Sorry for the late post, I am still recovering from the jetlag and sickness I caught traveling from Seattle > Bergen, Norway > and now New York City so hopefully this post makes a little sense and has some interesting content. I met some absolutely amazing people in Bergen and wanted to focus this post on a subject in which I felt really influenced the culture in Norway and that is their influence of a Socialist approach versus our capitalist approach. There are 4 major things I took out of my experience within this culture that I feel are valuable to any startup community.
1. Low taxes doesn’t mean more/better startups
In the U.S., one of the most debated discussions evolves around taxes. From a business perspective it is our belief that the higher the taxes the less small businesses will be created. We should give extensive tax benefits to startups so that entrepreneurs will be more incentivized to build companies and create more jobs for our economy. Now, I am not specifically against saving my startup money but I think ecosystems need to help create a culture that diverges this mentality that taxes have direct correlation towards thriving startup communities. Norway has a mixed economy which is partially influenced by socialism and focuses on equality for its people. Thus, they have some of the highest taxes in the world to help provide government programs that give back to all its people. The most successful entrepreneurs can pay nearly 50% of their income back to the federal government plus additional taxes. On top of that payroll taxes in Norway are double those in the U.S. Sales taxes, at 25 percent, are roughly triple. A normal person would think their startup economic output would be horrific but in reality they are not only beating the U.S. in small business creation per capita but they are leading the world. They also avoided the brunt of the last financial crisis (economy grew 6% between 06-09), essentially have no poverty and have an unemployment rate of 3.5% compared to the U.S.’s 8.3%. Plus, there is actually no specific evidence that correlates low taxes to entrepreneurial success let alone economic success. Now, I know this discussion could go on forever but I believe if I could take one major thing about my study on the Norwegian economic and entrepreneurial success it would be regardless of high or low taxes, entrepreneurs need to focus on if their ideas are actually solving a problem and if there is true market potential for it. High taxes just cuts out the potential for more pointless companies to receive capital. If we can answer yes to both things, taxes are only a minimal aspect to the massive amount of other problems you will see trying to make your startup a success.
2. Invest in a community that motivates through internal incentives
Benefits in Norway are pretty impressive. Financial employee compensation isn’t the absolute highest but full health care plans plus education is paid for by the state. If you a student and want to travel from Norway to MIT (average tuition for the year $40,00), don’t worry Norway’s got it 🙂 All of these benefits and perks give employees a mentality that is little more privileged than the average. The point here is that great managers in Norway can’t just give financial incentives to employees in hopes to motivate them to perform at their highest peaks. The great managers have to come up with creative incentives where they turn to internal motivators. They finds ways to turn their job from more than just a job but one with meaning. The happiness advantage plays directly into affect with the Norwegian work community. Actually, based off of Gallup’s latest Happiness poll they ranked 3rd in the world which is showing results all around their economy. Learning about the culture in Norway helped reinforce my belief to invest in a community that motivates people through meaning not money. If you need more convincing, here is a great video by Daniel Pink who wrote an entire book on motivation.
3. Never get too comfortable.
The luxury of these benefits do have a downside within this rich culture as well. Since employees of Norway have such a big safety net, some may believe it may be almost foolish to leave your job to start a company that will most likely pay less and have less benefits. It’s like if every company that hired an employee treated them as if they were an engineer at Google. Too much comfort leads to complacency which leads to lack of innovation and risk taking. Don’t be scared to shake things up a little bit and throw something like a Startup Weekend that reinvigorate those creative juices in your community.
4. Why do you start a company?
The approach to starting a company is far different in the states than it is in Norway. I believe socialism makes the choice to start a company a lot less attractive than the major potential upscale to become the next Mark Zuckerberg or Bill Gates. The limitless of financial success and the pure American dream celebrity stardom is embedded into our culture. In Norway, the reason to start a company is obviously not driven by those same cultural incentives. The salary difference between a highest paid CEO and an entry level employee actually aren’t that different in Norway. The reason a person would choose to start their own company is more of either a lifestyle choice or a big opportunity. When building a startup community, the underlying question we should ask aspiring entrepreneurs should be “Why do you want to start a company?” The real successful entrepreneurs across the world do it because they love to be an entrepreneur or because they saw a big enough opportunity that they had to take action on. Let’s continue to reinforce the purpose that we should become entrepreneurs because of a passion we are following not because of celebrity stature and money. It will benefit us ten folds with higher quality entrepreneurs finding success in our economies.