I considered a startup after university in the UK. The talent arbitrage is absurd, physics grads with 1sts from top Russell Group unis fighting to be paid £30k/yr. For me it came down to security, life is expensive, rent is expensive. I didn't have a spare parental garage to setup five computers - I barely had room in my flat for one desk. I barely had money for that flat let alone internet, and food. I had zero capital, as in literally zero. The plan was to get an entry level job to provide some base line, but that base line never really provided enough life security that I felt comfortable leaving the system once I was inside it.
I'm in the same boat. I've been chasing my tail for the last 6 years, just trying to keep my head above water financially. I'm a computer hardware engineer so the pickings are slim to none outside of the military-industrial complex, which pays shit outside of sales and executive management. Ended up at one of the big US semiconductor companies where I got paid 1/3rd of what my peers in the US earn, with similar expenditures. A starting salary of £26k... Barely broke £34k, plus a couple of grand in stock each year during my time there, while my US colleagues doing the same job get paid $120k+. That's with a good master's degree from Bristol, which is relatively prestigious.
I'm sure if I moved to London and focused on software engineering I could make more, but that shouldn't be the only route to wealth in this country.
I've spent so long trying to build out a minimum viable product in my spare time, so I can make my start-up dream a reality, but going through integration hell needs to take up all of your time, every day, for a long time, to get through the hurdles in any meaningful time frame. Every time I go back to it, I feel like I'm back at square one. 6 years of saving and I have zero runway to take this full-time to give it the time it needs.
What's embarrassing is that I discussed this with my colleagues, and they didn't quite fathom how fucked it is for young engineers in this country until I had the conversation with them. I was getting the same salary now as my mentor did when he was my age; in the early '90s. Wages haven't just stagnated. When adjusted for inflation, they shrank massively. That's not even considering the £60k of student loan debt I get hammered by every month.
That's because in most if not all anglesaxon countries, engineering is not legally protected unlike doctors or lawyers which further affects the engineering profession and mixes it with the role of technician.
People use engineer and technician interchangeably even when the gap of skill and knowledge between both is huge
Is a ‘computer hardware engineer’ different from a ‘hardware engineer’? I think of a ‘hardware engineer’ as someone who works on the development of ICs (or things on FPGAs). I would guess that people in such a role are paid a lot less than software engineers (at comparably sized companies) in the US, and a bit less in the UK (though maybe with more variance). But the numbers you give are lower than I would expect for eg ‘hardware engineer working at Arm/Qualcomm’. There’s also hardware engineering in finance, which can pay well, but not a lot of it.
I said computer to specify on-chip design, not hardware as in PCB/electronics work. I worked initially on CPU integration for industrial computers, which was that lower figure. I pivoted to FPGA design a couple of years ago and make a bit more now, but it's still pittance compared to my colleagues in other countries.
There's a bit more money to be made up in Cambridge with Arm and Qualcomm as you mentioned, but my take home would be less when adjusted for local housing costs. As for HFT, its an end goal if only to escape the cycle of poverty, but not something I want to do out of passion for the craft.
Yeah, Cambridge certainly can feel like it’s in a weird place where salaries are high by UK standards (at least outside London) but housing is also quite expensive. They’re planning/building a lot more housing there so that may change. The situation is something that’s fine for young people who don’t need much housing (especially if they want to share with friends) but for people with families who need more housing can have a harder time. I think it can still be worth it depending on one’s circumstances, though I haven’t attempted any calculation (intuition here is roughly (a) that a smaller % of a bigger number can be bigger than a larger % of a smaller number, and (b) similar other examples). I wonder how pay and available roles compare at Arm’s office in Sheffield.
What if there was a place that you and a few colleagues could go where you could have your living space and office space provided, basic food served, and basic amenities.
Such a place would probably be somewhat isolated and probably not in your own county. If such a place existed that catered to founders in exchange for minimal equity, is that something that would interest you, theoretically?
Huh, I’m guessing from the downvote that the answer is no. That’s kind of what I thought.
Risk is often a stand -in for comfort.
In general, I find that teams that are willing to be uncomfortable will come through. Ones that aren’t will fall apart.
I think this is because at some point, the level of commitment that is typically required to thrust a project above the noise floor implies a significant level of discomfort and sacrifice.
A great idea and a great team are not going to make it without either a) being logistically able to do what most projects are unable to do (backing) or 2) being willing to do what most people are unwilling to do (chutzpah).
It’s very rare that an idea or product is so great that it will succeed on its own merits alone.
For better or for worse, many cultures foster a sense of risk aversion and conservative attitudes about discomfort. It’s hard to assemble a team that will go the distance in these cultures without strong funding out of the gate.
I’m not sure that’s a bad thing, but it does seem to stifle entrepreneurial adventurism.
I wasn't the one to downvote you for reference, but to be clear, moving out and abandoning my partner and country so I can put together a half-baked MVP and give away equity for that hard work isn't what I, nor anyone else on this forum I suspect, would consider a good trade. I assume others are downvoting you because your comment sounds like you're running a scam operation.
If you want to conflate running away from responsibilities and joining a frat house as something that helps entrepreneurs, then you do. I would suggest looking at actual start-up incubators' work (Entrepreneur First and the like). Paying salaries and covering start-up costs, not just providing basic living expenses. What you're describing might as well be indentured servitude.
I think i overdid the hypothetical , I’ll agree with you on that. Certainly the need to move is extreme for many people. It’s never been much of an issue for
Me so I think I failed to adjust that to most peoples attitudes about travel.
It still reflects a bit though, and in my limited experience it holds true that the successes I have been either involved with or adjacent to have been accomplished by either money in the bank, credit cards, or shedding “normal” expenses by moving to somewhere that the cost of living was maybe twenty percent of normal.
Obviously you’re not going to do any of those things unless you are really sold on the value proposition of your product, and you think it can scale to bring 100x plus rewards on your time.
But if it’s a 10 percent chance of success on a 100x gain, that’s a bet I’ll take all day, every day.
But I don’t criticize anyone for not being willing to drop everything only to probably fail, and repeat that 10 times to get one solid win. That’s not for everyone, to be sure.
But I think that’s really what I mean anyway, if you’re going to try for anything but the low hanging fruit, you’ll have to be willing to do what most people will not.
That doesn’t make it the “right” thing for everyone though, and it sure doesn’t lead to a Healthy work-life balance, at least in the beginning.
Edit: Now that you've got me introspecting a bit, I think I realized my own ideas about these things are probably fundamentally unworkable for most people's dominant paradigm.
I haven't held a job in 40 years, I'm comfortable now but wasn't always. Even when I was young I refused to do anything for money I wouldn't do for free. That is a very expensive attitude to have, and unless you are willing to live in a very primitive way as I was, it is a very hard line to tow.
But I am happy with that decision, it has served me well, and made me very very comfortable and happy in life.
It honestly never occurred to me that anyone would think of starting a business that they weren't just dying to do anyway lol, but now I can see that that's an edge case, and your sincere if unenthusiastic words about your business made that click.
That said, I really don't think anyone should launch a startup or any business that they wouldn't do without compensation if they had the free time. Not that there aren't plenty of opportunities to make money for money's sake, but I just cant see that as being a wise way to spend the very finite hours we have in this life.
Thanks for being sincere, It has helped me to understand others a little better. Ive often seen a lack of total commitment as an insincere interest, but I now think maybe its more nuanced than that for many people. Still, I don't think I would fund or be involved in any project where i felt that the key people could be dissuaded from trying to complete their goal.
i kind of understand your perspective. i could never hold a job where i didn't enjoy working either. however over the years i have mellowed quite a bit, and learned to compromise because i realized there is more to life than only doing work i enjoy. also, there are more dimensions to enjoying work. in particular, there are always some aspects of work that are not fun and you have to find a balance.
from your proposal the main problem was living in an isolated area. i have lived in many places around the globe, but the key feature of every place was that it was not isolated. i just moved my whole family to get away from a place that ended up being to isolated. and for a startup i would move to a place where it is easy to find and hire new talent to grow the company. and the funding would have to be enough to pay for my whole family too.
i was part of a startup before, but i simply could not afford to stay because of the lack of funding. i totally would have continued if i could have funded myself.
in fact that's what i am doing now. using my savings to build a new business. it's a struggle though. the usual problem of a tech person failing to find customers. but i'll continue until i run out of money.
The UK is a giant version of the Cayman Islands. It's a big bank providing financial services to rich people while keeping them anonymous. Everything else is secondary. And Brexit only made it worse.
On the other hand, the UK is one of the safest countries in the world, is full of kind people, has a general abundance of food, gives workers a relatively large number of days off in a year, has a functioning police force and takes care of sick people and those who can't work for whatever reason.
Of course it is not perfect.
The people of Britain may not have huge bank accounts, but this is partly because they collectively spend their earnings on the worthwhile things mentioned above.
If you compare it to the rest of Europe for those criteria I think it would be pretty far down the list.
I'm from the UK but have been living in Europe (EU) for half a decade, and I'd say where I live now is much better than the UK for almost all of those things.
The only thing we don't give such high benefits (relative to cost of living) for those who can't work. But in the UK a lot of people abuse that, so maybe it's a good thing.
I don’t know about the UK as a whole, but London is not safe at all.
I wouldn’t call it inherently dangerous for the average person either, like some places in the world. But it was strange to go home last year and talk to the teenagers on my estate, who were now selling hard drugs, had stab/bullet wounds, easy access to guns and considered this the norm. All 16 years old or under.
It was never this bad previously. I hear from friends petty crime is rife, people riding scooters and bikes snatching phones with impunity.
I am curious what the UK was like 20 years ago, can't say I was very aware around that time. Would love to hear your thoughts on how and why its gotten worse.
I think its easy to shit on the UK at the moment because we're in this period of relative decline. The point I was trying to make was that in absolute terms, it's still a great place with a lot of upsides, it just takes more work to realise it and even more work to be grateful despite of it all.
Going from 5 to 4 hurts, going from 3 to 4 feels good. Either way, you're still at 4. It's on the people of Britain to recognise that 4 is still OK, better than the 2 that many countries experience, and better than the 1 of fighting lions and being murdered by your fellow tribesman because he's bigger than you.
The low salaries are a double edged sword - the talent is cheap, but the kind of people who might start a company are unable to build up enough savings to take the leap. It's partly due to low salaries, and partly high housing costs.
It's crazy that politicians on all sides talk about growth, but then consistently do almost nothing to address the single largest thing that's sucking the life out of 20-30 year olds.
Saying that, it's clearly not the only cause as housing in SF and NY is also really expensive.
> then consistently do almost nothing to address the single largest thing that's sucking the life out of 20-30 year olds.
They & their friends are literally profiting off it. Why would they kill their cash cow?
High housing costs is great for them - not only do their real-estate (& adjacent) investments go up, but a middle class perpetually in debt or barely able to make ends meet means there’s an infinite supply of cheap labor that won’t complain about terrible working conditions.
> The talent arbitrage is absurd, physics grads with 1sts from top Russell Group unis fighting to be paid £30k/yr.
That much?!?
I'm joking, but I've always wondered with FAANG never set up large R&D centers in Southern Europe. They have good universities and salaries are extremely low, even lower than in the UK.
Plus good weather & co. The actual Mediterranean climate :-)
Presumably because an ambitious young person in southern Europe would rather move somewhere like Zurich for higher pay rather than getting paid less in southern Europe? Who are those R&D centres going to end up hiring?
