[HN Gopher] Y Combinator's European founder intake continues to ...
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Y Combinator's European founder intake continues to grow
Author : tommatsuda
Score : 140 points
Date : 2021-08-24 08:09 UTC (14 hours ago)
(HTM) web link (sifted.eu)
(TXT) w3m dump (sifted.eu)
| jamil7 wrote:
| I always wanted something like https://www.carbonfact.co/ - hope
| it takes off and they expand the list of products.
| martindaniel4 wrote:
| Thank you jamil7 <3
| bttrfl wrote:
| I'm rooting for something like this too. As for the carbonfact
| and their focus on promoting eco brands, I'd like them to
| present an alternative metric if/when possible.
|
| Measuring each individual product is complicated and doesn't
| have to reflect brand's entire emission output. If a company is
| 10% manufacturing and 90% marketing then the methodology used
| by carbonfact will be underreporting the emissions.
|
| Some brands (inc. Nike) are already disclosing their total
| emission. Others might be forced to do so in a near future by
| regulators. Would it be possible to have a metric calculated
| simply as 'total emissions / units sold'?
| logronoide wrote:
| I think it's a sign of the times: the pandemic, the "everything
| is remote"... and of course the weak European ecosystem compared
| to the Americans'. Really happy for all the European founders
| that made it.
| gyulai wrote:
| I'm wondering if this actually implies that Y-Combinator is
| willing to touch even with a 10-foot-pole companies incorporated
| in jurisdictions where company law works very differently from
| the U.S. For example in Germany & Austria, if a startup is
| organized as a GmbH ("Gesellschaft mit beschrankter Haftung"),
| regulations around transfer of shares and minority shareholder
| protections are a lot heavier than for U.S. corporations and AG
| ("Aktiengesellschaft") with freely-transferable shares come with
| a high regulatory burden in all kinds of areas.
|
| My working hypothesis until obtaining information to the contrary
| is that the answer is "no", and that "European" in the article
| basically just means "London".
| dagw wrote:
| You can be from anywhere but your company has to be
| incorporated in United States, Canada, Singapore or the Cayman
| Islands. If you already have a GmbH and want to join YC you
| have to incorporate a parent company in one of those
| jurisdictions and make your existing company a subsidiary of
| that new parent company. YC will then invest and take a stake
| in the parent company rather than your 'real' company
|
| https://www.ycombinator.com/faq/
| ant6n wrote:
| I wonder what the implications are off such a company
| structure.
| gyulai wrote:
| Thanks! That's a neat legal mechanism there. Should have
| thought to look there myself.
| ToJans wrote:
| In my experience (Belgian guy that dabbled a bit with EU VCs for
| my SaaS) Europe is very risk-adverse, and you either have to give
| up ridiculous amounts of equity for a little amount (i.e. 50kEUR
| for a 25% to +50% stake) when not established yet, or have a
| recurring revenue of at least 50kEUR/month to get reasonable
| propositions.
|
| Also, European culture is slightly different: most people
| consider a startup failure as something bad that you drag along
| for the rest of your career.
|
| I've talked to some European VCs, and while they have big
| ambitions and are starting to gain momentum, it might take a
| while before the shift in the European mentality happens, and we
| end up with a thriving ecosystem. Some hubs (Switzerland and
| Berlin for example) seem to be doing quite good.
|
| I also assume a big difference with the US is the fragmented
| market: different languages, cultural differences, legislative
| constraints, market demands, ... For example, in my experience
| high touch B2B sales are highly impacted by the language gap, in
| fact some countries (France, Spain, Italy, ...) are notoriously
| against working with people who don't speak their mother tongue.
| (On the bright side most of us Belgians do speak at least 3
| languages, so it is still somewhat doable.)
|
| As an alternative to VCs in Europe, you could look at some of the
| national and European subsidized tracks, although they tend to be
| mostly coupled to the trend-of-the-decade (sustainability is hot
| right now), and also require quite some effort to enter with no
| guarantees of success. (Disclaimer: it's on my to-do list, so no
| real experience with this.)
|
| I would presume the combination of all of these factors results
| in people looking on other continents for better opportunities.
|
| (I personally think Africa might offer huge opportunities in the
| coming decades, but that's for another time.)
| IAmEveryone wrote:
| Let's not overlook that about 98% of US states have also been
| trying to replicate the success of California, with decidedly
| mixed results. And the successes are all connected to giant
| economies like New York or research clusters as in MA.
| mountainriver wrote:
| They also pay a fraction of US jobs so tech talent doesn't hang
| around those areas
| stevoski wrote:
| > "European culture is slightly different: most people consider
| a startup failure as something bad that you drag along for the
| rest of your career."
|
| I hear this over and over, but in my 20 years of living in
| Europe, I haven't found this to be the case.
|
| Perhaps it is only in some European countries or cultures?
| libertine wrote:
| Well the question that might be cynical is: do they actually
| mean it?
|
| Like saying, "oh at least you tried!"/"good for you!"/"you
| learning something right!"?, this is something I get.
|
| No one ever asked, "What went wrong, what went right?" /
| "What did you learn, what would you do differently?" / "Next
| time you'll try something hit me up!" / "I have something I'm
| working on, check this out, are you interested?" / "We should
| talk more about this"
|
| You may say, those are different types of persons, one shows
| support the other shows curiosity and drive - but in the case
| of the latter they actually care and are "invested" in your
| failure as well to the point they'll give up some of their
| time and attention to ask about it, so they can learn
| something from your experience as well.
|
| What we lack in Europe aren't patting on the back, it's
| actually to value the experience of failure.
|
| It's "easy" to say nice words.
| volta83 wrote:
| +1.
|
| Having worked at both, the main difference between SV and
| Europe is "share your failures so that everybody can learn"
| vs "downplay your failures so that you look better".
| moonchrome wrote:
| Maybe related but as a contractor I've noticed that
| working with EU clients there's so much posturing,
| pretend professionalism, suit and tie kind of guys
| throwing around titles, red tape etc. US clients are way
| more casual and to the point.
| tluyben2 wrote:
| Not my experience either; I see it usually met with 'at least
| they tried while I did nothing'. But may depend where in the
| EU you ask.
| agd wrote:
| Certainly not the case in the UK from my experience.
| ToJans wrote:
| We're probably about the same age, so let me ask you this:
| have you ever heard or seen a European person (who failed a
| business he or she depended on) carrying his or her failure
| like a badge of honor?
|
| In my experience with job interviews (from both sides of the
| table) people tend to be ashamed, or they assume you should
| be ashamed about it.
|
| As for me personally, I like sharing both my failures and my
| successes, and receive a lot of positive feedback about this.
| But when I ask them to do the same, I usually get a "I
| wouldn't want to ruin my reputation.".
|
| YMMV.
| stevoski wrote:
| > We're probably about the same age, so let me ask you
| this: have you ever heard or seen a European person (who
| failed a business he or she depended on) carrying his or
| her failure like a badge of honor?
|
| Yes, I have.
| ToJans wrote:
| Ok; point taken. Would you tend to agree that the
| majority is or expects you to be ashamed about it, or is
| that not what you experience?
| peoplefromibiza wrote:
| The majority of them have experienced failure, just like
| everybody else.
|
| What they are (require to be) ashamed of is tricking the
| system or running illegal businesses that lead to the
| aforementioned failure.
| filoleg wrote:
| > What they are (require to be) ashamed of is tricking
| the system or running illegal businesses that lead to the
| aforementioned failure.
|
| Are you trying to say that most startup failures are due
| to their illegal nature? If that's the case for majority
| of failed startups in Europe that you are familiar with,
| that's kind of telling (whether it is in regards to
| startups in Europe in general or just the European
| startups that you are personally familiar with, that's a
| different question).
| peoplefromibiza wrote:
| I am that European.
|
| There are 513 million people in Europe spread over 28
| countries, excluding Russia.
|
| Have you met all of them?
|
| In my 25 years of experience in the field, the opposite is
| true.
| Mvandenbergh wrote:
| Definitely not true in the UK, definitely not true in The
| Netherlands.
|
| Not true among my Paris based friends, had dinner with some
| of the latter which included someone who was on their third
| startup and a few Sciences Po / X types who have the kinds of
| jobs you would expect and the latter were extremely
| interested in the what the former was up to and how the
| startup ecosystem worked. Definitely not a sense that they
| thought having tried and failed to start a tech company was
| somehow a bad mark - and realistically grande ecole types
| tend to be very status conscious so would have picked it up
| if it was there. I can't speak to what older people, people
| outside of Paris would think of it. I would guess much more
| conservative.
| dukeyukey wrote:
| Keep in mind a unified "European" VC and startup market doesn't
| really exists, it's dozens of smaller ones instead. Only a
| handful are large enough to support a world-class ecosystem
| (France, Germany, and the UK) and out of those only the UK is
| really culturally friendly towards startups.
| pembrook wrote:
| Europe's lack of competitiveness in tech has been true pretty
| much since the birth of Silicon Valley.
|
| It was the same with the PC business back in the 80s and 90s.
| Here's an article from the New York Times in 1996, struggling
| to understand why European PC manufacturers were all failing to
| expand outside their home markets:
| https://www.nytimes.com/1996/10/07/business/why-european-com...
|
| 25 years later, the story is the same. Europe missed out on
| most of the big business opportunities of the internet, fell
| behind and lost the smartphone revolution, is largely missing
| from the top names in the app store, failed to create an
| internationally relevant social media company, etc. etc.
|
| However, I wonder if this could be an inflection point. Covid
| has dragged everyone into the future kicking and screaming.
| Meanwhile Europe is looking grossly undervalued due to a lack
| of tech exposure. European stock markets have been essentially
| flat since 2009 while American stock markets have 3X'd
| (pre-2009, European returns basically tracked American ones).
| Tech salaries in Europe are now just 1/5th of what they are in
| Silicon Valley. It seems like the pendulum has swung a little
| too far in the American direction.
|
| It took Europe 40+ years to become internationally competitive
| with Detroit in auto manufacturing during the 1900s. Maybe this
| is the natural cycle (of course, this time there's no wars to
| use as an excuse).
|
| If I were ever going to place a bet on Europe in the last 40
| years, now would be the time.
| Mvandenbergh wrote:
| The challenge with any argument about SV vs Europe is that SV
| is so sui generis that it's actually SV vs more or less
| everywhere else including the rest of the US. Really,
| including the rest of California. What's the startup
| ecosystem look like in Fresno?
