Unfortunately they tend to bring old-money sensibilities along with them, meaningful employee equity is rare even at executive levels in European startups.
employee equity in particular in startups isn't really as unambiguous as the term suggests. Given how many startups die out you may as well interpret it as a creative way for company owners to shift risk on employees. After all, the failing startup is the norm, by a huge margin. And one step further these days it looks like going public is then the next step to load risk off from employees and founders onto retail investors.
to be honest I'm not really too sad that this culture hasn't really taken hold over here. Most 'old money' in Europe isn't old billionaire heirs anyway but the small and middle-sized business who treat their employees quite well, employ them for decades, don't lay them off at the first sign of trouble and so on.
If tech in Europe is looking for a business culture I don't mind them going to the old money and family business in the German South rather than Silicon Valley.
You also need to pay Americans more to compensate for health insurance, insane holiday policy, poor worker protections, huge student debts that can’t be bankrupted out of, and so on.
OK yes, 3x for averages, with a widening gap at the high seniority level.
My point still stands - 3x is still a tremendous difference that more than makes up any other consideration (healthcare, rent, etc.) and makes one ponder whether a single US engineer is doing the work of three Spaniards...
Agreed, and it's an interesting phenomenon, even if you think inside the country borders.
Could Google close their entire MV office and relocate to Medford, Oregon and save millions of dollars in salaries?
But of course it's easier and there's more trust (some of which is merited because of how information and best practices spread) that someone that lives in SV can do the job their needed done.
> than makes up any other consideration (healthcare, rent, etc
I wouldn't be so quick. A three bedroom apartment in the city centre of Madrid goes for rent of about 1.7k per month. The costs in SF seem to be about 4-8k. I've heard American colleagues from the area talk about tens of thousands of dollars spent on costs for children's education, in much of Europe education is free or costs a negligible amount of money. I think in some parts of California you are eligible for certain types of aid even if you're into six figure salaries.
Anecdotally on a trip to California staying on the couch of a friend who rented a place for 3k you could have rented an entire house for the same price in Europe or presumably much of the US.
I'm German and when I started as a developer out of university I made ~45k and I paid 900 bucks in rent in a large German city and I did not even need a car.
Look at the total compensation comparison - software engineers are almost never paid any form of bonus in Spain - and it's at least 3x at every level. That's just averages.
The difference easily grows to 5-10x in "elite" positions.
I have worked for almost 15 years in SV at multiple tech companies (FANG and non-FANG) and at all the places, I have seen health insurance, at least 15 vacation days per year, 9-10 holidays and generous salary to pay off the student debt.
So your comment just reads like a somewhat inaccurate meme.
You are comparing the best the US has to offer with the standard for European employees.
Here in Germany, you have health insurance, no student debt, multi-month paid maternity/paternity leave, 30 days of vacation per annum, paid sick leave, multiple bank holidays.
Notice how I didn't specify a company or location?
Because this is the standard for every full-time employee in the whole country, irrespective of location or profession.
The German model has two draw-backs: Pay never reaches the levels in the US and it is relatively hard to land your fist job. Also, some gig economy jobs fall through the cracks.
For an honest comparison and a complete picture, you can't take a software engineer from SV and compare it to a software engineer from Berlin.
At least not just.
For a complete picture, you should also compare a software engineer from Boise to a software engineer from Düsseldorf. And a call center employee from Oklahoma with a call center employee from Mecklemburg-Vorpommern.
The ones who "made it" will always be better off in the US. But everybody else, not so much.
If you want to compare worst or average of the US, why not compare it to the worst or average of Europe - say, Romania or Spain or Moldova or Greece? Why compare it to one of the best places in Europe?
Or, to use your words - the Germans will always be better off in Europe. But everybody else, not so much.
The EU is probably not as homogenous as the US, still, in Bucharest, yearly salary is 20kEUR (92kRON) for your average Sw Eng (not to mention cost of living would be low).
Also in Germany you’re not going to get fired because your manager doesn’t like your face. And you’re unlikely to get incarcerated because a prosecutor doesn’t.
> You are comparing the best the US has to offer with the standard for European employees.
And you're moving goal posts by refocusing off of software developers and tech, an area where the EU and Europe badly lose to the US.
The median US software developer earns ~$110,000 this year before you get to any other compensation. That median employee (1.4m software developer jobs in the US) is not working in the bay area, NYC, or Seattle.
The US median software developer salary is over twice that of the EU. I haven't checked for an exact comparison but it's now probably close to twice that of a first tier EU economy like France, given how much higher incomes are in the US and how badly compensated software developers are in Western Europe. EU workers are also typically paying for their health insurance through high taxation.