People don't move if their lives are decent enough.
If FAANG sets up shop in Milan and pays 80k compared to the local average of 40k, few people would rather move to Zurich for 150k and have to learn Swiss German and have worse weather and few local friends.
For comparison, Eastern Europe has FAANG offices and people working there generally don't move as much, and the few that do leave, generally go to Switzerland (ok) or the US.
But those are the ultra ambitious, maybe 10-20%, and they generally leave because Eastern Europe has a lot of other structural problems that aren't really there in say, Spain, for example Eastern Europe has pretty bad healthcare in general, infrastructure is much worse than in Spain, general quality of life is also worse than in Spain.
> If FAANG sets up shop in Milan and pays 80k compared to the local average of 40k
I see this types of claims on HN frequently. This looks "too easy". Why isn't Big Tech setting up offices in large southern European cities to do exactly this?
I don't know, that's why I'm asking. My guess would be that they didn't get tax incentives or other behind the scenes things that we rarely find out about.
Generally, if you have a substantial presence somewhere, you become liable for a bunch of taxation stuff.
That being said, it's probably also non-English as a first language.
Note that the vast majority of tech in Europe is either in Ireland (tax reasons) or London (city known to Americans), both of which are English speaking.
Switzerland is interesting, in that it's not English speaking. I know that FB generally just set up Eng offices wherever Google did, so the real question is why Google set up there.
Europeans hate moving. They're not like the European diaspora, they will live within a days drive of Switzerland, all their life, and never even consider the concept of trying to make a life there to earn 2-5x as much.
Everyone hates moving if their lives are good enough. They generally only move because they think their environment has structural problems that can't be solved within, say, 5 years. For example: bad healthcare, generalized low level corruption, bad infrastructure, bad air quality, no opportunities, etc.
Americans are probably the only developed people that will move en masse just to make a bit more money, and even that's because there's no language barrier and hardly any cultural barrier. Plus it comes with downsides, no support network in the new place, if you're out of a job... things can become extremely sketchy.
Americans don't move en masse. They move as individuals. Lots of people in the UK move to London to make money. Move to the capital, make your pile, leave at 50 and buy a big house.
Moving in Europe is not like moving in the US. Language is the big one ofc, but the cultures are vastly different compared to US states. That doesn't mean it not worth it, but it adds a layer of friction.
This is it exactly, it's the cost of capital and living that is the problem.
If our countries had control over their own capital and provided utility at cost the economic development would be easy. Instead we're charged monopoly rents for everything from water to electricity, taxed to oblivion and charged horrendous usary on all capital.
As an immigrant to the UK I'm continually surprised on how poor life here actually is. The main culprit in my mind is the atrocious cost of real estate. Not so much in how much money it takes to buy a house - those costs can be comparable to other countries, but on the ratio of post-tax salary pound per square meter. Most of the real estate in the UK is very small, both in outdoor space as well as in indoor proportions.
In the US middle class housing often provides fairly large indoor spaces where multiple people can collaborate, as well as things like garages and large-ish lawns, these things are much rarer and more expensive in the UK.
This makes it much more difficult to have a space for multiple people to effectively collaborate on idea "for free". Sure, you can hire a co-working space, but that requires already some form of financial commitment.
Exactly my personal experience. The talent arbitrage for £30k physics grads is real. But it's hard to take advantage of when you are that physics graduate, and can't build up any serious savings.
This is the most useless post one can read about some guy who is happy with his life and complain others are not doing things that he is thinking about...
> just days before my start date at McKinsey, which finally gave me the confidence to choose the startup over a prestigious job offer.
I highly doubt many people are getting offers at McKinsey and getting funded at the same time. The dude talks about risk but he literally took little to no risk. He is funded. The profile that allowed him both this job offer and funding at graduation will allow it again if his startup fails.
Most people do not get funded while having a job offer from McKinsey.
Which brings us to the second point: How is the VC scene in the UK compared to the US?
> The UK certainly doesn’t lack the talent or education, and I don’t think it’s any longer about access to capital.
The author proof is some random $1bn funding for some auto driving. This is weird when you can pull number (https://dealroom.co/guides/global) which shows the UK is still lagging the US.
Finally, the university ranking thing is bogus; which is what the argument of the author rests on.
I had a dozen failures before I struck on the sass product that retired me in my forties.
You try, you learn, you improve, and eventually something might work. Or you don’t try, keep your safe job and work until you’re 70 like everyone else.
Interesting but also scary to go this route. I think part of the problem in Europe is also that companies/governments are less open to just try out new (startup) solutions. I would love to be learn from US startups how they manage to sell without much done already.
Thanks for this - I think there's something to also be said about too many people failing once and not trying again.
This could be for any number of reasons:
1. burnout
2. life circumstances (dependents like kids, parents or others)
3. time to failure - if you built a company for 9 years, you might have less time and appetite to start again (partly due to 1 and 2)
Life is uncertain, many things about our life are probabilistic. Risk management is central to many aspects of life. On HN a prevailing sentiment is on the luck of doing a startup (no doubt you do need luck!!!) but what about the farmer or fisherman? A disease or weather can wipe you out. Or a storm can kill you while you're out at sea.
> I think there's something to also be said about too many people failing once and not trying again.
Yes!
If you're an entrepreneur, short term failure is by far the most likely outcome. Successful entrepreneurs are the ones that keep trying until they finally hit on a success.
I haven’t heard that saying before but it certainly feels correct. I know a few successful people who don’t seem particularly bright or analytical, but keep pushing on in the misguided belief that things will work out. And sometimes they do.
There's many factors that make Europe less competitive than the US: small fractured markets, low salaries, high cost of living relative to wages, Brexit costs, fear of being labeled a failure, working to live, focus on worker's rights, stability, and pensions, general risk aversion etc.
A big issue is there's a lack of mega successes high margin software businesses that pump knowledge and money back into the startup ecosystem. From a cultural standpoint, some countries like France are also obsessed with credentials and what you could call a notion of 'innate superiority'.
The end results is a VC ecosystem filled with young finance types that went to locally famous schools with little experience in startups that deploy small amounts with deal terms that would be considered absurd in the US.
"There's many factors that make Europe less competitive than the US: small fractured markets"
This first one seems the largest hurdle w.r.t. startups. If you are a startup founder of say a ride hailing app - the total addressable market is much larger in the US for the same level of effort. If you want to scale beyond your home state (i.e. California) in the US, there are probably just a handful of different state/city taxes/regulations that need to be accounted for.
If you start in a country in Europe, you need to factor in:
- language translation of the entire app
- different country cultures/customs (i.e. tipping, wording of prompts and promotions) - even down to the naming of the app which might have a negative connotation in a different language
- prior to the Euro - differences with respect to currency, trademarks, patents, etc.
- entirely new country regulations and politicians that need to be "handled" - each in their own separate language which means a separate lawyer and lobbyist needs to be on staff for each country
- home court advantage - French probably prefer to support LeCab while Spaniards probably prefer to support Cabify
You are right in terms of the addressable market. Except in some niches, like pharma, it is too fractured. But IMHO, the biggest problem here is mentality. Starting a business and taking risks is not something the society encourages. That is what we have from centuries of rent-seeking aristocrats.
A good counterexample is Sweden, where class structure is flatter and imitating American trends is seen as cool. Unsurprisingly, Stockholm punches above its weight class in terms of startups, despite Sweden being a tiny market.
Low salaries increase competitiveness, while high salaries decrease it. That's one of the things you already learn as a kid when you live in an export-driven economy.
Even if your country is not particularly export-driven but you participate in competitive markets, the same effect may apply. For example, the US lost many manufacturing jobs to China, because American salaries were not competitive (low) enough.
Finland is sometimes said to be a country of engineers, for historical and cultural reasons. That doesn't mean engineers are paid well. On the contrary, engineer salaries are low and Finnish engineers like to complain how much more they would earn in Germany. What it does mean is that engineers have a higher social status than in most Western countries, and a lot of people want to be engineers. Finnish companies can hire good engineers with little money.
Finnish companies have traditionally been good at developing technology and bad at commercializing it. Explanations vary, from the low quality of business leadership to the lack of domestic capital; from the small size of the domestic market to foreign companies buying successful startups; from the cultural dominance of heavy industry to the culture of respecting laws and regulations.
It's true, speaking as a US to Finland expat. The median CS grad I've met here in Tampere handily outclasses the CS grads I knew at Northwestern - which is no MIT, sure, but they're definitely no slouches.
Marc Andreessen once described reading a magazine as a teenager and seeing the "Midwest tinkerer" archetype of tech mogul, people who figure out a little bit of everything from scratch because on a farm you just have to do that to stay afloat and then bring that mindset into their SWE work and become minor legends wherever they go, and having this sudden enlightenment moment that shifted him from quiet nerd to confident striver. I spent my honeymoon year in northern Finland and came to the conclusion that the whole country is like that. Except, no one filled them in on just how absurdly good the margins on software can be when you throw business prowess into the mix. So many companies here been punching well below our weight class. (Okay, the very business-hostile nature of making a startup in the 90s/00s didn't help either - that's less the case now.)
I'm convinced it's more sociological than legal, although there are elements of both. My long term aim while I'm here is to be missing link between Finland and Silicon Valley. These guys are genuinely, still, much better than they themselves realize.
> small fractured markets, low salaries, high cost of living relative to wages...A big issue is there's a lack of mega successes high margin software businesses that pump knowledge and money back into the startup ecosystem.
Honestly, these factors apply to many countries outside of the US and stops them from being startup hubs as well. Singapore is in a similar position; despite its wealth and apparent connectedness as Southeast Asia's preferred location for company HQ, it didn't really succeed in kicking off a virtuous circle of winners helping fund new startups. It's pretty hard/costly to acquire customers in disparate small/nonwealthy markets, especially if they stick to established brands.
A related factor is investors' relative unwillingness to take on risk, because big payouts haven't been observed. So VCs all pile into the same few existing winners that are actually looking like they'll hit a payday.
At one point in 2013-2016 there was a flurry of support for new startups due to aggressive government funding grants and subsidies, but very few of these managed to cross the chasm and raise significant follow-on rounds. A few years later, the funding schemes were cut (due to a lack of observed successes) and the early-stage scene grew quiet.
It feels like only very big, integrated markets can support a dynamic startup scene (the US and China). It doesn't seem to happen without easy access to similar consumers/clients and the willingness of those clients to try new services and companies.
>There's many factors that make Europe less competitive than the US: small fractured markets, low salaries, high cost of living relative to wages, Brexit costs, fear of being labeled a failure, working to live, focus on worker's rights, stability, and pensions, general risk aversion etc.
In some Asian countries there is a thriving startup scene, so cost of living and working to live are not determining factors.
I would say the determining factor is the mentality. Europe focuses much on safety nets, welfare. Europeans learned that they should be content with earning a wage that allows them to live while working 8 hours a day, with enough time off, decent amount of holidays, a good work-life balance. They want state backed pensions funds, free or cheap healthcare, free education.
There are less Europeans willing to work on weekends than there are Americans and there are less Europeans working more than one job than there are Americans.
So Europeans focus more on living their lives while Americans focus more on Entrepreneurship. Their respective societies, cultures, history kind of teach them to behave that way.
It's not that a change in mentality is impossible, but it won't happen overnight.
