November 25, 2016
Guest blog post by Jeroen De Wit, CEO Teamleader, one of Europe’s fastest growing software startups out of Ghent.
Startups have become an important part of the European economy – there are an estimated 1.5 million of them in the EU today. I think most would consider the existence of the EU to be an advantage for them – I know I did when I started Teamleader. For me, the European Union was a stable market that offers business owners access to a huge market.
Right? Well, maybe not quite.
Scaling in Europe is not a matter of simply setting up shop across the continent. There are still a lot of hurdles for startups, and I’d like to share some stories of where we bumped into them.
Now, someone recently told me that “startups are always complaining”. So I want to make this clear: I’m not complaining. I want to improve things. Not for us: any changes in the EU market will arrive way too late for us.
But I wanted to use this blog as a way to illustrate some points that are raised in the Scale-Up Manifesto, a document that was crowdsourced by entrepreneurs and startup associations. Hopefully, I can convince a few politicians to make changes that will make it easier for the next generation of entrepreneurs to build a category killer.
My goal is to show that the Manifesto is based on real-world issues that we bump into, and that are largely a waste of time for everyone involved.
Proposal 1.5: “Strengthen e-Identity to improve cross-border communication”
eIDs are the new “one click shopping” buttons: residents of Estonia can manage their private taxes or set up a company with their eID card (probably why it’s been called E-stonia).
If every EU country used this technology, I may never have to travel again to sign a document.
Unfortunately, in 2015, only 11 EU member states were using eIDs. At that time, only Luxembourg, Sweden, and Estonia enabled the cards for private and business functions.
This is not a theoretical issue. When we opened our Teamleader office in Spain, our CFO had to fly over to sign the rental agreement in person.
Another example: when I needed to open a German bank account to open our German office, I had to decide whether to fly to Berlin or make the drive to the nearest German border. Because to open a bank account, you need to be there in person.
This is a process I repeat for every new office – a new bank account, the same documents, and another trip to the notary. A solution to both situations would’ve been a signature with my digital identity card, it would have saved me a trip to Spain or Germany.
By the way, why do I need a German bank account at all to do business in Germany? Or start a German subsidiary? That’s not exactly how a single market is supposed to work, is it?
Proposal 1.7a: “Publish all official forms and documents online in certified translation”
I am pretty sure companies of every size find administrative tasks the stuff of nightmares. Though the EU has said, in our defense, that complicated laws and tax systems are particularly heavy on SMEs.
An example: I had to go to the notary in Spain (I’m not trying to pick on the Spanish, I swear!). Unfortunately, I don’t speak a word of Spanish. And yet, the process must be completed entirely in Spanish. This led to an absurd situation in which I had to listen to the Spanish notary for an hour as he read a long document to me – in Spanish – knowing that I didn’t understand a word of it. It’s the law, you see.
Of course, when a big corporation sets up shop in Spain, that’s a minor irritation – the cost of doing business. But for a startup, these things quickly add up if you’re trying to scale up in three, four countries at the same time.
A solution would be that instead, when you need an official document – a letter from the bank, the form to establish a new company – it should be available in any European language in a certified translation. Get rid of all the translations, legal costs and waiting time. This would make life so much easier for SMEs who want to grow internationally.
Proposal 3.3: “Mobilize European talent”
The EU Single Market allows us as Europeans to work wherever we want in the EU.
But that doesn’t mean you can work for any company in the EU from any place in the EU.
If you want to benefit from this rule as an employee, you actually have to pack up and move to the country where the business is operating. The reverse is also true: to hire workers in another country (and continue to let them work there), you need to set up a subsidiary.
So while this free movement of labor sounds good on paper, in reality, issues like remote working, transferring benefits, and country-to-country administration kill any actual trace of the Single Market.
An example: we have a Belgian colleague who was working in Dublin for some time. She came back to Belgium to work for us. However, since she had been working in Ireland, she was entitled to zero vacation days under the Belgian system. You can’t transfer benefits from one country to the other. Not cool.
We also hired an Italian colleague that moved and began work without a Belgian national register number. This prevented her from being put on our payroll. This process couldn’t even be completed online because her first day was November 2nd, a government holiday in Belgium. (We confess: she worked “illegally” for a day. Sorry!)
Wouldn’t it be simpler if EU citizens could move freely and retain the benefits they have accumulated under other systems? Startups also need to be able to hire employees in any member state through systems that do not require us to create additional subsidiaries.
Proposition 5.3: “Open the educational path to lifelong learning”
My one year old son’s education will look remarkably similar to my own (Belgium in the 1990s), despite the fact that the careers available to him when he enters the work force may not even exist yet.
Educators and technology experts have been saying for years now that education doesn’t teach us the skills we’ll need for our inevitably technological future. The Scale-up Manifesto encourages that we remove the linear model of education: attending courses, gaining skills, and being recognized with a degree or certificate.
At Teamleader, we don’t even look at people’s degrees or diplomas. We hire talent for their ability to adapt. While it’s easy to only remember the young people entering the workforce, we also need to educate employees in the middle of their career to develop digital skills that will keep them competitive.
We tackled all these challenges and we’re better for it. But, the challenges we have faced are not uncommon – the Scale-up Manifesto addresses numerous obstacles that SMEs face and proposes solutions to them. Want to know what the future Facebooks and Ubers of Europe need to succeed? Read the Scale-up Manifesto – share it, sign it, love it.
I want to hear how other startups across Europe are hacking their way across the continent – connect with me on Twitter at @jeroendewit and follow what’s happening in Bratislava this week by checking out #SMEassembly2016.Blogactiv Team