Hartvig [07.26.05 11:00 AM]

We're a small Danish startup creating an open source ASP.NET based cms/web development platform, called umbraco. We're trying to finance the show by delivering developer coaching/support and by selling OEM-licenses where other companies can use our technology.

Being a European startup its really strange that most of our customers are actually US based. It seems that open source software is wider accepted there.

  Alex Chauvin [07.26.05 11:09 AM]

Maybe is it easyer to start a company and found investors on the other side of the Atlantic.
We are looking for funding while devlopping and selling a security solution in Europe but like Hartvig said, early adopters are more US based.

  Bob Thomson [07.26.05 11:59 AM]

I can think of a lot of reasons - Perhaps the problem is that there is some truth in the stereotype that the British are a lot more cautious than the Americans? There is also the domination of management in the UK by those of an accounting and finance persuasion, who are never very keen to put their money and / or reputation where there is the slightest risk of failure. Historically bankruptcy has been more stigmatisted in the UK than the US, something which has only recently started to change. It is also the case over here that borrowing to finance your business often involves putting your house up as collateral which is hardly an attractive proposition.

Start-ups aside, reports from mates who've gone to the USA is that it is a lot easier to get a suggested idea off the ground in the US than in the UK. I imagine this general attitude follows through to start-ups too.

It's all a bit sad but it can always change in time.

A Scotsman (And cynic) in Scotland, UK.

  Lynn Fredricks [07.26.05 12:02 PM]

I dont see this as necessarily an open source problem but a start up problem. Incorporating a garage shop in the United States is a snap, especially in states where there is at will employment. In Europe however, you have to contend with regulations that vary state to state, but usually are so labor supportive that they discourage the start-up mentality. For example, the imposed 35 hour work week in France has both labor unions on both sides of the fence. When this was first implemented, it only applied to large companies. Now however, even small companies are impacted. It is also very difficult and expensive to fire incompetent staff or limit benefits for workers on term contracts or part time. The cost of business is so high that it discourages start-ups that ride on good will, credit cards and angel investors.

  Richard Bogle [07.26.05 03:29 PM]

Attitudes in general amongst we Europeans are less entrepreneurial and we're certainly encouraged to take the 'safe' jobs. With only a small pool of entrpreneurs to inspire people it may not even be something most of us consider. Speaking specifically about Britain, understanding of basic business skills is also something it's difficult to pick up in our overly academic school system.

  james governor [07.27.05 04:04 AM]

i have been thinking about this. different notions. they may not be startups but Linux and mySQL incubated here. also what about Skype, which may prove to be the most disruptive startup out there.

go and look at lafraise.com

  dave [07.27.05 05:29 AM]

Could we please put a hold on the "communist bearucratic old europe" versus "USA: land of the free (entreprise)" stereotypes for just one moment.

The original article talks about a two cultures (i.e. C.P. Snow's concept http://en.wikipedia.org/wiki/The_Two_Cultures) problem between technologists and business people.

All the advertising firms mentioned in the article and the ecosystem of small producers and artists around them (including, without doubt some techy stuff like special effects houses) are predominantly small, creative start-ups.

Similarly there are plenty of Open Source tech support outfits that are doing boring enterprise stuff that no-one gets to see or hear about, working on intranets or babysitting servers.

What he's asking is why alot of the 'cool' 'world-changing' stuff coming out of Europe is based on communities, or goverments rather than products, selling and business.

I can totally relate to this because despite bucking the trend and my lifetime's main interests by doing a business degree at University (looking back almost certainly inspired mainly by reading the techno-capitalist-utopian Wired Magazine as an impressionable pre-teen). Despite being happy to change the world by selling a product in this 'american' style, I've now retreated into academia as there simply is no supporting community of web technology entrepreneurs of the kind this article talks of. The tech start-ups that do exist are generally happy to be Microsoft resellers of inappropriate technology solutions as that is the kind of marketing/golf-lead business they understand.

Actually pushing an innovative, or sometimes even just useful, product (despite the UK's long-standing reputation in this area) is in fact incredibly difficult. See the Dyson vacuum cleaner story for example.
http://www.dyson.com/nav/inpageframe.asp?id=DYSON/HIST/NEWPLACE

  Tim Almond [07.27.05 08:05 AM]

There's quite a lot of people certainly using OSS in their startups like small web designers and the like.

In terms of people building OSS applications, I'm not so sure though. The bottom line is that a lot of small business guys will always say "how do I make money from this".

I know quite a lot of innovative guys in the UK, but none of them are large - and many of the bigger guys fall into Dave's "reseller" model.