|
| SV is so atypical that it's almost impossible to draw any
| kind of conclusions from particular factors and anyway is now
| probably self sustaining - VCs go there because tech talent
| goes there and tech talent goes there because VCs do. Very
| hard for anywhere else to break out in that scenario in the
| absence of substantial barriers to either talent or money.
| Barriers to employment are just high enough (not just visas,
| but leaving friends and family behind etc) to prevent a lot
| of European developers from moving for the higher salaries
| but not so high that a lot of top founding talent goes there.
|
| I do wonder if the temporary barriers of Covid might have
| triggered something, we'll see.
| martin_a wrote:
| > and anyway is now probably self sustaining
|
| As a German this is an interesting point.
|
| While I'm no big fan of the big cities (Berlin, Munich,
| Hamburg) we see lots of successful* startups happening and
| gaining track there and in smaller towns.
|
| University cities are often doing fine, too and are slowly
| but surely developing startup structures and everything
| else.
|
| To me this looks more promising than concentrating all
| startups and money in one place and measuring everything
| against that.
| SuoDuanDao wrote:
| I've also heard that the German banking system is much
| more geographically diverse, with many smaller banks
| giving business loans to businesses in their immediate
| geographic area. If that's still the case, it would make
| sense that there would be less concentration of capital
| and therefore entrepreneurship.
| IdiocyInAction wrote:
| > European stock markets have been essentially flat since
| 2009 while American stock markets have 3X'd.
|
| The DAX30 (German Index) tripled since 2009. The British and
| French indices did pretty much move sideways though.
|
| The growth of the S&P 500 is pretty amazing though.
| spaniard89277 wrote:
| Go and watch Spanish indices. It's a sad history.
| dgudkov wrote:
| That's exactly my thoughts recently. As it appears, American
| venture capital simply can't build a big social media company
| that doesn't end up being a surveillance-driven, ad-ladden,
| privacy-hostile, user-despising, fake virtue-signalling
| behemoth.
|
| So maybe it's time for Europe to shine.
| missedthecue wrote:
| Maybe what Americans have built is exactly what people who
| aren't HN users want. The numbers would seem to say that.
| tohmasu wrote:
| This is why social media ToS are typically concise and
| clear: "License agreement: We spy on you and sell your
| information to anyone that's interested, press accept to
| continue".
| missedthecue wrote:
| Say I want to buy information about you. How would I go
| about doing that? Where to I put in my credit card
| details?
|
| Facebook doesn't sell data. They sell advertising space.
| They're a billboard company.
| filoleg wrote:
| Agreed. "Selling user data" is just a nice catchphrase
| thrown around by people who didn't look into how FB ads
| really makes money and how they really work.
|
| Just at a cursory evaluation, it makes no sense, because
| if Facebook sold the data directly, why would advertisers
| even need Facebook after that? All of those questions can
| be answered by simply playing around with FB Advertising
| UI for less than an hour. But hating on FB is fashionable
| now, regardless of whether the reasons are justified or
| not. Given how there are plenty of legitimate issues with
| Faceebook, it really annoys me when people throw around
| these types of questionable accusations against FB
| without even looking into the subject matter first,
| because it just weakens legitimate criticism of FB.
|
| Back to the topic at hand, you are totally on point about
| the billboard analogy. If you are a business, you don't
| go to Facebook and say "give me the data of these users",
| you say, for example, "here is my ad, show it to users
| who are in this geographic area Z between ages X and Y
| who are into surfing and indie music". And then you get
| to see stats about interaction of those users with your
| ad, like "users who are closer to age X than age Y are
| more likely to click on your ad", so you draw a
| conclusion that your ad doesn't seem to appeal as much to
| the upper boundary of your target age range, maybe you
| need to tweak the ad or split it into 2 separate ads (one
| for users between ages X and (X+Y)/2, and another for
| ages between (X+Y)/2 and Y). At no point you get any
| additional info on the users, and neither do you get any
| individual user info, just anonymized aggregates.
| dgudkov wrote:
| I don't think this is what people actually want, but it's
| definitely what people _tolerate_.
| tester34 wrote:
| >failed to create an internationally relevant social media
| company
|
| Those are pros or cons?
|
| >Tech salaries in Europe are now just 1/5th of what they are
| in Silicon Valley.
|
| Are SV salaries 5 times higher than in Zurich or London?
| seriously? or you're talking about peak of peak of peak?
| pembrook wrote:
| If we're talking Zurich specifically, the difference would
| probably only be 2-3X less than FANMAG/ETC. London salaries
| are high too (not Zurich levels from what I've seen), but
| that market is now separate from the EU.
|
| But most places in Europe with tech scenes and outsized VC
| investment, eg. helsinki, stockholm, berlin, amsterdam, etc
| you're talking 5X less salary than in Silicon Valley.
|
| Given the tech talent in those cities, there must be some
| arbitrage opportunity there.
| j7ake wrote:
| Is it fair to compare salaries in one specific place in
| USA versus the average European city ? Seems like you are
| comparing max salary in USA vs average salary in Europe.
|
| Seems fair to consider max salary in Europe when
| comparing with SV.
|
| There should also be arbitrage opportunities for cities
| outside of SV in USA.
| adventured wrote:
| Just compare the median.
|
| The median US software developer earns $110,000
| (excluding any benefits).
|
| The EU median is close to 1/3 that.
| raverbashing wrote:
| > helsinki, stockholm, berlin, amsterdam, etc you're
| talking 5X less salary than in Silicon Valley.
|
| Certainly not for the same seniority level (and not
| considering stocks, which people in those places do get)
|
| Or you're telling me that someone making 60kEUR in Berlin
| could be transferred to SV and their salary would
| immediately flip to $300k on the payslip? (no
| promotions/stock/etc)
|
| Realistically, more like 2x, 2.5x, 3x if we're stretching
| it for the mentioned cities
|
| > Given the tech talent in those cities, there must be
| some arbitrage opportunity there.
|
| Absolutely ;) Though on SV salaries you're getting paid
| for the less PTO, the stretched hours, etc so probably
| not such a big arbitrage
| DandyDev wrote:
| And what kind of person you think we are talking about
| here for 60k in Amsterdam? Is that a senior Software
| Engineer? Or even an engineering lead (responsible for a
| bunch of other SEs)? Because 60k per year in Amsterdam
| equates around 4.6k per month + holiday pay. I can hire
| at most a medior - senior SE for that in AMS (let's say
| 4-5 years of experience) and I really don't believe a
| person with that kind of experience would earn 300k a
| year in SV.
| dcolkitt wrote:
| > I really don't believe a person with that kind of
| experience would earn 300k a year in SV.
|
| I just spoke with someone two years out of CS undergrad
| who's starting at $350k TC at one of the big SV unicorns.
| raverbashing wrote:
| > you think we are talking about here for 60k in
| Amsterdam? Is that a senior Software Engineer? Or even an
| engineering lead (responsible for a bunch of other SEs)?
|
| Yes, at most I'd say at that seniority level, that's why
| I'm questioning it. (300k is probably at a higher level
| AND with stocks, etc)
|
| (Though I mentioned Berlin, not AMS, which has slightly
| higher salaries)
| durandal1 wrote:
| Yes, I have 10 years in SV and I if I moved back to
| Stockholm my compensation would be approx 1/5 of what I
| have now. It's ridiculous.
| pembrook wrote:
| > _you 're telling me that someone making 60kEUR in
| Berlin could be transferred to SV and their salary would
| immediately flip to $300k_
|
| Yes. And it's not just FAANG anymore. That's a totally
| reasonable comp at about 30-50 different companies in the
| US right now (and the number of companies paying this
| comp is increasing along with the size of fundraising
| rounds).
|
| Also, in my experience nobody is working 60+ hour weeks
| at these companies (the bigger the company, the easier
| the job), so it's not like anybody is being overworked to
| get this money.
| api wrote:
| > Also, European culture is slightly different: most people
| consider a startup failure as something bad that you drag along
| for the rest of your career.
|
| This is a major issue in Japan too AFAIK. Working for a big
| corporation or the government is still considered superior to
| entrepreneurship, and failing at a company brings a lot of
| shame.
|
| Without permission to fail, it's impossible to succeed. As Elon
| Musk put it: "we're gonna have to blow up some rockets."
|
| I've wondered if the most significant innovation of the past
| 500 years and the one that led to our historic technological
| and economic explosion of progress wasn't just limited
| liability companies.
|
| In the past to do anything big you had to either be already
| rich (vastly limiting the pool), find a patron (again a small
| pool), or borrow money. In the old days borrowing was basically
| loan sharking. You'd end in prison, dead, or at best shamed and
| broken for the rest of your life if you failed to repay with
| interest.
|
| All that meant very few people could take risks, so very little
| innovation.
|
| Limited liability allows vastly more people to take risks. Yes
| it does lead to abuse, fraud, and waste, but it also leads to a
| huge amount of innovation since people have permission to take
| risks and fail and then recover.
|
| Failure at something like a startup still comes with costs. If
| you (the founder) are not a narcissist or a psychopath it will
| probably come with emotional costs like a feeling of failure
| and a feeling of having let people down. But it doesn't ruin
| your life, blackball you from your career, or land you in
| prison.
| dmichulke wrote:
| > Europe is very risk-adverse
|
| I'd say it depends. I lived in several places and my feeling is
| that the bigger and more cosmopolitan the city is, the less it
| is risk adverse.
|
| So the worst is usually the countryside or towns and cities far
| away from any border and with no particular significance.
|
| > big difference with the US is the fragmented market:
| different languages, cultural differences, legislative
| constraints, market demands
|
| The Germans tried to address this in the 1940s, but no one
| seemed interested. /s
| yaseer wrote:
| My experience also correlates with this, raising in Europe and
| from YC.
|
| The European ecosystem is focused on well-understood business
| models, and is less likely to fund something disruptive and
| novel. It's probably epitomised by the Samwer brothers' cloning
| American businesses like eBay.
|
| If you want to build a well-understood Enterprise SaaS company,
| I think the European ecosystem will suite you fine.
|
| If you want to try a crazy idea, like renting out Air beds to
| people in your living room, you're better off in SF.
| robinhouston wrote:
| I suspect it's a mistake to treat Europe as homogeneous in this
| respect. As a startup founder in the UK, this does not match my
| experience in any way at all.
| yaseer wrote:
| Also UK-based. The UK is culturally somewhere between the US
| and the EU in my experience.
|
| UK investors are less risk-averse than Germans, but still not
| quite the same as SF.