In Romania there's a huge pool of very talented SWEs. What do they do? They either work for foreign companies, or for a local company working for foreign companies.
They mostly outsource their skill. There are maybe two of three software products made by a local company known worldwide.
This is the result of risk aversion and lack of capital.
I think the "one thing that's not like the others" in the article are the crazy-high rankings of Britain's top schools. Universities are a bit of a self-perpetuating reputation scheme, and the UK has been punching well above its weight in that department.
Having worked with all Europeans, I can't say that I found the British to be skill or preparation outliers. Maybe just a little above the mean? Speaking English natively helps too.
That said, the UK was probably on its way to becoming the EU's tech hub, much to the chagrin of the French and Germans. Then 2016 happened.
Furthermore, the planetary economy has transformed itself, and has been consolidating around competitive advantage. Much of tech has massive scale economies. There's probably not enough 21st-century Britain to make it alone the way it used to in the 19th century. Its competitive advantage probably does not involve large-scale tech.
If you're a world-class tech graduate facing these realities, maybe you don't want to get marooned on an island.
>> are the crazy-high rankings of Britain's top schools
The problem(in general) with University rankings is that the ranking is done almost entirely on the number of publications.....in English. So it's no wonder that British universities take a lot of the top spots. I've had these conversations many many many times with people - it's not like the Universities of Warsaw or Milan or Prague are not as good as Oxford - but that's not what you're going to see in rankings because a lot of research doesn't get published in English, so somehow it doesn't "count".
As a completely separate point - British universities got absolutely decimated by Brexit in ways that are not immediately apparent, but I work with couple professors at Russel Group universities and they all say the same thing - the number of PhD and research positions applicants from the EU has gone from hundreds a year to literally a handful a year. Some of those were replaced by British applicants or non-EU applicants, but the number of people who want to be researchers in Britan and further the scientific fields has dropped drastically.
I have several friends that are 30+ years as lecturers, also at Russell Group universities, and their view is very different to yours. They're generally of the opinion that UK universities have now turned into visa-mills and poorly run money machines, with lots of students signing up, but far fewer turning up in person and completing the courses.
Essentially the Blair-era of 'expand the universities' (and cynically get the 18-21 yr olds out of the unemployment figures) has lowered standards across the board. They don't, however, see anything like the "drastic" drop in numbers you report.
As an employer in finance, I've seen our criteria in the early 90s go from a first or 2:1 from anywhere, to a first from Oxford/Cambridge/Bristol/Durham/Imperial only, and now our criteria is an MSc from a list, or a PhD from anywhere. Yes, a PhD. And we still get dozens of applicants for a single job.
> British universities got absolutely decimated by Brexit
It's likely heading for another cliff dive, as the UK government is constricting the supply of student visas (because immigration), and application numbers are nosediving.
I got a great education in the UK and think back on it very fondly, but these days I'd advise people to apply to the US instead. It might even be cheaper.
And also don't forget the student fees for international students have absolutely exploded. 10 years ago the fees for international students were £6k/year, now it's £30k/year. Like honestly, who can afford this, when you can study at most other EU universities completely free(or even get a stipend in fact).
>>as they UK government is constricting the supply of student visas (because immigration)
Can't stop myself thinking that it's probably at least partially because of scaremongering you see in newspapers about those lazy immigrants who pretend to be students but are actually coming to work here. Which ok, I'm sure is happening in places, but it can't be even remotely significant on any kind of scale, but the reaction now is to even further constraint our own supply of well educated people, it's madness.
It's extraordinary how determined the current UK government is to destroy its university sector. The economic and geopolitical advantages of having one of the world's best university systems are not only incalculable but also blindingly obvious. And yet apparently not too obvious to be missed by the caliber of person that currently makes up the cabinet.
There has been a precipitous drop in overseas university applications for the coming academic year. It was reported today that Cameron has warned Sunak that his visa reforms are likely to lead to university closures. The cabinet is aware of the problem but I don't think there is any limit to the damage Sunak is prepared to do when he believes it will improve Tory election chances.
We’re at 170 or so universities up from 90 or so pre-2000. I’m struggling to see the value in those universities and why the tax payer should be funding almost twice as many. Any other failing business would be allowed to go bankrupt and be wound up. Does any other country have such a massive increase in universities?
The new universities provide exactly the same kind of value that the old ones do, so I'm not sure why it's difficult to see what that value is (unless you just think universities in general are pointless). Countries should invest heavily in their comparative strengths. By any measure the UK punches hugely above its weight in global higher education. It's short-sighted beyond belief to throw that advantage away simply because some universities (a minority in fact) do not turn a profit in the simplistic sense that, say, a lemonade stand does. Moreover, if it is money you are worried about, then the measure that Sunak is proposing will only exacerbate the problem by cutting off a major source of funding.
The newer universities are, of course, not as good on average as the older ones. However, it takes decades, or centuries even, to build a world-class university. It would be a terrible mistake to close down these newer institutions simply because they have not somehow become competitors to the Russell Group or the Ivy League overnight. The short term cost saving (if there even is one) would amount to pennies in comparison to the terrible economic and social consequences to be passed on to future generations. But what hope is there of the current cabinet thinking further than the next few months?
> a lot of research doesn't get published in English, so somehow it doesn't "count".
As it shouldn't. I am from a non-English speaking country myself, and I cannot begin to tell you how senseless it is to cling to native languages for any serious work. It's creating an arbitrary barrier to collaboration just for pride or convenience. English is the lingua-franca (lol) of the world, just embrace it and stop being proud of your weird language that you're stuck with because of random traditions and geography.
Imagine Prague universities would have top AI research published in Czech, would that actually help the scientific community? My bet is: not until someone goes and translates it to English, is it going to be read by anybody outside of the country, whether that person is native English or not.
In this thread there's a lot of talk of the EU losing competitiveness because it is a fragmented market between a group of isolationist countries, opinions like these are a big part of that. Stop putting English second place, this is a global world now, English is the language of the global world, learn it, use it, or lose.
It's not about pride - it's about the reality of the fact that most academics do not have a sufficient command of English to write research papers in that language. We can lament this fact if you wish, but somehow it seems more important to me that a mathematics or chemistry researcher is good at those categories and not necessarily at writing in English. Again, you can think this is their loss - and maybe it is, but my general point is that the quality of their research isn't any worse just because it isn't done in English.
The obvious solution to this is translation - but I'm sure you can see why not every research paper is translated, the cost of doing so would have to be carried by someone so only some papers are translated, which means that by default English-speaking universities are getting a better position in rankings because all of their research counts, no matter how bad or good it is.
>>Imagine Prague universities would have top AI research published in Czech, would that actually help the scientific community?
Well it's a bit of a catch 22 - if it was top AI research, then university of Prague would pay to have it translated and then yes it would help.
> the fact that most academics do not have a sufficient command of English to write research papers in that language.
Because the academics are not taught in English, which they should be, because they will need to command English sufficiently if they wish to participate in the global science community. Again, this is a self-fulfilling prophecy.
> the quality of their research isn't any worse just because it isn't done in English
No but the quality of their work as a researcher is, because communication and collaboration is a part of research.
> The obvious solution to this is translation
No its not, because translation is exactly the meaningless overhead I was talking about. It does not aid in collaboration because its still a one-way process, and its lossy.
If only these were done on publications, it would be a lot more accurate.
English is the lingua franca of science, like it used to be german, because ideas build on each other so you need to be able to communicate your ideas to others.
Having your native language be the lingua franca is helpful, but many of these universities are filled with foreigners who have learnt English. They could have stayed in their native countries, but they chose not to.
The UK is Europe's tech hub at this point (not the EU's), assuming by tech we mean the sort of tech discussed in the article. As the article notes, the VC ecosystem in the UK does actually exist and is spinning up, whereas in most of Europe it hardly exists.
If you want something a bit more objective than the article's assertions, there is an attempt to calculate a ranking here:
The Global Startup Ecosystem Index compares the countries of Europe (not EU) and the UK is at the top with a massive lead. It has a total score of 127 vs 57 for the second place (France).
Well, I suspect a lot of the UK's startup stats are still connected to its universities. The page you linked shows London with a massive index lead over the EU. When you scroll down to the lists of notable companies, only ~10% of them are UK-based. The contrast of London to the rest of Britain is also much starker than for some other EU hubs.
It's questionable whether the "startup hub seed" would have germinated had the UK not been in the EU back when. It's also questionable whether the plant will wither now that it's out. All else held equal, the exits of UK startups are probably more acquisitional and trans-oceanic. This adds to risks and costs.
Either way, my argument was not startup-centric. It's pretty clear that an island company faces more market hurdles than a continental one. The difference will widen as the EU integrates further.
> the exits of UK startups are probably more acquisitional and trans-oceanic.
The US tends to purchase successful New Zealand startups oi reckon. Is it the same pattern in the UK?
I suspect there's a few major reasons:
(1) NZ startups seem to get acquired so that they can sell their products/services into the US market. NZ companies often struggle to market to the US. Similarly Rocket Lab moved to the US. However our local ebay competitor (TradeMe) was bought for a few billion by the UK based Apax Partners.
(2) NZ doesn't have the capital markets to buy successful businesses so we sell the family silver to overseas buyers.
(3) NZ government taxes owner's dividends (of the most successful businesses) at 39%. NZ's capital gain tax is 0% so owners usually have a financial incentive to sell their businesses.
For startups, our taxation system demotivates founders. Building or growing a business usually does not reward enough for the risks. A shame because NZ needs the foreign income.
Are they just a self-perpetuating reputation scam, or do they actually lead to real economic activity and growth? It can be both, but it can't be entirely the former if you think the startup edge is due to the universities.
I didn't see the list of notable startups. There's a section about "noteworthy growth and decline" but it's not got a list. For the other lists it's not clear how they're ordered.
> It's questionable whether the "startup hub seed" would have germinated had the UK not been in the EU
So why didn't it germinate everywhere else in the EU to the same extent?
This seems like wishful thinking. The startup capital of the world is the USA, notably not in the EU. The EU has done many things that are clearly startup and tech-hostile, but it's hard to think of policies that help. The EU is structurally designed to make it easier for France to sell agricultural products and Germany to sell manufactured products, but one of the reasons the UK didn't benefit economically from membership is because the EU doesn't make it easier to sell services (and the UK not benefiting is under-reported but unambiguously the case, see the recent Parliamentary report on trade ratios post leaving [1]). Yet many tech startups are software-as-a-service, so lack of a single market for services really makes the EU irrelevant to the tech ecosystem.
> It's pretty clear that an island company faces more market hurdles than a continental one
It's not that clear. The British Empire was a global trade based empire long before the internet existed. It's only got easier since then.
The universities are not a scam and do count. "Self-perpetuating reputation scheme" simply means positive network externalities for good professors, researchers and students, who seek each other out. The glorious antiquated buildings don't mean much.
Similarly, a startup hub means positive network externalities for good founders, workers and investors. Much like planets clean out orbits, hubs tend to not be nearby. I don't have a good read on whether the London hub will persist or be overcome by an EU one. It will depend on which force wins out.
As for your comments about the EU's role, these seem political in nature and I just happen to mostly disagree.
> Universities are a bit of a self-perpetuating reputation scheme, and the UK has been punching well above its weight in that department.
