5 Observations About European Startups

For the past 5 months, I’ve been living in Italy starting my company, FlowsBy, at the Techpeaks Accelerator. I’ve had the chance to work with some amazing people from 19 different countries, right here in Trento. During August, I also had the chance to visit iCatapult’s accelerator in Hungary to speak to their new class of startups.

There was no end to the shock when I told people I was going to start a company in Italy. “So you’re leaving the second biggest startup hub in the US to go to the middle of nowhere Italy to build a company. Makes sense…” “Does anybody even work in Italy?” There was also lots of encouragement, but I also think those people saw this as more of a sweet 6 months “working” vacation and told me to have fun and “YOLO”. Not quite what’s been happening.

For me, a major reason I chose to come here was to get out of my comfort zone. We are incredibly innovative in the US, we have lots of things going for us. But, at a certain point you forgot there is anything else in the world but the US. I got very wrapped up in my own way of living and working, and I got complacent. I hate being complacent. It doesn’t force you to work harder. It doesn’t force you to be creative. So I came here not only to work, but also to learn how other countries work and think and live.

After 5 months, a few things have stood out to me about the startup community in the countries I’ve been familiar with here. Most of this relates to Italy and southern Europe, since that is what I know best. None of this relates to Germany, Switzerland, Austria or any countries up near Sweden, Finland, etc since I haven’t had the pleasure of meeting them yet. 

Europeans are great problem solvers

When I was in Hungary at the iCatapult accelerator, one of the participants asked Zoli Piroska, a question.

“What’s the difference between entrepreneurs in Hungary and entrepreneurs in the US?”

Zoli’s answer hit it on the head for me. He responded that Hungarians are great problem solvers, but Americans were great executors. I’ve also seen this in Italy and other countries as well. Europeans are used to dealing with terrible bureaucracy, people not wanting to do their jobs, and everything being closed on Sunday (this still gets my goat). They have been problem solving their entire lives. Every time I got a bit stressed out from some bureaucratic BS at Techpeaks, my cofounders from Rome would be calm as ever. “Don’t worry, we’ll take care of it.” As mafia as that statement sounds, that’s what Europeans do. They work around the problems with a calm and grace we don’t have in the US. We’re used to things working, and when they don’t we get stressed out or pissed off. Europeans on the other hand, are used to almost nothing working, so they’re immediate reaction is to go into problem solving mode. This is a wonderful trait to have in cofounders, and I’m really lucky that both of mine have it.

On the other side of Zoli’s statement, he said Americans are better executors. I have to agree with this. In the US, we have the motto of “get shit done”. We’re incredibly efficient so that we can get more done in less time, and we know how to prioritize. I’ve seen quite a few startuppers here get hung up on things that just don’t need to be done now, or are a lower priority. Some of this is just lack of experience, and some of it is the environment they live in. I was standing in line at the grocery store the other day as the checkout lady slowly read every one of the 200 items in front of me and then commented on them to the purchasers. It was my own personal hell. Life tends to move at a slower pace in Europe, and it’s a wonderful pace if you want to relax, but it takes a toll on the work that European startuppers can get done. When the services you need to operate are closed, or people don’t care if it takes 3 weeks to get you a document, you are forced to move at that pace.

There is a different way of speaking

On the topic of inefficiency, one of the biggest challenges for me working with Italians has been learning their way of speaking. Not the Italian language, but the manner in which people speak. In Italian, there are a lot of pleasantries that are common practices. Some of these pleasantries don’t even exist in English, for example the formal “you”. For the others, we have similar ways of speaking in English, but most people would never talk like that. We prefer to get to the point quicker and be direct (without being an asshole). It’s something we’re taught in writing and speaking from an early age. Unfortunately, this can be seen as incredibly rude to any latin language speaker. I’ve run into this problem a few times here, which has made incredible strains on working relationships. Worried that I was being incredibly rude (because I know I can be short sometimes) I talked to people who worked regularly between the US and Europe. They experienced the same problems I have about the language differences, and told me I need to learn to adapt. So everytime I’m about to say something I normally would, I take a breath and really think about what I’m going to say. It’s hard. It’s not natural to me. I find it really inefficient to take 20 minutes to say something I could in 2 minutes. But it works and it’s something you have to do if you want to do business with people in latin speaking countries.

