I considered a startup after university in the UK. The talent arbitrage is absurd, physics grads with 1sts from top Russell Group unis fighting to be paid £30k/yr. For me it came down to security, life is expensive, rent is expensive. I didn't have a spare parental garage to setup five computers - I barely had room in my flat for one desk. I barely had money for that flat let alone internet, and food. I had zero capital, as in literally zero. The plan was to get an entry level job to provide some base line, but that base line never really provided enough life security that I felt comfortable leaving the system once I was inside it.
I'm in the same boat. I've been chasing my tail for the last 6 years, just trying to keep my head above water financially. I'm a computer hardware engineer so the pickings are slim to none outside of the military-industrial complex, which pays shit outside of sales and executive management. Ended up at one of the big US semiconductor companies where I got paid 1/3rd of what my peers in the US earn, with similar expenditures. A starting salary of £26k... Barely broke £34k, plus a couple of grand in stock each year during my time there, while my US colleagues doing the same job get paid $120k+. That's with a good master's degree from Bristol, which is relatively prestigious.
I'm sure if I moved to London and focused on software engineering I could make more, but that shouldn't be the only route to wealth in this country.
I've spent so long trying to build out a minimum viable product in my spare time, so I can make my start-up dream a reality, but going through integration hell needs to take up all of your time, every day, for a long time, to get through the hurdles in any meaningful time frame. Every time I go back to it, I feel like I'm back at square one. 6 years of saving and I have zero runway to take this full-time to give it the time it needs.
What's embarrassing is that I discussed this with my colleagues, and they didn't quite fathom how fucked it is for young engineers in this country until I had the conversation with them. I was getting the same salary now as my mentor did when he was my age; in the early '90s. Wages haven't just stagnated. When adjusted for inflation, they shrank massively. That's not even considering the £60k of student loan debt I get hammered by every month.
Is a ‘computer hardware engineer’ different from a ‘hardware engineer’? I think of a ‘hardware engineer’ as someone who works on the development of ICs (or things on FPGAs). I would guess that people in such a role are paid a lot less than software engineers (at comparably sized companies) in the US, and a bit less in the UK (though maybe with more variance). But the numbers you give are lower than I would expect for eg ‘hardware engineer working at Arm/Qualcomm’. There’s also hardware engineering in finance, which can pay well, but not a lot of it.
What if there was a place that you and a few colleagues could go where you could have your living space and office space provided, basic food served, and basic amenities.
Such a place would probably be somewhat isolated and probably not in your own county. If such a place existed that catered to founders in exchange for minimal equity, is that something that would interest you, theoretically?
The UK is a giant version of the Cayman Islands. It's a big bank providing financial services to rich people while keeping them anonymous. Everything else is secondary. And Brexit only made it worse.
On the other hand, the UK is one of the safest countries in the world, is full of kind people, has a general abundance of food, gives workers a relatively large number of days off in a year, has a functioning police force and takes care of sick people and those who can't work for whatever reason.
Of course it is not perfect.
The people of Britain may not have huge bank accounts, but this is partly because they collectively spend their earnings on the worthwhile things mentioned above.
The low salaries are a double edged sword - the talent is cheap, but the kind of people who might start a company are unable to build up enough savings to take the leap. It's partly due to low salaries, and partly high housing costs.
It's crazy that politicians on all sides talk about growth, but then consistently do almost nothing to address the single largest thing that's sucking the life out of 20-30 year olds.
Saying that, it's clearly not the only cause as housing in SF and NY is also really expensive.
> then consistently do almost nothing to address the single largest thing that's sucking the life out of 20-30 year olds.
They & their friends are literally profiting off it. Why would they kill their cash cow?
High housing costs is great for them - not only do their real-estate (& adjacent) investments go up, but a middle class perpetually in debt or barely able to make ends meet means there’s an infinite supply of cheap labor that won’t complain about terrible working conditions.
> The talent arbitrage is absurd, physics grads with 1sts from top Russell Group unis fighting to be paid £30k/yr.
That much?!?
I'm joking, but I've always wondered with FAANG never set up large R&D centers in Southern Europe. They have good universities and salaries are extremely low, even lower than in the UK.
Plus good weather & co. The actual Mediterranean climate :-)
Presumably because an ambitious young person in southern Europe would rather move somewhere like Zurich for higher pay rather than getting paid less in southern Europe? Who are those R&D centres going to end up hiring?
This is it exactly, it's the cost of capital and living that is the problem.
If our countries had control over their own capital and provided utility at cost the economic development would be easy. Instead we're charged monopoly rents for everything from water to electricity, taxed to oblivion and charged horrendous usary on all capital.
As an immigrant to the UK I'm continually surprised on how poor life here actually is. The main culprit in my mind is the atrocious cost of real estate. Not so much in how much money it takes to buy a house - those costs can be comparable to other countries, but on the ratio of post-tax salary pound per square meter. Most of the real estate in the UK is very small, both in outdoor space as well as in indoor proportions.
In the US middle class housing often provides fairly large indoor spaces where multiple people can collaborate, as well as things like garages and large-ish lawns, these things are much rarer and more expensive in the UK.
This makes it much more difficult to have a space for multiple people to effectively collaborate on idea "for free". Sure, you can hire a co-working space, but that requires already some form of financial commitment.
Exactly my personal experience. The talent arbitrage for £30k physics grads is real. But it's hard to take advantage of when you are that physics graduate, and can't build up any serious savings.