| eyko wrote:
| You can't paint all of Europe with the same brush, and whilst
| most of Europe may be in the single market, they're not the
| "same" market. In my experience, there is a high variance
| amongst European countries (Eurozone or not) in risk-aversion
| vs risk-tolerance, which seems to be echoed in some
| studies/observations[1]. I've never really been able to see
| what the main factors that determine this may be -- I used to
| think it was correlated to how much each country participates
| in the global economy, but that would explain UK and Spain, but
| not Germany.
|
| I also find it a bit narrow-minded to think of Europe as risk-
| averse simply by judging their attitudes towards tech
| investments. Spain (where I'm from) definitely appears to be
| one of the most risk-tolerant EU countries when you look at
| certain sectors and our foreign investments in infrastructure
| and other types of construction, but one of the most risk-
| averse when it comes to tech. If I were to speculate (and I
| stress, speculate), it seems to be influenced by the type of
| markets with capital that we have access to: the Middle East,
| Africa, and Latin America. This is also the case when you think
| of partially publicly funded projects that are quite risky --
| especially in countries that are politically unstable like
| ours. A perfect example would be renewable energies, which
| would have been the great success story in Spain until new
| legislation practically killed any hopes of it being eventually
| profitable.
|
| Germany, on the other hand, seems risk-averse _even_ within
| their own main domains (industrial engineering, automotive,
| etc). They also have a big global presence and
| prestige/reputation, but I have never lived or worked in
| Germany so I wouldn't even dare speculate why this is the case.
| I've often seen the finger pointed at bureaucracy, but other
| countries with similar levels of bureaucracy and hurdles don't
| seem to be as risk-averse. Different cultures, I reckon.
|
| The UK (where I now live) on the other hand was one of the most
| risk-tolerant countries in the EU (until their departure) when
| you think of tech investments. The fact that they speak in
| English and have a strong services economy helps in that
| respect, I would guess. I'm definitely not an expert.
|
| 1. https://voxeu.org/article/cross-country-differences-risk-
| att...
| ToJans wrote:
| Interesting line of thought; another POV that emerged during
| a late-night discussion a while ago, was to look at the
| percentage of people that work in public service in each
| country.
|
| We assumed that, the closer the percentage was to the median,
| the more risk-averse people would be (assuming the median
| represents some optimal size for the government).
|
| We never validated the idea though; I'm quite curious to see
| how that would hold up after verification.
| eyko wrote:
| I used to think so as well, but someone pointed out to me
| that Germany has a similar % of public sector jobs as the
| USA, and Spain is not that much higher, and all seem to be
| shrinking. Belgium on the other hand seems to be stable at
| 21% (21.5% 2013, 21.1% 2019) so it would seem to fit the
| hypothesis :-). I still think that it's a contributing
| factor, but perhaps it's more of a symptom and less of a
| factor.
|
| https://en.wikipedia.org/wiki/List_of_countries_by_public_s
| e...
| ithinkso wrote:
| Also success means something different here for the most part,
| maybe as a result of what you said above. It's more of a
| 'business' than 'startup' and if you're profitable that means
| you have a successful business. I think that big acquisition
| exit/IPO is a more of a wish/dream rather than a goal here
| daanlo wrote:
| Founder from Berlin here. EUR50k for 25% is really off-market,
| even if you are a first time founder (at least in Berlin,
| Paris, London and hopefully all across Europe). And IMHO having
| worked in a startup (even if you aren't the founder) is seen as
| a BIG career plus if you join any corporate afterwards. I would
| say we have a thriving eco-system across Europe. Not at the
| level of SV, but still many big and meaningful companies with
| global foot prints being built every year.
| [deleted]
| ionwake wrote:
| As a solo european with a secret startup Ive been working on for
| a couple of years ( Im semi retired young ) where should I apply
| for an assessment for possible seed? Is enrolling onto
| ycombinator still the best way?
| nickfromseattle wrote:
| I am an American founder that accidentally built a company in
| Europe.
|
| I hired my first person there, and through the path of least
| resistance, most of our 45 person team is based in Europe.
|
| I believe I am playing 'business' on easy mode compared to
| European founders.
|
| As an American founder it's pretty easy for my US company to pay
| my European team as contractors.
|
| European founders have to comply with European employment law.
|
| In the country a lot of my team resides, here are the rules:
|
| 1. ~50% tax on W2 employees (we pay none)
|
| 2. Ability to take 1 year of maternity leave, available on day 1
| of joining a company. Up to 2 years if there are complications.
|
| 3. 32 days of PTO standard for entry level roles
|
| Here were my rules as an American founder / company hiring in
| Europe:
|
| 1. No employment tax because everyone is hired as a contractor
|
| 2. Today we have a 2 month paid policy after 2 years in our org.
| We're hoping to improve this as our company becomes more
| financially secure, but the liability at this stage of our
| organization is significant.
|
| 3. We offer 38 days of PTO today, but for the first year we
| didn't have an official PTO policy.
|
| Building a startup in Europe as a European founder is very, very
| hard due to the above compliance requirements.
| another-dave wrote:
| This sounds really odd to me (UK-based, previously was
| contracting) -- if someone is hired as a contractor, normally
| your company would be engaging their limited company as some
| type of consultancy arrangement.
|
| So you wouldn't have any maternity leave or paid time off at
| all. In fact, from the contractor's point-of-view, you'd want
| to run a mile from these things as if the revenue believed you
| were a de facto employee (since you're getting company
| benefits) your tax liability would balloon.
|
| But see no reason that a European founder couldn't hire
| freelancers/contractors in the same way that your company does.
| arcturus17 wrote:
| In Spain if you hire full-time contractors long term they can
| be considered full-time employees by law. There are ways
| around this such as hiring through temp agencies, hiring
| part-time or rotating them. But trying to do "FTE as
| contractor" is risky.
| spaniard89277 wrote:
| That only applies if you hire from a spanish company and
| for a defined set of circunstances AFAIK.
| tinco wrote:
| This sounds too good to be true. I don't know about other
| countries in Europe, but in The Netherlands it is definitely
| illegal to have a contractor work in employment conditions.
| I.e. you're not allowed to give a contractor set work hours,
| not allowed to specify how they work, not allowed to prevent
| them from outsourcing the work, etc. If you do those things,
| and the tax service finds out, or a "contractor" gets sick
| and decides to demand you pay them sick leave, you're in deep
| trouble.
| mbeex wrote:
| The same in Germany. The people can be easily classified as
| bogus self-employed (scheinselbststaendig). The company
| would have to pay social security contributions
| retroactively up to 4 years. Furthermore, the 'contractors'
| could sue their way into employment. Also, workarounds
| mentioned elsewhere, like employment as temp by utilizing
| intermediate staffing companies, became widely known in
| time also to government agencies. Most companies will
| fire/replace such staff after 18 month max for this reason.
| cuillevel3 wrote:
| An European founder could do the same, hire only self-employed
| contractors.
|
| However, e.g. in Germany, that's only possible if the
| contractors work independently and have more than one customer
| long-term. I guess someone will notice eventually?
| mbeex wrote:
| > and have more than one customer long-term.
|
| This is rather a counter criterion. Government finally found
| out several years ago, that there is a new non-significant
| class of well-earning people - IT contractors - that can be
| legally milked by abusing laws, created ostensibly to
| 'protect' the weak.
| jcelerier wrote:
| > As an American founder it's pretty easy for my US company to
| pay my European team as contractors.
|
| if they are spending most of their contracting time at your job
| / are considered your subordinates, it's very very illegal at
| least in france (https://bpifrance-
| creation.fr/encyclopedie/micro-entreprise-...), and I'm very
| very tempted to report you to the relevant authorities.
| pavlov wrote:
| As contractors, your employees are liable to pay those taxes
| themselves. Hopefully you're paying them at least 50% above
| market rate, so there's no problem.
| Sytten wrote:
| FYI since the laws in Europe are most likely similar to the
| laws of Canada on this, it can get your "contractors" into big
| trouble with their tax agency.
|
| I know a lot of people do that (work as contractor but they are
| employees), but if you bother to read the tax code this is
| illegal. It takes one audit to be reclassfied and then you have
| to repay the taxes your employer would have paid. This can be
| retroactive for many years after employement has ended.
|
| Stay away from those contracts.
| tsbinz wrote:
| If you have "contractors" in Germany, what you are describing
| is social insurance fraud. I would be surprised if France
| doesn't have rules like that.
| arcturus17 wrote:
| If you're hiring contractors long-term in Spain for over a
| certain amount of their time (~80%) for the long term you can
| be liable as a full-time employer and may be obligated to
| change their contracts to full-time. I know it's the same in
| other European markets and I doubt there are any exemptions for
| non-EU employers whatsoever.
|
| All other conditions you describe are the same for a European
| or Spanish company hiring contractors, as long as you are not
| meeting the conditions for full-time employment and therefore
| disguising FTEs as contractors.
|
| I'm curious as to what countries you are operating in that
| allow these kind of exemptions compared to local EU
| entrepreneurs. IANAL but 99% sure these exemptions do not exist
| in Spain at least.
|
| EDIT: This case study [1] by a Spanish law firm indeed claims
| that a company based outside the EU (UK post-Brexit) can be
| tried in Spain for false contractor relationships.
|
| [1] https://likum.es/el-falso-autonomo-tambien-si-la-empresa-
| y-e...
| ToJans wrote:
| While this is somewhat true, most of the European founders I
| know work around this by hiring freelance senior contractors
| and employing heavily subsidized juniors.
| specialist wrote:
| > _European founders have to comply with European employment
| law._
|
| There's got to be a better way. By default or by design, the
| different rules in USA and EU both advantage larger companies,
| thwart smaller companies.
|
| To encourage small businesses and new business formation, we
| must synthesize the good parts of USA's (former)
| entrepreneurial spirit and EU's labor protections.
|
| Universal healthcare and German-style childcare would be huge
| boons for USA's startups and small businesses. Maybe reverse
| the decades long decline.
|
| Something like UBI coupled with looser labor laws (easier to
| fire, layoff) could allow EU startups to be more nimble, more
| competitive.
| watoc wrote:
| As a European founder you can do exactly the same. You can hire
| contractors in Europe and won't have to pay employer taxes,
| mandatory PTO...
|
| I don't think there is any difference if your company is in the
| US or Europe. In both cases however you have to be careful that
| your contractors don't get reclassified as permanent employees
| if you hire them for too long (more than 2 years in a row and
| 40 hours a week is risky).