On my team, we’ve come up with our own working language. We all speak English, sometimes there’s Roman thrown in (and sometimes I understand it), and every once in while my cofounders will speak Italian and I’ll answer very slowly in Italian. But the most important thing is, after a lot of conversations, that we found a way of communication that we can all respect, knowing that we come from different backgrounds. That’s critical.

There are fewer women in startups than the US

One of the more disappointing things I’ve found about European startups is that there seems to be fewer women here than in the US. Out of the 65 people in Techpeaks, only 6 of us are female. That’s a damn low number. I’ve met a handful of other women cofounders around Europe. One I met at the Mind The Bridge Bootcamp, where she was pitching her first startup with another female cofounder. She is originally from the US and lived in Milan for the past 7 years. She asked me why I think there are not more women founders or women even working in startups. I’ve also heard this question from 2 really great women cofounders in Hungary. It’s a hard question to answer.

One of the reasons is that we don’t tell our young girls it’s a possibility for them. But, when you’re older and you’re thinking of entering the field, it’s not easy. I’ve heard it said “misogyny is a full time job” for developers in the US, but it’s doubly so here. I don’t think Europeans intend it with as much malice as some of the brogrammers in the US, but they’re not used to working with women. I’ve heard so many conversations here which would end up as an HR nightmare at home. Also, a lot of things that I’ve heard developers say at home in general about women, have been directed solely to me by peers here. It takes it to another level, that is incredibly uncomfortable.

One of the advantages we have in the states (which shocked the Hungarian founders) is that we have groups like New York Tech Women and Girl Develop It, that were driving initiatives to get more women into the field and also support them. That support would do women well here. In order to include more women in the startup world (which can help you be more successful) I think many European cultures need to first recognize this as a problem, then learn to be more open to women in the industry, and definitely women leaders.

The Startup camaraderie needs some help

One of the things I love most about working in NYC, is that I know there are so many people out there who support me and want to see my succeed. We go to events together regularly, we run into eachother at meetups, and we always ask “What are you working on? How can I help?” This camaraderie makes work enjoyable and motivating at home. I think this is what makes us a powerful nation for starting companies. That’s one thing I’ve seen missing from Italy. Silicon Valley got to where it is today because of the community. When I first visited San Francisco, the whole community was buzzing with startup events, meetups, and people who were doing interesting things. Everyone I talked to was willing to sit down to have a coffee with me, introduce me to someone, or invite me to an event. It’s a magnetic place, and if you are in startups, you finally feel like you’re home, surrounded by likeminded people.

Italy, and Trento, has a long way to go to get to this place. Bringing in startups and entrepreneurial people is a great way to get started, but a true community has not formed yet. One contentious debate we got into with a community of startuppers in this area was on Facebook. We had been asking people in “Startup Spritz” to help us out with sharing surveys, giving us feedback, and just telling them what we’re working on. Some of the members of the group (not everyone) went on a rant that they shouldn’t help us and we weren’t “contributing” to the community so we don’t have the right to post. Meanwhile, one of the Techpeaks requirements is that each one of us does 40 hours of work in the startup community to help leave some knowledge and work in Trento. So the reaction in the group shocked me, as we had talked to these people and exchanged ideas before.

I’ve always been of the mindset of pay it forward, and if someone asks me for help, I will help. Then, when I need their help at a future date, I don’t hesitate to ask for it. This mindset just isn’t dominant here yet. I was really happy to see after this incident a lot of Techpeakers felt the same as me. We help each other out, we don’t expect things in return. We know that we’re a community that will support each other, and that lets us thrive.

It is expensive to start a company here

I am certain that the entrepreneurs in Italy are doing everything they can to make their companies happen. To some extent, I think they are also more driven and passionate about what they’re doing than some people in the US. Why? Because it’s damn expensive to start a company here. You have to shell out so much money, jump through so many bureaucratic hoops to incorporate in Italy, that you better be passionate or crazy to start a company here. Let’s compare:

USA: In the US, you can incorporate in Delaware for $239. If you make no revenue, you pay no taxes. If you do not personally get a salary, you do not pay any taxes. So for these costs, you pay about $239 to start a company, and $225 to maintain your company while it’s not making money.

