Unfortunately this applies to Spain, Greece and my home country Portugal. South european countries have the same base mentality when it come to entrepreneurship, you either get mocked/ignored/stigmatized for failing or you get jealousy/ignored when you succeeded.
Also, we don't have the mentality of "self-made man" and "go get it", most of our population expect everything from the government. They get a degree and expect to get a job the next day just because.
I have serious arguments with family members and friends regarding this, because I'm the totally opposite, I strive to succeeded and I'm happy and inspired when I see someone else succeeding. I don't want to be in a safe job for the rest of my life, I want to be in a limbo all the time, that will make me push forward and fight to a have a better life. And to be honest I'm doing a lot better than most of the people here, even if I don't have a "stable" job.
I'm currently working as freelancer for companies outside portugal, and I've just funded my company in the US. I expect to get away from here next year. I just can't stand this mentality
Portuguese here as well and I can vouch for just about everything phatbyte said as well. Anyone that has a little bit of success, in the eyes of 95% of the population did it either by a) corruption b) stealing c) abusing people/employees. People just don't believe hard work is a key to success. Heck, even when I change jobs for a better pay my own parents complain about it, they expect me to die in the same company I started working.
On another note, where care you in Portugal? If in the north/Porto, send me an email if you want to catch a beer. Always looking for same minded individuals for a chat.
You've reminded me the time when I decided to leave my job and become a freelance. My parents wouldn't stop telling me I was crazy for leaving a nice job for the uncertainty of being your own boss.
I'm not in PT right now, but GF lives in Porto and I get to spend quite a bit of time there. Drop me an email (it's in my profile) and we'll catch a beer some time.
> They get a degree and expect to get a job the next day just because.
Yes, and what is more, they expect to magically get a job even if they got a degree in Minoan pottery, or post-modern French feminist theory.
But to be fair this issue is not limited to this countries, even in the US there are plenty of people who believe that if they got a degree that somehow magically entitles them to a job.
The UK as well, we have "media" students from nth-tier "universities" like London Met strolling through the streets demanding their right to a job. The old attitude, call it Protestant or Anglo-Saxon or just plain English, is dying out, replaced by entitlement culture from the EU.
Sorry, my bad. As Alberto pointed in his comment, I was asking about how to incorporate a company in the USA when you are not a USA citizen (neither a legal resident)?
I'm Spanish and my GF is Portuguese. I can vouch for everything you said.
As an enterpreneur, I work really hard every day to meet my goals. 14 hours days are not unusual to me and working some 3-4 hours a day on weekends is the norm. When others know I work from home, they either assume that I just sit browsing Facebook all day and I'm really just collecting unemployment for the government or that I'm a lazy asshat whose parents pay for everything.
A year and a half ago, I was lucky enough to be featured by the most popular regional newspaper (~1M people live in this area) because of some work I did. A lot of the people who know me IRL congratulated me by it, but you should have seen some of the comments in the newspaper's website: they were incredibly vitriolic, calling me a lot of things like "lucky code butcher" or suggesting I was friends with someone in the newspaper because what I did was not newsworthy.
Combine that with the absurdly high unemployment rate, the incredibly high amount of people who prefer collecting 600€ of unemployment rather than working for 1000€ and the ridiculously high taxes we have to pay (an employee taking home ~1300€ a month would cost me around ~2700€) and you end up with the nightmare for startups we have here.
I can relate and sympathize. I’m from Spain although I have spent most of my professional life in the US and Canada.
Hats off to you if you are an entrepreneur in Spain. Some 20 years ago or so when I was in college and trying to be self-employed or create my own company I would go to the government offices in my hometown (with 40% or so unemployment rate) to know what to do and they would look at me like I was crazy.
In one office nobody knew anything and I had to come back later to talk to the guy who supposedly knew something but was out having coffee. In another office they pretty much kicked me out because my questions led them to believe I was trying to find some loophole in order to commit fraud or something. And these were the “Offices for Employment Creation” or whatever they called it back them.
Everybody in Spain just tells you to go work for the government (and there are 4 or 5 levels of government that exist in Spain), competing in the “oposiciones” or tests for a position, where the ratios are like one position for a thousand applicants. This is so because not only government employment is stable (they basically cannot ever fire you no matter what) and usually relaxed but they often make more money that their counterparts in the private sector.
Very good post. I am a dual citizen of the United States and Italy, and though I grew up in America and consider myself culturally more American than Italian, I lived, studied and worked (as a developer) in Italy.
It's difficult to describe the situation to an outsider, but I found Italy a beautiful place to live but a frustrating and difficult place to work.
