Comment by dgroshev
18 days ago
From experience, regulation as an explanation for EU startup competitiveness is overused so much it's almost meaningless. Can you point out specific laws that you consider existential for startups?
What I find matters way, way more is two factors:
- Concentration of capital. The US has an ecosystem of wealthy people that want to put their money somewhere. This is good for startups, but can also backfire as we can see in the news.
- Unified market. EU is not a single market, it's several dozen markets with different regulations, different languages, and different cultures. You can't sell the same B2C product with the same marketing in Germany, Spain, and Sweden as easily as you can in California, Ohio, and Texas.
Adding another point from Paul Graham [0] & [1]
[0] - https://x.com/paulg/status/1887186094120137042?s=46&t=mXA1Wm...
[1] - https://x.com/paulg/status/1887249759557009903?s=46&t=mXA1Wm...
First, your last point answers your first question: a non-unified market is an implicit result of too many regulations. Harmonizing them would create a more unified market. The US is efficient because it is more homogenous. That efficiency is one of the things that leads to capital formation.
So, I think you have causation backwards. Capital formation doesn't really happen because it's too difficult to build and grow things in Europe.
Look at tech in Silicon Valley - all that capital formation is years worth of growth and reinvestment.
Look at oil & gas Texas - again, all that capital comes from years of growth and reinvestment.
And what you learn in silicon valley you can generally apply to starting a company in Austin Texas. What would happen if Mercedes wanted to move it's company (HQ and all) to Spain? How much would it have to relearn from a regulatory perspective?