This is the most useless post one can read about some guy who is happy with his life and complain others are not doing things that he is thinking about...
> just days before my start date at McKinsey, which finally gave me the confidence to choose the startup over a prestigious job offer.
I highly doubt many people are getting offers at McKinsey and getting funded at the same time. The dude talks about risk but he literally took little to no risk. He is funded. The profile that allowed him both this job offer and funding at graduation will allow it again if his startup fails.
Most people do not get funded while having a job offer from McKinsey.
Which brings us to the second point: How is the VC scene in the UK compared to the US?
> The UK certainly doesn’t lack the talent or education, and I don’t think it’s any longer about access to capital.
The author proof is some random $1bn funding for some auto driving. This is weird when you can pull number (https://dealroom.co/guides/global) which shows the UK is still lagging the US.
Finally, the university ranking thing is bogus; which is what the argument of the author rests on.
I had a dozen failures before I struck on the sass product that retired me in my forties.
You try, you learn, you improve, and eventually something might work. Or you don’t try, keep your safe job and work until you’re 70 like everyone else.
I haven’t heard that saying before but it certainly feels correct. I know a few successful people who don’t seem particularly bright or analytical, but keep pushing on in the misguided belief that things will work out. And sometimes they do.
There's many factors that make Europe less competitive than the US: small fractured markets, low salaries, high cost of living relative to wages, Brexit costs, fear of being labeled a failure, working to live, focus on worker's rights, stability, and pensions, general risk aversion etc.
A big issue is there's a lack of mega successes high margin software businesses that pump knowledge and money back into the startup ecosystem. From a cultural standpoint, some countries like France are also obsessed with credentials and what you could call a notion of 'innate superiority'.
The end results is a VC ecosystem filled with young finance types that went to locally famous schools with little experience in startups that deploy small amounts with deal terms that would be considered absurd in the US.
"There's many factors that make Europe less competitive than the US: small fractured markets"
This first one seems the largest hurdle w.r.t. startups. If you are a startup founder of say a ride hailing app - the total addressable market is much larger in the US for the same level of effort. If you want to scale beyond your home state (i.e. California) in the US, there are probably just a handful of different state/city taxes/regulations that need to be accounted for.
If you start in a country in Europe, you need to factor in:
- language translation of the entire app
- different country cultures/customs (i.e. tipping, wording of prompts and promotions) - even down to the naming of the app which might have a negative connotation in a different language
- prior to the Euro - differences with respect to currency, trademarks, patents, etc.
- entirely new country regulations and politicians that need to be "handled" - each in their own separate language which means a separate lawyer and lobbyist needs to be on staff for each country
- home court advantage - French probably prefer to support LeCab while Spaniards probably prefer to support Cabify
You are right in terms of the addressable market. Except in some niches, like pharma, it is too fractured. But IMHO, the biggest problem here is mentality. Starting a business and taking risks is not something the society encourages. That is what we have from centuries of rent-seeking aristocrats.
A good counterexample is Sweden, where class structure is flatter and imitating American trends is seen as cool. Unsurprisingly, Stockholm punches above its weight class in terms of startups, despite Sweden being a tiny market.
Low salaries increase competitiveness, while high salaries decrease it. That's one of the things you already learn as a kid when you live in an export-driven economy.
Even if your country is not particularly export-driven but you participate in competitive markets, the same effect may apply. For example, the US lost many manufacturing jobs to China, because American salaries were not competitive (low) enough.
Finland is sometimes said to be a country of engineers, for historical and cultural reasons. That doesn't mean engineers are paid well. On the contrary, engineer salaries are low and Finnish engineers like to complain how much more they would earn in Germany. What it does mean is that engineers have a higher social status than in most Western countries, and a lot of people want to be engineers. Finnish companies can hire good engineers with little money.
Finnish companies have traditionally been good at developing technology and bad at commercializing it. Explanations vary, from the low quality of business leadership to the lack of domestic capital; from the small size of the domestic market to foreign companies buying successful startups; from the cultural dominance of heavy industry to the culture of respecting laws and regulations.
It's true, speaking as a US to Finland expat. The median CS grad I've met here in Tampere handily outclasses the CS grads I knew at Northwestern - which is no MIT, sure, but they're definitely no slouches.
Marc Andreessen once described reading a magazine as a teenager and seeing the "Midwest tinkerer" archetype of tech mogul, people who figure out a little bit of everything from scratch because on a farm you just have to do that to stay afloat and then bring that mindset into their SWE work and become minor legends wherever they go, and having this sudden enlightenment moment that shifted him from quiet nerd to confident striver. I spent my honeymoon year in northern Finland and came to the conclusion that the whole country is like that. Except, no one filled them in on just how absurdly good the margins on software can be when you throw business prowess into the mix. So many companies here been punching well below our weight class. (Okay, the very business-hostile nature of making a startup in the 90s/00s didn't help either - that's less the case now.)
I'm convinced it's more sociological than legal, although there are elements of both. My long term aim while I'm here is to be missing link between Finland and Silicon Valley. These guys are genuinely, still, much better than they themselves realize.
> small fractured markets, low salaries, high cost of living relative to wages...A big issue is there's a lack of mega successes high margin software businesses that pump knowledge and money back into the startup ecosystem.