| ggrrhh_ta wrote:
| Which European country are you referring to?
| [deleted]
| teekert wrote:
| The 1 year parenting leave makes me think Norway? Or anything
| Scandinavian at least... here in the Netherlands it's
| something like 16 weeks for women and 7 days for men? It was
| 2 days last year but it recently changed.
| fnomnom wrote:
| germany has the same (1 year) but doesnt have a 33 day PTO
| minimum.
| euorme wrote:
| You're cheating the system, though. The system exists in order
| to support the way of life in these countries, by bringing your
| American employment attitudes to Europe you're not really
| building a company in Europe by any measure: you're building an
| American company. Your company is benefitting from the robust
| systems in Europe, without contributing. There are people you
| want to hire in Europe _because of people paying their share of
| taxes_. If you don't want to pay employment taxes, if you don't
| want to offer maternity leave... stick to America.
|
| Personally, I think there is a strong argument to make for the
| value of America-style lax employment rules when it comes to
| startups, absolutely, but please don't bring those to Europe by
| gaming the system. Hiring people as contractors to avoid
| obligations is an age old way to game the system, and
| eventually you'll be caught and face penalties (unless you're
| smarter about it, so I guess my advice is actually: be smarter
| about it (don't announce it on HN for example!)).
| bluecalm wrote:
| You have to admit though that maternity leave from day one
| which often comes with obligations like keeping the position
| open (so you have to fire someone who has already being doing
| the job for a year+ if the mother comes back) is a ridiculous
| requirement. Sure, it makes sense for a huge employer where
| those things are just cost of doing business and you can
| afford to hire enough people to cover for that. It absolutely
| kills small businesses though.
|
| Fortunately people find ways around those laws and
| governments in developing countries don't care much but it
| puts you in position to fight the law from day one. The
| culture in Europe needs to change if we want people trying
| their hands on small businesses more.
|
| I own a small successful business. I will never hire any
| employees. That's why I avoid working with anyone in my
| country and will not open an office. Frankly I would prefer
| to close shop and enjoy the rest of my life in an
| unproductive way than to deal with the burden of government
| regulations when it comes to employing people.
|
| Hiring someone just for them to go on maternity leave after 2
| months and then coming back (or not, not allowed to ask when)
| in 1/1.5/2 years and me being forced to find replacement
| while keeping the position open? Seriously, for a company
| which would have at most several employees and where everyone
| has their distinct role?
| dcolkitt wrote:
| The problem (and this extends to many policies in the US as
| well) is that it's deceptively easy to offload the cost of
| welfare benefits to employers. Paid maternity leave is just
| welfare for new mothers. I'm not saying that's a bad thing,
| but it is what it is. But paying someone not to work is
| welfare.
|
| However the government handing out welfare checks is not
| very popular. Even taking welfare brings up images of
| government cheese. Often middle class people won't avail
| themselves of these programs even if they qualify.
|
| So from a policy perspective we solve this by making the
| employer administer the welfare program and call it an
| "employment benefit". Now it goes from a source of shame to
| a marker of status. Benefits are something enjoyed by
| middle-class professionals.
|
| This all works out fine for large companies, where the law
| of large numbers makes these costs statistically
| predictable and easy to hedge. But it's a huge unmanageable
| risk for small business. If you're in a four person startup
| and one person goes on paid maternity leave for a year,
| your company is pretty much dead.
| karaterobot wrote:
| Does cheating the system just mean you disagree with it, or
| do you maintain that he's breaking the law? Or that
| regulators aren't aware of this practice? I'm not sure what
| cheating means here: usually it means breaking the rules, but
| that's not happening based on what he described.
| euorme wrote:
| Every country within Europe is different in some capacity
| so it's difficult to say with absolute certainty that he is
| breaking the law -- the language in my comment was vague
| because I'm mostly addressing the spirit of his behaviour,
| rather than the law. That said, certainly in my European
| country he would be open to issues with the tax authority
| if he were to attract their attention.
|
| The United States is very permissive when it comes to
| employment, the majority of states could be described as
| "anything goes" (relative to Europe) and so dodging
| employment taxes is pretty much fair game... whereas in
| Europe a lot of regulation exist very specifically to
| address companies organising their business in this way.
| I'd be very surprised if he didn't face significant fines
| (I don't know of any examples of this behaviour leading to
| prison terms, but significant fines are very common and
| serve as a deterrent).
| mattmanser wrote:
| What he's doing is not legal, and legally tax avoidance, in
| a lot of European countries.
|
| What he's describing is known as a disguised
| employee/employment, and they or all their workers
| (probably their workers if they're operating as
| 'companies') might suddenly find themselves open for
| massive tax bills for unpaid employment taxes in their
| country.
|
| On top of that, this setup is open for the disguised
| employees being able to sue the company for unpaid holiday
| + benefits.
|
| Probably never get noticed at that scale though. And can't
| say for certain as he hasn't listed the country, but if
| this was happening in the UK, I'm 90% certain it'd be
| classified as tax avoidance in the UK, and all the
| 'employees' would be on the hook for something like 14%
| employer national insurance contributions. The big problem
| HMRC would have is that no-one's paying the employer NIC,
| and as his employees are officially the companies, they'd
| be on the hook for it.
| eplanit wrote:
| Since when is "the system" the thing that is supposed to win?
| To me, it seems more like the system is cheating the startup.
|
| There's validity in working around or gaming systems so that
| a company has a chance of growing and thriving. The tactics
| used (contractors instead of employees, etc.) are perfectly
| legal. People are getting paid per an agreement, and they
| spend their income in their country/society, which disperses
| the benefits. A startup saddled with year (or two) long
| maternity leave and other such extreme requirements would
| make the risk too high.
|
| These regulations create a regulatory capture situation where
| only large, established, or very well financed businesses can
| survive. Kudos to the agile and clever startups that find
| ways to make it, regardless. One should be on the side of the
| people, not the system.
| brnt wrote:
| I usually forgive Americans for not knowing this, but 'the
| system' is something we've built up together to help
| ourselves and organize ourselves. Unemployment is a
| statistically calculable fact, so we can plan for it.
|
| That systems tend to start living their own lives is of
| course the challenge, because indeed the point of this
| system is not the system, but to help ourselves. Like
| democracy, it requires indefinite maintenance, upgrades and
| changes. But that does not mean it's bad, it means people
| are a hard problem.
| euorme wrote:
| As a sweeping generalisation: Europe has chosen to value
| more stable employment opportunities with lower potential
| upside over highly volatile employment opportunities with
| larger potential upside. America has chosen the opposite.
| You're speaking as if there's an absolute truth in which
| model is better, but as we're finding in this very thread,
| American people are coming to Europe to build businesses
| (and Europeans are going to America to do the reverse).
|
| I won't rehash what brnt has said in their reply, but I
| will echo their sentiment: The System is me and my friends
| and my family and my co-workers working together to provide
| healthcare and education and security to each other. I pay
| taxes for that reason.
| ChicagoBoy11 wrote:
| I strongly disagree with your point, but it is well-
| articulated and I also felt the need to upvote given the LISP
| syntax.
| biztos wrote:
| I wouldn't say he's not contributing, I'd say he doesn't have
| employees. Same would be true if he has his "team" on 1099 in
| the US.
|
| Outside of any moral questions, the risk here is that the
| government may decide your group of happy startup contractors
| are in fact employees, and then you're in for some massively
| distracting and expensive restructuring (at best) or legal
| sanctions and maybe losing your team (at worst).
|
| So yeah, it's easier, but that's because it's cheat mode, not
| because he's American. You could use any offshore company for
| the same thing.
| bingohbangoh wrote:
| There are lots of laws over if your employee is a
| contractor or full-time. Many, _many_ companies butt heads
| with local labor boards who decide that a given employee is
| actually full-time and thus entitled to a bunch of
| different protections.
|
| Many regulations either don't exist in Europe or are under-
| enforced. For instance, Germany did not outlaw insider
| trading until ~2003. There's a strong chance that an
| American hiring a contractor in, say, Romania will simply
| not be prosecutable while an American hiring a contractor
| in America will be. There's some legal term of art for this
| that I can't recall off-hand.
| gautamdivgi wrote:
| Israel does extremely well with startups and exits
| notwithstanding cultural differences (e.g. weekends are not the
| same with the rest of the western world). What are the big
| differences between what Europe does vs. what Israel does? Risk-
| aversion may be one aspect but I doubt its the only one. There
| are probably a whole lot of factors.
| dgellow wrote:
| IMHO the main issue in Europe is the lack of a common market. So
| many different languages, cultures, and local regulations creates
| A LOT of fragmentation. If you're in the US or China you have
| access to a massive pool of potential customers as soon as you
| release your product. In Europe that's not the case, all your
| branding, marketing, or other content will have to be adapted to
| a specific language or culture. So instead of the EU dream of a
| EU market you have to take in account lot of small markets with
| their own specificities.
| mathverse wrote:
| The term "european" is meaningless.It's all just bunch of
| countries working under some framework. As a european there's no
| shared success if one european company succeeds.And because of
| that there's no synergic effects that would help "european"
| companies to grow and improve.
| Cthulhu_ wrote:
| There is some though; there are little to no restrictions for
| one country to use a service in another european country, or
| traveling to visit it. No currency conversion needed either.
| dukeyukey wrote:
| Unless you live outside the EU, like in the UK, Norway, or
| Switzerland. Or in a non-Euro country, like Sweden or Poland.
| biztos wrote:
| > or traveling to visit it
|
| Except during Covid, which might last forever.
|
| > No currency conversion needed either
|
| Except when you need to transact literally anything outside
| of the SEPA system, and then you have conversations _and_
| bank fees and very little control over either.
| mod50ack wrote:
| Travelling within the EU during Covid is very easy. Just be
| vaccinated and there are virtually zero barriers.
| tlogan wrote:
| I will list some problems / challenges Europe has:
|
| - different languages: even with simple SaaS you might need to do
| a demo.
|
| - different cultures: marketing in Spain is different than in
| Germany, different in Poland, etc. so market is very fragmented.
| Even Germany is much more diverse than people think (the joke is:
| Balkan starts just north of Munich)
|
| - much more complex laws
|
| - recruitment is harder: candidates are much more conservative.
|
| - cultural similarities: entrepreneurs are considered as a
| failure
|
| It is just harder. Not impossible but harder.
| solarkraft wrote:
| That's pretty cool. It's also a testament to the lack of capital
| for new stuff in the EU, which is sad, but at least _something_
| is being done about it, and if it has to be foreign investment.
