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The Real Reason Italy Sucks at the Startup Game

For a long time now Italy has been experiencing political and economical turmoil that would require several drastic changes in order to reboot it. Italy needs a new class of politicians who truly care about the real problems that the country and its people are facing everyday. It desperately needs to reform the educational, tax, and labour systems, as well as a substantial reduction of bureaucracy at every level.

In his famous 1961 inaugural speech John F. Kennedy said to his fellow American citizens, “Ask not what your country can do for you – ask what you can do for your country”. In the same spirit I can’t help but ask myself, what would it take to modernize and restart Italy?

Though easy solutions do not abound, there is something that young Italians can do to greatly help this situation: create startups. Over the past 30 years American startups have generated 44 million jobs. Starting a company is perhaps the most noble act Italians can do to improve their country and their own economical condition, while at the same time helping to create jobs for their fellow Italians.

I know that starting a company is not an easy or straightforward process in Italy. Doing so means facing a labyrinth of laws (plus very high taxes). The fiscal system is inefficient and often rewards tax evaders with a laissez-faire attitude, while showing a cruel persistence against honest small business owners.

It’s also hard because there are virtually no angel investors or venture capitalists. Though parents are sometimes seen as angel investors (of sorts), to some, for providing young Italians with a place to stay rent-free well into their twenties and sometimes even thirties.

The existence of obstacles shouldn’t be a good enough reason to prevent you from trying at all though. When you have very little to lose, because you’re already unemployed (or are not making anywhere near enough to get by), why not try and start something of your own? It’s obvious that without an initial capital, funds, or credit you can’t launch a physical retail outlet or start having goods manufactured for you in China.

Thanks to the web however, it’s possible to bootstrap a company and encounter relatively negligible monthly costs. The only real capital required is knowledge, which is freely obtainable online, paired with the ability to work both diligently and smartly towards a goal.

With rampant unemployment in Italy, particularly in the south, one would expect a huge surge of technical startups in Italy. You’d imagine people staying up until 3 AM in order to fulfil their dream of running their own business. Sadly, these are not the droids you are looking for. Unemployment figures are appalling, yet there are very few self-employed people or entrepreneurs to be found throughout the country.

The real limit is the mentality that most young Italians have.

Risk aversion. Even when there is very little to lose and you’re 20-25 years old and without a family of your own to sustain yet.

Recently a great deal of people from all over the world applied to temporary leave their respective countries to go to Chile, in order to create a startup and take advantage of a $40,000 fund for startups that the country is offering without any strings attached. Americans jumped at the occasion, despite the availability of local funds. How many Italians have gone so far? Very, very few. And yet they are the ones who could truly use – and need to avail of – chances like this.

Fear of failure. Italian society has never come to terms with the fact that failing is an opportunity to grow and try again. If you fail once in Italy, you are often seen as a failure forever (short of doing amazingly well later in life).

In North America it’s pretty much established that statistically you’ll fail a few times before getting it right. Nobody would attach such a negative label to you because you tried to create something of value and didn’t end up succeeding. You’ll be respected far more than timid souls who neither know victory nor defeat.

Real experts are usually people who have failed more than most people and have learned important lessons in doing so. This is true in any field, not just the business world.

Sense of self-entitlement. People in Italy still expect to obtain a long term post office or government job where you’re unlikely to get fired and will remain there for 40 years, just because they got a college degree.

I’ve interviewed several Italian job applicants throughout my life, and it’s not unusual to see them become visibly upset when a fellow Italian wouldn’t hire them over someone from a different country (simply on the merits that we’re both from Italy) – even when they’ve never written a single line of code outside of their university courses.

Fatalism. In Italy there is the belief that your future doesn’t depend on your own efforts, rather that it’s mostly influenced by impregnable external forces. When you are not convinced that you can take charge of your life, it becomes really hard to make the sacrifices and jump through the hoops required to achieve success.

Why work like a dog if you don’t believe in your heart that you can change your life and live the Italian take on the American dream? (I refuse to believe that the real Italian dream is to become a soccer player or a show girl, or to have a unionized job where you can’t get fired no matter how bad you behave.)

The following chart shows the results of some research that was carried out by the the Hoover Institution at Stanford University. As you can see, many Americans, Swedish, and English people replied “no” to the question, “Does success depend on forces outside our control?”. Italians however showed their fatalism, with more than 70% replying “yes”.

Does success depend on forces outside our control?

(By the way, tip of the hat to Fabrizio Capobianco for spotting this image on a slide by Richard Boly.)

I understand that as a whole a strongly catholic country may hold onto the popular belief that everything comes down to “God willing”, and that in many fields corruption and nepotism are the norm, not the exception. However it must be really sad to live a life in which you don’t believe in your ability to change your own destiny. Real change often derives from the ambition and desire to improve one’s situation in life.

