[pembrook]

People will blame the EU’s nightmarish fragmentation and regulatory headaches (all true)…but ultimately all factors ladder up to one thing: the availability of risk capital to invest in new ventures.

When Stripe was founded Venture Capital in Europe was even more nonexistent than it is today. Regardless of the regulation, if the EU dumped 2X as much risk capital into payments startups at the same time the U.S. did, Stripe would be a European company.

Talent flows to where the money is. Then once talent starts aggregating in one place it produces network effects (gravity), that gravity pulls in more capital and talent in a virtuous cycle, until fast forward a few decades and suddenly you have almost all the most valuable companies in the world being from Silicon Valley. Hence the present time we live in.

Who’s fault is it Europe is so far behind? Ultimately WW1 and WW2 destroying European wealth, assets, talent and risk tolerance.

If you look at the countries who stayed out of both wars (Sweden, Switzerland)…they are currently the tech hubs of Europe. They both have more unicorns per capita than the US.

Spain also stayed out of both wars but had a domestic Civil War in the 30s, which had the same net effect of destroying their prospects.

[taffydavid]

Ireland also stayed out of both wars.

Ireland is also a tech hub, although those facts probably don't have any bearing on each other.

Irelands success comes entirely from low corporation tax, EU infrastructure funding, investment in workforce education, and the fact that we speak English. This combination of factors resulted in a massive tech boom, with lots of American tech firms setting up in Dublin, mostly for tax reasons but ultimately creating an actual tech industry where development happens.

The fact that stripe exists at all is because the Collision brothers grew up in and around that industry, with Patrick doing coding lessons in university of Limerick which had a massive computer science dept built to feed that industry. Without that he might not have been in tech at all. But looking at the history, his first payments company was turned down funding by Enterprise Ireland, sending him abroad where a Canadian company bought it and gave him the footing and confidence to go on to found Stripe, which had lots of SV investment. sadly I don't think that would have been forthcoming here.

It's a textbook case of the European tech industry problem, which I'm sure is mirrored in other EU countries (regardless of if they were in the wars or not). We invest heavily in education and workforce and encourage tech to be here, but we won't take the risk of investing in it. It's all European developers working hard for American firms, or small European firms trying to compete.

Maybe that's about to change with EU governments wanting to reduce reliance on American fimrs, like swapping Stripe for Adyen. There might finally be money to go with the talent. Maybe the next Collison will found their firm here

[mathgeek]

> Spain also stayed out of both wars but had a domestic Civil War in the 30s, which had the same net effect of destroying their prospects.

The Spanish Civil War was arguably just a proxy opening of WW2 between the USSR and Germany. Doesn’t change your point, just came to mind while reading your comment.

[pembrook]

Very true, I preemptively assumed someone would reply 'What about Spain?' but then whether you consider the civil war part of WW2 or not is irrelevant given it had the same effect.

Ultimately, a company like Stripe sits on top of a fragile patchwork of societal/technological abstractions that are a byproduct of generations of compounded wealth.

Humans battling in the marketplace builds this compounded value, humans battling in warfare destroys it and makes you start from zero.

Just as the industrial revolution started decades before humans began leaving the farm en masse, the digital revolution started decades before anyone had a personal computer on their desk.

Europe was busy rebuilding firebombed cities and industrial capacity, while Americans were free to birth the next layer of abstraction post-WW2 (the digital one). This early lead compounded. Moral of story: don't get in wars on your soil.

[mathgeek]

> Americans were free to birth the next layer of abstraction post-WW2 (the digital one)

The "on your own soil part" is even more complex than this implies. America spent decades waging wars across the world to reduce the chance that Russia could do the same.

[gib444]

> If you look at the countries who stayed out of both wars (Sweden, Switzerland)…they are currently the tech hubs of Europe. They both have more unicorns per capita than the US.

And in absolute terms, the UK has the #1 number of unicorns in Europe, 4th globally.

[willy_k]

> Whose fault is it Europe is so far behind? Ultimately WW1 and WW2..

So still Europe’s.

[epolanski]

EU has plenty of VC, maybe not enough to sustain crazy rounds rounds like those we see often in the US, but capital is not the biggest blocker to founding your company in Europe, law is.

US has a very advanced corporate law, which is crucial in protecting investors, founders, employees and shareholders.

In Italy and most of Europe, if I create a startup, there is *no* legal way to give people stock options. I am bound to give it upfront, or the employees are bound to believe they will receive some. Even a legal contract signed at a notary cannot enforce stock options mechanisms 100%.

And this is a problem also for raising equity by the way. There's no C-Corp equivalent for low capitalized companies (e.g. any young startup) and emitting shares at small scale is borderline, as is cancelling shares after a buy back (which is why they are uncommon in European stock markets, it's feasible but very complicated).

This has been the killer of a startup of some friends of mine. They split a company in 3 and then one of the 3 left after some months and retained all of the equity and benefits without doing nothing and effectively held the company hostage for years pretending a huge exit. They had troubles raising equity because of him as well.

On top of that, in Italy, worker's protection is such that if you hire the wrong person and that person stops working after the brief period you can cancel the contract (generally 3 months) it's your problem and it's up to you to prove you had a valid cause. Even when you have and provide carrots for your employees and coworkers, there's no stick. You're at the mercy of lucking into the right people.

And, on top of that, you have taxes. Just to make an example. In Italy, it costs a business 70k euros to give 30k net to an employee. How am I supposed to compete for international talent if, even if I had the money to pay them very well and compete with higher cost of living countries, I then get hit by a truck of taxes? And that's not even mentioning corporate taxes.

And, bureaucracy is another issue. Let that sink in: it's easier for me in Italy to create a C-Corp in Delaware than create a basic ltd in my own country. And that bureaucracy scales at every level of your operations.

And, last but not least, the EU is still a fragmented market where regulations change dramatically as you cross borders. Scaling in the EU is hard in virtually every business, the unified market is just not there.

But every country and government will repeat populist propaganda that "we do our own way and protect only our interest, we won't delegate to Bruxelles".

UK is the only feasible place in Europe to make a startup, but even UK does not have as strong and mature corporate law as US does.

Pre Trump, if I had to found a company I would've just went with a Delaware C-Corp, even if I didn't need venture capital, let alone if I did.

Nowadays being a US company is increasingly risky, so I would probably look at Malta or UK.