Italy: In Italy, you have to go to the notary public with lawyer’s documents to incorporate. The fee for the notary was €1700, the fee for the lawyer is about €1500. You also need to contribute share capital, which was just lowered from a minimum of €2500 to €0, thankfully. If your company makes no revenues every year, you have to pay a flat tax determined by the gov’t, which we believe will be around €4000. If you are a shareholder for a company, but you make €0 a year, you need to pay €4500 a year in taxes. So for these costs, you pay about €3200 to start a company, and €8500 a year to maintain your company while it’s not making money.

Many people who want to start a company in Italy, are asked to fork over their life savings to do it, so you better believe they are going to work their ass off to make it succeed.

 

I’m really happy I decided to come to Italy to work. Although it’s been nothing but a rocky ride, to say I’ve learned a lot would be an understatement. Entrepreneurs in Europe may be few and far between right now, but they are driven. The government and cultures make doing their jobs hard, and most of them want to come to the US where they can raise money and do good work. I hope that we reform a lot of our immigration laws so they can do just that.

For the US people reading this, don’t underestimate the European startuppers. I have met some really amazing, hard working people here. For the Europeans reading this, keep chugging, don’t be too proud to accept help, and learn about American culture if you want to go there. There is a budding startup community here, a few years behind the US, but give it some time and the right mix of people, I think we’ll see it grow.

21 thoughts on “5 Observations About European Startups

  1. See this NYT op-ed: http://www.nytimes.com/2013/10/27/opinion/sunday/bruni-italy-breaks-your-heart.html

    As an SF entrepreneur with two relatively successful prior startups, I’m looking for a place OTHER THAN the US to build a company, so I came to TechPeaks. I’m really starting to love Italy – its history, arts, and nature. It has become painfully evident that I shouldn’t base my company here. I’m not sure I’m invested in the idea of being here enough to want to fight the fights. I’d like to look more broadly to the rest of Europe & Asia and see if there’s a city that will suit my personality and the needs of my company.

  2. P.S. Of late, the Italian Government has started a new programme whose goal is to attract foreign investment and talents. Its name is Destinazione Italian, and proposal #44 is about providing a “Startup Visa” to those foreigners who would like to start up their business in my country. I warmly recommend you to have a look and spread the voice… http://destinazioneitalia.gov.it/english/ Thank you!!

    • Hey Mattia – Thanks for the info. Italy got to the startup visa faster than the US! That’s wonderful. I have heard of the new rules and I think they’re making great progress. We were able to incorporate as an innovative startup under them and actually be able to afford the capital you had to put into the company. This all happened while we were in the process so it was great to see it happen in real time for us. I think with more support and programs like this, it will get more attractive to build companies in Italy.

  3. Dear Melissa, your post was really interesting and inspiring to me. I wonder if you’ve heard about Italy’s newly-passed legislation in support of innovative startups (executive summary here: http://www.sviluppoeconomico.gov.it/images/stories/documenti/Exective_summary_ENG_FINAL_30_agosto_2013_Rev.pdf). Thanks to these norms, my country has taken giant steps towards becoming a friendlier place for innovative businesses…

  4. Hi Melissa !
    Nice and interesting post !

    Can I ask why Trento ?

    • I am part of the Techpeaks accelerator which is based in Trento. I applied from NYC because I thought was a great program and I wanted to be a part of it. It happens to be funded by the Trento government and is located in thic city! So that’s how I ended up in Trento.

  5. I have been lucky enough to be part of the first batch of TechPeaks (with http://www.memeoirs.com), and to spend time with you, Melissa. From this side of the equation, it has proven really fruitful to share ideas and receive your feedback. And like you say, there is a strong group of very talented people around.

    Your essay is very informative. I would just add that the Trento startup scene seems to really be in its infancy, compared to other Europe scenes. In Portugal (the one I know the most), there is that very sense of camaraderie you mention is missing here. And because it is a small universe you quickly get paid forward (backwards?) when you help someone.

    • Well well well… I don’t want to play the defender of the “Trento startup scene”, it’s just a small town with some good talents in ICT who try to set up startups of a decent level. However, Fred & Melissa and others, we do have that “camaraderie” that you mention, to each other and to guests; but it’s fairly evident to me that you guys were parachuted in a reality that was unprepared, had little to no opportunity to meet the people who live and do business here, and inferred your judgment from that.
      I suggest that you ask your mentor, Evan Nisselson, about conversations that he had with local people and time he spent with us. They were very much appreciated, and it’s a pity that you did not have time to join us.

      • Alfiero, I’m sure that there is a healthy community here in Trento. I was not comparing it to the one in Porto (PT), only exposing a reality that I know. And that is European.