1) Italian bureaucracy is maddening. Simple things that take five minutes in America, like getting residency in a state or setting up a bank account can take days if not weeks or months.
2) Taxes and rent are absurdly high compared to wages. I had a great job--and compared to my Italian born peers it really was--that earned 2,600Euro a month. My one bedroom apartment cost 1,400 Euro + 400 euro for utilities and taxes (and utilities is where you get taxed into oblivion).
3) Nepotism and "serving your own." True to what the article mentions, to get my job I had to go through 4-5 rounds of interviews. When I was chosen over the two other Italian candidates, they were blown away. How could they chose this foreigner over them? It didn't matter I was a better programmer, or an Italian citizen, or that I spoke Italian. I was American and they were Italian -- how could the employer possibly chosen me?
4) A cultural tolerance for being corrupt or sly and getting away with it. I'm generalizing some here, but I feel this to be true for the most part.
I agree that rents are high compared to the average earning, but different places have different costs. For instance I live near Catania (it is not really Catania but very close, where half of the people that work in Catania live, in the little towns in the Etna side), and I pay 450 euros per month for an 80 square meters house (not very big but mid-size for here), with even furnitures and so forth.
Catania is not Milano and here we are in Sicily, but on the other side this is among the most costly places in Sicily, and at 10 Km from where I live there are tens of gyms, 1 Apple Store, a few very big cinemas and plenty of commercial centers and so forth.
Btw here there are a great number of programers, surely not less programmers than in the rest of Italy in average.
So the question could be, what is blocking the south where costs are much more reasonable from entering the startups business? I guess that cultural factors have the most weight...
On #2, €1800/mo rent including utilities sounds pretty absurd! Is that in a particularly desirable city center, or with some unusual arrangement (e.g. furnished short-term rentals?). The Italians I know here in Copenhagen have mentioned rent prices closer to €700-900 for a 1-bd back in Italy, when complaining about how expensive Copenhagen is in comparison (€1800 would even be high for Copenhagen, though; it's more like €1000-1300 here).
I am italian, I have a full-time job in an IT private company, I own an house and I know why you can't create a startup in Italy: money, burocracy and taxes.
In Italy banks or companies will never invest money in your startup if you can't cover at least all the money you need in 4/5 years. If you dare to found a new company and you fail then your life is destroyed. You are tagged as "cattivo pagatore" (bad payer) and you will never obtain money in form of loans.
Italy is a very bad place if you want to make something innovative.
You blaming it on outside forces (money, burocracy and taxes) just validates one of the points in the article.
I am German, working some years for FIAT, and did my PhD in Italy, but left right after graduation for the US. The article perfectly summarizes the reasons I didn't want to stay and start something in Italy.
You are right, but those outside forces are really strong. I had to fight only to study abroad, which is seen as a waste of time and possible drawback on your cv (because you spent time studying abroad instead of studying for real...).
The only way not to sound like an Italian just complaining about outside forces is to leave the country. But than that is also not useful for Italy. So, you see the problem?
The only way not to sound like an Italian just complaining about outside forces is to leave the country.
there is by definition one simple way not to sound like someone complaining about outside forces: don't complain.
If you start by the assumption that it's impossible to do so in country X you have already decided to be in the "it's not my fault" camp.
There are two aspects to this, that people are missing:
1) On a personal level, you absolutely must be optimistic and try and do everything you can to create a company if that's what you want, but also to push the system to change and improve.
2) Statistically speaking, it's pretty obvious that messy taxes, bureaucracy and so on, do have negative effects at the margin, so taken as a whole, they're absolutely a valid thing to complain about.
The key distinction is to stay as far as possible from the poisonous ponderings about how it's not possible to do anything and it's all stacked against me and blah blah blah, which is all just a big excuse not to try.
I am not sure where are you from. I come from the area described in "Gomorra" by Saviano. We have rampant criminality and corruption. People get actually shouted around here.
Those are outside forces that will come and knock to your door as soon as your activity start to be profitable. People will ask you for money or favors or they will just make your life difficult just so they don't have to envy your success.
So, you are right, but you are also taking a superficial look at the problem. Of course you can start a company, but you will have to be much stronger and determinate and be able to deal with the fact that nobody, not even your family and friends, will support you.
small town close to rome (with a decent share of corruption, crime and immobilism) but how does that relate?
I was only stating that the reasoning in your previous comment is incorrect (which, by the way, it's about italy, not your area).
I am not dumb enough to disagree on the general topic of "it's harder to start a company in corleone than in san francisco",
I'm just worried by blanket statements from young people that the only chance to succeed is to change country.
