00:01:58 · Simon Schaefer
[00:01:58] S1: Yeah. Well, I mean, from a perspective of a startup and a venture capitalist, investor, angel, whatever, you really want to have the simplest way to found, fund, and scale a company across Europe. And the concept that was on the table was the so called 20 regime. And you could say that twenty eighth regime conceptualized as a virtual member state. So imagine we have 27 now, let's call it the twenty eighth one a virtual one, in which you can have legislation, have a court, can have anything that you want that a member state would have, and member states can choose to opt in. So it would have been a real European solution. Imagine then the EU-INC is a corporate law framework inside the twenty eighth virtual member state and now, you know, from there member states can say we want to participate in this right now. That's what we wanted because it would have been like a pan European solution, one solution only, no derivatives, no differences, just one thing. And what it is now is at the brink at the at the sort of danger of becoming real 20 seat seven versions of it. There's many aspects to it. Right? We're looking at corporate law, labor law taxation, labor law taxation actively excluded, so we don't want to touch too much of the member state sovereignty because this would make it impossible to pass. But for instance, conflict resolution courts will have to be localized, so the EU-INC would have to have 27 different courts dealing with it. That's how the commission proposed it. For us, that's a downside. The the the real upside would be where we still have one interface, we still have, like, Delaware, the chance to have one, two, or three member states creating the perfect environment for starters. That's where we want to end up with. This is in its current form, it's already a compromise from the original idea, but there's, of course, the proof's in the pudding, devil's in the details. So there's now a lot of these features and functions of the actual legislation that need to be figured out, and that, of course, are on the chop block, so to speak, from member states and individual ambitions and people that are for it or against it.
00:04:03 · Sebastian Johnson
[00:04:03] S0: And this campaign is now kicking off. We've got a hundred days. What is it... What what is those hundred days? Like, what is it a hundred days until?
00:04:11 · Simon Schaefer
[00:04:11] S1: So there's a... The parliament will come to a conclusion, the European parliament, of what it wants this to be. The commission has made the original proposal, everyone follows after and gives their opinion. And with that, the council will do the same thing, and then all three will meet together and negotiate the final regulation. What you see now is that, of course, as a proposal has been released, it's being discussed in many forums, right? And one that is a very important one is COREPER, which is the permanent representative, so to speak, the ambassadors of the member states debating this. And, you know, there's there's there's various degrees of willingness and various degrees of knowledge when it comes to the startup economy or the innovation economy. And that's kind of how we see our role, trying to be at the table and trying to make sure that what the startups really want remains in there. I'm giving you one stark example, which is the main thing that we're pushing for right now, which is a central digital registry. Sounds extremely boring, but if you if you look at it in how nowadays companies house in The UK, the... I forgot the name in German. It's a terrible name anyway, but you have one in every country. Right? They've changed. So in the beginning, this was only the source of truth. Does that company exist? What is its its fiscal number? And what is the name and the address? Nowadays, expect a lot more or you could expect a lot more. Think about life data points. Think about annual reports. Think about cap tables such, you know, as ultimate beneficial ownership. Who are the ones that actually own the company? Which then relates to your business activities operationally, so going to get a bank account, things like that or compliance with certification. So all of these things now require an almost real time live access to that database or to that dataset, and that dataset is growing. And so for us, there's no question on whether we want a single database for all this for Europe or not. Do we want 27? Obviously not. Ask your CTO and or ask anyone who's ever put any code on a staging environment. Would you like to do that 27 times or one time? Right? So it's very clear, but member states don't quite see it as such.
00:06:23 · Simon Schaefer, Sebastian Johnson
If you look at, of course, also previous experience of member states and even everyone with European Union, handing over responsibility to the European Union hasn't always worked in the favor of who's handing that over, right? So I'm not surprised that the first pushback you get is why would we create another complex institution? Yet single economic realm, why would we create 27 versions of the euro? Right? I mean, the euro is also... It works because there's only one. And so that's that's where we're coming from, and there's like a total of five non negotiables. Happy to touch on every one of them. It's quite it's quite geeky. It's a technical matter. [00:07:02] S0: And what what has been the general pushback so far? Has it been, you know, an aversion to the kind of, like, centralizing more power within the EU? Is it a sort of, like, cynicism that actually maybe the EU itself won't want it that well? What what has been the pushback to these proposals?
00:07:17 · Simon Schaefer
[00:07:17] S1: I think the... First of all, the the the good thing there is that it used to be nice to have innovation economy, and since the Draghi and the letter reports, which I which I wouldn't want everyone to have a look at because they're really important for what's going on right now. Since those two reports, it's become not nice to have, but a must have. Innovation economy is also relevant for our security. We see how sovereignty is a big topic nowadays and has never been as on top of the agenda as it is today. Now, of course, we're touching several monopolies, would I dare I say. Right? One example is notaries in Germany. Believe it or not, you've seen the post recently, people actually have to read out loud every contract you sign, almost every contract you sign, it's stark simplification. And then you have the notary sitting there going through a series A stack of documents and reading it out loud, right, and you have to be there, and if you're not there, you have to give them a power of attorney, and they have to do this manually, completely offline process. You can do it online, but you need to be certified, yada yada yada, so it's a it's a old structure. Andreas, my my my partner in this EU-INC team, he he almost put it like, you have to ask the elderly for approval to actually get the transaction done. Right? And I thought that's a very fitting comparison actually, because it's so anachronistic. And of course, they don't want that. Second big adversary, which which not I don't even personally, I don't agree it's an adversary. It's just a downside protection that they're looking for is trade unions. So if you look at worker protection, right, I mean, obviously, you look at industrial age and industrialization and the results from that, worker protection is an extremely important topic. But is it really necessary for a German startup fast growing company to have employee representation in the board decisions when they're meeting with their VCs? I don't think so. I think the appropriate tool for today's time is to have them be shareholders, employee stock options, right, and have them sit on the table as shareholders and vote for whatever it is that the the board decides shareholders need to be voting for. So I think some of these pushbacks are from a a challenging position or or a lack of knowledge even about the innovation economy.
00:09:33 · Simon Schaefer, Sebastian Johnson
If you're not in the trenches, if you've never raised capital from a VC or invested in a company, how can you know these things? Right? And so people tend to stick to what they've built as the the thing that they're looking to protect, and, you know, we're rattling a lot of cages here. [00:09:50] S0: Yeah. It's really interesting. So, yeah, the the notaries has been a big one, of course, been very viral. It's interesting about the trade unions. You know, the notaries are obviously German. Are there markets or countries which are more cynical or more aggressively pushing back? [00:10:04] S1: Yeah. Of course. So it's not the country Germany, but it's German trade unions, obviously. If you look at one of the shadow repertoires and the leader of the pike actually, René Repasi, he's a social democrat from Germany. His mandate, his his constituency is social democrats and of course trade unions are a big part of that. Right? And so codetermination is a big topic in Germany. It's not a topic at all in Spain, and so there's there's these various levels. But, see, that's that's precisely, and this this touches on another nonnegotiable that we're trying to keep in there that member states want to delete, which is insolvency. We [00:10:41] S0: can