|
| Thanks, guys.
| wesleyverhoeve wrote:
| Wondering which EU countries will take the lead here.
| forgingahead wrote:
| It's definitely good to see a strong increase in entrepreneurship
| in Europe, though I do wonder whether the Y Combinator program
| can keep up its quality and value-add as they themselves scale
| up.
|
| It's one thing to have weekly sessions with experienced leaders
| like PG and others, and a small enough cohort whereby you can
| swap stories and learn as you progress through the program. On an
| industrial scale though, you lose a lot of that intimacy and you
| have to default to cookie-cutter approaches. Learning via mentors
| originally, vs. learning in the classroom currently.
|
| I know many founders use Y Combinator as a badge of merit to
| increase their chances of follow-on funding, but there is an
| interesting question of how much value-add it now adds to the
| original type of startup team (young, scrappy, more inexperience
| than product-market-fit and customers).
| ThePhysicist wrote:
| The weekly video sessions that StartupSchool offers are great.
| I participated in them during the first batch when they were
| led by YC alumns (I think now they're just self-organized),
| they basically just consist of people taking turns telling the
| group what they did last week and what they plan to do this
| week. In retrospect it was really great thing and helped me
| enormously to focus and make progress. Especially as a solo
| founder it's hard to keep focused as there's no one to "yell"
| at you if you're getting distracted, so having a group of peers
| that are in the same situation and that provide a bit of social
| pressure and encouragement was really great. Also, people would
| sometimes share stuff they struggle with, which also helped a
| lot to put things in perspective as startup life can get pretty
| grim, so it helps to laugh about failures with other people.
|
| Really sad they
| ant6n wrote:
| I think something guy cut off. Aren't all these videos
| available online still as part of the startup school
| material?
| ThePhysicist wrote:
| Ah my mistake, I originally though they discontinued these
| but actually they still exist, albeit without being led by
| YC alumns (I think).
| antupis wrote:
| This is basically failure in European startup ecosystem that
| companies needs to go SF, but good for Y Combinator and SF that
| they can attract best talent.
| _fizz_buzz_ wrote:
| If the headline had been "only 1% of Y Combinator startups are
| European", there would have also been a comment on how this was
| a failure of the European startup ecosystem ;)
| [deleted]
| raverbashing wrote:
| "Need to go", you're saying like only YC is financing startups
| anywhere.
|
| Most won't even bother. And YC is not the only way to get funds
| (not even in the US)
| lrem wrote:
| It's not "European startup ecosystem", it's basically "European
| societies". Imagine how well would SV work if being involved in
| a bankrupt company (co-founder, major investor, C-suite) made
| banks refuse to talk to you again for 10-20 years. I believe
| that was the case in France. You wouldn't even be able to open
| a checking account, never mention any credit again.
| oblio wrote:
| > You wouldn't even be able to open a checking account, never
| mention any credit again.
|
| Is this just hearsay? It seems extreme, even for French
| levels of bureaucracy.
| aardshark wrote:
| I'm fairly sure you have the right to a bank account under
| French law, but banks have the right to refuse you as a
| client.
|
| This means that if you get rejected as a client by enough
| banks you can go to the Banque de France and they will
| select a bank that is then obligated to provide you with an
| account.
| oblio wrote:
| I don't get why they'd refuse you a checking account,
| even if you were the founder or one (or several bankrupt)
| companies. Would they be worried you wouldn't pay their
| crummy fees? :-)
| p4bl0 wrote:
| In practice they don't. The comment to which you reply is
| 100% correct.
| gyulai wrote:
| Not only is it not just hearsay: In some European countries
| it's even enshrined in law. For example in Austria, the
| leader of a company ("gewerberechtlicher Geschaftsfuhrer"),
| including sole traderships, partnerships, and legal
| entities, cannot be a person who, within the past X years
| (can't remember what X is) has been in bankruptcy in any
| country in the world. The authorities check the relevant
| Austrian register before giving you a business permit. For
| a person who has not lived in Austria for that stretch of
| time, you have to bring proof from the countries you've
| lived in, that you're not in bankruptcy there either. For
| some countries, this can be pretty hard to prove, as the
| relevant registers may simply not exist there. I remember
| it being a major bureaucratic hurdle when I moved from the
| U.K. to Austria (being an Austrian native) to start a
| business there.
| oblio wrote:
| I think you're missing my point.
|
| I understand being banned from <<starting a new
| business>> after failing repeatedly. A bit extreme, but
| ok, it makes sense a bit. But he was saying he was banned
| from <<getting a bank account>> due to that.
|
| It is extremely unlikely that you won't be able to get a
| simple checking/deposit account at a commercial bank just
| because you went bankrupt.
| marvin wrote:
| Norway even has a special term for someone who has failed
| in entrepeneurship multiple times -- "bankruptcy jockey".
|
| You won't be banned from starting a business from a
| single bankruptcy, but if it happens multiple times
| and/or creditors end up losing significant money over it,
| you can be barred from starting a business for two years.
|
| I don't think these rules often _directly_ prohibit a
| promising entrepeneur from starting a business, but it 's
| pretty obvious that the whole culture provides a strong
| chilling effect.
| maeln wrote:
| I think he is confusing "interdit bancaire" and bankruptcy.
| If you end up being put in the interdit bancaire file, yeah
| life pretty much sucks and most bank will refuse to do
| business with you. But having a company that go bankrupt
| doesn't mean you will be put in the file. You usually need
| to do things like stop paying your loan to be put on this
| file.
| lrem wrote:
| I likely am. The idea to try a startup in France was
| _very_ short lived for me. Every card was stacked against
| me (many particuarly against me /my ideas, not everything
| is a reflection on society), so I moved on after just a
| few conversations.
| WastingMyTime89 wrote:
| > Every card was stacked against me
|
| Considering the insane amount of funds France will
| literally gift you just for opening a startup there, I
| find that very surprising. You have to be good at paper
| pushing and speak the language however. That much is
| true.
| lrem wrote:
| Yeah, my French is not what it should have been and I
| contracted an allergy to the French bureaucracy. Quite a
| bit of the whole thing is on me, no denying that.
|
| A good friend is doing it now and it's not like he's
| swimming in cash though.
| maeln wrote:
| Yeah, to do any business in France, your _really_ need to
| speak French. The French bureaucracy is not that bad
| (when you compare it to some of its neighbour) but in the
| same vein, it will be impossible to deal with it if you
| don 't have a good grasp of French.
|
| France cares a lot about French and its honestly an issue
| many time (and I say this as a French person). Things are
| changing slowly, but anybody serious about moving /
| opening a business in France should be serious about
| learning French. You would be astonished by the number of
| engineer, investor, and in general any business person,
| who have an awful level in any other language than
| French...
| StreamBright wrote:
| Exactly. If you live in a safe and secured society why would
| you want to do something risky like creating a startup. One
| of the biggest success for the EU startup scene was just
| copying what is done in California, avoiding the risk of
| trying out new ideas.
|
| On the top of that, regulation in the EU is much worse than
| in the US. This does not help either.
| CrLf wrote:
| "If you live in a safe and secured society why would you
| want to do something risky like creating a startup."
|
| Isn't that just another way of saying "quality of life"?
| StreamBright wrote:
| Depends what you are looking for. If you are in your 20s
| / 30s you might want to have higher salary and less
| social safety. Later in your life this changes. Many
| Europeans (including myself) went to work in California
| for higher wages and less taxation. Some of us wanted to
| have family and moved back. Quality of life is subjective
| above a certain threshold.
| RobertoG wrote:
| It seems to me that this article is saying exactly the
| opposite of what you say.
|
| The article is about how Europeans, that live in that "safe
| and secured society", are creating more startups than
| before.
|
| >>"On the top of that, regulation in the EU is much worse
| than in the US. This does not help either. "
|
| If you check those start-ups you can see that most of them
| are joining Y-combinator but they stay in Europe. So, also
| the opposite of what you are implying.
| StreamBright wrote:
| >> "safe and secured society"
|
| What is the distribution of Eastern vs Western Europeans
| in the sample?
| RobertoG wrote:
| ==Cyprus== Malloc
|
| ==Denmark== Gamerpay , Female Invest , Zoios
|
| ==Estonia== Membo
|
| ==France== Whaly , Carbonfact , Numary , Cafe , Hera ,
| Crew , PaletteHQ
|
| ==Finland== Kapacity.io
|
| ==Germany== Snowboard Software , Moving Parts , QOA ,
| HeyCharge
|
| ==Ireland== Luminate Medical , Noloco , Protex AI
|
| ==Netherlands= Quest , Orderli , Echoes HQ
|
| ==Poland== Enso
|
| ==Romania== Archbee
|
| ==Spain== Solarmente , Payflow , Arengu
|
| ==Switzerland== Pabio , Adaptyv Biosystems
|
| ==UK== Appollo , Shopscribe , Digistain , Abatable ,
| Heimdal , StudyStream , Teamspace , Genei , Sitenna ,
| Onfolk , SigmaOS
|
| ==USA== Beau , Iona Mind , Synder , Awesomic
| inglor_cz wrote:
| People in European societies still feel need for some
| thrill. I think the problem is a bit different. Language
| and cultural barriers are still meaningful. I am a Czech
| and I know shit about selling to Romanians or Portuguese
| customers; even if I was able to pay for professional
| translation of my products AND customer support in 20-25
| languages, my cultural ignorance would be still a
| significant hurdle.
|
| USA and Anglosphere in general is HUGE. China is HUGE. The
| closest thing to that in the EU is DACH (Germany, Austria,
| Switzerland), about 100 million rich people speaking the
| same language.
|
| But precisely Germany is a fairly technologically
| conservative country with median age close to 46, where
| people are much less keen on new technology than in, say,
| Estonia; ironically, the fact that older systems work
| reliably reduces the drive to adopt new ones.
|
| And smaller markets like Estonian or Danish one will not
| provide you with as much growth opportunity.
| bserge wrote:
| If you're selling a technical solution, why would you
| even touch cultural differences? I bet you'd be
| successful if you could afford the extra costs of
| translation/marketing.
| pjc50 wrote:
| Cultural differences hugely affect the marketing, and in
| some cases the market; you couldn't sell a tipping
| management app to somewhere without a tipping culture,
| for example.
| isbvhodnvemrwvn wrote:
| Another example - a friend of mine tried to expand to
| Poland and was surprised that using payment cards
| significantly reduced appeal of his solution.