Consider antirez, who ran a (successful, AFAIK) company from sicily or ciaopeople which has a decent business and is based in naples.
It's harder yes, but the first N steps should be trying and failing, and only N+1 should be giving up to blaming outside forces.
Couldn't agree more. Is it difficult to create a successful startup in Italy? Yes. Is it impossible? Absolutely not. I'm trying with mine and I'm pretty confident I'll do it in a few more months.
Respectfully disagree, up to a point. You can create startups in Italy (people do, and some actually succeed). True, bureaucracy and taxes hit you hard (but marginal corporate taxes in the USA are high nonetheless, aren't they?). True, if you are flagged as a bad payer, you end up in a very difficult situation (I guess that if you have a bad credit history in the USA, they will not put red carpets in front of you).
But just saying "it can't be done" makes it impossible for you to do it. Period.
Me: working as an associate in a VC firm. Yes, operating in Italy. And yes, it is difficult, but we (as a startup community) are creating momentum and we can see something happening.
Bottom line: banks do not invest money in your company, they lend you money, that's why they require a positive cash flow NOW.
the banking system of the eurozone (continental europe) is very conservative and not keen on risk. there's nothing that resemble venture capitalism in the old continent (with the notable exception of the UK which is a member of the Commonwealth). I think that the european system is more secure for private wealth (I assumed that having seen what happened to some banks in the US in 2008) but it's showing its weakness these days because it's putting entire countries on their knees.
I really like that graph. I suspect the Chinese may well be right in their assumption that "success is outside of their control", but few other countries have the same excuses.
There could be a case to be made that countries should monitor that metric very closely and work hard to improve their "Yes to No" ratio.
Also, having lived and worked in Italy, my number 1 reason for setting up my company (which failed) in the UK was the insane level of bureaucracy in Italy. It's farcical, near impossible to navigate and anyone who's prepared to deal with that level of antiquated incompetence, corruption and inefficiency needs their head looking at. It's a beautiful country, but it's rotten to the core.
Part of the Chinese belief of lack of control is the amazing amount of influence Confucian ideals still hold. How can one control one's destiny if they're beholden to their family, their elders and society. It's hard to be an innovator if individuality is discouraged. I'm not implying that Chinese men and women can't innovate, but I suspect they're disinclined to believe they can. It would be selfish to create a startup and risk failure which could jeopardize one's livelihood and therefore one's ability to continue the family. Also, failure would bring shame to the family. (There's a bit of stereotyping here, of course, and I'd love to hear from people who have spent time in Asia and could give me a more complete picture).
I think a large part of it is simply the belief that people with well-connected parents will succeed no matter what, and for a poor farmer to get to the top (competing with 1.3 billion peers) they need to be both incredibly lucky and talented and hard working. I don't think they think it's impossible to do fairly well, no matter who you are - if only because the government wants them to think that. People tend not to riot if they believe they have other options.
Most Chinese tend to be fairly pro-risk, but only after they have a degree. Cushy government jobs, or white-collar jobs in big corporations are preferred, but a reasonable number of Chinese want to start businesses. You don't have to meet that many old ladies selling wonton soup making twice the average wage of a university graduate to know the value of starting a business.
I don't think Confucianism is sufficient to explain it. They don't feel a loss of control because they're beholden to their families. That's a little silly.
It's really mostly the other pillar of Chinese culture; Taoism. The two belief systems over the centuries go through cycles of being influential and Taoism in the new capitalistic China is re-emergent.
Taoism is really a lot about individualism, but it's also about going with the flow of life. It's called "following the Tao" and is very fatalistic.
http://en.wikipedia.org/wiki/Wu_wei
Confucianism is historically the heart of Chinese culture. Taoism has never been as singularly influential in China as Confucianism has, nor is its "resurgence" sweeping away Confucianism. Assigning the idea of e.g. fatalism to "mostly Taoism" is also inaccurate. As far as popular beliefs go, Confucian, Taoist, and Buddhist beliefs have mixed together in the past centuries when we're talking about the influence of these set of teachings on the Chinese population (at least before 1949). Categorizing Value X as belonging to System A is too simple.
(sry posting from a different account, but same person)
I think your views of Chinese culture is being colored by a skin deep look at China's past hundred years. I think as a a whole Chinese history would disagree with you. During times of dynastic change Taoism was the prevailing cultural trope. Because dynastic change isn't the majority of historical time it can give the impression that Confucianism is the dominant "religion", but these moments of turmoil are critical and their effects are long lasting. Taoism (or at least their way of looking at things) is always in the background.
