Comment by zerkten
4 years ago
The costs you list are dwarfed if a company scales to any reasonable size and by that point they have enough of a team to consider moving elsewhere in the EU to better manage them. In fact, moving to the US might open up as an opportunity which some people take.
The biggest problem is funding due to the risk aversion of EU institutions and limited alternative sources. You have to be incredibly qualified to acquire the funding need to drive a startup forward in the way that happens in the US. This ranges from the small angel investors through to the first series of VC funding.
In the EU, if you are a business like a biotech or pharma you may be able to navigate this because those are well trodden paths with high risk adversity baked in. A software company has many unknowns, so you encounter problems with expectations. You can't fail in the EU because you only have one shot and won't get back again with another company/idea. In reality, it's very likely you'll stumble a lot initially and won't have the leeway that you have in the US. If you compared bankruptcy on both sides of the Atlantic you'd notice similar patterns.
I know those costs are nothing when a business grow, but having low barriers of entry means a lot more people trying.
I can understand having setup a company inside an EU country, but the lesson I got as a developer is that I need to think bigger if you want to have a sustainable business. You can build and validate startup ideas very cheaply by either using budget hosting, or trials of cloud products. EU companies often have to go down the path of consulting part-time, or building the product for one customer who covers most costs with the goal of extracting V2 as a general product.
Developers can have a very idea idea of cost management and what is valuable. They may be either blowing their employer's money on inefficient AWS solutions, or they are building their own k8s cluster on cheap VPSes because they felt that the managed solutions were expensive. It's an easy trap to fall into. You need to have a balance that is sustainable and productive. It was much easier to understand the whole space when we were building on LAMP or Ruby-on-Rails than it is now.
It's best to have a partner who is very business-savvy to help with navigating these options. If you only look at it from the tech perspective you'll fail quickly.