|
| eBay was also a spectacular failure because they
| disregarded local competition.
| inglor_cz wrote:
| Well that is why Linux is successful around the planet.
| It really does not touch any soft cultural differences.
| Geeks and their needs are similar everywhere.
|
| Something like a food delivery corp. on the other hand
| must know precisely what to expect from which holidays
| etc. There is a fairly successful Czech startup called
| Rohlik that expanded to Hungary, Austria and Germany, but
| every added country is a challenge.
|
| https://techcrunch.com/2021/06/30/rohlik-
| raises-119m-at-a-1-...
|
| BTW Translation is probably cheaper than support.
| Customers will often demand support in their native
| language.
| bserge wrote:
| Takeaway.com is a Dutch company operating in half of
| Europe including Romania and Poland.
| isbvhodnvemrwvn wrote:
| The Polish one was an acquisition of a local company
| which knew the market, which further proves that
| penetrating new markets in the EU is difficult.
|
| See this article:
|
| https://www.pulshr.pl/wywiad/arkadiusz-krupicz-
| wspolzalozyci...
| inglor_cz wrote:
| I do not claim it is outright impossible. The hurdles are
| higher, though.
| skrebbel wrote:
| Much of their expansion was through mergers and
| acquisitions of locally founded companies.
| raverbashing wrote:
| "Extra costs of translation/market" you're saying it like
| it's a byline
|
| It is more complicated than that for things moderately
| complex.
| A_non_e-moose wrote:
| Yep that same scary regulation that is intended to hinder
| businesses from selling me food with hydrogenated fats,
| overloaded with sugar or salt, that same regulation that
| forces auto manufacturers to not create exclusive
| overpriced repair consortiums for basic parts, and that
| generally makes life a bit less corporately tyrannical.
|
| Shareholder value is only nice if you're a significant
| shareholder, and it is disproportionately nice to those
| shareholders at the cost of others, when lobbying overtakes
| regulation.
| dfee wrote:
| > that same regulation that forces auto manufacturers to
| not create exclusive overpriced repair consortiums for
| basic parts
|
| My diesel jetta would like a word with you and your
| picky-choosy.
|
| Just kidding, America cracked down and forced VW to buy
| it back with a penalty kicker.
|
| Point is - these sorts of arguments are silly.
| StreamBright wrote:
| >> overloaded with sugar or salt
|
| I think you live in a different region.
|
| https://corporateeurope.org/sites/default/files/a_spoonfu
| l_o...
|
| https://corporateeurope.org/en/pressreleases/2016/07/food
| -lo...
|
| https://www.livestrong.com/article/464851-why-is-high-
| fructo...
|
| https://ec.europa.eu/health/sites/default/files/nutrition
| _ph...
| Grustaf wrote:
| > On the top of that, regulation in the EU is much worse
| than in the US
|
| Worse as in better for consumers and citizens, but more
| costly for companies that can't do exactly what they want?
| pjc50 wrote:
| EU regulation generally doesn't have "de minimis"
| exemptions. If you have something that takes a flat cost
| of EUR10k or EUR100k to comply with, that burdens small
| businesses much more than large businesses, and a startup
| is a small business in the beginning.
|
| Theoretically if you want to build an electronic product
| and sell one (1) unit of it in the EU you need to give it
| the full works of CE compliance. I don't believe UL/FCC
| are quite so onerous? And certainly this doesn't apply to
| random items in unmarked packages from China.
| raverbashing wrote:
| I was curious about this so went to Google.
| https://europa.eu/youreurope/business/product-
| requirements/l...
|
| So it seems it's not that clear cut that you need it (and
| it can be self assessed). But yeah, if it's an electronic
| device that plugs into the wall or connects to WiFi
| probably yes - or at least the modules that do that)
| jstx1 wrote:
| > If you live in a safe and secured society why would you
| want to do something risky like creating a startup
|
| Safe and secure unlike... California? The founders of US
| startups are already in very advantageous positions in
| life. In fact that security helps with taking business
| risks which is the opposite of what you're claiming.
| scrollaway wrote:
| People creating startups in the US aren't those who are in
| unsafe / insecure environments. It's those who can afford
| to fail.
| piva00 wrote:
| The difference isn't having a huge market with a more-or-
| less homogeneous culture on consumption and language, it is
| that Europe is a safe and secured society, completely
| different than fucking California.
|
| Not sure what is your point here, you brush off a lot of
| the real nuances of the problem to throw an
| overgeneralising jab onto 27 different cultures...
| awelkie wrote:
| There was an article on this in The Economist recently.
| Apparently what you're describing is no longer the case.
|
| https://www.economist.com/business/2021/08/14/one-way-to-
| mak...
| gyulai wrote:
| It's a pretty regular occurrence for the political PR
| machinery to try to get stories published that basically
| say that (thanks to some politician's doing) European
| region X is now going to be the next silicon valley.
| ...none of that ever actually filters through to the daily
| realities of a European entrepreneur. ...omg, the war
| stories I could tell, being an E.U. entrepreneur who was
| dumb enough for large stretches of time to believe the
| hype.
| Grustaf wrote:
| I don't think this is the case, in France or anywhere.
|
| And I'm certain it's not the reason SV creates more startups.
| The real reason is that this is where startups were invented,
| so for historical reasons the concentration of capital and
| talent is extremely high.
| quietbritishjim wrote:
| > SV ... is where startups were invented
|
| What exactly do you think "startup" means? To me, the word
| just means a new small business. Such things have been
| around for centuries, before the USA even existed never
| mind SV. That's true even if you take startup to mean
| specifically those taking large outside capital with a goal
| to grow large quickly (which I don't think is necessary, a
| bootstrapped startup is still a startup IMO).
| Grustaf wrote:
| If you take it to mean "new small business" then there is
| no lack of startups in Europe, or Bangladesh for that
| matter.
|
| I'm using the word in the Paul Graham sense, new
| companies that aim for really fast growth.
|
| And yeah, that also sort of existed before SV but I think
| you actually know what I mean.
| [deleted]
| antupis wrote:
| I think it is set of different problems Southern Europe and
| France are almost hostile to entrepreneurship and startups.
| Nordics, Baltic and Benelux countries mostly nail culture and
| regulatory frameworks but small markets slows down starting
| and scaling business. Personally I don't know what is problem
| with Germany probably something to do with how German is
| organised around manufacturing.
| mytailorisrich wrote:
| In my experience the UK has a very simple and friendly
| system and, I believe, London has grown into an European
| centre for startups and funding. France makes things
| overly-complicated and costly for the sake of it, not just
| for entrepreneurs but for everyone, this is very puzzling
| (and I was born there!).
| antupis wrote:
| Yeah did not add UK because Brexit but I agree that UK
| and especially London is best location to start startup
| in Europe.
| mod50ack wrote:
| Wonder how Ireland will be affected due to their status
| as an English-speaking country with major business
| operations already there that's uniquely able to hire
| effortlessly from both the UK and EU.
| qwerty456127 wrote:
| AFAIK banks are legally required to open checking accounts on
| demand of any resident in Germany, no matter their
| background. But I am not sure, just a rumor.
| [deleted]
| gyulai wrote:
| Not just a rumor. If you speak the right incantations at
| the counter, invoking the relevant legal reference, a bank
| in Germay will be obliged to give you a "basic bank
| account" with no credit facilities of any kind. There's
| also nothing stopping them from making that bank account
| the least attractive bank account you've ever heard of by
| charging insanely high fees and prohibiting you from using
| the regular ATM network, restricting you to just a few
| machines in a restricted geographical area.
| qwerty456127 wrote:
| > If you speak the right incantations at the counter,
| invoking the relevant legal reference
|
| What are these?
|
| > There's also nothing stopping them from making that
| bank account the least attractive bank account you've
| ever heard of
|
| Why would they want to? What do they actually risk?
|
| > restricting you to just a few machines in a restricted
| geographical area.
|
| Officially area-specific or just through the specific
| kind of machines accepting specific kind of cards being
| absent outside of it? I've heard of the unreasonably
| complicated system of types of cards in Germany: normal
| debit, "electronic cash" etc.
| hectormalot wrote:
| For the Netherlands. There is the concept of the 'basic
| bank account'. This is an agreement that safeguards that
| everyone can have at least 1 bank account. [1]
|
| You can't open an account like this if you already have
| an account. You can't pick the bank either. You're
| obliged to go to your last bank for this type of account.
| The price is fixed at the same level as the normal
| accounts. You can even have this account if you're
| homeless and don't have an address. Typical requests are
| done via support organisations rather than yourself, but
| it is is possible to do it yourself as well.
|
| At least in the Dutch situation I don't see them
| introducing deliberately unattractive pricing or
| conditions once you have the bank account. There is a
| burden to open one though.
|
| That said, I don't think bankruptcy would usually result
| in being account-less. More likely, you can't get a
| credit card, mortgage or other consumer loans, which can
| be inconvenient. Personal bankruptcy (as opposed to an
| LLC imploding) also likely means a few years of handing
| over all your income above minimum wage to the government
| in exchange for nullifying your outstanding debt. (Note
| that the Netherlands mostly runs on debit cards, and that
| most people don't have a credit card).
|
| [1]: https://www.basisbankrekening.nl
| gyulai wrote:
| > > If you speak the right incantations at the counter,
| invoking the relevant legal reference
|
| > What are these?
|
| "Basiskonto nach SS 31 Zahlungskontengesetz" [1], and
| tell them that you are aware that the regulator BaFin has
| a specific process in place for complaints about banks
| who refuse an application for a basic account [2]
|
| > > There's also nothing stopping them from making that
| bank account the least attractive bank account you've
| ever heard of
|
| > Why would they want to? What do they actually risk?
|
| My theory is that it has to do with outdated technology
| in the German banking sector that implies that it's
| actually impossible for them to make absolutely sure
| through technology that your account can't end up in
| overdraft.
|
| > > restricting you to just a few machines in a
| restricted geographical area.
|
| > Officially area-specific or just through the specific
| kind of machines accepting specific kind of cards being
| absent outside of it? I've heard of the unreasonably
| complicated system of types of cards in Germany: normal
| debit, "electronic cash" etc.