That $110k employee is not paying for their health insurance via high taxation. The only argument there is that their corporate compensation could be even higher, maybe $125k-$130k per year, if the corporation didn't cover health insurance (shifting the burden to the employee).
The only work advantage an EU software developer has over the US, is the greater guaranteed time off from work. In exchange for that, they have far less economic upside potential and fewer jobs per capita available.
I've worked in a US company (in a German branch) and the work hours, late night meetings etc. they did in the US were insane to all of us. I can't say if this is typical or not, but from what I hear it is.
In Germany, people usually give their best effort... for 8 hours, then they go home and enjoy their free time (or family time, if they have one). Of course, sometimes emergencies happen and you stay longer, but this is seen as an exception. Worker protection is also very strong here, meaning that things like "on call duty without compensation" aren't even legal.
Also, if you're in the valley you might not be able to afford to live there, so you have to factor in commuting too. Commutes are generally much shorter in Europe and public transportation is also usually better.
Yes, it's true that you earn a lot more in the US, even factoring in health insurance, rent etc., and I agree that European (and in particular German) employers should be paying more (and salaries are already starting to rise significantly), but still, I wouldn't want to trade because in the end, money is not all that matters.
While 30 days vacation is kind-of standard, the statutory minimum is 20, and I've had job offers fresh out of university where employers offered me only 26 days.
I knew that I could easily get another job offering the "standard" 30, but I'm sure that quite a few graduates fall into that trap.
Most EU students don't even get into the labor market until their late 20's (because the lack of jobs, erasmus etc).
In the US, it is not uncommon to see very young engineers making some serious money in their early career, due to accomplishments during their teen years.
So in effect, if you adjusted for age (not seniority or title) the gap in pay bet would be worse against EU.
Here's the thing: most companies in Europe also provide private health insurance, almost double of those 15 days and more or less the same holidays (which are state defined and if not provided, must be paid at 150% to 200% the normal rate - depends between country).
This, of course, does not account for the entire gap in wages between both sides of the Atlantic, but it does weigh on it.
Sure and the salary differential probably trumps those extra vacation days. According to levels.fyi[1], median compensation package for a software engineer in SF bay area is $237,000. That is a very big number even accounting for health insurance premiums, California taxes and the cost of living here. Can you please share a few European locations which offer a better deal than this? AFAIK: London has shitty salaries and slightly lower CoL than SF, Paris / Berlin / Barcelona have even shittier salaries with much lower CoL but higher taxes, Zurich has comparable salaries and lower taxes but as much or higher CoL.
What's the point of all that money when you don't get any time to spend it?
edit: I know this sounds flippant and like sour grapes, but I'm actually in the process of looking for a new job. Many of the best fitting job offers for my qualification are in the States, but the lack of vacation days, long work hours, etc. are a MAJOR deal breaker for me. With 15 vacation days I could see my family back home once per year during the Christmas holidays and maybe have 1.5 weeks for some short trip somewhere during the year. That's it.
15 vacation days is supposed to be good? I have 30 vacation days + 20 extra days for sabbatical every 4 years.
How do you even do longer 3-4 week trips with a limited mount of vacation like that?
Base salary is higher in the US just because there’s more demand and less supply. Big tech firms + tech startups + majority of engineering depts/HQs in the US means competition is high for software engineering talent.
I’ve worked in the U.K. and speaking with many data scientists from other parts of Europe, they say that the real data science work is just non-existent elsewhere and pays less.
The US has more supply, not less. But the demand is even higher.
Supply and demand around industry verticals in geographic hubs like SV doesn't follow simplistic supply & demand laws. More labour means more fuel for starting fires, and lots of fires require more fuel to grow, throwing off more and more heat (profit); meanwhile, if you're in a fuel-scarce region, to pursue the metaphor, it may not be possible to start a fire at all. Salaries are high because the companies have global scale and are competing with other companies with global scale, but they can only be global scale because they have lots of labour supply, and they only have that because they're co-located and can utilize fungibility in the labour market.
There's little need for data scientists in small local companies.
For data scientist positions, I wonder how many of those are created and hired for but management still doesn't know what to do with the data they produce. (Or even how good and/or actionable the data is)
Very experimental at this stage although my role is leadership around getting things to production. Data is actionable but a lot of processes/frameworks need to be developed for people to feel comfortable with AI/ML being just a regular part of business process.
Odds of success can be fairly valued in an equity offer despite success odds being low (the expected value of highly speculative equity, vesting on a schedule, equals a certain amount of cash per year.)
The conventional wisdom is to just take cash because that comes out ahead most of the time and you have to personally fully value the money from a successful exit to make a salary plus equity offer be worth it to you. But the math on early startup offers certainly can be and sometimes is fair.
Certainly agree that the business culture of the sturdy, monied middle class should be preserved.