Cynicism and envy. In Italy, people tend to ridicule, envy, or be distrustful of those who actively want to create a better future for themselves or to change the status quo.

When Mashape’s founders wrote an open letter to the Italian tech community in which they suggested that they were leaving Italy for Silicon Valley, people mocked them to no end. Many derided them and said they’d be back in a year with their tails between their legs and nothing to show for leaving Italy. What actually happened (as non-Italians might expect) is that they received $1.5 million from some of the largest investors in America, and in the process were able to get more investors to pay attention to wannabe Italian entrepreneurs.

This story speaks of a generation of cynics and discouraged people who not only struggle to produce something of value themselves, but who also actively sabotage others so as not to look incapable or lazy by comparison.

Overall Italians are a smart and (in the technical field) a generally talented group of people. Perhaps Italy will never have its own Silicon Valley, but it has a huge amount of human potential that should be put to good use. Change and innovation in my native country must start from the ground up, beginning with the attitudes and belief system of its youth.

I urge fellow Italians to fight these negative tendencies and stop, once for all, looking for excuses. If you wait for the ideal conditions to come along, you’ll never achieve anything important in life.

All change requires is for people to start taking action and trying for real. After all, just look around at the way Italy is these days: you don’t have a lot to lose. Yet there is so very much to potentially gain in the fight to reshape and transform Italy into the country it truly deserves to be.

[An Italian version of this article is available on Stacktrace.]

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arrow23 Responses

  1. 12 mos ago

    This is, word for word, as real for Spain as it is for Italy. Sad indeed.

  2. 12 mos ago

    I am Korean, and it’s surprising how accurate I believe that graph is. Many entrepreneurs tend to give up because of the social barrier (“that’s just how society is”) but we really need people to step up and use the available resources to better not only their personal status but also the conditions of their country/the world.

  3. Mahesh
    12 mos ago

    Interesting. Very adherent to reality in Italy. The graph, on the other hand, does probably not only reflect the perceived locus of control, which is where people think the cause of achievement resides.

    I am driven to think it rather reflects the real locus of control, which is where the actual cause of achievement effectively resides in all those different countries.

    People sometimes are just good at figuring out how things use to work in their own context.

    Mahesh

    {Italian soon-to-be [not-in-Italy] startupper}

  4. 12 mos ago

    As an Italian living abroad, I completely agree. Unfortunately, I’m not really positive about future in Italy and I feel sad for my friends still there and trying to set up a new business. But at least, I know there still are valid people there.

    I will not tell them what to do of Italy anyway, as I went off my path and left Italy back, so it would not be fair.

  5. 12 mos ago

    “The real limit is the mentality”

    well… yes. Culture is the tribe’s survival kit.

    In a changing world, it needs to be updated from time to time.

    If it’s fundamentally flawed, like with that toxic cynicism, then it will still be a kit but not exactly one about survival.

    So, two things:
    1. I’m glad about Mashape’s founder outcome. Those stupid atitudes deserved that slap right in the face (neutralization of self-destruction).
    2. I’m surprised on how non-Italian this issue is. As Borja Prieto commented validating this for Spain. I can validate this for Argentina and Brazil (they are glacially slowly doing the homework though).

    I guess that, for founders, the advice that will neutralize this problem most is: “maintain yourself surrounded by people that has a self-centered locus of control and run away from the rest”

  6. Hugo
    12 mos ago

    And yet so many Brits dream of being able to retire to places like Italy and Spain. I wonder if a country can combine the more can-do attitude of northern Europe or the US with the lifestyle, culture and community that is so valued in the southern European states?

  7. 12 mos ago

    Are you familiar with H Farm Ventures based in Treviso? http://www.h-farmventures.com/

    They are actually one of the investors in our Ameican startup. But, in addition they have an amazing campus and are growing like crazy. I’d recommend any entrepreneur in Italy looking for something y-combinator-like to check them out.

  8. Sai Reddy
    12 mos ago

    This is true for India as well. Most educated middle class folks think that they deserve a government job and that should set them for life. Also the government workers are very efficient at making the life of any small business man miserable unless they are paid off. So a certain portion of your working expenses have to be allocated to bribes. No wonder so many seek jobs abroad instead of starting something there.

  9. Colin Jenken
    12 mos ago

    I was in Italy just a few months ago and was talking with a friend of a friend at the wedding that we attended. I was surprised to learn from that friend of a friend (he is a copyright lawyer) that software patents don’t exists there…. In my mind that’s a big benefit to developing there but after asking the guy about it he was apprehensive with the idea of starting a small business. Mostly, he explained to me, because of the bureaucracy one would have to go through just to get things started.