Just as an example, look at the literati culture after the take over of the Yuan Dynasty. Southern Song loyalists persisted for about two generations and really revitalized Taoist-inspired world views. They were the driving engine of Chinese culture during that time. Things like romanticizing the farmer, living of the land, the life of recluses etc.
A very similar thing happened after the take over of the Qing dynasty. Ming loyalists revitalized many of the same ideas.
During more tumultuous times Chinese turn to the more individualistic, less paternalistic side of their Culture as the central authority (and everything it represents - a father figure, the cultural vanguard etc.) erodes.
Right now, with the influx of Western ideas/culture and lifestyle the authority of the Communist regime is eroding to an extent. People view it as corrupt, inept and it doesn't command the respect it once had.
I think there is a cultural "swing" that is going to happen. And my argument was that neither system is conducive to entrepreneurship
"Assigning the idea of e.g. fatalism to "mostly Taoism" is also inaccurate."
it's obviously an over simplification on my part. It's a complicated multifaceted world view of course, but fatalism plays an important part from what I understand.
It's a little unfortunate that you didn't elaborate because I'd love to know your view of Taoism. I'm by no means an expert (haven't read any Taoist literature for instance), but from what I know it isn't the belief system of the capitalist-entrepreneur.
___
Example of Taoist influence:
I've mostly approached Chinese culture from the artistic perspective, but look at for example Bada Shanren (Ming Loyalist), vs. like
Even without knowing a lot of abotu Chinese art, you can see that Shen Zhou has a more traditional Confusian take on art (he's imitating the masters. That's why his work looks more "generic") while Bada is a lot more experimental and lets his individuality come through his art (Shen does too, but in more subtler ways that aren't very easy to explain).
Have a look at the Geert Hofstede Cultural Dimensions, the five dimensions may allow a richer explanation than the 'yes' and 'no' question. There is an over arching theory independent of local characteristics as well - might even be falsifiable (aka Popper)!
National Geographic made an editorial describing how teen brains are more prone to risky behavior:
>> Peaking during adolescence is risk-taking. We court risk more avidly as teens than at any other time. This shows reliably in the lab, where teens take more chances in controlled experiments involving everything from card games to simulated driving. And it shows in real life, where the period from roughly 15 to 25 brings peaks in all sorts of risky ventures and ugly outcomes.
If teens think as well as adults do and recognize risk just as well, why do they take more chances? Here, as elsewhere, the problem lies less in what teens lack compared with adults than in what they have more of. Teens take more risks not because they don't understand the dangers but because they weigh risk versus reward differently: In situations where risk can get them something they want, they value the reward more heavily than adults do.
The period's uniqueness rises from genes and developmental processes that have been selected for over thousands of generations because they play an amplified role during this key transitional period: producing a creature optimally primed to leave a safe home and move into unfamiliar territory. The move outward from home is the most difficult thing that humans do, as well as the most critical—not just for individuals but for a species that has shown an unmatched ability to master challenging new environments. In scientific terms, teenagers can be a pain in the ass. But they are quite possibly the most fully, crucially adaptive human beings around. Without them, humanity might not have so readily spread across the globe. <<
Also, teenagers have an intense drive to move out and be on their own, and often to rebel. When thinking about how our ancestors created new villages and settled new territory, I believe that this probably played a role.
I like the arguments. I had to fight my family as well when making any ventures. Will they be fruitful? who knows. However my family was always saying "why risk failure, when you can have a nice 9-5 job that always pays well and is fairly stable?" or "why risk working your ass off for a year and "show nothing for it"" where to me working my ass off for a year is a year of education i'd have never received otherwise.
Italians have provided some of the world's greatest innovations in civil and mechanical engineering and continue to do so. Perhaps their creative energy has not yet been channeled towards the space of web apps and mobile apps, which the HN audience is biased towards.
I agree about the mentality problem, though I think it's mostly due ignorance in general and values that are often toward the wrong thing.
Regarding taxes, it's pretty ridiculous, I would never encourage people to open a business here if they can avoid it.
I'm moving to the US next year and I can't wait to stop paying the ridiculous amount of money (in proportion of what I earn) that I pay now as a consultant.
I think I can add another reason why doing startups is hard in Italy: finding a cofounder or team members. I've worked in one of the biggest startup incubator in Italy (h-farm), and I can say from experience that it's super hard to find talented people, and that makes a difference at the end of the day.
Regarding taxes, I was surprised to read today that corportations in Italy, if they actually complied with every law, would be paying a 68.6% tax rate. Still not as bad as a few countries in Africa where the offical tax rates are well over 100%, though.
