>The USA is in a position to shutdown all the technological infrastructure of Europe (AWS, Google, Facebook, Azure, ...) and to openly spy its citizens
OK, and what can we do about that?
We build our own successful cars, we build our own successful planes but it seems like when it comes to building highly scalable world dominating software we are powerless even though our universities churn out tons of talented CS engineers and researchers.
What does the US do right that we do wrong here? Besides paying our devs worse.
> What does the US do right that we do wrong here?
I have worked for a number of really successful Swedish software companies, all of them have been purchased by American companies. From Skype to Candy Crush, all companies are owned by USA corporations. USA is a rich country and has accumulated enough wealth to buy any competing economy.
China, when it comes to technology, has created an extremely innovative environment and growth local talent beyond what Europe can dream. (Before anyone complains about China "stealing" American technology, just remember that most of American technology was "stolen" from Europe after WWII. Except, that sharing technological advances should not be seen as stealing but as global collaboration for the improvement of humankind).
Just to make sure that I am not misunderstood. I do not think that the USA has done anything wrong, I just think that Europe, until recently, has not been in a position to compete with the USA. Not even Germany, one of the biggest and one of more successful economies in Europe, can compete with the USA as a whole. Europe failure has been to not unite and align their positions. A divided Europe cannot compete internationally, that is our fault. Internal-country markets are too small to create a software industry, or a film industry. Only aviation and car manufacturing have growth thanks to a heavy government intervention that forced a consolidation and shared efforts at European level, showing that the approach works.
USA and Europe should be partners, a week European Union will not be relevant in the world, a divided European Union would individual states up for grabs for other international powers (UK probably by the USA, southern regions have seen China investment increasing and Russia maybe temporally incapacitated but sooner or later will come back).
So, I believe that Europe has done some things poorly, event that also had done great things, as keeping one of the higher standards of living in the world. The current pandemic is creating a re-thinking on how countries interact between them. Isolation is not a solution, not even for China, and I hope that we do not get there. But, we need to find a way that each region can protect its own interest while sharing its wealth and knowledge with the rest.
> What does the US do right that we do wrong here? Besides paying our devs worse.
The reason there is really no cool tech firms in the EU is because the EU economic policies make them impossible.
Working for a startup is an extremely risky decision. As a top engineer, you get shitty pay, and a really good options package that in most cases ends up being worth nothing because most startups fail.
In the US, however, if your startup cashes out, you end up rich. This is not only a life changing experience, some of these rich top tech engineers end up creating their own startups afterwards with the money they make, which perpetuates the cycle.
In Europe, if as a top engineer your startup cashes out, you only end up marginally better than if you had had an 8-5 job at BigTech (Google, Apple, Microsoft). Almost 50% of your cashout goes away in taxes, and the rest barely compensates the bad paid you got the last 5-10 years of your life, and if you take "worked hours/week" into account, quality of life, and risk taken, the value proposition is just a joke.
Startups already have a very hard time flourishing with top talent. Europe makes it almost impossible for these to attract top talent, so that's why you don't see as many unicorns here as you do in the US.
This doesn't mean there aren't any startups in Europe. There are. There are just much fewer than in the US, have an even lower success rate, and a less qualified and risk-friendlier employee base.
Source: my own personal experience job hunting in Germany, for many US startups operating here, where most of them actually try to offer BigTech salaries without option packages because they know option packages do not make sense here.
>Working for a startup is an extremely risky decision. As a top engineer, you get shitty pay, and a really good options package that in most cases ends up being worth nothing because most startups fail.
How about structuring it differently? If you e.g. don't receive options but actual shares? Hold those shares not by yourself but via a shell company. Then you never pay income taxes. Since you are in Europe, look up the successors of the current Double Irish.
> If you e.g. don't receive options but actual shares?
Everything your employer gives you as part of your salary is subject to the salary tax. Whether your employee gives you options or shares, doesn't matter, you need to taxate them, and that requires assigning them a value.
If your employer gives you options, you can only exercise them when the shares you buy have a value (via an IPO, acquisition, etc.), so you pay taxes on the value when you exercise them - verifying this value is trivial for the tax office (check purchase price of shares, IPO share value, etc.).