Honestly, these factors apply to many countries outside of the US and stops them from being startup hubs as well. Singapore is in a similar position; despite its wealth and apparent connectedness as Southeast Asia's preferred location for company HQ, it didn't really succeed in kicking off a virtuous circle of winners helping fund new startups. It's pretty hard/costly to acquire customers in disparate small/nonwealthy markets, especially if they stick to established brands.
A related factor is investors' relative unwillingness to take on risk, because big payouts haven't been observed. So VCs all pile into the same few existing winners that are actually looking like they'll hit a payday.
At one point in 2013-2016 there was a flurry of support for new startups due to aggressive government funding grants and subsidies, but very few of these managed to cross the chasm and raise significant follow-on rounds. A few years later, the funding schemes were cut (due to a lack of observed successes) and the early-stage scene grew quiet.
It feels like only very big, integrated markets can support a dynamic startup scene (the US and China). It doesn't seem to happen without easy access to similar consumers/clients and the willingness of those clients to try new services and companies.
>There's many factors that make Europe less competitive than the US: small fractured markets, low salaries, high cost of living relative to wages, Brexit costs, fear of being labeled a failure, working to live, focus on worker's rights, stability, and pensions, general risk aversion etc.
In some Asian countries there is a thriving startup scene, so cost of living and working to live are not determining factors.
I would say the determining factor is the mentality. Europe focuses much on safety nets, welfare. Europeans learned that they should be content with earning a wage that allows them to live while working 8 hours a day, with enough time off, decent amount of holidays, a good work-life balance. They want state backed pensions funds, free or cheap healthcare, free education.
There are less Europeans willing to work on weekends than there are Americans and there are less Europeans working more than one job than there are Americans.
So Europeans focus more on living their lives while Americans focus more on Entrepreneurship. Their respective societies, cultures, history kind of teach them to behave that way.
It's not that a change in mentality is impossible, but it won't happen overnight.
In Romania there's a huge pool of very talented SWEs. What do they do? They either work for foreign companies, or for a local company working for foreign companies.
They mostly outsource their skill. There are maybe two of three software products made by a local company known worldwide.
This is the result of risk aversion and lack of capital.
I think the "one thing that's not like the others" in the article are the crazy-high rankings of Britain's top schools. Universities are a bit of a self-perpetuating reputation scheme, and the UK has been punching well above its weight in that department.
Having worked with all Europeans, I can't say that I found the British to be skill or preparation outliers. Maybe just a little above the mean? Speaking English natively helps too.
That said, the UK was probably on its way to becoming the EU's tech hub, much to the chagrin of the French and Germans. Then 2016 happened.
Furthermore, the planetary economy has transformed itself, and has been consolidating around competitive advantage. Much of tech has massive scale economies. There's probably not enough 21st-century Britain to make it alone the way it used to in the 19th century. Its competitive advantage probably does not involve large-scale tech.
If you're a world-class tech graduate facing these realities, maybe you don't want to get marooned on an island.
>> are the crazy-high rankings of Britain's top schools
The problem(in general) with University rankings is that the ranking is done almost entirely on the number of publications.....in English. So it's no wonder that British universities take a lot of the top spots. I've had these conversations many many many times with people - it's not like the Universities of Warsaw or Milan or Prague are not as good as Oxford - but that's not what you're going to see in rankings because a lot of research doesn't get published in English, so somehow it doesn't "count".
As a completely separate point - British universities got absolutely decimated by Brexit in ways that are not immediately apparent, but I work with couple professors at Russel Group universities and they all say the same thing - the number of PhD and research positions applicants from the EU has gone from hundreds a year to literally a handful a year. Some of those were replaced by British applicants or non-EU applicants, but the number of people who want to be researchers in Britan and further the scientific fields has dropped drastically.
I have several friends that are 30+ years as lecturers, also at Russell Group universities, and their view is very different to yours. They're generally of the opinion that UK universities have now turned into visa-mills and poorly run money machines, with lots of students signing up, but far fewer turning up in person and completing the courses.
Essentially the Blair-era of 'expand the universities' (and cynically get the 18-21 yr olds out of the unemployment figures) has lowered standards across the board. They don't, however, see anything like the "drastic" drop in numbers you report.
As an employer in finance, I've seen our criteria in the early 90s go from a first or 2:1 from anywhere, to a first from Oxford/Cambridge/Bristol/Durham/Imperial only, and now our criteria is an MSc from a list, or a PhD from anywhere. Yes, a PhD. And we still get dozens of applicants for a single job.
> British universities got absolutely decimated by Brexit
It's likely heading for another cliff dive, as the UK government is constricting the supply of student visas (because immigration), and application numbers are nosediving.
I got a great education in the UK and think back on it very fondly, but these days I'd advise people to apply to the US instead. It might even be cheaper.
> a lot of research doesn't get published in English, so somehow it doesn't "count".
As it shouldn't. I am from a non-English speaking country myself, and I cannot begin to tell you how senseless it is to cling to native languages for any serious work. It's creating an arbitrary barrier to collaboration just for pride or convenience. English is the lingua-franca (lol) of the world, just embrace it and stop being proud of your weird language that you're stuck with because of random traditions and geography.
Imagine Prague universities would have top AI research published in Czech, would that actually help the scientific community? My bet is: not until someone goes and translates it to English, is it going to be read by anybody outside of the country, whether that person is native English or not.