Someone like Peter Thiel would maybe argue that the difference in risk taking in the UK and the US is actually reflected in the relatively high number of high UK university rankings? I'm far from Thiel in my general perspectives but it's worth noting that in certain circles there's sort of an ambivalent — if not outright hostile — attitude toward universities in the US and that ambivalence is only increasing. I think a Thiel-like person might think it odd to draw a direct line between some reputational rankings of universities and startup culture, and might flip the whole thing on its head and argue it's evidence of problems with universities today.
I don't necessarily agree with this perspective but do think it's maybe worth pointing out some of the implicit assumptions being made in the essay.
Yeah, I'm pretty sure that these rankings are bullshit.
If you look at, e.g. universities by number of papers at neurips (ok, just one measure, but related to the AI boom), none of the UK universities crack the top 10; Oxford comes in at 12th, Cambridge at 18th, and Imperial isn't even on the list: https://www.reddit.com/r/MachineLearning/comments/185pdax/d_...
The expected returns from "want[ing] to go and work at companies like McKinsey, Goldman Sachs or Google" are both greater and more certain, so perhaps the individual young people are acting quite rationally in the UK?
For context I spent years in my 20s doing start ups in London, and undoubtedly would have been better off financially now if I'd worked for some soul-sucking consultancy instead. I do agree with him that raising money in the UK is quite hard.
Yeah, but I think it’s also true in the US (even more so as pay from the non-startup careers is higher). Maybe one should ask why it’s so much more common to do the irrational thing in the US than the UK.
Could be house prices again. You really cannot survive on ramen and hope to live anywhere close to London. I know that SF is not good either, but the US does have other cities with less of a housing crisis.
A key part is that in US you take less risk because investors are taking more risk - as described in the article, in UK the conditions you'd get for early funding push more risk towards the founder as most UK investors simply won't accept as much risk as US investors routinely do.
Remember you have to normalize for population size. And when we say the US we really mean one small part of it. People in the US often move to California to start their startups, they don't necessarily stick around in the part of the US they're currently in. This is largely due to the VC ecosystem there which makes "irrationality" relatively safe vs everywhere else in the world where it doesn't. Tom's article makes this crystal clear when he says:
> The downside of early-stage investing is that you lose 1x your money - it’s genuinely not worth worrying much about
The only potential downside is only losing all your money, what kind of stick in the mud would care about that?
So anyway, we might ask why is the VC ecosystem so much stronger in California than in the UK. But a lot people don't like to think about that because the answer is so obvious: in the 70s when Silicon Valley was getting established and the flywheel of founder->startup->success->sale->VC->founder was spinning up, the UK was mired in socialist hell with rotating power outages, militant unions toppling governments, four-day working weeks and an IMF bailout. At that time making a startup was entirely pointless and a VC fund literally impossible, because the top tax rate on investment gains peaked at 98%. You could invest in startups but the deal presented by Labour was: if you lose money you lose it, if you gain money you still lose it.
Thatcher and then Major beat back some of the most extreme aspects of this, and in this period the top level tax rates were systematically reduced to more normal rates. But Britain of the 1980s was still drastically more investor-hostile than the USA and there was no venture culture as a consequence. In particular the practice of granting equity in startups was not really known (notable exception: ARM, one of the few successful tech startups the UK has ever produced).
Even today British governments routinely levy so-called "windfall taxes" to grab the profits from companies that are doing well, the moment they have an opportunity to do so politically. That culture gap is ultimately the major difference. The idea of a windfall tax in the USA is hard to imagine, I'm not sure it's ever happened.
I think your population size argument is something like:
- SFBA has ~2% of the population of the US
- London has ~10% of the population of the U.K.
- the populations of the areas are similar (ca 7e6)
So for SFBA to feel full of startups, you can get away with e.g. 0.2% of the population of the US doing tech startups in the Bay Area at any one time, but for London to feel similarly full of startups, you would need 1% of the population of the UK doing tech startups in London at any one time.
Is that the point you are making about size, or is it something else? Network effects in VC?
Nothing so fancy, I just meant that a bigger population size will inherently create more successful companies. But your stats about population density are interesting, thanks!
I don't see how this affects innovation. Labor interests need to be taken care of too in a startup-friendly economy. In fact, I will probably never work for a startup simply because of the lack of safety net here in the states. That's a risk founders don't seem to consider too thoroughly - the lives they're entangling with their experiment.
People weren't choosing short weeks because they wanted leisure time. It was because there wasn't enough electricity to work five days a week due to Marxist miners unions shutting down the power stations.
Also on checking it turns out I misremembered. The UK went to three day weeks during this time:
TV stations were also required to shut down at 22:30 to conserve power. Bodies went uncollected, hospitals shut down, TV stations routinely went dark even when there was sufficient power. It's impossible to overstate the apocalyptic state of Britain in this era. You can read about it here:
The government was so left wing any thought of building a high tech ecosystem was out of the question and even keeping existing 1930s era industries was hard. Whilst the Americans were building Intel the British were living through something from a disaster movie. The 1980s were spent partly repairing the damage. By that point the US tech ecosystem was well under way.
Thanks, this is interesting. I can appreciate there being a balance of these two economic extremes. I think for the US, it needs more socialist policies so people's lives aren't ruined for things outside their control. E.g., going bankrupt at 24 over medical bills (happened to me).
Our instinct is to regulate and tax the technologies that are being pioneered in California, in the misguided belief that it will give us some kind of competitive advantage.
I don’t think that that’s the reason for regulation: it seems to me that US companies traditionally don’t care about externalities (environment, privacy, accessibility, etc.), and regulation is required to bring them into line. That doesn’t always mean that their business model will survive unscathed, but that’s generally a good thing.
This is a bad stereotype, I think. The US has regulatory failures like FTX, but at least that's a brand new market and type of commodity (or currency, maybe). And it was prosecuted under existing regulation anyway. The EU had Wirecard, a financially totally mundane company, and regulations didn't stop anything. It happens everywhere.
The difference is that the US is a force multiplier for businesses and innovation, so you get the most extreme stuff there. But you also get the most everything there. And even when it's not there, it's often funded or part-funded by the US. E.g. the NIH funds $45b of research a year, which is partly sent overseas, even though it's paid for by US taxpayers and businesses.
To me, this is misleading. Please stop writing as though all of the EU is uniform. It would be better to write: "Germany had Wirecard". That is much more accurate.
To be honest I'm not sure European companies are much better (VW emissions scandal, BP oil spill in Gulf of Mexico etc), it's just that regulation tends to be tighter. US seems quite happy to create global monopolies at the cost of its own domestic environment / consumer rights.
Financially, the UK is heavily centred around London, one of the most expensive cities in the world, so it's not altogether surprising that university students feel like they need a paying job that keeps a roof over their heads. Worse, the competition for rental property in London is ridiculous, which is the only choice in town for an ex-student.
And London is where the VC people are.
Also, in the USA 'bricks and mortar' businesses have far cheaper shipping costs, and 342 million people, without going international, that DHL or FedEx will ship across the entire US with a cheaper price than we can ship from SE England to NW Scotland. Then again, we both speak English, which is why the UK is always the second target for a US firm once they're up and running, and vice versa.
The UK is 4th in the count of 'unicorns' after USA, China, and India, and has not quite double that of it's closest European neighbour, so we're not doing that badly. It's just a shame everything is skewed towards London in the UK.
Why does this rent argument not apply to SF/Silicon Valley? I think SF is more expensive than London, though typical pay in (non-startup) tech is higher.
Because it's not just "higher" - it's so much higher it's hard to comprehend what difference that makes to opportunities young people have. I finished my BSc and MSc in Computer Science from a prestigious Russel Group university 10 years ago, got hired as a C++ programmer for a big corporation.....making £18k a year. My take home was about £1200/month if I remember correctly, which was still ok-ish because I was sharing a flat with some people so I only paid like £150/month towards the rent. I was only able to save a very modest amount of money and it took me years to work up to what you'd consider a "decent" salary.
From what I understand, in US your costs are of course higher in terms of rent, healthcare, etc, but the difference in salary is so huge you can actually save up some capital if you want to try starting your own business in few years time.
£18k/year as a junior programmer in London in 2014? I was underpaid as a junior at £16k/year in London (fintech) in 2004, and we were paying junior developers in the high twenties in 2015 in the public sector. You were definitely being seriously underpaid.
I was earning 35k in Nottingham as a C++ programmer with 3 years' experience in around... 2006 or so. Most of my programmer friends were in roughly the same pay scales. Programmer salaries in the UK aren't usually that low.
Not sure, as I don't live in SF, but I know that not all start-ups are in SF/The Valley even if the VC money is raised there.
In the UK, they're disproportionately concentrated in London. In fact the UK government has encouraged many of them to set up around Old Street / 'Silicon Roundabout' (sigh). That area is only accessible by public transport, whereas SF/California is accessible via cars, so the choice of where you live is considerably greater in the US. The vast majority of people that work in London live within 10 miles of the absolute centre of London and use public transport. The magic '1 hr commute', if you will. Hence the rental prices.
Our government is continuing the prosperity of London at the cost of the rest of the country. If you remove London from the UK, we're poorer than Mississippi: https://archive.is/UJZBP
It’s not clear at all that the vast majority of people in London commute by public transport. The sources linked below, one during the pandemic in 2020, and the other a series of estimates, suggest the figure is more like 25-35% but I wasn’t able to find something more conclusive. [1, 2]
More to your point, I agree that SF or at least the Bay Area has a higher dependence on cars, but it’s also more geographically constrained by the bay and resulting bridges/ferries, so it’s not obvious that there’s much more freedom in where to live in practice. For instance, I would guess a one hour commute in London would encompass a similar or greater number of housing units than in the Bay Area.
Somewhat unrelated, but London seems relatively low in public transport usage compared to virtually every large continental European city [3], which at least anecdotally tend to have much cheaper transport (particularly for monthly/annual subscriptions for commuters) and/or somewhat less car-friendly infrastructure. Riding a bus through Old Street, for instance, makes apparent one cost Londoners pay for not prioritising public transport.
I was replying regarding why London rent is high in general. SF/The Bay seems to be disproportionately tech-based jobs. London is a more generic mixture, including finance, arts, entertainment, services, insurance, tourism and so on.
Though specifically tech: offices are in central London - Google at King's Cross, Apple at Battersea, Facebook near Oxford St. Old Street and Hoxton for start ups. And of course fin/fintech in the City, Canary Wharf, and the West End. That's 10s of thousands (if not 100s) of developers concentrated in around London.
Microsoft in Reading 20 miles outside London is a bit of an outlier.
No one drives to any of those jobs. And the talent pool for those jobs is centred around London and London transport.
And then if you want to raise VC you need to get into the City or Canary Wharf for meetings - they won't go to you as you need their money. And then they'll be interested in 'where are you set up, and where will you get your talent from and grow?' - I can't recall any significant tech company that's inside the M25 and not in Central London.
The "Microsoft UK in Reading" equivalent towns in any other direction than the M4 would be something like Maidstone (Kent, SE), Bishop's Stortford (NE), Milton Keynes (NW), Crawley (S). None of those have any significant tech companies. Weirdly, Guildford (SW) does have a tech scene partly because some gaming companies set up there in the 1980s and 90s.
> I don’t think it’s any longer about access to capital
The link provided as proof for this comment is Wayve receiving a $1bn injection from Microsoft and Nvidia [1].