For instance... I've had an idea for a bizarre web services based app, but it needs lots of work and can't think how it could possibly make money.

Maybe there needs to be some sort of UK-based event to try and get a load of the OSS/Web 2.0 people together here.

  William B Dollars [07.27.05 02:46 PM]

Interesting question and interesting selection of responses. I am from the US, but work as a VC in Europe and am continually frustrated by the challenges of finding great start-up companies to work with. The reasons are complex and include:

- social issues: if you start a company and fail, there are often serious results from a career perspective; basically, failure is not accepted and this adds to the overall risk.

- VC issues: Although some VCs have been around in Europe for a while (e.g. 3i in the UK has been around since the 1950's), most were spawned by the craze of the late 1990's and were/are staffed by ex-investment bankers who had never been inside a business before, but thought they knew more than everyone else because someone had paid them a load of money in their previous job. Seriously, though, the big issue is that the VCs in Europe are typically unable to take on the level of risk that US VCs are happy with because on their first or second fund, they cannot afford to have failures. Often when you meet a Euro VC they say "we have not had any failures" which actually means they have not taken enough risk. The decent US VCs have been going for a while and recognise that having failures is part of the game and are thus more willing to take risks.

- Specifically with regards to software, it is usually important for software start-ups to be able to work with/collaborate with/grab the attention of larger software companies. In Europe that means they can go talk to ... SAP. Maybe Business Objects... in general, this industry is so dominated by US companies that I think some of the management/commercial expertise required to create viable, investible software start-ups is not readily available in Europe and certainly not to the extent that VCs need to feel comfortable investing in the sector... it is v. hard to invest in enterprise software in Europe.

Anyway, that is what I think.

  Justin Leavesley [07.28.05 11:48 PM]

It is true, there are not many start-up "companies" in the UK (I can't speak for Europe) and that the VC situation is not exactly conducive to creating them. But the people with the drive, vision and need to innovate are still here. We have just had to pursue our vision be other means.

I am the CTO of Talis Information Limited (www.talis.com) where we have effectively created a start up like mentality within an established business. We have been putting this innovation under the banner of something called Silkworm (silkworm.talis.com).
A third of the new senior management team have been through start ups before as have a number of the technical leads. We are doing some fantastic technology and business innovation at the edge of web2.0 and facing many of the same challenges a start up would have. Of course the hand of the innovators dilemma is also at work so we have some interesting challenges that a pure start up doesn’t have.

The point I am making is that high growth innovation is about people and the start up is just one vehicle for that, unless Talis is unique!

  Peter Cooper [07.29.05 02:53 AM]

I've just launched my new startup, Feed Digest - http://www.feeddigest.com/ - which supersedes the old RSS Digest tool you may have seen people using around the Web (it has 100,000 backlinks in Yahoo at least!) I'm in the UK, but the entire model is based around those used by guys like 37signals, Odeo, FeedBurner, Technorati, etc, and the intended audience is also the US. Just because you're not in the US doesn't mean you can't seem like you are.

The important thing, however, is that you must be self funding.. as getting funding from the US is tough, and getting funding from the UK..? Forget it. But self funding is great, it gives you all the control in the world :)

  Steve McLeod [08.09.05 11:59 PM]

I am a non-European living in Germany and have seen the underside of starting a company here. It's not pretty. According to The Economist magazine, you need to go through 70 steps to start a company in Germany. In my home country there are just 3 steps. In Germany you need to submit a business plan to the authorities and wait several weeks for approval to start. In my home country I can a basic form of a business running within 24 hours from getting the idea to start it.

No German small business owner is ever able to tell if they are meeting all the legal obligations on them, because there are so many and every month new ones are created.

You would need to be a masochist to start a business in Germany.

  Christian Kirsch [10.25.05 01:01 AM]

"In Germany you need to submit a business plan to the authorities" -- in which part of "Germany" might that be the case? I'm living here since nearly 50 years, and I've never heard of that. Of course, since you're only vaguely alluding to "authorities", you are perhaps talking about a bank or an investor?

I agree that e.g. the procedure around VAT are getting more and more crazy. But for starting "a small business" you basically have to fill out *two* forms. Its becoming a bit more complicated when you are employing someone, but that's mostly due to tax issues.

  sMs [09.13.06 02:37 PM]

Hi Steve McLeod, last year i wondered wether to start a ltd or a german gmbh. a lot of persons gave me advice to start with a ltd and not with a gmbh because of all the steps you have to go to get your own gmbh and because of tax-regulations and so on... if you want to start a small business, you can go to a german townhall and within 20 minutes you have your own "Einzelhandelsgesch�ft".