In this thread there's a lot of talk of the EU losing competitiveness because it is a fragmented market between a group of isolationist countries, opinions like these are a big part of that. Stop putting English second place, this is a global world now, English is the language of the global world, learn it, use it, or lose.
If only these were done on publications, it would be a lot more accurate.
English is the lingua franca of science, like it used to be german, because ideas build on each other so you need to be able to communicate your ideas to others.
Having your native language be the lingua franca is helpful, but many of these universities are filled with foreigners who have learnt English. They could have stayed in their native countries, but they chose not to.
The UK is Europe's tech hub at this point (not the EU's), assuming by tech we mean the sort of tech discussed in the article. As the article notes, the VC ecosystem in the UK does actually exist and is spinning up, whereas in most of Europe it hardly exists.
If you want something a bit more objective than the article's assertions, there is an attempt to calculate a ranking here:
The Global Startup Ecosystem Index compares the countries of Europe (not EU) and the UK is at the top with a massive lead. It has a total score of 127 vs 57 for the second place (France).
Well, I suspect a lot of the UK's startup stats are still connected to its universities. The page you linked shows London with a massive index lead over the EU. When you scroll down to the lists of notable companies, only ~10% of them are UK-based. The contrast of London to the rest of Britain is also much starker than for some other EU hubs.
It's questionable whether the "startup hub seed" would have germinated had the UK not been in the EU back when. It's also questionable whether the plant will wither now that it's out. All else held equal, the exits of UK startups are probably more acquisitional and trans-oceanic. This adds to risks and costs.
Either way, my argument was not startup-centric. It's pretty clear that an island company faces more market hurdles than a continental one. The difference will widen as the EU integrates further.
> Universities are a bit of a self-perpetuating reputation scheme, and the UK has been punching well above its weight in that department.
Someone like Peter Thiel would maybe argue that the difference in risk taking in the UK and the US is actually reflected in the relatively high number of high UK university rankings? I'm far from Thiel in my general perspectives but it's worth noting that in certain circles there's sort of an ambivalent — if not outright hostile — attitude toward universities in the US and that ambivalence is only increasing. I think a Thiel-like person might think it odd to draw a direct line between some reputational rankings of universities and startup culture, and might flip the whole thing on its head and argue it's evidence of problems with universities today.
I don't necessarily agree with this perspective but do think it's maybe worth pointing out some of the implicit assumptions being made in the essay.
Yeah, I'm pretty sure that these rankings are bullshit.
If you look at, e.g. universities by number of papers at neurips (ok, just one measure, but related to the AI boom), none of the UK universities crack the top 10; Oxford comes in at 12th, Cambridge at 18th, and Imperial isn't even on the list: https://www.reddit.com/r/MachineLearning/comments/185pdax/d_...
The expected returns from "want[ing] to go and work at companies like McKinsey, Goldman Sachs or Google" are both greater and more certain, so perhaps the individual young people are acting quite rationally in the UK?
For context I spent years in my 20s doing start ups in London, and undoubtedly would have been better off financially now if I'd worked for some soul-sucking consultancy instead. I do agree with him that raising money in the UK is quite hard.
Yeah, but I think it’s also true in the US (even more so as pay from the non-startup careers is higher). Maybe one should ask why it’s so much more common to do the irrational thing in the US than the UK.
Could be house prices again. You really cannot survive on ramen and hope to live anywhere close to London. I know that SF is not good either, but the US does have other cities with less of a housing crisis.
A key part is that in US you take less risk because investors are taking more risk - as described in the article, in UK the conditions you'd get for early funding push more risk towards the founder as most UK investors simply won't accept as much risk as US investors routinely do.
Remember you have to normalize for population size. And when we say the US we really mean one small part of it. People in the US often move to California to start their startups, they don't necessarily stick around in the part of the US they're currently in. This is largely due to the VC ecosystem there which makes "irrationality" relatively safe vs everywhere else in the world where it doesn't. Tom's article makes this crystal clear when he says:
> The downside of early-stage investing is that you lose 1x your money - it’s genuinely not worth worrying much about
The only potential downside is only losing all your money, what kind of stick in the mud would care about that?
So anyway, we might ask why is the VC ecosystem so much stronger in California than in the UK. But a lot people don't like to think about that because the answer is so obvious: in the 70s when Silicon Valley was getting established and the flywheel of founder->startup->success->sale->VC->founder was spinning up, the UK was mired in socialist hell with rotating power outages, militant unions toppling governments, four-day working weeks and an IMF bailout. At that time making a startup was entirely pointless and a VC fund literally impossible, because the top tax rate on investment gains peaked at 98%. You could invest in startups but the deal presented by Labour was: if you lose money you lose it, if you gain money you still lose it.
Thatcher and then Major beat back some of the most extreme aspects of this, and in this period the top level tax rates were systematically reduced to more normal rates. But Britain of the 1980s was still drastically more investor-hostile than the USA and there was no venture culture as a consequence. In particular the practice of granting equity in startups was not really known (notable exception: ARM, one of the few successful tech startups the UK has ever produced).
Even today British governments routinely levy so-called "windfall taxes" to grab the profits from companies that are doing well, the moment they have an opportunity to do so politically. That culture gap is ultimately the major difference. The idea of a windfall tax in the USA is hard to imagine, I'm not sure it's ever happened.
Our instinct is to regulate and tax the technologies that are being pioneered in California, in the misguided belief that it will give us some kind of competitive advantage.