        Key takeaway: create stronger interfaces between TechPeaks and the local Trento startup community, on the next round. It’s in everyone’s benefit.

  6. I’d like to add that we were used to be great executors too in the recent past (60’s, 70’s and 80’s).
    We still are in some fields (like leather-made products).

    Then laziness and comfort took over: it was very convenient to do less and probably it still is.

    I guess it’s going to be back in 10 – 20 years from now when we’re gonna be poor enough to understand we need to work hard. Unfortunately being used to not working things pushes you to lay down.

    All this is very typical for Italy: it has been like that since ever. History tells.
    “We” have been capable to “discover” America and get nothing good out of it 😉
    History is crowded with examples like that and repetition makes a pattern :-)

  7. Hello Melissa, nice post and very objective. I agree with your analysis

  8. One note on the language (it may be useful to you in the future): as you noticed we tend to distinguish between formal and informal much more than native speakers do. This is most likely due to the fact we are much better at writing than speaking, that is we speak english as if we are writing (were the distinction between formal and informal is much stronger).

    Regards,
    Marcello

  9. Federico Rampazzo

    That’s an interesting comparison! Thanks for bringing this up.
    As an italian enterpreneur, most of these idiotic problems are obvious to me and eradicated in our culture – but I understand how this can be shocking to someone coming from outside.

    Probably the problems you experienced are endemic to the italian system – in other (more advanced) states in Europe things fare much better.

    I really like your get-out-of-the-comfort-zone attitude – but coming to Italy and deciding to start a business here is more than notching up the difficulty.

    Yes – it’s harder starting a business here, it looks like we’re stuck in the 18th century and rounds are abysmally small.
    But the main problem I have with living, working and innovating in italy is knowing I’m supporting a state in which money are wasted on a regular basis inside useless institutions due to useless people with too much power.

    Run away.

  10. Hi Melissa,
    I have to say “thank you” for sharing your point of view about differences in way of thinking and acting in the two entrepreneurial realities.
    Marco

  11. Hi Melissa, looking for adding something to your post I just wanna say that the same good attitude to solve problems because of a multitude of bureaucracy issues and sick relationship patterns has created a real inability to focus on “getting things done”.
    Also I feel the problem solving trait of the skilled italian professional should not be confused with the well known bad attitude of “fuck around with people” that so many (old and) new startups suffer from (and americans know well).
    Pros and cons both sides, but it’s clear to me that trapped in a clandestine-unshared-too-exclusive- entrepreneurship-culture any italian new startup business will never take off.

    Nice to discover your blog today. Congrats and good luck!

  12. Hi Melissa, we don’t know each other, but I know Alfiero that commented on your post. I’m looking forward to meet you and exchange some views on EU vs US entrepreneurship. Although you saw Hungary and Italy, you are forgetting the powerhouses of EU startups, Paris, London, Berlin, Moscow. I guess there things should work more the NYC way.
    Anyway it’s interesting to see the recurring use of the word “execution”. I always thought it was a qualifier for a startup :-)
    All the best,
    F

  13. Hi Melissa, I’m an italian entrepreneur, I lived in San Francisco for 3 months and thanks for sharing your thoughts.
    Looking at our pros & cons from an american point of view can help us to understand better where we need to work on.
    Best of luck on your startup!

  14. Well Melissa, of course you’re right in most of the things you’ve said, but on a specific episode you’re quoting (about “We had been asking people in “Startup Spritz” to help us out with sharing surveys,” etc. etc.), you’ve only seen a part of the picture and yet turned it into a general view.
    I am saying this because at the time I was one of the group admins, and I perfectly know why that happened: there had been prior episodes of abuse, and you guys just came last with a poor timing. Yet hey, the Techpeaks community hasn’t really had the chance to mix into the local scene, and that’s for sure not your fault.
    Well, it’s a long discussion, too long for a blog reply. And by posting this article, you’ve set a viewpoint that is quite difficult to counter. Anyway, feel free to call for a coffee, you know where you can find me 😉

    • Oh I’m sure there’s lots of history in Startup Spritz I know nothing about that probably played into it. I don’t base all my thoughts about the community of startups off that one incident. It was just an example that stuck with me. But these are just my observations and impressions so far, not what I believe to be solid, cold hard facts. I’d love to hear your thoughts over coffee sometime.

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