more time than a UAE citizen
United States: 175h Germany: 218h
Governments are not very easy dealing, but to call it "horrible" when some countries require 10x the time is unfair.
> * the most difficult tax system in the world. even freelancers have to use accountant services, because most people will not be able to pay taxes properly without it.
Nothing strange about it. When I was self-emoloyed in the UK, I also had to use services of an accountant.
> * high taxes - 42% income tax + Solidaritätszuschlag 5.5% = 47.5%; for corporations it's ~30%.
Taxes are high but, for example, Belgium has higher taxes. In the UK I was also hitting 38%. Corporate tax in the UK was back then 20% with 10% tax on dividends, Germany is expensive but not the most expensive.
> * A LOT of buerocracy. I can't even send an email to tax authorities in my area, because they only accept paper letters but nothing else.
Where do you live. No problem with Finanzamt in NRW and RLP communicating over email. Germans do almost everything on paper but things can snd are done over phone and email.
> * highly qualified foreigners have to learn German and it's quite difficult language.
No, they don‘t. It depends who your clients are. I live in NRW and barely speak German. Not proud of it, learning. Just an observation. For sure it‘s easier with the language knowledge.
> * the market in Germany is much smaller comparing to USA. If you want to target EU, then you have to support a lot of different languages, date/time formats, regulations and laws etc.
I am not sure what you mean by that. I just invoice people in different countries. Nothing to do with dates, languages, formats.
> * recently the EU introduced a lot of additional regulations for internet companies (GDPR, new copyright directives that require checking uploaded files, etc...).
Personal preference. I prefer this over another facebook or google.
> * weather is not that appealing as in the valley. > * the difference in salaries between regular developers and rockstars is very low. So there is zero motivation to become one.
Fun fact, a graduate in Atlanta gets ~90k/year. Zero experience, barely left university.
> * low salaries for software engineers. The most of senior software developers will earn 50.000 - 60.000 EURO anually and after paying taxes it's only ~2.600 EURO per month (3.000 USD)
This number seems to be common everywhere in the EU. Different currencies but overall the same value.
> * poor internet connection in a lot of places / poor connection speed - almost any country is better in this regard
Oh yes. This is so common in Germany. When I read how easy it is to get fibre in India, I cringe.
During the late 80ies, Germany was on track to have 1G fibre connections everywhere by the end of the century.
B2C is more successful in the EU because barriers relating to foreign vendors are less significant to businesses as consumers.
So also a lot of employees won't take stock options over a bigger pay.
I also think most developers are not in the mood to live like people in SF do - just barely scraping by after accomodation and food. Most people here want to live a good life on their "developer salary" which is already pretty good for Germany in the most cases.