I don’t think that that’s the reason for regulation: it seems to me that US companies traditionally don’t care about externalities (environment, privacy, accessibility, etc.), and regulation is required to bring them into line. That doesn’t always mean that their business model will survive unscathed, but that’s generally a good thing.
This is a bad stereotype, I think. The US has regulatory failures like FTX, but at least that's a brand new market and type of commodity (or currency, maybe). And it was prosecuted under existing regulation anyway. The EU had Wirecard, a financially totally mundane company, and regulations didn't stop anything. It happens everywhere.
The difference is that the US is a force multiplier for businesses and innovation, so you get the most extreme stuff there. But you also get the most everything there. And even when it's not there, it's often funded or part-funded by the US. E.g. the NIH funds $45b of research a year, which is partly sent overseas, even though it's paid for by US taxpayers and businesses.
To me, this is misleading. Please stop writing as though all of the EU is uniform. It would be better to write: "Germany had Wirecard". That is much more accurate.
To be honest I'm not sure European companies are much better (VW emissions scandal, BP oil spill in Gulf of Mexico etc), it's just that regulation tends to be tighter. US seems quite happy to create global monopolies at the cost of its own domestic environment / consumer rights.
Financially, the UK is heavily centred around London, one of the most expensive cities in the world, so it's not altogether surprising that university students feel like they need a paying job that keeps a roof over their heads. Worse, the competition for rental property in London is ridiculous, which is the only choice in town for an ex-student.
And London is where the VC people are.
Also, in the USA 'bricks and mortar' businesses have far cheaper shipping costs, and 342 million people, without going international, that DHL or FedEx will ship across the entire US with a cheaper price than we can ship from SE England to NW Scotland. Then again, we both speak English, which is why the UK is always the second target for a US firm once they're up and running, and vice versa.
The UK is 4th in the count of 'unicorns' after USA, China, and India, and has not quite double that of it's closest European neighbour, so we're not doing that badly. It's just a shame everything is skewed towards London in the UK.
Why does this rent argument not apply to SF/Silicon Valley? I think SF is more expensive than London, though typical pay in (non-startup) tech is higher.
Because it's not just "higher" - it's so much higher it's hard to comprehend what difference that makes to opportunities young people have. I finished my BSc and MSc in Computer Science from a prestigious Russel Group university 10 years ago, got hired as a C++ programmer for a big corporation.....making £18k a year. My take home was about £1200/month if I remember correctly, which was still ok-ish because I was sharing a flat with some people so I only paid like £150/month towards the rent. I was only able to save a very modest amount of money and it took me years to work up to what you'd consider a "decent" salary.
From what I understand, in US your costs are of course higher in terms of rent, healthcare, etc, but the difference in salary is so huge you can actually save up some capital if you want to try starting your own business in few years time.
Not sure, as I don't live in SF, but I know that not all start-ups are in SF/The Valley even if the VC money is raised there.
In the UK, they're disproportionately concentrated in London. In fact the UK government has encouraged many of them to set up around Old Street / 'Silicon Roundabout' (sigh). That area is only accessible by public transport, whereas SF/California is accessible via cars, so the choice of where you live is considerably greater in the US. The vast majority of people that work in London live within 10 miles of the absolute centre of London and use public transport. The magic '1 hr commute', if you will. Hence the rental prices.
Our government is continuing the prosperity of London at the cost of the rest of the country. If you remove London from the UK, we're poorer than Mississippi: https://archive.is/UJZBP
> I don’t think it’s any longer about access to capital
The link provided as proof for this comment is Wayve receiving a $1bn injection from Microsoft and Nvidia [1].
The $1bn raise is not the concern of a budding 23 year old graduate leaving Imperial/Cambridge/Oxford. They're looking at the first £100k capital to see them through the first few months. In the UK, the scene for the first capital injection is far weaker than in the US, which has an inevitable downstream impact.
Been a while since I was in this position but that first £100k used to be a cakewalk. SEIS made it almost a no-brainier for any high net worth individual to invest in startups.
and it still should, as I understand it. On a £100k investment that the business loses all of, the investor gets £75k (£50k tax relief + £25k-ish loss relief) back or something ridiculous, don't they? Makes me wonder how this hasn't made UK capital more readily flow
The challenge in the UK at the moment is connecting willing high net worth individuals with entrepreneurs. Even with the tax incentives, and the relatively good incubator-ish organisations like Eagle Hub, there's some enormous disconnect between viable ideas and timely capital to execute on them.
Readit News
I'm sure if I moved to London and focused on software engineering I could make more, but that shouldn't be the only route to wealth in this country.
I've spent so long trying to build out a minimum viable product in my spare time, so I can make my start-up dream a reality, but going through integration hell needs to take up all of your time, every day, for a long time, to get through the hurdles in any meaningful time frame. Every time I go back to it, I feel like I'm back at square one. 6 years of saving and I have zero runway to take this full-time to give it the time it needs.
What's embarrassing is that I discussed this with my colleagues, and they didn't quite fathom how fucked it is for young engineers in this country until I had the conversation with them. I was getting the same salary now as my mentor did when he was my age; in the early '90s. Wages haven't just stagnated. When adjusted for inflation, they shrank massively. That's not even considering the £60k of student loan debt I get hammered by every month.
What if there was a place that you and a few colleagues could go where you could have your living space and office space provided, basic food served, and basic amenities.