That's part of the reason why they actually don't pay any of it. Tax evasion is widespread and in the open; the government periodically reacts with amnesties, which is the catholic thing to do, right? All is forgiven, let's try again! But what are you going to do, knowing there is going to be an amnesty sooner or later? You just don't pay, of course. So the State is not getting enough money, and they have to create a new tax to cover the shortfall, which will increase the official rate but that's ok, because almost nobody is paying it anyway, not even your main politician for 17 years, and he's fucking rich.
This makes the real tax rate between 5 and 20%, depending on the specific amnesty you're going to enjoy, how much you feel like paying, and how good is your accountant.
I live in Austria and have to pay about 40 to 50% tax on any income. At least I know it's going towards things such as free universities, free healthcare, unemployment insurances for everyone. Makes the pill a bit easier to swallow.
Looks like very good compared to Brazil, where we pay around 40% and still have to pay for private healthcare and education because the public services are terrible.
It must suck to live in Italy and pay a lot of taxes, knowing it's going straight into the pockets of corrupt and populist politicians while social services are cut and the whole economy starts spiraling downwards.
Italy has an education problem though. Only 1 in 10 have a higher education diploma. Among the 30-34 year olds, it's 20%, but this is still less than half what most northern European countries have (Ireland is top with 50%). [Source: IMF & Eurostat via my newspaper today.]
Italian university is... complicated. There are areas of excellence -- medicine, architecture, even engineering (!) -- but a lot of undergraduate courses are expected to run for more than 5 years, and that's a very long time for non-STEM stuff. The average length is much lower in other countries, and the format much more flexible.
And I say this as a serial drop-out who now lives abroad.
You have a point here, but due to the distribution of our (small) cities, we don't have many meetups here, for example. I love Italy's, just not for working.
Other European countries have similar urbanization levels/curves. And the most 'concentrated' country, the one with most of its people in cities, is, surprisingly, Australia. And they don't seem to have a ton of startups either...
There was a great article in the New York Times last year that partly attributed Italy's stagnation to its unusually insular, family-oriented culture.
"The suspicion of Italians when it comes to extra-familial institutions explains why many here care more about protecting what they have than enhancing their wealth. Most Italians live less than a mile or two from their parents and stay there, often for financial benefits like cash and in-kind services like day care. It’s an insularity that runs all the way up to the corporate suites. The first goal of many entrepreneurs here isn’t growth, so much as keeping the business in the family."
Italy does not suck at all at the startup game.
You English-only speaking people simply don't often hear about us because we speak Italian on Italian Startup Scene (http://www.facebook.com/groups/italianstartups/) so our plans to conquer the world with our startups remain hidden to you. ;)
Antonio, come to our (why not yours yet?) group and see what 3248 Italian startuppers are currently doing to improve the situation of Italy.
And after Berlusconi's exit from politics, Italy will be a better place for everyone.
I am allergic to generalizations, so I felt a bit sick when I read that "the real limit is the mentality that MOST young Italians have: risk aversion, fear of failure, sense of self-entitlement, fatalism, cynicism and envy". I'm not a hater here, I hate haters :P Just trying to show the other side of the coin. Moreover in the post you (implicitly) focus on tech/web startups. What about traditional startups in Italy? Btw thank you for your response.
Italy has a grand and extensive history of craft and flexible production, and to ignore these "material" industries when analysing the existence of software companies misses a considerable factor.
Amazing article acangiano! Specially loved the graph...It just shows that the people who believe that success lies in their own hands end up being wealthier and more successful!
I am an Indian. Yes the last column in the bar and I can totally understand what u mean about countries sucking at start up games. There is a negative mindset people have towards building new businesses. The safety and the boredom of a government job is much more appealing to them. Makes me sad...
not to defend Italians, but 20 (probably more) years of bad government and mafia collusion have robbed money from salaries and people, killing every real chance of growth and without giving back in turn any good social service
to me these have at least influenced "Fatalism" and "Risk aversion"
Seems a little fast and loose for that graph to equate new LLCs and startups. Beyond the general issue of getting any statistics like "number of startups" across dozens of countries.
Also, we don't have the mentality of "self-made man" and "go get it", most of our population expect everything from the government. They get a degree and expect to get a job the next day just because.
I have serious arguments with family members and friends regarding this, because I'm the totally opposite, I strive to succeeded and I'm happy and inspired when I see someone else succeeding. I don't want to be in a safe job for the rest of my life, I want to be in a limbo all the time, that will make me push forward and fight to a have a better life. And to be honest I'm doing a lot better than most of the people here, even if I don't have a "stable" job.
I'm currently working as freelancer for companies outside portugal, and I've just funded my company in the US. I expect to get away from here next year. I just can't stand this mentality