For publicly traded companies, if your employee gives you shares, you pay taxes when you get the shares on the value of the shares on the day that you got them.
If your employee gives you shares from a private hold company, those shares have no value until the company gets public or acquired. You'll taxate them not on the share price that the share had when you got them, but the one it has when it went public.
> You'll taxate them not on the share price that the share had when you got them, but the one it has when it went public.
Imagine getting 1 million euros in shares, that you want to hold on for a couple of years because you believe they will be worth 10 million euros then. Well, to do that, you need to first pay 500k Euros in taxes (where you get them from is not the tax office problem). Then, if the stock goes from 1 to ten million, you need to again pay taxes on the 9 million win that you made (25%).
Opening a startup in Germany, Italy or Spain means enter a world full of bureaucracy and complicated rules: you need enough money to start and an accountant hopefully knowing their stuff.
Taxes are so high that you will likely struggle (or just close) the first two years and you will eventually start accumulating tax debts. Errors
On the other side, some european countries came to rescue with some smart solutions — like the Estonian e-residency program.
Not in Sweden. To start a limited liability company here you only need 2500 euro and no accountant and Swden does have plenty of successful tech companies, it is that the US tech giants tend to buy them out.
I own two tiny companies, neither of them which has an accountant.
That's for a GmbH [1] where you create an independent legal entity. Actually it's 25k and almost 1k in legal fees. Though, you only need an accountant if you have millions in assets or plenty of employees. [3]
However, that's for an independent legal entity. If you want to start a business, you can simply register a business, even online [2] for about 25 to 100 euros. If you don't have wealth to protect you don't need a legal entity anyway.
[3] Actually you can buy an old, empty, GmbH for about 5k but then you lose those 5k instead of having them on your balance sheet like you do when you start your GmbH with 25k.
> However, that's for an independent legal entity. If you want to start a business, you can simply register a business, even online [2] for about 25 to 100 euros. If you don't have wealth to protect you don't need a legal entity anyway.
I'm not sure I follow. If your startup isn't even an independent legal entity, AFAICT you can't pay your employees with equity (e.g. stock options).
If you could, the risk would be super high. If the startup is an independent entity and the CEO screws up (e.g. goes to jail), you can replace it. But if it is a completely private business owned by one single person and that person doesn't want to be replaced, then whatever equity you had is now worthless.
You are right. I just wouldn't see those points as essential problems:
* If you have co-founders, 25k shouldn't be a problem if you pool your money. A group of people who have worked for some years should have that much money or I would fear that they cannot hold budgets for the company
* If you have employees, 25k is a month or two of their salaries. You are dead in the water if you don't have that amount of money in advance as a buffer
* If the CEO owns something like 90% of a GmbH and he screws up, his 90% go to whoever has to be compensated. There is no fundamental difference to him owning everything. If you are an employee, then you better start your own company with your colleagues, even if it was a GmbH. If you are an investor, well, start anew. You have spend less than 25k or this would have been a GmbH.
> You are dead in the water if you don't have that amount of money in advance as a buffer
In Germany, yes.
The people that usually have the high-enough risk tolerance to build a startup are usually broke college graduates. For a group of 3 broke college graduates each with 10k Euros in debt from BaFoG, coming up with 25k Euros just to try an idea that in the vast majority of cases will not succeed is pretty much impossible.
I finished my masters in germany debt free with 22 years old. The first time I got 25k in the bank was when I was almost 30, that's after working 7 years full time as an employee.
My risk tolerance at 30 is completely different from the one I had at 22. At 22 I could have "lost" 1 or 2 years building a startup that fails, living with 500 Euros a month or less in a shared apartment with my university buddies, waiting tables to pay the bills in between, no problem.
But now that I have 25k ? There is no way in the world I would quit my job to start a company. I have a family that depends on me, and other things I can invest those 25k in (car, house, pension fund, ...).
If you want fresh and broke college students with nothing to do to attempt a moonshot, those moonshots need to be almost free. Only 1 out of every 10.00 or 100.000 moonshots will land your country a profitable company, so you need to have a lot of them.
Requiring people to come up with 25k euros upfront is nuts. If you already had a couple of moonshots succeed, and each moonshot created a generation of 300 millionaires like it happens in the valley, then chances are that some of these risk-friendly and nostalgic millionaires will sponsor some of these startups is high. But Germany would need to somehow create that ecosystem first.