  10. Giuseppe
    12 mos ago

    As an Italian who founded a start-up at 23y/o and kept it running 7 years I do not agree with this analysis.

    Founding start-ups is indeed very possible in Italy, especially in the tech/IT field.

    However, it is difficult to grow them up to the point they are no longer small-to-medium business but rather large enterprises.

    Also, you are giving a misleading picture of italian people.

    Let me explain my thoughs:

    > Risk aversion and Fear or failure. It is not true italians are not risk takers, many are. The true is that many young entrepreneurs do not know how to adeguately manage the risk.

    It is true however that risk management in Italy comes at a rather high price. For example, Founding an LTD company goes a great way managing and limit risk.

    However it is not cheap to start an LTD in Italy, hence you need cash in advance. Cash (and loans for what matters) are not easily available to italian start-ups making the problem worse.

    So, the problem is not Fear/Risk aversion rather poor risk management and the difficulty to access to risk management tools.

    > Sense of self-entitlement / Fatalism. they exist, and they are distinctive tract of our culture, however they are not the reason why we have few start-ups. Reasons are embedded into our economic system and not in our social tissue.

    Being a bit fatalist could make a few italians cross fingers and prey the saints when launching a new product not to avoid launching alltogether!

    > Cynicism and envy. Do you really believe all italians tend to ridiculize themselves? Our (not so) beloved prime minister may have a ridiculous attitude, not every italian has.

    Now, in case you wonder why i have run an enterprise for just 7 years, the answer is: profit.

    One of the problems in Italy is that unless you get really big really fast the cost of running your own enterprise overweights the value of your time.

    That is, in Italy it is easier to to get much more money per hour of work by being employed rather than being on your own.

    But again, this is not failure of attitude, it is failuer of an economic tissue where the cost of being entrepreneur outweights the benefits.

  11. Jose
    12 mos ago

    Hi,

    Everything you say is true in Italy as it is in Spain. Envy and Laziness are the two capital sins characteristic of both catholic countries(people do not go to church anymore but it is in the culture anyway).

    But Italy does not “suck” at startups. California is the place when startups are created because all the USA technology is centralized there and in Boston.

    It was casual because of the WWII. In Europe, or Asia or South America everybody wants to be the “startup hub” of the continent like California is with Silicon Valley, but everybody have different countries, different cultures, different laws and different languages, so it is not going to happen.

  12. 12 mos ago

    Well, it was interesting to learn that Turkey an Italy are nearly the same in terms of Fatalism. If I translated your article and posted here by changing Italy to Turkey, no-one would know the difference.

    On second thought, maybe I will do it ;)

  13. 12 mos ago

    As an Italian that just leaved his job to found a startup, I completely agree.

    Especially to the part about the risk aversion: so many colleagues and friends shrugged when I said that I wanted to leave my job (full time).
    I’m sure that so many talented italians when faced to a similar decision, will be smothered by the general negativity.

    No one seems to understand that even in case of a failure, there will be always other opportunities and that the experience can only help grow.

    I don’t know if I’ll be successfull, but I’ll keep trying.

  14. Carlo
    12 mos ago

    You’re essentially right in your analysis. As an italian freelancer, that is self-employed, I’m especially concerned by the many hurfdles our state puts in front us; some days I’m spending more time in facing tax and breaucratic challenges instead of dedicating to my engineering activity. But I don’t completely agree with those that escape from Italy to follow their dreams. We must fight for our country, we must combat the intricacies of the law and of a hungry fiscal system, we must educate our own citizens, especially the young generations, to the culture of hard work, sacrifices but also great objectives. We cannot leave the country because our children we’ll heritate what we are building now. All 20-30-40-50 years old italians: our children will get the country we’ll leave them. If we escape and we don’t fight for it then it’s our generation that will be blamed by the next o es, don’t forget it.

  15. Frank Conte
    12 mos ago

    Hi, thank you for the great article. I was born in Italy but I left 10+ years ago. I worked in IT for banks though London, Tokyo, HK, Paris, etc. I’ve made 1M+ USD in 10 years. I consider that an achievement considering my humble origins.
    When I speak to my old friends in Italy I do experience the exact symptoms and fallacies you explained in your article.
    I only have 1 objection to make: Italians do think that success depends on forces outside of their control not because of their religious faith, but because the problem with Italy is the Mafia mentality. Read that again: not the Mafia as a criminal organization, but the ‘Mafia’ way of thinking, whereas people favor others not based on their merits, but based on the relationship they have with them. Unless you know the right people, no matter your qualifications, you won’t progress in Italy. I repeat: you won’t be allowed to do s*it unless you know the right people. There is an underlying mistrust in the Italian culture and among all of its citizens. I believe this was brought about by centuries of divisions among the different Italian regions, an endless number of invasions, kings and popes. And I believe this is something that cannot possibly be changed in the short term.

