In what way are lower wages good for the employees you're trying to attract? While some aspects of cost of living are low, others are not low at all. I guess if you're looking for nothing more than a temporary lifestyle involving enough money to go to concerts and eat at restaurants, the wage is fine for a younger person in Berlin. But it's a fantasy to believe you can effectively grow a company that way. You really do need to hire experienced people, often with families and expectations for a higher quality of living conditions, etc., who aren't particularly interested in the youth culture offerings of Berlin.
For these people, earning ~ 50k euros / year in Berlin is a way, way, way, way, way worse deal than earning ~ 200k dollars in San Francisco, despite SF's insane costs. You just simply cannot do anything with 50k euros/year in Berlin unless you have no outside obligations and are happy spending the money of minor lifestyle perks.
I'm surprised that any of this is even controversial. The same is true for start-ups almost anywhere else in continental Europe too. To a very limited extent there are some companies in Amsterdam that actually pay a "real" wage (i.e. you can support a family, enjoy life, and save for retirement), and some across Switzerland, but not many.
Thinking in terms of "yay, cost of living is low so I don't need much of a salary" is the classic immature analysis of a recent grad who looks at it more like a program for teaching English is southeast Asia than like they are actually working a job, building a career, etc.
I made 50k in a more expensive city, Paris. From that my partner and I were able to buy a flat, put our son into a catholic school, travel (squeezyjets €20 flights), dine out, and save a little. This would not be possible anywhere in the US including SF. Child rearing costs are punitively high in the US. Medical was less than 10% of my salary.
If my calculation is right the typical 2BR apartment in SF is $5000/month. Or $60000/year. That is almost 1/3 of $200k SF salary. Add childcare at another $12000/year. And medical.
It doesn't seem as far as lifestyle they are that far off. CoL plays a huge role. This is the typical American attitude at looking across the pond and not knowing how the other side lives but just assuming it's that bad.
You really do need to hire experienced people, often with families and expectations for a higher quality of living conditions, etc., who aren't particularly interested in the youth culture offerings of Berlin.
And yet these startups, everywhere, are able to do exactly that. They use equity as a carrot to lure experienced people from a sure thing all the time.
A bit of feedback from someone who tried to make it in Germany with a 40K salary (in the south) and couldn't. It's just not doable. You need at least 60-70K to get started in medium towns, and around 80-90K for large expensive cities. Otherwise you either have to downgrade your standard of living to that common in third-world countries or accept it to live with a chronically empty bank account and most likely with a long-term debt as you're trying to pay back your initial accommodation expenses. Cheap is an illusion for a brochure.
Plus the total amount of taxes (Income, VAT, GEZ/ARD) a person has to pay on a wage higher than the average in Germany, and inability to legally keep multiple citizenship, make the location even less appealing than CH and UK in a long run.
p4wnc6|9 years ago
For these people, earning ~ 50k euros / year in Berlin is a way, way, way, way, way worse deal than earning ~ 200k dollars in San Francisco, despite SF's insane costs. You just simply cannot do anything with 50k euros/year in Berlin unless you have no outside obligations and are happy spending the money of minor lifestyle perks.
I'm surprised that any of this is even controversial. The same is true for start-ups almost anywhere else in continental Europe too. To a very limited extent there are some companies in Amsterdam that actually pay a "real" wage (i.e. you can support a family, enjoy life, and save for retirement), and some across Switzerland, but not many.
Thinking in terms of "yay, cost of living is low so I don't need much of a salary" is the classic immature analysis of a recent grad who looks at it more like a program for teaching English is southeast Asia than like they are actually working a job, building a career, etc.
yardie|9 years ago
If my calculation is right the typical 2BR apartment in SF is $5000/month. Or $60000/year. That is almost 1/3 of $200k SF salary. Add childcare at another $12000/year. And medical.
It doesn't seem as far as lifestyle they are that far off. CoL plays a huge role. This is the typical American attitude at looking across the pond and not knowing how the other side lives but just assuming it's that bad.
You really do need to hire experienced people, often with families and expectations for a higher quality of living conditions, etc., who aren't particularly interested in the youth culture offerings of Berlin.
And yet these startups, everywhere, are able to do exactly that. They use equity as a carrot to lure experienced people from a sure thing all the time.
AndreyErmakov|9 years ago
ghostwriter|9 years ago
philefstat|9 years ago