The $1bn raise is not the concern of a budding 23 year old graduate leaving Imperial/Cambridge/Oxford. They're looking at the first £100k capital to see them through the first few months. In the UK, the scene for the first capital injection is far weaker than in the US, which has an inevitable downstream impact.
Been a while since I was in this position but that first £100k used to be a cakewalk. SEIS made it almost a no-brainier for any high net worth individual to invest in startups.
and it still should, as I understand it. On a £100k investment that the business loses all of, the investor gets £75k (£50k tax relief + £25k-ish loss relief) back or something ridiculous, don't they? Makes me wonder how this hasn't made UK capital more readily flow
The challenge in the UK at the moment is connecting willing high net worth individuals with entrepreneurs. Even with the tax incentives, and the relatively good incubator-ish organisations like Eagle Hub, there's some enormous disconnect between viable ideas and timely capital to execute on them.
I’m in continental Europe, not the UK, but I think the same basic cultural attitudes toward startups and entrepreneurship are the same. It is not a common or accepted thing to be building a business here, especially if you’re in your twenties. Your family will most likely wish you got a stable job at BigCo/university/government/etc. and there is a very real sense of “falling behind” if you spend years on something that doesn’t pan out.
The UK isn't really known for being an ambitious nation when it comes to the startup ecosystem.
For jobs, unless you're working in finance in London, for tech salaries (except for FAANG) it is simply no surprise that it is so low on average [0] that isn't even worth it.
What is more damning is that I saw an internship in the US earn more than a job posting of Head of Cyber Security at the HM Treasury which is $50-57K yr (senior level)
Doesn't matter if you went to the golden triangle of universities, it is much better to get a remote job in the US. each time.
As for startups, in the UK there is almost no connections here for VCs, angels or any investment network this might have changed in the few years but you would have to squint hard to find them.
Wealth in the UK is in the hands of the landed gentry and getting investment is about who you know and who your parents were. I worked for a number of London startups and the CEOs were surprisingly often public school/Oxbridge trust-fund grads (you learn to recognise them after a while) and always part-funded through some gov grant, one even openly admitted that his startup doesn't need to make money, because his dad is an investor in the startup incubator they were a part of. The HR lady was married to a City lawyer and spent more time collecting artworks for their house than dealing with pesky distractions like paying people on time. London is great if you are of the right pedigree and want to set up a bank, an insurance company, or a payment processor. Not so great if you want to copy Silicon Valley. I tried to get people interested in projects I worked on and there is zero of the US enthusiasm or trying to connect you with the people who might be able to help you.
We don't judge nations in the present based on their historical peak. The UK hasn't been capable of building anything like that for more than a century; the hammering the Germans gave them was really exposing weaknesses that were already starting to set in from the 1910s.
The UK is no longer known for being an industrial leader. Or indeed for achieving anything in particular except fading away with a certain gracefulness.
The UK still gets more tech funding than anywhere except the US and China, and more unicorns than anywhere except those two (and potentially India, but sources disagree).
Well the obvious touchpoints to me are that at one point the British Empire controlled about 60% of the world's wealth, was capable of conquering the Indian subcontinent and was a thought leader to the justifiably-named "Age of Enlightenment" that was the approximate foundation of the modern system of global organisation (let me just invoke Newton, Bacon, Locke and Adam Smith because they are good names to remember).
The UK today is world leading in a few industries. Which is underselling it a bit because I suspect even North Korea is world leading in something. The UK have a bit of wealth left over from the empire and some traditions they can be proud of in amongst a sea of fairly average policies and people. Still a nice place to live if you can handle the weather. Not really a leader, more a US follower.
Whilst I dont want to defend the relatively low compensation for public-sector jobs in the UK, it is more nuanced than just salary.
In this case, it was actually a salary of £50,550 - £57,500, so total compensation of around £75k (circa $95k), as the pension scheme is in the order of 30% of your salary. Then there's the usual US vs UK medical cover and vacation allowances.
It's still a way off, but the gap is smaller than you think when you crunch all of the other benefits into a single number.
Is a tech company only successful if it has a trillion dollar valuation? So there are only 6 successful tech companies in the whole world?
As always, you have the good counterexamples of critical for the world companies such as ASML, ARM, Zeiss, Ericsson and Nokia (5G) that don't have such high valuations. Does that mean they aren't successful or needed?
Bankruptcy laws and social mores massively different.
In the UK to go bankrupt is to be painted with indelible red shame dye. In America... going bankrupt means you are closing out the book on one failure to try another.
It comes with an inability to do lots of things for 6 (I think?) years, including things like not having an overdraft and more importantly to this conversation, prevents being a director of a company.
Where are you getting this from? You can definitely be the director of a company after bankruptcy (assuming you didn't try to deception or scams of course), and stuff like an overdraft or loans are up to the lending bank/company.
EDIT: Unless you mean personal bankruptcy, which you probably don't, but while you're under the bankruptcy order (~1 year) you can't become a company director.
Isn't this only for personal bankruptcy? If you have a limited company and it goes bankrupt, it's it that's bankrupt, not the owners. Or is the UK very weird in that regard and I'm reading gov.uk wrong?
At least in other places in Europe, and I assume also in UK, it's somewhat common for any sources of financing to new companies (i.e. without a proven steady cash flow), both banks and other investors, to explicitly require personal guarantees from the owner - so while technically you have a limited liability company, the lender will lend you money only if you accept full liability and put your house, car and other assets on the line. As the original post states, "investors spend too much time trying to mitigate downside risk with all sorts of protective provisions". So a company bankruptcy may result in a personal bankruptcy as well.
No, you're not reading it wrong, there are a lot of extremely negative comments on this thread that just aren't accurate. Limited companies are just like LLC's. There's so much nonsense being posted here
You can choose to have a gap or failure on your résumé. Either makes you unemployable at the types of banks or consultancies considered "safe" in the article, unless you have some sort of remarkable pedigree or network.
That type of résumé is accepted at less prestigious consultancies/staffing agencies, but the pay is on a lower level.
> You can choose to have a gap or failure on your résumé. Either makes you unemployable at the types of banks or consultancies considered "safe" in the article, unless you have some sort of remarkable pedigree or network.
This is all anecdotal but... You won't be unemployable because you ran a company and it failed. You may however be because you had "founder responsibilities" and then try to fall back into engineering roles after 5 years of running a startup.
Even at an investment bank in London, the percentage of FCA regulated jobs that would exclude you for recent personal bankruptcy would be less than 1%. And the reason for personal bankruptcy would be important. Did you go bankrupt for gambling losses or unpaid medical bills? These would receive very different treatment by the FCA when considering your application.
perhaps I reflect views of times past. C.P. Snow's "strangers and brothers" series of books starts with Lewis (the hero) as a child, bearing the burdens of his fathers bankruptcy and the implicit expectation he will work life-long to repay the debt, which he rejects. Shock! Horror! -Thats a 1940-1970 series.
It's a common trope in fiction: to be bankrupt, to fail in a business endeavour is to acquire shame and disgrace in society.
If the 40s is too far back, John Le Carré has used it several times as a back plot driver for characters across his books, no doubt reflecting his own experiences as a child of a fraudster and serial bankcrupt. He was writing actively into the modern era.
Obviously I'm not saying there is a literal colourfast red skin dye reserved for failed businessmen: Societal expectation is a stupid social construct, not law.
They are. And bankruptcy doesn't apply to businesses. They go insolvent, not bankrupt.
Honestly the amount of incorrect information in this thread about the UK is quite disappointing, especially as most of it can be corrected with a quick Google search
I can't speak for VCs, but at least in a social sense, if a friend of mine went bankrupt after a failed startup, I honestly don't think I'd even remember? Like I just wouldn't care.
In the USA a startup's market is, essentially, global - China. In the UK the market is, essentially the UK.
In the recent past it might have been argued that the market was the EU - but the reality is that the EU's market for services is fractured. The USA has the capital and power to enforce their companies access to markets everywhere (apart from China), the rest of the world does not.
This doesn't make any sense at all. There are tons of global UK companies. Why can't UK companies sell products or services outside of the UK and the US can?
What on earth...
The reality is that when you are trying to sell at scale somewhere outside your domestic market (where your laws and rules run) muscle counts. The USA plays relatively nice, but be under no illusion you will find that the game is stacked against you. Your IP in particular is at risk from domestic actors.
An anecdote: I was once part of an exercise to evaluate the potential for an IP case in the USA to be won. One fun part was that there was a jury simulation. The jury were presented with the case and asked to vote. In the first round the jury voted unanimously for us. In the second round the jury were told that the defendant was a US company and we were a foreign company - and they unanimously voted for the defendant.
In other places you will find that you can't play the game - you can't get licenses to operate, your staff can't work there, your payments don't go through, you get a tax case against you, your staff suddenly fail to show up and it goes on and on.
If you are a USA company that happens less everywhere because the USA has power. People in important places owe the USA their lives, and if not then they have had lovely experiences in the USA. If you are UK company then you operate, now, under the reality that the UK hasn't got that power. World markets are open for the UK - but more or less to the extent that the USA decides that they wish to maintain that openness. Often that suits US interests in places where the UK has no interests and does not suit the USA in places that the UK has extensive interests in.
If you wonder why we are doing Aukus and have two big expensive and hard to defend aircraft carriers then the above is why. We are trying to pay the tariff that the USA wants to tolerate us as part of their system.
But it is the USA's system, cut and dried, over and out.
> It was inconceivable that the Bank of England would authorise me, a 31 year old who’d never even worked in a bank, to act as the CEO of the UK’s newest bank.
In general I would think this as a good thing. The UK has a more rigorous banking control than the US (where different state laws can make starting a bank easier than in the UK), with more scrutiny of the business model and customer protection - you need to prove what your doing is safe, not just talk the talk. This means there are no small 'town' or small specialist banks in the UK but also none of the failures that have happened in the US in the past few years.
I believe Richard Bransons lawyers also told him he wouldn't get a bank license. Monzo got its full banking license after a couple of years
> none of the failures that have happened in the US in the past few years
I assume you are referencing Silicon Valley Bank, which wasn't a small bank and wasn't run by young, inexperienced leaders. In the US, community banks would be 10% the size of SVB at its peak (before the run). Except SVB, can you name any other failures? And were they due to young, inexperienced leaders? I cannot name a single one.
Republic Bank just failed in the past month (not to be confused with the First Republic Bank that failed last year).
This newest Republic failure was a bank started by the guy who created Commerce Bancorp which was purchased by TD Bank. The guy is a piece of work: https://archive.is/DwtAx
(I wouldn't say he is young but really not the guy for the job given the history and the banking environment now)
I have degrees from two of the universities he mentioned, and am currently in the process of raising. He says both:
> I don’t think it’s any longer about access to capital.
but also:
> many UK investors take an extremely risk-averse view to new business - I lost count of the times that a British investor would ask for me a 3 year cash-flow forecast
Which I think are in conflict.
I feel like my biggest take-away from doing an Entrepreneurship degree at the UK university with probably the best startup ecosystem was: "you'll get a much bigger valuation raising in the US", and while I have some connections that mean I will shop around in Europe and the UK, I am going to spend most of my energy raising in the US. I'm highly mobile and not especially bothered where I have to live to get this done.
I think the article also avoided a huge topic about risk averse companies that are your customers, if you are b2b. In US, if you are a young startup, and your solution can save huge amounts of money, you will get your chance to make your pitch to "big guns", as their incentive structures allow them to take risks and reward them, i.e. "here is % of these millions you saved integrating this new solution".