|
| The reasons are a bit difficult. In Germany there is the
| "Sparkasse", which is a network of small banks local to
| municipalities and where the municipalities have large
| ownership stakes (so it's weirdly-state-owned). They are
| legally separate but share a backoffice. Last time I did
| research on this the situation was this: The Sparkasse-
| network has more than twice as many ATM-machines than all
| the other banks (like Commerzbank, Deutsche Bank, foreign
| banks) combined. A normal bank account at one of the
| branches of Sparkasse will give you access to their whole
| network. But a basic bank account will only give you
| access to the ATM machines by that specific branch, which
| ends up being highly restrictive geographically. If you
| get a normal bank account from, say, Commerzbank, you can
| use the entire network of non-Sparkasse-ATMs, i.e. use
| all Commerzbank-machines countrywide, plus all Deutsche
| Bank machines, etc. But if you get a basic account,
| they'll restrict you to just the machines by Commerzbank,
| which are few and far between, but, at least that would
| give you some semblance of country-wide coverage. ...long
| story short, life really sucks with a basic bank account,
| even if you don't want/need credit.
|
| [1] http://www.gesetze-im-internet.de/zkg/ZKG.pdf
|
| [2] https://www.bafin.de/SharedDocs/Downloads/DE/Formular
| /dl_fo_...
| qwerty456127 wrote:
| Very informative. Thank you.
| [deleted]
| Cthulhu_ wrote:
| That's what I'm thinking; you can't pay bills or receive
| wages without a bank account.
|
| But I can see not being able to get any credit though, if
| the European or country-local equivalent of a credit score
| is not good enough.
| qwerty456127 wrote:
| Do start-ups actually use bank loans? I thought they
| mostly are funded by private investors who take risks
| more practically.
| dmitriid wrote:
| No. European "companies" look to the US and see that you can
| lose billions of unlimited investor money for years with no
| repercussions and no negative consequences for the founders.
|
| Now "successful" European startups want in on the money.
|
| YC's "most successful startups" routinely lose hundreds of
| millions of dollars every year:
| https://news.ycombinator.com/item?id=27485360
| oblio wrote:
| Heh, "business" dumping:
| https://en.wikipedia.org/wiki/Dumping_(pricing_policy)
| lifty wrote:
| We have to prevent deflation so money is cheap, and the tech
| sector is one of the first in line to get it. We have it good
| folks, cash in while the music is playing.
| cblconfederate wrote:
| there is also a lot of money thrown in businesses in the form
| of EU subsidies. YC gives a miniscule amount of money
| ($125K), i believe european entrepreneurs can (and do) milk
| naive US VCs for a lot more than what YC offers.
|
| The YC data is clear about one thing: if you remove the need
| to travel to the US , a lot more europeans flock to YC. We
| 've become a terribly sclerotic continent and it's very
| visible now. I believe things will get a lot better after we
| hit rock bottom.
| rapsey wrote:
| > there is also a lot of money thrown in businesses in the
| form of EU subsidies.
|
| And that money is mostly a complete waste. EU money comes
| with so many strings and baggage that you are either big
| enough and have the resources to deal with it (and thus you
| don't actually need it), or you are small and make it your
| entire business model to live off EU funds and not produce
| anything of value ever.
| TeMPOraL wrote:
| That's unfortunate, and also ironic - most of those
| strings weren't there initially; they were added _because
| of_ "entrepreneurs" stealing the funds and producing
| nothing of value.
| rapsey wrote:
| The root of the problem is that the EU funding system is
| just a bad way of going about funding innovation. The US
| private VC model is superior in every way.
| WastingMyTime89 wrote:
| > The US private VC model is superior in every way.
|
| You do realize that most of the innovation the US pride
| itself about was in fact directly funded by the state
| through DARPA, the NSF, NASA and military contracts:
| Fairchild Semiconductor, the internet, Google, Space X,
| Moderna...
| _-david-_ wrote:
| The government isn't funding a lot of those things now.
| Also, Europe has access to the new technology that came
| out of the US government funding so it is irrelevant to
| bring it up. Europe has access to the internet, they have
| a space program, etc.
| dmitriid wrote:
| How is it superior? I linked to a description of YC's
| _top_ companies: they lose _hundreds of millions of
| dollars a year_.
|
| Aren't successful companies supposed to, you know, earn
| money and turn a profit? Or is superiority is strictly in
| the amount of money thrown at unbelievably unprofitable
| companies?
| cblconfederate wrote:
| > How is it superior?
|
| First, you have to compare EU today with US of the 00s
| when there were actual new ideas in the market and
| profitable companies. The current US startup market may
| have been taken over by grubby marketers who market
| themselves as entrepreneurs, they may be buying their way
| to user growth, and may fail, but it doesnt matter.
| Because the big guys have cornered and monopolized every
| fundamental infrastructure , are already bringing in tons
| and tons of cash, and basically guarantee the cash flow
| towards that ecosystem ... forever. Whatever money is
| burnt in AWS ends up back in the same SV ecosystem.
| That's sustainable.
|
| Now, take for example the EU's H2020 system that funds
| partnerships between academia and industry. There are a
| lot of fancy proposals in there, with fancy names and
| fancy-sounding tech. And most of them deliver exactly
| what they describe in the proposal. If you look closely,
| most of the projects are minimum and viable, but they are
| not products. And when the project ends, there isn't a
| push to continue the project if the partners don't want
| to, even the bureaucrat in charge of it may be a
| different person at that time. While on the other hand ,
| a VC acts as a permanent point of reference who has long-
| term-interest and investment in seeing the idea bear
| fruit.
| TeMPOraL wrote:
| To be fair, US model produces both. The same regulatory
| and cultural burden that makes EU an infertile ground for
| money-burning billion-dollar scams also makes it harder
| for decent companies to create useful innovations[0] in
| general.
|
| I feel we could use a little more easy capital in double-
| digit million EUR range, but retain or even improve the
| friction above low triple-digit million EUR. Basically:
| experimentation is good. Unchecked growth from zero to
| multinational behemoth is not always so good.
|
| There are two hard problems though:
|
| 1. At the lower end, it's very hard to distinguish a
| legit experimentation from a scam. We already have too
| many fly-by-night small businesses preying on the
| population. I'm not sure how to fuel more legit startups
| without making the latter problem worse - as we can tell
| from the EU grants, adding more strings tends to kill
| good businesses faster than bad ones.
|
| 2. At the upper end, big corporations are geopolitical
| weapons. Nations and blocs like EU are always in conflict
| with others; currently, it's mostly economical warfare.
| This means that any country or bloc tends to be _happy_
| if they can spawn a billion-dollar company.
|
| --
|
| [0] - Where by "useful innovation" I mean one that's
| ultimately yielding a net positive value for the society,
| and is not purely a business model innovation like it's
| common with so many hot tech companies these days.
| rapsey wrote:
| Quoting the end of you post.
|
| > The vast majority is fuelled by litrerally endless
| investor money with only two modes of operation: corner
| the market (that is, outlive other competitors who don't
| have such an unlimited amount of money) or get sold.
|
| Yes that is the business model and business is good. As
| opposed to EU which is a wasteland where nothing grows.
| Lots of businesses are built to be sold to larger
| businesses. It makes sense and there is nothing wrong
| with this model. As for investing in money losing
| enterprises, so what? If investors are willing to do it
| let them.
| TeMPOraL wrote:
| > _Yes that is the business model and business is good._
|
| Not necessarily. A "wasteland where nothing grows" is
| obviously bad, but... there's a reason we don't let
| nature to optimize crops for growth, nor do we do it
| ourselves. We grow crops _for food_. We literally care
| about the fruits of their labor. And so is with
| businesses - the social value of a business is in the
| prosperity it creates for the people.
|
| The SV growth model, at the extreme, is overfitting the
| "growth -> acquisition" path - often creating negative
| value for the society, by disrupting an existing market
| with an offering that's too good to be true, subsidized
| by infinite investor money, and then leaving a gaping
| void after burning out or getting acquired. This would be
| like a crop plant that first releases poison into the
| soil, killing competing crop species, then sucks out all
| nutrients and dies without producing edible fruit. It's
| not something you'd like to grow on your field either.
| dmitriid wrote:
| > Yes that is the business model and business is good. As
| opposed to EU which is a wasteland where nothing grows.
|
| Endlessly burning through infinite cash isn't a good
| business model. And it ultimately results in a
| significantly worse wasteland than the perceived
| wasteland of Europe.
|
| Where in Europe you have lots of companies in lots of
| different markets, in the US you have continuous price
| dumping that drives away any and all competition (unless
| that competition has more infinite money), and preys on
| people.
|
| For example, the explosive growth of gig economy is the
| direct result of this "good business model". And who
| woulda thunk it, but predators like Doordash are
| predictably a "YC Top Company".
| rapsey wrote:
| > Where in Europe you have lots of companies in lots of
| different markets
|
| In Europe you have lots of companies in lots of limited
| local markets unable to grow out of them because they
| have no funding options available to them.
| dmitriid wrote:
| On limited local markets:
| https://news.ycombinator.com/item?id=28286789
| bongoman37 wrote:
| As long as there are a few companies producing billions,
| the system can sustain hundreds of companies soling
| millions and still come out ahead.
| cblconfederate wrote:
| > with so many strings
|
| I have found the strings to be bureaucratic, not
| material, which has turned many small european businesses
| to paperwork factories.
| dmitriid wrote:
| > there is also a lot of money thrown in businesses in the
| form of EU subsidies.
|
| Show me any subsidy in the EU that supports a business
| losing 500 million dollars a year for 10 years.
|
| > We 've become a terribly sclerotic continent
|
| No. The US has become reckless with money, and the concept
| of a successful business has been entirely substituted by
| "but this unbelievably unprofitable company with no chance
| of ever earning money has an imaginary market cap of 50
| billion dollars".
| cblconfederate wrote:
| > that supports a business losing 500 million dollars a
| year for 10 years.
|
| That assumes that those startups get investment from
| outside YC , which is not what i m talking about. Also,
| the EU just approved a giant stimulus package which will
| be used to support a lot of failing companies, just take
| a look at the air carrier subsidies around the continent.
|
| It's true that US is subsidizing unsustainable
| businesses, probably in the hopes that something good
| will come out of them regardless. But that doesnt change
| the fact europe is repelling entrepreneurs.
| dmitriid wrote:
| > That assumes that those startups get investment from
| outside YC
|
| Yes, they do. And that's the main difference between the
| EU and the US. Especially with YC startups expect to get
| significant investments after the incubator.
|
| > Also, the EU just approved a giant stimulus package
| which will be used to support a lot of failing companies
|
| You do realize there have been two years of pandemic?
|
| > But that doesnt change the fact europe is repelling
| entrepreneurs.
