Comments on: US entrepreneurs in Europe beware!

By: Alex

Alex — Tue, 30 Dec 2008 10:46:09 +0000

Great article and full of useful information. I think the environment in the UK is much better suited for US entrepreneurs. Out of curiosity, could you run a business in let’s say Spain while being registered in the UK? You’d be regulated by UK laws and taxes, what are the drawbacks, which I am sure are many? You could have a small HQ in the UK, and maybe a bigger office for R&D in other european country.

By: Jack

Jack — Thu, 11 Dec 2008 13:04:37 +0000

Fascinating topic!
I’m wondering how many “bad” practices exist in Spain, or elsewhere, simply because that’s what everyone is used to and nobody questions them.

In Chile, as in Spain, a bank will often as for an “aval”, or guarantee from a limited society’s owner for a loan to the company. I had this happen to me not too long ago when I was applying for a loan. What made this ridiculous is that the company owns real estate that is pledged to the bank as security which is valued at over 2 times the value of all our present and planned obligations to the bank!

Since I have had other experiences with banks outside chile, (in Canada), I felt the bank’s position was a totally unnecessary intrusion into my personal situation which also would result in limiting my personal ability to apply for other credit if I might want to.

I simply told the bank that if they wanted my business — which they did, because they came and offered me the loan — they’d have to be content with the existing guarantees. The account manager himmed and hawed, went back to discuss this with “his committee”, and they approved the loan.

This is just one example of several I could give in which I have avoided “customary” costs or obligations, simply because I was not accustomed to them, and insisted that another approach be considered.

By: Elliott

Elliott — Wed, 10 Dec 2008 21:30:12 +0000

I do not know the European problems, but I do remember an Italian CEO once telling me that “Now, even in Italy one can get a divorce, but once you hire an employee you have them for life.” Do not think that the USA is without fraud and employee problems. You never managed a company with a significant number of employees in the US. The Long Island Railroad had 97% of its retiring employees also getting disability with reports from their friendly doctors. California has the highest workers’ compensation costs per employee due to fraud. A TV exposé showed how psychologists & psychiatrists routinely approved depression disability for all patients they saw. In 2000, my company in Florida shut down a biomedical laboratory facility that we operated in California. We had to get approval from 27 California government agencies to shut down the facility; not to open it, to close it. You are correct that bankruptcy laws in the US are more lenient. Maybe it is because England used to send its bankrupt debtors to the “colonies” and Australia to get rid of them. In Florida, even in personal bankruptcy, no creditor can get your house [& up to 40 acres of land if it is outside city limits]. Texas is even better: you get to keep your house, horse and rifle!

By: Prem

Prem — Wed, 10 Dec 2008 20:25:19 +0000

Thanks Martin, being a European entrepreneur myself this has certainly been an eye-opener

By: Paul RODTS

Paul RODTS — Wed, 10 Dec 2008 20:21:48 +0000

Anyway….Godspeed Martin…I wish you honest and motivated people, and also a bit brighter thoughts…

By: Mike

Mike — Wed, 10 Dec 2008 20:16:28 +0000

Once upon a time I seriously considered a website that allowed entrepreneurs and businesses to rate their employees. This would eventually, with enough volume, weed out the rotten apples and serial scam artists out there, and improve the rating of good employees.

Of course, the unions would jump on this with lawsuits, so I decided it was just wishful thinking. There are however sites like trabajobasura.com that give free reign to employees’ comments about the companies they work for – IMHO this is an unfair situation.

A serial bad employee should leave a stinking trail behind him. Someone can always end up badly with his boss, but if all his ratings were bad, eventually the true story about him would surface.

By: Martin Varsavsky

Martin Varsavsky — Wed, 10 Dec 2008 20:04:30 +0000

@ Miguel Ángel Uriondo: Miguel, I have been personally warned by an employee in one case that if I did not give her the money she had asked for in terms of compensation she would declare herself depressed and hurt my company. And on a portfolio company of mine this has been the case time and again. And it is also true that entrepreneurs cannot be deemed depressed.

By: Martin Varsavsky

Martin Varsavsky — Wed, 10 Dec 2008 20:00:32 +0000

@ Max Navarro: Max I a speaking from experience. If an entrepreneur runs out of money and does not have funds to pay severance packages to his employees he is liable for those for life.

By: Martin Varsavsky

Martin Varsavsky — Wed, 10 Dec 2008 19:58:23 +0000

@ Paul RODTS: I do agree that Latin Europe is the most business hostile.

By: Martin Varsavsky

Martin Varsavsky — Wed, 10 Dec 2008 19:57:19 +0000

@ Prem: I just wanted to tell you and many other commentators that what I write comes from what has happened to entrepreneurs I know in different occasions, people who are very smart, well advised and resourceful.