In Europe the old rusty impotent gray-haired managers wont even listen to you, even if you offer them a goddamn magic bean or a money printer machine. And why would they? They risk a lot and gain almost nothing, as there are no reward structures that incentivize risk in any shape or form.
> In Europe the old rusty impotent gray-haired managers wont even listen to you, even if you offer them a goddamn magic bean or a money printer machine. And why would they? They risk a lot and gain almost nothing, as there are no reward structures that incentivize risk in any shape or form.
I don't know if this is true or complete hyperbole? (I'm from the UK and live in the Netherlands; I've pitched several businesses and startups to European "impotent managers"). It's true that enterprise sales is hard, and some business cultures are definitely trickier than others (Germany!), but there are plenty of thriving B2B startups in Europe.
It should (hopefully) be fairly uncontroversial that there are underlying legitimate reasons i.e. the fallout from the first decade of Brexit. Unfortunately it seems things are likely to worsen heading into the second decade.
UK economy stopped being dynamic well before Brexit. The simple reality is that the British political class (starting from New Labour and continuing with the current 14 years of Conservative rule) has no vision for Britain beyond the City + M11+ M40, all the infrastructure required to keep that afloat and a managed decline for everything else.
That said of course Brexit only made the above worse.
Not the UK, but I'm a Californian who lived in Ireland for ten years. The risk aversion is _intense_.
Me: "I want to build a house"
My Irish friends: "That's a bad idea, you will fail, it could fall down, you don't know anything about houses". They were extra horrified that I didn't want to build it out of concrete blocks because "you can't build a house out of wood"
My Californian friends (but one in particular): "Fuck yeah I'll bring a nailgun"
And this applies to EVERYTHING. If you have any ambition it's "notions". People scold their children for being "bold" (admittedly the word is used differently, but still). If someone makes one euro more than you they're a horrible capitalist bastard.
I point out that workers in my field are paid three times as much in the US (or more) and somehow am a class traitor.... for saying we should pay labour better.
Anyway, Europe has a bright future as a cheap third world backoffice for US companies at this rate. The fact that people here are paid closer to zero than what they'd make in the US is just sad, and they deserve better. The health care isn't even that good (though Ireland is especially bad at this).
Maybe that's just Ireland though. I'm in the Netherlands and it seems a bit better, maybe because the only people I talk to are other immigrants.
(I built the house, with contractors as well of course. It's a beautiful, warm, well-insulated, wood frame house with ridiculous new world features like high ceilings, aircon, and deciduous trees to the south)
Having just returned from the US, I was struck by this 'risk aversion' and the innate US 'competition'.
To give an example: there was a Subway on one of the streets in the US. A few doors down there was an independent sandwich shop that was offering similar, larger sandwiches, with more toppings, for less, with a huge advertisement saying so. In the UK, close to where I live, there's a Subway on the High St., and an independent cafe down the street. The cafe continues to serve two-slices of bread with an average amount of filling for slightly less than Subway, and has no interest in competing, despite Subway getting double, or more, the foot traffic.
That's the UK all over.
> Anyway, Europe has a bright future as a cheap third world backoffice for US companies at this rate.
A lost decade+more due to austerity after 2008's financial crisis, plus huge amounts of furlough money, and a falling exchange rate doesn't make good reading.
Same experience in England. There is little celebration of business success and more likely accusations of exploitation.
The class system is also alive and well in business - the ambition of many well off uni students is to manage others. Grinding on a startup doesn't fulfil that class ambition
Let's not pretend there is not actual exploitation and "exploitation".
The question is rather perhaps whether it's reasonable and justified given the huge amount of laws and regulations.
A typical small business owner will prey on the naivety of younger employees particularly around HR law. No business owner will be 100% truthful with their customers (ie they engage in some form of marketing). I have not worked a single job where this was not the case. It's celebrated here and called "growth hacking"
All of that is done for the gain of the owner, not solely so that they may enrich the lives of their employees
Exactly - if you are doing well as a business, then it must be because you screwed someone over, and in general you're a bastard for making people work for you and make you money, like how dare you.
I also live in Europe (Germany & Austria) and what you're saying is 100% true. I like Europe, but I really miss the positive everything is worth a shot attitude in America.
Everything here is no, no, no, why would you do that? It's so demotivating, and G-d forbid you make a tiny mistake! Long term I also don't see how this place won't just keep getting poorer... unless there is a major attitude adjustment in the near future.
Also, everyone just tries to dunk on everyone with petty status games like owning a fancy car... as if that's the ultimate achievement in life... really lame & depressing.
It's the main reason I would like go back home tbh. There are a lot of problems in America and a lot of things are okay here, so it's hard to say where it's really worse, but I just don't understand why they always need to have these negative attitudes all the time... it costs nothing to have a positive attitude...? Maybe I'm just too stupid to understand.
I'm an "expat" living in Germany and am also thinking of moving to US/CA for the sake of living in a different environment that is more can-do, even if I don't end up starting my own thing.
I keep trying to convince myself that day-to-day life in Germany is great, e.g. low cost of living, low crime, etc. but I'm wondering if I'm just comparing to the worst parts of what I hear about the USA on the internet. It's a large place anyways.
i.e. what if I moved to a reasonably priced city with a similar crime rate, get a reasonable amount of insurance. Has anyone done that?
There's a lot of things I love about living where I do, but if I could get Dutch urban design in California I'd look very closely at moving back. I also worry about the strength of US democracy, but Europe isn't immune to backsliding here either.
While Ireland has some cash these days, it was a poor place until joining the EU. If you wanted to do well, you emigrated. This is still the case pretty much.
Certainly, though I wonder if part of the mindset I encountered was a result of any surplus wealth being taken by the landowners for a good 800 years or so. If you don't get to enjoy the fruits of your labour, why try?
Ireland is a post-colonial society in many respects.
My generation are the first generation to be able to get a job in Ireland (and even then most of us can't afford a house). It takes time for culture like that to be worked through.
See also, Irish people's opinions of our most successful export, Bono.
(he's a dick btw, because of the tax dodging though, not because of his success).
Cynical theory, the UK is now full of the descendants of all those who said "Emigrating? That will never work", and that's set the culture. Grafters and optimists have had many opportunities to leave over recent centuries.
How much DNA do we need to show to prove this is at least partially true.
And when it is partially true, it echos. I think even iRobot mentions this about Europe.
There is a difference in culture. Where the US dominates, europe is pessimistic, and (Africa/New New World) is growing. I suppose the New New world never really happened, the US stayed ontop. I imagine iRobot was a bit more optimistic about the political affairs of the New New world.
You maybe right. I think the UK and Canada share similar problems. Low risk taking, real estate as the only investment, pulling each other down like crabs, appeal to authority.
The US for all its faults, is the land of hope and can do. I have travelled a lot in the world but somehow places like Miami, New York, SF, Vegas, Dallas and a bunch of other cities have this palpalable energy that you can do anything that you want.
This is really the biggest factor as to why the UK startup scene is a lot smaller than the US one (and from what I hear, why similar issues occur in Europe overall):
> On the contrary, many UK investors take an extremely risk-averse view to new business - I lost count of the times that a British investor would ask for me a 3 year cash-flow forecast, and expect the company to break even within that time.
In fact, UK investors seem terrified of investing in consumer facing tech businesses in general. Something like Facebook or Google or Amazon or Netflix or Uber or whatever would be seen as far too risky an investment when they could get a nice safe return from a B2B focused SaaS business instead. They're not willing to plough money in for years on end on the assumption they might eventually get a return at the end, while US investors seem more willing to do so.
My pithy take on the most important explanatory factors here:
1) EU/UK startups lack a big enough common market to sell into to go from 100 to 1,000,0000 relative to US and Chinese startups.
2) Tax laws in many EU countries significantly limit founders' exit opportunities and magnitude of personal financial success. This "tail wags to the dog" because of risk/reward: if the ultimate reward is not high, a founder can't justify taking on much risk, nor can their investors.
While the tax laws are interconnected with the societal culture (e.g. "American Dream mentality"), I think high frequency of examples of outlier success founders is what will change the culture, and those people won't start companies (or get very far) if they are dealing with 1) and 2).
Or they'll just move to USA to start their businesses, as has been often the case.
It's much easier to start in your home market, get experience there and then expand.
Also, the US is basically the best market for everything (fortunately or unfortunately), so even if you start in Latvia, the next market you enter will probably be the US.
This is because it's relatively open and has lots of people speaking a common language, with a (mostly) common regulatory system so you can spread the setup costs over a much larger market.
Compare to starting in Ireland and then hitting the UK, France, Germany, Poland etc. Each of those countries will incur startup costs but the market size is smaller so you'll make less profit (all other things being equal).
I am very well traveled and I spent considerable amounts of time in Europe in various different countries, I am however American, with particularly Midwestern sensibilities. One of the most common threads throughout the culture and society in nearly every European country I went to were three things in particular, that I think impact entrepreneurship:
1. An expectation that someone else will solve their problem, rather than an expectation of self-reliance.
2. A suspicion of anyone who thinks they have a good idea, as if that person is saying they're better than their peers and needs a comeuppance
3. A rejection of any kind of dream that entails class mobility, where the legitimate desires of people are to do something that fits the class they grew up in and "work to live" instead of "live to work" so they can spend as much time futzing about with friends and family rather than growing their family's class.
Many commentators in this thread have mentioned other aspects, but I think these three things are huge cultural drivers against entrepreneurship. In the US, when you found a startup, you are taking a financial risk, possibly a career risk, but you aren't taking a personal relationship risk or societal risk in the same way you are in Europe. In most countries in Europe, the people around you will think you are becoming too big for your britches the moment you entertain starting your own company, especially to do anything new, and will either cease their relationships with you or actively seek to tear you down socially. Not only is the financial risk larger, both in relative terms and in the legal structure, but the social and relationship risk that's non-existent in the US looms large in Europe. People will legitimately think you're a bad person who thinks you're too good to be around your peers for trying to do something more than the same job your father and uncle do.
#1 above is especially insidious as well, because most of the ways successful startups get founded is by finding a problem to solve and figuring out what you'd want to do to solve it for yourself. If you don't go and do this, it's really difficult to find any sort of product-market fit that resonates on anything but a tiny fractional basis. If you want to found a global company, you need to be able to devise /the/ solution to a problem, at scale, and if you are operating under the expectation that any meaningful problem has either already been solved or is the responsibility of some other entity, you won't do this, you won't have the right mentality.
The cultural commentary does seem right to me. People in the UK are probably more risk-averse and anti-ambition. There’s also some stuff about the culture of investors, like the thing about US startups making wild claims. This only really works because the investors in the US understand that the claims are nonsense, and VCs don’t sue the companies for fraud (because the companies are typically dead and it’s an iterated game).
Nevertheless I do wonder about the effect of people being able to move to Silicon Valley:
- moving there can be a good move for ambitious young people – it’s surely easier to raise capital, find employees/cofounders, etc
- for most internet businesses, starting in the US rather than the UK can be an advantage – doing business internationally can be harder and the US is 5x the size and wealthier on average.
- given this, there’s a reasonable selection bias in the pool of companies in the UK seeking investment: they are started by people who were ambitious enough to start SV-style startups but weird enough to not be doing it in the US. If those potentially-UK startups in the tail of outcomes are disproportionately being started in the US instead, that’s really going to suck for a VC.