Such a place would probably be somewhat isolated and probably not in your own county. If such a place existed that catered to founders in exchange for minimal equity, is that something that would interest you, theoretically?
Of course it is not perfect.
The people of Britain may not have huge bank accounts, but this is partly because they collectively spend their earnings on the worthwhile things mentioned above.
Do you see a way out? If so what is it?
It's crazy that politicians on all sides talk about growth, but then consistently do almost nothing to address the single largest thing that's sucking the life out of 20-30 year olds.
Saying that, it's clearly not the only cause as housing in SF and NY is also really expensive.
They & their friends are literally profiting off it. Why would they kill their cash cow?
High housing costs is great for them - not only do their real-estate (& adjacent) investments go up, but a middle class perpetually in debt or barely able to make ends meet means there’s an infinite supply of cheap labor that won’t complain about terrible working conditions.
That much?!?
I'm joking, but I've always wondered with FAANG never set up large R&D centers in Southern Europe. They have good universities and salaries are extremely low, even lower than in the UK.
Plus good weather & co. The actual Mediterranean climate :-)
If our countries had control over their own capital and provided utility at cost the economic development would be easy. Instead we're charged monopoly rents for everything from water to electricity, taxed to oblivion and charged horrendous usary on all capital.
In the US middle class housing often provides fairly large indoor spaces where multiple people can collaborate, as well as things like garages and large-ish lawns, these things are much rarer and more expensive in the UK.
This makes it much more difficult to have a space for multiple people to effectively collaborate on idea "for free". Sure, you can hire a co-working space, but that requires already some form of financial commitment.
> just days before my start date at McKinsey, which finally gave me the confidence to choose the startup over a prestigious job offer.
I highly doubt many people are getting offers at McKinsey and getting funded at the same time. The dude talks about risk but he literally took little to no risk. He is funded. The profile that allowed him both this job offer and funding at graduation will allow it again if his startup fails.
Most people do not get funded while having a job offer from McKinsey.
Which brings us to the second point: How is the VC scene in the UK compared to the US?
> The UK certainly doesn’t lack the talent or education, and I don’t think it’s any longer about access to capital.
The author proof is some random $1bn funding for some auto driving. This is weird when you can pull number (https://dealroom.co/guides/global) which shows the UK is still lagging the US.
Finally, the university ranking thing is bogus; which is what the argument of the author rests on.
I had a dozen failures before I struck on the sass product that retired me in my forties.
You try, you learn, you improve, and eventually something might work. Or you don’t try, keep your safe job and work until you’re 70 like everyone else.
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A big issue is there's a lack of mega successes high margin software businesses that pump knowledge and money back into the startup ecosystem. From a cultural standpoint, some countries like France are also obsessed with credentials and what you could call a notion of 'innate superiority'.
The end results is a VC ecosystem filled with young finance types that went to locally famous schools with little experience in startups that deploy small amounts with deal terms that would be considered absurd in the US.
This first one seems the largest hurdle w.r.t. startups. If you are a startup founder of say a ride hailing app - the total addressable market is much larger in the US for the same level of effort. If you want to scale beyond your home state (i.e. California) in the US, there are probably just a handful of different state/city taxes/regulations that need to be accounted for.
If you start in a country in Europe, you need to factor in:
- language translation of the entire app
- different country cultures/customs (i.e. tipping, wording of prompts and promotions) - even down to the naming of the app which might have a negative connotation in a different language
- prior to the Euro - differences with respect to currency, trademarks, patents, etc.
- entirely new country regulations and politicians that need to be "handled" - each in their own separate language which means a separate lawyer and lobbyist needs to be on staff for each country
- home court advantage - French probably prefer to support LeCab while Spaniards probably prefer to support Cabify
A good counterexample is Sweden, where class structure is flatter and imitating American trends is seen as cool. Unsurprisingly, Stockholm punches above its weight class in terms of startups, despite Sweden being a tiny market.
Even if your country is not particularly export-driven but you participate in competitive markets, the same effect may apply. For example, the US lost many manufacturing jobs to China, because American salaries were not competitive (low) enough.
Finland is sometimes said to be a country of engineers, for historical and cultural reasons. That doesn't mean engineers are paid well. On the contrary, engineer salaries are low and Finnish engineers like to complain how much more they would earn in Germany. What it does mean is that engineers have a higher social status than in most Western countries, and a lot of people want to be engineers. Finnish companies can hire good engineers with little money.
Finnish companies have traditionally been good at developing technology and bad at commercializing it. Explanations vary, from the low quality of business leadership to the lack of domestic capital; from the small size of the domestic market to foreign companies buying successful startups; from the cultural dominance of heavy industry to the culture of respecting laws and regulations.
Marc Andreessen once described reading a magazine as a teenager and seeing the "Midwest tinkerer" archetype of tech mogul, people who figure out a little bit of everything from scratch because on a farm you just have to do that to stay afloat and then bring that mindset into their SWE work and become minor legends wherever they go, and having this sudden enlightenment moment that shifted him from quiet nerd to confident striver. I spent my honeymoon year in northern Finland and came to the conclusion that the whole country is like that. Except, no one filled them in on just how absurdly good the margins on software can be when you throw business prowess into the mix. So many companies here been punching well below our weight class. (Okay, the very business-hostile nature of making a startup in the 90s/00s didn't help either - that's less the case now.)
