Over the past two years, anti-tourism protests have spread across southern Europe. In July 2024, demonstrators in Barcelona protested over-tourism with the slogan “go home,” while around 10,000 people marched in Mallorca over rising housing costs. Similar protests have also taken place in the Canary Islands, Portugal and Italy. The backlash reflects
Yakov Filippenko 
Over the past two years, anti-tourism protests have spread across southern Europe. In July 2024, demonstrators in Barcelona protested over-tourism with the slogan “go home,” while around 10,000 people marched in Mallorca over rising housing costs. Similar protests have also taken place in the Canary Islands, Portugal and Italy.
The backlash reflects an underlying tension: European governments increasingly see expats and digital nomads as a new tax-generating source of revenue. Conversely, many residents associate their arrival with higher rents and housing scarcity.
These opposing views raise a more fundamental question. Why can’t many Europeans afford the same apartments as foreign professionals? And why can’t European businesses consistently pay globally competitive wages?
The tension is not new
Europe has spent decades trying to attract talent and build innovation ecosystems. When I worked in venture capital, almost every country wanted to create its own Silicon Valley and many governments invested heavily in building domestic startup ecosystems. Yet only a handful produced globally significant innovation hubs.
Some venture funds explained Europe’s failure to build its own innovation engine in cultural terms: Americans and Israelis were supposedly more willing to take risks, which made the venture model work better in those markets.
I always found that explanation troubling because it implied that some nationalities were naturally better suited to entrepreneurship than others. I don’t think that’s true. People everywhere are fundamentally the same. Math holds a better explanation.
In mathematics, there is a remarkably simple formula to explain why people choose to follow a particular course of action or refrain from doing so:
Probability of success × potential upside > probability of failure × cost of failure.
The same logic can be used to explain crime rates, investment decisions or entrepreneurship. Let’s assume entrepreneurs everywhere are equally talented and willing to build companies.
In the United States, the potential upside is immense. You can build a billion-dollar company and make a fortune. In Europe, the upside is severely capped, simply because progressive taxation eats away at your margins.
With everything else remaining equal, the ultimate decision to build comes down to just one variable: the sheer scale of the upside.
Where European scale-ups go to stall
The environment to build is changing faster than at any point in the past two decades. The traditional pipeline of building a local startup just to flip it to an American buyer through mergers and acquisitions is broken. Governments now treat digital services as sovereign assets rather than borderless businesses.
We witnessed an example recently when the U.S. government imposed emergency export controls on Anthropic’s newest AI models. Because the company had no practical way to verify user nationality in real time, it temporarily suspended global access, illustrating how geopolitical decisions can instantly disrupt software infrastructure across borders.
Governments across Europe increasingly want critical digital infrastructure to remain local. Yet restricting foreign platforms only works if domestic alternatives are genuinely competitive. Otherwise, protectionism simply reduces productivity, since businesses and citizens no longer have access to the best tools.
While initiatives such as “EU Inc.” aim to unify Europe’s startup ecosystem, access to growth capital remains one of its biggest structural challenges. Many startups still struggle to secure the later-stage funding needed to become global businesses. Building competitive European alternatives requires conditions that make ambitious founders want to build them in Europe in the first place.
That leaves founders with a practical challenge. They must rethink not only where they scale, but also how they build their teams.
Top talent is waking up to the reality that a standard 0.1% option pool rarely justifies a gruelling tech grind without a clear path to global liquidity. We promised early hires a planet. Now, we are just selling them a neighbourhood.
Protected, but stuck
True digital sovereignty requires engineering talent that is increasingly difficult to secure. Startups must operate within one of the world’s most employee-protective labour frameworks. Volkswagen’s recent showdown with unions over plant closures proves how rigid labour protections can stall a company attempting to transform.
For startups, where strategic pivots happen in weeks, this friction is costly. Tech startups need a labour market where they can scale teams up or down as business conditions change.
More than a paycheck
To overcome hiring bottlenecks, founders are using Europe’s quality of life as a recruiting advantage.
In my own company, 30% of our team fits this profile. They could work almost anywhere, but deliberately choose Europe for its standard of living.
Yet, this competitive edge should not be taken for granted. Turkey has introduced an increasingly attractive package of tax incentives, while the United Arab Emirates continues to expand its tax-free environment and residency pathways for global talent.
However, top talent isn’t driven solely by tax optimisation. For highly skilled engineers in politically or economically volatile regions, relocating to Europe represents far more than a job. It offers long-term stability for their families, especially if they have school-age kids.
Commitment, in pieces
Recruiting globally is one way of adapting. Changing how people are employed is another. Many startups are moving away from relying exclusively on permanent, full-time contracts and are incorporating fractional executives and project-based contributors into their operating models.
This approach gives founders access to highly specialised expertise while preserving flexibility. It also aligns naturally with the four-day working week now being promoted by Brussels.
Hiring has become a strategic decision that extends well beyond talent acquisition. In an era defined by technological sovereignty, it increasingly determines how quickly a company can adapt when external conditions suddenly change.