Lots of the claims made by startups to VCs would be considered fraud if they were ever tried in court, which they aren’t because starting such a lawsuit would be terrible for the VC, and the VCs weren’t really defrauded because they correctly understood the claims to be highly exaggerated. The difference here is in cultural standards for what it means for a startup’s claims to be true.
Most of the time they're more "aims" than "claims", are they not? Startups want to capture x% of a market, and they'll say they think they can do it, but probably won't make it sound like they're actually guaranteeing it.
Maybe I'm missing something about startup claims that are actually fraudulent, rather than hopelessly optimistic.
I always wondered if it has something to do with employee protections, maybe the risk of starting a business in the US feels the same as joining a company as an employee with no protection and employee rights? Although I know that has changed a lot last few years and you now need to put 2 years in a UK company to get some employee right and protections
I've always been scared and worried to go off and do my own thing without something to fall back on. I have ideas and things I'd like to build but the risk seems really high. I end up asking myself questions like "how do I pay my mortgage?", "what do I do for food?", and so on...
What can be done to make it easier to start a company in the UK?
Something that was not really approached in this article is the underlying assumption that "entrepreneurship is good" and the difference of culture towards that.
Start-ups can be seen as the things that bring society forward, or the things that create useless junk and enshitification from bullshit-talkers who just want to make money.
It's not 100% the first in US and 100% the second in Europe, but the balance is just different.
I think that one aspect is just that US is more ok with bullshitters and con artists: they consider it's part of the game. In Europe, it's seen as immoral, and there is a fine line between "being optimistic while raising money" and "being misleading while raising money".
Inversely, Europe does not have so much prejudice against institutions. Maybe it is again due to the fact that in US, they consider bullshitters and con artists as part of the game: they are expected to be either the exploited or the exploiter, so, of course, you don't want to put yourself in a situation where you can be exploited.
I'm not saying they are more scammy, I'm saying that the reputation score is computed differently in US and in Europe, and having a scammy aspect is penalizing the startups more in Europe than in US.
You can start from exactly the same facts:
- X% are scammy
- Y% are bringing something great
- Z% are bringing yet another useless junk in shiny paper that pollute and had bad side effect
- W% are making new discoveries
- ...
In Europe, the first item will bring you -20 points, the second, +5 points, the third, -10 points, the fourth, +10 points, ...
In US, the first item will bring you -1 point, the second, +20 points, the third, -5 points, the fourth, +5 points, ...
So, at the end, the "goodness" of entrepreneurship is seen differently in the two sides.
I don't think institutions or other business are less scammy, or even that they are seen as better in Europe. Simply, if you score different paths, in Europe, the "entrepreneurship" path does not look that better than any other path, so why would you choose it.
But that's kind of the point - in your culture apparently there is a difference between making unrealistically ambitious claims and being scammy, and in my culture there is not. If someone tries to get investor's money by making unrealistic claims, they may be above the line legally, but in my culture they're clearly behaving morally unacceptably, demonstrating that they are a fraudster, someone who can't be trusted or respected by others in the community, "not one of us", and deserve to be shunned even if they were my friend or relative.
In my mind there is a strong ethical duty to ensure that your claims are realistic, and it's a severe breach of ethics to be irresponsible with unrealistic claims, triply so when others' money is on the line. As far as I understand, in USA being a bullshitter is treated as somewhat acceptable, to me being a bullshitter means you're scum that I'd need to warn others in the community so that they wouldn't work for you or with you. So while in every country there definitely are some "hustler-type" people who do try to initiate startups, they also have issues hiring and local B2B sales if word gets around that they are the type of person who routinely make unrealistically ambitious claims; the world is small, most industries even smaller and people do try to check references of potential partners through friend-of-a-friend-of-a-friend channels - so while a failed startup won't necessarily be held against you, the factors of why and how it failed (and how it affected others) definitely can be.
I think a key aspect of US culture is that when you make absurdly ambitious claims, they will generally give you some space to prove yourself. That doesn’t imply they are naive. They may be skeptical but there isn’t a prejudice. They allow that something might be possible even if they don’t see it.
You are the one who started talking about "scammy".
Look at what I've said, I've JUST said that US is more tolerant with con artist and bullshitters. I did NOT say "start-ups are con artist and/or bullshitter". What I mean is that US is less concerned to dodgy things, the more extreme being scam, the more benign being, for example, unrealistic claims. I'm just saying that the two are from the same mentality.
In other words: people in US and in Europe are not judging positively the scammers, and people in Europe are not judging positively people that are being unrealistically ambitious, while in US, they tend to be way more forgiving. People in Europe are not judging positively people that are being unrealistically ambitious not because they think they are scammers, but because, culturally, it is not seen as something positive for the society.
It's just cultural. The same way Europeans in US find it unpleasant when Americans are forcing themselves to smile at their customers when they obviously don't even know them and don't have a good reason to smile. And Americans are finding Europeans too cold when they are not smiling all the time even if they don't have a good reason to do it.
> You are the one who started talking about "scammy".
Not really? You said "con artist", did you not? "Scammer" is a near one-for-one replacement, I said "scammy" because "conny" isn't a word.
> I did NOT say "start-ups are con artist and/or bullshitter".
This is absolutely the implication of what you said.
If I say, "I don't know how I feel about Ted Cruz, I don't like voting for rapists", then I didn't explicitly say that Ted Cruz is a rapist, but that's the obvious implication. If you start talking about how Americans are more accepting of con artists while in the middle of an explanation of why Americans are more positive towards start-ups, it doesn't take a genius to connect the dots in what you're trying to say.
If your point was more broadly about dubious/unreliable claims, that's fair, but "con artists" is a lot more specific and critical than that, and that's what I was responding to.
Anyway, you're probably right that Americans are more tolerant of dubious/overambitious claims from a cultural perspective. I'm not sure if they're more tolerant of outright lies though, I think most draw a line between stretching the truth vs breaking it in half.
And again, "con artist" was not talking about start-up.
> This is absolutely the implication of what you said.
That is incorrect. I can see why you can interpret it like that, and indeed I should have been more clear, but it's just incorrect to pretend that there is a logical implication.
It's more like saying "I don't know how I feel about Ted Cruz, but then again, once, I voted for a rapist". In this case, it does not mean that I imply that Ted Cruz is a rapist, it just mean that my bar is as low as voting for a rapist. It does not mean I'm saying Ted Cruz is a rapist, it can totally mean that Ted Cruz is probably therefore above the bar. This is way more what I've said in the previous comment: "US people are less uncomfortable with start-up that will have unrealistically ambitious claims, but then again, US people are less unforgiving with con artists, so it's not surprising".
> but "con artists" is a lot more specific and critical than that, and that's what I was responding to.
And again, even if we go to the "start-up / scam" discussion, none of that is saying that all start-up are scam or that none of the non-start-up are not scam, but again, some start-ups are scam, this is just a fact. You seem to react like if saying that some start-ups are scam is going to far.
I dropped out of university for my £35k job as if I finished my final term I would have had _literally_ no money and no where to live. I could not afford to take risks. I had no family to rely on.
I was later invited to work for a startup as the first engineer. They offered me £45k which I negotiated up to £50k, which I declined as my stable job raised me to £52k to keep me. This startup is still doing well it seems, but that just wasn't a risk I could afford. I had no liquidity, I was barely saving £200 a month. If the startup fell through and I had no severance, then I would have had to find a job almost immediately or default on my rent.
This article is an extremely privileged take (which it acknowledges). University is relatively cheap in the UK, which makes the people that attend top universities often come from all classes of wealth.
I now have a lot more of my own cash in hand now and can certainly survive a few months of downtime, but I still probably wouldn't go for an early stage startup as I'd likely have to take a huge salary cut and would not be adding into this savings pot. I would rather be in a stable and good band of living rather than risk being on the poverty line again.
People attribute differences in the enterpreneurial landscape between the US and European countries to cultural factors (aka some "abnormal" risk aversion) but consider the possibility the difference is actually the rational stance on the face of persistent realities.
First, there is the issue of the absence of scale. As a Briton once said (and Brexit famously demonstrated), there is no such thing as Europe. This is particularly true in the financial domain that the author knows well. Every crisis, whether economic, natural or purely political leads to fragmentation and retrenchement back to national borders. Terms such as banking union or capital markets union are the sorry markers of an ambition that was never fulfilled. Alas none of the European countries is big enough for the emerging planet scale economic forces that are being unleashed.
Secondly, most European countries are quite statist, the central government plays a very, ahem, central role in economic life. This is not necessarily without merit - a different discussion altogether, but it does imply that the success or failure of potentially disruptive private sector initiatives hinges on political connections and access.
Markets are now "de-globalizing" in real time but that is less relevant for startups. Any entity that is now a "global" multi-national had to grow into that status at some point in their lifecycle. That trajectory is much easier (depending on sector) if the starting point is within a larger country. There are multiple factors: easier access to capital, more human talent, larger customer bases, a single regulatory framework etc. etc.
These factors don't just act linearly, but in a combinatorial fashion that helps beat the genuinely low odds. Changing the world (which is what the formation of a major new enterprise effectively does) is not a trivial occurrence. Overcoming those obstacles is occasionally possible but it is very complex and costly. For the European economies the writing is on the wall.
May I ask which countries in east Europe would you consider to be good and convenient, esp for foreigners (non-EU)? When I visited Budapest I like it there, but don’t know much about the tech scene.
Estonia and Bulgaria both have good English speaking levels, decent visa schemes, low and flat taxes, very good in the case of Estonia and maybe getting there in the case of Bulgaria government digital services, and lots of people in tech (so hiring shouldn't be a problem if you can provide good salaries).
Also, Romania, Poland have good reputation in this space but I don't have any direct experience with them.
Thank you for the reply! Do you mean the Estonia e-residency? If you got one, may I ask what your experience with it has been? I have always been thinking about it.
> The US - a country with 5x more people and 8x higher GDP
Who cares about "8x higher GDP"? China has the world's second largest GDP and the world isn't clamoring to move there. Why? Because GDP per capita is still low, compared to many other countries. Finally, median income is a much better number to use when comparing countries.
The article answers its own question as to why most people don't take more risk. Most of it boils down to 2 things; not having a safety net and not being fortunate enough to know the right people.
I've been thinking about starting a business, but only because I'm now at a point where I have a safety net and I've grown my network enough to consider myself having an ok shot at making it.
I have had the pleasure of being an immigrant visiting a startup event in England. To give you an idea of what this looks like: Five minutes in, an organizer comes up to me and informes me that the she was sorry but this event was invite only (I was invited).
At a tech meetup, most were happy to chat over beer, but every single one flat out refused to agree to a one-on-one, unofficial demo of my MVP.
I helped a startup debug and fix an urgent infrastructure issue on a critical customer-deployment, gratis. Their in-house guy had given up on it. Few months later I asked to sign up for a referral for my co, they stopped replying.
Sad but true in one aspect, but another is it's useful for additional practical learning and opportunity discovery working for a megacorp for a few years. Stanford is (or was, last I checked) an exception though: extremely entrepreneurial PIs, staff, grad students, and undergrads.
At UT Austin a couple of times talking to a startup club dude, he was having trouble gathering interest on the Yellow Brick Road. I suggested he improve his advertising and marketing graphics, lead with thought-provoking questions and elevator convo about financial security and regret, and consider broadcast mechanisms on social media.