|
| What's your definition of entrepreneurs? A company that
| always loses money "in the hopes that something good will
| come out of them"?
|
| The EU is a complex multi-lingual multi-cultural market
| unlike the uniform US market flooded with unlimited
| investor money. All of the "successful" incubators,
| investors, startups would fail miserably here, outside
| their near-ideal conditions.
| dancemethis wrote:
| Nope, will never understand how this Y Combinator thing is more
| than HN. Nor how it's even remotely interesting.
| streamofdigits wrote:
| There are cultural and political barriers that segment the
| European landscape like cracks in dry desert soil. From miserly
| jealousy to parochialism, to excessive (and in parts corrupt)
| bureaucracy, to very preliminary economic / financial / legal
| integration, to (justified) lack of trust between European states
| and long-held rivalries, its all here in abundance.
|
| Maybe YC can see past all that malaise into a brighter European
| future where startups scale and change the world :-)
|
| ... or maybe its just funny money that is being spend on a deep
| out of the money option.
| qwerty456127 wrote:
| Do they mostly move to the United States then?
| Cthulhu_ wrote:
| If they want to do business in the US, they often do; the US
| market is very protective and isolationist like that, for some
| reason. An EU company doing business with an US based company
| is a lot easier.
| oblio wrote:
| I wouldn't be surprised. Daniel Dines started UiPath in Romania
| but for it to become truly global, he had to move to NY and
| even incorporate the company there.
| qwerty456127 wrote:
| I don't want to insult Romania (and I actually am looking
| forward to an opportunity to visit it, there apparently are
| many spectacular places, nice people and delicious cuisine),
| but AFAIK it's rather far from the best places in the EU from
| the economic/social points of view, no surprise many people
| prefer to emigrate on a good opportunity. I would be more
| curious if founders still move to the US from Spain, Germany,
| Switzerland, Netherlands, Ireland etc.
| oblio wrote:
| UIPath has a huge development office in Bucharest, most of
| the company is there.
|
| Don't kid yourself, he went to NY for the money :-))
| awelkie wrote:
| They at least need to incorporate in the US, Canada, Singapore,
| or the Cayman Islands.
|
| https://www.ycombinator.com/faq#q25
| pjc50 wrote:
| Payflow: https://www.payflow.es/ (surprisingly, no english
| version)
|
| This is a fantastic innovation if it takes off and if the charges
| aren't prohibitive; it has the potential to obliterate predatory
| payday lending. In a world of free instant automatic electronic
| payments, there's no good reason to delay salary payments until
| the end of the month.
| thaumasiotes wrote:
| > it has the potential to obliterate predatory payday lending
|
| Say you earn about $200 over expenses in a given month. Your
| car suffers a problem that requires $1000 to repair. This is 5
| months of income, but you probably want to repair the car at
| the beginning of the 5 month period rather than the end.
|
| How much of a difference will it make if your paycheck arrives
| daily rather than semimonthly?
| pjc50 wrote:
| _Payday_ lending is usually considered to be for amounts that
| are less than one month 's income.
| thaumasiotes wrote:
| And? Your monthly income is $200 _over expenses_.
| Semaphor wrote:
| I don't quite understand the benefit. Surely, if you have to
| take loans to get over the month, this won't change anything as
| your overall income is still the same. I guess for unexpected
| expenses, you can bridge the gap one-time by borrowing from
| future-you.
|
| What am I missing?
| pjc50 wrote:
| Cashflow, the same as for busineses. If you don't have one
| months' spare cash as a "float", then you may have to resort
| to lending at the end of the month.
| Semaphor wrote:
| But again, this reduces next month's income. So you'll end
| up having the same problem every month. Unlike with
| companies, employed people's income doesn't vary between
| months (or maybe it does for some?).
| meheleventyone wrote:
| Yes it's a trap which is why a lot of people see it as
| predatory particularly as the interest rates are (used to
| be?) obscene. Payday lending companies can become a leech
| on poor people.
|
| This looks a little different to the usual structure of
| payday lending but still has the issue you point out.
| pjc50 wrote:
| > So you'll end up having the same problem every month
|
| Yes. This led to the UK FCA trying to ban rollover loans:
| https://www.fca.org.uk/news/news-stories/tougher-rules-
| payda...
|
| > employed people's income doesn't vary between months
| (or maybe it does for some?).
|
| Exactly: gig economy, variable shift patterns, tipping,
| benefit payments, delayed cheques, freelancers of all
| sorts, delayed payment of debts by customers, seasonal
| employment, sudden unemployment, seasonal expenses, etc.
|
| (That said, this app only works for payments from one
| employer, but I can see it working well for the service
| industry)
| dagw wrote:
| _employed people's income doesn't vary between months._
|
| As you mentioned for some it does (overtime etc.), but
| even if 'gross' income doesn't vary month to month,
| expenses can vary massively and so your total 'net'
| income can be very different month to month.
| Grustaf wrote:
| The solution to that is not to live even closer to the
| edge.
| pjc50 wrote:
| The solution to being poor is to have more money, yes.
|
| (You're going to reply to this with "just cut expenses",
| to which I can pre-emptively reply that some of the
| people in this situation are already choosing between
| food and heating. I'm going to pre-emptively cite the
| link from the other branch of the thread,
| https://www.fca.org.uk/news/news-stories/tougher-rules-
| payda...
|
| > We found some firms were using [continuous payment
| authority] as a debt collection method and that some
| borrowers therefore had difficulties paying for
| essentials such as food and heating.
|
| )
| Grustaf wrote:
| Even if you assume that their income is entirely fixed, I
| don't think you believe that all of them live exactly as
| cheaply as they possibly can.
|
| I'd say if you can possibly survive without the heating,
| then it's better to do that for a while than borrowing
| money and end up even more dependent on your salary,
| being a week away from ruin rather than a month.
|
| In short, payday lending is a short term solution that
| make things worse in the long term, even when it is free
| of interest.
| scrollaway wrote:
| "Thanks I'm cured"
|
| What's your revolutionary idea there? People wouldn't be
| poor if only they had more money?
| Grustaf wrote:
| It's not very revolutionary but making it easier for
| people to save is a better long term solution than making
| it easier to get into debt.
|
| Remember that we are discussing this on a solutions
| level, not an individual level.
| scrollaway wrote:
| Yeah, you don't have a solution, you're just using the
| opportunity to complain about "the poor" (cf your other
| post specifically).
|
| "The solution is not to live this close to the edge" is
| akin to "the solution to car accidents is to not get into
| car accidents".
| Grustaf wrote:
| I wonder if you actually read what I wrote. I haven't
| written a single word of complaint about the poor. I am
| complaining about payday loans, I don't think it's a good
| idea, even when they are interest free. The long term
| effect is likely to be mostly harmful.
|
| I haven't claimed to have a solution, what I am saying is
| that ideas that increase saving are better.
|
| I did not saying anything like "the solution is to not
| live this close to the edge." That is the intended
| effect, not the path there.
|
| But if I were to invest in a startup in this space it
| would be one that helped people save. Some random ideas
| that I think are all better than payday loans: gamifying
| micro saving, lowering food costs by selling simple
| staple foods in bulk, access to discounts on soon-to-
| perish food.
|
| Also: financial literacy education. This is a problem
| even in well off countries, it's just that people are
| doing fine anyway because the bottom tier is still quite
| ok here.
| biztos wrote:
| Interesting, I didn't know payday lending was a thing in Spain.
|
| Delaying salary payments serves two purposes: first, to benefit
| the employer by keeping _your_ money in _their_ account longer;
| and second, at least culturally, to force you into a budget
| cycle "for your own good." People accept these things
| culturally but there's no reason they should have to.
|
| When I moved to Germany from the US I was a little shocked to
| discover that I would be paid at the end of the month and not
| every two weeks. They took the cyclical paternalism one step
| further, and of course also forced me to give my employer an
| interest-free credit line. It would be fun to have the leverage
| to challenge that, but I did not.
|
| What do you think the ideal payment frequency would be?
|
| For wage labor it seems like you should get paid daily at
| least, but then why not hourly? Might it even be motivational
| to see your net pay (after deductions of course) dropping into
| your account every hour, and you get a notification in some
| app?
|
| For a salaried position I think I'd be quite happy getting paid
| by the week, especially if my actual salary were set on a
| weekly basis so I always got the same amount.
| pjc50 wrote:
| Weekly feels about right, but as you say: what reason is
| there for the lower bound? We have high frequency trading,
| why not high frequency wages?
|
| I'm reminded of the minimum wage machine paying out one US
| penny every five seconds:
| https://www.blakefallconroy.com/minimum-wage-machine.html
|
| (The minimum granularity is probably that of your timesheet
| or timeclock, and then we get into how oppressive the
| surveillance involved in policing that can be, bathroom
| breaks, screen-watching software, etc.)
| benhurmarcel wrote:
| > When I moved to Germany from the US I was a little shocked
| to discover that I would be paid at the end of the month and
| not every two weeks. They took the cyclical paternalism one
| step further
|
| This is standard everywhere in Europe by the way.
| magicalhippo wrote:
| I get paid middle of month, which is a nice compromise from
| the "work delivered" vs "paying up front" perspective.
|
| Given that I have a rather fixed income, I don't see why I'd
| need any higher frequency than that. It wouldn't change
| anything.
|
| If I had a highly variable income I could see weekly making
| sense, though it would be a bit of a mess in months with a
| lot of red days.
| fumblebee wrote:
| Revolut just launched the same feature this week [1]
|
| [1] https://www.revolut.com/payday
| mytailorisrich wrote:
| > _In a world of free instant automatic electronic payments,
| there 's no good reason to delay salary payments until the end
| of the month._
|
| Salaries are usually paid in arrear simply because employers
| want you to deliver the work first then get paid. When you call
| a plumber do you prefer to pay upfront or only after he has
| fixed the leak?
|
| Then, of course the number of payments adds accounting overhead
| for everyone, so monthly in arrear seems like a good
| compromise.
| benhurmarcel wrote:
| A lot of companies already offer that service, you just request
| it to HR.
| Cthulhu_ wrote:
| While I agree that it's a good innovation, it's fighting the
| symptoms of low wages and high cost; people living paycheck to
| paycheck. Wages should go up and cost of living should go down;
| people should be entitled to having financial reserves, to not
| be afraid of not making it to payday.
| NicoJuicy wrote:
| People mostly don't live paycheck to paycheck in Europe.
|
| In Belgium, we're record savings holders.
|
| I thought that was more in the US.
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