I'm convinced it's more sociological than legal, although there are elements of both. My long term aim while I'm here is to be missing link between Finland and Silicon Valley. These guys are genuinely, still, much better than they themselves realize.
Honestly, these factors apply to many countries outside of the US and stops them from being startup hubs as well. Singapore is in a similar position; despite its wealth and apparent connectedness as Southeast Asia's preferred location for company HQ, it didn't really succeed in kicking off a virtuous circle of winners helping fund new startups. It's pretty hard/costly to acquire customers in disparate small/nonwealthy markets, especially if they stick to established brands.
A related factor is investors' relative unwillingness to take on risk, because big payouts haven't been observed. So VCs all pile into the same few existing winners that are actually looking like they'll hit a payday.
At one point in 2013-2016 there was a flurry of support for new startups due to aggressive government funding grants and subsidies, but very few of these managed to cross the chasm and raise significant follow-on rounds. A few years later, the funding schemes were cut (due to a lack of observed successes) and the early-stage scene grew quiet.
It feels like only very big, integrated markets can support a dynamic startup scene (the US and China). It doesn't seem to happen without easy access to similar consumers/clients and the willingness of those clients to try new services and companies.
In some Asian countries there is a thriving startup scene, so cost of living and working to live are not determining factors.
I would say the determining factor is the mentality. Europe focuses much on safety nets, welfare. Europeans learned that they should be content with earning a wage that allows them to live while working 8 hours a day, with enough time off, decent amount of holidays, a good work-life balance. They want state backed pensions funds, free or cheap healthcare, free education.
There are less Europeans willing to work on weekends than there are Americans and there are less Europeans working more than one job than there are Americans.
So Europeans focus more on living their lives while Americans focus more on Entrepreneurship. Their respective societies, cultures, history kind of teach them to behave that way.
It's not that a change in mentality is impossible, but it won't happen overnight.
They mostly outsource their skill. There are maybe two of three software products made by a local company known worldwide.
This is the result of risk aversion and lack of capital.
Having worked with all Europeans, I can't say that I found the British to be skill or preparation outliers. Maybe just a little above the mean? Speaking English natively helps too.
That said, the UK was probably on its way to becoming the EU's tech hub, much to the chagrin of the French and Germans. Then 2016 happened.
Furthermore, the planetary economy has transformed itself, and has been consolidating around competitive advantage. Much of tech has massive scale economies. There's probably not enough 21st-century Britain to make it alone the way it used to in the 19th century. Its competitive advantage probably does not involve large-scale tech.
If you're a world-class tech graduate facing these realities, maybe you don't want to get marooned on an island.
The problem(in general) with University rankings is that the ranking is done almost entirely on the number of publications.....in English. So it's no wonder that British universities take a lot of the top spots. I've had these conversations many many many times with people - it's not like the Universities of Warsaw or Milan or Prague are not as good as Oxford - but that's not what you're going to see in rankings because a lot of research doesn't get published in English, so somehow it doesn't "count".
As a completely separate point - British universities got absolutely decimated by Brexit in ways that are not immediately apparent, but I work with couple professors at Russel Group universities and they all say the same thing - the number of PhD and research positions applicants from the EU has gone from hundreds a year to literally a handful a year. Some of those were replaced by British applicants or non-EU applicants, but the number of people who want to be researchers in Britan and further the scientific fields has dropped drastically.
Essentially the Blair-era of 'expand the universities' (and cynically get the 18-21 yr olds out of the unemployment figures) has lowered standards across the board. They don't, however, see anything like the "drastic" drop in numbers you report.
As an employer in finance, I've seen our criteria in the early 90s go from a first or 2:1 from anywhere, to a first from Oxford/Cambridge/Bristol/Durham/Imperial only, and now our criteria is an MSc from a list, or a PhD from anywhere. Yes, a PhD. And we still get dozens of applicants for a single job.
It's likely heading for another cliff dive, as the UK government is constricting the supply of student visas (because immigration), and application numbers are nosediving.
I got a great education in the UK and think back on it very fondly, but these days I'd advise people to apply to the US instead. It might even be cheaper.
As it shouldn't. I am from a non-English speaking country myself, and I cannot begin to tell you how senseless it is to cling to native languages for any serious work. It's creating an arbitrary barrier to collaboration just for pride or convenience. English is the lingua-franca (lol) of the world, just embrace it and stop being proud of your weird language that you're stuck with because of random traditions and geography.
Imagine Prague universities would have top AI research published in Czech, would that actually help the scientific community? My bet is: not until someone goes and translates it to English, is it going to be read by anybody outside of the country, whether that person is native English or not.
In this thread there's a lot of talk of the EU losing competitiveness because it is a fragmented market between a group of isolationist countries, opinions like these are a big part of that. Stop putting English second place, this is a global world now, English is the language of the global world, learn it, use it, or lose.
English is the lingua franca of science, like it used to be german, because ideas build on each other so you need to be able to communicate your ideas to others.
Having your native language be the lingua franca is helpful, but many of these universities are filled with foreigners who have learnt English. They could have stayed in their native countries, but they chose not to.
If you want something a bit more objective than the article's assertions, there is an attempt to calculate a ranking here:
https://www.startupblink.com/blog/analysis-of-europe-startup...
The Global Startup Ecosystem Index compares the countries of Europe (not EU) and the UK is at the top with a massive lead. It has a total score of 127 vs 57 for the second place (France).