This is all valid if you need a GmbH. But if you are building a website you can do without. Which risk do those students take that cannot be stomached?
On the other hand, since you have 25k, where else but in your startup can you invest your money and expect high profits? If anything, your family does not only rely on you but you can rely on your family to start a company. Your children depend on you showing them how to take risks and be successful.
> This is all valid if you need a GmbH. But if you are building a website you can do without.
If you are doing that alone sure, but if you need to hire people and only have equity to pay them, things will get sketchy quickly without some kind of legal entity.
> On the other hand, since you have 25k, where else but in your startup can you invest your money and expect high profits? If anything, your family does not only rely on you but you can rely on your family to start a company. Your children depend on you showing them how to take risks and be successful.
High profits are the reward for high risk, and high risks do by necessity materialize very often - otherwise they wouldn't be high.
Also, high risks aren't necessarily rewarded with high profits - there are many risks that just aren't worth taking.
Those are the true lessons for the children: assess the risk, asses the profits, and decide whether taking the risk is worth it _for you_. Every person is different and has a different risk tolerance, there is no right answer to the question of whether a risk is worth taking.
A 25 year old joining a startup is taking a smaller risk than a 30 year old simply because they are investing less (their time is worth less, they have less to lose, etc.). The profits are also higher for a 25 year old: 1 year of failed startup experience at 25 can have a huge impact on your human capital long term - if you are a manager at 30, and jump to a startup that fails people will just think that you hugely miscalculated a risk. That might actually hurt your human capital.
There are legal forms to share a company that are not a GmbH but come with personal liabilities. There is also always the option to use an English Ltd or that Swedish form.
>there is no right answer to the question of whether a risk is worth taking.
I tend to disagree. Multiply the risk with the expected profits. Unlike extreme sports, death is not part of the outcome unless you invest in drugs. It's not about thrills and crossing boundaries. If the expected profits are the highest, a risky investment is the reasonable choice, no matter the size of the risk.
Regarding the age, a 25 year old has the most to lose. Until 26 or 27, the brain has the biggest capacity for development. Wasting those years on something profitable but non-educative is a waste of potential. On the other hand, most successful companies are created by older founders because they have the experience and network to be able to succeed.
The 30 year old manager on the other hand hasn't even reached the middle of his life. What if he runs a project in his company that fails? Will he have to prevent mistakes at all costs? Will he ever be able to manage instead of having to cover his ass for further 30 years? By focussing on what he could lose, he is wasting all the opportunities in his life. People who think like that shouldn't start a company.
High profits don't come from high risks. As you say, if you only have the option between high profit, high risk and low profit, low risk, then it is all about risk preference. However, it's all about information asymmetry. Once you know a market and you see an opportunity, that means the risk is lower or the profits are higher than any other market participants assumes.
We pay devs worse because software is a complete aftertought, and the guys who produce it therefore are not seen as adding much value, if any. Meanwhile, the "software is eating the world" memo is almost 10 years old yet nobody this side of the pond got it.
Fix this mindset (good luck!), which is the real issue, and dev wages will correct themselves too.
I never felt I was earning worse than on US, while enjoying my 30 days vacations, home office, unemployment support, health insurance and having a privileged life above many of my friends in "regular" (non-IT related) jobs.
In the US, so many jobs, in so many industries, pay a complete pittance. It's one of the least regulated economies and people are seen as a fungible asset, hired, laid off at a company's convenience (in many states), and paid literally as little as possible. And yet, in this bizarro (for Europeans) world, devs are often paid a small fortune.
That's not generosity.
That's because they are recognized as bringing huge value, otherwise they would never be offered anywhere near those amounts of money. Europe just won't get it, therefore Europe is going to remain behind.
> Everything else is lost in US with immediate job termination, no thanks.
This doesn't matter when you save $60k/year from your $250k FAANG job. Job termination just means a long, fun vacation before you look for your next thing.
Also the idea of people get fired in IT jobs in USA at the drop of the hat is also bit of an exaggeration. Just look at how Airbnb and Uber are handling it.
"Affected employees will receive a severance package, which includes a minimum of 10 weeks pay and health benefits through the end of the year" [0] and their average senior software engineer is making 345k a year [1] so a minimum of 66k on average.