  16. Gerald Greene
    12 mos ago

    Italy has a different mentality than the US does, that’s exactly right. The US has had the mentality of going west, taking risks, and trying to create fortunes. Unfortunately this mentality not only pervades the best and the brightest than countries have, it infiltrates the government and makes laws that make starting up a company harder than it has to be. This is why the US (despite its numerous flaws) is still the best country in the world for creating new businesses. I don’t think it has to be this way because I know there are a lot of good developers in Italy and a lot of smart business people with great judgement. It can be hard to find time to create stuff, but the technology is often easy if you can find time to outsource some of the marketing stuff (use Google, use Facebook, use 3rd party services at http://www.buyfacebookfansreviews.com there are plenty there, use blogs, use Twitter, etc). This is the biggest problem. As Ayn Rand said (and I don’t thing she’s perfect but she had a few good ideas), America is a country of money. This isn’t the case with the rest of the world. Now, not saying that Italy is bad or anything. They along with the rest of Europe enjoy life more and value family and companionship a bit more, which might lead to better happiness for the most number of people. But its not a climate conducive to creating new businesses. As an American, I love Europe and may ultimately end up retiring there one day, but building up a business is so much easier in the US because this is what this country is all about. Other countries might have a lower cost of doing business, but this is where stuff actually gets done.

  17. 12 mos ago

    I did open an IT startup in Rome, back in 1994, and kept it alive and well until 2005.
    I do agree with your analysis. Although I wouldn’t motivate the feeling that your success doesn’t depend entirely on you with some catholic cultural heritage, but rather with the reality of facts that almost everything here is made through connections, and quality often means nothing compared to beng part of a smaller or larger masonic group.
    The reason why I shut down my company, was because I was tired to support and fight with the eternal enemy of every business in Italy, the italian tax system.
    I won’t go into detail, you know them all already probably.
    Anyhow, people do evade taxes here, because otherwise there is no chance of survival.
    I often think that italian laws were written by Pirandello, or by Monty Python in a more international standard of absurdity.
    Having tried it on my own skin, I can confirm that it is almost impossible here to run a small business in tota honesty. I tried it, and although it was successful, most of the earnings went to feed the monster with its absurd requests. Often, tax laws, ask money from you that you can’t have from a mathematical point of view. And many people borrow money from banks just to pay “next year prospective tax”.
    Yes, in Italy, you also pay in advance taxes for next year. Funny isn’t it?
    I advice to all italians NOT to start a business in Italy, unless you are ready to face some tax evasion.
    Otherwise, move to the uk, 20% profit tax, and you can deduct even tube tickets.

  18. 12 mos ago

    I wouldn’t put much faith in “success” surveys. In the US people check “strongly agree” on those questions to get hired/promoted. There’s plenty of people here who think the “1 percent” controls everything–read the news lately?

    Fact is, no Italian knows his/her destiny. I’d like to see you find one Italian who would seriously argue otherwise. Maybe he can pick some lottery numbers for you ;-)

    If fatalism is truly a “failure signal” I would argue you’re more likely to find those people reading Hacker News or Slashdot, you know the “science” people who believe we’re a series of robotic responses, psychopathic smiles and tears for survival. Sound familiar? Our brains will be reproduced in a lab, etc. How’s that for some fatalism?

  19. 12 mos ago

    I remember the Italian film series “The Best of Youth” starring Allesio Boni. This topic was touched upon in that series very poignantly.

    And while America is supposed to be the land of second lives and second chances, I think it’s changing here, too.

  20. 12 mos ago

    We have eerily the same Startup scene here in the Philippines (no Angels and VCs) and the I do see the same reasons such as fear of failure, success is pretty much not what you know but WHO you know. To think that Italy and Philippines are half a world from each other!

    I would be interested to see stats for the Philippines on Fatalism as well.

    And LOL on the “I refuse to believe that the real Italian dream is to become a soccer player “

  21. Marco
    11 mos, 2 wks ago

    Giuseppe, great analysis. I am an entrepreneur too and I talk everyday with other entrepreneurs about this. In my opinion, your last sentence is (unfortunately) the sinthesis of the current situation.

  22. Damian Scavo
    11 mos, 2 wks ago

    I totaly agree with the publication.
    I can also add that thanks for such an avarage standard, the few that think different are in one incredible position of opportunity: almost zero competition…
    So, it’s time to do it right, and do it harder as never before.

  23. Riccardo
    8 mos ago

    Sure?

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