It's questionable whether the "startup hub seed" would have germinated had the UK not been in the EU back when. It's also questionable whether the plant will wither now that it's out. All else held equal, the exits of UK startups are probably more acquisitional and trans-oceanic. This adds to risks and costs.
Either way, my argument was not startup-centric. It's pretty clear that an island company faces more market hurdles than a continental one. The difference will widen as the EU integrates further.
Someone like Peter Thiel would maybe argue that the difference in risk taking in the UK and the US is actually reflected in the relatively high number of high UK university rankings? I'm far from Thiel in my general perspectives but it's worth noting that in certain circles there's sort of an ambivalent — if not outright hostile — attitude toward universities in the US and that ambivalence is only increasing. I think a Thiel-like person might think it odd to draw a direct line between some reputational rankings of universities and startup culture, and might flip the whole thing on its head and argue it's evidence of problems with universities today.
I don't necessarily agree with this perspective but do think it's maybe worth pointing out some of the implicit assumptions being made in the essay.
If you look at, e.g. universities by number of papers at neurips (ok, just one measure, but related to the AI boom), none of the UK universities crack the top 10; Oxford comes in at 12th, Cambridge at 18th, and Imperial isn't even on the list: https://www.reddit.com/r/MachineLearning/comments/185pdax/d_...
For context I spent years in my 20s doing start ups in London, and undoubtedly would have been better off financially now if I'd worked for some soul-sucking consultancy instead. I do agree with him that raising money in the UK is quite hard.
> The downside of early-stage investing is that you lose 1x your money - it’s genuinely not worth worrying much about
The only potential downside is only losing all your money, what kind of stick in the mud would care about that?
So anyway, we might ask why is the VC ecosystem so much stronger in California than in the UK. But a lot people don't like to think about that because the answer is so obvious: in the 70s when Silicon Valley was getting established and the flywheel of founder->startup->success->sale->VC->founder was spinning up, the UK was mired in socialist hell with rotating power outages, militant unions toppling governments, four-day working weeks and an IMF bailout. At that time making a startup was entirely pointless and a VC fund literally impossible, because the top tax rate on investment gains peaked at 98%. You could invest in startups but the deal presented by Labour was: if you lose money you lose it, if you gain money you still lose it.
Thatcher and then Major beat back some of the most extreme aspects of this, and in this period the top level tax rates were systematically reduced to more normal rates. But Britain of the 1980s was still drastically more investor-hostile than the USA and there was no venture culture as a consequence. In particular the practice of granting equity in startups was not really known (notable exception: ARM, one of the few successful tech startups the UK has ever produced).
Even today British governments routinely levy so-called "windfall taxes" to grab the profits from companies that are doing well, the moment they have an opportunity to do so politically. That culture gap is ultimately the major difference. The idea of a windfall tax in the USA is hard to imagine, I'm not sure it's ever happened.
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I don’t think that that’s the reason for regulation: it seems to me that US companies traditionally don’t care about externalities (environment, privacy, accessibility, etc.), and regulation is required to bring them into line. That doesn’t always mean that their business model will survive unscathed, but that’s generally a good thing.
The difference is that the US is a force multiplier for businesses and innovation, so you get the most extreme stuff there. But you also get the most everything there. And even when it's not there, it's often funded or part-funded by the US. E.g. the NIH funds $45b of research a year, which is partly sent overseas, even though it's paid for by US taxpayers and businesses.
And London is where the VC people are.
Also, in the USA 'bricks and mortar' businesses have far cheaper shipping costs, and 342 million people, without going international, that DHL or FedEx will ship across the entire US with a cheaper price than we can ship from SE England to NW Scotland. Then again, we both speak English, which is why the UK is always the second target for a US firm once they're up and running, and vice versa.
The UK is 4th in the count of 'unicorns' after USA, China, and India, and has not quite double that of it's closest European neighbour, so we're not doing that badly. It's just a shame everything is skewed towards London in the UK.
From what I understand, in US your costs are of course higher in terms of rent, healthcare, etc, but the difference in salary is so huge you can actually save up some capital if you want to try starting your own business in few years time.
In the UK, they're disproportionately concentrated in London. In fact the UK government has encouraged many of them to set up around Old Street / 'Silicon Roundabout' (sigh). That area is only accessible by public transport, whereas SF/California is accessible via cars, so the choice of where you live is considerably greater in the US. The vast majority of people that work in London live within 10 miles of the absolute centre of London and use public transport. The magic '1 hr commute', if you will. Hence the rental prices.
Our government is continuing the prosperity of London at the cost of the rest of the country. If you remove London from the UK, we're poorer than Mississippi: https://archive.is/UJZBP
The link provided as proof for this comment is Wayve receiving a $1bn injection from Microsoft and Nvidia [1].
The $1bn raise is not the concern of a budding 23 year old graduate leaving Imperial/Cambridge/Oxford. They're looking at the first £100k capital to see them through the first few months. In the UK, the scene for the first capital injection is far weaker than in the US, which has an inevitable downstream impact.
[1] https://www.bbc.co.uk/news/articles/crgypzg4edvo
and it still should, as I understand it. On a £100k investment that the business loses all of, the investor gets £75k (£50k tax relief + £25k-ish loss relief) back or something ridiculous, don't they? Makes me wonder how this hasn't made UK capital more readily flow