I think it's also younger generations aren't supported and encouraged appropriately to take risks, to view discomfort and fear as temporary obstacles to be sought, and are sold traditional dogma that "working as an employee equals financial security".
Unavoidable microeconomic law: You're never going to get anywhere near rich working for someone else without substantial equity.
I’ve noticed the risk appetite of investors in the Uk is much worse. They want a much larger slice of the pie early on, so there’s much less incentive to do a risky startup, rather than a sure thing like GS / Google. There’s nearly no risk in working at GS - you will work hard and you will be paid exceptionally well for it.
> Imagine how different the UK would feel if Google, Microsoft and Facebook were all founded here.
Or if ARM and DeepMind remained UK-owned and based, and simply took smart venture capital and grew themselves independently, instead of selling to foreign owners.
If we look solely at US vs EU or US vs UK, we might think that US have a huge amount of money and the salaries are greater. But this doesn't solely explain why US has a healthy startup scene while EU or UK doesn't.
China was a poor country - and maybe still is if we factor GDP/capita - but they've built a thriving startup scene.
So maybe it's about the money, but not about the amount of money. Instead it's about how societies and governments manage to focus whatever amount of money into startups. It's about building a virtuous cycle, where startups produce wealth which is channeled into building further startups.
> Along with UCL, these British universities represent 4 of the top 10 universities in the world.
... according to QS Global Surveys. A disreputable organization who won't open their data and whose rankings are based at least 50% on reputation surveys (!!), of which only 2% or so are responded to. Is it worth mentioning that it's based in England?
I'm not saying the US should have more institutions. I'm saying that it's highly unlikely that four of the top 10 institutions worldwide are British.
But reputations are what they are, and you can't dispute that those four unis are top drawer by that "measure" if we can even call it that.
Regardless of what you think of QS. I also think it's silly to have uni rankings, but the way to think about them is that they simply construct a ranking that shows what people expect based on reputation. If you don't have Harvard and Cambridge in your top tier, your ranking is wrong.
> But reputations are what they are, and you can't dispute that those four unis are top drawer by that "measure" if we can even call it that.
But reputation is not a just measure of quality. It's mostly a measure of whether someone has heard of the institution at all, or knows anything about them. Similarly, US News has reputation survey based measures for its terrible rankings, and is roundly criticized for them, as they largely shut out better but newer but less well known institutions.
I suspect the same thing goes for the corruption perceptions index. People conveniently drop the perceptions part, and they get their corruption reputation from last year's headline.
The UK has an age-based advantage in this metric. Oxford & Cambridge are nearly 1,000 years old. Once you take that into account, the stat becomes "of the top 8 universities (ex. Oxbridge), 2 are in the UK and 4 are in the USA". Imperial is very high quality institution, definitely the peer of Berkley/Yale. UCL normally isn't thrown into the top 10 though - it'd usually appear in the top 25.
Bologna cannot be faulted for not being able to capitalize on its age.
Northern Italy went through an awful lot of tumultuous history between 1450 and now that England didn't experience: it was cut up into lots of little fiefdoms, dominated by several external powers, and generally kept under constantly changing iron thumbs.
>On the contrary, many UK investors take an extremely risk-averse view to new business - I lost count of the times that a British investor would ask for me a 3 year cash-flow forecast, and expect the company to break even within that time. UK investors spend too much time trying to mitigate downside risk with all sorts of protective provisions.
contradicts this:
>There is no longer a shortage of capital for great founders in the UK (although most of the capital still comes from overseas investors). I just believe that people with the highest potential aren’t choosing to launch companies, and I want that to change.
>> Most of these smart young people wanted to go and work at companies like McKinsey, Goldman Sachs or Google.
>> "The vast majority of our smart, technical graduates take “safe” jobs at prestigious employers. I am trying to figure out why that is."
Well Europe pays significantly less than US and if one wants to make any amount of significant (for Europe, lame for US) money, one's gotta work for prestigious US employers. Starting a business requires capital so here we have it: Europe has less money and to get them, the usual route is work for US.
> Imagine how different the UK would feel if Google, Microsoft and Facebook were all founded here.
It wouldn't be the UK, I think. As a UK resident, who reads quite a lot of US business stuff, and who lived in South Africa for a few years, the culture is just totally different in both compared to the UK. I don't know if it's the frontier mentality still ongoing from them being relatively recent countries, but there's definitely something.
I think this misses a big mentality difference between the US and most other developed countries.
In the US, people like to exaggerate and boast. Everything is the best, biggest, etc.
In the US, "new is always better". Doesn't matter if the new is just the old with an app (coworking, food delivery, taxi, hotels), or just a worse iteration of an already existing thing (all the crappy companies trying to reinvent worse trains with "pods") it's celebrated for being new and innovative. Reminder that bloody Juicero got millions of dollars of investment.
In the US, there's a big celebrity culture. People genuinely worship celebrities, including successful business people (Steve Jobs, Elon Musk to name two popular examples). There's always the assumption that they were successful because they were smart and hard working (which is of course, at best, half the story).
None of those exist to such an extent in other developed countries. Hell, in France being a billionaire is seen as a negative thing in many social circles. Even entirely self-made billionaires such as Xavier Niel who dropped out of middle/high school to start a business over Minitel (a French precursor to the Internet) that have had a very positive impact on French society (by one, creating a telecom that brought extremely affordable internet and mobile phone plans to the general public, and two, creating a free and brilliant tech school, 42) aren't really seen as "good" or considered a celebrity worthy of respect/veneration.
Also, in many other developed countries people "work to live" instead of "live to work". Getting a stable good paying job that will get you plenty of time off to do things you genuinely enjoy, be they pottery, gardening, travelling, lego, rock climbing or whatever, is considered a good deal for many. Why waste your early years when you have the most energy hustling so that maybe you can make it big? People's ambitions usually revolve around personal things such as bucket lists of travel destinations, family, hobbies, etc., and often but not always, being successful at work, but to the extent of being able to calmly afford all the aforementioned and mostly enjoy/tolerate it, not necessarily becoming billionaire businesspeople.
> Also, in many other developed countries people "work to live" instead of "live to work". Getting a stable good paying job that will get you plenty of time off to do things you genuinely enjoy, be they pottery, gardening, travelling, lego, rock climbing or whatever, is considered a good deal for many.
I wish this was more widely understood. And I agree with your whole post and wish for it to be higher.
> Hell, in France being a billionaire is seen as a negative thing in many social circles.
Well, purely socially, having a billion euros is kinda... bad? If you think about it, what do we call all other kinds of people that have a lot of 1 thing, more than they need or could possibly use within their lifetimes?
Hoarders.
It's not a positive term. It implies something being wrong in the head.
Now, an entrepreneur building a business that becomes worth billions and themselves having a new worth of a billion? Probably a different story, but as we're seeing more and more, power corrupts and most of these folks don't really stay in touch with reality 5-10+ years after they become so rich.
Smaller countries, less money to throw around in general.
Focus on more traditional sectors and a general fear of software solutions (partially justified since many software things are net negative).
First mover advantage for the US as the country that invented the transistor, the social media, internet, etc. Especially in this era of Extremistans (see: Black Swan), being first is super important.
Oh, and this isn't talked about enough, US protectionism (and focus on locally produced things), look at all the efforts to keep jobs in the US, to keep Chinese companies out, etc. As an example, even when Apple was crap in the late 90s and early 00s, it still had relatively high percentages of the desktop/laptop market compared to the rest of the world, just because it was the poster-boy of US computer companies. It's more subtle and it's imperfect (see the steel and auto industry being overrun by foreign companies).
It's very complicated, but 1 & 2 are probably the biggest factors.
Yes, although it's the US that's the outlier when it comes to compensating engineers. There aren't many other countries where junior engineers can get paid a lot more than other people in professional occupations.
Why bother starting anything in the uk, the taxman will just take any proceeds. The moment I get an opportunity to move to the USA I’m heading over there to continue my business.
"Entrepreneurship is like one of those carnival games where you throw darts or something.
Middle class kids can afford one throw. Most miss. A few hit the target and get a small prize. A very few hit the center bullseye and get a bigger prize. Rags to riches! The American Dream lives on.
Rich kids can afford many throws. If they want to, they can try over and over and over again until they hit something and feel good about themselves. Some keep going until they hit the center bullseye, then they give speeches or write blog posts about "meritocracy" and the salutary effects of hard work.
Poor kids aren't visiting the carnival. They're the ones working it."
> I now live in San Francisco and invest in early-stage startups at Y Combinator, and it’s striking how undergraduates at top US universities start companies at more than 5x the rate of their British-educated peers.
There's the risk aspect and the regulation aspect. Personally I think there's something to be said for a country where your car can't collect data on your trade union membership and sex life and pass it on to your insurers. (The UK is no longer in the EU so it's not technically subject to GDPR anymore, but they "forked" that law when they left and it's now called the Data Protection Act (DPA).
It's worth noting that's Data Protection Act (2018), there was also Data Protection Act (1998) which predates GDPR and had many of the same laws. People outside of the UK only started caring when a regulator with enough teeth (and penalties harsh enough) took notice, but data protection has been a requirement in the UK long before GDPR and should hopefully continue long after it.
No, the Data Protection Act (2018) is just the legal instrument which sets out the (UK) GDPR. It is 'technically subject to GDPR anymore', it's just a different one (with essentially if not entirely the same contents).
>No, the Data Protection Act (2018) is just the legal instrument which sets out the (UK) GDPR.
That's not right either.
The GDPR is law because it's an EU Regulation that was made while we were part of the EU, and it became UK law automatically when it was passed, as regulations do.
The Data Protection Act 2018 augments the GDPR, but the GDPR would be the law of the land with or without the DPA.
I instantly thought of this comment when reading Tom's eloquent post. Tom is rightly advocating for more of the rich kids to not settle and keep throwing the darts. Rightly because this is the demographic that VCs want to invest in.
""
Entrepreneurship is like one of those carnival games where you throw darts or something.
Middle class kids can afford one throw. Most miss. A few hit the target and get a small prize. A very few hit the center bullseye and get a bigger prize. Rags to riches! The American Dream lives on.
Rich kids can afford many throws. If they want to, they can try over and over and over again until they hit something and feel good about themselves. Some keep going until they hit the center bullseye, then they give speeches or write blog posts about "meritocracy" and the salutary effects of hard work.
Poor kids aren't visiting the carnival. They're the ones working it.
""
> The American dream is the belief that anyone can be successful if they are smart enough and work hard enough
Silicon Valley has practically symlinked the word "successful" to "started a company that got a high valuation". Maybe outside of the USA, people are likelier to center friends and family in their vision of success?
Not only this, but failure has consequences socially and professionally.
Startup founders are seen a little bit like fortune seekers ("gold diggers") in that they seek fortune without "having to work". Of course it depends on details and context and so on.
Failed startup founders are seen like bankrupt gamblers, unless they were previously wealthy and could afford to absorb the losses.
Citation needed? The UK certainly has plenty of upper-middle class families. This is nothing to do with family wealth and everything to do with business culture.
The UK is a class society much closer in nature to East Asia than the United States. Wealth accumulation is still to a great extent occurs along the stratified classes and they ain't sending their kids to engineering schools.
Again, citation needed. These are extremely broad claims about the nature of British society. Or just go ahead and downvote me if that makes you feel better
