Bootstrapping Abroad: why we do it and why it's awesome(spreadsong.com) |
Bootstrapping Abroad: why we do it and why it's awesome(spreadsong.com) |
I think it is laudable to live abroad, and in our field we're fortunate enough to be able to choose where to live. But with that choice I think comes a certain responsibility. You can live very well in a place like Thailand or China without engaging with the country past the minimum needed to get your needs met. Basically treating it as your private hotel resort. I've seen many people who choose this route, and I find it pretty repugnant.
If you are going to bootstrap abroad, be careful to remember that the country you choose does not just exist for your convenience. Be respectful of the place, and try to go beyond the role of a self-satisfied expat, which is very easy to fall into.
I assume that by this, you mean buying cheap food/beer and ignoring local culture? While it isn't my preference, I'm curious why you find it repugnant.
I'd like to hear you expand on this or is it something that you just learn from experience and actual long-term traveling and not from arm-chair reading articles on a site like http://BraveNewTraveler.com? Thanks
first, yes, it's cheaper, and yes, the wine i buy is better 100 fold than the states, and yes, i would say i've cut costs by about 40%. my kids didn't belong to a private club and take swimming and tennis lessons in seattle... so we're not taking advantage of the cost savings we could.
but it's still hard: hiring is hard. getting a good cultural fit is hard. building a business that works within the legal framework is impossible. i'm deathly afraid of hiring local talent because it's VERY easy to be sued due to the employment laws of the country.
but it's great: you get a lot of time back in ways i can't explain. it's like you get to ignore a lot of the BS that working in seattle or SF can overwhelm you. explaining the details of why that is would be a longer post, but every tech expat i know in argentina talks about the same thing - somehow you feel more in control of your schedule and your life.
do it when you can hire foreigners, keep your team small, keep your relationships and contacts with people back in the states or europe, and get paid in dollars or euros (or build a product that makes dollars or euros), and can come back once in a while - anything else and it's not such a great deal.
In my opinion and limited experience, these are the top 3 places to launch a tech startup:
1. Chile: Government, (CORFO, specifically) helps out a lot with grants even for off the wall tech startups, something I dont see in the U.S., however, it is expensive compared to its neighbors, but living costs are at around $800/mo comfortably (no dependents)
2. Argentina: Amazing and large tech community with presedence, tech Angels and VCs, lots of tech and startup meet ups and events. Most, if not all the main tech startups have come out of Argentina. Great talent. Day to day living costs are more expensive than Chile.
3. Colombia: Best bang for your buck, more business friendly, extremely good engineering talent that is very affordable, easy cultural fit and work ethic. However, not a lot of tech startup presedence and capital. See: Results of: 7 developers, working 24/7 for 90 days, 1 house (in Colombia) http://news.ycombinator.com/item?id=730031
• The #1 obstacle for startups in Latin America (and I think most of the rest of the world) is the Government. In the U.S. it takes 1 or 2 days, $70, to incorporate an LLC, whereas in Latin America it can take from a week in chile to over 175 days in venezuela.
• Most countries demand that you have an actual physical office, killing the option of work from home/garage.
• There is correlation between the time it takes to incorporate and the corruption of a country.
Going to Costa Rica next month but I'll be down to South America in January, we should definitely meet up when I'm in town.
If you plan on swinging through Manta, shoot me an email.
One of the biggest benefits of bootstrapping abroad is that you don't have the social obligations that you do back home. No friends calling to grab dinner, go to a movie, go for drinks, etc (this is also a drawback, of course). You truly are able to control your own time. I spend 10-12h a day working, and when I get off my computer, I'm somewhere cool (like Budapest, or Buenos Aires!)
Having social contact is important when you're not working, but meeting people on sites like couchsurfing is pretty easy.
1) Easy to find and hire good people from your own network
2) Easy to raise money from connections in your own network
3) Easy to find accountants, lawyers, office space from your own network
Starting a successful business is a fairly complicated and risky thing to do, why would you want to go live somewhere that makes it even harder? (Note: This does not apply if you're the only one building a product and just need a change to focus and get it out.)