Nobody is talking about being rich but if you look at house prices in the major European metro areas or tech hubs, they're out of reach even for devs while that's not the case in the US.
By having a 30 year long credit and not going over the roof with their choices.
Meanwhile as described by Lehman brothers fiasco documentaries, multiple American families went totally bankrupt with their multiple mortgages over their houses.
Except that as a FAANGer you earn enough to own your house in full in 10-20 years and retire early, while as a dev in Europe's strongest economy you're basically a neofeudalist slave to your bank and employer way into your 60s(if anyone will still hire you then). Really nice.
Just because some people in the US made bad financial choices with property investments(some Europeans also did the same) doesn't change the fact that US tech workers earn way more than Europeans, cost of living adjusted.
I dont think it's that level of job that determines which economy became dominant. The US had policies friendly towards huge capitalist projects and funding that allowed for companies like facebook and google to form in the first place and reward immensely the people that took the risks to make that happen. You get as a result huge wealth inequality, but also huge concentration of international power since that's what you incentivized from the beginning. For the average worker its probably better to be in a country with worker protections, lower inequality, less concentrated power, etc. But that same system doesnt lend itself to creating multinational dominant corporations as powerful as many nation states
I have experience across Germany, Switzerland, France, Greece.
It is not the legal minimum, usually around 22, but you can easily negotiate it.
Back home, in Portugal, 25 days.
Ah, and if manage a position at a research institute like CERN, you can up it to 45, because usually they close around Christmas and it doesn't count for vacations.
1. Stop putting college kids with a bachelor degree in business in charge of software development teams. "Management" is still seen as something very 'fancy' in Germany. Being "a manager" carries a lot of weight.
2. Allow Engineers to advance without forcing them into management. A lot of very talented engineers in Germany are forced in mediocre middle management / product owner positions as the only option to gain some more influence.
It tends to be a fabrication of people miscalculating. You look at the total income sum "Wow!, 120k is twice 60k!" and you judge based on that.
It's similar to items appearing cheaper in the US because they do not include taxes, salaries "the sum" does not accurately reflect the quality of life. The number is higher but it doesn't reflect purchasing power accurately.
It's hard to explain, but I did these calculations a whole bunch of times because I keep considering moving to the US, but ultimately it comes down to:
A) Having a huge benefits package (which is not optional for an employer to avoid paying out for in the EU, especially Scandinavian countries)-- this includes insurances for loss of employment or sickness, but also pension contributions which are actually illegal to avoid in most European countries (5% matching contribution being pretty standard).
B) QoL differences up to and including healthcare, paid vacation time, paid sickness leave and paid parental leave. (from 2w-480d depending on country)
C) Childcare.
D) Taxes (and an accountant's time to file them on your behalf, this is assumed to be a minor cost)
Ultimately I did the math, and I'd have to dig it out again, but unless you're 20-30, very healthy, childless and a low-risk taker that enjoys driving: it is unlikely that you'll be better off working in IT in the USA.
Obviously there's 10x developers who would out-earn me there though.
If you want to earn large sums of money in a European country, that can still be done in Ireland or Switzerland.
FWIW: in my calculations 120k USD in Los Angeles was roughly equivalent to 55k EUR in Stockholm (50k SEK/mo)
Objectively, pendantically, you’re right. The actual sum of money being paid to you the employee is higher.
However, if you are “earning more” but also “paying more” then your purchasing power is lower. And when people mention salary, what they really mean is purchasing power.
It’s also true that US companies don’t have to pay certain overages that are required in the EU.
For example. I earn 60k (SEK) per month, my employer pays out 90k (SEK) due to insurances, social securities, pension plans and so on.
And things like that can’t be factored in easily, as it’s not usually known to the employee- so it’s often apples to oranges.
Ironic considering I would _at_least_ double my pay just moving to London (from north Italy, of course col is very different unless you live in Milan which is comparable to London but still with worse pay).
OK, and what can we do about that?
We build our own successful cars, we build our own successful planes but it seems like when it comes to building highly scalable world dominating software we are powerless even though our universities churn out tons of talented CS engineers and researchers.
What does the US do right that we do wrong here? Besides paying our devs worse.