Growing up in Eugene, Oregon, which like Berkeley or Boulder could have the label “People’s Republic of” applied to it, I always thought of “business friendly”, as something along the lines of helping huge corporations avoid laws against pollution, or other antisocial behavior. Only after moving to Europe did I begin to get an idea of what the very positive side of “business friendly” is in the US.
Truth be told, all countries tend to protect their ‘big players’ to some degree, be it the US propping up creaking airlines after September 11th, Italy finding various clever ways to get around rules about funding Fiat and Alitalia, or France finding it in their ‘national interests’ to discourage a potential bid for Danone (yogurt!) by PepsiCo. Some are better or worse (the UK has been pretty good about not interfering), but there is a tendency to want to intervene.
Leaving be the discussion over whether those sorts of policies are good, bad, or ugly, the biggest difference between continental Europe and the US is the ease with which new companies – ‘startups’ can be created and enter a market.
As a first hand example, I decided this summer to create DedaSys as a real company in order to better separate my business and personal financial dealings. Were I to do that in Italy or Austria, we would be talking about fees upwards of 3000 Euros (about 4000 dollars at market rates), which is a great deal of money for something that is not making a lot of it at this point in time.
Contrast this with what it took to create a Limited Liability Company (LLC) in Oregon, my home state. To have things done up professionally, it’s certainly possible to lay down a bit of cash there too, but by trading my time for money, and with the assistance of some nolo.com books about the creation and maintenance of an LLC, I was able to register DedaSys with the state of Oregon for the grand total of 55 dollars, and was actually able to complete the process remotely from Austria prior to going home on vacation, where I did the only thing I needed to do in person: open a bank account.
So it costs 1% of what it costs in Italy or Austria to open a company that provides limited liability… a very impressive difference, especially to a small, new company that does not have the connections a Ford or a Fiat will likely have to enable it to deal with all the other paperwork, rules, and regulations to deal with.
Add to that a culture of greater risk taking (meaning also more acceptance of failure), better funding opportunities, and… one comes to the conclusion that Paul Graham is right. It’s a pity, because the people in Europe are top notch. In Italy alone, I know a bunch of really bright hackers. Granted, some of them aren’t interested, and are probably better off not starting a company or otherwise dealing with the business side of the equation, but it’s always nice to have that opportunity.
In closing, here is another example of bureaucracy in action, from my personal on line journal about life in Italy, and now Austria, which I recently revamped by moving it to the Typo platform:
Confronting the bureaucratic beast – registering an Italian domain
Two months to accomplish what can be done in ten minutes with a