Perhaps, starting and selling a business in the valley and then going on your world tour/vision quest is a better idea, no? :-)
1) There are tons of people who would kill to work for a company that lets them live in interesting places around the world. We actually have some pretty seriously cool stuff going on in this area, but we're not quite ready to talk about it yet- I'll get a post out in a few weeks talking about exactly this.
2) Fuck that, we're already profitable.
3) Already have a great accountant, already working with a phenomenal law firm. Office space? Seriously? I'm not going to stick around the Valley because it's easier to find an office on Twitter.
I'm not sure if your last sentence is sarcastic or not- life is too short to spend seven years (average time to exit) somewhere you don't like.
edit: btw, your personal website gives me a redirect loop (Chromium and FF on linux)
It does sound intriguing though.
I hope you'll write more.
"Steven Frank Gets [...] strangers to talk to [...] Google App Inventor [...] Phil Schiller [...] in Chinese Language [...] and why it's awesome"
Which completely ignores the fact that working in this fashion means you are building an international network which opens up an entire world of opportunity.
You can keep your Valley network, thank you very much!
But really, everything you mention is only relevant to a certain kind of of company. If you're not a Social-Media-Music-Sharing site that runs on the back of Twitter and needs to Get Big Fast, and you instead sell things to people who pay you money, then your list of things becomes much less important.
It's pretty good out here. You should come give it a try!
It did not take me more than 2 weeks to get connected with the top lawyers, entrepreneurs, investors, accountants, talent, press and get complimentary access to office space.
At least that was my experience in Chile and Argentina, which have thriving and large tech startup communities.
So yes, technically you'd be subject to pay income tax in both the US and the country you live in, but it is likely that there is a tax treaty with the host country that will let you deduct any local income taxes paid from your US taxes.
In practice, this means that you will pay only one income tax (but file two returns).
The US gets first dibs. At least they do in my situation. Then the full amount I pay to the US in tax (100%) is removed from the taxes I owe in Austria.
Simple example: Austria says I owe 20,000 euros. US says I owe $15,000. I pay the US $15,000. My tax burden in Austria is now approximately 20,000 - 10,000 euros (ballpark currency exchange) = 10,000. (This is assuming you crest theearned income waiver for expats, which is about $85,000 USD now.)
Basically, though, you have to hire a tax specialist. There's no way to manage it simply. And tax specialists with international experience are hard to find, but if you're coming from the US you'll have an easier time than if you're coming from a smaller country. Your best bet would be to contact one of the larger international firms, e.g. Deloit. I had to search for 9 mos to find one, myself.
(As an aside, I'm outraged that I have to pay US taxes at all.)
If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to $87,600 of your foreign earnings. In addition, you can exclude or deduct certain foreign housing amounts."
It's much more complicated than this but that's the jist of it.
http://www.irs.gov/businesses/small/international/article/0,...
copla201 at gmail is my email- hit me back!
Careful with tax advice from the Internet, folks. idlewords is talking about passing the Physical Presence Test for the Foreign Earned Income Exemption. If you quality for the FEIE via either the physical presence test or the bona-fide residence test (see the IRS docs, they are fairly easy to understand), you get to exempt the first X of your income from the income tax. X is in the $80k range this year, check your friendly local IRS website.
Regardless of the FEIE, your income is not exempt from self-employment taxes, as idlewords said. Additionally, it has to be EARNED income, a distinction which has VERY IMPORTANT CONSEQUENCES for people here who are intending to sell their startup at some point. To oversimplify, earned income is the portion of your profit you gain in return for services rendered, but it excludes the return on invested capital -- including IP. So if you end up selling your business for $500,000, it is highly likely that large portions of that are not earned income, and will be taxed from the first dollar in the US.
Taxes are a minor headache for me every year, and this year my business gets to start filing with Japan, too. Yaaaaaay, more fun.