Equity should not be in lieu of competitive salary, its purpose should be to align the employee with the company's success in the long run.
> to be honest I'm not really too sad that this culture hasn't really taken hold over here. Most 'old money' in Europe isn't old billionaire heirs anyway but the small and middle-sized business who treat their employees quite well, employ them for decades, don't lay them off at the first sign of trouble and so on.
That is increasingly less true for new businesses (although still less arbitrary than the US, although-although some would argue this is a form of agility necessary for startups) and was never due to the kind nature of business owners but due to post-ww2 tradition of worker-friendly politics and regulation backed by strong unions. The "old money" investors do not directly manage the startups any more than silicon valley VCs do theirs.
A well funded startup in the U.S. is typically going to pay salary plus equity. Given the churn of technology I wouldn't expect European startups to be around any longer than the average U.S. startup.
> employee equity in particular in startups isn't really as unambiguous as the term suggests. Given how many startups die out you may as well interpret it as a creative way for company owners to shift risk on employees. After all, the failing startup is the norm, by a huge margin.
The modal startup company fails and any equity grants or options are worth nothing. The modal employee of a company that is extremely liberal with equity because it was a startup before it found product market fit is AppAmaGooBookSoft, Oracle, Stripe or Uber. AppAmaGooBookSoft must hire at least 50,000 software engineers a year between them. YC may have funded that many founders in its entire history. Possibly over YC’s entire history all the startups whose equity went to zero have had 500,000 employees though that seems high. Google alone has over 100,000 employees right now. If AppAmaGooBookSoft don’t have half a million employees who get substantial portions of their compensation in stock right now I’ll be very surprised.
Isn't 1-2% significant for an employee that also gets a market-competitive salary & thus takes no risk? How much did early employees who joined amazon in 1994 or google in 1998 get?
IIRC the "rule of thumb" is that the first batch of employees share 10% of equity, the next batch get 10%, etc but each batch is much larger than the previous (e.g. from <10 to 10s-100s to 1000s).
So as an early employee you'd get a single-digit % but if you come in the next phase you'll get permill(s) & later on even less.
If good execs prefer equity, they’ll go to where the equity is. And because they’re good, their companies will perform better, which creates a virtuous cycle.
It even gets murkier when you consider people like Susanne Klatten, one of the heirs of BMW. Definitely a heiress, but then she did pretty well with what she inherited. So, entrepreneur or heir? Or both?
I think it's really positive that these companies / networks open themselves for startups, still it would be better if they would try to change their companies so that all startups have a fair chance to work with them. This would be beneficial to them as they would have a larger sample to choose partners from. Right now these VCs present maybe 50-100 companies to them (LaFamigila for example has 34 investments as of now, I think), which is still a very biased and restricted sample, so they are almost surely missing out on some great innovation opportunities.
Doing B2B sales to large enterprises in Germany I found that it takes a lot of side channels & social engineering to sell into large organizations as a startup. Maybe this is just part of the "game" but I can't stop thinking that those companies miss out on so much innovation because they simply don't have good processes in place to systematically and fairly build relationships with small, innovative tech companies.
Founders from different regions, how is your experience with this?
The thing with big companies is that you have to fit in whatever reality they are telling themselves in that moment. Then you need big credibility points to give them a way to say you were the best at xyz, pity that you failed. They care 0 about innovation, unless they are telling themselves they need it but even then it’s likely to require the small startup to have accumulated a lot of credibility first.
Yeah you can pretty much forget about wealthy Europeans doing anything at the speed of any business cycle. They are scared oldest sons managing a family office who have no idea what they are doing aside from breathing and making a baby in wedlock.
These people will put down $1 million dollar deposit to make it seem like they are serious about completing a deal, and will just let the timeline expire forfeiting the entire deposit!
Forget about the negative interest rates. Unless you can tap into the high yield corporate debt market, then dealing with these rich people is hopeless.
Source: Been around a lot of wealthy Europeans that talked a big game. It is the most ridiculous stable business climate on Earth. I do not recommend, especially for tech.
But honestly that sounds reasonable to me. Old money wants to keep their money, so they are risk averse. New money is in the process of making their fortune so they are more interested in betting big.
Yes that is precisely what is going on, but they know they want to get out of real estate and yachts and public equities, and want to feel close to the action.
I had a couple of discussions concerning that topic lately. And the main driver behind a lit of investments seems to be the low, or in some cases even negative, interest rates. So everyone with enough money in the bank is looking for investment opportunities raking in more than 1% of returns. Which kind of lowers the bar for investment on general, also startups loom a lot less risky than they used to.
I completely agree with that. The article refers to a trickle so far of interest. It was non-existent over a decade ago. If they get good returns that is and brag about it, then it might be a “flood”.
